Over the past several months, regulators in the ECTEL Member States have been publishing job vacancies and tender advertisements in relation to Universal Service/Universal Access in telecoms. They look poised to start implementing projects this year. Having been involved in the process in the initial stages when I worked in Saint Lucia, I recalled that USF Contribution Orders had been executed as early as 2006. I thus wondered “why has it taken so long to implement Universal Service/Universal Access?” but soon had to admit that the situation in the Eastern Caribbean is not unique…

Universal Service (US) and Universal Access (UA) are two of the key considerations for regulators when markets, such as telecoms, are liberalised and open to competition. Although the terms US and UA are often used interchangeably, strictly speaking, US stipulates providing identified services to specified standards to individual residents in a country. On the other hand, UA is a broader model that classifies access to services in terms of society groups or interests, or by distance or time. In most Caribbean countries, UA in telecoms would be defined with respect to households, schools, health facilities, libraries, post offices etc. For example, “every school must have Internet service with a minimum download speed of x”.

US and UA initiatives are usually financed by a Universal Service Fund (USF) or a Universal Access Fund (UAF). These funds are established through legislation, and require comprehensive specifications and mechanisms to guide their implementation. However, there can be significant delays between set-up of the Fund and executing projects financed by the Fund. Some reasons are outlined below.

1. Long delays in establishing a full operating framework.  In many countries the primary focus of legislators tends to be on securing contributions to the Fund. The main source of revenue is usually from licensees, specifically network operators and service providers. However, the structures and mechanisms to operate the Fund and to implement the approved Universal Service Obligations (USOs) are often considered separately to the contributions framework.

Determining the appropriate systems and procedures that should be established to operationalise the Fund can be a lengthy process. They can be complicated and are frequently subject to a series of consultations. However, in many instances the Fund is already active and receiving contributions, but the process to satisfy USOs and to effect disbursements is still being decided.

2. It takes time to build the Fund. UAF/USF contributions from licensees are relatively small. In the Eastern Caribbean, the rate of contribution started at 0.25% of gross annual revenue and gradually increased to a maximum of 1%. In smaller markets, it can a few years from mandating contributions to the Fund, to developing adequate reserves to cover its administration costs and to implement projects.

3. US/UA priorities fulfilled through competition. The establishment of US/UA in telecoms is usually one of the key considerations in market liberalisation and regulation processes. A primary objective of most US/UA regimes is to facilitate network expansion and access to areas that might be considered uneconomical for the operators to undertake themselves. However, the introduction of competition tends to stimulate network expansion, along with increased access to and availability of services, as experienced around the region with the launch of low cost mobile service by Digicel. As a result, many of the initial priorities for US/UA funding might no longer be necessary by the time the Fund has been established, since they have been fulfilled through competition.

4. The process to execute projects takes time. Even after the operating framework is established, the required systems and procedures must be implemented.  In many countries, the administration of US/UA is financed by the Fund. Hence, a separate unit with its own staff and resources is usually established, even if it is being set up within an existing organisation.

Further, many USF mechanisms follow a multistage process in order to execute projects, and each stage can become protracted. Depending on the amount of money available, the Fund administrators may first identify priority areas or interests for financing, in keeping with the approved USOs. Thereafter, some of the key process stages could include:

  • requesting proposals for projects that can be financed by the Fund
  • assessing the project proposals that are submitted
  • preparing budgets for the shortlisted projects
  • requesting and evaluating tenders to implement the approved projects, and then finally
  • executing the approved projects.

5. Government captures the Fund. Although Governments tend to have the best intentions when they establish UAFs/USFs, if the funds remain unused over an extended period of time, Governments may seek to draw down monies or to take greater control of the Fund. This situation is likely to occur if the Fund has accumulated a considerable amount of money, and the rate of inflow is appreciably higher than that for outflow.

Many governments, like ours in the region, are strapped for cash. It is always a challenge to identify revenue streams that can support government expenditure and the economy. Arranging to draw down from grossly underutilised UAFs/USFs, even if it is in the form of a soft loan, could offer an attractive means to balance budgets. However, if or when Fund administrators are in a position to execute projects, there might be insufficient monies available.

Are there any projects or needs in your country or community that should be addressed through US or UA?

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