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Financing Mechanisms for Information and Communication Technologies for Development

Study by Townsend, David; Yan, Yin; Wu, Dong/ UNCTAD, 2010

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This paper presents observations and trends that have occurred in the key areas identified by the Task Force on Financial Mechanisms (TFFM) and Tunis Agenda, in terms of development of ICT opportunities and financing, and then identifies key challenges and opportunities going forward, for addressing continuing gaps and new conditions in ICT development policy and financing.



Financing Mechanisms
for Information and Communication

Technologies for Development


New York and Geneva, 2010



The United Nations Conference on Trade and Development (UNCTAD) serves as the lead
entity within the United Nations Secretariat for matters related to science and technology as
part of its work on the integrated treatment of trade and development, investment and finance.
The current work programme of UNCTAD is based on the mandates set at UNCTAD XII,
held in 2008 in Accra, Ghana, as well as on the decisions by the United Nations Commission
on Science and Technology for Development (CSTD), which is served by the UNCTAD
secretariat. UNCTAD’s work programme is built on its three pillars of research analysis,
consensus-building and technical cooperation, and is carried out through intergovernmental
deliberations, research and analysis, technical assistance activities, seminars, workshops and

This series of publications seeks to contribute to exploring current issues in science,
technology and innovation, with particular emphasis on their impact on developing countries.

The term “country” as used in this study also refers, as appropriate, to territories or areas; the
designations employed and the presentation of the material do not imply the expression of any
opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal
status of any country, territory, city or area or of its authorities, or concerning the delineation
of its frontiers or boundaries. In addition, the designations of country groups are intended
solely for statistical or analytical convenience and do not necessarily express a judgement
about the stage of development reached by a particular country or area in the development
process. Mention of any firm, organization or policies does not imply endorsement by the
United Nations.

The material contained in this publication may be freely quoted with appropriate


Copyright © United Nations, 2010
All rights reserved




This paper was prepared by David Townsend and Yin Yan. It was finalized by Dong Wu of
the UNCTAD secretariat. Anne Miroux and Mongi Hamdi provided overall guidance. Nadège
Hadjemian designed the cover. Elvira Chudzinski provided administrative support.

Written contributions were received from the World Bank, the Organization for Economic
Cooperation and Development (OECD) and the Association for Progressive Communications
(APC). Time-series data were provided by the International Telecommunication Union (ITU)
and the World Bank.

The paper benefited from comments and suggestions provided by Tim Kelly (the World





Table of Contents

1. Introduction ......................................................................................................................... 1
2. Policy frameworks and implementation strategies .......................................................... 2

2.1. Issue summary and background ..................................................................................... 2
2.2. Key developments since WSIS ...................................................................................... 3
2.3. New challenges and opportunities.................................................................................. 5

3. Financing backbone infrastructure ................................................................................... 8
3.1. Issue summary and background ..................................................................................... 8
3.2. Key developments since WSIS ...................................................................................... 9
3.3. New challenges and opportunities................................................................................ 12

4. Financing universal access................................................................................................ 14
4.1. Key developments since WSIS .................................................................................... 15
4.2. New challenges and opportunities................................................................................ 16

5. Financing applications and content ................................................................................. 19
5.1. Key developments since WSIS .................................................................................... 20
5.2. New challenges and opportunities................................................................................ 22

6. Strengthening capacity, promoting opportunity ............................................................ 24
6.1. Key developments since WSIS .................................................................................... 25
6.2. New challenges and opportunities................................................................................ 26

Bibliography ........................................................................................................................... 29

List of figures

Table 1. World Internet usage and population statistics........................................................ 9

Box.1. Ghana’s National Telecommunications Policy…………………….…..…………...4
Box.2. Elements of South Africa-Finland Knowledge Partnership programme…………..27

Figure 1. Worldwide ICT growth, 1998–2009...................................................................... 3
Figure 2. Worldwide private investment in telecom infrastructure, 1990–2008................. 10
Figure 3. Worldwide telecom infrastructure private investment by region, 1990–2008..... 10





1. Introduction
The Geneva phase of the World Summit on Information Society (WSIS), which took place in
2003, recommended that “while all existing financial mechanisms should be fully exploited to
make available the potential benefits of information and communication technologies, a
thorough review of their adequacy in meeting the challenges of ICT [information and
communication technology] for development should be completed by the end of December
2004. This review shall be conducted by a Task Force under the auspices of the Secretary-
General of the United Nations and submitted for consideration to the second phase of this
summit.” In response to this, the Secretary-General asked the United Nations Development
Programme to take the lead in setting up a Task Force on Financial Mechanisms (TFFM), in
collaboration with the World Bank and the United Nations Department of Economic and
Social Affairs and other key partners.

The Task Force in 2004 released a 120-page report which contained a thorough review of all
existing financial mechanisms available then and identified major gaps and challenges which
called for concerted action. This report was forwarded for consideration by the Prepcom of
the second phase of WSIS, which took place in Tunis in 2005. One of the main outcomes of
the Tunis phase was the “Tunis Agenda for the Information Society”, which contains a section
on “Financial mechanisms for meeting the challenges of ICT for development”. The Tunis
Agenda draws on the work of the Task Force, and identifies a number of areas as in need of
greater financial resources, and where the existing approaches to ICT for development
(ICT4D) financing had been inadequate. The Tunis Agenda also outlines a number of
recommendations that aim at “improvements and innovations in existing financing
mechanisms”, directed at national governments, multilateral, regional and bilateral
development organizations.

The Commission on Science and Technology for Development (CSTD) has been requested by
the Economic and Social Council to assist it in the follow-up to WSIS. In this context, the
Commission at its twelfth session decided to examine “Improvements and innovations in
existing financial mechanisms” during its 2009–2010 intersessional period. This paper was
prepared based upon review of the findings and recommendations of the TFFM Report and
the Tunis Agenda, and of developments in the years since the conclusion of the World
Summit. It presents observations and trends that have occurred in the key areas identified by
the TFFM and Tunis Agenda, in terms of development of ICT opportunities and financing,
and then identifies key challenges and opportunities going forward, for addressing continuing
gaps and new conditions in ICT development policy and financing.



2. Policy frameworks and implementation strategies
2.1. Issue summary and background
The issue of financing for ICT development does not stand in isolation, but must be
considered within the overall framework of national ICT policies, and indeed national
development and poverty-reduction policies in general, as information and communication
have become increasingly central to effective, sustainable economic growth throughout the
world. The TFFM Report strongly encouraged the establishment of ICT policy frameworks
that encourage and enable competitive investment opportunities and open markets for these
technologies and services:

“removing barriers to market entry and resource mobilization can, by themselves, unleash
major flows of untapped financing”.

The report went on to describe some of the many examples of innovation and growth that
have occurred in unconstrained ICT markets, from mobile telephony and SMS text to the
Internet itself. To reinforce and sustain the impacts of such fundamental market forces,
government policies must establish strong and effective regulatory mechanisms, which can
guide the transition toward lasting and expanding competition. As identified in the report, the
key regulatory imperatives necessary to promote market-based development include:

• Licensing procedures;
• Competition regulation;
• Interconnection regulation; and
• Reducing costs and risks.

Throughout the past two decades, the overwhelming majority of countries has embraced, to
one degree or another, the benefits of liberalized telecommunications markets and has
followed the path of opening markets and establishing regulatory agencies aimed at managing
and promoting competition. As of 2005, however, a large number of developing countries
were still struggling to fulfill these goals. The challenges associated with market liberalization
include not only the basic steps of modifying legislation and issuing new licenses, but the
more complex demands of developing regulations that fairly and effectively implement each
of the key requirements identified above. Perhaps most difficult, especially at the outset of
such policy reforms, is for newly-established regulatory authorities to obtain the expertise and
skilled personnel, as well as other resources, essential to oversee a newly created competitive
market. This is especially challenging when, as has most often been the case, the introduction
of new, competitive operator licenses takes place before all of the critical elements of the
competitive regulatory regime have been set up.

