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Network Partners for Capacity Building and Knowledge Exchange in thre Telecommunications Sector


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Title: Network Partners for Capacity Building and Knowledge Exchange in thre Telecommunications Sector

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Universal Service and Universal Access
  • Charley Lewis
  • LINK Centre
  • University of the Witwatersrand
  • Johannesburg, South Africa
  • http//
  • NetTel_at_Africa Professional Development Course

Putting universal access universal service in
Session Objective
  • This session aims to give you an understanding of
    the issues relating to universal access and
    universal service, and to equip you with the
    tools to apply these concepts in your national
    telecommunications environment.

Expected session outcomes
  • Upon completion of the session you will be able
  • describe the role of universal service and access
    in social and economic development
  • articulate the concepts and issues relating to
    universal access and universal service
  • appreciate various models and mechanisms for
    extending universal access and promoting
    universal service.

Session roadmap
  • The importance of Universal Service and Universal
    Access in Africa
  • Understanding and analysing Universal Access,
    Universal Service, Universality
  • Mechanisms and models to achieve universality
  • Further issues affecting universality in Africa

Discussion Question
  • What do you understand by the terms Universal
    Service Universal Access?
  • Why do you think Universal Service and
    Universal Access might be important issues for
    telecommunications regulation?

Session roadmap
  • The importance of Universal Service and Universal
    Access in Africa
  • Understanding and analysing Universal Access,
    Universal Service, Universality
  • Mechanisms and models to achieve universality
  • Further issues affecting universality in Africa

Africa some access statistics
  • Average mainline teledensity in Africa lt 3
    (ITU, 2002)
  • No African country has total teledensity gt 50
    (ITU, 2003)
  • More phone lines in Tokyo or Manhattan than in
    all of sub-Saharan Africa (Maitland, 1984)
  • Half of humanity has never made a phone call
    (Mbeki, 1996)
  • Africa has 2 of the worlds 700 million Internet
    users (ITU, 2003)
  • 25 of those live in a single country
  • Universal Service Universal Service
  • therefore critically important for Africa
  • And for other developing countries?

Telephone main lines, 2000Africa lags the world
Africa main line teledensity (ITU, 2002)Where
does your country rank?
Total teledensity growth 1992 - 2002 (combining
fixed mobile)How does Africa fare?
Source ITU World Telecommunication Development
Report, 2003
Impact of telecomms reform on universal access
  • What are the key features of telecomms reform?
  • Separation of powers functions
    policy, regulation operations
  • Separate telecomms from posts
  • Commercialise the telecomms operator
  • Establish an independent regulatory authority
  • Privatise the incumbent telco
  • Unbundle telecomms market segments
  • License additional operators
  • Rate rebalancing (local vs international)
  • Interconnection requirements
  • What is the impact of these on universal access
    universal service?

ICTs, Development the Digital DivideWhat do
you think?
  • Access to ICTs ability to use ICTs
  • increases ability to benefit in the Information
  • generates economic growth promotes social
  • But ICTs are expensive to buy, deploy, access,
  • depend on expensive imports (hardware
  • require high levels of (expensive) skills
  • Therefore ICTs will increase inequality
  • the rich skilled will benefit
  • the poor will be left out
  • True or False?

from Space of Places to Space
of Flows
  • Information technology, and the ability to use it
    and adapt it, is the critical factor in
    generating and accessing wealth, power, and
    knowledge in our time
  • The disinformation of Africa at the dawn of the
    Information Age may be the most lasting wound
    inflicted on this continent by new patterns of
  • - Manuel Castells, The Information Age, Vol 3

Universal Service Access
  • Importance of Universal Service / Access policy
  • Telecomms is a key enabler of social development
    economic growth
  • Legacy of the digital divide
  • Role in telecommunications reform -
    privatisation, liberalisation, re-regulation,
    rate rebalancing
  • Trade-off for privatisation - obligation to
    extend the network in return for exclusivity /
    monopoly profits
  • Counterbalance to liberalisation - to prevent
    cherry picking

