GLOBAL ICT DEPARTMENT (GICT) THE WORLD BANK GROUP Best Practices and Lessons from Internet Infrastructure Development Initiatives Rob Stephens World Bank.

Presentación del tema: "GLOBAL ICT DEPARTMENT (GICT) THE WORLD BANK GROUP Best Practices and Lessons from Internet Infrastructure Development Initiatives Rob Stephens World Bank."— Transcripción de la presentación:

1 GLOBAL ICT DEPARTMENT (GICT) THE WORLD BANK GROUP Best Practices and Lessons from Internet Infrastructure Development Initiatives Rob Stephens World Bank Group March 24, 2005 El Uso de Internet en las Americas 17 de Junio, 2005 CIDE

2 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Contents l The World Bank Group and ICTs l Affordability and the access gap l Universal Access: the OBA & smart subsidy approach l Examples: Guatemala and Peru l Closing observations

3 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP The World Bank Group and ICTs

4 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Examples of World Bank Group Work Finance studies: WSIS/UN financing of ICTs studies and Regulatel universal access project Development of national sector policy and implementation strategy – e-strategies, etc Privatization of state-owned telecom operators Encourage public private partnerships Establishment of legal and regulatory framework and institutions Capacity-building and finance spectrum management Design and finance universal access programs Foster and finance incubators Invest in private sector companies Development, Implementation and Financing of UA Schemes

5 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP No project yet Technical Assistance TA & Investment GICT Rural Access Projects Project under development

6 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP GICT Portfolio 2005

7 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP An overview of the rural access problem

8 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Health Environmental and natural resouces management Business Services Education Public Services Telecommunications Infrastructure Financial Sector Telecommunications are a key element of economic and social development... Less isolation in poor and rural areas

9 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Wireless/cellular explosion n subscribers growing globally at 30-50% per year, in Africa this rate is of 150% n substantial penetrations are being achieved, already overcoming that of fixed lines worldwide n mobile phones are becoming a means of access for many: — pre-pay mass market — wireless payphones Satellites fill in the gaps: n offer cost-effective solution for remote locations, particularly if power systems are already available n deployed in rural areas of Chile, Colombia, Guatemala, Peru, South Africa, and elsewhere n serve to demonstrate there is actual demand & viable markets … and they are becoming increasingly more affordable

10 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Very rapid growth of ISPs, Internet hosts & users Phoneshops: n basic public telephone n some are adding fax and PCs/e-mail Telecenters: n basic public telephone & fax n e-mail, Internet, computers n training resources, skills transfer, community role n access to gov’t & commercial data, distance education, health & other info services Telecenters sustainabilty (financial, social, cultural) challenge Internet services are also slowly becoming essential

11 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP However, great inequalities remain Country Rural areas / Low-income users Other urban areas / middle-income users Capital / High-income users

12 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP The digital divide is widest between urban and rural areas

13 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Giving rise to universal service & universal access policies Universal Access Universal Service Primary focus: shared access (payphones) for rural areas Primary focus: private lines for low-income users Developing countries focus limited resources primarily on universal access in rural areas/where the market failure is greatest. Urban areas – markets serve

14 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Affordability and the access gap

15 30000 1 1.5 2 2.5 3 3.5 4 0500010000150002000025000 GDP per capita (US$) Telecommunications revenue as % of GDP World People spend about 2% on phone service

16 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP % GDP Country 2.31.3Malaysia Tanzania1.92.1 1.61.3Botswana 1.21.5 Rural Areas Perú Source: A. Dymond, Intelecon …including rural areas and poor customers Poor people in rural areas often have “high” willingness to pay for phone service (different opportunity costs and income measurements)Poor people in rural areas often have “high” willingness to pay for phone service (different opportunity costs and income measurements) Availability is a larger barrier than affordabilityAvailability is a larger barrier than affordability

17 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Access Divide: the two gaps Current individual user access Community access Current expansion plans Geographic Isolation Poverty Market Efficiency Gap (MEG) Commercially Feasible Market Access Gap (MAP) Rural Market Access Gap Full Market Access Gap

18 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP How to reduce the gaps? Current individual user access Community access Current expansion plans Geographic Isolation Poverty Market Efficiency Gap (MEG) Market Access Gap (MAP) Remove Legal and Regulatory Barriers Develop Universal Access Programs Full Market Access Gap Rural Market Access Gap

19 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Closing the access gap: output based aid (OBA) and the smart subsidy

20 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Government defines objectives Provide 200 public telephones in a certain rural area, for a one-time subsidy and operate them for a ten year period at specified minimum quality standards. RURAL AREA

21 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Private operators bid for subsidy $2 million $1 million $1.5 million $0.5 million Concession is awarded to consortium requesting lowest subsidy.

