Session2 Definition and Scopeof UA

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Damascus - Syria, 1012 October 2010

Session 2: Definition and Scope of

Universal Access/Service

Moez Chakchouk

Wireless Broadband Internet Access

in Rural areas

ITU/BDT Arab Regional Workshop on

Ministry of Communication Technologie Tunisia

Email : [email protected]


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Damascus - Syria, 1012 October 2010ITU/BDT Arab Regional Workshop on Wireless Broadband Internet Access in Rural areas

Session 2: Definition and scope of universal Service/Access

Introduction

In the 21st century, affordable broadband access to the Internet is becomingas vital to social and economic development as networks like transport, water

and power Dr Hamadoun Tour, ITU Secretary-General.

ICT for alleviation of poverty in developing countries: Reality of rural and remote areas of developing countries: lack of

infrastructure, low population density, low economic activities,illiteracy, lack of ICT and information, difficult geographical,

environmental and living conditions, etc.

Rapid migration of population from rural to urban areas indeveloping countries causing poverty.

Amelioration of living condition and empowering rural and remoteareas by ICT.

Applicability of emerging ICT technologies and services.


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Introduction

The digital divide between urbanareasofdeveloped countriesand ruralareasofdeveloping countries are becoming: Wider

and Wider! We must strengthen our actions to bridge the

digital divide bydeveloping ICT infrastructure in rural areas.

Tunis Commitment18) We shall strive unremittingly, therefore, to promote universal,

ubiquitous, equitable and affordable access to ICTs, including universal

design and assistive technologies, for all people, especially those with

disabilities, everywhere, to ensure that the benefits are more evenly

distributed between and within societies, and to bridge the digital divide

in order to create digital opportunities for all and benefit from thepotential offered by ICTs for development.

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Outline

Basic Definitions Universality Policy Implementing Universality

Role of regulators Universality trends

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Basic Definitions

Universal Service (US) Promoting or maintaining of universal availability of

connections byindividual households to public

telecommunications networks,

A practical ICT policy objective (developed countries), Not economically feasible (developing countries).

Universal Access (UA) Providing to every person a reasonable means of access to a

publicly available telecommunication centres,

May be provided by pay telephones, tele-centres, communitytelephone centres, community Internet access terminals, etc.

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Basic Definitions

Universality policygenerallyrefers to both US and UA

The common objective provide or maintain service to

those who would notnormally be served :

Universal

Access

Universal

Service

Teledensity

Revenue per inh.

People living in rural areas (high cost service areas), Lower income people, People with physicaldisabilities, etc.

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Basic Definitions

Three main issues relevant to Universality Availability: The Service is available in total geographic territory

and especially in inhabited parts of the country through pub lic,

community, shared or personal devices.

Accessibility:All citizens can use the service, regardless oflocation, gender, disabilities and other personal characteristics.

Affordability: The service is affordable to all citizens regardingthree main factors:

People incomes, Overall price levels which in turn depend on costs (technology) and

profits (competition), Other factors: price presentation and packaging, payment schemes,

credit management, user awareness and value perceptions, ...

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Universality Policy

Regulatory Best Practices 4th GlobalSymposium for Regulators (GSR2003):

An enabling regulatory environment: Role of governments andregulators The success of any universal access/service policy is dependent upon political

support at the highest level that recognizes the role of ICTs as a tool fordevelopment

It is essential that Regulators exist or be established where they do not yet exist,and that their key role in implementing universal access policies and promotingcompetition be recognized and reinforced.

A series ofpolicy and regulatory reform measures can be taken to achieveuniversal access to ICTs.

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Universality Policy

Fundamental Step: Formulating a national policy that identifiesappropriate and realistic universal access/service objectives.

Five major objectives of implementing Universality Policies:1) To promote Ubiquitous Network Society,2) To promote national political, economic and cultural cohesion,3) To eliminate disparitybetween rural and urban areas.4) To encourage more balanced distribution of the population,5) To promote economic growth.

Four major issues:1) Define Universality What to Fund?2) Guarantee the best Quality of Service,3) Ensure affordable tariffs for all,4) Implement Universality How to Fund?

