| Pro Poor Opportunities and Challenges in Liberalising Markets |
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| Thursday, 21 April 2005 | |
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In a post-privatisation context, market actors may not choose to service areas that are perceived as unprofitable. Particularly problematic is extending network infrastructure to rural areas where it is costly to extend physical infrastructure and where lower population densities imply reduced demand and hence reduced revenues. It is often claimed that failure to extend the network occurs due to market factors such as lack of economies of scale in extending the network and offering service. However, it is increasingly found that poor and marginalized communities are in fact willing to spend higher amounts on telecom services than in places with already developed infrastructure. And whether or not a profitable market exists, community will to connect to the network implies a universal service obligation to facilitate – or at the very least to remove restrictions which impede – network extension to these unconnected communities.
In the ideal case, regulatory incentives or funds would promote network growth in the direction of underserved communities and to make telecom services more affordable for low income users. In reality, communities, groups and individuals adopt strategies to make the network accessible and affordable. As is well-documented, the growth of the mobile network worldwide during the past decade has achieved in expansion of access to the telecom network what years of universal service programs have failed to deliver. Mobile telephony has proven effective in developing economies because it is increasingly affordable and adaptable to different modes of ownership and use. The fact of pro-poor use of mobile telecom infrastructure has actually altered the economics of telecom provision, forcing a pervasive low average revenue per user especially for the prepaid market segment. Prepaid cards, shared use of handsets, texting, ring-call-back, and micro-financing of service vendors are some of the strategies that make access to the telecom network affordable. It is these kinds of strategies that have made mobile telephony ubiquitous in countries that are still unable to provide adequate fixed-line infrastructure. Beyond efforts to make access affordable, it is essential to allow for or to create conditions that stimulate propoor adoption of ICT and alternative uses of network infrastructure. An issue with relying on mobile telephony for network extension is that unless you are connected to network via expensive satellite services the signal does not reach far off of the beaten track of fixed line services. Especially for rural connectivity solutions, other wireless technologies could be useful to extend access points to other users and to remote communities. A weak point for mobile services concerns interconnection with other networks – and long distance and roaming charges. Thus, the benefits of gaining access to the network can be limited to a particular service range. Further, there is also the paramount issue of access to information services and content, fundamental for participation in the information society and economy. As was the case with prepaid mobile telephony, new wireless technologies have the potential to further alter economic models of telecom service provision – making them more accessible to the poor and marginalized. But because of spectrum requirements, many of the new technology applications require particular regulatory conditions, if not active regulatory support. Clearly there will be points of contradiction between creating regulatory incentives for robust network roll-out of fixed line services; and new ownership and open access models which will compete with the offering of these services. This theme comprises research which surveys infrastructure affordability, pro-poor adoption strategies and demand side ICT needs.
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