

[
] 98
Some gaps can be filled by leveraging the government’s role
as consumer and infrastructure owner. By offering to pay for
services to be rolled out to public sector operations in rural
areas such as schools, hospitals, and customs posts, govern-
ments can provide an incentive to private operators to serve
local communities. For example, in Mongolia a World Bank-
backed project supported the Ministry of Finance to link up
rural banks using a private provider of services who also plans
to offer telecommunications services to people living near the
connected banks.
In addition, because governments remain in the business of
providing a number of other networked services, there is also the
opportunity to leverage those networks to reduce the economic
cost of backbone build-out. The potential to roll out ICI along-
side other networks such as power, rail, water, pipelines, and
roads is a significant one. In many cases, utility operators have
already built private telecommunications networks along these
rights of way with capacity that can be leased to private telecom-
munications companies.
Some gaps may require government-supported access initia-
tives, such as Universal Access funds. In the wealthier developing
countries where most funds to date have been created, the most
frequently used mechanism has been to collect between one and
two per cent of the annual revenues of telecommunications oper-
ators. In poorer countries, funding universal access from a revenue
or spectrum levy alone is unlikely to be practicable in the short
run, and the use of government budgetary resources may become
necessary, perhaps financed by donors. A very approximate upper-
end estimate suggests that the additional funds required for global
universal access above a two per cent levy would equal less than
USD2 billion globally, if all countries had completed the basic
reform agenda prior to launching access initiatives (Keremane
and Kenny, 2005).
Chile is a good example of what can be achieved with univer-
sal access programmes, with its system of auctioning subsidies
to pay for rural telecommunications rollout. In 1994, the country
set up a limited-life fund to support the provision of the first
payphones to remote and rural areas. Companies were asked to
bid for the lowest subsidy that they would accept to provide
service. Within two years, the fund had achieved 90 per cent of
its rollout objectives using only about half of its USD4.3 million
budget (Wellenius, 1997).
What role for donors?
It is worth noting that, in volume terms, international donors and
financial institutions have played a relatively small role in invest-
ments in ICI, with the great bulk of external financing to
developing country telecommunications sectors coming from
private flows. Having said that, it is important to note that donors
and international financial institutions can play both catalytic
and counter-cyclical roles. For example, during the post 2000
slowdown in private flows to developing market telecommuni-
cations companies, the IFC’s telecommunications investments
in Africa increased from an average of USD5.4 million between
1996 and 1999 to USD54.5 million between 2000 and 2003.
Each dollar of IFC
7
investment in the ICT sector attracted USD8.7
million of outside financing in 1999, and each USD1 000 of IFC
investment supported the rollout of an average of 14 new lines
(World Bank, 2002).
Within the World Bank Group alone, a large range of instru-
ments are available to support technical assistance, policy reform,
and investment in the area of ICI. The International Bank for
Reconstruction and Development and the International
Development Association have a number of instruments to provide
technical assistance and investment in the sector (investment loans,
but also development policy loans – quick-disbursing assistance
to support policy or institutional reforms in a sector or the economy
as a whole). Along with the IFC, the Multilateral Investment
Guarantee Agency promotes foreign direct investment by provid-
ing political risk insurance (guarantees) to investors and lenders,
and by helping emerging economies attract private investment. The
World Bank Group also administers programmes and trust funds
on behalf of donors, which can support technical assistance and
pilots. Examples include the Public-Private Infrastructure Advisory
Facility or InfoDev.
8
The World Bank Group fully recognizes the relevance of
modern information and communications services to poverty alle-
viation and sustainable development, and stands ready to
continue and increase its support to client countries in develop-
ing the ICI sector.
As % of Countries
As % of Population
Mobile
0% 20% 40% 60% 80% 100%
Fixed local
International
35
46
18
41
42
17
60
13.5 26.5
0% 20% 40% 60% 80% 100%
60.4
38.6
78
21.3
90
6
Not available
Monopoly
Competition
Figure 3: Level of telecommunications competition worldwide