At the same time, the rapidly changing dynamics of the ICT sector and its role in national
economies and poverty reduction strategies has mandated that ICT policies be linked and
integrated with a range of other Government initiatives. Many countries have brought ICT
objectives to the highest levels of public priorities, establishing new national ICT policy
statements, “e-strategies” and high-level agencies empowered to promote the ICT
development agenda across multiple sectors of public and private activity. This is new
territory for most of these governments, which are also seeking to implement their own
internal ICT related resources and “e-government” initiatives. For these reasons, the TFFM
and the WSIS recognized that further progress was needed in the transformation of national



telecommunications and ICT policies in many countries, and that international technical
assistance and best practices should be shared as widely as possible to facilitate these goals:

“There is an overwhelming need for technical assistance with planning, capacity-building,
comparative research and analysis, as well as financial support for public investments in
government ICT networks and facilities. … One of the key roles that development
assistance can play in this regard is to mobilize national forums and consultative processes
at the highest levels of government, and also to follow up policy development exercises
with affirmative, coordinated implementation projects across the spectrum of ICT sector

Similarly, the Tunis Agenda recognized that key pre-requisites to effective utilization of
financial mechanisms included, among others:

“26. a. Creating policy and regulatory incentives aimed at universal access and the
attraction of private-sector investment.
“b. Identification and acknowledgement of the key role of ICTs in national
development strategies, and their elaboration, when appropriate, in conjunction with e-

2.2. Key developments since WSIS
The years since 2005 have seen continued rapid growth and evolution in the global ICT
sector, particularly in developing countries, where markets have been expanding steadily,
while the role and utilization of technologies for all forms of communication have penetrated
further into the basic structures of these societies. This expansion is largely attributable to the
transformation of national policy regimes to encourage competitive entry and the free flow of
financial resources into this increasingly vital sector. The impacts of this global ICT
revolution are visible:

Figure 1. Worldwide ICT growth, 1998–2009










'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

r 1





Worldwide ICT Growth, 1998‐2009

Mobile cellular telephone subscriptions

Internet users

Fixed telephone lines

Mobile broadband subscriptions

Fixed broadband subscribers

Source: ITU (2009b)



Clearly the most dramatic development has occurred in the cellular mobile telephone market,
which has become by far the dominant means of communication for the entire world, in a
very short period of time, by historical standards. In part because cellular networks and
licenses were new to virtually all countries, and legacy monopoly State telecom enterprises
were not necessarily in the best position to deploy these networks rapidly, these market
segments have often been quickly opened to competition by multiple new suppliers, typically
involving foreign investment by an array of aggressive players from throughout the world.
Their investments have fueled incredibly rapid growth, and that growth has fueled yet further
investment, in the ideal virtuous cycle for industry expansion.

Further supporting the continued expansion of ICT markets has been the ongoing trends of
privatization of many State-owned operators, the creation and enabling of national
communications regulatory authorities, and the adoption of national telecommunications and
ICT policy documents, strategic plans and legislation, embracing this sector as a critical
component of the development agenda, and channeling resources and political will into
promoting ICT opportunities (see the example of Ghana in Box 1).

Box 1. Ghana’s National Telecommunications Policy

The example of Ghana is illustrative of an effective policy framework that has been successfully
implemented in the past few years. The Government adopted both a national ICT Policy and then a
National Telecommunications Policy (NTP) in 2005, while also revising and introducing a range of new
national legislation to support these policies. The NTP emphasized market-oriented, competitive
development. Among its key statements of principles:

“The Government is convinced that the interests of consumers and businesses in Ghana to achieve
optimum access to the best quality and most cost-effective telecommunications services will be
accomplished through the wisdom and incentives of the competitive market. To this end, this Policy
seeks to establish conditions that will be most favorable to encouraging further sector growth, and
reorientation of the overall market structure, through affirmative liberalization and competition

“The development of telecommunications in the Republic of Ghana shall be based upon principles
of open markets and fair competition. To the greatest extent possible, the Government shall
encourage telecommunications growth through the initiative and innovation of the private,
competitive marketplace at all levels, with particular emphasis on promoting local
entrepreneurship and socially responsible investment, including firms that encourage equal
employment opportunities and gender equality.”

As a result of this policy, a wealth of new licenses and investments has gone into the Ghana telecom
sector, with mobile telephone services, as would be expected, leading the way. As many as six mobile
licenses have now been issued, along with dozens of licenses for ISPs, data service providers, and other
operators. At the time of its adoption, the NTP set a target for “National penetration of universal
telecommunications service to reach 25 per cent of the population, including at least 10 per cent in rural
areas, by the year 2010”. In fact, by mid-2009, telephone penetration (fixed and mobile) had exceeded 50
per cent of the population, and was on track to surpass 60 per cent.

Source: Government of Ghana, 2004

For their part, international finance institutions and donors have continued to support policy
reforms and initiatives as a priority focus, to promote further market expansion and access to
competitive private finance. As one valuable example, the World Bank’s infoDev programme,
together with ITU, sponsored the creation of a new and extensive online “ICT Regulation
Toolkit” (ITU/InfoDev, 2010), which provides detailed information, ideas, and extensive



examples and references to support regulators and policymakers in all aspects of ICT policy
development. Such initiatives have contributed strongly to the steady pace of reform and
growth in the global ICT sector, in developing countries especially.

2.3. New challenges and opportunities
The recent progress made in the evolution of telecommunications and ICT policies represents
one of the remarkable success stories of global development in the past decade. The
unrelenting increase in investment and expansion of communications, while far from
complete, provides very encouraging testimony to the effectiveness of market-oriented
reforms, and hence points clearly in the direction of the path ahead. For the fundamental
purpose of mobilizing financial capital to invest in ICT networks and services, a mix of open
markets, free and fair competition, minimal restrictions, technological neutrality, and
competent, effective regulation has proven itself repeatedly. Many of the remaining
bottlenecks in national ICT objectives, including those discussed in further sections of this
paper, could be greatly reduced or eliminated with additional doses of competition

At the same time, however, the accelerated transformations of the ICT sectors of nearly every
country continue to introduce new challenges for policymakers and regulators, who must cope
with constantly changing technical and market conditions. The key imperative remains to
enable and encourage investment financing of ICTs for development objectives, and to ensure
that the market and regulatory environment facing current and potential investors will allow
maximum deployment of resources, in the most equitable and advantageous ways possible.
The question will be: How should these principles and objectives be applied to new
circumstances, which don’t precisely conform to the experiences of the recent past?

Some prominent trends and issues that will require new ideas include:

• Effective management of competition:

Opening markets to new entry and reducing restrictions on licenses represent only the first
steps in establishing effectively competitive markets. The more difficult challenges arrive
with the need to regulate and manage competition, especially as the complexity and size
of the market grows dramatically. The initial imperatives in this area involve ensuring that
fair competition takes hold and is allowed to thrive on an equitable basis. As discussed in
the TFFM report, the most crucial step in this process is to develop an effective
interconnection regime among all telecommunications operators in a market. While many
countries have made significant progress in this area, full implementation of competitively
neutral and cost-oriented interconnection practices remain a challenge for many fledgling
regulators in newly open markets. In these cases, it is likely that costs, prices and market
structure continue to be out of line with their true potential, and implementing world-class
interconnection standards should be a top priority, for both national officials as well as
their international partners.

There are other challenges to manage long-term competition effectively. In the initial
growth stages, as new entrants are helping to expand the overall size of the market, they
may be less concerned about competing directly with each other to retain or capture
established customers. This can lead, for example, to a de-emphasis on investment in
quality of service or differentiation and innovation. Some countries where cellular markets
have grown dramatically fast through widespread new entry have also seen declines in



service quality standards, especially in increasingly congested urban markets, as
competing carriers see little incentive to pay for new capacity upgrades as long as the
market is growing on its own. There are also risks that major operators will achieve
dominant status in a market, or act in oligopolistic fashion, maintaining prices artificially
high for consumers while squeezing out smaller competitors. As more services and
markets converge (see below), distortions arising from vertical integration and alliances
may also appear. These types of tendencies may be new territory for regulators in
developing countries, which have only recently begun to take on the skills and knowledge
necessary to oversee complex and sophisticated market behavior. The path ahead for
regulatory authorities worldwide thus involves a difficult goal of keeping up with
constantly changing industry dynamics while seeking to guide the market toward
sustainable and beneficial competitive balance.

• Regulatory reforms in view of convergence:

The pace of technology and market changes has surpassed in many ways the licensing
regimes that have created the current market structure of most telecommunications
sectors. Distinctions between fixed and mobile networks, between voice and data, among
local, long distance and international segments, are increasingly artificial, as
interconnected operators deploying a mix of advanced platforms can readily deliver a
combination of diverse services utilizing the same infrastructure. In this environment,
many regulators are moving toward removing these distinctions in their licensing regimes,
and adopting “Unified Licenses”, which permit operators to provide virtually any
communications service over any type of network or technology platform, subject to only
the most minimal restrictions to ensure service quality and proper business practices. This
process becomes even more significant as still newer generations of technologies
approach the market, from WiMax wireless broadband to 3G cellular networks and even
the planned 4G or “Long Term Evolution” (LTE) generation of advanced mobile
broadband, for which investors will be looking for wide flexibility to deploy a range of
integrated services.

