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.
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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
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
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
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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
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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
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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
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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
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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
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