Toward universal telephone access: Market progress and progress beyond the market

The last 10 years have seen an explosion in access to telephone services worldwide based on rapid technology advance in increasingly competitive markets. The mobile phone has driven expansion in subscribers and access, especially in the developing world. This paper estimates global mobile footprint coverage based on 2002 data and calculates that as much as 77 percent of the world's population may live in an area covered by a mobile signal. Nonetheless, many people remain without access to telephony. The paper estimates the maximum likely cost in terms of cross subsidy within the industry and outside financing for achieving universal access using competitively awarded subsidies to private providers in a reformed market. This upper-end cost is estimated at $5.7 billion, with costs that could not be supplied by a reasonable tax on existing providers (and so required from outside the sector) estimated at $1.8 billion.     

Retaining telecommunication services when universal service is defined by functionality: Japanese consumers' willingness-to-pay

This study uses contingent valuation to measure Japanese customers' willingness-to-pay to maintain combinations of five telecommunication services that are considered substitutes if universal service is defined on the basis of functionality. The analysis revealed the following results. First, consumers are more willing to pay to retain voice communication services than data transmission services. Second, customers accept Internet Protocol telephony as a substitute for plain old telephone service (POTS) as a universal service, and they are willing to pay much more than Japan's current Universal Service Fund charge. Third, even when mobile phone service (MOB) is available, consumers will pay to retain fixed-line voice services. Finally, consumers have an equal desire to keep fiber-to-the-home (FTTH) and fixed-line voice services, but it is less than the demand for MOB. Thus, under the present definition of POTS as a universal service, FTTH could be considered as a basic telecommunication service.     

Food subsidies in Egypt: reform options,distribution and welfare

Egypt's food subsidies (in 1996/97 5.5 percent of government expenditures) cover rationed cooking oil and sugar (23 percent of subsidy cost) and unrationed bread and flour (77 percent). The subsidies enhance food security but are nontargeted and have substantial leakages. This paper uses a Computable General Equilibrium (CGE) model to simulate the short-run effects of alternative food-subsidy scenarios. Government savings from reduced spending finance uniform cuts in direct tax rates across all household types. The model uses a 1996/97 database with detailed household information. The targeting of cooking oil and sugar subsidies to “the needy” (the bottom two quintiles in rural and urban areas) has a progressive effect while elimination of this subsidy is regressive. Disaggregated household consumption changes are small (±0.3 percent). The targeting of all food subsidies is pro-needy, partly due to important indirect effects. The consumption of the needy increases by 0.5 percent with little change for the nonneedy. Food subsidy elimination is regressive: the needy suffer a consumption loss of 1.1 percent. If the government savings instead are transferred to the needy, the impact is reversed: consumption increases by 4.2 percent for needy households while the nonneedy register a small loss. The overall policy implication is that food subsidy reform can benefit the needy with at worst only a modest negative impact on the nonneedy. If the subsidy is entirely eliminated, targeted government programs would be necessary to protect the needy from the negative impact.     

Impacts of mobile Internet use intensity on the demand for SMS and voice services of mobile network operators: An empirical multi-method study of German mobile Internet customers

Scholarly and business publications alike convey the message that past and future strong growth in mobile Internet (MI) access and service demand has solely positive commercial implications for mobile network operators (MNOs). This position neglects the possibility that increasing MI use intensity may lead to demand decreases for the highly profitable short messaging service (SMS) and mobile voice telephony. The extant literature provides few insights on relations between MI use intensity, on the one hand, and SMS as well as mobile voice call use intensities, on the other hand. This study developed hypotheses concerning the presence or absence of impacts of MI use intensity and circumstances of MI use (e.g., device type, tariff scheme) on the demand for SMS and mobile voice telephony at the individual customer level. The hypotheses were tested by analyzing actual use behaviors of 304 MI adopters in Germany, for whom objective use intensity data were extracted from the billing system of an MNO. These non-reactive measures were combined with responses collected from the adopters through a telephone survey. Multivariate regression results suggest that though MI use intensity significantly negatively affected both number of SMS sent and received, these effects were so small that their practical relevance is highly doubtful. Further, customers who used MI more intensively did not generate lower volumes of outgoing or incoming mobile voice connection minutes. Conclusions are drawn for MNO, telecommunications sector regulators and scholarly researchers seeking to explain the acceptance of mobile communications services.     

