A.3. Deciding on areas of intervention and funding
Universal access funding in the broadband and digital technology space falls broadly into four buckets, funding for connectivity, for adoption, for innovation and for inclusion, the latter being cross cutting. The rationale for this is set out in the ITU Financing universal access to digital technologies report. This section discusses what is being funded in each of these areas.
A.3.1. Connectivity
Connectivity programmes and their funding, focus on supply-side strategies that encourage investment in the deployment of last-mile and backbone network infrastructure, essential for network extension and broadband access. At a local level, this includes investment in data centres and local Internet exchange points (IXPs). Such connectivity-based interventions will reduce operational expenditure (opex) and capital expenditure (capex) and increase productivity for businesses, efficiency of public services and access to digital opportunities for all.
Connectivity programmes may include a number of elements (see checklist below). These may include (1) the enabling environment, which is under the control of the regulator and policy-makers, and which give the “green light” for the implementation of projects; (2) connectivity, which requires choosing the right technical solution and can be measured in terms of speed, technology and network elements, (3) non-ICT infrastructure, which is core to any project, electricity and security being two aspects, (4) smart devices, whether shared or personal in more connected areas, and (5), other ICT infrastructure, which is sometimes in the form of applications (apps), platforms, and software. In a school connectivity project for example, other ICT infrastructure could include cybersecurity software, school portals and cloud computing solutions. These are critical to completing the connectivity solution and if locally relevant and easy to use, can also positively influence uptake.
Given the high costs, and potentially high levels of risk, there is a need to think creatively about accountable governance and how to fund sustainable connectivity initiatives that will bring about economic growth and social inclusion. There are two types of funding required to facilitate connectivity. The first is mainly infrastructure related capital expenditure, including:
- equipment purchases;
- deployment costs for infrastructure for power, middle- and last-mile connectivity;
- installation of infrastructure to hospitals, schools and other strategic institutions (VPN/LAN/WAN);
- annual operational costs for initial connectivity, and for expansion and maintenance of Internet access including maintenance, labour, electricity, and security.
The second is recurring operational expenses, including:
- usage costs, i.e. monthly broadband fees;
- network and equipment licences, where open-source solutions are not available or applicable;
- managed services;
- maintenance and support.
A.3.2 Adoption
Adoption programmes aim to increase individual and institutional access through inclusive interventions that encourage adoption and increase usage and affordability. Adoption funding focuses on demand-side interventions, including:
- Individual and strategic public institution support, which is necessary to increase demand, with a focus on investing in digital literacy, promoting uptake and use.
- Digitalisation and support for industry and in particular small and medium-sized enterprises (SMEs) to ensure that businesses, start-ups and micro-level entrepreneurs, as well as digital and non-technology related industries can benefit from digital innovations to create a higher value chain and to scale up projects.
- Digital literacy, skill development and relevant content development that help to increase uptake and use in communities where broadband networks have been deployed. Funding should be geared towards projects that prioritize promoting the participation of women, children, marginalized, and vulnerable persons.
- Digital inclusion support, which ensures that all finance provided includes requirements to include and promote the participation of women, persons with disabilities and specific needs, older persons, marginalized, and vulnerable persons.
A.3.3 Innovation
Innovation and investment in research and development (R&D) and SMEs facilitate the development of innovative digital technologies, however, the SME funding gap is significant. It is difficult to raise finance for relatively high-risk, untested, innovative businesses, despite the locally relevant and significant economic contributions that SMEs make. Furthermore, in terms of innovation, new technologies such as drones, Internet of Things (IoT), machine-to-machine (M2M) technologies, artificial intelligence (AI) and augmented and virtual reality (AR/VR) will require funding to make it past the start-up stage and into the mainstream. Given that they too are untested, the availability of financial support to facilitate such innovations may be limited, even though they are likely to be key in fast tracking SDG target attainment.
A.3.4 Inclusion
Digital inclusion funding seeks to ensure that all finance provided (through any programmes) is conditional on inclusivity and the promotion of the participation of women, persons with disabilities, specific needs, older persons, marginalized, and vulnerable persons.