Broadband networks, or more specifically the services and applications they support, are increasingly critical for economic growth, global competitiveness and a better life. While these networks are rolled out and technologies evolve there is a need to review universal service regimes so that they continue to fulfil their role. This report therefore discusses the main areas in which national strategies to expand broadband networks affect universal service objectives, proposes criteria to rethink the terms of universal service policies, and shares the latest developments across a selected group of OECD countries.
The notion of universal service in telecommunications was established immediately after the liberalisation of the sector. The common view was that guaranteeing affordable access to a minimum set of predetermined services for all would help prevent social exclusion and maximise the economic benefits of existing telecommunication networks. No common concept of universal service was ever adopted across the OECD. However, to articulate universal service goals, most OECD countries imposed an obligation to provide service on one or more carriers.
The economic and social objectives that served as the original foundation for universal service in telecommunications remain valid today but acquire a new dimension with the expansion of high capacity networks and the evolution of social needs. Economic incentives are insufficient to extend broadband networks and their services beyond a certain point, but there are broader economic and social justifications that support the provision of telecommunication services for all at a certain level. In this context, strategies to articulate universal service goals are changing. Legally enforceable universal service obligations remain a core instrument in many countries. However, OECD countries increasingly rely on a host of additional demand and supply instruments to achieve the maximum possible availability, affordability and accessibility of telecommunication services. These additional instruments are not always legally enforceable and include, among others, political commitments, national plans, and aspirational goals to expand broadband for all; computer and Internet literacy plans; or standard setting measures to ensure einclusion.
A re-evaluation of the scope of universal service aims to establish whether some of the services currently guaranteed through universal service obligations no longer need to be supported through this means, and vice versa, whether other services fulfil essential needs and should be supported through enforceable obligations or through other policy instruments. The inclusion of broadband service in the scope of universal service obligations is currently a core issue and there is no common position on the subject. OECD countries share a vision about the socio-economic role of broadband networks and services and they are committed to attain their greatest practical national coverage and use. However some countries view a universal service obligation on broadband as the adequate instrument to articulate their goals and others consider that an obligation may discourage market-driven investment and innovation.
Governments should follow a systematic process to decide which tool is the most suitable instrument to achieve their universal service goals in regards to broadband. The decision-making process should clearly define the specific features of the service under consideration, determine whether broadband is essential for full participation in society, establish that market mechanisms are insufficient to ensure that service is available and affordable for those without it, assess the option of imposing a universal service obligation relative to other policy alternatives, and evaluate those alternatives in light of broader policy objectives and other on-going programmes. In the end, the ever-present question will be how best to economically expand broadband coverage and use, to the greatest practical extent, with the minimum distortion on competition, as opposed to imposing a particular policy instrument.
As mobile telephony becomes ubiquitous, OECD countries may consider the role of wireless
technologies in universal service policies. In some cases, the inclusion of mobile telephony in the scope of
universal service obligations could lead to better coverage and reception. Conversely, costs could be hard
to justify, especially in large, sparsely or unpopulated areas. Countries with high population densities and
extensive, advanced wireless networks are more likely to consider the universal service obligation option.
Wireless broadband may come to play an important supporting role to fibre networks. Wireless already provides broadband connectivity to remote areas. Furthermore, mobile connectivity is eroding the justification for fixed-line subsidisation through universal service obligations by reducing the costs and expanding the functionalities of public payphones. To ensure that the potential of wireless technologies is fully unleashed, countries will need to ensure that telecommunication policies are technology neutral, and that enough suitable spectrum is made available to expand coverage and to support bandwidth intensive services.
Where universal service funds (USFs) exist, they were designed to cover relatively small gaps derived from fulfilling universal service obligations over existing networks, not to deploy new infrastructure. Where fulfilling universal service goals requires network deployment, countries will sometimes need to supplement private investment. To do so, countries face the option of reforming existing USFs or creating new funding mechanisms. USF reform requires fundamental changes to the funding mechanism and may face substantial opposition. In those cases where reform is undertaken, mechanisms should ensure that the USF is sufficient, flexible, technologically neutral and efficient. Timing for reforms should be carefully considered to prevent any potential negative impact on private investment.