Session roadmap
  • The importance of Universal Service and Universal
    Access in Africa
  • Understanding and analysing Universal Access,
    Universal Service, Universality
  • Mechanisms and models to achieve universality
  • Further issues affecting universality in Africa

Universality is a policy question
  • Universal access to basic communications for
  • UN General Assembly, 1997
  • Technology that theoretically provides access
    from any place on the Earth is available.
    Universal Access is now not an engineering or
    supply-side problem but rather a regulatory and
    policy challenge.
  • - ITU, WTDR 1998
  • Regulation and policy needed so that telecomms
    investment does not increase inequality - within
    between countries

Given Africas digital disparitiessome possible
Universal Service /Access policy objectives
  • Promote economic growth
  • Reduce levels of poverty
  • Enable social development
  • Facilitate democratisation
  • Support information and communications rights for
  • Allow full participation by all in the
    Information Age
  • Promote national economic, political and social
  • Encourage balanced development and population
  • Eliminate urban-rural disparity

Universal Service Access
  • History of Universal Service
  • First used by Theodore Vail, ATT (1907)
  • One System, One Policy, Universal Service
  • Argument for ATT monopoly
    (in return ATT will provide universal service)
  • Europe public service provision model
    ? state responsibility to ensure universal

Defining Universal Service
  • Universal service telephony service for the
    individual subscriber
  • personal service
  • usually fixed line
  • like owning your own car - waBenzi
  • usually measured by household penetration
  • Why is household penetration a good measure?
  • What other measures could be used?
  • How does the growth of mobile impact on
    universal service?
  • Challenges of using mobile penetration to
    measure universal service?

Defining Universal Access
  • Universal Access ability to make use of
    telephony service
  • usually public / communal access
  • like using public transport - minibus taxi
  • sometimes measured by public pay-phone
  • What other measures could be used?
  • What policy interventions promote universal

Universal Service, Universal Access Universality
  • Universality
    Universal Access Universal Service
  • Universal Access vs Universal Service
  • may require differing policy interventions
  • does increased universal service greater
    universal access?
  • does improved universal access higher
    universal service?

Stages of Universal Service policy
  • Claire Milne universal service development
    model (1998)
  • 5 stages, based on teledensity levels
  • Stage 1 Network establishment
  • Stage 2 Wide geographic reach
  • Stage 3 Mass market take-up
  • Stage 4 Network completion
  • Stage 5 Service to individuals
  • Universality policy objectives based on
    underlying conditions
  • Regulatory / policy interventions appropriate to
    level of network development
  • Provides social political justification for
    universality policy

Stages of Universal Service policy (Milne)
Issues of universality
  • In developed world, universality policy usually
    refers to provision of
  • telephony to last few / poor marginalised
  • widespread ICT / Internet broadband access
  • In developing world, the key objective of
    universality policy is telephony access for the
  • ABC of Universality is the service
  • Available?
    Accessible? Affordable?

  • Geographic coverage of telecommunications
  • nation-wide network rollout
  • where is it?
  • New technologies LEO, VSAT, WLL
  • Interventions to increase availability -promote
    network growth and innovation
  • In Asia, BTO and BOT licences (also DRC)
  • Licence twinning (eg Philippines)
  • Chile - least subsidy auction

  • All users treated alike
  • no discrimination
  • can everyone use it?
  • No difference in range of services, price of
    service or quality of service
  • No gender / ethnic / social / religious
  • Geography - especially urban / rural
  • Special treatment - people with disabilities
  • Lifeline services for aged, unemployed, poor

  • Cost of service
  • Elements installation, rental, services (local,
    long-distance, international)
  • can everyone afford to use it?
  • Churn - people disconnected from network due
    to non-payment (often consequence of adherence to
    rollout targets)
  • Only unlimited credit poor people get!
  • Policy responses to lack of affordability -
    flexible billing options, pre-paid telephony,
    high / low tariffing, staggered disconnection

