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Pakistan’s Universal Service Fund

05.10.2020

UA funding and financing policies: tackling accessibility challenges

Pakistan established an autonomous Universal Service Fund (USF) by the end of 2006, in accordance with rules and guidelines from the Telecommunications Law enacted in July 2003, the 2004 Mobile Cellular Policy, and the 2004 Broadband Policy. It was created by the Ministry of Information Technology and Telecommunication (MoITT) with the goal of promoting the development of telecommunication services in unserved and underserved areas throughout the country. The USF follows a Corporate Model under Section 42 of the Pakistani Companies Ordinance. The main objectives of the USF are:

Universal Service Contracts are awarded using a “negative auction.” This method implies that the bidder requesting the lowest amount of subsidy to perform each predefined contract wins said contract.

Structure

The USF structure is the first of its kind in Pakistan. The USF has an independent and diversified Board of Directors, which is balanced with four members from the government and four from the private sector. The composition of the board is as follows:

members of the board, participation of industry is an integral part of the USF. The USF also permits and encourages participation by local communities and voluntary bodies where relevant. Operators with innovative and cost-effective solutions are encouraged to participate.

Impact

The USF finances the spread of telecommunication services to unserved and underserved areas, and makes it possible for licensed operators to provide services to those areas on normal commercial terms. Covered services include basic telephony, broadband Internet, infrastructure for these services (such as fibre networks), and community telecentres. All disbursements of the USF are done through competitive bidding, encouraging full competition among participants. The USF is funded by contributions (1.5 per cent of adjusted revenues) from operators with no government funding involved.

Programmes funded by the USF include:

Best practices

Several characteristics of Pakistan’s USF are aligned with success factors for UASFs (ITU 2013: 10-14; GSMA 2013: 238-240):

Monitoring and auditing

The USF is controlled and monitored by the Ministry of Information Technology and telecommunications, and is administered by an independent but wholly state-owned company.

References

GSMA. 2013. Universal Service Fund Study. London. https://www.gsma.com/publicpolicy/wp-content/uploads/2016/09/GSMA2013_Report_SurveyOfUniversalServiceFunds.pdf.

ITU (International Telecommunication Union). 2013. Universal Service Fund and Digital Inclusion for All Study. Geneva: International Telecommunication Union. https://www.itu.int/en/ITU-D/Conferences/GSR/Documents/ITU%20USF%20Final%20Report.pdf.