Management of USAFs: Policy and Regulatory Foundation

Management of Universal Access Funds for Telecommunications Regulatory Board of Cameroon

Module Three: Policy and Regulatory Foundation

7 – 9 February 2011

© Commonwealth Telecommunications Organisation

The Basic Process

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Step One

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Formulation of the universal access policy outlining the following:

– Key considerations and decisions to be pursued in establishment and operation of the fund

– Principles of the fund

– Objectives of the fund

– Range of authority of the fund

– Responsibilities of the fund

– Activities aimed to be implemented by the fund


Step Two

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• Formulation and implementation of legislation through national laws or decree

• Legislation sets up the framework and limitations in which the policies can be implemented.

• This framework is necessary to ensure the credibility, enforceability and authority of the policies.

• It also enables the fund’s activities to be in line with other national priorities and ongoing programmes.


Legislation

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• Typically outlines the purpose for the establishment of the fund

• Its scope and mode of operations

• Funding mechanisms and in some cases the specific rate of contributions

• Sometimes the structure of the fund and its management

• Grants the authority to an entity (e.g. the regulator) or a person (e.g. Minister in charge of telecommunications) to draft the required by-laws, regulations and procedures


Regulation

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• Ensure that the fund meets its objectives and obligations

• The person/entity empowered by legislation will decide by regulations operating provisions and procedures, such as precise amounts of contributions

• It is important to take in to account the context and market including:– geographic, political, economic, social and cultural structures – existing infrastructure– national policy and regulatory framework– Review Context-specific access (defined for the local areas targeted)– availability and affordability– Need for effective use of incentives that foster innovation and reward

efficiency– Ensure technology neutrality– Broadening mandates – shifting from just telephony to the inclusion of

internet and broadband access, particularly with public shared access points


General Policy Framework (1)

• Latin American and Early African adopters of USAFs can be used to draw good practice

• The three key requisite features of USAF policies:

– Availability – ICT services to be available to all inhabited parts of a country through public, community or personal devices

– Accessibility – for all people to have access to use the service regardless of who they are and where they are

– Affordability – for the service to be affordable for everyone

• Another key issue: Whether it encompasses all ICTs or just telephony

– majority of African USAFs now cover all ICTs

• Use a dependable model to base interventions - Access Gap Model

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General Policy Framework (2)

• Adopt an efficient business model in the use of subsidies to ensure long-term commercial sustainability. At a pre-determined point the operator should be financially viable to continue without continuous support. Thus, subsidising operational expenses sometimes might not contribute to this objective.

• Targets are useful provided they have certain characteristics:– should focus on clearly identified needs and high priorities so that

efforts are not spread too thinly – should be designed to look ahead three to five years– should be ambitious yet realistic in the light of the country’s actual

situation– should be reviewed regularly (e.g., every two or three years) to

remain ambitious but realistic– should be objectively measurable, so that progress can be

assessed

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Key Features of Latin American Policy Frameworks

• The overall policies were similar to those in Africa but the specifics vary

• Originally focussed on fixed line public telephones in mountainous remote villages, reaching over 20,000 villages with subsidised payphone

• Emphasis was on physical infrastructure through subsidy of installation and operation of public access.

• Today changing to fund internet, broadband, backbone etc

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Policy Frameworks of African USAFs

Should be considered in the unique context of each country at the time the USAF was set up.

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South Africa

• To improve equal access to telecommunications for all races

• Make ICT’s available, accessible and affordable to all South Africans through the provision of funding from USAF, in collaboration with ICT stakeholders

• Undertake continuous research to promote, encourage, facilitate and offer guidance regarding universal services and access, in order to inform policy and regulatory processes for the continuing adaption to the market context

• Monitor and evaluate the extent to which universal access and services have been achieved in order to assess the impact

• Ensure the optimal functioning of the Agency through strengthening the strategic and operational capabilities

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Uganda

• Achieve Universal Access to basic communicationso Phase 1 - Public access voice telephony available in 926 rural sub-

counties o Phase 2 - achieve a target of one public access telephone per 5,000

inhabitants in every sub-county by the year 2005

• Support establishment of a local Internet point of presence (POP) in every district of Uganda.

• Increase the use of ICTs by supporting establishment of at least one telecentre or ICT project, sponsored by a public or private institution, in every district.

• Ensure effective utilisation of the resources of the RCDF to leverage investment for rural communications development as a viable business, through competitive access to smart subsidies.

