broadband strategies handbook.pdf - Khazar University

simple, transparent, expeditious, and not unduly burdensome on the biddersalso contributes to attracting bidders.The environment. Competition for subsidies among firms is designed to beused to narrow gaps between the market and development needs, not tosubstitute for the market or to compensate for regulatory distortions of themarket. It makes practical sense only when the private sector is responsiblefor service provision, new entry and competition are encouraged, and crosssubsidieswithin firms have been largely phased out. A clear, stable, andcredible legal, regulatory, and general business framework is needed forprospective service providers to make reasonable estimates of costs andrevenues and assess the risks they are being asked to assume. Service providersare especially concerned about the rules and practices with regard tocompetition, pricing, interconnection, and access to scarce resources withinthe sector as well as with regard to private ownership, foreign exchange,and taxation of businesses in general.Competition for subsidies also requires that all key players have accessto financing. A major aspect of qualifying firms to bid for subsidies is theircapacity to mobilize equity and debt financing for the components ofinvestment and start-up that are not subsidized. This is not likely to be aproblem when programs are large enough to be attractive to foreign investors,who have access to long-term financing in the international markets.However, smaller-scale schemes targeted primarily at local operators mayface difficulties if longer-term financing is not available through the domesticcapital markets.The government must have in place sustainable sources and transparentmechanisms to collect money for and disburse the subsidies it isoffering. In the telecommunications sector, the revenues often come fromlevies on sector revenues or sometimes from the proceeds of spectrum oroperating license auctions. Funding within the sector, although secondbest to funding from the government in terms of economic efficiency,fairness, and fiscal discipline, can improve the reliability of access to subsidyresources. Governance of subsidy resources is critical. Even wheresector funds have been established, in some instances the resourcesremaining have not been disbursed or have been diverted to meetingpressing fiscal needs.A key challenge in implementing rural infrastructure delivery modelsbased on competition for subsidy is coordinating strategies among donorsand among different tiers of government. A concession of a private operator,premised on a partial investment subsidy and a financially self-sustainingoperation over the medium term, would be destroyed if, within a couple ofExtending Universal Broadband Access and Use 177