OXFORD, England-Tele-communications development boosts economic growth. Or is it the other way around? Economists have argued for decades about the exact nature of the relationship. What is not in dispute is that access to communications is a basic human right and there is an urgent need to improve telecom infrastructure, particularly in developing nations.
Improving telecom infrastructure requires financing. Exactly how much depends on what a nation is trying to achieve-in the long term as well as in the short term. There has been general agreement for some time over long-term goals. These were famously expressed in 1984 in the “Missing Link” report of the Independent Commission for Worldwide Telecommunications Development-the so-called “Maitland Report.”
The commission established the objective that “by the early part of the next century virtually the whole of mankind should be brought within easy reach of a telephone.” Widely interpreted as requiring nations to achieve a teledensity of at least 1 percent, this objective will not be met. As the millennium approaches, there are still 43 countries with teledensities less than 1 percent, representing nearly 800 million people.
Teledensity is a blunt instrument for measuring the telecommunications performance of a country; it can mask huge differences between urban and rural areas. A better indicator is the percentage of households with a telephone-a measure of universal service, the goal to which developed nations have aspired. But universal service involves nationwide coverage, non-discriminatory access and widespread affordability. According to the International Telecommunication Union’s (ITU’s) “World Telecommunication Development Report 1998,” it is not an appropriate concept for developing nations.
Developing nations are in the early stages of network development. Even the most developed nations required almost a century of network development to achieve the universal service goal of 90-percent household penetration. Therefore, in developing nations the concept of universal service has undergone a transition. It is now interpreted as universal access, the goal that people should be within reasonable distance of a telephone. The emphasis now is on community service rather than individual service. A telephone in every household is unrealistic; community access is the practical strategy.
Strategies for universal access have focused on two approaches: the use of wireless technology to implement networks in underserved areas; and increasing the number of players licensed to provide service.
Wireless networks often are quicker to implement than fixed lines. But mobile cellular networks have made little impact on the universal-access aspirations of the developing world. They are simply too expensive. Fixed cellular, or WLL (Wireless Local Loop), is fast reaching the point where it can be cheaper to install than copper. It has had a disappointing debut, with only 1 million lines installed to date, but the industry remains optimistic, forecasting 5 million lines by 2000.
WLL suffers from a plethora of different technologies, with no global standard to effect economies of scale. It also suffers from the need to obtain spectrum and operating licenses. Many governments view mobile cellular licensing as a windfall revenue generator, not a mechanism for improving access to communications. Extending this perspective to WLL can artificially increase costs to the point where providing service to rural areas is not economical. WLL presents developing nations with the dilemma of balancing the short-term need for revenue generation with the long-term goal of universal access.
The most common mechanism for improving access is to inject competition and external financing into the telecom sector, either through privatization policies, build/transfer arrangements or the licensing of additional operators.
Privatization provides capital and expertise and has transformed the telecom sector in Latin America, Central and Eastern Europe and parts of Africa. Build/transfer arrangements grant investors the right to build or rehabilitate networks, operate them for a time and then hand them over to the state operator. They have been used mainly in Southeast Asia. Licensing additional operators also attracts investment, a mechanism particularly evident in the Asia-Pacific region, where more than 80 new market entrants have materialized since 1990.
The technological and financial instruments exist for tackling universal-access aspirations. Making effective use of those instruments is now a regulatory and policy challenge.
“In developing countries, a majority of households do not have telephone service, and many individuals and communities do not have reasonable access to communication facilities,” notes the ITU report. “Effective policies are needed to remedy the situation. Policy makers and regulators must take an active role in order to enhance access to telecommunications.”