22 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Subsidy paid against investments RURAL AREA Output-Based Aid: Subsidy paid as investment targets are met.

23 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Project design aimed at commercial viability of concessions  Max subsidy to make private NPV=0  Tariff structure and adjustments, interconnection charges allowed at expected traffic levels Well-defined roll-out targets for operators  E.g. Towns to be served/Services to be provided/ Quality indicators/ Contract length No exclusivity rights or technology restrictions Freedom to provide additional services Key Features of OBA Projects in LAC

24 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Output-Based Aid (OBA) Disbursement of public funding is tied to specified outputs or services delivered by private firms (or NGOs): n May complement or replace user-fees under structures where operator is responsible for financing and providing the service. n Public funding may be sourced from Bank loans, other kinds of donor assistance, or government’s own resources. Potential benefits: n Better targeting of beneficiaries/outcomes n Better incentives for efficiency & innovation n Opportunities to leverage private financing.

25 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Problem  Universal services are socially desirable (social NPV>0) but not always commercially viable (private NPV<0) Solution  Provide a one-time investment subsidy for private operators willing to provide the universal access service.  Bid the subsidy out competitively to ensure that costs are kept as low as possible. Paid over time as outputs are provided.  This effectively leverages maximum private investment in achieving universal service goals OBA - Smart Subsidy Approach

26 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP The spread of the model income level level of interest upper middle income lower middle income low income water transport electricity telecom Chile Guatemala Nepal (Paraguay) Argentina Chile Bolivia (Mexico) (Ecuador) Cape Verde (Benin/Togo) (Uganda) (Senegal) Peru Uganda(Nicaragua) Colombia South AfricaDom. Rep.

27 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Some examples: design ChileColombiaPeruNepal Year1994  19951994  19991994  19982001  2003 TargetMeet requestsTowns of 250+Towns of 300+Eastern Development Region FundingTaxationUSL+licenses1% USL+finesIDA Credit RevenuesUS$6m pa.US$60m pa.US$12m pa.US$ 2m pa. Duration10 years 20 years10 years PaymentImmediateInstallments (18 months) Installments (2 years) Price regulation Yes+rural interconnect Yes No

28 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Some examples: outcomes ChileColombiaPeruNepal Projects200671 Bidders-2 to 72 to 53 Subsidy per town $3,600$4,600$9,500$9,365 Towns served 6,0597,4154,4201,064 Population served 2.2m3.7m1.6m4m

29 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Financing options Universal access funds, financed by: n government budget n operator revenue contributions (typically 1-2%) n cellular, basic service or radio frequency license fees n interconnect levies and ‘virtual fund’ transfers Low interest operator loans n national sources (e.g. USA’s REA loans) n aid agency sources (not a good record) Micro loans for phoneshops or other retailers n e.g. Grameen Bank ‘phone ladies’ n part financing by telecom operators

30 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Applying the access gap and OBA model: Guatemala and Peru

31 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Guatemala – Liberalization achievements

32 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP … there is a pending agenda – access gap: example -- Guatemala

33 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Guatemala: Identifying the Gaps Four areas were selected that had a high concentration of areas in clusters 4 & 5 This led to selecting four departments: Petén, Huehuetenango, Alta Verapaz y Quiche. A field survey was carried out in these four departments

34 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Results of Gap Assessment in Guatemala Las Brechas de Eficiencia de Mercado se calculan quitando a la población urbana y rural no pobre la densidad total fija y móvil. La Brecha de Acceso Real es la población rural pobre y pobre extrema que requiere de subsidio para poder accesar al servicio (y cuyo gasto en comunicación sí cubre el costo de O&M de TTPP). Backbone Gap: 288 out of 331 Municipalies do not have backone access

35 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Estimated Costs of Bridging the Rural Access Gap in Guatemala Estimated not Actual/Unofficial

36 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP 1% tax on operators could finance programs to fully address the rural access gap in Guatemala Esquema de desembolsos es: 30% como adelanto ante entrega de cronograma detallado de instalaciones, 30% contra entrega de sistema y 4 pagos anuales de 10%. Estimated, Not Actual/Unofficial

