The Impact of Universal Service Funds on Fixed-Broadband Deployment and Internet Adoption in Asia and the Pacific

The Impact of Universal Service Funds on Fixed-Broadband Deployment and Internet Adoption in Asia and the Pacific

Friday, October 6, 2017
Public information and advocacy materials

Investment in the information and communications technology (ICT) infrastructure helps achieve all the Sustainable Development Goals (SDGs), but in particular, SDG 9 targeting industry, innovation, infrastructure and ICT. Enhanced and affordable access to ICT connectivity will deliver an expanding range of development interventions and public services, not only in urban areas but also in remote and rural areas for vulnerable groups in society. However, according to a report of the United Nations Economic and Social Commission for Asia and the Pacific—State of ICT in Asia and the Pacific 2016—the digital divide in Asia and the Pacific continues to widen at various levels, limiting the potential for delivering transformative capabilities that the achievement of all SDGs requires.

In addressing this persistent challenge, universal access and service funds (UASFs) have been adopted by some of the Asia-Pacific governments as a mechanism to expand ICT access in unserved and underserved areas. UASFs normally collect funds from telecommunication operators and reallocate them to augment investments in ICT infrastructure development in such areas. The UASF, therefore, plays an important function in providing affordable and accessible telecommunication and broadband services for all.

However, the effectiveness of UASF in delivering its core objectives has been questioned and debated for some time. Recognizing the importance of developing enabling financing mechanisms for broadband connectivity projects under the Asia-Pacific Information Superhighway initiative, this Working Paper examines selected country case studies in the region to identify the policy challenges and opportunities associated with the UASF. In addition, econometric analysis was conducted to test the effects of UASF on broadband and Internet expansion in middle-income countries.

The results of the analyses highlight that countries with UASFs targeting broadband/Internet expansion have not experienced better results in fixed-broadband and Internet growth than the countries without such fund. Based on the review of existing literature and publicly available documents, the effectiveness of UASFs seems to have been limited, due possibly to weaknesses in the design, structure and implementation, which imposed enormous pressure on timely disbursement of the funds. At the same time, the study identifies good examples from countries that have effectively used the UASFs to connect rural and underserved communities.

The findings presented in this Working Paper has important policy implications for governments and international organizations alike, in promoting this financing mechanism and understanding the likely impact that UASFs can have on broadband expansion. In addition, how UASFs can be better designed in order to fulfil its core objective of bridging the digital divide could be a topic of further policy discussion.


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