Telecommunications infrastructure facilitating sustainable development of rural and remote communities in Northern Australia

Telecommunications access in the rural and remote areas of Australia has come under considerable scrutiny in recent years. In the past decade, various Federal Government reports and inquiries have citied inadequate infrastructure, lack of service provision, the high cost of access and “thin” markets as key impediments. Whilst these difficulties are not restricted to rural and remote Australia, they tend to impact disproportionately on regional communities, notably in education and health service provision. Particularly at risk are the indigenous communities in rural and remote regions of Australia.In this paper telecommunications infrastructure is perceived as the lynch-pin for achieving sustainable economic and social development. It is suggested that without appropriate development of information infrastructure, the disparities already experienced by rural and remote communities will be further exacerbated as the reliance of goods and services over computer-mediated networks increases.The paper offers a new paradigm that will assist in maintaining a competitive telecommunications environment and facilitate the sustainable social and economic development of rural and remote communities.     

Voices from Northern Canada: Integrating stakeholder expectations in telecommunications policy for rural,remote and Northern regions

In Canada, residents of rural, remote and Northern communities generally pay more for slower, less reliable, and more expensive telecommunications services compared to southern and urban residents. This situation is particularly concentrated in small-population, rural Indigenous communities located in the Northern territories. Over the last several decades, many public policy initiatives have attempted to develop telecommunications services, including high-speed broadband, in these underserved areas. However, Northern input into these initiatives and their outcomes has been limited — despite increasing evidence of the benefits of place-based planning, monitoring and evaluation processes. In this context we examine a recent public consultation about telecommunication services in these regions, focusing on expectations submitted by individual Northerners and by intermediary organizations representing their interests. Our analysis reveals distinct but complementary functions expressed by these different kinds of intervenors, which we suggest policymakers could take into consideration when planning consultations involving rural and remote regions.     

Assessing the effect of food retail subsidies on the price of food in remote Indigenous communities in Canada

The Canadian government currently subsidizes food retailers in the 25 remote communities in Nunavut through the Nutrition North Canada program. The program expects each dollar of the food subsidy to be fully passed on to the consumer in the form of lower prices. Unfortunately, existing audits and reviews of the program have failed to determine the pass-through rate of the subsidy. Using regression analysis on food price data in each of the 25 communities, subsidy rates, and covariates that control for community characteristics, we overcome the limitations of past research and provide the first-ever estimate of the pass-through rate of Nutrition North in Nunavut. Our results suggest that most, if not all, of the subsidy is passed on to the consumer in lower food prices.     

Mobile-only consumers arise from heterogeneous valuation of fixed services

Mobile-only users are usually perceived as a consequence of fixed-mobile substitution. This study uses a unique dataset based on a survey in France, combined with interviewee's telecommunications billing data, to reveal heterogeneous consumer preferences for fixed services. With the same mixed logit model we estimate the willingness to pay (WTP) for fixed communications services and fixed-mobile relationship. Results show a very large heterogeneity of WTP for fixed services among consumers. In addition, we show that fixed and mobile data are complement for all consumers. Mobile-only consumers have a much lower but non-zero WTP, and higher price sensitivity compared to fixed-mobile consumers. Consequently, an increase in the fixed offer price would reduce the demand for fixed service. Heterogeneous preferences for fixed services constitute an alternative explanation for the existence of mobile-only users, despite the complementary nature of fixed and mobile broadband. Counter-factual simulations show that the share of mobile-only could also be driven by the way to subsidize mobile handset. For instance, making the handset subsidy only available to fixed-mobile quadruple play subscribers could reduce the share of mobile-only by half.     