New broadband networks introduce uncertainty regarding the costs of fulfilling universal service policies. Price and cost structures of broadband networks differ from those of the public switched telephone network (PSTN). Therefore it is unclear how many people will be unable to afford services on broadband networks or what will be the cost per connection. Current subscription prices for PSTN telephony may serve as rough estimates, but will need to be adapted to account for broadband network characteristics. The difficulties estimating costs may be compounded during the transition to next generation access (NGA) networks. Decreasing traffic will likely increase the costs of maintaining PSTN networks and voice-only customers may require assistance to prevent discontinuity in service and topurchase adequate equipment. Furthermore, investment will be needed to design reliable and efficient systems to transmit emergency communications over VoIP. Transition may therefore cause a temporary spike in funding requirements.
To maximize the benefits of NGA networks and telecommunication technologies for people with physical disabilities, countries will need to develop specific policies and consider the potential role of universal technical standards. Measures could be taken early on in the state of development of new communication infrastructures and encompass design, development and fabrication processes of applications and equipment to ensure that developments do not go down a path that creates new barriers and forces the disabled to play catch-up. That being said, new technologies, such as text-to-speech functions on computers/e-readers, or voice prompted “search and query responses” on smart-phones offer tremendous opportunities to empower users that face challenges in one or more areas. These technologies are sometimes driven by commercial imperatives and in other cases they are developed in response to requests from certain communities. Both these drivers need to be acknowledged in the formulation of government policy. In addition, historical differences in the treatment for content (e.g. value added tax) delivered through different media (e.g. books and newspapers vs. electronic devices) need to be considered in terms of the ability of electronic devices to foster inclusion.
The Annex provides a description of universal service policies in selected OECD countries.
Calvo, A. G. (2012), “Universal Service Policies in the Context of National Broadband Plans”, OECD Digital Economy Papers, No. 203, OECD Publishing.
Saturday, August 18, 2012
Friday, August 10, 2012
Learning from China's rise to escape the middle-income trap : a new structural economics approach to Latin America
This paper discusses the causes of the middle-income trap in Latin America and the Caribbean, identifies the challenges and opportunities for Latin America that come from China's rise, and draws lessons from New Structural Economics and the Growth Identification and Facilitation Framework to help Latin America escape the middle-income trap. Countries in Latin America and the Caribbean are caught in a middle-income trap due to their inability to structurally upgrade from low value-added to high value-added products.
Governments in Latin America and the Caribbean should intervene in industries in which they have a comparative advantage, calibrating supporting policies in close collaboration with the private sector through public-private sector alliances. Through continuous structural upgrading in sectors intensive in factors such as natural resources, scientific knowledge, and unskilled labor, the region could achieve dynamic growth. This would require investments in education, research and development, and physical infrastructure.
Therefore, industrial upgrading and diversification would be essential to avoid further de-industrialization arising from the competitive pressures of the rise of China, broaden the base for economic growth, and create the basis for further sustained reduction in unemployment, poverty and income inequality. Failure to do so would lead to a loss of competitiveness and risks of further de-industrialization.
Tuesday, August 7, 2012
The education system in the United States is continually challenged to adapt and improve, in part because its mission has become far more ambitious than it once was. At the turn of the 20th century, less than one-tenth of students enrolled were expected to graduate from high school. Today, most people expect schools to prepare all students to succeed in postsecondary education and to prosper in a complex, fast-changing global economy. Goals have broadened to include not only rigorous benchmarks in core academic subjects, but also technological literacy and the subtler capacities known as 21st-century skills.
To identify the most important measures for education and other issues and provide quality data on them to the American people, Congress authorized the creation of a Key National Indicators System (KNIS). This system will be a single Web-based information source designed to help policy makers and the public better assess the position and progress of the nation across a wide range of areas. Identifying the right set of indicators for each area is not a small challenge. To serve their purpose of providing objective information that can encourage improvement and innovation, the indicators need to be valid and reliable but they also need to capture the report committee's aspirations for education.
This report describes a workshop, planned under the aegis of the Board on Testing and Assessment and the Committee on National Statistics of the National Research Council. Key National Education Indicators is a summary of the meeting of a group with extensive experience in research, public policy, and practice. The goal of the workshop was not to make a final selection of indicators, but to take an important first step by clearly identifying the parameters of the challenge.
