|Project Rationale and Linkage to Country/Regional Strategy
ICT supports economic growth and social development. Recent quantitative studies indicate that increase in ICT penetration has a positive impact on economic growth, and the impact is larger in low and middle income countries than developed countries. Impact of ICT in improving education and health service delivery, disaster risk reduction, administrative services, etc. is well documented around the world. Pacific developing member countries (DMCs) should harness ICT to overcome remoteness and dispersed population which results in diseconomies of scale.
Market liberalization and consequent competition in the telecommunication sector (or broadly the ICT sector) has expanded service coverage, improved the quality, and lowered the prices of ICT services in some Pacific DMCs. Many countries with monopoly operators experience slow improvement in the sector. Even for a liberalized market, successful competition in the ICT sector requires government involvement to (i) level the playing field; (ii) ensure appropriate investment signals through clear policy directions and measures; and (iii) protect consumers. These are the areas where ICT regulations can improve sector performance.
Regulatory systems in the Pacific are relatively new or immature. Fiji, Papua New Guinea (PNG), Samoa, Solomon Islands, Tonga, and Vanuatu have liberalized telecommunications market, and with the exception of Tonga, have established independent regulators. Most of them have a legal framework for market liberalization, but do not have elaborated policy and regulatory rules to implement. Before liberalization, regulatory functions were imbedded in government ministries and were concerned primarily with technical aspects such as spectrum management and standardization of user apparatus. Competition policy, dispute mediation and resolution, public consultation, and consumer protection are new areas to Pacific regulators. In countries without an independent regulator, a ministry responsible for the sector policy often also develops regulations and monitors compliance. Monopoly operators, often owned by the government, were allowed to have quasi-regulatory powers, such as control of spectrum and national numbering plan. In these countries, both the legal framework for more independent regulatory functions and the regulatory body's institutional capacity need improvement. The ICT sector is changing rapidly due to innovations in technology and business practice, which aggravate the challenges faced by Pacific DMC regulators with limited human and financial resources.
In summary, regulators in the Pacific face challenges in (i) market liberalization (non-exclusive carrier licenses, spectrum management, interconnection arrangement, and cost-based pricing), (ii) universal service schemes, and (iii) institutional development for independent operation. The regulatory capacity becomes more important in countries with monopoly operators, as their regulators have to improve market performance through policy and regulatory instruments in the absence of competition.
The establishment of PIRRC is to support the Pacific DMCs in addressing the challenges. PIRRC aims to become a regional telecommunications and ICT regulatory support facility with a range of functions including (i) supporting information sharing and industry data collection; (ii) improving awareness of sector performance across the region; (iii) providing direct assistance to regulators and policy makers; and (iv) assisting the member countries to build their regulatory capacity and to adopt best practice principles and supporting legislation consistent with international experience.
The Pacific Region Infrastructure Facility (PRIF), through the World Bank, has provided $1.3 million to support the preparation for the establishment of PIRRC and its operations at a basic level of service for first three years. PIRRC will collect annual membership fees of nominal amount from each member country. It expects 7 to 10 countries to become paying members over 3 to 5 years, and the membership income will largely cover PIRRC's non-staff operational costs. However, a funding gap will remain in both staff and non-staff costs (training, travel, short term consultants, etc.) for the first three years of operation. Without additional funding, PIRRC will be unable to effectively respond to the surging demand from Pacific DMCs. PIRRC's credibility depends on its ability to provide timely, demand driven, technically sound, and customized support until desired regulatory framework and practices are established. Therefore, it is desirable for PIRRC to have more resources to provide technical advisory and capacity development services to meet the high demand of existing regulators and emerging regulators in the Pacific DMCs. Readily accessible advisory services are relatively more important for smaller islands countries with weak regulatory capacity than countries with independent regulators.
The TA will augment other development partners' assistance through PIRRC, enhancing PIRRC's services to Pacific DMCs by mobilizing an advisor and technical experts. The TA will also support PIRRC in building awareness of the general public and policy makers (especially parliamentarians) through its website, mass media, i.e., other websites, newspaper, radio, and TV, and in-country events about the benefits of improved ICT regulations. This will ensure that the demand for better ICT regulation can be created by the general public, civil society, governments, and parliaments.
The TA is consistent with ADB's Pacific Approach 2010-2014, which identifies transport and ICT as an operational priority. The TA will strengthen technical advisory service of PIRRC so that it can be established as a sustainable regional knowledge hub, contributing to regional cooperation and facilitating coordination in regulatory standards in cross border issues in the ICT sector. Improvement in ICT policy and regulations will also improve private sector environment. Responding to the Pacific DMCs' demand for improved connectivity through ICT, ADB has been increasing investment in ICT infrastructure and applications in the region. The performance of ADB's investment projects can be further enhanced by improved regulatory environment.