Universal service funds: Without the necessary condition, all discussion of benefits becomes moot

Posted on August 31, 2017  /  0 Comments

Yesterday, I presented at CPRsouth 2017 a policy brief on the disbursement efficacy of universal service funds. We presented two relatively easy to develop metrics (year-on-year disbursement rate and cumulative disbursement rate) and applied them to four countries, India, Malaysia, Pakistan and Sri Lanka. The conclusion was that irrespective of country and irrespective of political and administrative leadership, the funds failed to get the money out. In India, for example, USD 10 billion had accumulated in the fund by 2016 taken out of a highly competitive sector and making no contribution to connecting the unconnected.

We pointed out that any tax or levy imposed on an operator that is a regular payment is passed on to customers and serves to depress demand. So governments that impose so-called universal service levies on competitive industries are actively depressing use of ICT services. When those funds are not disbursed there is no counter-balancing good.

We recommend, among other things, automatic reductions in the quantum of levies when disbursement fall below specified levels. I was happy to hear that such provision are included in the draft universal service policies of Myanmar.

View the USF policy brief

The slides:

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