document the world bank for official only

Document o f

The World Bank

FOR OFFICIAL USE ONLY

Report No: 3 1395 - LAC

PROJECT APPRAISAL DOCUMENT

ON

PROPOSED

CREDIT OF SDR400,OOO (US$541,600 EQUIVALENT) TO THE COMMONWEALTH OF DOMINICA

CREDIT OF SDR 200,000 (US$270,800 EQUIVALENT) AND LOAN OF US$272,161 TO GRENADA

LOAN OF US$544,322 TO ST. KITTS & NEVIS

CREDIT OF SDR 200,000 (US$270,800 EQUIVALENT) AND LOAN OF US$272,161 TO ST. LUCIA, AND

CREDIT OF SDR 200,000 (US$270,800 EQUIVALENT) AND LOAN US$272,161 TO ST. VINCENT & THE GRENADINES

FOR A

TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT

April 18,2005

Finance, Private Sector, and Infrastructure Unit Caribbean Department La t i n America and the Caribbean Regional Of f ice

a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

I

(Exchange Rate Effective March 3 1,2005)

ADR

C&W

CAS

CIDA

ECTEL

IDA

IBRD

I C B

I C T

IFC

ISP

NTRC

Currency Unit = Eastern Caribbean Dollar (EC$)

EC$(XCD)2.67 = US$1

US$O.37 = EC$(XCD) 1

SDR0.663117 = US$1

US$1.50803 = SDR 1

FISCAL YEAR

January 1 - December31

ABBREVIATIONS AND ACRONYMS

States Alternative Dispute Resolution OECS Organization o f Eastern Caribbean

Cable and Wireless OBA Output-Based Aid

PCP Price Cap Plan Country Assistance Strategy

Canadian International Development Agency PDO Project Development Objective

Eastern Caribbean Telecommunications RSMS Radio Spectrum Monitoring System Authority

International Development Association SBD Standard Bidding Document

TAL Technical Assistance Loan International Bank for Reconstruction and Development UNICT United Nations Information and

Communication Technologies Task - International Competitive Bidding Force

Information and Communication USF Universal Service Fund Technologies

International Finance Corporation

Internet Service Provider Development

National Telecommunications Regulatory Commission

USG Universal Service Guidelines

USAID United States Agency for International

Vice President: Pamela Cox

Country Managermirector: Caroline Anstey

Sector Manager: Pierre Guislain

Task Team Leader: Robert Schware

FOR OFFICIAL USE ONLY OECS COUNTRIES

Telecommunications and ICT Development Project TABLE OF CONTENTS

Page STRATEGIC CONTEXT AND RATIONALE .......................................................................... i

1 . Country and sector issues ................................................................................................................. 1 2 . Rationale for Bank’s involvement ..................................................................................................... 3 3 . Higher level objectives to which the project contributes ................................................................. 4

PROJECT DESCRIPTION ..................................................................................................... 5 1 . Lending instrument .......................................................................................................................... 5 2 . Project development objective and key indicators ........................................................................... 5 3 Project components 5 4 . Lessons learned and reflected in the project design ......................................................................... 8 5 . Alternatives considered and reasons for rejection ............................................................................ 9

C . IMPLEMENTATION ............................................................................................................. I O 1 . Partnership arrangements ............................................................................................................... 10 2 . Institutional and implementation arrangements ............................................................................. 10 3 . Monitoring and evaluation o f outcomes and results ...................................................................... 10 4 . Sustainability ................................................................................................................................. -10 5 . Critical r isks and possible controversial aspects ............................................................................ 11 6 . Loadcredit conditions and covenants ............................................................................................ 12

APPRAISAL SUMMARY ....................................................................................................... 13 1 . Economic and financial analyses ................................................................................................... 13 2 . Technical ........................................................................................................................................ 14 3 . Fiduciary ........................................................................................................................................ 15 4 . Social .............................................................................................................................................. 16 5. Environment., ................................................................................................................................. 16 6 . Safeguard policies .......................................................................................................................... 17 7 . Policy Exceptions and Readiness ................................................................................................... 17

Annex I : Country and Sector or Program Background ............................................................... 18 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ......................... 26 Annex 3: Results Framework and Monitoring., ............................................................................ 28 Annex 4: Detailed Project Description ......................................................................................... 33

Annex 6: Implementation Arrangements ...................................................................................... 39 Annex 7: Financial Management and Disbursement Arrangements ............................................ 41 Annex 8: Procurement Arrangements .......................................................................................... 45

Annex 10: Safeguard Policy Issues ............................................................................................... 58 Annex I I: Project Preparation and Supervision .......................................................................... 59 Annex 12: Documents in the Project F i le ..................................................................................... 61 Annex 13: Statements of Loans and Credits ................................................................................. 62

A .

B .

. ..........................................................................................................................

D .

Annex 5: Project Costs .................................................................................................................. 38

Annex 9: Economic and Financial Analysis ................................................................................. 56

Annex 14: Countries at a Glance .................................................................................................. 67 Map IBRD 33564

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties . I t s contents may not be otherwise disclosed without W o r l d Bank authorization .

Commonwealth of Dominica, Grenada, St. Kitts & Nevis, St. Lucia, and St. Vincent & the Grenadines

Telecommunications and ICT Development Project

PROJECT APPRAISAL DOCUMENT

Latin America and the Caribbean Country Department CITPO

Date: April 18, 2005 Country Director: Caroline Anstey Sector ManagerDirector: Pierre Guislain Project ID: PO88448 Lending instrument: Technical Assistance Loan (TAL)

Team Leader: Robert Schware Sectors: Information & Communications Themes: Technology Diffusion, Private Sector Development Environmental screening category: C Safeguard screening category: n/a

Project Financing Data:

[XI Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans: Amount (US$): 1.36 mi l l ion

Proposed terms: Single currency (US$) VSL - Grace period: 3 years - Years to maturity: 15 - Commitment fee:

For Credits: Amount (US$): 1.35 mi l l ion (SDR 1,000,000 equivalent)

- Grace period: 10 years

- Commitment fee: 0.40% - Service charge:

0.25% o n un-dis,ursed balance

Proposed terms: Standard IDA

- Years to maturity: 35

0.75% o f disbursed and outstanding balance

Financing Plan (US$m.)

Does the project depart f rom the CAS in content o r other significant respects?

Source

o Y e s .No

Borrower: Dominica Grenada St. K i t t s & Nev is St. Luc ia St. Vincent & the Grenadines

IDA: (SDR 1,000,000) Dominica (SDR 400,000) Grenada (SDR 200,000) St. K i t t s & Nev is (SDR -) St. Luc ia (SDR 200,000) St. Vincent & the Grenadines (SDR 200,000)

Dominica Grenada St. K i t t s & Nev is St. Lucia St. Vincent & the Grenadines

IBRD:

Total

Loca l

0.14 0.13 0.14 0.13 0.14

0.68

Foreign

0.54 0.27

- 0.27 0.27

- 0.27 0.55 0.27 0.27 2.71

Total

0.68

1.35

1.36

3.39

Borrower: Governments o f Dominica, Grenada, St. K i t t s & Nevis, St. Lucia, St. Vincent & the Grenadines

Expected effectiveness date: July 3 1,2005 Expected closing date: December 3 1,2009

Does the project require any exceptions from Bank policies? Have these been approved by Bank management?

oYes @ N o o Y e s o N o

I I s approval for any policy exception sought from the Board? I o ~ e s @NO

Does the project include any critical r isks rated “substantial” or “high”? o Yes 0 N o

Does the project meet the Regional criteria for readiness for implementation?

@ Y e s o N o

Project development objective Improve the access, quality and use o f telecommunications and I C T services to achieve socio- economic development in the OECS.

Project description 1. Legal and Regulatory Reforms: strengthen the national and regional regulatory frameworks

and promote additional competition in the telecommunications sector. 2. Universal Service Fund: review current universal access policy, create related guidelines and

provide financial support to establish a Universal Service Fund. 3, Information and Communications Technologies (ICT) : improve growth and competitiveness

in ICT-enabled services through utilization o f broadband infrastructure. 4. Project Management: provide support to project management and administration as we l l as

fimding for project audits.

I Which safeguard policies are triggered, if any? N o t applicable.

Significant, non-standard conditions, if any, for: Board presentation: None.

Loadcredit effectiveness: 0 ECTEL i s f i l ly staffed to carry out the project management h c t i o n s , including hiring a

project manager, as agreed with the Bank; 0 Finalize the customization o f the financial management software through the

development o f a chart of account and the reporting format for both the project and ECTEL; and A Subsidiary Financing Agreement acceptable to the Bank has been executed o n behalf o f the member countries and ECTEL.

0

Covenants applicable to project implementation: For sub-component 2.3 “Support for Universal Service Fund”, preparation o f Universal Service Guidelines acceptable to the Bank is a prerequisite to any disbursement under this sub-component.

A. STRATEGIC CONTEXT AND RATIONALE

1. Country and sector issues The economies of the OECS are facing a dual challenge o f slowing economic growth and persistently high unemployment and poverty rates. Regional economic dynamism has been inhibited by reduced preferential market access for traditional crop exports, stiffer competition f rom other tourism destinations, fiscal imbalances and high public sector debt levels. The region urgently needs to carve out new areas of competitive advantage in the global economy to create a more stable and less vulnerable platform for economic development and poverty reduction. As indicated in a recent Bank report on growth and'competitiveness issues in the OECS, improving access and quality and reducing costs o f telecommunication services will be critical to stimulate growth and improve competitiveness not only in I C T activities but also in emerging clusters o f other services (e.g., niche tourism, offshore education, and offshore financial services).' In its development strategy, the OECS recognizes in i t s development strategy that information and communication technologies (ICT) offer significant opportunities to achieve greater economic growth and diversification and contribute to poverty reduction. In 1998, five country members o f the OECS--Dominica, Grenada, St. K i t t s & Nevis, St. Lucia, and St. Vincent and the Grenadines--embarked o n a liberalization process that passed new telecommunications acts, terminated monopoly rights, and established a common regulatory framework for the telecommunications sector. They created the Eastern Caribbean Telecommunications Authority (ECTEL) - the first regional telecommunications regulatory authority in the world--to facilitate the harmonization o f the regulatory regime. ECTEL has spent five years establishing itself, harmonizing legislation in five countries, and supporting and guiding NTRCs in the ongoing reform process. Talks with the remaining four OECS countries--Anguilla, Antigua, Bri t ish Virgin Islands and Montserrat--to j o i n ECTEL are continuing. Under ECTEL's guidance and review, reform o f the sector was initiated. The NTRCs have issued fixed and mobile licenses to 12 new telecommunications service providers other than the incumbent and licenses for submarine cable operators are currently under review (see Table 1). Since M a y 2002, seven mobile operators have been issued licenses leading to growth and competition in the mobile market. Another major achievement o f ECTEL was the Price Caps Implementation Agreement signed between October and December 2004 with the incumbent, Cable and Wireless (C&W), which provide concessions o f an estimated US$7.5 mi l l ion over the first two years o f the Price Caps Plan ("PCP''). These reforms were facilitated through the OECS Telecommunications Reform Project, financed by the World Bank.

' OECS: Towards a New Agenda for Growth, World Bank, 2005.

1

ECTEL Activity Companies' offeredissued individual licenses Number o f individual licenses issuedoffered Number of individual licenses in operation

Table 2: Status of Individual Licensing - December 2003 I Country I Licenses Issued

Fixed Mobile Internet/retworks

8 7 8 12 16 12 6 9 8

I Dominica I C&W, Marpin, SAT Telecom, AT&T, Orange Caraibes I Grenada

St. Kitts/Nevis

St. Lucia

St. Vincent

C&W, GNP TWTC, Digicel, AT&T,

C&W, The Cable , Carib Globe

C&W, Digicel, ATT

C&W, Digicel, ATT Source: OECS/Telecommunications Liberalization Programme, Impact Assessment: ECTEL States, USAIDKARANA ECICT Project, January 2004

Overall, the first steps in reform have led to increasing access to telecommunications services. They have promoted growth in the mobile market as wel l as competition in other services including fixed and Internet connectivity. The regional cellular penetration rate has increased from 2.3 percent in 2000 to an estimated 63 percent by the f i rs t quarter o f 2004.3 Reform has also fostered macroeconomic growth by attracting foreign direct investment and increasing employment in the telecommunications and I C T sector. Direct investment in the sector has increased from EC$108 mi l l ion in 2001, to more than EC$234 mi l l ion in 2003. The investment f low was expected to reach EC$25 lm (US$94m) in 2004.4

There are a number o f significant challenges that need to be addressed if the region wishes to increase the use o f I C T to promote economic development and diversification. High communication costs in particular hamper the development o f investment in I C T activities such as call centers, data processing, and data storage services, and adversely affect telecommunications and financial services that rely o n international bandwidth.