• Use special interconnect (preferential incoming-call terminating rate) as a means of enhancing rural communication sustainability and minimising subsidy requirements

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Nigeria

• Promote greater social equity and inclusion for the people of Nigeria

• Contribute to national economic, social and cultural development of Nigeria

• Fund and its processes based on core values:o Professionalism o Integrityo Innovationo Commitment

• Create an enabling environment to improve use of ICTs

• Assure accessibility and availability of telecommunications and ICT infrastructure and services

• Facilitate provision of infrastructural development

• Promote technological innovation & competition

• Provide access for business to improve their development and adopt methods of attaining greater Universal Access and Universal Service.

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Ghana

• Facilitate partial investment funding to companies and entrepreneurs wishing to implement eligible projects in under-served areas

• Projects are eligible if deemed by fund’s management to develop and deploy access to infrastructure and services, provide delivery of government services and develop local content and applications

• Aims for the projects to attain long-term financial sustainability that is specific to the local community context

• Prioritise projects in under-served areas seeking to increase basic rural connectivity and access to broadband services, along with development of relevant local content

• General principles of public-private-partnerships to be followed in the allocation process

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Important Features in Policy

• Started with telephony connectivity but has progressed to encompass all ICTs.

• In some instances moving beyond even that to focus on “local content” (Ghana)

• Two African USAFs (Ghana and Uganda) have adopted Public Private Partnerships as a model

• Most of the USAFs seek value addition as a driver

– Delivery of public services

– Facilitate business improvement etc

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Legislative Frameworks of African USAFs

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South Africa

• Consolidated Telecommunications Act 1996-2001

• Act 64 of 2001 as amended from time to time such as by Act 64 of 2001

• http://www.internet.org.za/telecoms_act.html#Objects_of_Act

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South Africa - Consolidated Telecommunications Act 1996-2001

Article 65: Establishment and control of Universal Service Fund(1) There shall be a Universal Service Fund, of which the Agency (i.e. USAASA) shall keep account in its books and which shall be credited with(a) universal service contributions referred to in section 67(1); and(b) money accruing to the fund from any other source.

(2) All money received......... shall be paid into the National Revenue Fund established by section 185 of the Constitution.

(3) Subsidies paid from the Universal Service Fund ........ shall be financed from money appropriated by Parliament for that purpose.

Note: The money is not held by USAASA. Parliamentary allocation will supply the funds for subsidies

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Article 66: Application of money in Universal Service Fund

(1) The money in the Universal Service Fund shall be utilised exclusively for the payment of subsidies -

(a)for the assistance of needy persons towards the cost of the provision to or the use by them of telecommunication services;

(b)to Telkom and to any other holder of a licence ..... which imposes obligations on the holder relating to the extension of its telecommunication service to areas and communities which are not served or not adequately served by telecommunication services, for the purpose of financing such extension;

(c)to public schools and public further education and training institutions ....... for the procurement of internet services and equipment necessary to access the internet;

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d) for the establishment of centres where access can be obtained to telecommunication facilities

e) for the establishment of public information terminalsf) to assist small businesses and cooperatives to acquire and

construct infrastructure to provide telecommunication services to areas which are not served or not adequately served by telecommunication services

g) to facilitate the provision of multimedia services.

Note: Funds are specifically to be used for subsidies. It is not envisaged as an investment fund. The legislation may constraint adopting different business models

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(2) The money in the fund shall be apportioned for the separate purposes referred-to in subsection one in accordance with a formula determined by the Minister by notice in the Gazette.

(4) The Minister may ..... determine

(a)categories of needy persons to whom assistance may be given;

(b)the persons who shall make application for assistance and the manner in which such applications shall be made;

(c)the manner in which and persons to whom subsidies shall be paid.

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Article 67: Contributions to Universal Service Fund(1) Every holder of a licence granted or deemed to have been

granted in terms of Chapter V shall pay, in addition to licence fees ......., the prescribed annual contributions to the Universal Service Fund with effect from a date fixed by the Minister by notice in the Gazette.

(2) The Authority shall prescribe(a)the basis and manner of determination of such contributions,

which shall not exceed 0,5% of a licencee’s annual turnover; and

(b)the dates when such contributions shall become payable and the manner in which they shall be paid.

Note: the legislation sets an upper limit to the contributions but leave the specific rate of contribution to be determined by USAASA

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Article 67A: Competitive tender for universal service projects

(1) The Agency may award universal access projects by public competitive bid to the qualified bidder that requests subsidy for such project.

(2) The Agency shall in allocating the subsidy take into account, inter alia, the provisions of section 2 (primary objectives of the act)

(3) The subsidy for universal access projects shall be paid out of the Universal Service Fund.

(4) The Agency shall supervise the execution of projects awarded under subsection (1).