The digital divide problem: An economic interpretation of the Japanese experience

This study presents an economic analysis of Japan's attempt to address the geographical digital divide problem for broadband and mobile telephone services. To receive broadband service local inhabitants make voluntary contributions, which are matched by a municipal subsidy. The approach is effective in terms of economic efficiency and equity. Importantly, as fixed broadband service is provided locally the benefits are limited to local inhabitants. By contrast, mobile service is provided via a spectrum user fee system. That is, for mobile telecommunication services, no universal service fund exists. The underlying rationale is that subscribers are beneficiaries and commercial decision-making should be left to mobile operators.     

Cost orientation and xDSL services: Retail-minus vs. LRAIC

Forward-looking long run average incremental cost (LRAIC) bottom-up models have now established themselves as a popular methodology to guide European telecommunications regulators’ setting of interconnection charges between the incumbent and other operators. The purpose of this article is to discuss the adequacy of using bottom-up LRAIC models or retail-minus to calculate bitstream access charges—the charges typically applicable to wholesale xDSL services. In particular, the author is interested in the cost drivers of such services, how different they are from circuit-switched voice services, and ultimately whether retail-minus should be preferred over LRAIC models when setting these bitstream charges.     

Municipal electric utilities’ role in telecommunications services

Municipal electric utilities (MEUs) are increasingly expanding into telecommunications services. Such entry is interesting in several respects. First, MEUs marry two potential pathways for the growth of telecommunications access infrastructure and services: public ownership of last-mile facilities and electric power company expansion into telecommunications. Second, municipalities are key early adopters of next generation access technology in the form of both fiber-to-the-home (FTTH) and broadband wireless (e.g., WiMax) systems. Third, MEUs are at the nexus of the debate over the proper role for local government in promoting broadband Internet access. Most homes in the United States are served by investor-owned local telephone and cable television providers, using company-owned wireline infrastructure. These providers have generally opposed municipal entry, arguing that it will crowd out private investment and represents an unfair and less efficient form of competition. A number of states have acted to limit—or in some cases—to promote such entry. Before engaging in this debate, it is necessary to have a clearer picture of the current state of municipal entry and the local demographic, cost, industry, and policy factors that influence its evolution. To address this need, this paper reports the results of an empirical analysis of MEUs that provide communications services to the public. This analysis shows that MEUs are more likely to offer such services if they also provide internal communication services to support their electric utility operations (scope economies); are relatively close to metropolitan areas (lower backhaul costs); are in markets with fewer competitive alternatives (cable modem and DSL service availability limited); and which are less encumbered by regulatory barriers to entry (in communities in states which do not restrict municipal entry into telecommunication services). Of these results, the competitive impacts are the least straight-forward to interpret, suggesting richer dynamics and avenues for further research.     

Cost allocation of WCDMA and wholesale pricing for mVoIP and data services

This study estimates cost-based prices for wholesale voice and data services provided to 3G (WCDMA) MVNOs according to their distinct types. For estimation, 3G MVNOs are classified into different types, and the overall cost of WCDMA facilities are separated into voice and data components based on their subscriber rates, actual traffic rates, as well as efficiency consideration of traffic rates. The study then calculates cost-based wholesale prices of voice and data services for each of the 3G MVNO types. The result of this study shows that a cost-plus pricing scheme can help achieve the policy goals of the regulator, namely, lowering telecommunications tariffs and facilitating the introduction of new convergent-type services, far more effectively than the current retail-minus pricing scheme. The findings of this study may assist firms in developing business models based on 3G networks and telecom regulators in designing policies related to interconnection, mVoIP, prepaid calls, wholesale services, and network neutrality.     

