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Wow! Universal Service Funds are Hoarding Over $12 Billion in ICT4D Funding

By Wayan Vota on October 27, 2016

universal-service-fees

The concept of Universal Service is pretty simple: telecommunications services should be accessible to the widest number of people at affordable prices. We can break it down into three principles:

  • Availability: the level of service is the same for all users in their place of work or residence, at all times and without geographical discrimination
  • Affordability: for all users, the price of the service should not be a factor that limits service access
  • Accessibility: all telephone subscribers should be treated in a non-discriminatory manner with respect to the 
price, service and quality of the service, in all places, without distinction of race, sex, religion, etc.

Most countries support the concept of Universal Service through Universal Service Fees from telecommunications service providers, who often pass the costs on to consumers. Governments should use USF to incentivize Universal Service by the telecom operators through various means, of which ICT4D programs would form a large percentage of their efforts.

There is only one problem.

A recent GSMA study found that less that 50% of the USF funds collected have been disbursed. That adds up to $12 billion in potential ICT4D funding that’s not being used by governments to improve the digital lives of their citizens.

Another study by the ITU found 14 different reasons that USF fees are not being investing in ICT4D, including everything from the underlying legal and regulatory framework, to changing requirements and focus, to the omission of broadband deployment.

It might not surprise you that one of the ITU recommendation is for countries to establish independent units to manage USFs in a transparent, autonomous and competitive manner. Telcos are understandably annoyed that they’re paying into a fund that’s not being used.

Question is: with so much potential funding hoarded in USF, why are we not jumping up and down in screaming fits trying to get it spent?

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Written by
Wayan Vota co-founded ICTworks and is the Digital Health Director at IntraHealth International. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of IntraHealth International or other ICTWorks sponsors.
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7 Comments to “Wow! Universal Service Funds are Hoarding Over $12 Billion in ICT4D Funding”

  1. I think if we can just use the fraction of the funds in a correct way, we can really create better internet opportunity for the world.

    We need better awareness and capacity building programs especially in Asia and the connecting world.
    We can only change the world one at a time and we need to start today or else the digital divide is widening so much that there is not only gaps in between nations but there will be gaps in between policy, laws and practise.

  2. Ayad Babaa says:

    12 billion dollars? Who has this money? The ITU? Why don’t they use some for cabling fiber, or award some to the most innovative idea through an ICT4D prize competition?

    • Dan Lubar says:

      Wayan.. Yes.. I agree with Ayad Babaa.. It would be good to know who is NOT spending these monies to build some much needed broadband infrastructure.. (yes.. IMO it is true that less developed locations need broadband much more than the developed ones!)

      And.. at the risk of causing trouble.. I’d also be very curious to know if this money is “technology agnositic” (ie are these $$$ used to buy a specific type of technolgy to create broadband capability? ..or is a diversity of different technology able to be supported?)

      I ask because there are some very large are very well capitalized industries out there who have serious dominate positions in the world. If those industries are complaining because they want access to this “ICT4D-centric source of capital” that is essentually free– verse spending their own capital.. well.. I sincerely hope they don’t view these USF $$$ as State spondored captializum they have rights to.
      I also hope that these $$$’s are NOT going to funding 1st world technology (at great expense) vs “right sized” technology that goes a much further to building larger networks for less money with best effort technologies. Its important to remember that broadband infrastructure can evolve & change over time if need be. Respectfully.. DL

  3. David Mendoza says:

    One of the largest uses of the USF funds, at least in Latin America, is as the national government’s piggy bank – Colombia and Peru being two of the most inventive culprits, in some cases with some resemblance of Michael Lewis book “The Big Short”. Since the managing board of the USF’s is highly stacked with government representatives, the board elects to “invest” the funds, but by law, the only “safe investment” are government bonds, thereby providing financing for general government operations rather than high impact technology investments. +1 to technocrats for creative government financing.

  4. Darrell Owen says:

    Wayan, thanks for getting this issue out to a broader audience. It is a huge issue needing attention. But more than attention, it needs ACTION!

    Interestingly, the “recent” reports you sight from GSMA and ITU are in fact over 3 years old–the GSMA report issued in May 2013 and the ITU report issued in June 2013. In a rapidly moving sector such as telecommunications, my take is that these reports are “old.”

    In my discussions with those that specialize in these space, it’s generally thought that the real numbers could easily be twice this amount of $12 billion, with perhaps most of it being held in national treasuries, thus separated and not identifiable as Universal Service Funds.

    Picking up on the new-old theme, a study undertaken by the World Bank on Regulatel (associated on Latin America Regulators) back in 2006–10 years ago, highlighted this same situation as a big issue. I recall having dialog at that time with David Townsend, one of the authors of this study. His main point was simple, “get the funds moving out the door as quickly as possible or they may never be disbursed.”

    At the time I was just getting underway on a new Last Mile Initiative in Vietnam for USAID–I brought in David to handle the USF. And within just a year he had funds going out the door. I estimate since then, something on the order of $1 billion has been disbursed within Vietnam alone.

    A few years later, around 8 years ago when USAID asked me to help design what became their Global Broadband and Innovation (GBI) program, we sought to include this within the scope of the program. The recent data shows that since its launch in 2010, the GBI has been instrumental in shaping and/or releasing for disbursement, on the order of $1 billion in several countries–Indonesia being the biggest success.

    Purpose in the above: it’s one thing to do a study, it’s another thing to do something about it. It can be done, and you’re right, the telecom industry hates these funds just sitting around. I had a conversation with one of the managers in GSMA not long back and basically put forward, “do you want to do more studies on something you already know, and complain about it, or do you want to fix it?” From what I’ve seen since, I’m guessing it’s the former.

    • Hedwig Siewertsen says:

      Hi Darrell,

      Can you give some initial action ideas to move this money in the right direction?
      Where to go with which ideas? I work in Kenya, Tanzania and Ghana on digital financial inclusion

  5. As pointed out by Darrel Owen above, the GSMA report is rather old – three-and-half years! As a former head of a USF (in Pakistan) at that time I was quite unhappy (not at the report) at the conclusions (key findings) of it. At that point i wrote a blog http://www.piftikhar.com/2013/05/14/i-have-a-problem-with-gsma-2/#comment-121 , which is still relevant.
    Subsequently I have worked with USAID, World Bank, ITU and few others trying to help improve the working of USFs in vatious countries. Darrel’s designed “GBI” program of USAID has been particlarly very active – successfully – across asia and africa.
    The concluding sentence of my blog sums it up: “GSMA should help, rather than strangulate, the well-intentioned USFs”.