Regulators must be empowered address universal service1 and universal access issues.2 The means to achieve universal service are frequently addressed through the establishment of a Universal Service Fund (USF) that provides and maintains telecommunications services in those areas of a country where service provisioning is challenging due to physical and economic restraints and thus, is less commercially viable.
(a) Establishment of Universal Service Funds
A primary goal of any telecommunications regulator is to make certain that telecommunications services are accessible to the widest number of users at the lowest cost. A common mechanism used to help achieve this goal is the creation of universal service/access development funds. These funds are being used increasingly in competitive markets given that former monopoly operators are prohibited from using cross-subsidization to meet their universal service obligations.
In most countries, establishing the objectives and priorities of the USF is the role of the government as policy-maker in close cooperation with the regulator. Regulators, in turn, are generally responsible for implementing the USF and therefore must develop appropriate guidelines that comply with the policy-maker’s goals and objectives, but also enable the regulators to make decisions and carry out their duties regarding the establishment and management of the USF.
The following is an example of Uganda’s innovative USF program (Box 7-3).
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Box 7-3: The Rural Communications Development Fund (RCDF) of Uganda
The RCDF was created in 2001 by the Uganda Communications Commission (UCC) as part of its Rural Communications Development Policy. Its purpose is to support the development of a commercially viable communications infrastructure in rural Uganda to promote social, economic, and regional equity in the deployment of telephone, Internet, and postal services. The fund’s objectives include providing access to basic communications services within a reasonable distance to all Ugandans; ensuring effective utilization of the RCDF to leverage investment in rural communication development; and promoting ICT usage in Uganda.
In particular, the RDCF fund’s objectives are to:
- ensure that all sub-counties with at least 5,000 inhabitants have access to basic communications services by 2005;
- ensure that the limited resources of the RCDF were effectively utilized to create an immediate impact;
- support the creation of an Internet Point of Presence (PoP) in every district of Uganda by 2003, where each PoP would be linked to at least one Internet cybercafe;
- increase the use of ICTs in Uganda by supporting the introduction of ICT use in at least one “vanguard” institution in every district of Uganda by 2003; and
- promote the provision of communications services in rural areas as a profitable business.3
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(b) Management and Administration of the USF
In addition to establishing the USF, the regulator must put in place the necessary procedures to manage and administer funds. The following are examples of countries that have implemented procedures for the management and administration of USFs.
In Taiwan, for example, the Directorate General of Telecommunications (DGT), a division of the Ministry of Transportation and Communication (MOTC), administers and manages the Universal Service Fund. The DGT oversees the affairs of the fund through the Universal Service Fund Administrative Committee, composed of seven to eleven members from agencies, academia, and sector experts. The Director General of the DGT is the chairman of the committee, and other members of the committee are selected by the DGT. The main functions of the committee include: assessment of the annual implementation plans and subsidy applications for universal service; assessment of the revenues as reported by contributing parties; auditing and calculation of the contribution proportion and amount to be made by contributing parties towards universal service charges; auditing and assessment of the Telecommunications Universal Service Fund; evaluation of the universal service regime; and other matters related to universal service in Taiwan.4
Similarly, in Chile, the Telecommunications Development Fund (FDT) is managed by the Telecommunications Development Council, a group composed of three ministers (including the Minister of Transportation and Telecommunications who acts as Chairman of the Council) and three telecommunications experts representing different regions of the country. However, unlike Taiwan, the Council is supported by the regulator, SUBTEL, and the Council’s members include a broader group of government representatives. Each year, the Council is responsible for: (i) determining the criteria SUBTEL will consider when evaluating projects; (ii) carrying out the annual agenda of projects to be tendered and those being subsidized, as well as establishing their priorities and the subsidies necessary for their execution; and (iii) determining, through public tenders, the disbursement of funds for subsidies for projects to be carried out. The Council can request necessary information from regional, provincial or community authorities. Once a project is selected, the Council forwards all relevant information to SUBTEL for the regulator to issue the pertinent authorizations. The Council also is responsible for preparing and distributing the FDT’s annual report that allows for periodic assessments of the fund.5
ENDNOTES
1 Universal service policies generally focus on achieving or maintaining “universal availability” of connections from individual households to public communications networks. See International Telecommunication Union, Trends in Telecommunication Reform: Effective Regulation, 2002.
2 Universal access describes the situation in which every person has a reasonable means to access a publicly available telephone in their community but not necessarily in their home. See International Telecommunication Union, Trends in Telecommunication Reform: Effective Regulation, 2002.
3UCC District Information Portal, About the RCDF, available at http://www.dip.go.ug/english/rcdf.php; and UCC Rural Communications Development Policy for Uganda, July 2001.
4 DGT/Ministry of Transportation and Communications of Taiwan, Regulations on Telecommunications Universal Service (unofficial translation), June 2001.
5 SUBTEL Decree No. 37.146 4, Regulations for the Fondo de Desarrollo de las Telecomunicaciones, December 2001.