Chile’s Telecommunications Development Fund: monitoring and evaluation

Payment milestones linked to project progress

UA policy and project monitoring is a key policy element that can and should be fundamental to any program that disburses public funds for the development of telecommunications services.

In Chile, the Telecommunications Development Fund (FDT) is governed by a regulation that explicitly requires government certification of project completion before subsidy funds can be released. The FDT regulation notes that, in order for a UASF subsidy to be paid, the concessionaire, permit holder or licensee must present the certificate granted by the Undersecretariat of Telecommunications (SUBTEL) certifying that the work has been correctly executed in accordance with the awarded project or one or more of its stages (SUBTEL 2013: Article 22) The regulation also provides for projects that are carried out in stages, enabling SUBTEL to release payment for funds corresponding to specific stages as they are completed.

Considering one recent example, the terms of a 2019 fibre optic deployment to be funded by the FDT set out a payment schedule that reserves the majority of the payment for each zone until SUBTEL confirms completion of the project in the particular zone (SUBTEL 2019: Article 20). Specifically, payments are divided into three tranches:

• 25 per cent upon SUBTEL approval of the detailed engineering report for the zone;
• 55 per cent upon SUBTEL confirmation of completion of the works and the start of services; and,
• 20 per cent six months after the second payment.

Such a payment structure provides a balance of initial funding to support project initiation while reserving the bulk of the subsidy payment until the project is completed and in service. The final payment, after the project has been in service for six months, provides a further incentive for the recipient to ensure that the deployed infrastructure and service continues to meet project goals for at least that long.

Public transparency

In addition to the incorporation of an evaluation mechanism and incentive in the terms of a universal access (UA) project contract, SUBTEL increases transparency for the general public through the publication of a report on current projects funded by the FDT. The March 2020 report, for example, provides details on 12 projects underway as well as a further five projects in the procurement or planning stages. Such a report provides a different type of project monitoring, providing information to any interested party regarding the projects funded by the FDT. The publication of project information may serve as an additional motivating factor for subsidy recipients to spend public funds efficiently and effectively, while similarly motivating SUBTEL and the FDT management to do the same.

References

SUBTEL. 2013. Decreto 353 Aprueba reglamento del fondo de desarrollo de las telecomunicaciones. https://www.leychile.cl/Navegar?idNorma=193117&idParte=&idVersion=.

SUBTEL. 2019. Res. No. 1 Aprueba las bases específicas para el concurso público “fibra óptica nacional,” Codigo: FDT-2019-01. https://www.subtel.gob.cl/wp-content/uploads/2019/10/Bases_Especificas_PFON_2019.pdf.

SUBTEL. 2020. Informe nacional: Estado de avance de los proyectos del fondo de desarrollo de las telecomunicaciones. https://www.subtel.gob.cl/wp-content/uploads/2020/04/Informe_Nacional_1T_2020.pdf.