Use of Universal Service Obligation Fund and Stimulus Package to Expand Rural Coverage

Author: Nadine Manjaro, Senior Analyst, Mobile Networks

Published: 16 Jun 2009

As operators reach market saturation in urban areas and turn to rural areas for growth they face new challenges in both emerging and developing markets. How can they cost effectively deploy mobile services in areas that lack access to electric grids and wired infrastructure and how can they increase subscribers when the target group lacks resources to pay for services? Governments in Europe, Asia Pacific, and North America are pushing mobile operators to deliver services to rural areas in an effort to provide fair access to all of their constituents. Some governments are leveraging the Universal Service Obligation Fund (USOF) to assist in their efforts and the United States is leveraging the Federal Stimulus Package. Universal Service Obligation is a government-provided safety net that guarantees a minimum level of service for phone and Internet access for all end-users. In most countries, the regulatory bodies mandate public telephone operators and wireless carriers to contribute to a Universal Service Obligation fund. Incentives can work, but how far can governments push operators to share infrastructure before market competition refuses to sustain those efforts?

The full text of this Insight is available to subscribers of the Mobile Networks Research Service and the Radio Access Networks Research Service.

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