Universal Access Targets
  • Different target definitions in different
  • Population
  • Ghana a phone for every village over 500
  • Distance
  • Costa Rica a phone within 1 km of every citizen
  • Time
  • South Africa a phone within 30 mins walk of
    every citizen

Universal Access / Service in what?
  • From POTS (Plain Old Telephone Systems)
    to PANS (Pretty Amazing New Services)
  • an Access Rainbow
  • What services should be included in a US/UA
  • Tone dialling, data quality, operator / directory
    / emergency services, itemised billing, call
    forward, voice mail
  • Should include aspects of Information Age
    access - including Internet, broadband,
    capacity building

Session roadmap
  • The importance of Universal Service and Universal
    Access in Africa
  • Understanding and analysing Universal Access,
    Universal Service, Universality
  • Mechanisms and models to achieve universality
  • Further issues affecting universality in Africa

Discussion Question
  • What mechanisms does your country have to extend
    Universal Access and promote Universal

Approaches to increasing universality
  • Monopoly provision
  • Market-based reforms
  • Universality obligations
  • Subsidy mechanisms
  • Leveraging investment
  • Public access models
  • Combination?

Monopoly provision
  • Rationale
  • Barriers to entry ? natural monopoly
  • Address market failures through cross-subsidies
  • Track record
  • Poor network development
  • Poor universal service / access record
    (especially in developing countries)
  • Long waiting lists, poor quality of service
  • Inefficiently managed operated
  • Shortage of capital
  • Shortage of skills and technology
  • Inability of telecomms to enable economic
    development ? knowledge economy

Market-based reformsStrengths weaknesses
  • Unlikely achieve universal service or extend
    universal access on their own
  • Privatisation, competition, and cost-based
    pricing promote network rollout only to economic
  • If carried out piecemeal or in the absence of the
    proper regulatory and institutional oversight,
    these reforms can often fail
  • Policy-makers Conflict of interest between
    universality goals maximising proceeds of
  • Privatisation without liberalisation ? private
    monopoly monopoly profits (worst of all
    possible worlds)
  • Need to be supported by other universality
    approaches models

Universality obligations
  • Targets set for operators
  • Also called USOs / CSOs
  • Fixed or incremental
  • Can include
  • Network rollout (lines, geographic coverage)
  • Pay phone provision
  • Community access points
  • Provision of essential services (eg emergencies)
  • Specified
  • in individual licence (Telkom 60 of 90 pages)
  • by regulation
  • Advantages and disadvantages?

Universality obligationssome examples
  • Source Intven, 2000

Universality obligations Strengths weaknesses
  • Effective means to ensure basic services to
    uneconomic areas
  • No need for external sources of funding
  • Needs proper planning and monitoring
  • If too onerous will negatively impact on network
    rollout operator viability
  • Operators seek to circumvent or misreport on USOs
  • Regulatory burden of strict monitoring /
  • Need for appropriate penalties
  • eg Kenyas incumbent
  • Fine lt1m
  • Rollout cost 160m
  • Justify anti-competitive behaviour by incumbent

Subsidy mechanisms
  • Used to finance universality interventions
  • Internal cross-subsidies
  • international / long-distance vs local calls
  • business vs residential services
  • urban vs rural services
  • Intra-service subsidies vs inter-service
  • Access deficit charges (ADCs)
  • cross-subsidisation between operators
  • Paid to designated universal service operator
  • Unpopular with (new) operators difficult to

Subsidy mechanismsstrengths weaknesses
  • Traditionally widely used
  • Unsustainable in a competitive environment
  • Lack of clarity in internal accounting
  • Undermined by reduced international accounting
  • Incomaptible with rate rebalancing
  • Poorly targeted - does not focus on needy users
  • Benefit only existing users
  • Reduces revenues for network expansion