37 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Gigantesco progreso en la obtención de Accesso Universal Efecto de reducción de distancia ha sido dramático, pero las variantes entre regiones puede ser grande (debido a la altura, terreno e inclinación) Impacto de FITEL (1)

38 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP FITEL ha reducido la distancia de 5.7 km en promedio, esto es notable en un país con un terreno tan desafiante como Perú El impacto de teléfonos FITEL es numeroso, incluyendo un cuidadoso uso de dinero en algunos pueblos donde anteriormente usaban el trueque Impacto de FITEL (2)

39 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Análisis de costo- beneficio de 1.64 y excedente por consumidor de 13 Soles por mes indica beneficios tangibles significativos Beneficios menos tangibles incluyen la mejora del contacto familiar, mejor salud y seguridad (llamadas de emergencia), integración de economías regionales y menor aislamiento Impacto de FITEL (3)

40 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP 70% de encuestados fueron conscientes de los teléfonos públicos en sus comunidades, sólo ~50% lo ha usado en el año pasado (MINAG análisis de encuesta) Promedio de gasto en telecomunicaciones es alrededor de 8 Soles por mes por usuario – US$ 2.3 – cerca de las salientes ARPU de muchos usarios de prepago en la ciudad Esto es equivalente al ~1.4 % de los ingresos familiares Modelo típico de uso ligeramente mayor a 3 llamadas por mes/usuario, 10 minutos por mes en promedio (Suministro- figuras afectadas) Más de 3.3 millones de llamadas por mes en teléfonos rurales GTH, 1.9 millón recibidas (58%) y1.4 millón salientes (42%) Impacto de FITEL (4)

41 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP FITEL alcanzó similar (ligeramente menor) subsidio por figuras prepagadas como FDT de Chile, entre US$ 5,600 y 12,000 FITEL ha usado pilotos y circulado ofertas iniciales como experiencia de aprendizaje, y continua mejorando su programa, diseñando ofertas y marcos regulatorios. Tarifas de interconexion asimetricas para operadores rurales FITEL ha logrado mantener los costos administrativos de gestión del fondo en un nivel bajo (debajo del 2% del financiamiento), aparece estable alrededor del 1% Impacto de FITEL (5)

42 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Components of Access Strategy 3. Telefonos Comunitarios/VSAT: Mejorar, mover, fomento uso para otros servicios 4. Telefonia Celular: Estimular expansion celular 5. Banda Ancha Nacional: Diagnostico y opciones. 2. Internet y Telecentros: Mas pilotos y estrategia para asegurar uso productivo 1. Liderazco, dialogo y coordinacion: Consensuar una estrategia nacional de e-desarollo

43 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Priority is universal access not universal service Voice is the “killer ICT application” demanded by poor  cellphone is the world’s most important 2-way ICT commodity Privatization, Liberalization and Universal Access reforms at the same time: Chile, Peru, Guatemala, Colombia, Brazil  Private sector has lead role to invest in sector. Government roll is to stimulate private investment in less attractive areas.  Slow roll-out of some universal access programs Rural build-out requirements imposed on privatized firms  Benefit: Service quickly provided to unserved communities  Policy Cost: Exclusivity periods and weaker regulation of incumbent Universal access fund and agency established  Financing options: (1) government budget --Chile), (2) 1%-2% tax on telecom sector -- Peru, Colombia, Brazil), (2) Other sources – Guatemala.  Options: (1) part of regulator – Peru, Chile, (2) part of Ministry; (3) “independent” Targeting of funds – Identify access gaps Allocation of funds -- Output Based Aid (OBA) model/tenders Universal programs evolve over time Trends: From large national projects to smaller projects, from supply/infrastructure focus to projects that combine supply/infrastructure with demand generation and productive use. Recap of LAC experiences

44 GLOBAL ICT DEPARTMENT THE WORLD BANK GROUP Evolucion de Proyectos TICs Rurales Primera Generacion: Telefonos publicos y infocentros comunitarios VSATs Enfoque sobre la demanda Subsidio minimo Enfoque en expandir la oferta Segunda Generacion: Tecnologia y servicios variados n Telefonos publicos, infocentros, telefonia celular y servicios inalambricos (WAP, Wi-Fi, Wi-Max) n Infocentros comunitarios y infocentros especializados n Banda ancha y “backbone” n Contenido y aplicaciones Estimular/compaginar la oferta y demanda Eliminar barreras legales/regulatorios Variedad de subsidios y selección Multi-sectorial y integrados Acelerar el desarrollo de marcados En algunos paises se esta empezando la transicion de aceso universal a servicio universal