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Monday 14 March 2011Monday 14 March 2011 Windhoek, NamibiaWindhoek, Namibia

Leona MentzLeona MentzITU ExpertITU Expert

Validation WorkshopValidation Workshop

Session 4.2: Presentation of the ToolkitSession 4.2: Presentation of the Toolkit

Introduction SADC nearing 50% mobile voice penetration rates

BUT Most rural & high cost areas remain under served,

Internet and broadband not addressed significantly

The Toolkit discusses: Understanding & Setting up Universal Service Funds Alternative Funding for Projects Programme and Project Design Monitoring & Evaluation Regional Harmonization

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“How to” - Guide

Understanding USAFs Why set up a Fund?

only one of a number of methods of financing depends on the project and the country context depends on the definition of universal service & access

Important to implement SADC Ministerial Decisions, and critical to ensure ongoing relevance Understanding and Analysis of Market is required What should be achieved (definitions)? Where and who are eligible (services, convergence)?

Important considerations from an implementation perspective: What programmes and projects are to be pursued? How is the money disbursed?

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Understanding USAFs

Successful Funds embrace the following key principles:

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•OBA •Good Governance

•Alignment with Regulatory & Policy framework

•Technology neutral

•Market orientation, sustainability & entrepreneurship

•Decentralized bottom up planning & project definition

•Innovation & localization of projects & processes

•Total Cost of Ownership approach

Setting up a USAF Best established in a liberalized market:

Clear institutional framework for the Fund Clear, pro-competitive licensing regime Fair interconnection regime A framework for infrastructure sharing and facility leasing; Effective and efficient spectrum management regime; and Harmonization with regional and global approaches and

standards

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US/UA Guidelines and other CRASA Guidelines deal with this extensively

Fund Management The Ministry A division of the regulator A separate agency An independent third party

Fund Must have (at a minimum):

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Own Bank Account

Fund Management

Accountability: Transparency & Trust Efficiency

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USAF Funding Variety of sources:

Government general budget, Levy imposed on industry, as a percentage of annual revenue Regulatory sources such as the proceeds of license competitions,

frequency spectrum auctions and fees. Once-only contributions from government Consumers

Level of funding:

Range from 0.02% to 6%

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USAF Funding

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SADC mostly Levies on operators could be coupled with

•Approach has been primarily market driven

•Best Approach to determine level of contribution: - Consultative process - Put maximum/range in legislation not actual % - Review levies periodically

Financing of Projects: Utilization of Funds (Challenges)

1998-2006, only 26 percent of USAF funds collected globally had been redistributed to the ICT sector for use on universal access projects

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Slow Funding:

• Fund is located with the regulator (not prioritised)•Speed of the political process, governments fail to pass enabling legislation, or hold back approvals for funds to be spent•Significant time needed to design, evaluate and assess and implement projects•Projects often considered ‘public investments’ & subject to lengthy approval processes•Disbursements may be subject to additional constraints from third party organizations such as donors

Financing of Projects: Utilization of Funds (Opportunities)

Best practice: Legal framework encourage efficiency & transparency &

enable speedy Fund disbursement Fund should be given sufficient autonomy to disburse funds A clear Delegation of Authority Framework should exist

across the organization Fund should have clear continuous and ex post reporting

requirements Funds should have a maximum amount that can be rolled

over from one year to another without eliciting a review of the USAF contributions

Only collect money when structure in place to disburse

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Designing Programmes & Developing Projects

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Understand the Status Quo:• Current policy and regulatory tools to meet defined targets and objectives;• Short and medium term policy changes impact the

ICT environment• Current infrastructure and infrastructure

requirements to meet the defined targets;• Infrastructure roadmap of operators using all types of

infrastructure and technologies;• Market dynamics and demand analysis• Impact of non-ICT factors such as electricity, roads

and access

Designing Projects

Well Designed projects : Targeted Measurable Sustainable

Successful Projects: Commercially successful (i.e. successful from a

market perspective) and Successful from a developmental perspective.

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Focus on demand and needs as well as on

supply and socio-economic impact.

Types of Projects Infrastructure Projects:

the network should be open and provide universal coverage in the area concerned.

the amount of the compensation for rolling out the network cannot go beyond what is necessary to cover the additional costs to deploy the network in non-profitable areas.

Last Mile Access: Infrastructure sharing

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Funder(Private, public,

PPP etc.)

Funding(Subsidies

grants, loans etc.)

Types of Projects:School & Library Connectivity Projects

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Funding Schools DIRECTLY Funding Schools INDIRECTLY

-Well measured-Focused on areas-Focused on communities

-E-rate-Infrastructure Sharing-License obligation

Types of Projects:Community Access Projects

Cyber cafes, telecentres & information access points

Sustainable Project is Demand Driven

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Funder (Private, public,

PPP etc.)

Funding(Subsidies

grants, loans etc.)

Types of ProjectsContent and Applications Projects

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Funder (Private, public,

PPP etc.)

Funding(Subsidies

grants, loans etc.)

ICT sector strategies focus more on broadband uptake

Becomes critical to focus on culturally and linguistically sensitive information

Type of Projects:Pilot Projects

Objectives Document for a pilot project Objectives – what is the thesis being tested Project Team – who from the Fund and its

partners is involved in the pilot? What are the roles and responsibilities?

Sample and Sample size – what is the location/population/technology/etc being tested and why?

Timeframe – provide a start and end date Budget – what is the budget? Who is

paying for what portions (if a partnership) Monitoring and Evaluation Overlapping Projects

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Funder (Private,

USF, Other etc.)

Funding(Subsidies

grants, loans etc.)

Calculating Cost of Universal Service and Access

Cost analysis will require: Market data which is below national level ICT access levels – which is more micro that national

penetration levels Geographical information on the project area Population centre’s and population

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Two of the more user friendly cost models:• World Bank’s ICT voice Model•Public Access Broadband Model

Calculating Costs: Recent Modeling Trends

Most common approaches to arrive at cost: Use of cost information to approximate the

maximum subsidy and Use of benchmarks derived from available local,

regional and international information

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Process Issues: Eligibility for Funding Eligible Bidders

Cannot distort the market

Eligible Areas competitive market interest

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Process Issues: Eligibility for Funding

State owned entities:

No fundamental problem with government owned companies being awarded projects if the process followed has been transparent and fair

New Entrants & Small Players:

May be inadvertently excluded due to lack of experience i.e. requirement for 5 years experience in bid…

Non-licenced Companies:

Open to debate….

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Process Issues: Awarding Subsidies

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Process Issues: Bidding Documents

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Monitoring & Evaluation Monitoring & Evaluation defined Benefits of Monitoring & Evaluation Link between Monitoring and Project Design Examples such as World Bank 10 step Monitoring &

Evaluation process Design Mistakes established through M & E

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Regional Harmonization

Role of CRASA: promoting the harmonization of universal service provide capacity building on Fund management compile annual statistics and indicators to assist

the 14 members to measure the success or otherwise of the Funds

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Conclusion

Intended to be a practical guide Highlight important areas to consider

from Fund establishment to Fund disbursement

Provide case studies and examples as a reference

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Thank You!Leona Mentz

Director: Policy and RegulationPygma Consulting

lmentz@pygmaconsulting.com

Tel: +2711 783 1210www.pygmaconsulting.com

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