Would 2015 be the year telecom authorities turn towards much-needed rural ICT development? An agency for that purpose is certainly available: Universal Service Fund (USF) Company, which embodies the spirit of public-private partnership. USF was created in 2007, under a USF Policy, to help deploy telecom infrastructure in areas where it would be commercially infeasible for operators to go on their own.
Inspired by the globally-acclaimed Universal Service Obligation (USO) model at the time, federal government became the custodian and licensed telecom operators the financiers of the USF. The latter would pay 1.5 percent of their (adjusted) annual revenues, which the former would spend through the same operators in un-served and under-served areas under specified projects. That’s how it would roll.
Sadly, USF no longer evokes the hope like it did in its formative years. While the fund has been collecting money regularly, the developmental outflows have been scarce and patchy. By some estimates, in the last 7-8 years, USF has collected over Rs100 billion from operators. Yet it has contracted projects for less than 30 percent of that amount. Actual disbursements are said to be even low.
Pakistan’s telecom industry is not alone in wailing over an under-spending USF they have been funding without fail. Back in April 2013, GSM Association – the global body of over 800 mobile network operators – openly indicted the USF model, mainly on account of severe under-utilization of the funds. It decried political interventions, limited project planning and poorly-conceived programmes under USFs.
Among the 64 USFs it studied, GSMA noted that “more than one third of these USFs have yet to distribute any of the levies collected; and very few funds would appear to disburse everything they collect…” A consideration for shutdown was floated on behest of telcos, who feel that consistently low disbursements makes the USFs just a façade to help governments raise non-tax revenues. But alas, governments hate that proposal, for it entails killing the golden goose.
Pakistan needs to change that, soon. This column would identify specific USF reforms in two broad areas. One is the mandate of the organization – or its direction. The other is related to USF’s implementation of that mandate – or its process and pace.
Direction needs to be revisited. USF Policy is outdated. A new policy must have broadband connectivity – especially fixed broadband – at its front and centre. That would fix twin problems of low optic fiber and broadband connectivity in rural areas. Besides, fixed infrastructure will lay a solid foundation for subsequent entry of 3G services to areas truly rural in characteristics. Universal Telecentres can also utilize that infrastructure and become a hub citizen services and local entrepreneurship.
Second, how the USF works also needs some regeneration. To start, the government must loosen its hold on USF finances, appoint right people and let them work, and depoliticize the project identification and implementation phases. Concurrent with a fresh organizational mandate, the fund’s CEO must get things moving quickly. Passion shouldn’t be in short supply at the leadership tier.
Even then, it is likely some telcos won’t go into remote areas citing security concerns – or they simply choose not to participate despite the USF subsidy. That’s fine if some in the industry want to remain focused on their primary job – serving existing footprint. Outsourcing can help here. We suggest that USF must encourage participation of third-party enterprises that specialize in telecom development in stubborn areas.
These third-parties can either come in through telcos’ sub-contracting or they can bid for USF contracts directly. That would encourage competition and get the custodians a bigger bang for the buck.
It’s time to end the funded dysfunction that is prevailing at USF. Thanks to USF, ICT development doesn’t require a rupee from the government – just some smart thinking on their part by making appropriate policy changes.
Source: http://www.brecorder.com/br-research/44:miscellaneous/5118:give-usf-new-direction-pace/
