Case Study: Vanuatu’s “pay or play” scheme

The Universal Access Policy (UAP) in Vanuatu

The Universal Access Policy (UAP) in Vanuatu has been designed and implemented by the national government with the aim of expanding telecommunications services to underserved and unserved areas. The UAP was approved by the Council of Ministers in November 2013 (Republic of Vanuatu 2013).

The Telecommunications, Radiocommunications, and Broadcasting Regulator (TRBR) has been appointed as the implementing agency by the Vanuatu government. TRBR is responsible for the implementation of the UAP and for universal service implementation in general. It is empowered by the 2009 Telecommunications and Radiocommunications Regulation Act to enter into contracts on behalf of the government, for the payment of subsidies for the provision of telecommunication services in accordance with the UAP. TRBR is in charge of monitoring the achievement of objectives set out in the policy, for which it must prescribe appropriate reporting requirements and measurement standards, as well as conduct measurements and take any other appropriate actions (Republic of Vanuatu 2013: Section 3.2.)

Pay or play scheme to promote UA

In 2014, as part of an initiative between TRBR, the Office of the Government Chief Information Office (OGCIO), the Ministry of Education and Training, and the Australian Government’s Governance for Growth (GfG) programme, the Vanuatu government announced the implementation of three programmes:

• Computer Laboratories and Internet Community Centre (CLICC);
• Tablets for Students (TFS); and
• Internet Community Services (ICS).

Under the UAP, the government expected 98 per cent population coverage of the following telecommunications services by January 1, 2018:

• Voice services (mobile services);
• Narrowband data services including text messaging; and
• Broadband Internet services with download speed of at least 21 Mbps and upload speed of at least 12 Mbps.

A secondary objective of the UAP was to ensure that all government offices and schools had the ability to access broadband data and Internet services, and that services offered outside Port Vila and Luganville were of comparable cost to those available in Port Vila and Luganville.

The UAP implemented a “pay or play’” approach: under the UAP “Play” approach, a service provider must meet its own cost of rolling out telecommunication services to underserved and unserved areas throughout Vanuatu. The “Pay” approach enforces non-playing service providers to pay a levy imposed by the regulator under the TRBR Act 2009. Thus, if a service provider decides to “play” under the UAP, the TRBR will not impose a levy for the relevant year, provided that the service provider meets its commitment to roll out services to their nominated and TRBR-approved UAP sites at their own cost. For those providers that decide not to “play,”i.e. payers, TRBR has begun and will continue to impose a levy of up to 4 per cent of net annual revenue (TRBR 2013).

Reported results

As reported by TRBR in January 2019, population coverage roll-out met the UAP obligation target of 98 per cent (TRBR 2019). However, according to the final report, players have faced several challenges during the UAP implementation (TRBR 2019, 10-11):

• Significant delays to their roll-out because of land ownership disputes. These disputes significantly slowed progress on the infrastructure build-out and increased costs, delaying the economic return and the social benefit associated with this build.
• Extraneous land disputes impacting key network sites impacted progress as these activities diverted focus to resolving an issue that, although impacting UAP sites, has a greater impact on the continuance of service to a larger number of operating sites.
• Commercial disputes with local labour, whereby demands for increased wages and benefits beyond what had been contractually agreed upon affected work at sites and increased construction costs.
• Demands from various communities in order to extract a greater financial, or some other benefit, such as vehicles and free phones/credit impacted UAP implementation.
• Threats of violence towards personnel engaged in the infrastructure build, impacting the completion of UAP sites.
• Theft or the removal of equipment from sites, which impacted infrastructure builds, caused delays, and increased costs.
• The ineffectiveness of local law enforcement agencies in assisting and upholding the law as identified in the Telecommunications Act.
• Increasingly difficult terrain requiring a significant amount of pre-work with road construction and clearing prior to civil works commencing. This has led to players modifying site location to reduce the capital cost required for establishment.

Escalating costs for logistics (specifically transport and local labour) impacting return on investment (ROI).

TRBR is now committed to investigating and designing the next generation of policy for the further development of telecommunications access in remote and underserved or unserved areas of Vanuatu.

References

Republic of Vanuatu. 2013. Universal Access Policy. https://www.trr.vu/attachments/category/215/universal_access_policy.pdf.

TRBR (Telecommunications, Radiocommunications, and Broadcasting Regulator). 2013. Implementation of the Universal Access Policy. https://www.trr.vu/index.php/en/telecom-industry/universal-access/universal-access-policy.

TRBR (Telecommunications, Radiocommunications, and Broadcasting Regulator). 2019. The Status of Implementation of the Government’s Universal Access Policy. https://www.trbr.vu/attachments/article/756/uap_stakeholder_10th_and_final_report.pdf.