Uganda’s Rural Communications Development Fund

Uganda’s Rural Communications Development Fund (RCDF) conducted Africa’s first-ever universal access competition for both voice telephony and data networks.

The RCDF was established to support the development of a commercially viable communications infrastructure in rural Uganda, thereby promoting social, economic and regional equity in the deployment of telephone, Internet and postal services. The RCDF was designed to be funded from a 1 per cent levy on operators’ gross annual revenues but has also benefited from contributions from the government and the World Bank.

To utilize the resources of the RCDF efficiently, subsidies are awarded through a competitive process and are only available to geographical areas and for services that are in definite need of assistance. Specifically, funds are only available to areas where service provision is not feasible or unlikely to be provided by operators within the next one to two years without subsidy.

The RCDF mandate is to finance the following:

  • Universal access (UA) telephony in all 154 sub-counties not served by the major operators;
  • Special equipment that would extend the reach/coverage of existing telecommunications networks into rural and remote areas;
  • Internet points of presence and wireless access systems at district centres;
  • A national Internet exchange point (IXP) to facilitate inter-ISP traffic;
  • Vanguard Internet access projects for schools, NGOs, health clinics and other intermediaries at the district level; and
  • Content creation pilot projects in telephony and Internet areas.

Internet POP Programme
Uganda has a digital backbone that was constructed by both the incumbent telecommunications operator, Uganda Telecom Limited (UTL), and the second national operator, MTN Uganda. The networks were planned to link virtually every regional centre (district headquarters town) into a national backbone. Although the incumbent’s wired network was not extensive outside of the district centres, the most prevalent service being deployed throughout the country by the second operator was GSM. As Internet access was already being provided by leading ISPs in conjunction with the two leading telecom operators in a few of the larger towns, it was realised that the GSM base station towers could serve as potential hubs for a broadband wireless system across the nation.

UCC decided that the provision of financial support from the RCDF to deploy a minimal level Internet point-of-presence (POP), providing a broadband wireless hub to every district centre, would be the logical next step of national Internet development. This would enable schools, intermediary agencies, local government and businesses that wished to become Internet users to obtain access to the Internet by purchasing a high speed wireless terminal. It was thus decided to facilitate, first and foremost, the Internet POPs infrastructure through competitive subsidy auction rather than to focus on a multiplicity of telecentres and other user projects.

UCC also decided that along with, or following immediately behind, the deployment of each Internet POP, one public Internet café per district and at least one vanguard institution (e.g., a leading Internet-ready school or college) could be supported with access as well as training and regional content development. These would combine to promote the start-up of the local Internet market on a commercially sustainable basis.

Thus, a complementary, competitive tendering programme was to offer USD 27,000 grants to schools to support ten School Internet Centres in ten districts, and to NGOs for the establishment of ten NGO Internet Centres located in ten districts throughout the country.

The RCDF commenced its development programme with a competitive lowest subsidy tender for implementation of 20 Internet POPs. This competition was won by a single provider, the incumbent UTL. A few Internet cafés willing to provide Internet training were also given subsidy awards through a competitive tender process. In 2004, the RCDF conducted a further competition to subsidize the provision of the remaining 32 district centre POPs.

In total, 54 wireless Internet POPs, one for each unserved or undeserved district centre, were tendered. Of the 54 Internet POPs, 32 were mandated as broadband access services. Peak data rates were up to 2 MB for proprietary broadband and 150 Kbps for the CDMA base stations. The tenders included a mandated coverage radius of 15 km and backbone to connect to national terrestrial backbone.

A total subsidy amount of USD 1 million was offered for the provision of the 32 broadband POPs. From the total of 32 Internet POPs, the incumbent, UTL, won a total of 12 with a combination of proprietary broadband and CDMA 2001X base stations. MTN Uganda won the remaining 20 POPs with a similar combination of technologies. The average subsidy amount requested for the 32 sites was USD 30,000 each.

The approach taken in the RCDF Internet POP programme focused on the delivery of broadband services to districts with existing demand. While in many countries there is political pressure for governments to deliver ICT services to the village level, the RCDF took the approach that if such services are to be sustainable and viable, they should be deployed first where there are private and public clients ready to support them. Once the service has been established in the more densely population district centres, further deployment beyond their boundaries should be reviewed as demand and capacity becomes evident.

The RCDF competitions used a technology neutral approach, whereby any proven technology could be used to offer voice and data services in the rural and underserved areas, provided that they met the standards that were outlined in the Bidding Documents and Service Agreements. The Request for Proposals (RFPs) were aimed at attracting both ISPs and telecom operators as bidders, however, only the telecom operators (MTN Uganda and UTL) participated in the bid processes. This was likely due to their greater financial and resource capacities, as well as their economies of scale, to deliver services to more remote areas of the country.

Sources: various reports prepared by Intelecon for the Uganda Communications Commission. 

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