WTDC Backgrounder

The ITU’s second World Telecommunication Development Conference will take place at the Mediterranean Conference Centre, Valletta, Malta, from March 23-April 1.

The main purpose of the conference will be to review and evaluate the success of the Buenos Aires Action Plan (BAAP), which was developed by the Union’s first World Telecommunication Development Conference in Buenos Aires, Argentina, in 1994.

The BAAP targeted specific programme areas which were identified as requiring extra work in the effort to boost telecommunications growth throughout the developing world (see box).

In retrospect, it is clear that while significant improvements have been made as a result of the BAAP, the strategy fell short of expectations in many areas, particularly in providing greater access to telecommunications. It is also clear that changes in the world telecommunications scene since the last WTDC will necessitate some changes of focus, and even, sometimes, completely new approaches.

The main discussion areas for the next conference will largely focus, therefore, on the following broad topics:

New partnership arrangements – these represent possibly the most promising area for growth in telecommunications development. Joint arrangements such as Build-Operate-Transfer (BOT) between government and the private sector have already proved very successful in nations such as Thailand, China, Lebanon and Ghana to name but a few. The BOT arrangement works as follows: a private company, which has been granted a concession, builds the telecommunication network, the ownership is transferred to the national telecommunication administration of the PTO but the private company operates the network during the determined concession time period while giving a share of revenue and/or profit to the PTO. Private sector partners can take advantage of a large, often untapped market for telecoms equipment or services, while governments and administrations can direct the capital investment provided by private industry into network development programmes.

Regulatory policies also foster improved access in underserved areas. One such policy which has produced positive tangible results consists in linking profitable market segments such as cellular phone licences to service obligations which bring telephony to remote parts of the country. In the Philippines or in South Africa for example, private operators have been able to get, through such arrangements, the right to win market share in the country’s more lucrative markets and the government gets help with network expansion in less profitable regions.

The challenge is to develop partnerships which benefit all parties, that go beyond purely commercial approaches and which focus on long-terms benefits rather than short-term gains.

New technologies – many of the newest telecommunications technologies have enormous potential to increase accessibility of telecommunications around the world. A cellular telephone network, for example, is generally much cheaper to install that a fixed line system, particularly in areas of difficult terrain or which are geographically remote. As well, paging and messaging networks can offer low cost communications which are well suited to developing countries, where cost of the service may be determinant. Other technologies, such as Global Mobile Personal Communications by Satellite systems (GMPCS), may prove highly suitable for developing countries’ communications needs, provided they can be offered in a cost-effective way. These systems, based on constellations of low-Earth-orbiting satellites, have the potential to deliver voice and messaging services between any points on the surface of the planet – perfect for areas which are too sparsely populated to warrant other kinds of networks, or too rugged to make other technologies practicable.

New information sharing mechanisms – changes in the global telecommunications environment are necessitating new ways of managing service provision and operations. Privatization of national operators, combined with liberalization of the world’s telecoms markets means new legal and regulatory frameworks will have to be developed.

New information sharing mechanisms are also important for enabling developing countries to compete. Given the deregulation, privatization and structural reforms taking place around the world, a solid and consistent programme is needed to help developing countries introduce effective legal and regulatory frameworks. A network of resources allowing countries to find out about and learn from other experiences must therefore be put into place. The hows, whos and whats of this strategy will be an important component of the discussions at Valletta.

New approaches – Strategies to achieve universal access fall into two categories: regulatory changes to increase overall network development and specific programmes for those without individual telephones. Privatization has had a positive impact upon telephone access. One reason is that network expansion targets have frequently been made a requirement of the privatization. Another approach to expand network penetration has been to contract out specific projects to private companies under Build/Transfer schemes. A few countries have introduced competition for providing fixed-line local services while other countries have issued licences to new companies to provide service in unserved areas.

Countries are also adopting new methods to enhance access for those without individual telephones. It may be possible to improve the coverage of telecommunications by changing focus from traditional target which in practice have proved difficult to reach. For example, a shift away from universal service, which requires one telephone per household, to universal access, which proposes instead a village to share a community telephone, may prove more successful. The same approach can also apply to marginalized urban residents with the provision of telecommunication outlets in places where they are likely to come together, such as community centres.

