Leveraging Telecommunications Policies for Pro-Poor Growth: Universal Access Funds with Minimum-Subsidy Auctions

This paper discusses the topic of Universal Access -- specifically Universal Access to telecommunications in rural areas of developing countries -- from the policy perspectives of telecommunication policy reform and of complementary Universal Access public subsidy mechanisms. Starting with broad lessons learned on competition in telecommunications, the report will narrow in onto the specific mechanism of minimum-subsidy auctions for Universal Access to telecommunications. First of all, how does competition in telecommunications affect Universal Access/Service? What roles does competition play on technological innovations such as Internet or mobile? And what regulatory safeguards have been or are necessary to enable competition and to promote Universal Access/Service?We will first analyse the experiences of OECD countries that started reforming their telecommunication markets early on, to gather insight into the process and impact of telecommunication reform. We will also review complementary mechanisms that OECD countries have set up to subsidise Universal Access in the areas unlikely to be covered by market forces alone. We will then review some regulatory measures that can help to provide Universal Access to the rural areas of developing countries without subsidies, and we will discuss some cost-effective ways for developing countries to provide incentives to markets to expand telecommunication infrastructure to poor rural areas, before making use of subsidies...