GSMA urges regulators to review USF approach

Industry body the GSMA has called for national governments and regulators to review their approach to Universal Service Fund (USF) levies, which it has labelled as inefficient and ineffective.

The term Universal Service relates to telecommunication services that are available, accessible and affordable to a country’s citizens. The provision of such services has been advocated as a policy goal by regulators across many countries and to this end, many have established USFs – funds collected by imposing a levy on all  operators to be used for providing communication services to the underserved.

The GSMA surveyed 64 USFs and concluded that most of them remain inefficient and ineffective, with more than $11bn waiting to be disbursed between them. This is money that could otherwise be used to extend rural coverage or lower the cost of mobile ownership, the body noted.

“USF levies and taxes have been established without any substantive analysis regarding the actual service funding or subsidy levels needed, if at all,” the GSMA said in a statement.

“Many funds continue to request operator contributions that appear to be in excess of the actual USF needs or capabilities even though they seem unable to use the levies collected.”

For example, in India, the Universal Service Obligation Fund (USOF) currently imposes approximately a five per cent levy on operator revenues, despite the fact that is contains over $4bn of accumulated funds.

There is a similar situation in Brazil. Sergio Quiroga da Cunha, Ericsson’s head of Latin America said Brazil’s USF, which was created by collecting 0.4 per cent of operator revenues, currently sits at almost $5bn but is not being tapped because “nobody is sure how to use it”.

“The situation needs urgent government review and attention, as the money collected to date far exceeds the amount that is needed to ensure universal access,” said Tom Phillips, chief regulatory and government affairs officer at the GSMA.

“The reality is that these funds have become a convenient form of taxation on the telecommunications industry and in the majority of cases, they should be closed down and the balance of monies held used to extend access to mobile services to those unable to afford them, or those groups that live in particularly remote areas.”