In OECS countries, high speed Internet charges are approximately 45 percent higher than for similar services in other parts o f the Caribbean, domestic leased lines are 148 percent higher per Mbps than for comparator countries in the region and international private leased circuit prices

Cable & Wireless, Digicel, AT&T Wireless, Cariaccess, C o x Cable, Kelcom, S V G TV, Marpin, Sat Telcoms, Orange Caraibe, GNF', TWTC, Emerging Technologies, Grenada Cable Television, The Cable, Cable Television of Nevis, and Cariglobe.

EMC Wor ld Cellular Database. These figures are corrected f r o m the original CARANA numbers, wh ich appeared to double-count investment and

employment in Cable and Wireless St. Vincent.

2

are 61 percent higher (See Tables 3-5 in Annex 1). These high costs are reflected in comparatively l o w Internet usage, especially for advanced services.

Furthermore, while cellular service is available to most o f the regional population, access to broadband Internet connectivity s t i l l remains limited. Moreover, most public institutions such as schools, libraries, post offices, or health centers lack adequate connections to the Internet, which turns into a disadvantage for these institutions and the services they provide and will also affect competition in ICT-enabled services.

Studies in the region by multi- and bi-lateral organizations have identified that these high costs are partially driven by prevailing monopolistic behavior in some market segments, such as fixed and leased lines, as we l l as international fiber access. Thus, initiatives by ECTEL to facilitate new entry o f additional service providers in areas currently dominated by the incumbent would be welcome. Furthermore, higher than justified interconnection rates also favor the incumbent at the expense o f the new entrants and their customers. Inequalities in access to and use o f broadband services are driven both by the market reality that provision o f such services to rural areas i s frequently dif f icult to sustain financially, and by the fact that OECS governments lag in the introduction o f broadband applications to improve the delivery o f their own services.

In turn, monopolistic behavior and access gaps are also driven by weaknesses in the legal and regulatory framework. The current Telecommunication Act, tar i f f regulations and the ECTEL Treaty need to be updated and improved. The roles o f ECTEL and the National Telecommunications Regulatory Commissions (NTRC) are not clearly defined and both lack the experience, resources, and training to cope effectively in a rapidly evolving and competitive environment. Additional regulations are needed in dispute resolution, consumer protection, market dominance, and interconnection. Furthermore, a universal access mechanism, which pursues pro-liberalization objectives, combined with government initiatives in broadband applications are needed to ensure widespread connectivity and access to advanced I C T services for government, public institutions and communities. This new project seeks to overcome these remaining gaps and weaknesses, building o n the first-stage success o f the Telecommunications Reform Project.

2. Rationale for Bank’s involvement The rationale for continuing the Bank’s involvement in the region is to assist the countries in the consolidation o f the reforms implemented under the Telecommunications Reform Project and to capitalize o n the outcomes o f these reforms. The Bank recognizes that the resulting increase in access and reduction in costs o f telecommunications services has the potential to enhance the region’s competitiveness, promote diversification o f the regional economy, and integrate it into the global market. The Bank’s involvement fits with activities and projects o f other regional and intemational agencies. The UNDP/UNICT Task Force recently developed an OECS I C T Strategy that recognizes the need to leverage I C T as a catalyst for competitiveness. I t addresses the areas o f connectivity, affordable costs, human resource training, and a supportive telecommunications and E-commerce legal and pol icy environment. The project also f i t s within the context o f the CARICOM Regional Programming Framework o f September 2002, and the Special Summit o f the OECS Authority (Heads o f Government) o n the Economy o f the OECS, held in St. K i t t s in October 2002. The former identified in particular I C T as offering significant potential for

diversification o f the economies o f the OECS member states. The project complements the initiative by CARICOM and OECS countries to implement a Caribbean Knowledge and Learning Network that will set up IT centers o f excellence within the tertiary education institutions in order to build a broad base o f IT professionals in the Caribbean. The Bank's experience in the sector and knowledge o f the region wil l contribute significantly towards achieving project objectives. The Bank will utilize i t s considerable experience in both telecommunications reform as wel l as in developing strategies to promote universal a c c e s ~ . ~ I t will put emphasis o n attracting and leveraging private participation and investment in telecommunications infrastructure as wel l as on public return on invested resources through lower telecommunications prices to consumers and businesses. The Bank's participation wil l continue to provide comfort to the stakeholders on the development benefits o f consolidating past reforms and provide added incentives to undertake new pol icy and regulatory initiatives. The multi-country nature o f the project wil l also provide added support to the collaborative, cross-country approach adopted by the OECS in the area o f telecommunications pol icy and regulation. A number o f other donors are involved in identifying ways to improve competitiveness and increase economic diversification utilizing I C T in the region. Project funds wil l not be utilized to coordinate key stakeholders and donors in the region. However, the Wor ld Bank wil l continue i t s cooperation with other bilateral and multilateral agencies in I C T development in the region.

3. H i g h e r level objectives to which the project contributes The successfill implementation o f the project wil l contribute to high-level development objectives identified in the region, namely economic diversification and competitiveness. I t will promote universal access to I C T services, facilitate new entry and competition o f service providers, provide economic opportunities for the region by attracting private investment and employment in I C T services, and foster the utilization o f I C T to achieve economic and social development. The project wil l facilitate the development o f an information society. I C T can help bring the people o f the Caribbean closer together, maximize the f low o f knowledge and information within the region, and provide a gateway to global knowledge resources. Given the correct enabling environment, I C T can assist the region to overcome many o f i t s physical and economic constraints and compete globally in the expanding business processing services market. The project helps address key development challenges defined in the 2001-2005 Wor ld Bank Country Assistance Strategy (CAS) for the OECS: promotion o f sustainable, private sector-led economic diversification by providing a supportive environment for promising, newly emerging service industries, thus improving the provision o f public services to the population and strengthening the broader functioning o f the public sector. More specifically, the proposed project fits into that strategy by seeking to improve access and quality and reduce the costs o f telecommunication services for communities and businesses, and foster economic diversification by developing the I C T services sector and improving the competitiveness o f f i r m s in the OECS.

Universal Access i s generally defined as a set o f telecommunications services o f a determined quality that should be accessible to a l l users, independent o f their geographic location at an affordable price.

4

B. PROJECT DESCRIPTION

Saint Lucia

St. Vincent & the Grenadines

1. Lending instrument The project will be financed through a combination o f IBRD loans and IDA credits. The proposed instrument i s a Technical Assistance Loan (TAL), which was considered the most suitable instrument in terms o f the borrower’s needs in regards to technical assistance and specialized advisory services. The following table illustrates the loan and credit breakdown by country. Grenada, Saint Lucia, and St. Vincent & the Grenadines wil l each receive $270,800 in loan and the same amount in credit, Dominica will receive the total amount o f US$ 541,600 as an IDA credit and St. K i t t s & Nevis as an IBRD loan only. A front end fee o f 0.5% i s applied for IBRD loans.

272,16 1 270,800 542,961

272,161 270,800 542,961

Table 1: Loan and credit allocation by country

bt, K i t t s & Nevis I 544,322 1 0 1 544,322 I I I I I I

I Total 1 1,360,805 I 1,354,000 I 2,714,805 I * Includes a front end fee o f 0.5 percent

2. Project development objective and key indicators The overall development objective o f the project i s to improve the access, quality, and use o f telecommunications and I C T services to achieve socio-economic development in the OECS. T o measure the progress toward achieving the project outcomes, the fol lowing key indicators were defined:

0

0

Extended access to advanced I C T infkastructure for community facilities. Reduction on leased lines rates, broadband, and mobile tariffs.

The baseline and targets for these development objectives, as well as for measuring outcome and outputs are detailed in the Results Framework and Arrangements for Results Monitoring tables in h e x 3.

3. Project components The project has four main components that were selected considering the client needs, its implementation capacity, and the challenges identified by I C T sector assessments.

COMPONENT 1 - Support for Legal and Regulatory Reforms

5

The objective o f this component i s to strengthen the national and regional regulatory frameworks and promote additional competition in the telecommunications sector. Emphasis wil l be given to capacity building o f ECTEL and the NTRCs by providing them with assistances to revise the regional and national sector legislation, and develop a modem interconnection regime. The goal o f the component i s to achieve more competitive tariffs for consumers and businesses in the region as well as to strengthen the institutional capacity o f ECTEL and the NTRCs. Subcomponent 1.1 - Telecommunications Act and Regulations: The objective o f this subcomponent i s to update the Telecommunications Act and tariff regulations o f the participating countries in accordance with the new market and technological conditions. The subcomponent wil l also identify areas where new regulations are needed. Subcomponent 1.2 - Regional Forum for Consensus Building: The objective o f this subcomponent i s to establish a regional forum for consensus building and alternative dispute resolution. The forum will facilitate resolution o f issues that have a commercial and public pol icy dimension and seek consensus on commercial issues among industry players. Subcomponent 1.3 - Alternative Dispute Resolution (ADR) Support: The objective o f this subcomponent i s to build capacity within ETEL and the NTRCs to establish positions and guidelines for handling specific anticipated areas o f dispute, and develop a standard model for review and adoption by each member country based on current draft dispute resolution regulations, develop a standard model for review and adoption by each member country. Subcomponent 1.4 - Development of Pro-competition Policies and Procedures: The objective o f this component i s to assist ECTEL and the NTRC’s to develop a modem cost methodology for determining fixed-to-mobile interconnection and related consumer rates, and promote lower fixed-to-mobile retail tariffs through reductions in mobile termination charges. In parallel, this component will address the high cost o f leased lines by C&W, by focusing ECTEL and NTRC’s work on extending the existing Price Cap Plan (PCP), and by ensuring a fair interconnect outcome. This i s a major issue requiring attention when new entrants are allowed into the marketplace. The component will also explore methods to attract additional service providers to services currently dominated by the incumbent, including telecommunications submarine-cable infrastructure. Subcomponent 1.5 - Regional Collaboration, Training, and Resource and Information Sharing: The objective o f this activity i s to provide a comprehensive review o f the telecommunications legislation, with special focus o n interconnection and spectrum management, and implementing numbering and dispute resolution procedures. I t includes the provision o f a comprehensive regional program o f related training to the staff o f ECTEL and N T R C and government staff o f the participating countries. Another priority will be to strengthen E C T E L and N T R C capacities to collect and analyze usage and pricing data covering the sector.

COMPONENT 2 - Universal Access The objective o f this component is to review current universal access policy, create related guidelines, and provide financial support to establish a Universal Service Fund (USF). The goal o f this component i s to promote and stimulate private I C T investment for under-served communities and public institutions in accordance with the universal access pol icy framework and reduce the disparities in access to telecommunications infrastructure including the Internet and submarine cable infrastructure.

6

Subcomponent 2.1 - Universal Service Guidelines: This subcomponent will establish unif ied policy, strategy, and implementing guidelines that wil l help ensure the spread o f advanced telecommunications infrastructure to communities and public institutions (such as schools) in the region. I t wi l l assist in preparinghpdating a comprehensive consultation paper to define Universal Service Guidelines (USG) for improving access to information and telecommunications services through a USF, as wel l as drafting regulations that would address the management of the Fund and Universal Service Obligations. The steps to be taken will define socio-economic objectives of universal service policies and the scope o f the USF (i.e., what to fund by identifying universal service projects). An important aspect of implementation is the funding mechanism. In case o f the USF, options are: (a) funding f rom government budget; (b) contributions from al l telecommunications operators; (c) proceeds from privatizations or spectrum and license auctions; (d) subscriber levy; and (e) funding from international development agencies. Other key USF items that the project wil l support include fund administration, the project selection process, the use o f competitive tender process to allocate subsidies, and performance monitoring. The expected deliverables o f this component include the draft Universal Service Fund regulations, a USF pol icy and USF Operating Procedures. Subcomponent 2.2 - Implementation Support: The objective o f this subcomponent i s to provide skilled support to ECTEL and the NTRCs to implement the USF regulations, pol icy and operating procedures to be defined under subcomponent 2.1. Based o n one set o f ECTEL guidelines and regulations, each country will, with expert support, adapt them to their particular context. Subcomponent 2.3 - Support for Universal Service Fund: The objective o f this subcomponent i s to establish and provide a one-time subsidy to the USF that will stimulate private investment in expanding broadband connectivity and access to advanced I C T for under-served communities and public institutions. The implementation o f the universal access wil l use output based aid (OBA) type schemes to deliver services. This component will assist ECTEL in the implementation o f an OBA competitive auctiondtender process to select service providers for providing services and the funding o f the subsidy. A USF and competitive bidding for the subsidy is generally viewed as the best option in financing and promoting universal access objectives. Variations o f this component have been implemented in Chile, Peru, Dominican Republic, Nigeria, Uganda, Nepal, and Sri Lanka. The Bank and ECTEL are supervising a “best practices’’ study funded under a Dutch Consultant Trust Fund to explore potential projects that could be candidates to receive funds from the USF. Whereas subcomponents 2.1 and 2.2 design and implement ECTEL’s general universal service pol icy framework, subcomponent 2.3 wil l focus o n financing specific projects including the possibility o f open access to shared telecommunications submarine cable infrastructure.

