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Chapter 1: Introduction UNIVERSAL SERVICE IN TELECOMMUNICATIONS A CASE STUDY OF NEW ZEALAND AND VIETNAM LEGAL AND INSTITUTIONAL FRAMEWORKS, WITH PROPOSALS FOR REFORM IN VIETNAM BY VO THANH LAM A thesis Submitted to the Victoria University of Wellington in fulfilment of the requirements for the degree of Doctor of Philosophy in Law Victoria University of Wellington 2013 1 ACKNOWLEDGEMENTS I would like to thank my supervisors Professor Geoff McLay (Currently New Zealand Law Commissioner), Professor Tony Angelo (Victoria University of Wellington) and Douglas Webb (New Zealand Telecommunications Commissioner 2002-2007) for their careful, attentive and patient reading, and for their helpful comments and suggestions. I am also thankful for the supervision and support of my former supervisor Dr David Carter (Victoria University of Wellington) during the first year of my research. I thank David van der Zouwe and Richard Howarth for reading my early drafts and their comments. I am thankful to Professor Lew Evans and Sean Mosby for their willingness to discuss the idea concerning the thesis at the early stage. My special thanks go to Bronwyn Howell and Derek Pullen for their advice and comments on the final drafts. I am grateful to Dr Anthony Russell, who has conscientiously provided wonderful support and encouragement. I owe a lot to him for reviewing all the countless early drafts, proof reading the final drafts, and his willingness to discuss the idea and helpful observation that greatly improved the quality of the thesis. Most importantly, this thesis would not have been possible without the love and support of my family. 2 ABSTRACT This thesis examines models for the delivery of telecommunications universal services in Vietnam and New Zealand. The focus is on identifying obstacles to effective and economically efficient performance of services delivery in Vietnam, and proposing solutions for substantial improvements to legal frameworks and institutional structures. The central argument of the thesis is that the universal service scheme in Vietnam and the supporting laws and agencies responsible for implementation of the scheme need to be improved in order to contribute to the achievement of social targets. The universal service funding mechanism in Vietnam, including the allocation of industry levies and subsidies, is not linked to real costs, nor is it efficient. The laws and legal instruments governing the universal service scheme are incomplete and in parts contradictory. Moreover, the institutional structures reflect diffuse and duplicated accountability among the authorities involved, lack of transparency, and insufficient external monitoring mechanisms. Performance information systems and involvement of the public and stakeholders are also insufficient. The insufficiencies in the Vietnamese structure are illustrated in the thesis by comparing them to the key elements of a best practice model. They are also compared with elements of the New Zealand model that reflect features closer to the best practice: transparency, effective monitoring and performance accountability. These features serve as a basis for the principal proposals for improvements to the legal framework and institutional structures in Vietnam and for economically efficient and competitive funding arrangements. 3 4 TABLE OF CONTENTS CHAPTER ONE INTRODUCTION ..................................................................................................... 17 CHAPTER TWO A FRAMEWORK FOR THE ANALYSIS OF TELECOMMUNICATIONS UNIVERSAL SERVICE ........................................................................................... 31 CHAPTER THREE TELECOMMUNICATIONS UNIVERSAL SERVICE IN NEW ZEALAND ................................................................................................. 77 CHAPTER FOUR TELECOMMUNICATIONS UNIVERSAL SERVICE LEGAL FRAMEWORK AND ITS IMPLEMENTATION IN VIETNAM ................................................... 141 CHAPTER FIVE PROPOSALS FOR THE IMPROVEMENT OF UNIVERSAL SERVICE DELIVERY IN VIETNAM ........................................... 215 CHAPTER SIX CONCLUSION ....................................................................................................... 277 5 6 TABLE OF EXPANDED CONTENTS ABSTRACT ................................................................................................................. 3 CHARTS, FIGURES AND TABLES.......................................................................... 14 LIST OF ABBREVIATIONS...................................................................................... 15 CHAPTER ONE INTRODUCTION ..................................................................................................... 17 I Overview ................................................................................................................ 17 II Thesis Questions and Hypothesis .................................................................... 20 III Approaches to the Research ........................................................................... 23 A Legal Analysis .................................................................................................... 24 B Comparing Vietnam with New Zealand ............................................................. 24 C Interviews ........................................................................................................... 25 IV Structure of the Thesis ...................................................................................... 26 CHAPTER TWO A FRAMEWORK FOR THE ANALYSIS OF TELECOMMUNICATIONS UNIVERSAL SERVICE ........................................................................................... 31 I Overview ................................................................................................................ 31 II Universal Service Conceptual Framework ................................................... 33 A The Concept of Universal Service ...................................................................... 33 1 Universal service .............................................................................................. 34 2 Availability, affordability and accessibility ....................................................... 34 B Universal Service Rationales/Objectives ............................................................ 37 1 The promotion of full participation in the information society .......................... 37 2 The promotion of economic productivity and growth ........................................ 38 3 The promotion of economic, political and social cohesion ................................ 39 4 The elimination of economic and social disparities .......................................... 39 7 5 The improvement of delivery of government services ........................................ 39 C Universal Broadband Access ............................................................................ 40 D Universal Service Funding Approaches ............................................................. 43 1 Institutional arrangements for universal service funds ...................................... 44 (a) Accountability ............................................................................................ 45 (b) Efficiency ................................................................................................... 47 (c) Transparency .............................................................................................. 48 2 Sources of universal service fund ...................................................................... 48 (a) Industry levies ............................................................................................ 49 (b) Industry levies - how to determine levy levels ............................................ 50 (c) Regulatory sources ..................................................................................... 51 3 Allocating universal service levies .................................................................... 51 (a) Who should pay universal service levies? ................................................... 52 (b) Levels of universal service levies ............................................................... 52 4 Administration of universal service funds ......................................................... 53 (a) How service providers should be selected ................................................... 54 (b) Type of the subsidies .................................................................................. 55 (c) Who should be subsidised ........................................................................... 56 III Concepts of Public Administration Related to Universal Service ........... 57 A Performance Accountability ............................................................................... 58 1 Concept of accountability ................................................................................. 58 2 Types of accountability ..................................................................................... 60 3 Accountability: the shift to improved performance accountability ..................... 61 B Transparency ..................................................................................................... 63 1 The concept of transparency ............................................................................. 63 2 Transparency: its problems in traditional and managerial models .................... 66 C Performance Budgeting: Efficiency and Effectiveness .....................................
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