Universal service funds attacked

The GSM Association (GSMA) has slated developing world governments for overtaxing mobile network operators, continuing to fund inefficient fixed-line operators and not using collected universal service funds.

A study commissioned by the GSMA of 92 countries examined the collection and use by governments of universal service fund levies. These are monies that have been taxed from profitable cellular operators in order to fund telecommunications services in areas that may not have connections due to the inability of people to afford the commercial services.

The GSMA says the study found over $6 billion (R24 billion) had been collected from the telecoms industry worldwide since the funds` inception, with $2 billion (R14 billion) coming from the mobile operators. Only $1.5 billion had been distributed so far with just 5%, or $75 million, used to extend mobile coverage.

Intelecon Research, which conducted the study on behalf of the GSMA, also found that, while only three sub-Saharan African counties had universal fund levies, another seven countries were about to introduce them.

SA`s own Universal Services Agency has been criticised this year for failing to get the underserviced area licensees off the ground.

"Despite the critical role telecoms plays in developing markets, the study found that governments have yet to allocate $4.4 billion collected by these funds. If governments allocated the unspent money to extending mobile networks, an additional 450 million people in rural areas of the developing world would have mobile coverage," the association says.

Gabriel Solomon, GSMA director of government and regulatory affairs, says in sub-Saharan Africa more than 60% of the population had mobile coverage. Nigeria has 72% of its population covered and SA has 99% of its population covered by mobile networks.

"Governments should focus on connecting the 350 million sub-Saharan Africans who already have coverage, but are not connected, by removing specific taxes and regulations that make mobile ownership more expensive than it needs to be," he says.

Solomon says while the mobile industry is reducing costs for its customers through shared access initiatives and the development of low-cost handsets, many governments are increasing the burden of regulation.

MTN group executive for regulatory affairs Nkateko Nyoka says universal service funds are not utilised optimally and have proven to be an ineffective instrument for propelling universal access to fixed and mobile communications.

Nyoka says market forces have proven to be efficient and effective in increasing access to mobile communications. The use of universal service funds, therefore, should be limited to infrastructure investment in remote and commercially unsustainable areas, he notes.

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