ProPoor, ProMarket ICT Policy and Governance

1
Pro-Poor, Pro-Market ICT Policy and Governance

• Scaling Up
• R. Spence IDRC

2
The Case

• Conclusions of the Harvard Forum on ICTs and
  Poverty Reduction
• the crucial importance of governance and
  regulatory reform in ICT sectors in many
  developing countries, with focus on the poorer
• the importance of social entrepreneurs and their
  initiatives, that bring connectivity, services
  and content to the poor
• the importance of ICT alliances with coalitions
  advancing in particular - gender equality,
  education, health and democracy.
• (A Dialogue on ICTs and Poverty Reduction)

3
The Case

• There is substantial demand for ICTs and services
  in poorer populations
• it has been predominantly for voice
  communication
• but is increasingly encompassing (in particular)
• employment and incomes
• general education
• health and health education.
• (A Dialogue on ICTs and Poverty Reduction)

4
The Case

• There is also growing use of ICT in public
  activity crucial for poverty reduction
• better and more pro-poor design and delivery of
  social services, especially education and health,
  but also social safety nets and economic services
  (water, energy, transport, environment etc)
• political/social/gender empowerment and
  government accountability.

5
The Case

• The next 1.5 billion poor people will get access
  to ICTs and ICT-enhanced services via
• government and donor investment a small share
  of total investment, but strategic, and can
  target poor populations
• private-market and non-profit investment lions
  share, poverty reach depends heavily on ongoing
  technology development, and cost decline.

6
The Challenge

• ICTs have to become low-cost quite quickly
• to be affordable to poorer users,
• to be affordable to strained public budgets,
  especially social services.
• Unless user costs fall, many ICT4D investments
  subsidizing ICT access since the 1990s will be
  undermined,
• from telecentres to school nets,
• because many public and donor subsidies tend to
  be interrupted and to ultimately stop.

7
The Challenge

• Further, in lagging countries, economic
  competitiveness will decline as other economies
  succeed, via ICT diffusion, to achieve large
  (transactions) cost reductions in
• most economic sectors - SME and informal sector
  included
• social and political development activity.
• And broad or universal ICT access will be central
  to newer technology diffusion and governance
• biotech, nanotech and emerging technologies.

8
The Reality

• Mobiles and wireless ICT use is expanding rapidly
  in most developing countries.
• Fixed line expansion, and computer and broadband
  use, are stalled.
• The difference is mainly due to differences in
  policy and regulation.
• Wireless broadband technologies may be the
  long-term answer, BUT
• this is, at the least, some years away,
• it could be stalled by poor policy and
  regulation,
• fixed line will be important for the foreseeable
  future.

9
Somaliland

• Formerly part of Somalia, Somaliland declared
  independence in 1991, and has no ICT regulatory
  agency. Although ICT penetration is low, there is
  considerable use of mobile phones, including by
  poor people. Local telephone calls within an area
  are free of charge if they belong to the same
  company, and
• The rates for international mobile calls are
  internationally among the lowest and this may be
  seen as a combined result of real competition
  low economic level/ development and no public
  intervention...
• The only significant problem is lack of
  interconnection among providers, so that users
  need 4 phones to be sure to be able to call
  anyone. This is a problem that could be solved by
  light regulation or, as has sometimes happened,
  by the mobile operators themselves in either
  case adding to costs of calls.
• Knud Eric Skouby and Reza Tadayoni, A case
  study on Somaliland, in the framework of the WDR
  project http//www.regulateonline.org/pdf/wdr0306.
  pdf

10
ICT Policy and Regulation

• Somaliland is an example of what happens with no
  regulation and no effective monopoly power.
• By contrast, in most countries build-out of
  infrastructure is stalled due to monopoly power
  and ineffective regulation.
• The frequent bear-like embrace between policy
  maker, regulator and incumbent has huge costs to
  the economy and society.
• Large vertically integrated incumbents are
  obsolete the issue is by what path and time
  frame they will become something else.
• Typically they become strong market participants,
  given initial advantages.

11
ICT Policy and Regulation

• While there is much technical detail, and
  knowledge required, competition is most
  essential
• typically requiring more than one and preferably
  more than 2 telecom operators and similarly
  for mobile.
• Key basic regulatory functions
• market entry
• allocation of scarce resources (spectrum)
• interconnection
• tariffs
• regulation of anti-competitive behaviour

12
Pro-poor Policy Regulation

• In addition to the essential element of getting
  regular market access up and costs down,
• There are several (universal service) mechanisms
  and approaches to making policy and regulatory
  regimes pro-poor (often pro rural), including

13
Pro-poor Policy Regulation

• removal of regulatory restrictions on a variety
  of forms of participation in network and service
  development, and regulatory facilitation of
  participation, eg
• resale of mobile minutes,
• prohibitions on Wi-Fi 2.4 and 5.8
• regulatory requirement of cost-based
  interconnection
• the design of market mechanisms to enable
  sustainable market functioning for services used
  by the poor, eg
• Grameen phone ladies, enabled by microfinance,
  and (similarly) poor individuals being able to
  buy and sell mobile minutes

14
Pro-poor Policy Regulation

• transparent, market-based supply-side subsidies
  to suppliers to build networks in the least
  serviced areas, eg
• least-cost subsidy auctions (Chile, currently
  Nepal, Sri Lanka) and
• transparent demand side subsidies and mechanisms,
  to increase effective demand in the context of
  low purchasing power, eg
• voucher systems, or commitments of (often
  coalitions of) public and private users to buy
  minimum service levels,
• asymmetric pricing (to correct typical pricing
  distortion favouring higher income users at the
  expense of poorer (rural) users.

15
ICT Policy and Regulation

• In EVERY known case of progressive reform of ICT
  policy and regulation, EVERY major group has
  gained, including the incumbent telco, and in
  spite of the (usually dire) warnings and
  opposition of the incumbent.
• Within some groups, labour and firms, there are
  winners and losers, and these issues are
  important.
• BUT, this is a very large positive-sum game, and
  the expansion of demand and usage market,
  government and not-for-profit is always
  underestimated.
• Getting policy makers, regulators and incumbents
  to take action is typically a matter of political
  rather than economic persuasion.

16
How to Get There

• Evidence, advocacy and time for change of views
  and attitudes.
• ICT policy and regulation is a key ongoing
  component of public policy, requiring capacity.
• The global PPPM initiative, and others, provide
• training for policy makers, regulators and
  researchers
• research support in government and outside
• advocacy and coalition building
• networking regional and international.

17
Global/Regional PPPM Initiatives

• are not intergovernmental
• focus on local research and advocacy
• aim at long-term local capacity building and the
  development of regional research networks
• develop South-South and South-North networking
  and dialogue
• are reformist in nature, and postulate win-win
  outcomes, based on the experience of both
  developed and developing countries and
• include microeconomic (community, household)
  assessment of the impacts, benefits and costs of
  policy/regulatory reform and ICT diffusion.

18
PPPM Partners

• National partners in countries, especially policy
  makers, regulators, research/academic
  institutions and individuals
• LIRNE.NET (lirne.net) and the World Dialogue on
  Regulation (regulateonline.org)
• Link Centre (link.wits.ac.za) and Research ICT
  Africa (researchictafrica.net/)
• LIRNEasia, launched Sept. 17 in Colombo
• IDRC, DANIDA, the World Bank (InfoDev), OECD,
  EBRD, Industry Canada
• New partnerships emerging