A related imperative as licensing reforms are considered is to review spectrum allocation
plans, in accordance with ITU international standards. In many countries, frequencies
have been assigned to existing operators and a variety of low-priority uses on the basis of
older technology and service definitions, and some portions of the spectrum may be
underutilized or not in use at all, but still not easily available for new allocations. In the
context of converged, unified networks and services, appropriate and adequate frequency
assignments represent the single most critical resource required for any operator to
compete effectively in the market. To optimize further market development, regulatory
authorities must consider how best to allocate this resource, ideally on a technology- and
service-neutral basis.

Another implication of convergence is the increasing overlap of the markets for
information content and for the pure transmission of data signals. Even the traditional
distinctions between radio and television broadcasting (as well as newer cable TV and
satellite broadcast systems) and “common carrier” telecommunications networks are
becoming anachronistic, as more users receive audio–video programming via the Internet,
and broadcasters utilize a range of transmission media. Where countries have previously
established separate regulatory treatment associated with media content, they must now



consider how these rules should be adapted to the new media arriving with the
Information Society.

• Consumer protection:

Most developing countries do not have a well-established body of consumer protection
law and enforcement generally, let alone rules specific to the telecommunications
competition environment, and the new world of cyber risks and problems. Competitive
markets carry the threat of mistreating customers. Some companies may mislead
customers with practices, such as overcharging for services or creating unfair restrictions
and obligations, thus diminishing the benefits of open competition. Regulators in much of
the world have been burdened enough with merely opening markets to allow robust
competition, and often do not have the staff or expertise to establish measures to monitor
and prevent a variety of inappropriate practices by ruthless competitors. This will be an
area in which regulatory and policy responsibilities should only increase in the years
ahead, if liberalized markets are to achieve their purpose.

Meanwhile, as Internet access spreads further into mainstream populations, a host of new
and serious consumer protection issues are arising, which carry fundamental risks not
previously encountered with other, less sophisticated technologies. These include the need
to protect consumers’ privacy, identities, and privileged data, and measures to mitigate the
damaging effects of computer viruses and spam solicitations, as well as to prosecute those
in the society who may be perpetrating these schemes. These are challenges that the entire
interconnected world is still wrestling to overcome, but it is increasingly evident that as
newer users from less regulated societies join the global cyber community, the incidence
of fraudulent and malicious activity increases disproportionately. Again, most
governments and regulators do not have the resources, especially in these highly technical
areas, to address such abuses.

This is another area where intensive international cooperation, including technical and
financial assistance, would seem to be advantageous. Without a major initiative to combat
cyber crime coordinated among international stakeholders, ideally before the inevitable
exponential increases in Internet users, and scammers, that will accompany the successful
implementation of so many other ICT policy initiatives.



3. Financing backbone infrastructure
3.1. Issue summary and background
One of the most fundamental barriers to more rapid and efficient development of ICTs in
much of the developing world is the lack of available and affordable transmission capacity in
national and international “backbone” networks. As traffic demand has grown exponentially,
particularly for long-haul and international voice and data communication, the limitations of
these wholesale transmission networks have become more apparent, with significant impacts
upon prices for services and market competition. Backbone networks invariably require the
highest upfront investment in major infrastructure, thus imposing the greatest burdens and
potential risks upon investors. They typically involve a combination of transmission
technologies, from fiber optic cables (terrestrial and undersea) to microwave towers to
satellite systems, and they must be fully linked across often harsh terrain in remote areas:
mountains, jungles, oceans, deserts. For these reasons, the financing of backbone networks
depends upon large-scale investments, often by a combination of Governments, major
network operators, international investors and partners, as well as donors and financial

In the past, such backbone networks served mainly to transmit switched voice telephone calls
throughout the country and around the world, and capacity demands were essentially a linear
function of the number of telephone subscribers. In the twenty-first century, however,
backbone networks have become much more of a lifeline for the full range of global
communication traffic, and capacity utilization has skyrocketed. Nearly all traffic is now
digital and an increasing proportion of voice is transmitted via Internet Protocol (IP) packet
switching, so that the vast majority of transmissions worldwide are in digital format,
indistinguishable between voice and data. And the volumes of traffic have been increasing
relentlessly as voice usage has continued to climb and worldwide Internet traffic – which
increasingly includes high-bandwidth image, audio, and video transmissions – has saturated
global networks.

As a consequence, the demand for additional backbone bandwidth throughout the world has
grown steadily. In less developed countries, the barriers represented by insufficient capacity,
including the resulting premium prices for both international and domestic connectivity, have
become a critical impediment to Internet market growth in particular. As stated in the TFFM

“In certain areas, notably rural and outlying ones, there is often insufficient private sector
investment interest despite the offer of government incentives. Where such a strategy
fails, full public funding for the deployment, ownership and operation of a broadband
network is often the only recourse – especially where governments, notably at the local
and municipal level, have regarded broadband infrastructure as an essential public utility
and its rollout as a public sector responsibility.”

The report went on to suggest cooperative strategies and partnerships that should be
considered to help promote greater investment in remote backbones, including further
elimination of entry barriers and introducing open access principles, mitigation of financial
risk through demand stimulation, and joint infrastructure development together with other
utilities. Based on this assessment, the Tunis Agenda recommended that greater international
financial resources should be directed toward:



“23. c. Regional backbone infrastructure, regional networks, Network Access Points
and related regional projects, to link networks across borders and in economically
disadvantaged regions which may require coordinated policies including legal,
regulatory and financial frameworks, and seed financing, and would benefit from sharing
experiences and best practices.

“d. Broadband capacity to facilitate the delivery of a broader range of services and
applications, promote investment and provide Internet access at affordable prices to both
existing and new users… and

“27.b. Enhancing regional cooperation and creating multi-stakeholder partnerships,
especially by creating incentives for building regional backbone infrastructure.”

3.2. Key developments since WSIS
To a considerable extent, the much-heralded expansion of mobile voice telephone networks
throughout the developing world in recent years has overshadowed the continuing, and even
growing, disparities between the least developed countries and the rest of the world in other
areas of ICT infrastructure. In particular, the industrialized and emerging economies are
seeing broadband Internet services become increasingly standard and widespread (although
not yet truly universal), and the vast bulk of online services and applications are becoming
bandwidth-rich, and hence less accessible to older, narrowband and dial-up technologies. In
sub-Saharan Africa, especially, although Internet usage has grown substantially in percentage
terms, levels of overall Internet penetration remain starkly low: less than 7 per cent, compared
with world averages of over 24 per cent (see table).

Table 1. World Internet usage and population statistics

A World Bank report highlights the disparity in Internet access and backbone networks within
Africa in particular, and notes that “the current backbone network infrastructure in sub-
Saharan Africa is extensive but it is predominantly low capacity, wireless-based infrastructure
designed to carry voice communications traffic. The current network infrastructure is not
capable of carrying the volumes of traffic that would be generated if affordable broadband
connectivity was available on a mass-market basis.” (Williams, 2008) At the same time, there
has also been a significant lack of international bandwidth connecting countries in Africa and



other regions to the global Internet. The impact of these low levels of supply is that prices for
data transmission, for example leased line capacity for Internet Service Providers, can be
prohibitively high, suppressing the entire market for Internet development.

