Digital Regulation Platform
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Universal access to digital technologies and services

31.08.2020

UA funding and financing policies: tackling accessibility challenges

UA policies cover not only connectivity, but also measures to ensure affordability and inclusion. The means by which governments, the private sector, non-governmental organizations, and international bodies can effectively and collaboratively achieve these goals directly relate to variables such as population density, income, geographical features, political and economic characteristics, and available resources, among others. Depending on features such as these, countries have followed different approaches to close access gaps. Moreover, in some cases, such as Kenya, universal access is increasingly being included as a key pillar within countries’ overarching digital strategies (Republic of Kenya 2019).

It is noteworthy that nearly 28 per cent of low-and middle-income countries either have no universal access and services fund (UASF) or do not have a UASF that is active. The remaining countries have no mechanism in place or use other mechanisms to promote UA objectives, including licence conditions, subsidies, and public-private partnerships (PPPs) (Bleeker 2019: 19).

This section reviews UA policies and funding approaches being adopted around the world.

Universal access and services funds (UASFs)

UASFs are funding mechanisms established by national governments to promote UA to telecommunication services. They provide financial incentives to telecommunication service operators to provide service in locations that would otherwise not be commercially viable (UN ESCAP 2017: 10). Traditionally, governments have allocated subsidies in service-specific ways (e.g. for fixed telephony payphone services). However, they have evolved to allow service-neutral competition (e.g. fixed or mobile), as well as technology-neutral competition for UASF subsidies.[1] UASFs are used to support ICT/broadband programmes, including access to PCs and other digital devices, broadband Internet connections, and localized content and service. Further, the Economic Commission for Latin America and the Caribbean (ECLAC) notes that UASFs are a valuable resource that can be used to fund programmes to assist people with disabilities (PWDs) in the Caribbean, a view that is equally valid for other disadvantaged populations and in other regions (Bleeker 2019).

Generally, telecommunications service providers contribute to UASFs through levies based on a percentage of their annual operating revenues (ITU 2013: 6). However, operational and management features vary by country. In many cases, funding also derives from licensing fees, full or partial proceeds from spectrum auctions, direct contributions from government budgets, contributions from international agencies such as the World Bank, regional development banks, and so on. (ITU 2013: 6).

The shift in focus from voice services to broadband connectivity, as well as the promotion of affordability and inclusion, has been crucial for many countries. However, this has required legal and regulatory changes to give UASFs the flexibility to support initiatives and programs for implementing various broadband strategies (Alliance for Affordable Internet 2015: 17).

A review of successful UASFs demonstrates that certain capacity requirements are necessary to attain UA goals. A UASF carries many of the same functions as a financial institution, including managing large capital assets, evaluating and defining projects for investment opportunities, and providing financing to implementing contractors, whose operations must be overseen and evaluated to ensure the UASF’s resources are well spent. Some of the success factors include (ITU 2013: 10-15):

Generally, countries that have UASFs usually do not comply with every success factor. Examples typically show that countries often meet only some of these factors, and UASFs have been subject to well-documented challenges. These may include the following (ITU 2013: 15-16; GSMA 2013: 261-262):

UASFs may also face structural challenges (UN ESCAP 2017: 37):

Moreover, UASFs are generally designed to accelerate broadband implementation in rural and remote areas. Thus, in countries with low overall Internet adoption rates, deploying broadband in rural areas could be less justifiable (UN ESCAP 2017: 37).

Effective operation of UASFs require identifying and addressing these problems.

Alternative approaches to funding broadband infrastructure

Additional funding and financing strategies to achieve UA goals are also being implemented around the world. These strategies aim to improve the economics or reduce the cost of projects aimed at deploying infrastructure to meet UA goals that may not be financially viable otherwise. For example, these may include fiscal measures such as enabling tax, tariff, import, and business regulation policies designed to reduce risks and financial burdens, and provide incentives to ICT investors and financiers.

Successful measures in getting more people online include, for example, direct device and tariff subsidies to vulnerable user groups, together with value-added tax (VAT) reductions and import duties; Wi-Fi hotspots, Internet-enabled community centres/anchor facilities; online content, apps, and services including public awareness campaigns; and ICT skills training to targeted user groups (ITU 2017: 17).

Some of the funding options include the following:

However, this approach may face implementation challenges and requires effective oversight from the regulator to achieve positive results.

Endnotes

  1. See available here.

References

Alliance for Affordable Internet. 2015. Universal Access and Service Funds in the Broadband Era: The Collective Investment Imperative. Washington, DC: A4AI. http://a4ai.org/wp-content/uploads/2015/03/A4AI-USAFs-2015_Final-v.2.pdf.

Arcep. 2018. Décision n° 2018-1389 de l’Autorité de régulation des communications électroniques et des postes en date du 15 novembre 2018 relative au résultat de la procédure d’attribution d’autorisations d’utilisation de fréquences dans la bande 900 MHz en France métropolitaine pour établir et exploiter un réseau radioélectrique mobile ouvert au public. Paris: Arcep. https://www.arcep.fr/uploads/tx_gsavis/18-1389.pdf.

Bleeker, Amelia. 2019. Using Universal Service Funds to Increase Access to Technology for Persons with Disabilities in the Caribbean. ECLAC Subregional Headquarters for the Caribbean, Studies and Perspectives Series No. 79(LC/TS.2019/59-LC/CAR/TS.2019/2). Santiago: Economic Commission for Latin America and the Caribbean (ECLAC). https://www.cepal.org/sites/default/files/events/files/series_79_lcarts2019_2.pdf.

Broadband Commission for Sustainable Development. 2019. The State of Broadband: Broadband as a Foundation for Sustainable Development. Geneva: International Telecommunication Union and United Nations Educational, Scientific and Cultural Organization. https://www.itu.int/dms_pub/itu-s/opb/pol/S-POL-BROADBAND.20-2019-PDF-E.pdf.

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

GSMA. 2016. Digital Inclusion and Mobile Sector Taxation in Colombia. Reforming Sector-Specific Taxes and Regulatory Fees to Drive Affordability and Investment. London: GSMA. https://www.gsma.com/publicpolicy/wp-content/uploads/2017/03/Digital-Inclusion-and-Mobile-Sector-Taxation-in-Colombia_English.pdf.

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

ITU (International Telecommunication Union). 2017. Connecting the Unconnected: Working Together to Achieve Connect 2020 Agenda Targets. Geneva: ITU. https://broadbandcommission.org/Documents/ITU_discussion-paper_Davos2017.pdf.

Republic of Kenya. 2019. Digital Economy Blueprint: Powering Kenya’s Transformation. https://www.ict.go.ke/wp-content/uploads/2019/05/Kenya-Digital-Economy-2019.pdf.

UN ESCAP (United Nations Economic and Social Commission for Asia and the Pacific). 2017. The Impact of Universal Service Funds on Fixed-Broadband Deployment and Internet Adoption in Asia and the Pacific. Bangkok: UN ESCAP. https://www.unescap.org/sites/default/files/Universal%20Access%20and%20Service%20Funds%20final.pdf.

Last updated on: 02.09.2020