COMPONENT 3 - Information and Communication Technologies (ICT) The objective o f this component i s to improve growth and competitiveness in ICT-enabled services through utilization o f broadband infrastructure. I t includes consulting services to identify policies as wel l as implementing various pi lot projects with a particular focus o n regional initiatives.

7

Subcomponent 3.1 I - Extending the Use of Broadband Applications by Governments and the Private Sector: The objective o f this subcomponent i s to identify the regulatory infrastructure required to move the I C T Agenda o f each o f the countries forward and design pilots to encourage regional use o f broadband. This subcomponent wil l be based on the identification o f the policies required for facilitating the development o f broadband applications. I t includes the fol lowing key activities: (a) technical assistance to identify policies required for facilitating the development o f broadband applications and infrastructure, and drafting appropriate regulations that would give effect to these policies; (b) elaborating and recommending common information systems architecture and information technology standards for the Member States and finding viable mechanism by which complex information systems can be supported and maintained. (e.g., using remote applications v ia broadband systems); and (c) designing pilots to encourage regional use o f broadband technologies to increase productivity and employment through purchase o f equipment and services.

Subcomponent 3.2. - ICT Pilot Projects: Based upon the consultancy study carried out in 3.1, the project will finance up to f ive pi lot projects that demonstrate the viabi l i ty and business case for I C T using broadband connectivity, with a particular focus on regional initiatives.

Subcomponent 3.3. - Alternative communication technologies for Radio Spectrum Monitoring System (RSMS): This activity would establish an alternative telecommunications system to transfer data from the RSMS to ECTEL and the five NTRCs through the use o f alternative technology for the provision o f more reliable communication and lower recurrent costs while maintaining international and domestic l inks using the incumbent telephone network. This component builds upon the past RSMS system that was being satisfactorily implemented by ECTEL under the previous OECS Telecommunications Reform Project.

COMPONENT 4 - Project Management The objective o f this component i s to ensure management and administration o f the overall project. The project would finance related technical assistance by providing complementary resources. Subcomponent 4.1. - Support to Project Administration: This subcomponent would provide resources to support project administration capacity within ECTEL. A dedicated person would be hired for the duration o f the project. This person would have project management, procurement and financial management skil ls, as wel l as technical expertise. Subcomponent 4.2. - Audit: This activity would provide fimding for project audits.

4. Lessons learned and reflected in the project design The proposed project design reflects lessons learned in the previous OECS Telecommunications Reform Project, as we l l as those from international best practice and analytical work in the sector. First, based o n the previous Telecommunications Reform Project, the proposed project wil l continue with a regional approach for the development o f the telecommunications and I C T sector. I t i s necessary to ensure that telecommunication policies and regulations are updated and compatible across the region. There is a continuing need to take collaborative action to negotiate tariff agreements with the incumbent operator, Cable and Wireless (C&W) and ensure broadband access that involves the creation o f competition conditions. The proposed project will take into

8

account the higher than estimated costs incurred in previous negotiations with the incumbent operator. Second, the project includes continuing support for ECTEL and the NTRCs. An important lesson from similar projects in the past i s that newly created regulatory authorities take a long time to consolidate and require continuous support in developing their institutional, human, and technical capacity. ECTEL in particular wil l require additional assistance and resources due to i t s regional structure and that i t i s operating in a rapidly evolving market. Third, the project design reflects the vital importance o f government commitment from al l countries in moving forward on a regional project. It focuses on an area in which the governments intend to take action and have requested the Bank’s assistance. The borrowers have been in continuous contact with the Bank and have adjusted the project design and costs according to their specific needs. As implementation tends to be slower and weaker in the OECS than for the average Bank project, particularly for regional projects, expected dates have been set accordingly and most components are basically a consolidation o f ongoing reforms since the last project. Finally, the proposed support for the development and implementation o f universal access policies and regulations as wel l as setting up a Universal Service Fund to finance universal access initiatives wil l incorporate the lessons from the successes in Lat in America, South Asia and Africa.

5. Alternatives considered and reasons for rejection During the last three years, the OECS region has actively organized workshops, conferences, and e-readiness studies to determine the way forward for the development o f an I C T sector. Yet, no project that would implement recommendations from these studies has been initiated o n the ground. Other approaches and components were considered but were later rejected because the Bank and the borrowers decided they did not address a key challenge o f ICT-enabled competitiveness, namely high retail prices that users have to pay for accessing inter-carrier, international Internet, and leased lines. Initially, support for building new government networks was considered to provide alternative l o w cost access to services where the monopoly structure st i l l prevails. In addition, the Bank also considered supporting a regional e-government program, but later decided that the initiative was more suitable for a governance and public sector reform project, which i s currently under preparation. The Bank and borrowers also discussed assistance for the development o f regional websites, an e-strategy, and e-commerce legislation. The borrowers decided to use available grant financing for these activities. In particular, the governments o f Grenada and St. Lucia requested financial and technical support to expand the operations o f Call Centers and to develop a cyber park. The OECS Member States decided that these projects should be pursued bi-laterally between each country and other financial institutions such as the IFC. Finally, the decision to implement pi lot projects by ECTEL under the I C T component was taken after considering that involving other implementing agencies in such small projects would increase transaction costs and reduce efficiency.

.

9

C. IMPLEMENTATION

1. Partnership arrangements There are no partnership agreements in the project.

2. Institutional and implementation arrangements ECTEL will be responsible for executing and implementing the project. The functions o f a Project Management Unit were established as a result o f the OECS Telecommunications Reform Project within the OECS Secretariat and transferred to ECTEL. ECTEL will procure al l Bank-financed goods and services under the project and also operate the financial management system according to World Bank requirements. ECTEL will be responsible for managing the disbursement o f a l l World Bank loan and credit proceeds, monitoring availability o f Government’s counterpart contribution to the project, monitoring implementation progress o f project components, and preparing semi-annual progress reports in accordance with a reporting format acceptable to the Bank. Annual audits are to be arranged and carried out by professional auditors according to Bank and Government requirements and agreements. The Bank will review progress reports, make sure that ECTEL has adequate resources and staffing to meet the challenges o f implementing the project management functions, and provide assistance to ECTEL should achievement o f project development objectives become imperiled by pol icy changes, institutional issues, or other unforeseen changes. ECTEL wil l submit to the Bank overall progress reports and financial management reports o n a bi-annual basis. The Bank will make occasional f ield visits to participating OECS countries to meet with beneficiaries and to assure implementation effectiveness o n the ground. A mid-term review (about 24 months from the date o f effectiveness) wil l be carried out to evaluate progress o f implementation against planned objectives. ECTEL wil l prepare and submit a project completion report within six months o f loan closing.

3. Monitoring and evaluation of outcomes and results The data to monitor and evaluate the outcome and results o f the project will be collected by ECTEL. Sources o f the information and data wil l include al l telecommunications operators, and national and regional entities in charge o f collecting economic and demographic data. The capacity to collect and analyze data shall be supported and strengthened by resources f rom the project.

4. Sustainability The borrowers have demonstrated strong project ownership and commitment during implementation o f the previous project and preparation o f the proposed project. During the Telecommunications Reform Project, the borrowers showed a strong commitment in establishing and supporting ECTEL. They also implemented significant sector reforms, despite significant pressures from the incumbent operator, which have contributed to promote competition in telecommunications services and increase private investment in the sector. The success o f the previous project has encouraged ECTEL Member States to continue with reforms in the sector, such as universal access and interconnection frameworks, and to pursue

10

higher-level reforms such as affordable access to broadband connectivity. They also want to ensure that al l established reforms and institutions are strengthened by additional assistance from a new project. The borrowers have shown ownership in the development o f the proposed project since the beginning and have been proactive in component design and cost estimation. There are some factors that are critical to the sustainability o f the project’s objectives, the most important being the consolidation o f the institutional and regulatory reforms. Although ECTEL and the NTRCs have become more capable o f performing their functions effectively, they s t i l l lack the necessary resources and experience to cope in a rapidly evolving and competitive environment. The telecommunications operators, especially the incumbent, are more organized and have more resources than the NTRCs and ECTEL. In order for the project to be sustainable, the regulatory entities need to be financially self-sustaining, and also empowered to resolve conflicts, protect consumer interests, and enforce regulatory decisions. Other critical factors to ensure project sustainability are the successful f low o f private investment into less commercially attractive telecommunication services and sufficient demand for these services. Experience with the previous telecommunications project highlighted the need to clearly define a medium term business plan for ECTEL to help it move forward in a more planned manner. The proposed project coincides with ECTEL’s formally developing a three-year business plan with clearly defined activities, indicators, budgets, implementation schedules, and responsibilities. The project has been designed to address some o f these factors. The establishment and financial support for an USF will encourage private operators to make investments in commercially r isky areas. In addition, the project will promote demand for these services by assuring that interconnection prices among operators are competitive and consumer retail tar i f fs are reduced.

Weak institutional capacity of regulatory entities.

5. Critical risks and possible controversial aspects

Institutional capacity i s weak from an M administrative and, at times, technical point o f view given the complexity o f the telecommunications environment.

Fiscal situation worsens and affects contributions to ECTEL.

The project provides a comprehensive program o f resource sharing, information exchange and training to strengthen ECTEL and the NTRCs institutional capabilities. ECTEL has been the key implementing agency under the previous Telecommunications Reform Project.

ECTEL and the NTRCs wi l l receive spectrum fees and a share o f sector revenues to eliminate their dependence from public funds.

I I

T o component result

Incumbent operator causes I Ensure participatory approach with all stakeholders, 1 S

11

regulatory actions (subcomponent 2.3).

USF may strengthen position o f incumbent and hamper competition.

Incumbent may fight an unfavorable outcome o f U S F in court.

Insufficient demand to make projects self-sustainable.

Overall risk rating

Risk Mitigation Measures

including incumbent operator.

Set up USF competitive tender process that will a l low a sufficient number (at least two) o f operators to participate. Meet operators to discuss their appetite to participate in tender process and create tender conditions that will facilitate operators to bid.

Evaluation committee will consist o f the NTRC commissioners, guided by policies f rom the various Ministries. Evaluation criteria will be clear and the evaluation process transparent and accountable.

Execute a demand survey to make sure that only projects that are self-sustainable are tendered. Make sure that public institutions can finance operating costs f rom their budgets.

Risk Rating with Mitigation

M

H

M

M H=High, S=Substantial, M=Modest, N=Negligible

6. Loadcredit conditions and covenants The following is condition for negotiations:

0

0

A draft Project Operational Manual (POM) i s complete and satisfactory to the Bank; and A detailed Procurement Plan for the f i rst 18 months o f the project implementation, satisfactory to the Bank.

ECTEL i s fully staffed to carry out the project management functions, including hiring a project manager, as agreed with the Bank; Finalize the customization o f the financial management software through the development o f a chart o f account and the reporting format for both the project and ECTEL; and

0 A Subsidiary Financing Agreement acceptable to the Bank has been executed on behalf o f the member countries and ECTEL.

The following is a condition for disbursement for subcomponent 2.3 - Support for Universal Service Fund: 0 No disbursement wil l be made to finance specific projects under the Universal Service

Fund unless procedures acceptable to the Bank for the management o f the Fund have been developed, including the scope o f the USF, the selection criteria and processes for the projects to be financed, financing arrangements and performance monitoring mechanisms.

The following is condition of effectiveness: 0

0

12

D. APPRAISAL SUMMARY

1. Economic and financial analyses

Economic Analysis As a technical assistance project, precise economic benefits are difficult to quantify. However, for some components, orders o f magnitude o f potential benefits can be estimated. As indicated in a recent Bank report6 on growth and competitiveness issues in the OECS, improving access and quality and reducing costs o f telecommunication services wil l be critical to stimulate growth and improve competitiveness not only in I C T activities but also in emerging clusters o f other services (e.g., niche tourism, offshore education, and offshore financial services). The provision o f basic telecommunication services will also improve the provision o f public services to the population and strengthen the broader functioning o f the public sector. For the regulatory reform components, worldwide evidence suggests the importance o f a successful and sustained regulatory institution to increasing access, improving quality and lowering costs. W h i l e the Telecommunications Reform Project took the first steps towards this goal, this project will extend and consolidate the gains made. International evidence suggests that moving towards fully competitive, well-regulated markets from monopoly markets can reduce prices by 15 to 30 percent. Assuming that prices for telecommunications service in the E C T E L countries fa l l only an additional five percent as a direct result o f the consolidation and expansion o f regulatory capacity under this project, there will be a significant economic impact. Based on estimates o f consumer surplus and net consumer savings from price declines under the Telecommunications Reform Project, a further five percent reduction o f prices wil l create consumer surplus and savings worth US$3 mi l l iodyear across the reform c o ~ n t r i e s . ~ This suggests the reform component alone will gamer very high economic returns for the project as a whole. For the universal access components, cross-country evidence suggests considerable consumer surplus from access to ICTs. These direct impacts that can be projected are l ikely to be outweighed by impacts that are more difficult to estimate. The improved range and quality o f I C T services that wi l l be available at lower cost as a result o f this project will provide increased access to international markets and create new export opportunities, especially in the service sector. There is considerable evidence that developing countries which see more Internet use generate more exports than countries with l imited Internet use.' The project will also have a significant social impact equalizing the opportunity to benefit from ICTs for presently excluded groups and easing the ability to communicate with friends and family in the region and around the world.