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Universality Policy

Universality Policies have to differ from developingcountries to developed countries, with regards to sevenmajor factors:

1) Social, economical, political environment,2) Telecom regulatory environment,3)

ICT Infrastructure development,

4) Market opening and privatization strategy achievements,5) Efficiency of the competition environment,6) Geographical difficulties and distribution of population in

rural and urban areas,

7)

Existing disparity, realization of the Millennium DevelopmentGoals (MDGs) and perceived order of need (telecom vs water vselectricityvs housing vs etc.)

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Universality Policy

Scope of Universal Service Provision The EuropeanCommission Case (Universal Service Directive 2002/22/EC): Covers connection to the telephone network and access to services

provided over that network

Refers to access at a fixed location (technologically neutral could bewireless),

Network connection must support dial-up Internet access, Subject to periodical review.

Directory enquiry services and directories Public payphones Specific measures for disabled users, In addition to some mandatory services, e.g. uninterrupted access toemergency services, operator assistance service, bill control

measures, etc.

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Universality Policy

Scope of Universal Service Provision The EuropeanCommission Case (Review Report April 2006):

There is no need to change the scope of the US obligations atthe time particularly noting that:

Access to mobile services is high but competitive mobilemarkets can be expected to continue to support high access

without the need for a special mobile US obligations,

Only a minority of households have access to broadbandand extending the USO scope to cover broadband at that

stage would be costly (governments could however support

rollout of broadband through direct government funding),

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Universality Policy

Universality and economic growth High correlation between network penetration and economic development

Increasing evidence of causality

Consensus that network development should have high priority in order toachieve economic growth

However, Universal Service Obligations (USO) can be sometimes inconflict with objective of economic growth

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Network Development

Network development for

universal service?


economic growth?

Prioritise subscribers

with ability to paywith economic potential

Prioritise subscribers

who needs subsidieswho are in rural areas Broadband


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Universality Policy

Focus on Broadband as an essential need to access information Provides access to information, which is public good and is essential to all

forms of economic activities

Provides access to new applications & allows companies to explore newbusiness opportunities, access customers and obtain information about marketprices.

Provides better access to information that makes markets function moreefficiently and raises producer incomes.

Provides access to information on the performance of government that helpsimprove government accountability and governance.

Broadband networks are increasingly being used to deliver public services suchas financial services, healthcare and evoting.

Broadband in developing countries will follow a similar path, but withmuch greater emphasis on wireless networks.

Expanding affordable access to broadband is a top priority forgovernments of developed & developing countries.

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Universality Policy

Proposed strategy First, appreciate the market competition environment (market analysis), Then, determine the market deficit areas/people, and Finally choose the best funding strategy in order to ensure an efficient

implementation of the universal policy, including funding issues.

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Poverty

Remote areas (rural)

Connectedpeople

Market deficit

Economically feasible Intervention required

Access deficit


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Universality Policy

Policy elements can provide direct or indirect stimulus


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Implementing Universality

Promoting universality in a competitive market via a cost-basedapproach

Two Options: Tariffs de-averaging (!!!) Tariffs self select packages Support the USO objectives, Profitable when marginal costs are covered, No subsidy required Commercially viable


economic growth

Subscribers with ability to pay:Pay (Common Costs+ Marginal Costs)

Subscribers withoutability to pay:Pay (Marginal Costs)

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Five main adopted options in different countries:1) Market-based reform

2) Mandatory Service Obligations

3) Cross Subsidies

4) Access Deficit Charges (ADC)

5) Universality Funds

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Market-based reforms: especially privatization,competition, and cost-based prices, etc.

Proven effectiveness in expanding service in economies withstate-run telephone monopolies,

Privatization tied to specific network roll-out obligations(sometimes including non-economic areas),

Reforms should provide incentives for continuous service to allareas that are economic to serve,

Reforms wont expand service to uneconomic areas,Some conflict could exist between these reforms especially when

an exclusivity periods are granted in order to maximize

privatization proceeds to the government.