Figure 2. Worldwide private investment in telecom infrastructure, 1990–2008

US $ million






























Source: The World Bank (2009)

Figure 3. Worldwide telecom infrastructure private investment by region, 1990–2008





























East Asia and Pacific

Europe and Central
Latin America and the
Middle East and North
South Asia

Sub-Saharan Africa

Source: The World Bank (2009)

The supply of telecommunications infrastructure investment is sensitive to changes in the
economic climate. Globally, investment in telecom infrastructure suffered from a dramatic
decline during the dot.com crisis at the turn of the millennium, but has since picked up
momentum. The picture for international backbone network development, at least, is now



becoming more promising on the whole. At the regional level, infrastructure investment in
sub-Saharan Africa has experienced less fluctuation than it has in many other regions of the

There has been a flurry of recent activity in the realm of international backbone infrastructure
development, particularly focused on Africa. Among the new projects that are at some stage
of development are the following:

• Globacom, a major African cellular operator, has invested in the Glo-1, a 9,400-km

submarine cable which connects 14 countries in West Africa through Portugal to the
United Kingdom on a 1.28 terabits-per-second (tbs) capacity cable. This cable only
became operational in September 2009, and will soon be connecting multiple countries in
the region;

• SEACOM is also planned as a 1.28 tbs submarine fibre optic cable connecting East Africa
to Europe, Asia and the rest of the world. SEACOM is privately funded and three quarters
African owned, and expected to provide bandwidth on an open access basis;

• The Main One Cable is also planned as a 1.28 tbs undersea cable system, intended to span

14,000 km and provide additional capacity for international and Internet connectivity to
countries between Portugal and South Africa on the West Coast of Africa. The project is
designed in two phases, both of which are scheduled for completion in May 2010;

• The Eastern Africa Submarine Cable System (EASSy) is an initiative to connect countries

of Eastern Africa via a high bandwidth fibre optic cable system, from South Africa to
Sudan and the rest of the world. The project, funded by the World Bank and the
Development Bank of Southern Africa, was initiated in 2003, but has met with delays in
arranging the coalition of governments and private investors;

• The ACE (Africa Coast to Europe) submarine communications fibre is a 14,000 km cable
system planned to run along the West Coast of Africa between France and South Africa,
expected to become operational in 2011 with a minimum capacity of 1.92 tbs.

This surge of interest in supplying international capacity to Africa reflects high expectations
that Internet traffic will soon be growing in a pattern similar to the explosion of mobile voice
service demand. By delivering the needed capacity to permit such Internet usage at more
affordable costs, these projects may well catalyse such new demand.

Since telecommunications infrastructure investment accounts for a large portion of capital
expenditures in many countries, it is likely to be adversely affected during economic
downturns. It is reasonable to believe that decreased access to private capital will be most
deeply felt by developing countries. In addition, as many of the donor funds for the ICT sector
have been diverted to pay for domestic stimulus packages, it is plausible that many donor-
funded projects will suffer from underfunding and eventual termination. Although the extent
of the current decrease in donor funds is yet difficult to determine, policymakers should
nonetheless consider employing countercyclical measures to stimulate ICT infrastructure
development. Financing the ICT sector can be secured by either injecting public capital that is
no longer available from the private sector or providing economic incentives to attract private
capital. In particular, countercyclical fiscal stimulus packages that target building broadband
infrastructure can potentially foster long-term economic growth and development.



3.3. New challenges and opportunities
The upsurge of recent and anticipated investments in new international backbone cables
provides strong encouragement that many of the bottlenecks in this area are being addressed,
including in some of the least developed regions. If the projects all proceed as planned, their
impact could be substantial on many levels: opening up additional avenues for both
international and domestic competition in wholesale and retail Internet services, driving down
capacity prices, fueling opportunities for other new infrastructure investors, such as WiMax
networks, while consequently spurring Internet demand. To the extent these trends are
relatively new and tentative – and the impact of the global financial crisis remains highly
uncertain – policymakers and other stakeholders may prefer a “wait and see” attitude before
evaluating their impact, and the scope of the remaining international gaps in backbone
investment and finance.

However, there are several areas where concerns raised at the time of the World Summit are
still evident, and other new concerns as well as opportunities are also presenting themselves.
In addressing the goal of continued expansion of backbone network capacity and availability
to promote ICT development, it may be worth directing focused attention on these issues:

• Further development of national, rural backbones:

As discussed in the World Bank report, there are still many least developed countries
where national conditions do not favour development of domestic backbone networks
across rural regions. Regulatory policies may continue to restrict the number of entrants,
the types of technology that can be deployed, and the networks and services that can be
connected to new backbone infrastructure. Beyond these barriers, there are also legitimate
economic constraints facing potential investors, which may need to be mitigated through
various forms of public-private partnerships. As the report suggests:

“A number of different models for these partnerships have been implemented around
the world. These include (a) competitively awarded subsidies provided to private
operators to build open-access networks; (b) partnerships with existing operators to
develop open-access networks as consortia; and (c) providing financial incentives for
operators to develop networks in under-served areas.” (Williams, 2008)

In those countries where national backbone capacity remains inadequate to serve and
stimulate growing ICT traffic demand, a combination of loosening restrictions on market
entry and creating such positive incentives should be strongly considered as a strategic
development priority.

• Open access and infrastructure sharing:

When new backbone infrastructure is built, the market will benefit most from a regulatory
framework that moves away from traditional exclusivity arrangements that serve to
maintain high prices and artificially suppress wholesale and retail supply. Advocates for
liberalized investment in backbone networks are increasingly pushing for “open access”
principles. As outlined in one recent paper (Ó Siochrú, 2009), these should include:

• Access is open to all: The network is “plug and play” where any service provider is

entitled to ask for and gain access, including those at the periphery of the networks.
This means that small and local players can use it to deliver their services;



• Technology-neutral regulation: All technologies should be permitted to plug-in, as
long they have the appropriate physical attributes. Regulation should encourage
innovation in technologies;

• Fair and non-discriminatory access: No service providers should be discriminated

against or given favourable deals. Competition should be encouraged in service areas;

• Transparency to ensure fair trading: Tariffs and prices between the backbone and
service suppliers should be transparent;

• Everyone can connect to everyone else: No providers should be blocked from

connecting with others, and bandwidth access from local to international should be
readily available.

Some investors and operators will resist measures to require open access, if they see
market advantages in exclusivity, and expect to repay their capital outlays through such
arrangements. Similar arguments have often made it difficult for regulators to introduce
other forms of infrastructure sharing policies in many countries, where it would ultimately
be more efficient for operators to utilize the same towers, poles, underground conduit, and
similar support structures, rather than duplicate investment. In the long run, however,
from the perspective of development objectives, it may be preferable to establish strong
open access and sharing rules.



4. Financing universal access
The question of “access” ultimately dominates nearly all discussions of the Digital Divide and
similar metaphors for global disparities in availability of information technologies and
resources. Access is the most basic prerequisite to obtaining the benefits and opportunities of
information and communication: (a) access to network connectivity; (b) access to computers,
phones, and other equipment and facilities; (c) access to relevant information itself; and (d)
access to the skills and knowledge needed to take advantage of modern ICTs. Typically in
policy forums, the main focus has been on technical network access: the extension of national
telecommunications infrastructure beyond the limits of urban and affluent markets, into
remote, high-cost, and low-income areas in developing (as well as developed) countries.

Even where backbone networks extend reasonably far into these regions, they need to connect
across the “last mile”, to local communities and individual households, businesses and
subscribers, which is typically the most costly component of the network on a per-unit basis.
Where the markets that are reached by such connections are most often small and likely to
have little income to spend on telecommunications services, the anticipated financial return on
investments in fixed local access networks is very low or negative. The economics of wireless
mobile networks have begun to significantly change this dynamic, as signals can reach entire
geographic zones from one transmission tower, although the cost of constructing towers and
base stations to serve very remote locations can also be prohibitive in many instances.

Perhaps the most prominent and increasingly common financial mechanisms that have been
introduced to address these access challenges are so-called Universal Service Funds or
Universal Access Funds (USFs/UAFs). Modeled initially after USFs that were established in
North America and Europe to achieve truly “universal” telephone service, most of these funds
in the developing world have aimed to help subsidize expansion of access networks to rural
and high-cost areas, typically on an incremental (rather than universal) basis. The standard
approach involves imposing a fee on licensed telecommunications operators (for example, 1
per cent to 2 per cent of gross revenues), which is contributed into the fund, to be managed
either by the national regulatory authority or an independent agency; this money is then
allocated to provide financial support to rural access and other ICT development projects,
often through a competitive bidding process, in which the same operators that contribute to
the fund are invited to bid for the subsidies and the mandate to deliver rural access and

The TFFM report noted the strong progress that had been achieved in financing access
networks in the developing world, particularly in the growth of cellular telephone services,
while also acknowledging that the economics of rural access remained challenging for many
investors and governments. It presented a variety of models and trends that indicated
promising opportunities to channel additional sources of financing toward rural networks and
services, including USFs/UAFs, but also other sources of investment and finance, among
them the emerging concept of local community-based investment and ownership. In this area,
the report noted that “communities are now taking the lead responsibility, often with public
authorities and private partners, in initiating, designing, resources and managing network
solutions.” Examples of local telephone cooperatives, social enterprises, and public-private
partnerships at the local level, often utilizing new technologies such as WiFi to deliver service
across a village, were cited as promising new approaches. On the whole, the report
emphasized that a combination of methods for increasing financial support for local ICT
access is called for, through integrated strategies that expand market opportunities, leverage



available funds, mitigate investor risk, and involve local communities as well as other public
institutions, on a coordinated basis.