OECS: Towards a New Agenda for Growth, World Bank, 2005. The original project was associated with a weighted average reduction o f telecommunications charges o f about 34

percent over the 1998-2003 period, estimated to be worth $US20m in consumer surplus and savings. ' A one-percentage point increase in the share o f the population with access to the Internet would increase total exports as percent o f GDP by 1.4 percentage points and would increase exports to high-income countries by 1.3 percentage points (G. Clarke and S. Wallsten, 2004 Has The Internet Increased Trade? Evidence from Industrial and Developing Countries, World Bank Policy Research Working Paper 3215).

13

For the I C T component, advanced information systems have wide-ranging applications in tourism, health care, education and the provision o f other government services. For example, the number o f uses o f advanced networking in government service provision alone has garnered significant economic returns. Piloting such initiatives may lead to considerable efficiencies in the provision o f government services. The use o f alternative technologies subcomponent wil l save 30 percent o f the recurrent communication costs between ECTEL and the NTRCs. These savings are expected to pay for investment costs after 16 months.

Financial Analysis As a technical assistance loan, the activities envisaged under the project for support are not investments designed to generate significant financial returns to the implementing agencies. Even so, the financial sustainability o f certain components should be addressed. Expanded ongoing activities under ECTEL and the NTRCs, include the regional forum, procedures related to universal access, interconnection, tar i f fs and spectrum management. These may require additional budget for the regulatory bodies and ECTEL. This might involve additional specialist staff. Some additional budgetary resources may be required as a result o f expanded regulatory activities, as the sector becomes increasingly attractive to investors. If fee and license payments increased 1 percent as a result o f new investments, this would more than cover the cost o f additional staff. The investments made under the universal access regime should be financially sustainable. This wil l be ensured by capping access fund payments for a particular access initiative at the capital cost o f equipment ensuring that the running costs o f the service provided under the fund can be met from revenues generated.

2. Technical The selected technical design o f the project corresponds with the borrowers’ needs and implementation capabilities. I t also considers the Bank’s experience from the previous project. Technical viability is primarily a concern for the system specifications and operation o f equipment required by ECTEL and the NTRCs for radio spectrum monitoring and use o f alternative technology systems such as wide-area networks and Internet. The technologies supported by the project have been demonstrated worldwide as technically sound. While this equipment i s readily available, i t is also highly specialized. To minimize technical r isks associated with this project activity, the project supports additional training in equipment operation and spectrum database use. The second component o f the project includes the design and establishment o f a USF. The approach utilized will consist o f contracting out service delivery to a third party, usually a private firm, where payment f rom the USF i s tied to the actual delivery o f these services. Similar models have proven to be very successful in countries such as Peru and Chile, where private operators have installed public phones and Internet community centers in underserved areas. As ECTEL member countries are in their first phase o f the liberalization process, the decisions will need to be made to ensure that the liberalization objectives for each country are not undermined.

14

Fiduciary Financial Management The overall risk o f the project is moderate, characterized by an experienced and organized implementing entity and relative simplicity o f the activities to be implemented. The financial management arrangements and the findings o f the financial management capacity assessment for the project are detailed in Annex 7. The major risk area lies in the Universal Service Fund that will provide grants to private sector firms. The mechanisms have not been defined yet. But the risk i s considered moderate, as the project will support the development o f guidelines requiring the approval o f ECTEL, the NTRCs, and the Bank. This will ensure that potential risks are adequately addressed. The preparation o f detailed procedures for the management o f the Fund satisfactory to the Bank will be a disbursement condition for the financing o f specific projects under the Universal Service Fund. These procedures will define the scope o f the Universal Service Fund, the selection criteria and processes, and the Fund management, including financing and performance monitoring mechanisms. ECTEL wil l have the financial management responsibility o f the project. I t s financial management i s found to be globally satisfactory. But it needs to be adapted to the current context to meet ECTEL statutory requirements to prepare i t s own financial statements (as an entity) and the requirements o f the new project. As o f now, ECTEL’s financial management system i s shaped around the needs o f the OECS Telecommunications Reform Project. I t needs now to be elevated to a level where i t can meet both ECTEL’s statutory requirement and the need to ensure the project’s financial management. ECTEL has already been implementing measures including customizing the financial management software and preparing a new financial pol icy and procedures manual, which has just been approved by i t s Board. The manual has been reviewed and considered to be satisfactory subject to minor changes to include procedures more specific to the project. I t i s expected that the remaining actions to be implemented, consisting o f finalizing the customization o f the software and the hiring o f the project auditor, can be completed soon. They are considered as effectiveness conditions.

Procurement capacity The Overall Procurement risk has been rated “average”, based o n past experience implementing a World Bank project. Procurement o f goods and services, including consultants’ services (firms and individuals) will be processed in accordance with Wor ld Bank guidelines Procurement under IBRD Loans and IDA Credits, May 2004, Selection and Employment of Consultants by World Bank Borrowers, May 2004. The implementation arrangements for the project are detailed in Annex 8. An assessment o f the capacity o f the implementing agency (ECTEL) to implement procurement actions for the project has been carried out during the pre-appraisal mission. The E C T E L project team includes staff with experience in WB procurement procedures. The team will be further strengthened with the inclusion o f a suitably qualified project manager financed under the project, who wil l also have experience in procurement and Wor ld Bank procedures. Recruitment o f a project manager i s a condition o f effectiveness. An action plan has been designed to mitigate the potential risks and strengthen ECTEL’s procurement capacity. Agreed upon corrective measures to be implemented by ECTEL are:

15

0 Hiring o f a project manager with experience in procurement and Wor ld Bank project implementation procedures, along with other appropriate technical sk i l ls to implement the project by effectiveness. Preparation o f a detailed procurement plan for the first 18 months o f implementation i s due by appraisal. Final plan to be agreed by negotiations. Preparation o f a draft financial polices and procedures manual with a specific section on procurement. This section i s to detail a l l the procedures and channels o f responsibility as we l l as the f low o f documentation and reflecting Wor ld Bank procurement policies and procedures. Due for review before negotiations. Final to be approved by effectiveness. Preparation o f draft standard bidding documents and RFPs for the f i rs t 18 months o f the project activities, by April 30,2005.

0

0

0

3. Social At the local level, populations wil l benefit from easier social and emergency communication as well as lower access charges. A large Diaspora population suggests that the project countries wil l also gamer significant social benefits from less expensive and more widely accessible international connectivity. The results o f the Telecommunications Reform Project were to increase the quality and range o f services available while providing lower tar i f fs for consumers. The proposed project plans to continue expanding the benefits o f a competitive telecommunications sector to the general population and extend those benefits to socially marginalized communities. The socio-cultural and political opportunities that these communities will gain f rom having access to I C T networks may be considerable. I t i s widely demonstrated that better access to ICTs improves earning opportunities and the quality o f government services received by previously excluded groups. The project wil l indirectly have a social impact on better employment opportunities to young graduates by providing better access and more affordable services. The proposed project also plans to continue the effort to create channels o f communication with the c iv i l society with regard to how I C T can contribute to economic development. During the Telecommunications Reform Project, ECTEL initiated a public awareness campaign, where community meetings were organized in schools and community centers. The objectives were to discuss issues related to telecommunications in the region, disseminate general information o n the operations, h c t i o n and structure o f ECTEL including a web site, and develop capacity for information exchange between ECTEL and the public in the participating countries.

4. Environment There are no significant environmental issues in relation to this project. The Bank will not be financing c iv i l works, which i s an area normally requiring environmental assessment. The project has been classified category C for its l o w impact o n the environment.

16

5. Safeguard policies

Safeguard Policies Triggered by the Project Yes N o

Environmental Assessment (OP/BP/GP 4.01) [I [XI

Natural Habitats (OP/BP 4.04) [I [XI

Pest Management (OP 4.09) [I [XI Cultural Property (OPN 1 1.03, being revised as OP 4.11) [XI

Involuntary Resettlement (OPBP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [XI

Forests (OP/BP 4.36) [ I [XI

Safety o f Dams (OP/BP 4.37) [I [XI

Projects in Disputed Areas (OP/BP/GP 7.60) [ I [XI

Projects on International Waterways (OP/BP/GP 7.50) [ I [XI

[ I

[ I

6. Policy Exceptions and Readiness There will not be any policy exceptions to this project. Most o f the applicable readiness criteria, detailed component activities, budgets, output and outcome indicators, implementation plan and schedule, procurement plan, terms o f reference for consultants, and financial management plan have been defined at appraisal and are included in the draft Project Operational Manual, which i s to be agreed at negotiations. Governments’ investment budgets, including counterpart b d s , have been defined at project appraisal.

17

Annex 1: Country and Sector or Program Background


Background The economies o f the OECS are facing a dual challenge o f slowing economic growth and persistently high unemployment and poverty rates. Real GDP growth averaged 5.7 percent per year in the 1980s, dropping to 2% percent per year since the mid-1990s. Regional economic dynamism has been affected by reduced preferential market access for traditional crop exports, stiffer competition from other tourism destinations, and fiscal imbalances and high public sector debt levels. This trend was exacerbated in the early 2000s by several negative external shocks (natural disasters, the 9/11 events, the slowdown in the global economy and o i l price increases). The 2001-05 Wor ld Bank’s Country Assistance Strategy (CAS) for the OECS identifies the following key development challenges for the OECS: the promotion o f sustainable, private sector-led economic diversification by providing a supportive environment for promising, newly emerging service industries, improving the provision o f public services to the population and strengthening the broader functioning o f the public sector. The region urgently needs to improve competitiveness in order to safeguard investment inflows, reinvigorate growth and generate employment. As members o f a quasi-currency board arrangement, however, improving international competitiveness o f the OECS countries wil l depend on real increases in the efficiency o f production. In addition, the region wil l need to carve out new areas o f competitive advantage in the global economy in order to diversify i t s economies and create a more stable and less vulnerable platform for development and poverty reduction. The governments o f the OECS have placed the reform o f their telecommunications sectors at the center o f their strategy to diversify their economies, enhance export competitiveness, and increase economic growth. The economic linkages o f telecommunications to the other productive sectors in the economy are pervasive. Higher quality, lower prices and greater variety o f telecommunications services impact positively on the growth o f sectors such as tourism, agriculture, and manufacturing. Moreover, a competitive telecommunications sector is essential to enable the emergence o f information and technology services, such as outsourcing information p roce~s ing .~ I C T can also contribute to eliminate the geographical barriers that small remote states face, to become more integrated in the global economy. The OECS recognizes in its development strategy that I C T offer significant opportunities to achieve greater economic growth and diversification and contribute to poverty reduction. They are pursuing opportunities offered by information technologies, taking full advantage o f a recently liberalized and regulated telecommunications sector. To ensure that the appropriate infrastructure and service platforms are established, countries in the region have favored a broad sub-regional approach towards telecommunications reform. In 1998, five country members o f the OECS (Dominica, St. K i t ts & Nevis, Grenada, St. Lucia, and St. Vincent.) established a common regulatory framework, created the Eastern Caribbean Telecommunications Authority

Such as key data entry, manuscript conversion, health care claims processing, call center operations, telemarketing, computer-aided design, geographic information services, document storage and management, and software development.

18

(ECTEL)--the first regional telecommunications regulatory authority in the world--to facilitate the harmonization of the regulatory regime. Besides licensing new services providers ECTEL and the NTRCs have also recently signed the Price Caps Plan (PCP) Implementation Agreement. The PCP sets the maximum level o f prices for certain services offered by a telecommunications company where it has dominant or monopoly advantage. I t does this by imposing caps o n how much the rates for a group o f services (or “basket”) can change. Under the negotiated price cap plan, residential access l ine rates are specified and can neither go up nor down during the four years o f the plan. Business access l ine rates can only increase by the rate o f inflation in any given year. The remaining regulated services must be reduced, o n average, by an amount representing expected productivity improvements (in this case 2.5 percent per year), less inflation. International and mobile services are not included in the price cap plan as there i s sufficient competition. Under the terms o f this agreement, C&W fixed l ine customers in the ECTEL Member States should pay as much as 22 percent less for their fixed-to-fixed local calls from December lst, 2004, with a further 20 percent reduction for fixed-to-fixed local calls coming in December 2005. Local calls o n the f ixed network will decrease from 9 cents (day), 8 (evening) and 6 cents (weekend) to 7 cents, 5 cents, and 5 cents respectively on December lst, 2004. Evening and Weekend rates will h r the r decrease to 4 cents and 4 cents respectively o n December lSt, 2005 (see Table 2). The agreement also makes provision for additional benefits to consumers - average reductions o f 10 cents per minute for fixed-to-mobile calls by 1 December 2005. Residential fixed customers will also receive 60 free minutes o f local fixed-to-fixed calls in the evenings and on weekends with effect f rom 1 December 2004.”

