Development of Universal and Rural Service Schemes

Budgeting and Funding for Universal Service

In order to determine the need for universal service provision, the regulator will need to understand the availability of public telecommunications services for those categories of end users least likely to be able to afford a basic level of telecommunications service under normal commercial conditions. It may also need to study the current levels of coverage and capacity offered by fixed and mobile networks and their ability to meet anticipated demand in both urban and rural (or remote) areas, as well as assessing the likely costs of meeting any shortfall using efficient network technologies.

Ensuring the provision of a defined minimum set of services to all end-users at an affordable price comes at a cost. Even with the use of efficient processes and technologies to minimise avoidable net cost, it may still be necessary to compensate providers where it is demonstrated that universal service can only be provided either at a loss or at a net return falling outside normal commercial requirements. It is important to note that providers may gain indirectly from being the universal provider, in terms of brand value, consumer awareness and secondary income streams (e.g. advertising at payphone sites).

These secondary sources must also be taken into account. Any universal service policy, therefore, must balance social objectives with affordable costs of provision, and determine how the net costs of provision, after both direct revenues and indirect gains are considered, should be compensated, whilst ensuring that such funding causes the least distortion to competition in the market for electronic communications services.

InterConnect Communications has assisted a number of national regulatory authorities and other bodies in assessing the affordability of universal service provision, devising means of financing such provision and establishing dedicated Universal Service Funds. Our experience includes:

Devising a Universal Service Fund Policy to meet the communications needs of a South Asian country and build on existing sector policies, including the development of an income forecast, budget and distribution criteria;
Determining methods for analysing and calculating the costs of provision in new areas and corresponding sources of funds as part of the creation of a new universal service policy in a Middle Eastern country;
Costing the gap between present provision and full universal service in a Pacific Islands state and providing recommendations as to how the necessary levels of provision could be funded through a Rural Communications Fund and other sources;
Studying the existing availability of affordable services (and the definition thereof) in a Central European country, their means of funding and calculation of net costs of service provision, including modelling the costs of community Telecentres and from this advising upon the establishment of a Universal Service Fund, the services to be funded and mechanisms for organising the Fund.

Key Service Areas:

Universal & Rural Service

More Information?

For more information about InterConnect's Universal Service experience, please contact Hugh Collins by phone on +44 (0) 1291 638400.