Building the BoP Producer Ecosystem: The Evolving Engagement of Fabindia with Indian Handloom Artisans

Recent research on the base of the pyramid (BoP) has called on firms to initiate market‐driven interventions directed at the BoP population with the objective of identifying and pursuing mutually profitable means of attaining meaningful poverty alleviation outcomes. In response, firms as well as scholars have engaged at length with the creation of new products and services for the BoP consumer but paid far less attention to the BoP producer—a member of the BoP population who creates value by producing goods and services for sale in nonlocal markets. Additionally, extant studies have largely focused on snapshot views of BoP interventions by firms, thereby limiting our understanding of the emergence of meaningful poverty‐alleviating outcomes over time from these interventions. This paper seeks to redirect attention toward the dynamic of the long‐term engagement between the firm and the BoP producer. Using rich qualitative data from Fabindia—an Indian handloom retailer—this paper examines how the engagement between Fabindia and communities of handloom artisans in India has persisted over a period of five decades. We found that, even as it encountered changes in the external environment and pursued newer organizational goals, Fabindia repeatedly renewed its engagement with handloom artisans and facilitated progression in poverty‐alleviation outcomes. Building on the insights from the case study, this paper presents a process model that highlights the role of innovative management practices in sustaining engagements between firms and BoP producers over time. Additionally, this paper proposes the concept of the “bridging enterprise”—a business enterprise that originates at the intersection of specific BoP communities and the corresponding nonlocal markets—as an interpreter and innovator reconciling the interests of stakeholders across the pyramid.     

Regulation and investment behaviour in the telecommunications sector: policies and patterns in US and Europe

This paper reports the results of the quantitative analysis of international experience of the relationship between infrastructure investment in the deployment of capacity that can carry large volumes of voice and data traffic and regulatory policy changes in the telecommunications sectors. It looks at the relationship between infrastructure investment for these infrastructure assets and the access pricing régimes for local exchange carriers in the United States and Europe. It then looks at the relationship between various aspects of regulatory and institutional policy changes in Europe and how they affect access prices.The paper finds that a lower access price promotes greater deployment of digital technology among US incumbent local exchange carriers (ILECs). Based on this finding, it suggests that it is in the ILECs interest to have access to their networks encouraged.The European data for interconnection are recent and far reaching conclusions are not feasible, but the findings, however, suggest that competition has worked by facilitating new entry through decreasing interconnection prices, although path dependencies, of existing and traditional concepts, in the mindsets of operators as well as regulators, may account for these findings.     

Inequalities of opportunity in the access and use of telecommunication services in Togo

The liberalization of the telecommunications sector in Togo aimed at ensuring access to a better quality of telecommunication services at affordable prices to everyone. While the liberalization policy has increased competition in the sector and reduced significantly telecommunication services prices charged to costumers, statistics on the access and use of telecommunication services in Togo reveal disparities with respect to individuals' socio-economic characteristics which could be an indication of the existence of inequalities of opportunities in the access and use of these services.This paper investigates the inequalities of opportunity in the access and use of telecommunication services in Togo using a parametric approach. The results of estimations indicate that, inequalities of opportunities are larger for men and the elderly than respectively women and youths and are more pronounced in urban areas and regions such as the Plateaux and Savanna regions. Moreover, the circumstance variables such as the ‘place of residence’ and the ‘region’ are the key variables in explaining the inequalities of opportunities in the access and use of telecommunication services in Togo. So, policies toward reducing inequalities of opportunity in the access and use of telecommunication services in Togo should be designed with regards to men, the elderly, and people living in urban areas and regions such as the Plateaux and Savanna regions.     

Closing the rural broadband gap: Promoting adoption of the Internet in rural America

Even as geographic disparities in high speed Internet access narrow, an urban–rural broadband gap persists, pointing to the importance of individual differences in motivations to adopt broadband as the key to closing the gap. Diffusion of innovation is reconceptualized through contemporary perspectives of the digital divide and social cognitive theory and tested on a survey sample drawn from four rural communities. Path analysis was used to examine the factors that cause broadband Internet service adoption in rural communities. Prior experience with the Internet, the expected outcomes of broadband usage, direct personal experience with broadband, and self-efficacy had direct effects on broadband intentions. Age and income, but not education or ethnicity, also had direct impacts. Efforts that promote the personal benefits of broadband and advanced ICT literacy skills among Internet users are recommended.     

