subsidy


It appears that Myanmar’s universal service strategy has been finalized. Our work was represented in the draft that was put out for comments, but we made additional comments on that draft, which are here. Current mobile networks cover over 90% of Myanmar’s population, but the government believes the USF will be necessary to fund the development of network towers in unserved areas. Through the project the government is targeting 94% population coverage by the first quarter of next year and 99% coverage in the future. Once basic infrastructure is deployed to the rural areas, more advanced telecommunications services can be introduced in the future, the report states.
When we discovered that Nepal had only spent 2.6 percent of the universal-service funds it had collected since 1997, we were shocked. No government could do worse, we thought. But we were wrong. The Bangladesh government’s disbursement rate is much easier to calculate.
When I was working for the government of Bangladesh I was given a free Teletalk SIM. I wanted to use it. Who doesn’t like free stuff? I tried. Since I spent a lot of time at the Secretariat, I managed to actually make some calls.
I was a little surprised by the report in the Hindu Business Line that the Department of Telecom is planning to set up a testing and payment infrastructure for mobile apps, along with a subsidy/investment scheme funded from the Universal Service Fund. I was surprised about the DoT taking the lead when apps seem to be more within DEITY’s subject area. I was also surprised that funds from the USF were being used, when one would think that converting the universal service fund into an investment vehicle is an unusual choice. I was also surprised that many of the topics had been discussed in great detail by Rajat Kathuria and Sughanda Srivastva at the Expert Forum we conducted in Delhi on March 12th, 2014. DoT senior officials were present, but it seems that a month and half is little too short a time for policy recommendations to be transformed into actual policy in India.
There was a time when voice telephony was seen as a public utility, requiring government involvement in supply. In most parts of the world, the end result was waiting lists and poor service. Now the same refrain is being sung re broadband. Why not take a look at Hong Kong? Here is where to start.
The money comes from everyone with a telecom connection in the US. And the government has trouble pushing it through. Five billion USD is a lot of money to keep unspent. Here, we’ve been griping about India’s USD 4 billion and Brazil’s USD 4 billion plus. The E-Rate program has been faulted for inadequately allocating money in the fund, which is provided through a tax on consumers’ phone bills, a monthly charge between 50 cents and $1.
The program we talked about few weeks back has been announced. It will spend USD 4.5 billion a year to connect 20 million Americans to broadband. In an effort to expand broadband Internet service, the Federal Communications Commission on Thursday approved an overhaul of its fund that subsidizes rural telephone service, turning it into one meant to offer broadband service to the millions of Americans who lack high-speed connections. The plan could lead to higher fees for consumers on their telephone landlines because the commission also approved changes in the complex compensation system by which telecommunications companies pay one another for completing or carrying calls on one another’s systems.
The right analogy is key to a decision to subsidize. When the main thing USPS does is distribute coupons, what rationale is there for subsidy? The Internet can’t be used to tele-transport packages, of course, and our use of package delivery services, including the Postal Service’s, has grown with e-commerce. But the Postal Service is running large deficits, bumping up against the $15 billion limit it is permitted to borrow, and is on the brink of default unless Congress comes to the rescue. Is this where the Postal Service wants to make its stand, as a package delivery service, one among several providers?
Governments are subsidizing millions and billions of dollars for the deployment of fiber up to the home, aka, FTTH. Such subsidies are based on the premise that fiber to the home brings substantial externalities. But Charles Kenny and his brother Robert Kenny claim that basic broadband has contributed significantly to economic growth is decidedly mixed, and points to low returns for (expensive) superfast upgrades.  They think fiber to the businesses and government outfits make more sense than FTTH. The Kenny brothers accuse that the benefits of fiber have been considerably overstated while the other infrastructure remains ignored.