Subsidy mechanismsUniversality Funds
  • Fund to support universality
  • Usually managed by regulator
  • Levy on operators / subscribers
  • Usually of revenue
  • Can also be from other telecomms revenues
    (licence fees, auctions, IPO) (eg Colombia)
  • Occasionally other sources - eg fiscus (Chile,
    Peru), donors
  • Can be used to
  • Finance universal access / service projects
  • Support rural operators
  • Subsidise needy users

Universality Service Fund critical success
  • Source Intven, 2000

Leveraging investment
  • Reverse subsidy auctions
  • (eg Chile)
  • Telephone co-operatives
  • (eg USA, Scandinavia)
  • Build, operate, transfer
  • (BOT /BTO / BOO / DBOT)
  • (eg Indonesia, DRC)
  • Privileged licensing
  • (eg RSA - under-serviced area licences)

Public Access Models(often donor
funded)(aggregating access - bringing people to
  • Payphones - basic access
  • Public Call Offices- small commercial telecomms
    entrepreneurs - eg Wartels
    (Indonesia), Telecentres Privés (Senegal),
    Grameen Telecom (Bangladesh)
  • SchoolNets
  • Telecentres / MPCCs - centres with ICTs
    information services to meet development needs

Public Access Models
Telecentres, phone shops, schoolnets
Telecentre definition
  • A telecentre is a physical location where
    community members have access to
  • Information and communications technologies
    hardware, software services
  • Learning systems and information
  • Community, national global, social economic
    enhancement services
  • Support systems (technical, financial,
    managerial) that facilitate economic and social
    sustainability of the telecentre itself
  • Telecentre enhances community value and creates
    potential for social and economic improvement
    through affordable access

Role of telecentres in access
  • Access to ICT services
  • One of the barriers to access to ICTs is the high
    cost of the necessary hardware and technology
  • Telecentre is a cost-effective way to distribute
    value in the community by making ICTs accessible
  • Telecentre enhances community value and creates
    potential for social and economic improvement
    through affordable access

Market opportunities in Universal Access
  • Pent-up demand
  • Demonstrated by explosion of mobile
  • Lower barriers to consumer entry
  • Innovative pricing models (prepaid)
  • Mobile payphones (Nigerias umbrella people)
  • Revenue streams from call termination
  • Distinguish between
  • Market efficiency gap and
  • Real access gap

Market Efficiency Gap vs Real Access Gap
Source ITU, 2005, Dymond Oestman, 2003
Policy interventions to provide market incentives
for universality
  • Technology-neutrality
  • Price regulation
  • Permit resale
  • Promote public access
  • Asymmetric (cost-based) interconnection rates
  • Lower barriers to entry (licensing, fees)

Session roadmap
  • The importance of Universal Service and Universal
    Access in Africa
  • Understanding and analysing Universal Access,
    Universal Service, Universality
  • Mechanisms and models to achieve universality
  • Further issues affecting universality in Africa

Reinventing telecommsNew ICT targets
  • A gale of creative destruction is currently
    blowing through the industry The
    telecommunications sector must reinvent itself
    for a new age of plentiful and ubiquitous
  • - ITU World Telecommunications Development
    Report 2001
  • New ICT targets by 2006
  • telephone penetration of above 90
  • personal computer and Internet subscription rates
    at 50

  • Development impossible in the absence of
    democracy, human rights, peace and good
  • Bridging the digital divide ICTs can
  • provide impetus to the democratisation process
    and good governance
  • Integration of African into the new information
  • In Africa, poor ICT infrastructure, combined
    with weak policy and regulatory frameworks and
    limited human resources, has resulted in
    inadequate access to affordable telephones,
    broadcasting, computers and the Internet.
  • (NEPAD Clause 106, 2001)

NEPAD ICT targets
  • Double teledensity to two lines per hundred by
  • Lower cost and improve reliability of service
  • Achieve e-readiness for all countries
  • Develop ICT scholars and professionals
  • Develop local content software

