Paper for Publication 08th Oct. ‘09 Meeting the challenge of climate change in developing economies, – an example from Pakistan Although it is mainly the developed countries that have to address the menace of climate change but as mentioned in World Bank’s “World Development Report 2010: Development and climate change”, the developing countries also need to lower carbon paths while promoting development and reducing poverty. Unfortunately the tide seems to be flowing in the other direction. My country, Pakistan, is no exception. Pakistan is the 6th most populous country in the world 170 million people - 62% of them living in villages and another 17% in small semi urban towns and cities. With population expanding @ of more than 2.6% and 60% people under the age of 24, it is increasingly becoming difficult to provide education, healthcare and jobs in the villages. This results in increasing mass migration – or mass commuting - to the large cities, in the process throwing colossal amounts of carbon in the atmosphere. What brings people to large cities? Job opportunities. No doubt jobs are scarce even in large cities, but still there are millions of jobs for which villagers migrate – or commute daily/weekly – to the cities. It is ICT that can make it possible to train them and utilise their services in the villages. Jobs like data entry, back-office accounting, web designing/maintenance, etc can easily be done by rural people provided they get the necessary education, training and facilities like connectivity. document1 Page 1 / 8 Education. In countries like Pakistan many villages do not have schools, at least not of acceptable quality, if at all. If and when extra help is required by the kids, it is not available. Modern teaching aids are unheard of. ICT could help instantly. Empowerment of Women. In those - mainly primitive - societies it is even more difficult for girls to go to school, or to work in offices and workshops. ICT could enable them to learn and work from their homes. This would also help in women empowerment which in turn contributes to other benefits, like population control. Healthcare: Despite all efforts, Governments have not been able to make enough doctors go practice in villages. ICT could bring basic healthcare to the doorsteps of majority of the population via Tele-medicine. It holds a huge promise and pilot projects have proven it’s efficacy. Not-so-lucrative profits in Agriculture. Agriculture happens to be the major occupation in the villages so they need to learn the modern methods and tools of agriculture like, drip irrigation, use of disease-resistance seeds, proper pesticides at proper timings, etc., information that could be acquired by simple mouse-clicks. Their agricultural profits could increase with timely access to market prices. But the pre-requisite is a ubiquitous ICT network. Entertainment. The village entertainment is no match with what is available through TV channels and the net. All that most villages get are a couple of state owned terrestrial TV channels. They yearn for more and the cities promise them all. What if all that could be had in the comfort of their own homes? Other factors. For example there are more than 3 million Pakistanis working abroad, most have their families back home. They want to communicate but in all those unserved villages the necessary ICT infrastructure is missing. The list goes on and on… How to stop mass migrations/commuting that contribute to climate change There are two options for the governments – either they create infrastructure in the large cities that is enough to absorb those ever growing tens of millions streaming in, or develop all over to provide people what they need where they need. As for the first option, the large cities are already heavily over-burdened while the second option is also not easy. The governments are doing whatever they can in this regard, but we all know that it is the ICTs that can play a MAJOR role. This infrastructure of infrastructures, that is making distances irrelevant: can remotely provide healthcare and education – education itself addresses many of the issues confronting us document1 Page 2 / 8 can provide employment in villages and make it possible for millions (especially women) to contribute to the economy without leaving their homes can provide information to the farmers to maximize yields and profits can give the villagers access to branchless banking can provide entertainment and, and, and, … But for this, first all the villages need to be connected with rest of the world. Example of a solution from Pakistan In Pakistan, the job of connecting such areas spread over 850 thousand square kilometers has been assigned to Universal Service Fund - also called USF. Most people are familiar with the concept of USF - all telecom operators contribute a percentage of their revenues into a Fund. The Fund is then used to spread ICT Services in the unserved areas. It is the same in Pakistan. USF Pakistan was created in the ministry of IT, two years ago, where the licensed operators contribute 1.5%. of their revenues. There is no direct government funding involved. Then, to make use of the fund in an efficient manner, an innovative way was chosen, ie to create a COMPANY (rather than a bureaucratic government department). USF Company was thus created as a Public-Private-Partnership (of which the author is the CEO). At USF Co. we identify unserved areas and subsidise capital expenditures of telecom operators to help them provide ICT services in those areas. Who gets how much subsidy, is determined through open competitive bidding. USF in Pakistan has been a success story so far, bringing telecom to thousands of unserved villages, optic fiber to remote corners of the country and broadband to hundreds of small towns and cities, in short, spreading ICT to promote development in the rural areas (where majority of the population lives) and thus doing our bit to develop unserved areas and help prevent climate change. Innovations in USF in Pakistan To start with, in order to disburse the fund it was decided to devise a mechanism that brings in private sector efficiencies. Thus breaking from the norm, it was decided to form an independent Company under the Companies law, as a Public-Private-Partnership document1 Page 3 / 8 entity, with a Board of Directors having balanced representation from Public and Private sectors. This was one innovation that helped a great deal in getting rid of usual bureaucratic hurdles and moving swiftly. Up until then all attempts to discharge Universal Service Obligations in various countries, were made through some kind of “government departments”, created within the ministries or the regulators. But that is not all. Open competitive bidding process, that is followed to determine who gets how much subsidy, is kept scrupulously transparent – all bidding and other related documents are available on the Website for anyone to see. USF Rules ensure sharing of infrastructure raised with USF money, so that no local monopolies are created. It is also ensured that no ONE telecom operator gets more than 50% of the