1. Project Description
In this era of globalization and advanced technology, most people in developing countries still live in rural areas that are isolated and lack access to basic resources and opportunities that are necessary for development. In Asia, it is estimated that 75% of its population lives in rural areas. Rural dwellers are generally poor primarily because they are far from the metropolis where their markets are located. This creates a vicious cycle. Few potential customers mean high price, which further reduces the number of providers, and so on. These remote areas, according to the United Nations, also suffer from “information poverty” or the lack of access to basic information on health, education, and employment that will help better the lives of the people.
Access to information through telecommunication services is crucial for the development of rural areas. In more developed countries, access to information through the internet is propelling their economies and improving people’s welfare. Thus, innovations in ICT have become crucial tools in addressing universal access and bridging the digital divide.
However, perceived lack of profitability in investing in telecommunications and ICT infrastructure in rural communities and the absence of policies and strategies for universal access impede the realization of this objective. The high cost of telecommunications, the basic requirement for internet access in most developing countries, compared to the limited financial resources of rural dwellers hampers the deployment of ICT services especially in far flung areas.
To address universal access, the Philippine Government initiated the Service Area Scheme (SAS) wherein Public Telecommunications Entities (PTEs) were obliged to roll out landlines in unserved areas.[1] However, global advances in convergence of technologies resulted in stiff competition for profit and market share in the telecommunications sector. These brought about the rapid decrease in cross subsidy between international and local operations of PTEs. Coupled with the lingering effects of the Asian financial crisis, local telecommunications service progress was stunted.[2] This negatively affected the roll out of lines in unserved areas and thus the government’s universal access goals. With the pressing issues in the roll out obligations of telecommunications companies (telcos), the government initiated steps to improve universal access. The government reformed the last mile obligations of telcos to include the establishment of Telecenters and public calling offices (PCOs) instead of the exclusive fixed line roll out obligations stipulated in the SAS.[3]
Given limited resources, many developing countries are now finding means to increase access to telecommunication and ICT services. An innovative way to have access to ICT service is the telecenter. Telecenters may differ in terms of size, services offered, technology used, and available infrastructure, as well as location, ownership, and relationship with other public facilities. This kind of flexibility makes the concept of telecenters so attractive as a tool for economic development, especially in rural communities.[4]
A basic feature that distinguishes a telecenter from a typical public phone access is that a variety of services are made available via the telecommunication link – voice, fax, email, web, etc. In this way, telecenter exploits the convergence in computer and telephone technologies, making investment in telecommunication infrastructure more attractive because the telecom facility can now deliver more services than simply voice telephone calls. These “multi-purpose” telecenters are seen as an incentive for encouraging the expansion of the national telecommunications infrastructure into outlying areas.
There are two general types of telecenter based on the services they offer.[5] Telecenters that offer “basic services” are those that use a common network of infrastructure and software platform, such as basic backbone telephone network, and standard voice instruments. Basic services include telephone, facsimile, printing, photocopying, computer services, electronic mail, internet access, and voice messaging while telecenters that offer value added services (VAS) involve add-ons to the basic infrastructure and platforms of the telecentres. Examples include tele-health, tele-medicine, local broadcasting, tele-education, e-post office, and e-commerce.
It is important that telecenters are able to address the needs of the community for basic information and communications services. However, income generation has proven to be a key for the success of telecenters. If they can offer services that customers are willing to pay, they can generate profits for the owners and economic development within the community. The sustainability of telecenters depends on several key aspects. Public funds can be used to initially set up the telecenter and train the participants but dependence on these funds does not prove viable in the long run. In fact, even in developed European countries like Sweden and Finland, many telecenters closed when government support was withdrawn.
There is a central, profit-driven role for business in ICT for development. The private sector, through ICT as a tool for development, can generate income in rural areas by creating investments for infrastructure, broader market development efforts and overcoming widespread misperceptions about the business opportunities at the bottom of the pyramid (BOP). Several business models have been developed throughout the years based on the experiences of telecenters around the globe. There is “stand-alone” business, joint purchasing, or a network of small satellite telecenters to name a few. Whatever the business model used, studies have stressed the importance of “community ownership.” Content development has also been the driver of telecenter profitability in some developing countries. It is an important service to address information demand, which in the end will contribute to income generation. Content should be tailor-made based on the needs of the community.
A critical element in starting up a telecenter is to secure financing for infrastructure, equipment and human resource expenditures at the initial stage of development. Given that start up cost for high technology is relatively high, telecenter proponents should explore partnerships with other stakeholders to minimize risk and share the actual cost of investments. Financing schemes available for telecenters include government loans, development bank loans, grants, soft loans from multilateral development institutions, local government, and innovative financing schemes such as franchising. The key in securing financing for the initial stage is to spread the capital cost among partners.
In the Philippines, the government made initial success in expanding access to information and telecommunications by encouraging the establishment of Public Calling Offices (PCOs) and telecenters in unserved communities where individual subscriptions and computer hardware are too expensive for most people. In 2002, the government implemented Memorandum Circular 08-07-2002 on "Deployment of PCOs and Telecenters in the Countryside", which allows firms to register as "Public Telecommunication Office and Telecenter Service Providers" for both basic and value-added services This reform is foreseen to accelerate progress started under the previous Service Area Scheme in bringing voice and data services within the reach of both families and small producers, as well as in creating opportunities for new telecommunications enterprises in secondary towns. The Government's goal is to reduce access time and cost to vital information and communication, promote local community development, bridge the digital divide and expand universal access.