The Impact of MobileMobile vs PSTN in Africa
Source ITU African Telecommunication Indicators
Mobile replaces PSTS
Source ITU African Telecommunication Indicators
Mobile outstrips fixedImplications for
Universality in Africa
  • Network extension key issue
  • Major expansion can be achieved without subsidies
  • New calling opportunities - outgoing incoming
  • New revenue streams - calls out and in!
  • New demand almost always significantly
  • Enlarges the market for new services
  • Primary benefit of cost analysis will be improved
    network efficiency
  • Also needed to identify, quantify and justify

Achieving Network Extension
  • Social responsibility of national PTO?
  • Insufficient limited results everywhere
  • Competitive service help everywhere
  • Local participation brings reduced costs through
    local labour and initiative
  • Competitive bidding for minimum subsidies
  • Public / private partnerships
  • A diversity of approaches is usually needed
  • W H Melody, LIRNE.NET

The Future Universality Problem The Digital
  • Access to phones was never seen as a key to
    economics, social and personal development
  • Now it is - one reason for telecom reform
  • The internet is now seen as a key to e-commerce
    and knowledge for development
  • As one gap begins to close (telephony) another
    (Internet) opens
  • The digital divide is more exclusionary than the
    telephone divide
  • W H Melody LIRNE.NET

The Digital Divide
  • Access to information relates to power in society
  • Inequities of access to / dissemination of
    information extend to differential ability of
    citizens to be effective, whether in their
    political or economic systems
  • The key for developing countries is adopting
    appropriate national ICT strategies based around
    private sector participation, market
    liberalisation and independent regulation - and
    developing ambitious universal access policies.
  • - ITU World Telecommunication Development Report

Next generation regulation
  • Affordable access to increasingly advanced
    services remain central public interest issues
  • Reduction of costs and improvement of quality of
    services critical for information infrastructure
    essential to effective participation in networked
  • The way such challenges are tackled will
    determine whether the next generation
    technologies and infrastructures become a
    catalyst to overcoming the digital divide or
    whether they will reinforce the telecom divide
    dramatically for those not connected.
  • WH Melody (2001)

Group Activity
  • Consider the Milne model of stages of
  • How does it apply to your country? Assess (with
    supporting evidence) your current stage of
  • Propose an appropriate universality mechanism for
    your country based on the stage of universality
    identified above
  • Compare this with the universality mechanism
    currently in place in your country. Account for
    any differences.

  • Universality policy is central if telecomms is to
    contribute to wider development and not increase
    digital divide
  • Universal Access moving target towards
    widespread access
  • There are a range of policy and funding
    approaches, mechanisms models
  • Each country must define its own targets
    strategies appropriate to its environment
  • Not just a social objective, but also an economic

Recommended Readings
  • Benjamin, P Dahms M (1999) Universal Service
    and Universal Access Issues, CommUnity,
    Johannesburg, http//
  • Dymond, A Oestman, S (2003) The Role of Sector
    Reform in Achieving Universal Access, in Trends
    in Telcommunications Reform 2003, Intelecom
  • Intven, H, Oliver, J Sepúlveda, E (2000b)
    Universal Service, in Telecommunications
    Regulation Handbook, Intven, H (ed), World Bank,
    Washington DC, http//
  • ITU (2003) World Telecommunication Development
    Report 2003 Access Indicators for the
    Information Society, International
    Telecommunication Union, Geneva
  • Laffont, J Tirole, J (2000) Universal
    Service, in Competition in Telecommunications ,
    MIT, Cambridge
  • Milne, C (1998) Stages of Universal Service
    Policy, Telecommunications Policy, vol 22, no 9
  • Wellenius, B (2000) Extending
    Telecommunications beyond the Market Toward
    universal service in competitive environments,
    Public Policy for the Private Sector, World Bank
    Group, Washington, http//

Thank you
  • http//

(No Transcript)