The Tunis Agenda highlighted the need to focus particular attention on the potential and
needs of US/UA Funds, by directing additional resources toward:

“26.c. Developing institutional and implementation capacity to support the use of national
universal service/access funds, and further study of these mechanisms and those aiming to
mobilize domestic resources.”

4.1. Key developments since WSIS
Over the past several years, a great deal of attention has been devoted to access development
policies and mechanisms, with particular emphasis on Universal Service/Access Funds as a
key source of financial support for such access. At the same time, developments in the
telecommunications industry have moved forward so rapidly that the basic issues traditionally
raised under network access policy discussions have shifted dramatically. Until recently, most
such policies and funds focused initially on expanding access mainly to basic voice telephone
service, typically through subsidy of public telephone installations in rural locations. While
these programmes succeeded in providing such basic voice access in thousands of previously
isolated villages, particularly in Latin America, more recent market trends have rendered this
approach to Universal Access nearly obsolete.

The explosive growth of cellular mobile telephone coverage has brought access to voice
telephones within reach of hundreds of millions of users who were previously without any
form of telephone service, and this form of access is far more convenient, flexible and useful
than increasingly outdated public telephone booths. The rapid expansion of this new market
has in many cases almost fully overtaken the slower implementation of established Universal
Access policies, resulting in an increasingly common paradox: subsidized and/or mandated
public telephones being installed in locations that are still officially designated as “unserved”,
but where mobile phones are already widely in use. These public phones often see little or no
traffic, yet must be maintained under anachronistic contractual or license terms arising from
these outdated Universal Access policies.

These changing dynamics have compelled re-examination of access policies and funds, even
as many countries have only recently established them, often without yet reaching the point of
implementation and disbursement. Several important studies and reports since the WSIS
concluded have taken a close look at the experience, accomplishments and challenges of
Universal Access policies around the world, leading to an emerging set of new perspectives
on approaches to and objectives for ICT access, as well as a formidable body of knowledge
concerning the effectiveness and problems of various UA/US methods.

One of the most extensive studies was sponsored in 2005 and 2006 by the World Bank and
Regulatel, the association of Latin American telecommunications regulators, to study the
Universal Service experience of the entire Latin American region, where many of the most
well-established and successful policies and funds (along with some unsuccessful ones) have
been in place for more than a decade. (Stern and Townsend, 2006) The study found that USF
mechanisms in several countries (e.g. Peru, Chile, Colombia, and the Dominican Republic)
had been quite effective in channeling subsidies from the sector to support both rural public
telephones, as well as more robust rural telephone and even Internet services. On the other
hand, a number of countries had been relatively unsuccessful in implementing their US/UA



funds, for a variety of legal, political, and bureaucratic reasons (Brazil being the most
notorious example). A smaller study recently conducted by ITU focused on the experiences of
Africa, which are generally newer than those in Latin America; this study found that a
majority of funds in sub-Saharan Africa were not yet operational, and had not adequately
planned and organized for implementation of the Funds’ mandates. (ITU, 2009a)

Certainly, one of the main criticisms directed at many funds has been that they have often
taken in far more money than they have been able to disburse, so that large sums – which
originally came from telecom industry customer payments – are sitting in designated bank
accounts without being deployed to serve a purpose. These circumstances have created
legitimate doubts about the efficacy of utilizing this type of mechanism to promote access,
despite the many positive examples that have also been demonstrated.

4.2. New challenges and opportunities
It is clear that the model of some form of public fund to support equitable ICT access will
remain a key financial mechanism and a cornerstone of many countries’ development policies
for some time to come. Even the most advanced OECD countries have instituted Universal
Service Funds to promote basic communications access for all citizens, and many have
augmented these recently with “stimulus” funding to support expansion of broadband and
Internet access. Meanwhile, many developing countries have only very recently passed
legislation or introduced regulations to establish new USFs (e.g. Thailand, Kenya, Saudi
Arabia, the Eastern Caribbean States, among numerous others), but have yet to implement the
formal rules and procedures that will determine how the fund is managed and spent. Those
that have been in operation for a number of years are now generally wrestling with new
questions of priority objectives, efficient use of resources, and institutional capacity.

Going forward, there are a range of key questions and challenges confronting agencies
responsible for defining Universal Access policies, and for implementing and overseeing
those policies and the related Funds. Some of the most salient of these issues include the

• Reconsidering access objectives and priorities:

With the near saturation of mobile telephones and the diminishing urgency of connecting
people for minimum-level public voice access, advocates of Universal Access must
reconsider the objectives that such policies should now pursue. As these shifts in the
landscape have occurred, it is now becoming commonplace for access policies, as well as
funds, to highlight a range of new capabilities and services in their goals for inclusion of
all citizens in the Information Society. But simply identifying “Internet Access” or similar
terms within the general scope of a policy or fund mandate does not adequately define the
priorities for such access, nor the limits and means for achieving it. Some key questions
must be addressed:

o To what extent should access policy embrace Internet, even broadband, access as a

priority goal?
o How should higher-end services be balanced against minimal connectivity, when

considering allocation of scarce resources?
o Should US/UA funds or other mechanisms subsidize areas such as computer,

hardware, software, information content, training, etc.?



o How should the impact of new Universal Access policies be measured and evaluated,
to ensure that they are producing worthwhile results?

• Institutional management of UA/US funds:

The need to implement more effective institutional management of many Universal Funds
is clearly a top priority, to unblock money that has already been collected in many cases,
and to ensure that all resources are utilized efficiently and appropriately. Too many funds
have been established without an adequate institutional plan, sufficient trained staff, and
operational procedures that are realistic and compatible with the mission and capabilities
of the administration. There are also often conflicting political pressures and legal disputes
that hamper effective fund implementation. Given the large amounts of money that many
such funds collect, they should ideally be governed and operated in a manner similar to
any other financial institution: with fully transparent criteria for allocating funds and
procedures for making decisions, with in-depth due diligence supporting all project plans,
and with staff that have expertise in finance, accounting, economics, and other relevant

To reach this level of sophistication and professionalism in their functions will take time
and investment by the funds, and technical assistance from outside sources in most cases.
In principle, such institutional measures should be adopted before the fund collects
significant sums from the industry. Where funds have already been established, but have
not functioned effectively, it may be appropriate to suspend collections, and possibly even
reimburse some funds, while bringing the fund administration up to adequate operational
standards, so as to restore confidence and ensure a more smooth process of financial
transfers in the future.

• Enhancing market-orientation and sustainability of access financing:

Universal Fund administrators, even where they are well organized and supported, face
difficult challenges to ensure that their funds are spent in the most effective manner
possible, to promote sustainable market development that brings tangible and lasting
benefits to target areas that truly require public assistance. The Access Gap theory and
methods depend upon in-depth study of regions where subsidies might be required, to
understand local market and demographic conditions, and to design support programmes
that can be cost-effective. As a starting point, administrators need to create mechanisms
for collecting data and monitoring market status on an ongoing basis. They also need tools
to analyze market conditions, and should collaborate with industry players to maintain up-
to-date knowledge of technology and cost trends. All of these resources should be geared
toward implementing financial support practices that help launch commercially
sustainable services wherever possible, while limiting perpetual or long-term subsidies to
valid public service needs.

• Decentralized and community-based approaches:

As suggested in the TFFM report, there are potentially important new ways to approach
the delivery of ICT services in rural, small villages and other areas not served by the
established markets. While traditional communications networks have most often been
centrally owned and operated, with all local service directly linked to the main provider,
an increasing body of experience demonstrates that decentralizing this arrangement can



yield benefits for local populations, while reducing costs and risks for network operators.
The types of options available, and examples from locations around the world, are quite
varied. For example, local community-owned cooperative telephone companies have
proven viable in a number of countries (indeed, this model dates back more than 100 years
in some places). An alternative approach involves setting up local franchises, which may
be affiliated with larger national operators or organizations, but owned and operated by
entrepreneurs within the community.

