In every developing and developed nation's telecommunication jargon, 'universal service' is one phrase that is captivating attention. What is disappointing though, is the attitude that is associated with it. Most of them relate to USO as 'Universal Service Obligation'. Can't we approach the acronym USO as 'Universal Service Opportunity' and give solution a better chance over convolution?
In an era of international telecommunication liberalization, I would, through this memo, like to explore universal service as an opportunity for leveraging international investment. This means that telecom regulators, with a strong mature policy, can come up with a business strategy to lure international investment to promote universal service. On the other side of the story, international telecom companies can come with an investment plan to articulate universal service as a creative entry mechanism and hence explore a potential business breakthrough.
The biggest motivation for inviting international competition in this sector, is the inefficacy of the cross subsidy model. I believe that generation of funds via a cross domain accessibility revenue model, gives the government a much better chance to materialize universal service. To clarify this, I have developed a naive model: 'proctorial expansion model'. It has two procedures: the inside-out procedure and the outside-in procedure.
The Model
We can visualize the entire telecom domain as a set of 2 concentric circles. The inner circle is the rich circle, conceptually comprising of an aggregation of rich telecom services provided by several players. The outer void circle is the opportunity circle, the target of the service. In the inside-out procedure, the government encourages every service provider in the inner circle to expand its services to an adopted sector of the outer circle, by cutting down on the taxes charged for providing services to the inner sector. This, I believe, is a strong enough incentive for the service provider because it is offered with a massive cost advantage in a fiercely competitive domain. The service provider has an opportunity to steal some substantial chunks of the 'rich' market share by way of lowering its service costs. Every fraction of the outer sector expanded, is rewarded by the government in the form of further tax deductions. In the outside-in procedure, the government gives every potential new telecom player mega incentives to enter the inner circle, if it promises to proctor some portion of the outer circle. To boost these further, the regulator can device methods which entitles every other industry, that has a market in that particular sector of the outer circle, to use the telecom services only of the proctor of that particular sector. Although this tends to create local monopoly, globally it is still a competitive space. If a competitor is able to proctor a sector in a more cost effective manner (for the sheer anticipation of a government tax incentive), he will definitely try and procure it, which will force the existing player to reorganize its cost model and not take advantage of the monopolistic status. After all, you need to know monopoly, to know competition !
By doing this the national telecom regulator is mobilizing funds, in an automated manner, towards universal service. The onus is now on the existing and the newer players to device methods to adapt to the model, in a manner that is most feasible to their economics and logistics.
Moving to the other side of the fence, there are some real opportunities for the telecom companies, especially international ones, to take advantage of the universal service jack. The international competitors pay some serious taxes and still manage to compete because of superior service quality and business models. So as an international player, if one comes up with an investment plan that satisfies the government's goal of providing service to the outer circle, in a cost effective manner, it can exploit the advantage of tax deduction for providing services in the inner circle. Now the economic gains of this (by being able to lure a portion of highly profitable market towards yourself) can actually more than compensate for the probable loss one might have to incur in the process of providing service to a 'poor' market. The company can judiciously re work its call and associated service cost model in the competitive inner circle, to take utmost advantage of the government incentive. However, I feel that master stroke will be to work out means of providing cheap service in the outer model so that even if there isn't much of a market to exploit, the return on investment is still in the positive.
On the technology front, using WLL services is a potential economic option. Here the spectrum allocation charge does not come into question because it is going to be a government backed option. Secondly backing technology that uses the vintage power-line networks to provide telecommunication infrastructure is a big opportunity for resolving the issue of universal service.
Strategically, as a proctor of the adopted sector, one can invest on efforts to develop or enhance the brand equity of your sector as a potential market for suitable industries. Every new industry lured towards your sector for a potential market, will require a telecommunication infrastructure to further its cause. As per the policy, you will be the telecom solution for all the potential industries. One can push the creative pedal to boost the economics. What is the motivation? The national regulator's patron which will help you make your venture more and more profitable.
The entire hypothesis delineated above is a attempt to neutralize my conceptual model of an inner white circle (area of rich service) surrounded by an outer black circle (area devoid of service), to a uniform single grey circle (area of universal service). This is practically a difficult proposition and the model needs refinement but I guess this can insinuate towards a better self-controlled approach that envisages moral and social responsibility to both sides (the regulator and the players), and help them collaborate efforts towards accomplishing the goal of universal service.
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