Business Access Lines (per month)

Table 1: Price Caps Plan: Initial Rates and Pricing Commitments for Voice

ECTEL countries: 48.00 I 17.98

(per month)

_ _ _ _ _ ~ ~

Fixed to Fixed (cents per minute) - Year 1 - Years 2-4

Grenada 24.00 I 8.99 St Kitts & Nevis 26.40 19.89 St Lucia 26.40 19.89 St Vincent & 20.40 17.64

the Grenadines

& Evening Weekend 9 1 3 813 6 1 2

Fixed to Mobile (cents per minute) - Year 1

Dav Evening Weekend 81/30 80130 7 8 / 2 9

- Years 2-4

Frozen at existing rates.

Allowed to increase by Inflation

Dav Evening Weekend 7 1 3 5 1 2 5 I 2 7 1 3 4 1 1 4 1 1

I& Evening Weekend 7 6 / 2 8 7 5 / 2 8 7 5 / 2 8 7 1 / 2 9 6 9 / 2 6 6 9 / 2 6

lo Actual implementation date i s January 1,2005.

19

Service Current Rate (EC%/USD) N e w R a t e 60 (Year 1) 80 (Years 2-4)

Free Evening and Weekend Minutes

In terms o f public return on invested resources regarding the consultancy o f US$ 0.55m supported by the World Bank project, this has to take some significant credit for an annual consumer benefit o f approximately U S $ 20 mi l l ion in terms o f lower fixed l ine prices delivered to date, as well as the considerable rollout and price reductions seen in other market segments including mobile and Internet. Both the init ial project and consulting support were instrumental in negotiating the recent price cap agreement, which i s scheduled to deliver US$ 7.5m in additional price reductions over the next two years alone.

None

Impact of the telecommunications reform process This first step o f liberalization has promoted growth in the mobile market as well as competition in other services including fixed and Internet. Fourteen entrants have been granted licenses to provide f ixed and mobile services. According to data from E M C Wor ld Cellular Database, the regional cellular penetration has increased from 2.3 percent in 2000 to an estimated 63 percent by the f i rs t quarter o f 2004. As a result, by the end o f 2003, St. Lucia and St. Vincent were among the countries with the highest penetration levels in the Caribbean, with 88.9 and 61.4 percent respectively, surpassing the regional average o f 53.1 percent. To foster lower prices in international connectivity, ECTEL has recommended the NTRCs to issue a license for a second submarine cable that connects al l OECS countries. The new cable wil l increase broadband access and enable the emergence o f greater competition in the fixed l ine market, currently dominated by C&W. The increase in network capacity and competition among operators has caused prices to drop for most services. According to the ECICT Impact Assessment report produced by CARANA/USAID, average prices for calls f rom the region to the United States have been reduced by more that 70 percent since that start o f the liberalization process. Liberalization o f the sector has also promoted macroeconomic growth by contributing to increases in foreign direct investment and employment in the telecommunications and I C T

sector. A report by C A R 4 N A indicates that direct investment in the sector has increased from EC$129 (US$48) mi l l ion in 2001, to more than EC$240 (US$90) mi l l ion in 2003. The investment f low i s expected to reach EC$286 (US$107) m i l l i on in 2004. An expansion in employment opportunities has begun as a result o f opening up the sector, as newly licensed companies start operations and as employees from the incumbent operator leave to start

20

their own businesses. Direct employment by new service providers has increased from 377 in 2001 to an expected 693 at the end o f 2004. Direct employment in the sector has decreased from 1,615 employees in 2001 to approximately 1364 reported in 2003; however this is primarily due to outsourcing arrangements by Cable and Wireless. I t i s estimated that over 500 new jobs were created in the region in the areas o f Internet services and customer premises equipment services, suggesting an overall positive impact o f reform o n employment in the broad I C T sector.

Remaining constraints in the telecommunications sector During the past several years, there has been considerable interest in advancing a larger I C T agenda in the OECS region. In 2002, I C T Assessments for each o f the five ECTEL member countries were completed as part o f the Eastern Caribbean I C T Initiative carried out by CARANA, funded by USAID. In addition, the OECS undertook a complementary initiative by developing a regional I C T Policy and Strategic Plan with Wor ld Bank funding. These studies identify the fol lowing constraints as the most important to building o n the reform process.

(a) Weaknesses in the legal and regulatory framework The newly established regulatory regime in the OECS i s under pressure f rom the incumbent, multinational new entrants, and local investors. I t lacks the experience, resources, and training to cope effectively in a rapidly evolving competitive environment. The roles o f ECTEL and the NTRCs are not yet legally clear. ECTEL’s position as an advisor to the NTRCs, an advocate in proceedings before the NTRCs and a type o f regulator, i s confusing and may invite legal challenges over time. Additional regulations are needed in dispute resolution, consumer protection, market dominance, and interconnection.

(b) High cost and disparities in access to telecommunications infrastructure While the Price Caps Implementation Agreement discussed earlier has partially addressed some o f the pricing issues, the relatively high cost and unavailability o f telecommunications services remain an important constraint in the sector. The high retail price o f international calls, Internet connections, and leased lines i s deterring the development o f new economic opportunities such as business processing services (see Table 3, 4 and 5). Although the market has been liberalized, monopolistic behavior s t i l l prevail in some market segments, such as international leased lines. Currently, ECTEL i s reviewing application for three undersea fiber optic networks. This is a positive development and ECTEL will need to fast track the issuing o f additional licenses to facilitate competition. The present backbone provider charges very high rates to the growing number o f ISPs and international long-distance operators. The same market dominance from the incumbent i s influencing high interconnection rates, such as in fixed-to-mobile. ECTEL member countries must regulate the dominant operator so that i t offers competitive rates for ISPs and other competing operators that interconnect with i t s network. W h i l e access to the telecommunications infrastructure has increased dramatically--with more than one cellular telephone per two inhabitants--access to the Internet s t i l l remains low. Access to a broadband connection is s t i l l unavailable in parts o f the region. Opportunities being implemented to enhance broadband external connectivity in nearby countries such as Guadeloupe and Martinique could also be carried out in the OECS with competition in provision o f submarine cable infrastructure. The current legislation and pol icy includes elements for

21

framing a universal access strategy, but the process o f establishing a Universal Service Fund remains to be undertaken. The lack o f access to the network infkastructure and the related high access rates must be solved in the short term, as they wil l impact other initiatives such as provision o f distance learning facilities as wel l as private sector competition in ICT-enabled services.

