A thorough liberalization process, whereby the communications sector is effectively regulated and open to fair competition from private investors, is vital to the success of a universal access and service (UAS) programme for the following reasons:
- Without an effective regulator operating within a modern communication law, there are significant challenges for the implementation of a UAS programme;
- Where a government continues to be a market player, usually by owning all or a part of the incumbent operator, it is likely that the government cannot be impartial when making sector policy and UAS policy, as it will have a vested interest in one of the market participants. Also, there is a risk that governments will continue to direct the incumbent operator to serve certain areas for political reasons, regardless of viability; and;
- Only a reformed or renewed institutional framework is conducive to network and service expansion on an equitable basis. Therefore, competition, interconnection, licensing/authorization policies, tax burdens and any economic disincentives must be properly addressed.
Liberalization, through private sector participation and open competition, encourages UAS by setting targets or providing opportunities that motivate operators, such as the following:
- Setting license or contractual obligations for the roll-out of services that are explicit and realistic;
- Exceeding roll-out obligations for reasons of longer-term profit;
- Ensuring the ability to run efficient and politically un-encumbered communications businesses;
- Creating fiscal benefits for introducing investment capital and expertise; and
- Facing less political interference (decisions based on non-commercial issues) than incumbents have traditionally faced.
- Being demand-driven increases the chances of both responding to consumers’ needs and closing the market efficiency gap.
Thus, governments should implement regulatory reform measures before creating Universal Access and Service Funds (UASFs) or other specialized subsidy tools. Such regulatory reform efforts should include:
- The development of a modern regulatory framework, including addressing the impact of convergence, and the establishment of an independent and effective regulator. The national regulatory authority (NRA) should have the qualities of an accountable entity with decision-making powers that are isolated from vested interests. Consideration needs to be given to the scope of the regulatory authority’s role and responsibility, introduction of a statutory framework that enables effective operation within government hierarchy and ability to set and enforce measures that are publicly acceptable. For a discussion of this, see Module 1: Regulating the Telecommunications Sector: Overview, and Module 6: Legal and Institutional Framework;
- The effective regulation of competition and the establishment of interconnection and tariff rules is examined in Module 2: Competition and Price Regulation;
- The pursuit of technologically neutral licensing, unified licensing or general authorizations is discussed in Module 3: Authorization of Telecommunications Services; and
- The management of radio spectrum, maximizing the use of this scarce resource, and allowing for innovative and emerging technologies, including Broadband Wireless Access (BWA) is explored in Module 5: Radio Spectrum Management.
tackle some of the main regulatory reform issues. These issues include:
- New licensing approaches that allow operators to have the freedom to choose technologies to be used and services they wish to provide; and
- Competition regulation, especially regarding open access and the importance of interconnection and tariffs.
These sections discuss specific cases that illustrate potential problems with UAS programmes if certain reforms or regulatory requirements are not addressed. Section 2.1.4
review radio spectrum management and regulation, while Section 2.1.5
addresses other economic incentives that can be used to improve UAS before any special UASF or other intervention is used: taxes, import duties and other (regulatory) fees. Section 2.1.6
discusses the importance of the removal of pre-liberalization Universal Service Obligations (USOs), often borne by the fixed incumbent operator.
The discussion about regulatory reform concludes with Section 2.1.7
providing some considerations about the timing of a UAS programme in relation to regulatory reform.