A community financed telecentre may quickly pay for itself through increased economic prosperity, and may encourage other entrepreneurial activities which could further raise living standards and telecoms penetration. In Senegal, for example, where private telecentres have blossomed in recent years, access to telecommunications has more than doubled, representing close to 6% of all telephone main lines. In addition, the cost-effectiveness of these lines is far greater than those of the public operator with nearly four times as much revenue per line. The telecentres have also created over 1 000 jobs in three years.

Public payphones have been the traditional method of encouraging widespread access to telecommunications facilities. New approaches to increase the supply of payphones revolve around mandated targets for incumbent operators and liberalization of payphone provision. A number of developing countries are adopting policies calling for the installation of telephones in unserved localities, through establishing targets for incumbent operators or by establishing special funds.

Access is then based upon a reasonable distance from each user’s location. The result has been a variety of definitions, from a telephone "within less than five kilometres" in Brazil, to "a thirty minute travelling distance to a phone" in South Africa, to China’s "one family, one telephone in urban areas and telephone service to every administrative village in rural areas."

Technology also allows for a re-evaluation of access options. In Brazil, voice-mail boxes are made available so that individuals without a telephone are able to receive as well as to make calls from public telephones. In South Africa, there is an initiative to provide email addresses to all families accessible from post offices equipped with public Internet facilities.

Other new approaches lie in the area of financing – for example, community-based lending or microcredit systems, which have proved highly successful in improving the economic status of many living in poverty in the developing world, may also prove to be appropriate financing models for telecoms development.

In the area of financing, the expected breakdown of the old accounting rate system, which governed inter-carrier payments for international traffic, is also at centre-stage. Some operators will have to revise their tariffs structure to make them less reliant on incoming inter-carrier settlement payments. But because of the shift of costs to the local and domestic networks, the decrease of the settlement revenues will, in some cases, impact on the affordability and could even endanger the objective of global access. For example, Mexico suffered a decrease of 10% in the number of household penetration in only one year as a result of the increase of local tariffs (aggravated by the financial crisis on people’s income). Moreover, the capacity to pay of the population of several least developed or developing countries may make it impossible to compensate for the loss of revenue from international settlements leading to various degrees of shortage in revenue-generation needed for network expansion. Low-income populations are very vulnerable to costs variations and tariff re-balancing may place several governments in front of tough choices.

To be able to define universal access goal and put in place the right mix of policies that would boost the supply of telecommunications, regulators must be able to rely on accurate and detailed information. Who has access, who does not? Who can afford it but does not have access and who cannot? Why those who do not have access are deprived (because of unaffordability, distance?). What pricing can be sustained in relation to the capacity of various segments of the population? etc. Once the tools are selected and the policies implemented, monitoring for compliance must be made and enforcement ensured. All of this information can then be fed back into the process to adjust the policies for greater effectiveness. Currently, few countries have put into place the appropriate machinery to enable such on-going analysis to be undertaken. All of these functions depend on a detailed information base with interaction between the telecommunication regulatory agency, operators and the national statistical office. A clear message from the Valletta conference is expected to be sent to all governments urging them to move from a public-service approach to a business service.

From supply-deficit to demand stimulation: Not many countries, if any, have achieved universal service. Most developed countries provide a high level of household telephone penetration although, even within high-income countries, pockets of disadvantaged citizens without access can be found. In developing countries, a majority of households do not have telephone service and many individuals and communities do not have reasonable access to communication facilities. At the same time, the liberalization of the telecommunication industry is bringing universal service into sharper focus. The introduction of competition raises questions about traditional cross-subsidy methods for extending affordability of telephone service. The obligations of incumbent and new operators must be defined if progress towards universal service is to be maintained and advanced. This is now mandatory for countries that made commitments under the World Trade Organization’s Regulatory Reference Paper, which calls for universal service to be administered in a "transparent, non-discriminatory and competitively neutral manner".

These developments require a pragmatic, concrete and transparent programme to enhance access to telecommunications. This involves a practical definition, based on the socio-economic situation of each country, policy tools for translating the definition into reality and a monitoring mechanism to measure and enforce progress towards universal access.

Technology that theoretically provides telecommunication access from anyplace on the surface of the earth is already available. At the same time, the introduction of cheaper, more efficient sources of supply and new players should help shift the balance from supply-deficit to demand stimulation. As a result, universal access is now not so much an engineering or supply-side problem but rather a regulatory and policy challenge. The adoption of relevant universal access policies, with committed monitoring, enforcement and funding mechanisms, are essential to ensuring that all of the world’s citizens have reasonable access to telecommunications early in the 21st Century.