Note: Legislation mandates public competitive bidding. This may hinder adopting different business models such as

co-financing

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Uganda: Uganda Communications Act 1997

Article 4 - The functions of the Commission shall be (aa) to establish and administer a fund for rural communications development”

Article 5 (e) - Institute a levy on the gross annual revenues from services licensed under the Act from operators

Article 18 - Funds of the Commission, includes (c) a percentage of the gross annual revenues of operators charged under Section 5

Article 94 – Regulations (1) The Commission may, by statutory instrument, make regulations including

(a) fees payable upon the grant or renewal of a licence;(j) the specifications of reserved and mandatory services to be provided for by an operator under this Act;

Note: UCC is empowered to levy a charge on the operators and determine the mandatory services to be offered by the operators http://www.ucc.co.ug/ucaCap106LawsOfUganda.pdf

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Nigeria

• Nigerian Communications Act 2003

• http://www.ncc.gov.ng/RegulatorFramework/Nigerian%20Communications%20Act,%202003.pdf

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Nigeria: Nigerian Communications Act 2003

Article 4 - Functions of the Commission

(g) fixing and collecting fees for grant of communications licences and other regulatory services provided by the Commission

(r) designing, managing and implementing Universal Access strategy and programme in accordance with Federal Government’s general policy and objectives thereon;

Article 70 - (1) The Commission may make ... regulations for ....

(c) any fees, charges, rates or fines to be imposed pursuant to or under this Act or its subsidiary legislation;

(d) a system of universal service provision under Chapter VII, including but not limited to the quality of service standards;

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Article 112 - (1) ....... the Commission shall consider, design and determine a system which shall promote the widespread availability and usage of network services and applications services throughout Nigeria by encouraging the installation of network facilities and the provision for network services and applications services to institutions and in unserved, underserved areas or for underserved groups within the community (“Universal Service Provision”)(USP).(3) The Commission may make regulations for the implementation of subsection (1).

Article 113 - (1) A determination by the Commission ...... shall include definitions of “institutions”, “unserved”, “underserved areas” and “underserved groups within a community”.

Note: the power is vested with the NCC to determine the focus of the fund by defining areas which are unserved or

underserved

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Article 114 - (1) For the purposes of this Act, a fund to be known as the “Universal Service Provision Fund” (“ USP Fund”) is established and it shall be controlled and operated in the manner specified in this Chapter.(2) The USP Fund shall comprise funds derived from -(a) such monies as may be specifically appropriated to the USP Fund from time to time by the National Assembly;(b) contributions from the Commission based on a portion of the annual levies paid to the Commission by licensees(4) The Commission shall ensure that the USP Fund is at all times totally separated from the Commission’s Fund

Note: Though residing with the NCC, the funds of USPF are ring-fenced for the specific purpose it was set up

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Article 115 - establishes the “USP Board” to “supervise and provide broad policy directions for the management of the USP Fund”.

Article 116 lists the membership of the USP Board which includes•the Minister as the Chairman•NCC Chairman as the Vice Chairman•one representative each from the Ministry of telecommunications and Ministry of Finance;•four private sector representatives.

Article 120 - The Commission may make regulations regarding contributions by licensees, under this Act, to the USP Fund and any other matters related to or incidental to Universal Service Provision and the establishment and operation of the USP Fund.

Note: UCC is granted wide powers with regard to contributions and other aspects of universal service

provision

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Ghana

• The National Communications Authority Act 524 of 1996• National Communications Authority Act 769 of 2008,• National ICT4AD Policy, 2003,• Electronic Communications Act no 775 of 2008• National Communications Regulations 2003, L.I. 1719. -• Electronic Transactions Act No 772 of 2008• National Telecommunications Policy, 2005 (NTP-05)• http://www.nca.org.gh/downloads/NCA_ACT_524_1996.pdf• http://www.nca.org.gh/downloads/

National_Communications_Regulations_2003_LI_1719.pdf• http://www.ict.gov.gh/Telecom%20policy/Ghana

%20Telecom%20Policy%20Final.pdf

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GIFTEL

• GIFTEL has been established as an investment fund for collecting financial contributions from telecommunications sector licensees, which shall be distributed to promote universal access an universal service.

• Every operator that has been either licensed and/or authorised by the NCA will have specific options and scope of contributions as defined in their respective license and/or authorisation. Contributions to GIFTEL will not replace, diminish or affect in any way separate obligations from each licensee, such as licensing or spectrum fees.

• Contributions to the GIFTEL will begin effective in January 2005 and will be subsequently harmonised with the beginning and end of each fiscal year.

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Management of USAFs: Policy and Regulatory Foundation

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