Widespread access to and diffusion of ICTs are highly desirable for social and economic reasons. Ensuring the full participation of all in the Information Society is a major policy goal, the implementation of which brings all the benefits and transformational opportunities of ICTs. For example, countries participating in WSIS set the ambitious goal of connecting all villages of the world to ICTs by 2015, including establishing community access points, and connecting universities, schools, libraries, post offices, health centers, and local governments. The EU has adopted the term “e-inclusion” to refer to full access and participation[1] and is particularly conscious of the promises of new digital opportunities and the new risks of digital exclusion.
As the ITU observes, two different terms are used to describe levels of inclusion. Universal Service (US) means that every household in a country has the opportunity for telephone service. Universal Access (UA) means that everyone in a community can gain access to a publicly available telephone, although not necessarily in their homes. Normally, both include free access to emergency services, the availability of directory services, and special provision for customers with disabilities.
The term “Universal” encompasses several elements including availability, affordability, and accessibility (see Module 4). The focus of US/UA policies is delivering service to those segments of society that are least able to attract the commercial provision of service. Policies targeted at US address non-commercially viable households and those targeted at UA address non-commercially viable communities. High cost-of-service provision and/or low incomes are the primary reasons that such customers are unattractive to operators.
However, the provision of UA/S should not be viewed as a burden since extending access brings about the economic benefits of “network externalities” (increasing the customer base brings benefits to all customers), “call externalities” (new customers may not make many calls but they generate revenues when they receive calls), and externalities derived from substituting electronic communications for other forms of participation or access to important public services. Generally, operators do not take these externalities into account when making purely commercial decisions. The possibility of materializing such externalities provides a rationale for policy interventions.
The WSIS target is one for universal access, which is appropriate for developing countries at this time. But as markets and technology unfold, the bar will continue to be set higher. This implies a periodic reconsideration of what types of service should be included in any definition of UA/S (ranging from single line voice-grade, incrementally all the way to two-way broadband services) and at what cost to the consumer. Flowing from these issues are the mechanisms for both delivering and financing the desired level of service.
Global experience with extending access and UA/S policies has expanded considerably since the publication of the infoDev Telecommunications Regulation Handbook. Separately or in combination, the following approaches have been implemented:
- Market based reforms
- Mandatory service obligations
- Leveraging new technologies, e.g., mobile services
- Leveraging new business practices, e.g., pre-paid cards
- Cross subsidies
- Access deficit charges
- Universal Funds
Of these, the most successful have been the market-based reforms associated with the liberalization of the mobile sector, supported by a stable regulatory environment and the subsequent exponential growth in customers in developing countries. These initiatives have allowed market forces to contribute fully and thereby close the “market gap.” The remaining “access gap” can be categorized as:
- communities that only require a targeted capital injection where future revenues will support operational expenditure – sometimes referred to as the “sustainability frontier” - and
- communities that require ongoing support for both capital and recurring expenditures.
The practice of ensuring universality by using cross subsidies between the different services of an operator (from international to local and/or access) to ensure affordability has been severely strained by the introduction of competition. Access deficit charges have also been found to be sub-optimal in competitive environments. In many jurisdictions, Universal Service Obligations (USO) are in place. The informational demands on regulators are considerable where a designated operator (frequently the incumbent) is reimbursed for the losses incurred or reported in the provision of US/A.
As the Toolkit illustrates, Universal Access/Service Funds (UA/S Funds) have been established to provide financial incentives to operators to close the access gap. They require mechanisms to garner finance and disburse the incentives in a cost-effective manner to achieve the ends of the UA/S policy objective. Frequently, the sector is the source of finance for the UA/S Fund in the form of levies and in other cases the fund is financed from the general budget. The EU, under strict conditions, provides subsidies[2] of up to 50 percent to ICT local users in circumstances where broadband is not economically viable. UA/S Funds have proved effective when disbursement is coupled with competitive bidding or auctions for these financial incentives, where operators compete for the minimum subsidies required to fulfill the UA/S target.[3] In some instances, subsidies have been provided directly to customers or to particular institutions, such as libraries, schools, and public tele-centers. Early, large-scale UA/S projects were frequently undertaken on a top-down, supply-driven approach where a single provider, often the incumbent, was selected to provide a standard set of services, using a narrow set of technologies over a wide geographical area. The introduction of NGN-related technologies, such as Broadband Wireless Access (BWA) and Wi-Fi, has substantially reduced economies of scale in both the infrastructure and service segments. This has opened up the field to a wider range of small or local providers to expand universal access from a bottom-up, demand-driven approach.
The phenomenal spread of the Internet has had an impact on notions of universal service. The EU has included the concept of “Functional Internet Access”[4] in the definition of universal service and is currently constructing a “future proof” regulatory environment. In a converged economic space of electronic communications, new forces are being set in motion. VoIP business models are leading to the erosion of revenues from voice services for operators, while the intensification of competition is hastening the transition to NGNs. While NGNs provide the opportunity for a much wider range of revenue-generating services, the platforms will be deployed on a commercial basis. It is quite possible that this deployment will follow the geographic and income-related distribution of computers in businesses and households. This implies that those locations currently underserved or benefiting from a US/A Fund will not be among the first to be connected. Furthermore, given the shift in cost towards the user, when the cost of a computer is included, the concept of “affordability” must be re-examined. Clearly there will be an enhanced role for shared access and community-based initiatives.
There is growing interest in and experience of community-based projects to provide Internet services based on the “municipal open access model.” A study by infoDev found numerous examples of community-based projects, including[5] the Myagdi, Kaski, and Parbat districts in north-west Nepal; the municipality of Pirai in the Rio de Janeiro state of Brazil; and the city governments of Philadelphia (USA) and Knysna (South Africa).
The debate over the role of broadband in universal service is underway in developing countries, such as Chile[6] and India.[7] Convergence, facilitated by NGNs, raises the potential externalities (referred to as “Social Capital”[8]) by increasing the potential benefits to households of services if they had access to them. Convergence may possibly increase the sector base on which levies can be made for a UA/S Fund while also raising specific regulatory issues related to universal service regarding voice quality, emergency services, and services for the disabled.[9] These issues are addressed in Module 4 of the Toolkit.
ENDNOTES
[1] http://www.ianis.net/communities/other/e-Inclusion/Pages/docs.aspx and http://ec.europa.eu/information_society/activities/einclusion/index_en.htm
[2] http://europa.eu.int/information_society/eeurope/2002/news_library/documents/eeurope2005/execsum_en.pdf
[3] http://iris37.worldbank.org/domdoc/PRD/Other/PRDDContainer.nsf/WB_ViewAttachments?ReadForm&ID=85256D2400766CC7852570A0005E1F14& and ITU “Trends in Telecommunications Reform: Promoting Universal Access to ICTs”, 2003.
[4] See Article 4 http://eur-lex.europa.eu/LexUriServ/site/en/oj/2002/l_108/l_10820020424en00510077.pdf
[5] http://www.infodev.org/en/Publication.130.html
[6] http://www.regulatel.org/SU_Peter_31_08_07/Full_report-COMPLETE-June_11,2007.Edited_PAS_v.1.pdf
[7] http://iris37.worldbank.org/domdoc/PRD/Other/PRDDContainer.nsf/WB_ViewAttachments?ReadForm&ID=85256D2400766CC7852570A8007031B6&
[8] ftp://ftp.jrc.es/pub/EURdoc/eur21064en.pdf
[9] See ITU “What rules for Universal Service in an IP-Enabled NGN Environment?”, Background Paper, ITU workshop “What rules for an IP-Enabled NGNs?”, Geneva 23-24 March 2006.