Why

Universal Service Funds

Fail?

2

Parvez Iftikhar

– Former CEO USF Pakistan

– Founding CEO – therefore built it from scratch

– Ran USF Pk. successfully for nearly 5 years

– Now a consultant working in different

countries of Asia and Africa for WB, ITU, ADB,

CTO, and … USAID!

My own Introduction

Africa Latin America Asia Pacific

315 1,133 1,441 544

5,367 5,634

• Most USFs considered ”failing”, as:

• 1/3rd of USFs have not disbursed any funds

• Almost no USF has disbursed everything collected

Nearly US$ 12 Bln

undisbursed!

All figs. in Thousand US$

What does “USFs failing” mean?GSM Study 2013

One very important “cause of failure” that

we will not discuss:

At times Universal Service is a low Priority for

Political Leadership

Not necessarily bad intentioned!

Disclaimer!

Major Issues and Challenges relate to:

Policy

Legislation

Governance Model

Trust

Competition

Operators’ Issues

Broadband

Not clearly laid out

Objectives unclear (eg: coverage & service delv. targets)

Not prepared in consultation with Stakeholders

Not presented in easy-accessible sites/media

No measurement parameters (Milestones/Achievements)

Results not Independently verifiable

No built-in Periodic Review

Policy

Inflexible - with respect to changes,esp. changes in technology

Funding allowance too restricted

USF Levy on Operators:

Has no Maximum Limit

Is not easily adjustable

Not fixed in consultation with stakeholders

Legislation

Governance Model – an example

8

Nominee of Consumers

Nominee of Consumers

Nominee of ISPsNominee of ISPs

Nominee of Fixed-Line SPs

Nominee of Fixed-Line SPs

Nominee of Cellular SPs

Nominee of Cellular SPs

RegulatorRegulator

Ministry: Chief Tech.Ministry: Chief Tech.

Ministry: SecretaryMinistry: Secretary

MinisterMinister

CEO USFCEO USF

PUBLIC PRIVATE

ALL stakeholders on Board!

Nominee ConsumersNominee Consumers

Nominee ISPsNominee ISPs

Nominee Fixed-line TelcosNominee Fixed-line Telcos

Nominee Cellular TelcosNominee Cellular Telcos

RegulatorRegulator

Ministry: Chief Tech.Ministry: Chief Tech.

Ministry: SecretaryMinistry: Secretary

MinisterMinister Political Leadership

Chief Bureaucrat

Chief Technocrat

Telecom Regulator

Cellular Mobile Operators

Fixed Line Operators

Internet Service Providers

Consumer Associations

To create trust – everything on website

All Bidding Docs & Bidding Results

• collected• disbursed• balance

Fund Statistics

Approved Projects & Progress

Performance of Completed Projects

Obstacles & Challenges

• Regularly

• At least Bi-Annually

• By Professional External Auditors

• Make Results Publicly Available

To create trust – USF Own Audits!

Keeps operators on their toes - benefits consumers!

Prevents creation of local monopolies with USF Money

To generate competition: Mandatory Infrastructure Sharing

• Passive Elements – site, tower, …

Rural Telecom Access

• Dark-Pair sharingOptic Fiber Cables

Competition!

Operators are normally reluctant!

• Do not assume the Operators know all about USF - talk to them!Keep close liason’

• Give only “Service” specs in Bids• All interested get equal chancesTech. Neutral

• Efficient Deployment• Innovation• Sustainability

Give Incentives

• USF is a “volunteer” exerciseNo “mandating”

Ensuring Operators’ Involvement - 1/2

• Use whatever Influence USF can manage within the government/sRight-of-Way’

• Make Renewable Energy mandatorySustainability

• Optic Fiber Cables!Backhaul

• Work is normally in very difficult areas/conditionsBe mindful!

Ensuring Operators’ Involvement – 2/2

Important: Use USF for Broadband!

Supply

Demand

No Broadband uptake

unless both sides are

addressed

Voice is now everywhere,

it is Broadband age!

USF must help to make Broadband:

Available Coverage

Accessible Public Access Points

Affordable Low Cost

Usable - Language, - Digital Literacy

Relevant - Professions,- Interests

Independent Organisational Structure

Facilitate Operators

Technology Neutral

Participatory Management

Trustworthy with Transparent Processes

Ensure Competition

Clear & Fair Policy Robust Legal Framework

Summarising

Go for Broadband – don’t forget Demand side!

This is not the end of the Causes

(each country has more of it’s own)

But it’s the end of my Presentation!!!

THANK YOU

parvez@piftikhar.com