Some telecenters were deployed through international support and funding. However, when funding ceased, sustainability and viability became major issues. Moreover, a viable and sustainable telecenter business model is yet to be conceptualized and adopted on a nationwide scale. There is also no comprehensive government initiative in setting up a “cook book” for telecenter development, which includes content development, funding, stakeholder involvement and private-public sector collaboration.
Information and telecommunications in the Philippines will be a vital driver of socio-economic growth and development. By the turn of the 21st century, the Philippines envisions to have laid the infrastructure for every business, every agency of government, every school, and every home in the Philippines to have access to information and communications technology. The challenge ahead involves the crafting of an enabling environment and the development of viable and sustainable telecenter models that address the needs of the people.
2. Project Objectives
2.1. Developmental Objectives
Information and communication technology through community telecenters provide new opportunities for social and economic integration and can serve as a catalyst for synergies between development goals and business objectives. ICT networks and telecenters can provide access to isolated communities, provide marketing and distribution channels, drive down transactions cost and help aggregate demand and buying power. Telecenters can bridge the digital divide, enhance rural connectivity and access to information and bring in new ways to generate income.
2.2. Specific Project Objectives
- Conduct a general assessment of the policy environment vis-à-vis the market realities of providing internet access and communication services to rural communities.
- Recommend government intervention strategies and policy options to address “information poverty” (based on United Nations), expand universal access and bridge the digital gap.
- Provide a comprehensive overview of past and existing telecenter initiatives in the country and conduct an analysis towards the identification of the crucial features of a successful telecenter.
- Develop a citizen-centric, market-oriented business model for the viable and sustainable operation of telecenters in rural communities with the end goal of achieving universal access, bridging the digital divide, enhancing economic development and improving the welfare of the community.
3. Project Beneficiaries
The project will provide substantial information, analysis and recommendation on the framework, strategy, and policy to promote the achievement of universal access by providing basic communications and internet services in the rural areas. The following will benefit from the research:
- The investors and operators of telecenters could benefit from the findings and adopt the business model developed. They include the Department of Transportation and Communication (DOTC), Philippine Postal Corporation (PPC), Telecommunications Office (Telof), local government units, public telecommunications entities (PTEs0, Small and Medium IT Enterprises (SMITES) and other private firms;
- The Commission in Information and Communications Technology (CICT) could make use of the database and policy recommendations;
- The National Computer Center ()NCC could benefit from the identification of content to be taken from the survey and analysis of community needs;
- The Advanced Science and Technology Institute (ASTI) of the Department of Science and Technology (DOST) could benefit from the identification of the different technologies available and recommended;
- The National Telecommunications Commission (NTC) could adopt the recommendation regarding Last mile initiatives;
- The households of the local communities would benefit from the establishment and operation of a viable and sustainable telecenter as it will provide them with ready access to important information that will help promote their living standards. The private companies in the rural areas would also gain from the presence of telecenters for the conduct of their business.
4. Project Sustainability
The project proposes to develop a framework, which includes a survey instrument and business model, for analyzing the components of a viable telecenter in the rural areas to be used by the government, operators and the community.
5. Project Methodology and Activities
- Conduct research on the best practices and successful models of telecenters in other Asian countries. A study tour will be undertaken to examine actual telecenter operations. (2 months)
- Conduct a case study of past initiatives in telecenters for each major island in the Philippines, namely, Luzon, Visayas and Mindanao. (5 months)
This includes:
- Gathering of primary and secondary data
- Interviews from involved stakeholders
- Gap Analysis
- Drafting of case study
- Conduct a survey on existing telecenters and private sector initiatives. (5 months)
The survey will focus on the following:
- Identify the Business model utilized
- Determine telecenter funding and resources
- Draw out the stakeholders involved
- Identify operations and management
- Determine telecenter content and services offered
- Determine the extent of demand for telecenter services
Data from the survey will be tabulated and analyzed using methodologies in reference to the conceptual model. These include identification of key parameters of success, frequency analysis, simple impact analysis and comparison of local initiatives with international best practices and telecenter models.
- Draft an overview of past government initiatives relating to the achievement of universal access (Republic Act 7925, the Service Area Scheme and other rules) and conduct an analysis of the current policy and regulatory environment. (1 month).
- Draft policy recommendations and government interventions strategies for telecenter development and deployment (1 month)
- Develop a conceptual (component) and operational (implementation) frameworks for a citizen centric business model for a viable and self-sustaining telecenter in the rural areas. (2 months).
- Conduct a seminar workshop and meetings with concerned government offices and private firms to present initial findings. (2 months)
- Draft final report and revise, as necessary. (2 months)
6. Project Timeline (January 2005 to August 2006)
7. Project Outputs
The project will deliver the following outputs:
- Recommendations on government intervention strategies and policies for the creation of an investment climate that is favorable to the establishment and operation of telecenters in the rural areas.
- A business model for a viable and self-sustaining telecenter in the context of Philippine rural areas.
- A database of existing telecenters and other similar efforts for achieving universal access
- Presentation and survey results
[1] Executive Order 109 issued by Pres. Fidel V. Ramos in July 1993.
[2] Nestor Virata, “Assessment of the Implementation of Service Area Scheme (SAS),” a study under the Accelerating Growth, Investment and Liberalization with Equity (AGILE) Project with funding from the United States Agency for International Development (USAID) for the National Telecommunication Commission (NTC), January 2002.
[3] National Telecommunications Commission Memorandum Circular 08-07-2002 on “Deployment of PCOs and Telecenters in the Countryside, July 2002.
[4] Townsend, David N., “Model Universal Service/Access: Policies, Regulations and Procedures,” International Telecommunications Unit (ITU)/Commonwealth Telecommunications Organization (CTO) Workshop on Universal Access Models, Banjul, The Gambia, April 10-14, 2003.
