" ITREALMS: GSMA faults disbursement of universal access funds

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Wednesday, November 01, 2006

GSMA faults disbursement of universal access funds

INDUSTRY study commissioned by the Global System for Mobile Association (GSMA), has faulted governments of developing nations on the disbursement of the Universal Service Provision Funds (USPF).

GSMA in the study’s main findings made available to ITREALMS Online, stated that emphasise should be on mobile networks, rather than the fixed networks.

Pointing out that mobile communications will deliver affordable voice, data and Internet services to over 5 billion within the next decade, that is, by 2015.

GSMA also believes that the cost of mobile networks and devices will continue to fall, if adequate investments are made thereby facilitating affordable mobile services to be offered to people on very low incomes.

This study conducted by Intelecon Research examined how universal service funds are currently meeting their objectives and what role mobile networks play in delivering universal service and access.

Main findings in the study include that mobile networks now cover 80 per cent of the world’s population, double the level in 2000.

This was attributed, mostly to investment by mobile operators and the liberalization of some telecom markets by governments, especially in developing countries.

“By 2010, 90 per cent of the world will be covered by mobile networks” the study stated, stressing that 32 out of the 92 developing countries surveyed have set up universal service funds; which levy contributions came from mobile and fixed operators, to subsidize the rollout of telecommunications networks in rural areas.

Currently, the study said, 15 out of the 32 universal service funds have collected more than US$6 billion from the telecommunications industry, of which US$2 billion has come from the mobile industry.

Lamenting that only 27 per cent, about US$1.62 billion of the US$6 billion that has been collected to date has been redistributed to the telecommunications industry to aid in network expansion. The remaining 73 per cent remains unallocated and unspent.

“Universal service fund disbursements have had little impact on improving market penetration, primarily because 93 per cent of the US$1.62 billion has been spent on extending fixed-line networks, which are relatively expensive compared to mobiles,” GSMA decried.

Further, the study recommended that governments should regard market forces as the primary means to extend access and connections to mobile communications.

“Universal service funds should play a secondary, 'last resort' role in the provision of access to communications,” they suggested.

Just as it has pointed out the US$4.4 billion accrued by universal service funds and has not yet been disbursed should be invested in mobile coverage rollout.

This, GSMA said, should be complimented by the reduction of other barriers to mobile usage, such as tax, as a matter of priority, advising, “Universal service funds should only be used as a short to medium term policy tool, which should be phased out over time.”

Additionally the group said, USPF should be spent on the lowest cost access technology, typically mobile networks, which have been demonstrated to be the most efficient way to extend access to telecommunications.

Governments should, therefore, make public their policies towards universal access, ensure transparency and review progress regularly.

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