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Mandatory Service Obligations: imposed by licenseconditions or other regulatory measures

Can be effective, if realistic and not anti-competitive,Most effective for newly licensed or newly privatized operators,Places burden of financing universality on specific operators;

with potentially anti-competitive effects (if USO burden outweighs

benefits),

Sometimes used as a rationale to limit market-based reforms:tariffs rebalancing and competition.

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Cross Subsidies: between or within services providedby incumbent operators,

Traditional approach in place in many countries; oftencombined with mandatory service obligations

Promotes inefficiency; demand is depressed for higher costservices that provide subsidies and entry is foreclosed insubsidized markets,

In most cases, only existing users receive the subsidy,Anti-competitive effects are difficult to detect and prevent.

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Access Deficit Charges (ADC): paid by telecom.operators to subsidize the access deficit of incumbents

Spreads burden of financing uneconomic access services acrossall operators (including competitors),

Difficult to calculate access costs; difficult to implement andadminister in a transparent and efficient manner,

Inefficient (as with cross subsidies),Difficult to calculate benefits of USO provider; can lead to

excessive access charges to competitors,

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Universality Funds: independently administered fundsthat collect revenue from various sources and provide

targeted subsidies to implement universality programs

Most effective means of providing targeted subsidies to expandor support uneconomic service

Potentially the most efficient and most transparent,Work best in expansion of service to new areas if combined with

competitive bids for private operators,

Some administrative complexity and transaction expenses inestablishing fund; some potential for bad governance; difficult to

forecast associated costs and revenues.

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Role of regulators

Typical goal: Ensure the provision of telecoms services asneeded to meet all reasonable demand by:

Protecting consumer interests (price, quality, variety), Establishing and maintaining an efficient competitive market and

providing protection from the market power of incumbent

operators, Stimulating investment and economic growth and enabling private-

sector market entrants to operate through reasonable access to the

facilities of incumbent players,

Encouraging existing players to develop and innovate further inmarkets that are expanded by the dynamics of competition, and

Maximizing and securing public interest.

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Role of regulators

Regulators need tobalance the Interests of various groups ofstakeholders, which are often conflicting, even within each

group : Public Interests vsSpecific Interests

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Consumer Interests

Telecom Operator Interests

Public Interests

I want employment I want universal access I want to develop the economy I want increased density I want to comply with WTO regulations I want to max. revenues for scarce resources I want to strengthen our position as a

communications hub,


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Role of regulators



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I want choice I want the best customer service I want better quality of service I want lowest tariffs possible I want advanced and innovative services I want to access the service everywhere

Consumer Interests


Public Interests


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Role of regulators

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I want to enter market I want ROI on my infrastructure invests I want to offer converged services I want to offer only services I want to offer low quality for low prices I want to operate in certain regions only I want the freedom to use any technology

Consumer Interests


Public Interests


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Universality Trends

Review of Universality Scope with respect to : Mobile telecoms development (technologies, services, penetration, revenues, etc.)

National licence conditions have made mobile communications ubiquitouslyavailable, e.g. In Tunisia more than 99% of the population is covered,

Access radio network shared: low cost base, Subscriber added at a marginal cost independently of its location, Pre-paid services: low entry price for consumers greater possibility to control

costs.

Broadband and convergence development Comprehensive national broadband strategies are already in place but until now

overall proportion of the population in most of Arab countries using broadband

does not fulfil the requirement of a service used by a majority of consumers,

Competition in broadband market needs a lot of attention (ULL is notimplemented),

Broadcasting services need also to be considered in a convergent market.28


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Universality Trends

Other important issues have to be raised: Whether the US obligations should be defined with regard to

network access rather than with reference to particular

services,

Whether the practice of requiring the incumbent operator tocontinue to exclusively fund the USO, as occurs in most ofcountries, is still appropriate given developing competition,

Whether a general adapted taxation mechanism is moreappropriate than an universality fund implemented through

complicated regulatory reforms.

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Damascus - Syria, 1012 October 2010

Thanks for your attention ...

Moez Chakchouk

30

Wireless Broadband Internet Access

in Rural areas

ITU/BDT Arab Regional Workshop on

Ministry of Communication Technologie Tunisia

Email : [email protected]

Documents

Session2 Definition and Scopeof UA