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New Models for Universal Access to Telecommunications Services in Latin America

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New Models for Universal Access to Telecommunications Services in Latin America NEW MODELS FOR UNIVERSAL ACCESS TO TELECOMMUNICATIONS SERVICES IN LATIN AMERICA: LESSONS FROM THE PAST AND RECOMMENDATIONS FOR A NEW GENERATION OF UNIVERSAL ACCESS PROGRAMS FOR THE 21ST CENTURY PRINCIPAL AUTHORS PETER A. STERN, PH.D, LEAD CONSULTANT DAVID N. TOWNSEND, SPECIALIST CONSULTANT, ECONOMIC AND POLICY ANALYSIS WITH THE ASSISTANCE OF JOSÉ MONEDERO, SPECIALIST CONSULTANT, POLICY AND TRADE CAIO BONILHA RODRIGUES, TECHNOLOGY SPECIALIST ROBERT STEPHENS, CONSULTANT VIET TRAN, EXPERT, FORECASTING AND MARKET DEMAND ANALYSIS LOCAL CONSULTANTS JULY 2007 LATIN AMERICAN FORUM OF TELECOMMUNICATIONS REGULATORS Ceferino Alberto Namuncurá President, REGULATEL 2006-2007 Auditor, CNC Argentina COMITE DE GESTION Ceferino Alberto Namuncurá Auditor, CNC Argentina Oscar Stuardo Chinchilla Superintendent, SIT Guatemala Héctor Guillermo Osuna Jaime President, COFETEL Mexico José Rafael Vargas President, INDOTEL, Secretary of State Dominican Republic Pedro Jaime Ziller Adviser, ANATEL Brazil Guillermo Thornberry Villarán President, OSIPTEL Peru Gustavo Peña-Quiñones Secretary General Printed in Bogota, Colombia by Ochoa Impresores Ltda ISBN: 978-958-44-1291-1 All rights of publication of the report and related document in any language are reserved. No part of this report or related document can be reproduced, recorded or stored by any means or transmitted in any form or process, be it in electronic, mechanical, magnetic or any other form without the express, written permission obtained from the organizations who initiated and financed the study. The views and information presented in this report are the views of the authors and do not necessarily represent the views, opinions, conclusions of findings of the Latin American Forum of Telecommunications Regulators (Regulatel), the World Bank through its trust funds PPIAF and GPOBA, the European Commission and the Economic Commission for Latin America (ECLAC). Table of Contents Executive Summary I. INTRODUCTION, p. 1 I.1 Background and objectives, p. 1 I.2 Project team and work program, p. 2 II. TELECOMMUNICATIONS IN LATIN AMERICA, p. 5 II.1 Introduction, p. 5 II.2 Privatization, p. 5 II.3 Introduction of competition, p. 7 II.4 Regulators, p. 8 III. ANALYTICAL FRAMEWORK, p. 15 III.1 Objectives and definitions, p. 15 III.2 Policy and program analysis, p. 18 III.3 “Market gap” and “access gap” concepts, p. 19 III.4 Regulatel gaps model, p. 23 IV. REGULATEL GAPS MODEL RESULTS AND ANALYSIS, p. 27 IV.1 Overview, p. 27 IV.2 “Macro” comparative analysis of market efficiency and access gaps, p. 28 IV.2.1 Cellular mobile telephone service, p. 28 IV.2.2 Internet and telecenters, p. 31 IV.2.3 Broadband, p. 33 IV.3 “Micro” detail analysis of selected country results, p. 35 IV.3.1 Brazil, p. 36 IV.3.2 Bolivia, p. 38 IV.3.3 Colombia, p. 39 IV.3.4 Mexico, p. 41 IV.3.5 Chile, p. 43 IV.4 Analysis of findings and implications for policy-makers, p. 43 V. UNIVERSAL ACCESS PROGRAMS IN LATIN AMERICA, p. 47 V.1 Introduction, p. 47 V.2 Market liberalization and regulatory initiatives, p. 58 V.2.1 Overview, p. 58 V.2.2 Experiences with universal access obligations, p. 59 Table of Contents V.3 Universal access funds, p. 61 V.3.1 Introduction, p. 61 V.3.2 Characteristics of universal access programs and funds, p. 63 V.4 Other financing initiatives, p. 74 V.5 State controlled mandates, p. 78 VI. UNIVERSAL ACCESS PROGRAMS: RESULTS ACHIEVED, BEST PRACTICES AND CRITICAL EVALUATION, p. 81 VI.1 Introduction, p. 81 VI.2 Market liberalization and regulatory initiatives, p. 84 VI.2.1 Introduction, p. 84 VI.2.2 Results achieved, p. 84 VI.2.3 What has worked well, and why? p. 89 VI.2.4 Main problems encountered and responses, p. 90 VI.2.5 Lessons learned and the way forward, p. 91 VI.3 Universal access programs and funds, p. 92 VI.3.1 Introduction, p. 92 VI.3.2 Results achieved, p. 92 VI.3.3 What has worked well, and why? P. 97 VI.3.4 Difficulties, problems encountered and responses, p. 98 VI.3.5 Lessons learned: Best practices in universal access fund programs, p. 111 VI.3.6 Recommended action: Universal access programs and funds, p. 114 VI.4 Other financing initiatives, p. 116 VI.4.1 Introduction, p. 116 VI.4.2 Results achieved, p. 116 VI.4.3 What has worked well, and why? p. 118 VI.4.4 Main problems encountered and responses, p. 119 VI.4.5 Lessons learned and the way forward, p. 120 VI.4.6 Recommendations: Other financing initiatives, p. 122 VI.5 State controlled mandates, p.123 VI.5.1 Introduction, p. 123 VI.5.2 Results achieved, p. 123 VI.5.3 What has worked well, and why? p. 126 VI.5.4 Lessons learned and the way forward, p. 127 VI.6 