total subsidy disbursed – a lesson learnt from some countries where most of the fund went to the incumbent. This way maximum number of operators get the subsidies so that all work together to achieve the national objectives Thanks to USF, so far, around 230 million dollars are being invested out there in the unserved areas of Pakistan for ICT services. In this the USF contribution is nearly 150 mil. Actually competitive bidding forces operators not to demand too high subsidies and therefore they have to cover the gaps with their own investments. Once the infrastructure has been laid and the payments have been disbursed, USF monitors quality of service for a certain number of years. USF keeps unconditional Bank Guarantees from the operators to ensure compliance. To top it all, in Pakistan USF has made it obligatory that all telecom infrastructure being set up in the Rural Areas using Universal Service Fund, is powered by Renewable Sources of Energy. Pakistan document1 Page 4 / 8 has probably the most Green USF programs in the world! USF Pakistan has 4 major programs: 1. 2. 3. 4. 1. Providing basic Telephony to the unserved villages, Increasing Optic Fiber penetration in areas not connected with fiber Taking Broadband to unserved Urban Areas – the 2nd and 3rd tier cities and towns And in the very near future, taking Broadband to rural areas via Telecenters Providing basic Telephony to unserved Villages This USF Program identified around 12,000 unserved villages where there are no phones at all. People of those areas have to walk kilometers to make a single phonecall – mostly in emergency situations. Work is progressing to cover nearly 8,000 villages and the good news is that Services have already started in 1,800 of those. Subsidy proposals for another 1,400 villages have been solicited through advertisements. It is satisfying to see the villagers using their own phones. For those who cannot afford, thousands of Public Call Offices are also being established. 2. Increasing Optic Fiber penetration in areas not connected with fiber The 2nd USF program aims to connect each and every (what we call) “Tehsil” with Optic Fiber Cables. In Pakistan there are about 400 Tehsils. 30% of these Tehsils are unserved with Fiber and we have document1 Page 5 / 8 set about correcting this. As we are all aware, laying fiber is like making super highways to these far-off areas that will be used for backhauling telephony, broadband and all those applications that come with – tele-medicine, e-education, e-governance, e-commerce and what have you. 3. Taking Broadband to the 2nd and 3rd tier cities and towns The 3rd USF program relates to increasing the Broadband penetration. Presently there are a pathetic half a million Broadband connections in Pakistan and those too are all confined to less than 20 big cities. Therefore USF has stepped in with the strategy of targeting the 2nd and 3rd tier cities and towns with an innovative program of its own. This is the second most important innovation of USF Pakistan. Where others are contemplating use of USF for broadband, we have gone ahead and implemented it. In our model, one-time subsidies are paid only AFTER the Broadband Service Provider is able to demonstrate that not only has he laid the infrastructure in the particular unserved area but the target number of new Broadband connections has also been reached by him. And to keep the competition alive, there is more than one Service Provider competing for Broadband connections in the same area. The program design forces the Broadband Service Providers to increase numbers by doing whatever it takes - like reduction in Tariffs. This is important as affordability seems to be a barrier to broadband growth in Pakistan. As mentioned, without increase in numbers they do not qualify to receive subsidies. Once the numbers increase, not only subsidies become payable but the Economies of Scale kick in as well. Therefore larger cities document1 Page 6 / 8 also feel the positive impact. In one USF area, Broadband monthly charge has come down fro Rs.999 ($ 12) to Rs. 299 ($ 3.6) We have held auctions and signed subsidy agreements for 4 of the 11 regions that we need to cover. Just the first 4 regions consist of more than 200 cities and towns where our target is to bring about 250,000 Broadband connections in that region. This is akin to sowing the seeds of Broadband in those places. The next 2 regions are already advertised for auctioning. The service providers winning subsidies are obliged to create EDUCATIONAL Broadband Centers in every high-school and library in these small cities and towns; including training of 2 teachers and free broadband for the first year. In addition each town will have at least 1 Community Broadband Center for people who cannot afford their own PCs. There will be 2,700 such Broadband Centers benefitting millions in the small cities and towns of Pakistan. 4. Broadband Multipurpose Community Telecenters for villages This is a different ball-game altogether. There are tens of thousands of villages with no PCs & no computer knowledge. Therefore we have to go via rural Community Telecenters. But even if we set up telecenters in thousands of villages, we still cannot be there in thousands of villages - to support, to monitor – so that they sustain themselves. Although there are many challenges, sustainability is right on top. All over the world many telecenters fail because after the TV cameras go away, they start falling apart as they cannot sustain themselves. We are working on creating models incorporating international best document1 Page 7 / 8 practices with local knowledge and expertise. We will also arrange ICT trainings on a large scale. The problem of electricity will be solved through Alternate Energy Sources. A pilot program has been launched. Once that gets cleared, we plan to roll out thousands of telecenters all over the country, bringing broadband to the villages. Setbacks and challenges There have been setbacks in these two years and with each setback we have tried to learn lessons and correct our course and move on. For example at times for areas that are too difficult, there have been no bidders. So we split that particular area to auction in smaller lots. Then we noticed that bidders shy away from areas where adjacent areas are unserved. So we have changed the strategy accordingly. The latest issue that has arisen is that of subsidising Opex. Up to now we have only subsidised Capex. So as always we are talking to service providers as to how to manage that and hope to find solutions in the next days. It goes without saying that this kind of flexibility is only possible because we are a “company”, rather than a “government department”. USF in Pakistan has been a success story so far, bringing telephony to thousands of unserved villages, optic fiber to remote corners of the country and broadband to small towns and cities - spreading ICTs in villages (where majority of the population lives), promoting development and helping to meet the challenge of climate change. - Parvez Iftikhar CEO USF Co., Pakistan www.usf.org.pk document1 Page 8 / 8