22

Table 3 - Cost o f telecommunication services (in US$)

~~~

Dominican Republic

Countries E- C&W (ADSL)

The Cable Co (cable) Weblinks (WiFi)

0 i 0.67 55 47 (512 kbps) 60 (512 kbps)

Anguilla

Bahamas SRG BTC BTC

Coralwave (cable)

0.49 (indigo) 0.5 1 (reduced) 0.99 (regular)

0 0

35 (512 kbps) 55 (1Mbps) 70 (2Mbps)

72 (256 kbps) 87 (768 kbps) I Barbados

C&W (ADSL) 30 0 I 9 7 97

1-18 (day) 1.00 (eve.)

Verizon Tricom (cable)

15.55 7.40 0 0 0

8 (128kpbs) 23 (512 kbps) 53 (1,5 Mbps)

48 92 0 0.47 C&W

GT&T

ECTEL

Guyana 0.56 (peak) 0.50

C&W (ADSL) 35

16.39 17

20.70 35

37

66 (128kpbs) 93 (256kpbs) 129 (768kpbs)

0 I 5 0 50 50

0.26

0.29

Jamaica

Digicel Cybervale Emoquad

Angel Infochan (ADSL)

12.30 0

9.43 0 1 150

150 150

40 l300+ 300+ 300+ 300

59 (256kpbs) 390 (1Mpbs)

670 (1SMpbs) 75 (256kpbs) 100 (384kpbs) 200 (512kpbs) 55 (256kpbs)

Kasnet (MMDS)

N5 (MMDS)

I Suriname Telesur

Greentone EDUCONS

0.44 0.15

10 TSTT 56 65 (128kpbs) 18.75 I 7 8 0.32 (day)

0.27 Trinidad &

Source: Stern (2004) -Draft

23

Companies such as C&W and Delphi have also indicated that they have difficulties in finding skilled staff. Most member countries o f ECTEL do not have a national pol icy or strategy for the integration o f I C T into the education system. St. Lucia and Dominica have prepared a draft I C T pol icy for education but these remain to be implemented. Other initiatives in the region are based on equipping schools with computers without broader efforts to incorporate their use in the curriculum.

Current initiatives in ICT All ECTEL member governments have explicitly recognized that I C T can have an important impact on economic diversification, educational outcomes, and more effective government services. The region’s international partners have also acknowledged the role o f ICT in improving competitiveness and increasing economic diversification both within the OECS and the Caribbean. Several workshops, conferences, and initiatives have started a process o f transforming studies and recommendations into actions. In St. Lucia, the Ministry o f Education has prepared a draft I C T Policy for Education System, which among many objectives, intends to encourage principals, teachers and students within the education system to use I C T to enhance the teaching-learning process. Grenada has established an I C T policy, which envisions the creation o f a national network that would electronically link al l government ministries, departments and statutory bodies to local and wide area networks. Once established, the Government o f Grenada would l i ke to use this network along several dimensions, such as improving the exchange o f information between the police, immigration, and drug enforcement authorities. The government, however, has other rebuilding priorities fol lowing the recent hurricane. The construction and operation o f a submarine cable between Guadeloupe and Puerto Rico v ia St. Martin is underway with subsidized public funding through the European Un ion and French Government, which could possibly be extended to OECS/ECTEL member countries.

25

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies


St. K i t t s

Projects Countries Sector issues Latest Supervision (PSR) addressed Ratings

Implementation Development Progress (IP) Objective

(DO) Supported by World Bank

St. Luc ia St. K i t t s

OECS Telecommunications Reform

OECS Education Development Project

Domin ica Grenada St. Luc ia St. K i t t s & Nevis St. Vincent & the Grenadines

Grenada St. Luc ia St. K i t t s & Nevis St. Vincent & the Grenadines

Supported by other agencies _ _

OECS Trade Policy Assistance Project (Canadian International Development Agency ( C I W

Eastern Caribbean Information and Communications Technology Project (USAID)

OECS Needs Assessment and Feasibility Study:

Ant igua & Barbuda Domin ica Grenada St. K i t t s & Nevis St. Luc ia St. Vincent & the Grenadines

Domin ica Grenada St. Luc ia St. K i t t s & Nevis St. Vincent & the Grenadines

Dominica Grenada

Regulatory reforms in the telecommunications sector

Build human capital t o support diversification o f economy

Strengthen regional capacity to participate and compete in global economy

Regulatory reforms in telecommunications sector

Competit ive advantages in ICT clusters and ICT-

Highly satisfactory

Satisfactory

Not applicable

N o t applicable

Not applicable

N o t applicable

Not applicable

Not applicable

26

Improving the Competitiveness and Increasing Economic Diversification in the Caribbean -The Role o f ICT (infoDev)

St. Luc ia St. Kitts & Nevis St. Vincent & the Grenadines

enabled clusters

27

Annex 3: Results Framework and Monitoring


Results Framework

To improve the access, quality and use o f telecommunications and ICT services to achieve socio-economic development in the OECS.

Component One: Reduction in communications tariffs as a result o f competitive network charges among operators on local and intemational routes.

Component Two: Private operators invest in network infrastructure and provide ICT access to previously underserved communities/facilities.

Component Three: Demonstrate the effective use o f Broadband applications provision through access to broadband capacity at reasonable cost.

Outcome Indicators Prices for a basket o f key communications services (lease lines, International tariffs, mobile, and intemational rates). Number o f community centers providing Broadband access across region.

Results Indicators for Each Component

Component One: Domestic leased lines: monthly rates are reduced by 30 percent. International Leased lines: monthly rates are reduced by 50 percent. Mobi le retail tariffs drop by 25 percent. Intemational communications prices drop by 50 percent.

Component Two: Broadband I C T access available in 100 points o f public access across region. Leverage o f USF subsidies as ratio o f private investment vs. subsidies. In t h i s case the leverage factor also follows from the financial model. In the above-mentioned Chile example the leverage factor was 6.8.

Component Three: Pi lot project established in three countries for altemative communications between the ECTEL Member States.

To evaluate impact o f universal access program and regulation policy.

Component One: To monitor effectiveness o f competition framework and identify areas where tar i f f regulation might be needed to address monopoly structures.

Component Two: To determine if Universal Service Guidelines and pol icy have been adequately implemented and there has been leverage o f the subsidies o f private sector investment.

Component Three: To demonstrate effective use of affordable, efficient and competitive availability o f broadband services.

28

I

0 2 & 0 0

W 2 6

0 l-

2 52

E 0 2

b x E E .d

w t- €4 VI 3

I- 00 €4 VI 3

0 m

Annex 3: Results Framework and Monitoring (cont.) Arrangements for results monitoring (cont.) -

co

1. Legal and Regulatory Reforms Reduction o f communication tariffs as a result o f competitive network charges among operators o n local and international routes

2. Universal Access Private operators invest in network infrastructure and provide ICT access to previously underserved communities/facilities

3. ICT Demonstrate the effective use o f Broadband applications provision through access to broadband capacity at reasonable cost

4. Project Management Provide Administrative Support to the project

Telecommunications A c t and regulations reviewed

Monthly rates for Domestic leased lines Monthly rates for International Leased lines Mobi le retail tariffs International communication prices

Increase in Community centers with Broadband ICT access Universal Service Guidelines and pol icy designed Increase in leverage o f USF subsidies as ratio o f private investment vs. subsidies

Month ly rates for Broadband services costs (decrease) Increase in usage o f broadband services Annual communications for RSMS (decrease)

Project manager Audit firm hired

relecom Act md regula- .ions updated Decrease by: 15%

25% 12.5% 25%

X+30

Guidelines are implemented

Tbd

10%

Tbd

10%

H i red H i red

Completion

Decrease by: 30%

50% 50% 50%

x+100

-

Tbd

20%

Tbd

25%

Hi red H i red

31

Annex 3: Results Framework and Monitoring (cont.) Arrangements for results monitoring (cont.)

Project Objective Basket o f prices f rom component (Baseline 100 at end 2004) Number o f community centers with broadband access (baseline at end 2004 to be determined)

1. Legal and Regulatory Reforms Month ly rates (in US$) for Domestic leased lines

Month ly rates for Intemational Leased lines

Mobi le retail tariffs International communication prices

2. Universal Access Increase in Community centers with Broadband ICT access Universal Service Guidelines and pol icy have been implemented Increase in leverage o f USF subsidies as ratio o f private investment vs. subsidies

3. ICT Month ly rates for Broad band services costs (decrease) Increase in usage o f broadband services. Annual communications for RSMS (decrease)

4. Project Management Project manager Audit firm hired

80% Xt-30

1,417 (El) 1,423 (Tl)

11,682 15,382 23,084 23,999

0.69 0.35

X+3 0 Implemented

Tbd

83 Tbd 10%

Hi red H i red

60% x+ 100

1,167 1,089

7,788 10,255 15,390 16,000

0.59 0.23

X+lOO same

Tbd

74 Tbd 25%

H i red H i red

32

Annex 4: Detailed Project Description


Component 1 - Support for Legal and Regulatory Reforms: US$840,000 The objective o f this component i s to strengthen the national and regional regulatory frameworks and promote additional competition in the telecommunications sector. I t will provide assistance to ECTEL and the NTRCs to revise regional and national sector legislation, and to develop a modem interconnection regime. The goal o f the component i s to achieve more competitive tariffs for consumers and businesses in the region. 1 .I The current versions o f the Telecommunications Act and tariff regulations o f each country need to be updated and improved as the region moves forward in overseeing a multi-carrier environment. There i s a need to update these after nearly four years o f experience, and to determine changes needed to the foundational documents (Treaty and Telecommunications’ Laws). The subcomponent wil l also identify areas where new regulations are needed. Total cost: US$llO, 000. 1.2 There will be a growing interest by private operators to have ECTEL and the NTRCs rely o n dispute resolution as opposed to ex ante regulation, once market competition evolves. The speed, openness, and transparency o f handling licensee disputes wil l have significant consequences for sector dynamism, and will directly impact the level o f investment, growth and expansion o f networks and services. Failure by ECTEL and the NTRCs to quickly and effectively resolve disputes will result in delays in the introduction o f new services, continuing higher prices and lower quality o f service for consumers. An effective dispute resolution capability and process will help establish predictability and certainty, and wil l improve transparency. Failure to address disputes collectively will diminish the intended benefits o f the regionalized ECTEL approach. This activity wil l assist the establishment o f a regional forum for consensus building and altemative dispute resolution. The forum should facilitate resolution o f issues that have a commercial and public pol icy dimension and should seek consensus o n commercial issues among industry players. The areas where the mechanism wil l become useful are the following: fixed-to-mobile and fixed-to-fixed interconnection; pricing and technical arrangements between ISPs (and other value-added service providers) and local fix l ine operators; use o f rights o f way; pricing o f access; and site sharing and co-location. Total cost: US$140,000. 1.3 The objective i s to establish positions and guidelines for handling specific anticipated areas o f dispute, and based o n current draft dispute resolution regulations, develop a standard model for review and adoption by each member country. To the extent possible, the TA for this subcomponent wil l include discussion leading to the adoption o f the regulation to include dialog and possibly public hearings for building some base level o f consensus amongst industry players on business and commercial interests. And where possible, the positions/guidelines o n areas such as fixed-to-mobile and fixed-to-fixed interconnection, pricing and technical arrangements between ISPs (and other value-added service providers) and local fix l ine operators, use o f rights

Telecommunications Act and Regulations

Regional Forum for Consensus Building

Alternative Dispute Resolution (ADR) Capacity Building

33

o f way, pricing of access and site sharing and co-location, should also be made public in an effort to avoid possible future disputes from even arising. Total cost US$llO, 000. 1.4 Interconnection issues are the biggest concern when new competitors enter the telecommunications market. I t is essential to establish fair and equitable interconnection rates between the incumbent and new entrants to allow for the functioning o f a multi-operator environment. The experience in the ECTEL member countries has been that the incumbent leverages i t s dominant position, which causes delays in the introduction o f services by new entrants. The incumbent’s position allows it to charge high interconnection rates, which elevate the cost and retail price for accessing inter-carrier, international, Internet, and leased lines. Specific areas that need attention are the current fixed-to-mobile interconnection regime, mobile- to-fixed call termination and leased l ine fees in each o f the E C T E L member states. As the closest broadband access source to the Eastern Caribbean with competitive prices i s Puerto Rico, attention wil l also be provided to expand access to telecommunications submarine cable infrastructure. This activity wi l l assist ECTEL and the NTRCs to develop a modem cost methodology to determine interconnection and related consumer rates. The methodology would be developed in consultation with fixed and mobile operators and will consider international best practice. One o f the objectives o f the methodology wil l be to lower fixed-to-mobile retail tariffs through reductions in mobile termination charges. The activity wil l review the curreat interconnection regime and recommend amendments in order to implement the new methodology. Finally, the component wil l also explore methods to attract additional service providers to services currently dominated by the incumbent. Total cost: US$245,000. 1.5 The objective o f this activity i s to support continuous training to ministers, board members, commissioners, and ECTEL and N T R C staff in telecommunications regulation, especially focusing on interconnection, numbering, dispute resolution procedures, and spectrum management. I t includes a comprehensive review o f the telecommunications legislation, with special focus o n interconnection and spectrum management, implementing numbering and dispute resolution procedures, as wel l as a regional program o f related training for ECTEL and NTRC staff and government officials o f the participating countries that consists of: (a) courses in specific areas o f telecommunication regulations; (b) short term, on-the-job training provided by consultants undertaking on-going assignments; (c) short and long term, planned courses and programs (e.g., the Public Utility Research Center (PURC) at the University o f Florida, E-MRP from University of West Indies); and (d) regional seminars and workshops on current topics organized and delivered in response to emerging needs. Depending o n the regulatory needs o f ECTEL, i t wil l also consider inclusion o f an intemational technical advisor to ECTEL. Total cost: US$235,000.

Development of Pro-competition Policies and Procedures

Regional Collaboration, Training, and Resource and Information Sharing

Component 2 - Universal Access: US$1,270,000 The objective o f this component i s to review current universal access policy, create related guidelines and provide support to establish a Universal Service Fund (USF). The current telecommunications legislation and policy includes elements for framing a universal access strategy. However, the process o f establishing a USF remains incomplete. This component will assist in the implementation o f a common universal access framework and make i t operational

34