With the advent of wireless broadband technologies, such operations can be established
relatively easily. Some models anticipate initially providing basic public access through
community telecenters, then expanding to offer both fixed telephone and Internet access to
residents and local businesses, building off the same foundation. Even where cellular
signals may be available, this approach may have the potential to expand the choices
available to communities and end-users. The challenge for those seeking to encourage and
implement such decentralized solutions is both to prove the viability of the business
model, and then to develop workable management plans, utilizing the institutional and
financial support of government, international institutions, and US/UA Funds where



5. Financing applications and content
The initial focus of most “Digital Divide” concerns and related financing initiatives was
understandably on the development of basic infrastructure, investment in networks and
technology platforms, and promotion of competitive market models for telecommunications
service delivery. But as the Internet and related global information resources have continued
to expand and grow in influence in all levels of society on a worldwide scale, it has become
increasingly apparent that these electronic transmission media are only the vehicles through
which the truly valuable commodity – information – is accessed and shared. Merely investing
in networks and facilities, without paying attention to the information content that flows
among users of those networks, is almost like investing in farming equipment and machinery
with no regard for the crops that will be grown and harvested.

The ubiquitous role of electronic information throughout the developed and emerging
economies, and increasingly in at least the urban and affluent areas of less developed
societies, demands that socio-development policies take account of the vast “software gap” as
well as the hardware gap. In fact, there is a strong synergy between the market for information
content and the market for underlying digital networks and facilities, as users will be more
inclined to demand and pay for Internet access to the extent they perceive that the content
they will find is of value to them. For new users, particularly in the early years of Internet
growth and popularity, simply being able to communicate via electronic mail and to access
chat rooms and the like was a primary driver of Internet demand, and this remains the case for
newer generations of users, but as the Web has grown to provide virtually limitless sources
and means of obtaining every conceivable type of digital content, the value and role of
Internet-based information resources can be much more diverse, and indispensable.

The range of areas in which greater access to information can help with development goals is
as broad as the development field itself. ICTs have begun to enter mainstream discussions as a
primary component of education, health, agriculture, employment and poverty reduction
policies in general. Also, most governments have adopted some degree of e-government
applications, from Web portals for government information and services to digital record-
keeping and electronic procurement and transactions.

Despite the great potential value, however, progress in this area has been problematic. The
dynamics of the content marketplace, however, are very different from the market for
communications networks and services, and at least to date, the prospects for commercially
driven, open and competitive growth in locally produced ICT content and applications in the
developing world have not proven nearly as promising. Although governments and donors
have put financial resources behind numerous specific projects to disseminate high-priority
information to citizens, such as in the health and education fields, and through e-government
platforms, these initiatives have typically been small and slow to implement effectively.
Meanwhile, commercially profitable software and information service sectors are at best
marginal in most developing countries, with certain well-known exceptions, such as India.

The TFFM Report recognized Applications and Content as the “next frontier” for ICT
financing, noting that “the ICT revolution is about much more than telephones”, despite the
continuing primary value of voice communications. The Task Force noted the heavy United
States dominance and influence in all elements of the worldwide software and content
markets, from computer operating systems to end user applications to television and films. As
the report stated:



“Beyond the ‘access gap’, which divides the connected from the disconnected, this
imbalance between creators and consumers of information is even greater, and possibly
more difficult to overcome…

“…what is most missing from the limitless worldwide knowledge base is an adequate
representation of the vast diversity and richness of knowledge, ideas, experience, and
imagination that thrive throughout the developing world, but rarely find their way into the
consciousness of the commercially driven, mass media markets…”

The report recommended a range of areas where financing should be enhanced, such as (a)
support for user-friendly, graphic based interfaces; (b) content in local, indigenous languages;
(c) culturally sensitive and diverse materials; (d) self-directed content production; (d)
fostering of sustainable local markets for information; and (e) support for shared, coordinated
development of content, such as government applications.

5.1. Key developments since WSIS
Without question, some of the most dramatic and far-reaching developments in the ICT arena
during the past several years have been in the realm of content and applications. The Internet
has continued to evolve so rapidly that it is virtually impossible to keep up with all of the
changing and emerging trends, but the dominant new directions for online content are
unmistakable. The most prominent of these are the increasing role of broadband, multimedia
content, and the explosive arrival of social networking and user-generated content.

The broadband revolution had been long anticipated, as the capacity of Internet connections
and the sophistication of media sites’ services continued to grow. In the past several years,
this expectation has begun to reach fruition, as computer-based and online audio and video
features have become the “killer apps” for spurring broadband penetration. Digital music may
be the most ubiquitous application, as the spread of iPods and MP3 players together with
downloading and sharing of music files has become a worldwide phenomenon, rendering the
traditional “off-line” recorded music industry almost extinct. And video applications are
nearly as commonplace wherever broadband signals are well entrenched, from streaming of
movies and TV shows to music videos to home video clips to embedded advertising shorts.
Almost any video programming that is aired over traditional television is becoming available,
in some form, on the Internet as well, together with limitless original and highly creative on-
line programming. Now the most recent new trend is focusing on broadband-enabled Smart
Phones, such as the iPhone and devices using the Droid operating system, for which
thousands of new mobile “apps” have been developed, enriching and transforming the
functions of mobile phones in countless ways.

The prevalence of broadband has also helped fuel the social networking revolution, although
this phenomenon can be conducted effectively in a narrowband environment. In just a few
years’ time, social networking has become perhaps the single most widespread type of online
activity, and it is the application that is driving most new investment and innovation in the
Information Industry – despite the fact that many of the most popular services are not yet even
profitable. What is most dramatic and intriguing about this trend is the fact that nearly all of
the “content” that is created and shared in social networking environments is user-generated.

The social networking phenomenon has manifested itself in a variety of distinct but
interrelated forms:



• True social networking sites, dominated by Facebook, MySpace, Friendster and the like,
which have millions of users around the world, and countless smaller imitation sites:
members post their personal biographies, photos, artwork, comments, messages and other
materials, and maintain regular (often virtually obsessive) connections via these sites;

• Weblogs (“blogs”), of which there are hundreds of thousands all over the world, from

small, individual diaries to large and influential sites which attract thousands of readers
and comments every day: blogs provide a vehicle for personal commentary, knowledge
sharing, activism, and amusement on virtually any topic imaginable. By many accounts,
the type of “citizen journalism” that they have fostered is among the leading causes of the
decline of traditional print newspapers in much of the networked world;

• Multimedia content sharing sites: these are led by the video clip giant YouTube, which

allows any user to upload short video files (subject to certain restrictions on copyright
violations and appropriateness standards), and has become a repository for a vast wealth
of serious to innocuous postings, to the degree that YouTube is arguably a new medium of
communication and creativity all by itself. Other sites, including Web leaders Google,
Yahoo, and MSN, also have their own video sharing features, and there are many smaller
sites with specific multimedia content styles and purposes;

• Information and answer services, led by Wikipedia, the most comprehensive single

collection of basic information in the history of mankind, which is built upon the
revolutionary “Wiki” standard of user-generated and user-moderated content: this non-
profit service is also available in dozens of languages, focusing on different countries and
cultures, although the original English remains by far the largest. Other sites follow a
question-and-answer format, where users can post questions on any topic, and other users
can provide answers, with back-and-forth comments and verification or debate;

• Dating, matchmaking, and marriage sites, specifically aimed at bringing couples together:

the more broad-based social networking sites also serve as dating media, but these
targeted sites focus on identifying compatibility and partners explicitly;

• Chatting and voice/video telephony: bringing technology applications full circle, several

prominent Web-based services allow for real-time, person-to-person communication, both
through text-based chatting (which is also, of course, a major mobile application), as well
as through Voice over Internet Protocol (VoIP telephone calls and “Web cam”
connections. The leading site, Skype, has become a dominant source for international
telephony, including computer-to-computer, and computer-to-phone, while others such as
Yahoo Messenger and Microsoft’s Windows Live Messenger are ubiquitous worldwide
for text chatting as well as voice and video.

