Universal Access Policies ITU-WTO Workshop on Telecom & ICT Regulation Relating to WTO Obligations and Commitments 1

1. Universal Access PoliciesITU-WTO Workshop on Telecom & ICT Regulation Relating to WTO Obligations and Commitments1-7 December 2004WTO, Geneva Presented by Susan Schorr, Regulatory Officer, Regulatory Reform Unit Telecommunication Development Bureau

2. ITU BDT Products on Universal Access Trends in Telecommunication Reform 2003: Promoting Universal Access to ICTS GSR Universal Access Best Practice Regulatory Guidelines ITU-D Study Group Question 7-1/1

3. GSR 2003 Universal Access Regulatory Best Practice Guidelines • Designing universal access policies, regulations and practices in order to createincentives for the private sector to extend universal access to communicationsservices. • Establishing a fair and transparent telecommunication regulatory framework thatpromotes universal access to ICTs. • Adopting technologically neutral licensing practices enabling service providers touse the most cost-effective technology to provide services for end users.

4. GSR 2003 Universal Access Regulatory Best Practice Guidelines (Cont’d) • Adopting a framework of interconnection rates linked to costs. • Reducing regulatory burdens to lower the costs of providing services to end users. • Developing an effective regulatory body responsible for implementing policiesdirected towards assuring the best quality reliable services at the most affordableprices that meet the needs of consumers—existing and future. • Promoting competition in the provision of a full range of ICT services to increaseaccess, affordability, availability and use of ICTs.

5. GSR 2003 Best Practice Guidelines • http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_E_31.pdf • http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_F_31.pdf • http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_S_31.pdf

6. Definitions Universal Service: policies focused on providing individual household connections to public telecommunication network. Universal Access:policies focused on ensuring that all people have reasonable means to access a publicly available telephone in their community (but not necessarily in their home) through shared use of lines or terminals including public payphones, community telecentres, teleboutiques or community Internet access centres Universality: term used by some to refer to both universal service and universal access All share same goal

7. Universality Goals • Availability • Affordability • Accessibility • Traditionally Implemented By PlacingObligations on Fixed Line Monopoly Operator

8. Availability and Accessibility Goals Vary • Some countries or regions lack services of any kind • Some countries or regions seek to add advanced ICTs to existing basic services

9. THE BASIC ACCESS CONTINUUM Single Line Voice grade service Access to enhanced emergency services, operator services, and relay services; Equal access to long-distance; touchtone Access to data; minimum role of data speed on phone lines Fully digital system end-to-end Two-way broadband service The Basic Access Continuum, From Voice to Broadband

10. Principle Objectives of Universality Policies • Allow full participation in the Information Society • Promote economic development • Encourage equal access by all segments of the population • Promote national political, cultural and economic cohesion • End differences in access between urban and rural areas

11. What are Universal Access Objectives For Your Nation? • Does your country have a universal service or universal access policy? • If not, what objectives would you identify to be included? • Why does your country wish to improve access to its citizens? • What kinds of services are important? Voice? Internet? Broadband? Others?

12. Achieving Universal Service or Access Through Monopoly Operators • Very few countries have achieved universal service/access goals solely through monopoly operators • For this reason, most countries have embarked on sector reform

13. Universal Service/Access as an Obligation • License conditions, e.g. roll-out obligations • Cross subsidies • Interconnection levies and access deficit charges • Universal Access Funds e Basic Access Continuum, From Voice to Broadband

14. Universal Access as an Opportunity • Can regulatory conditions be provided to transform universal service obligations into market opportunities? • Could your country use sector reform to achieve universal access?

15. Sector Reform Is Working As a Tool for Universal Access • Mobile is the prime example! • More mobile than fixed line subscribers in many developing countries • Prepaid makes it affordable • Public access, through mobile payphone, re-sale and entrepreneurs is making mobile even more effective • SMS even cheaper than voice and is a limited email substitute

16. Mobile Payphones • Provided by Individual Entrepreneurs in India, Uganda, Nepal, Cambodia and Nigeria • Mandated in Mobile Licenses in South Africa • Chosen by some operators as least cost solution in Chile • As a business managing a network of small entrepreneurs in Uganda and Bangladesh • Informal operations, such as “Umbrella People”

17. Rural Market Gap and Competition • Competition, or more broadly—Market Efficiency Gap—is the first step in analysis of how to address rural access • Question: Are there market barriers preventing rural users from having access to telecommunication and ICT services? • Requires an assessment of the state of market liberalization and competition

18. Real access gap Commercially feasible Market efficiency gap Access today Poverty Geographic isolation What do we mean by Market Efficiency Gap?

19. Market Efficiency Gap Defined “The Market Efficiency Gap is the difference between what markets are actually achieving under current conditions and what they could achieve if regulatory barriers were removed and regulation were used to provide incentives.” Source: ITU Trends in Telecommunication Reform 2003: Promoting Universal Access to ICTs, Practical Tools for Regulators

20. Can You Identify Any Market Efficiency Gaps In Your Country? • Are there any regulatory barriers to entry that could be removed to encourage commercial responses? • What are your policies on resale? • Interconnection? • End user tariffs? • License fees? • VoIP, License-exempt spectrum . . .?

21. Universal access/ service: What role for regulators and policy-makers? • Set measurable targets • Analyze which targets can be achieved through sector reform, especially the introduction of competition • Consider the use of Universal Access/Service Funds to providelimited and targeted « smart » subsidies withina competitive framework

22. Use of Universal Access Funds to Address True Access Gap • Basic principles of funds • Who contributes? • How much? • Which revenue? • Who manages fund? • How to identify projects to be funded?