across the E C T E L member countries, with a focus on providing advanced I C T services (ie., beyond basic telephony services) that positively impact the socio-economic development o f local communities. 2.1 Universal Service Guidelines (USG) The ECTEL Treaty established in M a y 2000 provides a general outline to establish a USF with the purpose of promoting access to affordable telecommunications services. Furthermore, the Telecommunications A c t in each o f the countries includes a provision for universal access, recognizes the role of ECTEL with regards to guidance in this area, and acknowledges the contribution required f rom each licensee towards the USF. As a general rule, each license includes the contribution requirement to the USF but implementation has been postponed. Consultants funded by U S A I D produced a white paper on universal service mechanisms and pol icy options for ECTEL and its member countries, as we l l as a draft regulation o n universal service. The recommendations provided in the report have not been implemented. The focus o f the effort under this project i s to establish a unified policy, strategy, and implementing guidelines that help ensure advanced telecommunications infrastructure i s more widely accessible to al l communities and public institutions in the region. Consultants will assist in preparinghpdating a comprehensive consultation paper to define Universal Service Guidelines (USG) to improve access to broadband connectivity through a USF. The first element o f the component wil l be a review o f the relevant policy, legislative and regulatory provisions with respect to universal access. I t will fol low the development o f a business model and framework for the USF tender process being developed by the Bank and ECTEL as part o f project preparation activities. The second element wil l be a consultation process that wil l include a workshop to discuss and seek consensus from OECS countries in regards to implementing the proposed USF tender process for I C T projects. The third element wil l provide assistance to ECTEL and the NTRCs in preparing the USF regulations, Pol icy and Operating Procedures, establishing the USF, and help plan and support i t s implementation over the subsequent 3 years. Total cost: US$150,000. 2.2 Implementation Support This will include assistance to ECTEL and the NTRCs in the implementation o f the USF regulations, USF Policy and USF Operating Procedures and assistance in starting the process o f collecting funds, selecting projects and issuing USF tenders over a period o f 3 years. Total cost: US$120,000. 2.3 This objective o f this sub-component i s to establish the USF and provide a one-time subsidy to service providers. Based on experience from other countries, the amount that will be generated from the 1 percent o f operators’ gross revenues for the USF wil l be insufficient to cover immediate needs. The objective o f the USF will be to stimulate private investment in expanding broadband connectivity and access to I C T for under-served communities and public institutions. Private companies will be selected by fol lowing a competitive bidding process and the minimum subsidy that i s required to provide services in the member states. Thus, the implementation o f the USF will use output based aid (OBA) type schemes to deliver services. To assure adequate management o f the USF, the subcomponent wil l ensure that clear procedures for i t s operation are developed, as wel l as transparent criteria and institutional arrangements established. Based o n the ongoing analysis and advisory work, the USF design is not fully developed. However, ECTEL i s clear that i t needs to enhance competition in the marketplace, and i s considering awarding the

Support for Universal Service Fund (USF)

35

subsidies to proposals that can be evaluated according to a number o f criteria such as price, quality o f service, and also the extent to which the proposals meet the liberalization objectives o f the member states. Thus, potential service providers can be invited to submit a proposal with the fol lowing terms: (i) provide broadband Internet access to al l beneficiaries at specified ratehandwidth combinations and installation costs; (ii) minimum subsidy requested per year for a 3-year period; and (iii) quality o f service requirements are explicit. The Bank and ECTEL are conducting a “best practices” study to explore potential activities that could be candidates to receive funds from the USF. The OECS countries have agreed that the study should focus on the viability o f providing broadband connectivity to public institutions (schools, training centers, public libraries and post offices) in order to facilitate or promote widespread public access to the Internet, and, in the future, to e-government services. The results of this study should assist OECS countries in their efforts to develop and implement more effective, targeted and sustainable universal access programs, including possible access to telecommunications submarine cable infrastructure. Total cost: US$l, 000,000.

Component 3 - Information and Communication Technologies (ICT): US$1,030,000 The objective o f this component i s to improve growth and competitiveness in ICT-enabled services through utilization o f broadband infrastructure. I t includes consulting services to identify policies as well as pi lot projects with a particular focus on regional initiatives.

3.1 I Extending the use of broadband applications by governments and the private sector

The objective o f this subcomponent i s to identify the regulatory infrastructure required to move the I C T Agenda o f each o f the countries forward and design a pi lot scheme to encourage regional use of broadband. This subcomponent will be based on the identification o f the policies required for facilitating the development o f broadband applications. I t includes the fol lowing key activities: (a) identifying policies required to facilitate the development o f broadband applications and infrastructure, and drafting appropriate regulations that would give effect to these policies; (b) elaborating and recommending a common information systems architecture and standards for the Member States and viable mechanism by which complex information systems can be supported and maintained (e.g., using remote applications v ia broadband systems); and (c) designing pi lot projects to encourage regional use o f broadband technologies. Total cost US$605,000. 3.2. - ICT Pilot Projects

The objective o f this subcomponent i s to implement up to five pi lot projects that demonstrate the viability and business case for I C T and showcases the application o f ICT using broadband connectivity, following the design activities in subcomponent 3.1. There will be a focus o n regional initiatives that would enable exploitation o f broadband connectivity to improve productivity and employment creation. The subcomponent wil l also support consulting services to implement the pilot. Total cost US$ 325,000 --including a) Equipment: US$250,000, and (b) consultancy: US$ 75,000. 3.3.

This activity would establish an alternative telecommunications system to transfer data f rom the RSMS to ECTEL and the five NTRCs through the use o f alternative technology for the provision o f more reliable communication and lower recurrent cost while maintaining international and

Alternative communication technologies for Radio Spectrum Monitoring System (RSMS)

36

domestic l i n k s using the incumbent telephone network. This component builds upon the past RSMS system that i s being satisfactorily implemented by ECTEL. Total cost US$I 00,000.

Component 4 - Project Management: US$245,000 The objective o f this component i s to provide administrative support to the project by providing complementary resources. The goal i s make sure the project management function i s adequately staffed with the rights skills. 4.1 Support to Project Administration This subcomponent would provide resources to support project administration capacity within ECTEL. A dedicated person would be hired for the duration o f the project. This person would have project management, procurement, financial management skills, as wel l as technical skills. Total cost: US$200,000. 4.2 Audit This activity would provide fbnding for project audits. Total cost: US$45,000.

37

Annex 5: Project Costs

Telecommunications and ICT Development Project (with contingencies)

Local Foreign Total Project Cost By Component andor Activity U S $million U S $million U S $million

1, SUPPORT FOR LEGAL AND REGULATORY REFORMS 1.1 Telecommunications Act and Regulations 1.2 Regional Forum for Consensus Building 1.3 Alternative Disputes Resolution (ADR) Capacity Building 1.4 Development o f pro-competitive Policies and Procedures 1.5 Regional Collaboration, Training, and Resource and Information Sharing

2. UNIVERSAL ACCESS 2.1 Universal Service Guidelines (USG) 2.2 Implementation Support 2.3 Universal Service Fund (USF)

3. ICT 3.1 Extending use o f broadband applications 3.2 a) ICT Pilot Projects: Equipments 3.2 b) ICT Pilot Projects: Consulting 3.3 Alternative communication technologies for RSMS

4. PROJECT MANAGEMENT 4.1 Project Administration 4.2 Audit

0.15 0.02 0.03 0.02 0.04 0.04

0.22 0.03 0.02 0.17

0.18 0.11 0.04 0.01 0.02

0.05 0.04 0.01

0.61 0.08 0.10 0.08 0.18 0.17

0.89 0.11 0.09 0.70

0.74 0.44 0.17 0.05 0.07

0.18 0.15 0.03

0.76 0.10 0.13 0.10 0.22 0.21

1.12 0.14 0.11 0.87

0.92 0.55 0.22 0.07 0.09

0.23 0.19 0.04

Total Baseline Cost 0.61 2.42 3.03 Physical Contingencies 0.01 0.04 0.05 Price Contingencies 0.06 0.25 0.31

Front-end Fee 0.01 Total Financing Required 3.40

Total Project Costs' 0.68 2.71 3.39

'Identifiable taxes and duties are 0 (US$m.) and the total project cost, net o f taxes, i s 3.40 (US$m.). Therefore, the share o f project cost net o f taxes i s 100%.

38

Annex 6: Implementation Arrangements Telecommunications and ICT Development Project

The implementation of the project will be the responsibility o f ECTEL given the experience it has acquired during the Bank’s recently closed Telecommunications Reform Project. In accordance with a decision made by the OECS Heads o f Government, E C T E L wil l be responsible for executing the project.

The Borrowers wil l designate at least two individuals in ECTEL to represent each o f the respective borrowers for the purpose o f using and withdrawing loan and credit proceeds. The position o f these persons may include Managing Director, Director o f Technical Services andor Accountant.

ECTEL will carry out the procurement o f a l l Bank-financed goods and services under this project; operate the financial management system according to Wor ld Bank requirements (including management o f disbursement o f a l l World Bank loan proceeds, monitoring availability o f Government’s counterpart contribution to the project, monitoring implementation progress o f project components, and work to prepare semi-annual progress reports in accordance with a project progress reporting format acceptable to the Bank). Annual audits are to be arranged and carried out by professional auditors according to Bank and Government requirements and agreements.

The Bank will review ECTEL’s progress reports, make sure that there are adequate resources and staffing to meet the challenges o f implementation, and provide assistance to ECTEL should achievement o f proj ect development objectives become imperiled by pol icy changes, institutional issues, or other unforeseen changes. The Bank will make occasional f ield visits to participating countries to meet with beneficiaries and to assure implementation effectiveness on the ground. A mid-term review (about 24 months from the date o f effectiveness) will be carried out to evaluate progress o f implementation against planned objectives.

ECTEL wil l prepare and submit a project completion report within six months to loan closing.

39

Annex 7: Financial Management and Disbursement Arrangements


Overall conclusion The major risk area lies in the Universal Service Fund that will provide grants to private sector f i rms . The mechanisms have not been defined yet. But the risk i s considered moderate, as the project will support the development o f guidelines for which the approved o f ECTEL, the NTRCs, and the Bank i s required. This wil l ensure that potential r isks are adequately addressed. The preparation o f detailed procedures for the management o f the Fund satisfactory to the Bank will be a disbursement condition for the financing o f specific projects under the Universal Service Fund. These procedures will define the scope o f the Universal Service Fund, the selection criteria and processes, the Fund management, including financing and performance monitoring mechanisms. ECTEL will have the financial management responsibility o f the project. I ts financial management i s found to be globally satisfactory. But it needs to be adapted to the current context to meet ECTEL statutory requirements to prepare i ts own financial statements (as an entity) and the requirements o f the new project. As o f now, ECTEL financial management system is shaped around the needs o f the OECS Telecommunications Reform Project. I t needs now to be elevated to a level where it can meet both ECTEL’s statutory requirement and the need to ensure the project’s financial management. ECTEL has already been implementing measures including customizing the financial management software and preparing a new financial pol icy and procedures manual, which has just been approved by i t s Board. The manual has been reviewed and considered to be satisfactory subject to minor changes to include procedures more specific to the project, I t is expected that the remaining actions to be implemented, consisting o f finalizing the customization o f the software and the hiring o f the project auditor, can be completed soon. They are considered as effectiveness conditions.

Summary of the project design

Project objective and activities. The overall development objective o f the Telecommunications and ICT Development Project is to improve the access, quality and use o f telecommunications and I C T services to achieve socio-economic development in the OECS. This objective will be achieved through the implementation o f the four components specified in the PAD. The implementation o f the project is relatively simple given i t s small size (US$ 3.4 mil l ion) and the nature o f its activities, consisting mainly o f consultant services and the procurement o f a l imited number o f goods. The only activity o f the project that is relatively specific i s the Universal Service Fund (US$l. 1 million), representing about a third o f the total project costs.

Implementation arrangements. The Telecommunications and I C T Development Project will more or less fo l low the implementation arrangements o f the recently closed OECS Telecommunications Reform Project. The same implementing entity, ECTEL, will be used. ECTEL wil l be responsible for the execution o f the project, including financial management. ECTEL was established, as part o f the OECS Telecommunication Reform Project, by f ive country members o f the OECS as a regional telecommunications regulatory authority. I t has

41

managed successfully the implementation o f the Telecommunications Reform Project, including the financial management aspects. ECTEL has a well-defined organizational structure and administration (see chart in Annex 6). I ts Managing Director reports to a Board o f Directors. The Treaty that established ECTEL requires specifically that: (a) ECTEL prepare for each year the general budget and any special budgets for approval by the Board which shall then be submitted to the Council for consideration and adoption; (b) a l l expenses o f ECTEL be approved in respect o f each financial year by the Council and shall be chargeable to the general budget or to a special budget; and (c) The Council appoint an External Auditor to submit to i t an annual audit report which includes a financial and management audit o f ECTEL and the ECTEL Fund.

Financial management and disbursement. ECTEL, through i t s accounting unit, wil l have overall responsibility o f the project financial management. It wil l maintain the project’s accounts, manage disbursements, prepare the required financial reports and coordinate the financial audit.

Flow of funds. The project wil l finance a l imited number o f contracts for goods and consulting services and most o f them will be international, The amount o f local expenditures i s relatively small and can be pre-financed by ECTEL. O n this basis, and as agreed with ECTEL, there i s no specific need to use a special account for the project. ECTEL wil l pre-finance and get reimbursed for local expenditures incurred and contract payments under U S $ 20,000 and will submit to the Bank direct payment requests for international contracts. This mechanism, which was also used in the implementation o f the OECS Telecommunications Reform Project, will simpli fy the disbursement processes given the large number o f financing agreements involved and their respective small amount.

Financial reporting. A s required by World Bank’s policy, ECTEL will prepare financial monitoring reports (FMR) and annual financial statements for the project, in addition to its own annual financial statements fol lowing international accounting standards. To align the financial monitoring reporting with the regular activity reporting o f ECTEL, the FMR will be prepared o n a semi-annual basis as part o f the semi-annual project progress reports that wil l provide more detailed information on progress and implementation issues. The FMR will be submitted not later than 45 days after the end o f ECTEL’s semi-annual financial reporting period. Given the nature o f the activities, i t was agreed that there i s no need to have specific tables on physical progress monitoring in the FMR. The semi-annually progress report wil l be more detailed o n the activities implemented and how they compare to the activities planned along with possible implementation issues. The financial part o f the FMR will consist o f a statement o f sources and uses o f funds, and a statement o f uses o f funds by activity. The procurement part o f the FMR will include the updated procurement plan and information on contract management. The annual financial statements for the project to be audited will consist o f the statement o f sources and uses o f funds and the statements o f uses o f funds by activity showing the transactions for the year and cumulatively since the beginning o f the project.

42

Auditing. E C T E L has submitted al l annual financial audit reports required during the implementation o f the OECS Telecommunications Reform Project. The audit opinion in al l these reports was unqualified and the quality o f the audit reports was found to be satisfactory by the Bank. But the reports were received with a few months late. Under the proposed project, an independent private sector audit firm will audit annually the project financial statements. This audit wil l be performed in accordance with intemational standards o n auditing. The project annual audit report will be required to be submitted to the Bank no later than four months following the end o f ECTEL fiscal year. The first audit report to be submitted wil l cover financial statements for the period from effectiveness to the end o f the second fiscal year (up to 18 months). As noted above, the ECTEL Treaty indicates that the Council shall appoint an External Auditor to submit to it an annual audit report, which includes a financial, and management audit o f ECTEL and the E C T E L Fund. This requirement has not been fulf i l led yet. As ECTEL will start preparing its own financial statements, i t wil l be necessary that an Extemal Auditor be appointed to audit them. E C T E L will be required to submit to the Bank a copy o f i ts audited financial statement along with the audit report. At the request o f ECTEL’s management, the project and ECTEL’s financial statements will be audited by separate auditors.