Experience around the world is starting to demonstrate that interest in these types of peer-to-
peer and user-originated communication and content is essentially universal. As Internet
access and especially broadband have begun to take hold in developing countries, these same
services, and local imitations of them, have immediately taken a lead in user popularity,
especially among the younger generations that tend to be the most prolific adopters and users
of new ICTs. In fact, China’s “QQ” network is reportedly the single largest social network in
the world, with over 300 million members. However, Facebook is probably the most
ubiquitous, with hundreds of thousands of members in each of scores of countries from Asia
to Africa to the Middle East. (Web2forDev Gateway, 2009)



What is perhaps most interesting about these activities is that virtually none of them, even in
the developing world, have been financed by government or donor investments; the social
networking boom has been a grass-roots, market-driven movement from the outset, fueled by
the kind of entrepreneurialism and innovation that ignited the World Wide Web in the first

On the other hand, there has been significant public investment in recent years in the more
“socially desirable” forms of ICT content and applications. In the education field, especially,
international organizations have taken strong initiatives. The World Bank’s infoDev
programme for example “is developing an integrated curriculum of briefing sheets,
handbooks, toolkits, case studies, best practice and lessons learned, and is sponsoring related
training activities focusing on the appropriate use of ICTs in education”.(infoDev, 2010)
Similarly, increasing attention has been paid to e-government programmes, particularly
development of websites for the majority of national-level ministries and agencies that
interact with the public, although in many cases these are relatively superficial. In other
realms, such as health care, agriculture, small business management, women’s and children’s
needs, and many others, there have been numerous initiatives and ideas to develop customized
ICT-based information (videos, websites, interactive learning tools, etc.), but there has been
little study of the impact and effectiveness of these programmes, and the amounts of finance
directed toward them has been small by most standards.

5.2. New challenges and opportunities
Software and ICT content development remain largely external industries for most developing
countries, with applications based primarily upon large international software firms, and only
a small amount of local value added, translation, or other adaptation. Even where some
domestic content is produced, for example in news reporting or basic public information, such
sites are typically minor in comparison with their international counterparts. The markets for
domestic Web design and custom software applications are often tiny, even as the number of
national websites and Web users has been increasing. Despite many gains, the imbalances in
content remain, and continued efforts are required to promote more equitable sources of
content and ICT applications. In the new worldwide environment, these efforts should take
account of the following potential objectives:

• Promoting development of domestic software and content industries:

For policymakers and financial institutions, a key challenge is how to jump-start more
extensive growth of internal information content and software development, design,
hosting and dissemination. Larger developing countries such as India and China have had
great success, partly because they can also serve their own mass markets in their own
languages, while also exporting ICT technical and programming expertise. In principle, it
should be possible for any country to establish a functional and profitable
software/content sector, as the only resource required is skilled personnel, and each
society has its own unique interests and culture. Some new applications may be developed
specifically for developing markets, such as more narrowband mobile apps. As market
demand grows for connectivity in general, and particularly for broadband, it may be
rewarding to help incubate such domestic programming and Web design expertise, as well
as related marketing and management, on a public–private partnership basis, and to study
more closely the models of successful local ICT content sectors, to spread the benefits and
value of this type of information market more equitably around the world.



• Creative adaptation and decentralization of ICT content production to include
indigenous and local cultures and knowledge:

The lack of ICT content that is inclusive of indigenous, rural and other marginalized
groups and cultures, and of less developed societies in general, remains a major concern,
despite some improvements. The opportunities to transform this imbalance, however, may
now be greater than ever. The essence of online social networking is that the information
shared is by nature local and indigenous for whoever is creating each personal website,
uploading images or video, and/or chatting with other users in their own language. In the
quest to decentralize content production and bring more citizens into the realm of digital
inclusion, social networking may represent the most promising trend yet.

The goal for strategic allocation of financial mechanisms should perhaps be to reinforce
this trend in ways that enable and encourage more widespread awareness of these tools.
For example, greater emphasis should be placed on translation of application platforms
(interfaces, instructions, features, etc.) into local languages and even more graphic and
audio interfaces. Training and education programmes can be customized to highlight not
merely passive use of technology, but interactive participation and creation of
personalized content (including use of digital cameras, video, etc., and procedures to edit
and upload files). Where local school programmes are incorporating ICT resources and
curricula, assignments focused on producing ICT content should become new priorities,
as students will undoubtedly graduate into a world in which self-designed online content
will be a leading measure of one’s inclusion in the Information Society. The ultimate
benefit of these approaches will be not only the greater involvement of local populations
in the ICT realm, but a far richer and expansive global Internet environment for all.

• Support for public and social objectives through ICT applications and content:

Even with the increasing advantages of non-hierarchical, user-generated content, there
remain important public and social purposes for which the production and dissemination
of standardized information resources are also essential. This is especially the case for e-
government information and applications that must directly engage citizens, as well as for
a variety of other public awareness campaigns that are linked to core development
objectives, such as health, poverty alleviation, etc. Financing for many of these types of
applications remains low when compared with resources that have been put into ICT
infrastructure and other hardware facilities.

Part of the problem is that the benefits of such programmes, when they are implemented,
are difficult to measure, as they are likely to be long-term and indirect in nature. Also,
governments and donors, in contrast to social ICT users themselves, may not always be up
to date with the ways in which these users interact and absorb relevant information.
Heavily pedantic or technical programmes – or, alternatively, overly juvenile or simplistic
productions – may alienate many in the target audience who may become increasingly
accustomed to the newer, informal styles of online and multimedia communication. Here
again, the goal of distributing valuable information from public sources may be served by
creatively embracing these new vehicles of human social interaction. It may require a
great deal of experimentation, which must be adequately and enthusiastically supported by
financial resources, to learn the most effective means of serving legitimate public
information purposes via these new and evolving mechanisms, but the potential rewards
may again be great.



6. Strengthening capacity, promoting opportunity
Among all the issues addressed by the Task Force on Financial Mechanisms and the World
Summit, capacity-building in ICTs was highlighted as perhaps the most important need, and
the most under-financed. While acknowledging that a wide variety of initiatives had taken
place to promote ICT training and human resource development, the TFFM Report indicated
that this field was nevertheless relatively new and not well understood within the overall
picture of ICT4D policies. The Tunis Agenda went on to conclude:

“22. We note that ICT-related capacity-building needs represent a high priority in all
developing countries and the current financing levels have not been adequate to meet the
needs, although there are many different funding mechanisms supporting ICTs for

“23. We recognize that there are a number of areas in need of greater financial resources
and where current approaches to ICT for development financing have devoted insufficient
attention to date. These include [inter alia]:

“a. ICT capacity-building programmes, materials, tools, educational funding and
specialized training initiatives, especially for regulators and other public-sector employees
and organizations.”

Part of the reason for the continuing challenges in this area is the fact that “capacity” itself is
an elusive concept, embracing a wide range of human and institutional skills, knowledge,
experience, and insight that are difficult both to build up and to measure in explicit,
unambiguous ways. For purposes of promoting effective ICT sector development, the TFFM
Report identified at least four key categories of human resource capacity that need to be
strongly reinforced for any medium or long-term Information Society agenda to be

• Basic Education in the use of ICTs, as well as utilizing ICT tools to teach other topics in

• Advanced Training in technical fields, as well as in job skills that require utilization of

• Government, public sector training for public employees, especially those responsible for

designing and implementing policies and regulations regarding the ICT sector, as well as
managing e-government programmes; and

• Public awareness campaigns of various types, to support understanding and adoption of
ICTs and related capabilities and services.

These are related, mutually dependent areas of responsibility, given that citizen interaction
with ICTs increasingly occurs at multiple stages of education, job responsibilities and civil
society. Ideally, effective investment in basic educational resources at the earliest stages will
ultimately pay dividends by creating a more skilled work force, more effective public
servants, and greater awareness of and involvement with ICTs at all levels.

One of the most overriding needs, as noted by both the TFFM and the Tunis Agenda, is to
increase support to government policymakers and regulators in the ICT field itself, where
many countries had not had the knowledge or skills to implement effective sector reforms,
and hence stimulate market development to its full potential. In the realm of Universal Access



Funds, for example, as discussed above, a primary reason why many of these funds have been
unsuccessful to date in fulfilling their mandates has been a lack of adequate staffing, technical
and management skills, and other human resource needs. Yet many of these funds, which
have ample bank accounts that they may have difficulty spending on Access objectives, are
nevertheless prohibited by their enabling statutes from using these funds to pay for their own
internal capacity-building needs. With more strategic allocation of resources toward this basic
requirement, all other aspects of the ICT development agenda could be more easily achieved.

6.1. Key developments since WSIS
Capacity-building has clearly been recognized in the development community as a critical
element towards effective growth of the ICT sector. Despite multiple efforts to provide
training and capacity-building opportunities in the sector, however, these have often been
inefficiently designed to reflect the needs and experience of the regions, and also generally
costly. Most important, many initiatives have failed to produce a practical and lasting impact
in the development of regulatory and policy capacity.