Weighing what’s practical: proxy means tests for targeting food subsidies in Egypt

Despite achieving a significant cost reduction over the past two decades, the absolute cost of food subsidies in Egypt is still high relative to the benefits received by the poor. There is scope for better targeting these food subsidies, in particular for targeting cooking oil and sugar ration cards, both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policy for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits. Targeting the high-subsidy green ration cards to the poor and the low-subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households. An International Food Policy Research Institute research team in Egypt, in collaboration with the Egyptian Ministry of Trade and Supply, developed a proxy means test for targeting ration cards. The paper describes the process of moving from the optimal income-predicting model to the final model that was both administratively and politically feasible. An ex-ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households. An effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system, and, at the same time, the total budgetary costs of rationed food subsidies would decline. Moreover, the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in Egypt.     

Implications of regulation for entry and investment in the local loop

A number of countries around the world are trying to promote competition at the local loop as demand for higher bandwidth to the home increases. Different technologies (xDSL, cable modems, and wireless local loop) offer alternative solutions and the issue for regulators is to design a framework that promotes competition and investment. Regulators can promote competition in a number of ways, but two “pure” strategies are services and infrastructure competition. This paper models the regulator and incumbent–entrant interactions explicitly in order to understand how the structure of the voice services might evolve under different regulatory frameworks. Our analysis suggests that a “mix” of infrastructure and service competition like the one promoted in Netherlands, stimulates investment by incumbents and entrants alike and offers better consumer benefits. The message for policy makers is that the introduction of “sunset clauses” provides new entrants with strong incentives to invest while allowing them to enter in service competition and to acquire important knowledge about their new market.     

Factors determining municipal broadband strategies across Europe

Recognizing that high-speed broadband connectivity emerges as a key element for growth, city authorities engage in fiber access deployments to empower their local communities in the digital economy. Currently, a growing number of municipal fiber projects are underway or planned while the international community and the telecommunications industry are yet undecided about the role and type of municipal intervention. This paper takes a holistic view of municipal broadband in Europe, aiming to understand the factors that determine municipal strategies in fixed Next-Generation Access (NGA) networks and the implications of municipal broadband to regulation and markets. The data suggests that the determining factors are (a) the engagement of public utilities; (b) the involvement of the private sector in joint infrastructure projects; (c) the local demand for retail and wholesale services; and (d) the institutional and regulatory framework at the European and national scale. The findings of the study indicate that (a) municipal initiatives are highly dependent on national factors, thus the resulting interventions fare strong resemblance within a single country, while they can be substantially different across national contexts; (b) current EU provisions for public involvement in broadband development stimulate municipal plans for large scale arrangements; and (c) national regulatory frameworks, that primarily address vertical integrated incumbents and nationwide markets, may need adjustments to handle emerging access monopolies of regional and city broadband infrastructures.     

Can one laptop per child reduce digital inequalities? ICT household access patterns under Plan Ceibal

The study of information and communications technology (ICT) adoption signals that diffusion processes within highly unequal societies produce stratification in the access to digital technologies and thus, maintain or even increase previous socioeconomic disparities. While technological utopians believed that One Laptop Per Child (OLPC)-like programs could reduce societal inequalities, the economics literature evaluating these initiatives has mostly focused on student's human capital. Results suggest no impact, even for successful programs such as Uruguay's own OLPC-inspired Plan Ceibal. In this paper, we use an event-study approach to difference-indifferences to identify the impact of Plan Ceibal on the household adoption of technological goods across income quintiles. Our results show that Plan Ceibal helped to bridge domestic digital disparities in terms of access to PC and favored the uptake of internet services. We discuss the potential mechanisms behind these results. Regarding household PC access, even though Plan Ceibal was conceived as a universal program targeting primary-level students attending public schools, both infantilization of poverty and a dual-system educational stratification may explain why this initiative had a heterogenous impact across different income groups. Regarding household connectivity, Plan Ceibal reduced the cost of the bundle required to consume internet services at the time of the study, improving affordability and access among households with beneficiaries of the program.