Recommendations
Governments should regard market forces as the primary means to extend access and connections to mobile communications. Universal service funds should play a 'last resort' role in the provision of access to communications and should only be adopted to extend coverage to very remote or high cost areas, where it is not commercially viable to build networks without subsidies.

The $4.4 bn that has been accrued by universal service funds and has not yet been disbursed should be invested in mobile coverage rollout. This should be complemented by the reduction of other barriers to mobile usage, such as consumer tax, as a matter of priority. Such activity will not only increase network coverage but also boost penetration and usage.

Universal service funds should only be used as a short to medium term policy tool, and should be phased out over time. There is no justification to continue using this funding mechanism in markets where universal service goals have been achieved, either through market provision or through government subsidies.

Universal service funds should be spent on the lowest cost access technology, typically mobile networks, which have been demonstrated to be the most efficient way to extend access to telecommunications.

Governments should make public their policies towards universal access, ensure transparency of their accounts, and review progress regularly.

Making it Work
The mobile industry has already removed many of the barriers, both monetary and non-monetary, to provide accessible communications.

The priority for governments is to continue to encourage the industry to deliver commercial solutions that will achieve universal access and service goals on a sustainable basis.

To date, universal service funds have taken substantially more money out of the industry than they have put back in, generally failing to achieve their objectives.

Policy makers should consider universal service funds only as a last resort, when a relatively mature market has failed to provide widespread access to telecommunications services.

Mobile coverage will extend to more than 90% of the global population by 2010 on a commercially viable basis. There will remain, however, some areas that will never be economically feasible to serve. In most countries this will be the last 2–5% of the population, which corresponds to 20–30% of the geographic area.

The study shows that mobile is the only viable solution to provide universal access and universal services. If the unspent and future universal service levies are allocated to mobile operators, it will be possible to reach close to 100% population coverage via mobile networks.

Governments should focus their policies on connecting the 2.7 bn people who already live in areas covered by mobile networks, but don't currently use mobile services. By removing sales and customs taxes on mobile handsets and services, for example, governments could boost affordability for the poorest members of society and mobile penetration by as much as 20% in areas which already have network coverage.

Earlier studies have shown that a 10% increase in mobile penetration can increase the annual economic growth rate of a developing country by 0.6%. Governments should prioritize their policy objectives to realize these gains, along with a focused program of extending geographic coverage to sparsely populated areas.

GSM Association White Paper
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