A recent study by infoDev (2008) provides a useful overview of capacity-building
programmes and initiatives in Africa, the Caribbean and the Pacific, and identifies the
following key findings:

• Chronic capacity shortages of policy and regulatory bodies;
• The predominance of one-off, short-term training courses, based heavily on developed-

country models and experiences;
• Poor coordination among suppliers of capacity-building initiatives;
• Inadequate attention to the broader ecosystem of, and other key stakeholders in, effective

policy and regulation; and
• Lack of clarity on the roles of, and insufficient support for, regional institutions.

The study identifies a number of capacity-building initiatives and projects with capacity-
building components, including some at the university level. However, it recognizes that the
existing initiatives are not fulfilling the demand for ongoing specialized training. Current
initiatives may be useful and informative, but mostly lack a practical and interactive aspect
that facilitates learning by doing.

To respond to this situation, ITU, infoDev and the World Bank have launched a joint
initiative – The Global Capacity Building Initiative for ICT Regulators (GCBI). While still in
its early stages, this $2.25 million multi-stakeholder initiative aims at providing sustainable
capacity-building opportunities, through the implementation of a framework focusing on the
development and support of local and regional research efforts, as well as the establishment of
capacity programmes at regional universities or training centres. To be implemented in all
developing regions during the 2009–2012 period, the GCBI provides an opportunity to
establish reputable specialized programmes for long-term needed capacity-building
opportunities in developing regions.

ITU has taken some of the most ambitious and comprehensive initiatives in ICT capacity-
building in the developing world, leveraging the expertise and interests of its members that
dominate the supply of ICT goods and services to help expand the opportunities of consumer
countries. The ITU Telecommunications Development Bureau (BDT) has established a
Human Capacity-Building programme, (ITU, 2010) which sponsors a wide range of
workshops, meetings, online training resources and Centres of Excellence around the world.



ITU has also initiated the “Connect a School” sponsorship programme, to promote linking
schools to computers and the Internet. For regulators and policymakers, ITU cosponsored the
infoDev ICT Regulation Toolkit, and hosts the annual Global Symposium for Regulators
(GSR), among many other activities.

Many donor governments have sponsored various forms of bilateral training projects. For
example, Finland recently launched the South Africa–Finland Knowledge Partnership
(SAFIPA) programme, which has several concrete objectives (see Box 2).

Basic and advanced ICT training has become a significant market itself in many developing
countries, where training institutions offer courses in a variety of technical skills that will
most likely lead to favourable job prospects. The National Institute of Information
Technologies (NIIT) of India, which established its reputation as one of the most successful
training organizations in the developing world, now has franchises in more than 30 countries
that are building upon the same business model.

Other programmes are offered under the sponsorship of major international ICT corporations,
again in the interests of their own long-term market growth in the developing world. Intel has
established several global programmes, such as the Intel Education Initiative and Learn
Programme, and sponsors country-specific initiatives in numerous countries. Microsoft,
Cisco, and many other technology companies provide similar broad-based training,
certification, and technical assistance support.

Box 2: Elements of South Africa–Finland Knowledge Partnership (SAFIPA)

Component 1: Institutional development to facilitate the take-up ICT service applications

- Process involving value added instruction, the training of trainers, activities with multiplier

effects, and networking both on institutional and human level.

Component 2: Expert skills building to develop ICT applications for end-users

- Seed Fund addressing education and learning sector competences and societal development

issues amongst selected constituency. Special attention given to the institutional education
and learning outputs as sustainability factor. Selection, upgrading and implementation of the
on-going projects and Identification and preparation of new projects and stakeholder groups.

Component 3: Partnership development to bring ICT service applications into market

- Stengthen the cooperation between networks and research institutions locally and globally,

support PPP in the service delivery process. Open dissemination of results and ideas to
innovate new development activities and promote networking.

6.2. New challenges and opportunities
Despite the undeniable proliferation of so many forms of ICT-related capacity-building
programmes throughout the world, there is little question that this area remains one of the
most elusive challenges in the realm of ICT development and finance. In fact, as access to
ICTs grows, the need for capacity-building in all areas increases in at least the same
proportions, if not more. And since there is typically little direct linkage between sector



revenues and funding of education, training and awareness programmes, the need to channel
financial resources toward such programmes through partnerships, public policies, and
international coordination is likely to remain paramount. Beyond simply continuing and
expanding the variety of established approaches, there is certainly room to consider new ideas
and options, which might help to accelerate and better institutionalize capacity-building as a
core element of ICT development strategies. Some issues and objectives that should be taken
into consideration in such programmes include the following:

• Develop methods and studies to improve measurement and assessment of ICT

capacity building programmes:

A key challenge of capacity-building objectives is to determine how effective different
methods and approaches may be in actually improving skills, awareness and ultimately
meaningful utilization of those resources. But the connection between any particular
training course or public awareness campaign and end-result benefits, whether for the
individuals involved or for the sector as a whole, is very difficult to measure. In many
cases, these benefits will occur only over time, and only with the accumulation of
knowledge through a variety of sources. Yet those who are responsible to design capacity-
building programmes, and to allocate limited funding to support them, need some useful
metrics to understand the most cost-effective tools and methods. While there have been a
handful of studies of this issue, it merits closer, more expansive review, and wide debate
and exchange of ideas among experienced practitioners of ICT capacity-building,
including detailed findings and recommendations on the nature, scope, and focus of
programmes that should be given priority support.

• Increase coordination and standardization of capacity building across governments,

international agencies, private sector:

In line with the previous issue, there is a need to increase the coordination of capacity-
building initiatives among the wide scope of organizations and institutions that are in
some manner involved in them. Many training workshops and classes, technical assistance
programmes, published and online materials, and similar resources contain either
repetitive or even conflicting information, confusing differences in approach and
emphasis, and varying degrees of detail or concentration. Given that the ICT sector itself
is vast and constantly changing, this situation is not unusual, but particularly for
individuals in government, business, or society in general who are new to these
technologies, the “noise” level of such inconsistent approaches can certainly be
discouraging. More important, lack of standardization means duplication of costs and
misuse of scarce training resources, especially skilled teachers and trainers. The
infoDev/ITU ICT Regulation Handbook is a good example of a coordinated attempt to
collect and standardize a wide scope of information in this important area, although it
represents mainly a starting point for those seeking in-depth training in regulatory matters.
Similar approaches to developing universally available and consistently designed
materials, curricula, and methods would likely produce valuable results.

• Consider innovative ways of linking capacity-building to other forms of content,

including decentralized, peer-to-peer approaches:

Just as the options for developing and supporting ICT content (see above) should take
account of the latest trends in social networking, user-generated content, and peer-to-peer



information sharing, there may be advantages in applying these new interactive methods
to capacity-building objectives as well. Practitioners and programme designers can create
platforms for local users, from technicians to educators to public officials, and can share
their knowledge and experiences, provide answers to questions, and interact to develop
unique solutions, ideally in local languages and with reference to shared concerns and

• Reinforce technical assistance to policymakers and regulators, with greater emphasis

on hands-on capacity building:

As indicated above, many technical assistance projects that support ICT policy and
regulatory institutions in developing countries tend to fall short of their intended goals,
particularly in the area of capacity-building for policy and regulatory officials. Projects
that focus primarily on specific desired outcomes, such as producing a new piece of
legislation or a policy statement and regulatory documents, do not often deliver enough
hands-on training and learning-by-doing support to the key officials involved. Instead,
outside experts may do the work of the client agency for them, with minimal substantive
involvement by the appropriate decision-makers, leaving behind inadequate skills or even
understanding of the policies just adopted.

To improve this situation will require much more focused attention to this type of
technical and capacity support. Experts must be more often embedded within the target
organizations, which requires significantly higher budget allocations for these projects,
and the personnel that they work with must be free to learn on a continuous basis,
meaning that the training cannot simply be a burdensome extra responsibility, but a main
focus of their daily tasks. More effective and customized “toolkit” materials should be
sponsored, which can be utilized and adapted by regulatory authorities directly, and these
must include adequate instructions, support, and follow-up, as well as ongoing review and
revision by the sponsoring institutions. As mentioned, such needs are particularly strong
for many Universal Access Fund administrations, whose capacity to release and
effectively deploy the large sums that many have already collected should represent an
urgent priority for capacity-building support.



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