23. First Step in creating a Fund—Enabling Legislation or policy • Define principles of the right to communications access • Define objectives and obligations for national telecommunications development • Mandate establishment of Universal Service/Development Fund

24. Enabling Laws and Policies (cont’d.) • Define responsibilities for implementing and administering the Fund • Emphasize market-oriented, non-discriminatory principles • Establish enforcement and dispute resolution powers

25. Sources of Contributions to the Fund • Equitable contribution by all market participants • Fixed percentage of designated revenues • Key questions: • What revenues should be covered? • Should anyone receive special treatment • Who should contribute?

26. Management and Administration of Fund • Under control of independent telecommunications regulatory authority • Management autonomy • Independent budget, separate accounting • Regular Audits

27. Procedures for Funding Allocations • Develop an Operating Plan identifying intended projects and targets for an identified period (1-2 years) • Projects to be identified through needs assessment identifying locations, populations, socio-economic activities with the greatest needs • Use funds for “smart” subsidies—to launch new universal access projects

28. Funding Only for Basic Voice or Also For Advanced ICTs? Different Perspectives • Some experts recommend limiting funding to basic communications–-public payphones--because these projects will leverage financing for other services, including advanced • Other experts argue that citizens need access to ICTsNOWand recommend at least some financing be provided for Internet access through telecentres

29. Minimizing Fund Expenditures: The minimum subsidy auction • Project identification • Maximum Subsidy determination • Mechanics • Project Guarantees • Impact of Consumer and Interconnection tariffs on financial self sustainability

30. Trends In Telecommunication Reform 2003– Includes Detailed Look at Minimum Subsidy Auctions—Chapter 5 and Annexes • Describes a set of processes and procedures for applying Fund financing to construct and operate new public access telecom facilities in un-served rural areas in developing and least developed countries, based on a minimum subsidy competitive auction mechanism • Focuses on public payphones as the “mandatory” designated service to be provided • Other types of infrastructure, service delivery modalities and services, including regional broadband operators, individual lines and telecentres, delivering basic and/or advances services, may also be provided

31. Trends 2003 Chapter 5 (cont’d.) • Brings together “best” or "promising” practices, based on extensive research and on successful experiences in Chile, Peru and Colombia • Within the context of a sector liberalization policy and recognizing the limits of the market, these countries designed market-oriented universal access regimes based on providing incentives, not on imposing obligations • Annex 1 of the 2003 Trends Reportprovides a summary of these experiences

32. Trends 2003, Chapter 5 and Annexes (cont’d.) • Development of Projects • Bidding Process • Auctions in Existing Coverage Areas • Selected Minimum Subsidy Results • Indicative Contents of a Sample RFP • Effect of Consumer Tariffs and Interconnection Charges on Financial Viability

33. Funds Bottom line • Funds and Auctions require know-how • Funds and auctions can help governments to extend universal access into rural areas • There can be many pitfalls if not managed properly • Difficult to go it alone—resources like Trends 2003 identify best practices • Consider expert help to implement

34. Universal Access Funds in Your Country—if plan is to create one • Will the Fund be used only for rural access? Or also for urban? • Is the focus on basic or advanced services? • Are projects to receive one-time jump start financing? • Are projects expected to become financially self-sustainable?

35. Promoting Public Access Either Through Funds or Sector Reform • Universal Service Funds Can be Used for Payphone Deployment or Telecentres • Telecentres and payphones can also be run by entrepreneurs or financed by aid agencies • Telecentres can Provide “Basic” Internet Access, offer Tele-Learning/Health, Job Training and other Community Services

36. Promoting Public Access—Telecentre Success Factors • Telecentres, to be self-sustainable,need Viable Business Plan • Community involvement is key • Local, relevant content and applications are crucial • Using existing public facilities like schools orhealth clinics can save costs • Staff needed to provide training for all users • Gender awareness required for training, location, hours

37. Competition, Price and Technology • Three Keys to Rural Access Are Relevant to Telecentres too! • Competitive bidding keeps subsidy, if any, low • Lack of competition for access services will impact financial viability • Price of services to end users and from incoming calls can make or break financial viability • Technology choice can push forward the envelope of financial sustainability and affordability

38. The Universal Access Toolkit • Part 1: Setting up and administering universal access/service funds • Part 2: How to use the funds in conjunction with minimum subsidy competitive auctions • Part 3: Public access strategies: Establishment of Telecentres with self-sustainable business plans Available in Trends in Telecommunication Reform 2003

39. Regulators and Policy Makers shape the framework for access to ICT services • Fast emergence of new service issues • Mobile voice and new data services • Broadband, Wi-Fi, Voice over IP • Digital convergence, etc • Requiring Regulatory decisions • Regulate or not regulate • Number of competitors and condition for licenses • Access to infrastructure • Promoting Universal Access to ICT services by • Ensuring stable and attractive investment conditions • Encouraging competition for services • Promoting development and affordability

40. Ingredients for a Successful Universal Access Policy Approach • Regulatory fairness and certainty • Recognizing ICTs as a unique tool fordevelopment • Commitment to the development of a fullycompetitive market • Clear view of the limits, purposes and targetsof direct monetary subsidies • Low-cost, adaptable and robust technologies • Local community and/or entrepreneurialinvolvement

41. Thank You for Your Attention! Susan Schorr Regulatory Officer ITU BDT Regulatory Reform Unit susan.schorr@itu.int