broadband strategies handbook.pdf - Khazar University

ural pay phones. Since then, it has become a recognized good practice intelecommunications and has also spread among upper-middle-incomecountries and services that appeal most to private investors (telecommunications,electricity) and to lower-income countries and less attractive services(water and sanitation, transportation).Competition among firms for subsidies is increasingly being used to supportbroadband development programs and comprises the following mainsteps:• The government defines the broad objectives, target population, and levelsof funding of the subsidy program. It also establishes key service conditionssuch as service quality, maximum prices, and duration of servicecommitments (see the experience of Mongolia in box 4.4).• Specific service needs and choices are identified primarily by prospectivebeneficiaries and communities. Economic, financial, and technical analysisis used to select and prioritize projects that are likely to be desirablefrom the viewpoint of the economy at-large, but not to be commerciallyBox 4.4: Universal Service Subsidies in MongoliaWith the lowest population density in theworld, Mongolia launched two pilot programsin 2006: one to provide public access telephonesfor nomadic herders in 27 communities,the other to extend wireless Internet andvoice service to one soum (rural administrationcenter). For these pilots to be commerciallyviable, estimated subsidies of US$5,100to US$6,200 would be needed for the herdercommunity and US$63,000 to US$73,400 forthe soum. Mongolia’s regulatory authorityconducted separate competitive bidding processesfor each pilot. Each request for proposalsspecified the maximum allowable subsidyand included a draft service agreement,which specified how the subsidies would bepaid out—linked to progress on constructionand initial operation. Bidders were required tosubmit evidence of corporate and financialqualifications and experience in Mongolia.The bids were evaluated first on technical andoperating compliance with the specifications.Those bids that passed were then evaluatedon their requested subsidies. The bidderrequesting the lowest subsidy was awardedthe subsidy. Each tender attracted two bidsfrom operators already active in the targetmarkets. Three of the four were in substantialcompliance. The networks in both pilots wereimplemented in September–November 2006and were fully operational before the onset ofthe winter. Both operators met targets forservice availability and technical quality aheadof schedule.Source: Dymond, Oestmann, and McConnell 2008.Extending Universal Broadband Access and Use 173