Operators and manufacturers, p. 128 VI.6.1 Observations of operators and manufacturers, p. 128 Table of Contents VI.6.2 Recommendations based on observations of operators and manufacturers, p. 129 VI.7 Conclusions, p. 129 VII. INNOVATIVE STRATEGIES, BEST PRACTICES AND NEW MODELS FOR ACHIEVING UNIVERSAL ACCESS, p. 139 VII.1 Introduction, p. 139 VII.2 Transmission technologies for local access and transport, p. 139 VII.2.1 Introduction, p. 139 VII.2.2 The most promising wireless technologies for local access, p. 140 VII.2.3 Applications in rural and underserved areas, p. 147 VII.2.4 Deployment of broadband, p 149 VII.2.5 Conclusions, p. 152 VII.2.6 Recommendations: transmission technologies for local access, p. 153 VII.3 Financing innovations, p. 153 VII.3.1 Introduction, p. 153 VII.3.2 Micro-credit, p. 154 VII.3.3 Enablis: Filling the gap between micro-credit and venture capital, p. 155 VII.3.4 Recommendations: Financing innovations, p. 157 VII.4 Innovative business and commercial practices, p. 158 VII.4.1 Introduction, p. 158 VII.4.2 Business practices, commercial and service delivery innovations, p. 158 VII.4.3 Service offerings, p. 162 VII.4.4 Marketing, p. 163 VII.4.5 Management practices, p. 164 VII.4.6 Partnership arrangements, p. 164 VII.4.7 Procurement, p. 165 VII.4.8 Recommendations: Business practices, commercial, service delivery and partnership innovations, p. 166 VII.5 Regulatory policies and strategies for universal access, p. 167 VII.5.1 Introduction, p. 167 VII.5.2 Spectrum use policies: Encouraging the development of license-exempt technologies, p. 167 VII.5.3 Voice-over-Internet Protocol (VoIP), p. 168 VII.5.4 Licensing, p. 170 VII.5.5 Quality- of-service and standards policies, p. 171 VII.5.6 Tariff and interconnection regulations, p.171 VII.5.7 Facilities and infrastructure sharing, p. 173 VII.5.8 Recommendations: Regulatory policies and strategies for universal access, p. 174 Table of Contents VII.6 Conclusions: Innovative strategies and best practices for universal access, p. 175 VII.7 New models and pilots for universal access in Latin America, p. 179 VII.7.1 Introduction, p. 179 VII.7.2 Community telecommunications cooperative: The Agrarian Information System (SIA) Project in the Chancay–Huaral Valley, Peru, p. 179 VII.7.3 Community telecommunications operator: The ACLO/IICD Sistema de Información Campesina–Indígena Project, Sopachuy, Department of Chuquisaca, Bolivia, p. 179 VII.7.4 Privately initiated and operated regional telecommunications company: The Televias Huarochiri Pilot Project in Huarochiri Province, Peru, p. 180 VII.7.5 Televias Puyhuan Project in the Department of Junin, Peru, p. 181 VII.7.6 Small Commercially Operated Regional Network: The QINIQ Broadband Network in Nunavut Territory, Canada, p. 182 VII.7.7 Privately initiated and operated local telecommunications company: Ruralfone in the State of Ceara, Brazil, p. 183 VII.7.8 Broadband access systems integrator: OmniGlobe Network Model, p. 185 VII.7.9 Initiatives of incumbents and large operators: Telefonica in Peru and Brazil, p.186 VII.7.10 Telecenter models, p. 187 VII.7.11 Conclusions: New models and pilots, p.189 VII.7.12 Recommendations: New models and pilots, p. 189 VIII. BEYOND THE HORIZON: RECOMMENDATIONS FOR ACCELERATING UNIVERSAL ACCESS IN LATIN AMERICA, p.193 VIII.1 Introduction, p. 193 VIII.2 New vision, p.194 VIII.3 What is needed? p. 196 VIII.4 High-level planning and coordination, p. 197 VIII.5 Further unleashing of the market, p. 198 VIII.5.1 Ensure technological neutrality, p.198 VIII.5.2 Reform and expand frequency access and small operator licensing, p. 199 VIII.5.3 Facilitate dissemination of new and adapted technologies, p. 199 VIII.5.4 Further streamlining and reform of regulatory processes, p. 200 VIII.6 The new mandate of the Universal Communication Fund, p. 201 VIII.7 Role of Regulatel, p. 205 Bibliography p. 207 Annexes 1. Summary of Recommendations, p. 211 2. Analytical Framework and Gaps Model, p. 225 3. New Models and Project Pilots for Universal Access in Regulatel Member Countries, p. 235 4. Telecenter Models, p. 287 5. Technological Overview: Wireline and Wireless Broadband Access Technologies, p. 297 6. Traditional Financing Instruments for ICT Projects, p. 307 7. Regulatory Dispositions of Interest, p. 311 8. Comparison of Monthly Charges for Broadband Internet Access, p. 321 Table of Contents Figures ES.1 The Market Gap and Access Gap Model p. iii ES.2 Gap Analysis in Selected Countries – Aggregate p. v ES.3 Evolution of Universal Access Programs p. xi III.1 The Gaps Model, p. 19 IV.1 Gaps Model results for cellular telephone access, p. 29 IV.2 Estimated cellular service penetration in Latin America, p. 29 IV.3 Gaps Model results for Internet/telecenter access, p. 32 IV.4 Gaps Model results for broadband access, p.
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