Monday, August 6, 2012
From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop
The opening workshop address was designed to provide an overview of women’s status and participation in entrepreneurial careers. E. J. Reedy presented findings from a Kauffman Foundation study titled “Sources of Financing for New Technology Firms: A Comparison by Gender” (2009) and noted that a relatively small
number of studies have specifically examined the experience of women in high-tech entrepreneurship.2 The Kauffman Foundation study shows that among all surveyed startup firms, only 15 percent of those in the biotechnology and hightechnology sectors reported having a female primary owner as compared to 30 percent femaleowned startup firms in all other sectors. In the initial start-up year, among the high-tech start-ups examined, 20 percent of male-owned firms reported obtaining formal equity (primarily venture capital or angel funding), compared to 7 percent of female-owned firms. Reddy suggested that this occurs because the venture capital industry is relatively closed and male-dominated. His studies show that women-owned firms represent a small minority of the overall venture capital backed firms, which may contribute to the lack of initial formal equity.
He noted that an additional factor may be that female owners of high-technology firms have less overall
managerial experience than their male counterparts and are less likely to have previously owned
start-up companies in the same field, since 55 percent of male owners have previously owned a
high-technology start-up compared to 12 percent of females. Reedy pointed out that venture
capitalists view this serial behavior—and even serial failure—as a mark of an entrepreneur being
tested, because investors value an entrepreneur’s willingness to start over again and again.
Reedy further elaborated on the gender gap in the high-tech industry by quoting similar
findings by other researchers. A 2006 study by Cross and Linehan found that in established
high-tech organizations, women are often excluded from formal and informal networks that
would otherwise provide access to managerial or technical leadership positions in those firms.3
Similarly, a 2005 study by Tai and Randi L. Sims4 found that women had difficulty gaining
senior management experience that would make them attractive to external capital providers,
should they start their own companies. Reedy considered the pervasive culture in such
enterprises as a plausible reason for this gap, where issues such as work-life balance and familyfriendly
policies affect gender equity.
Despite the existing gaps, Reddy noted that women-owned firms represent a growing
component of the small-business sector. According to a U.S. Census Bureau report,5 there were
6.5 million privately held women-owned firms in the United States in 2002. These firms
generated an estimated $940 billion in sales and employed 7.1 million people. He continued to
comment that women-owned firms now account for 30 percent of all firms, including selfemployment
and larger businesses. From 1997 to 2002, the number of women-owned businesses
increased 20 percent. However, he noted that revenues from women-owned businesses increased
less than 15 percent during this period, compared to a 22 percent revenue increase for all
A study on women-owned high-tech firms in four metropolitan regions in the United
States—Silicon Valley, Boston, Washington, D.C., and Portland, Oregon— found that in all four
regions women-owned high-tech firms were smaller in terms of average revenue and
employment.6 Reddy suggested that women are more likely to form companies alone than in
partnership with men, even though studies indicate that the success rate for new companies
increases as the number of company founders increases. Women entrepreneurs are also more
likely to participate in high-tech sectors such as software publishing, computer systems design
services, research services, and management and consulting services; whereas men are more
likely to establish companies in the manufacturing sector. Interestingly, Reddy noted both maleand
female-owned start-ups were initially shown to be based out of the home, 50 percent of the
time for males and 60 percent of the time for females, suggesting a focus on consulting efforts.
Female-owned high-tech start-ups do show a slightly higher survival rate than those
owned by men. However, Reedy noted that women entrepreneurs launch high-technology firms
with less financial capital than men, and continue to follow a different financial strategy over time. Women’s reliance on internal funding sources (e.g., owners’ savings, loans from family
and friends, credit cards) makes a difference such that years after startup, women-owned hightech
firms lag behind men-owned firms in numerous performance measures, including revenues,
assets, and employment. However, profits were shown to be higher for female-owned firms.
In addition, Reedy discussed the age at which entrepreneurs usually start their businesses.
One of the common misconceptions about entrepreneurs is that these individuals are age 25 to
30.7 In fact, it is more common for those in their late 30s and early 40s to start companies
because at that age people have considerable industry experience and starting a business is a
strategic part of their overall career goals. This average start-up owner age was not shown to
vary significantly between men and women or across sectors. But women owners reported
working slightly fewer hours per week than their male counterparts.