Financial management assessment ECTEL’s accounting unit has already demonstrated adequate capacity, as shown during the implementation o f the OECS Telecommunications Reform Project through: (a) the current financial management system, which was used for the OECS Telecommunications Reform Project; (b) ECTEL accountant’s experience in project financial management gained through the implementation o f the OECS Telecommunications Reform Project; (c) the existence o f a Financial Pol icy and Procedures Manual. This capacity, along with the satisfactory regular financial audits, meets the Bank’s financial management requirements. But the context for the implementation o f the proposed Telecommunications and I C T Development Project i s different from the previous project in the sense that the previous financial management system was set up mainly for the needs o f the project because o f the overlap between the project’s and ECTEL’s activities. As ECTEL i s now we l l established as an autonomous entity, i t s financial management system must also reflect the scope o f i t s own activities, and not just that o f a project. To address this issue, ECTEL has already taken measures to upgrade i t s overall financial management system, including:

Customizing the financial management software to meet the financial management needs o f ECTEL as an entity, allowing ECTEL to keep accounting records o f i t s own and prepare i t s financial statements following private sector practices, and at the same time, meet the accounting requirements o f the project. Preparing a new Financial Pol icy and Procedures Manual.

.

. For the customization o f the financial management software, i t was agreed that ECTEL would create two separate accounting entities (ECTEL and the Project). A chart o f account and reporting format wil l be developed for each reflecting the respective operations. The new Financial Pol icy and Procedures Manual have been approved by ECTEL’s Board. During project preparation, i t was recommended that while addressing mainly the needs o f ECTEL it would also make provision for project management to avoid the need to prepare a

43

separate manual only for the project. The Manual has already been reviewed and found satisfactory by the Bank subject to minor changes to address the specific needs o f project management. Significant risks Given past experience, existing financial management and the nature o f the project, no significant financial management risks have been identified. The major r isk area lies in the Universal Service Fund that will provide a one-time grant to competitively selected private sector firms. The mechanisms have not been defined yet, although this has been successfully undertaken in other countries. The risk i s considered moderate because the project wil l support the development o f specific procedures that will be approved by ECTEL, the NTRCs and the Bank, Approval o f these procedures by the Bank wil l be a condition o f disbursement o f the financing for the specific projects under the Universal Service Fund. This will ensure that potential risks are adequately addressed. Action plan To ensure that ECTEL financial management system i s h l ly satisfactory, the following actions have to be implemented: . Finalize the customization o f the financial management software through the

development o f a chart o f account and the reporting format for both the project and ECTEL (effectiveness condition); Hi re an independent private auditor satisfactory to the Bank in accordance with terms o f reference satisfactory to Bank (to be completed no later than six month after effectiveness); and Development o f procedures acceptable to the Bank for the management o f the Universal Service Fund, including scope o f the Fund, selection criteria, financing and performance monitoring mechanisms (disbursement condition for subcomponent 2.3).

Relevant issues to be included in the legal documents The usual financial covenants will be included in the legal documents in addition to the conditions mentioned above. Interest and charges o n the loan and credit where applicable will be payable every April 1 5th and October 1 5th for the duration o f the loan. A covenant applicable to project implementation for sub-component 2.3 “Support for Universal Service Fund”, wil l require as a prerequisite the preparation o f Universal Service Guidelines acceptable to the Bank to any disbursement under this sub-component. Plans for supervision of the financial management aspects of the project. Given ECTEL’s experience in project financial management and the nature o f the project, frequent financial management supervision i s not needed. A f i rs t supervision mission should be done during the first six months o f implementation to ensure that the financial management system operates effectively and meet the needs o f both the project and ECTEL. Thereafter, unless major issues arise, a yearly supervision would be done to monitor the overall financial management o f the project. The semi-annually progress report including the FMR and the annual audit reports wil l also be reviewed and comments will be sent to ECTEL to address any issue identified.

.

44

Annex 8: Procurement Arrangements


8.1 Procurement Arranpements Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement Under IBRD Loans and IDA Credits” dated M a y 2004 and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” dated M a y 2004, and the provisions stipulated in the Legal Agreements. The general description o f various items under different expenditure category i s described below. For each contract to be financed by the Loadcredit, the procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame as agreed between the Borrower and the Bank project team are laid out in the Procurement Plan. The Procurement Plan wil l be updated at least annually or as required to reflect the actual project implementation needs.

8.2 Procurement methods: The methods to be used for the procurement described below, and the estimated amounts for each method, are summarized in Table A and A1 , The threshold contract values for the use o f each method are fixed in Table B.

8.2.1 Procurement of Goods Goods procured under this project would include (a) establishing and providing a one- time subsidy to the Universal Service Fund (USF) that will stimulate private investment in expanding access to advanced ICTs for under-served communities and facilities, (b) establishing Pilots for broadband applications, and (c) acquiring off-the-shelf equipment using alternative technologies to monitor the radio spectrum. These will be procured under BOO/BOT/BOOT, concessions and similar private sector (ICB) and Shopping procedures respectively. To the extent possible contracts for these goods will be grouped into bidding packages o f more than U S $ 150,000. These goods are estimated to total about US$1.35 mi l l ion equivalent and would be procured fol lowing I C B procedures, using Bank-issued Standard Bidding Documents (SBDs). Contracts below US$150,000 but above US$50,000 may be procured under National Competitive Bidding, using bidding documents acceptable to the Bank. Contracts for goods estimated to cost US$50,000 or less per contract, may be procured using shopping procedures based o n a model request for quotations satisfactory to the Bank. Given the nature o f goods to be procured for alternative communications technologies for the radio spectrum monitoring system estimated at US$lOO,OOO, on an exceptional basis will also be procured using shopping procedures.

8.2.2 Selection of Consultants Under this project, consulting services will be contracted normally in the fol lowing areas o f expertise: telecommunications regulations; universal access, project management, audit and training. These services are estimated to total about US$2.04 mi l l ion equivalent and would be procured using Bank Standard Request for Proposals (RFP) when hiring f i rms.

45

Firms All contracts for firms would be procured using Quality and Cost-Based Selection (QCBS), except for small and simple contracts estimated to cost US$200,000 equivalent or less that would be procured using other methods such as Consultants Qualifications (CQ), Single-Source Selection (SSS), always with the Bank’s prior review regardless o f the amount, Selection under a Fixed Budget (FBS) and Least-Cost Selection (LCS). Contracts for auditing services wil l be procured fol lowing Single-Source Selection since ECTEL hired the firm competitively and has provided satisfactory services under the World Bank financed Telecommunications Reform Project that closed o n December 3 1 , 2004.

Individuals Specialized advisory services would be provided by individual consultants selected by comparisons o f qualifications o f at least three candidates and hired in accordance with the provisions o f paragraph 5.1 through 5.4 o f the Consultant Guidelines. In exceptional cases, single-source contracting may be used with the previous agreement of the Bank and in accordance with the provision o f paragraph 5.4 o f the consultants Guidelines.

8.2.3 Procurement documents The SBDs and the procurement procedures to be used for each procurement method, as wel l as model contracts for goods procured, are presented in the Project Operational Manual (POM).

8.3 Prior Review Thresholds

The proposed thresholds for prior review are based on the procurement capacity assessment o f ECTEL and are summarized in Table B.

8.4 Assessment of the Agency’s capacity to implement procurement

Procurement activities o f the project wil l be carried out by ECTEL. ECTEL has demonstrated satisfactory competence in Wor ld Bank procurement through its implementation o f the Telecommunications Reform Project that involved procurement o f large goods, consultants’ services and training. ECTEL is staffed by the Managing Director, Director o f Technical Services, Accountant, Technical experts, and the procurement function is presently staffed by the Accountant, the Director o f Technical Services and Technical experts. This assessment determined that in general sufficient qualified staffs are available to carry out the normal procurement tasks that would be assigned to them. Existing staffs have relevant knowledge o f the disciplines and the capacity required for carrying out the proposed procurement plan under the project. To help integrate activities, budgets, outputs and outcomes, and implementation schedules under the project, hiring o f a project manager i s proposed in the Act ion Plan and has been agreed upon by ECTEL. The Administrator i s to be hired by project effectiveness.

46

A World Bank Procurement Specialist has carried out an assessment o f ECTEL’s capacity to implement procurement actions for the project. ECTEL has the institutional capacity to carry out the project. The key issues and risks concerning procurement during implementation o f the project have been identified and include:

Procurement i s not a specialized task within the Directorate. However, there i s some staff with procurement experience. All staffs have job descriptions. The requirements for procurement are included, as appropriate, in the j o b descriptions o f each o f the key staff; All E C T E L staff has been selected competitively.

6)

(ii)

(iii)

1, Adding Capacity: Hiring a project manager with experience in procurement and World Bank project implementation procedures, along with other appropriate technical sk i l l s to implement the project.

The Accountant and Director o f Technical Services have received training f rom a Senior Procurement Officer supplemented by in-house training by the Wor ld Bank’s Procurement Specialist. This training has enhanced procurement processes. All auditing arrangements seem to be in place and suitably established. An external auditor audits the project annually. The Managing Director (MD) reviews the drafi audit report.

(4

ECTEL

(vi> The scope o f the audit and the choice o f the auditor are subject to prior review and no objection from the MD. The audit i s independent, and al l recommendations are implemented.

In consideration o f the present capabilities within ECTEL and past experience implementing a Wor ld Bank project, the proposed risk rating is “average”. An appropriate action plan, however, would be necessary to mitigate such risks and strengthen the performance o f ECTEL. Agreed upon corrective measures are provided in the Act ion Plan below.

Procurement Training

2. Procurement Training will be provided by Bank staff during project launch workshop and during supervision.

Enhanced planning and controlling mechanisms

8.4.1 Action Plan

Bank Project Launch and Supervision missions

The fol lowing action plan i s proposed to mitigate the average risk assessment.

I A) Capacity Enhancement: I I I

47

3. Preparation by ECTEL o f a detailed procurement plan for the f i rst 18 months o f implementation. Draft due by appraisal. Final plan to be agreed by negotiations.

I

4. Procurement documents for the first 18 months activities should be prepared and ready for the start o f project implementation.

5. Establishment o f a procurement filing system satisfactory to the Bank.

6. Preparation o f a draft financial polices and procedures manual with a specific section on procurement detailing al l the procedures and channels o f responsibilities and f low o f documentation.

7. Procurement supervision will be conducted every year and the procurement plan wil l be monitored o n an on-going basis.

8. A draft Project Operational Manual (POM) will be developed and disseminated to a l l project team members after clearance by the Bank as a condition o f negotiation. This manual will contain a section on procurement which will cover at least the following issues: 0 roles and responsibilities o f parties involved in

the procurement process al l agreed procurement procedures applicable to the Project agreed requirements and procedures for procurement planning and execution o f the contracts with a time bound implementation plan

0 procurement audit and review system (external, by Project, internally within the organization o f the units, or by the Bank)

0

0

0 legal advice system

ECTEL

ECTEL

ECTEL

ECTEL

Bank

ECTEL

Proposed Completion Date

Agreement on Procurement Plan (PP) will be reached during negotiations. PP wil l be monitored and updated annually or as the projects evolves

By April 30,2005

By Effectiveness

Due for review before negotiations. Final to be approved by Effectiveness

During Implementation

Prior to Negotiations

48

0 standard documents, TORs 0 procedures o n recording and resolution o f

complaint, and 0 procurement reporting system.

9. Format for the procurement report (as part o f the POM agreed with the Bank) should be developed and wel l understood prior to negotiations. This report should include at least the fol lowing areas: procurement plan vs. actual, procurement issues, reasons for the procurement delays, procurement complaint database and its resolutions, and a check list o f any preparations required by ECTEL to respond to the Bank’s regular supervision missions. The sample format acceptable to the Bank should be attached to the POM.

10. Cases o f collusion and other fraudulent and corrupt practices will be reported and investigated by the Borrower and the Bank and remedial actions wil l be taken.

B) Prior Review Threshold and SuDervision Plan

1 1. Prior Review: 0 Goods: All goods procured fol lowing I C B above US$ 150,000; and contract for Alternative communications technologies for the radio spectrum monitoring system estimated at US$lOO,OOO following shopping procedures. 0

more (firms-QCBS) and below US$200,000 f i rst three contracts and only TORs for rest o f the contracts. US$ 100,000 equivalent or more (individuals), TORs for a l l contracts. 12. The supervision plan will include for the Bank to carry out an ex-post review annually to cover at least a sample o f about 18% o f contracts implemented in that period. The fol lowing issues wil l be regularly addressed during supervision: (1) the capacity and capability o f the project staff in implementing procurement, (2) the level o f enforcement o f the agreed procedures and documents, and (3) the effectiveness o f the implementing agency in solving procurement problems, including complaint

Consultant Services: US$200,000 equivalent or

ECTEL

ECTEL/Bank

Bank

Proposed Completion Date

Prior to Negotiations

During Project Implementation

Confirmed at Negotiations

49

resolutions. The ex-post review wil l also include the assessment o f the effectiveness o f the Borrower’s monitoring and supervision with respect to procurement.

8.5 Procurement Plan ECTEL’s draft procurement plan for project implementation provides the basis for the aggregate amounts for the procurement methods (see Table A). I t covers the init ial 18 months o f the project. The use o f the methods defined in the Plan is mandatory. This plan wil l be agreed between the Borrower and the Bank Project Team during negotiations and will also be available in the project files and in the Bank’s external website after Board approval. At the beginning o f each calendar year or whenever required under Appendix I o f the Bank’s Guidelines, ECTEL will update the Procurement Plan in agreement with the Project Team annually or as required to reflect the actual project implementation needs.

8.6 Frequency of Procurement Supervision In addition to the prior review supervision to be carried out from Bank headquarters, the capacity assessment o f the Implementing Agency recommends that the first supervision mission be carried out six months after starting o f implementation and once every year thereafter to carry out post-review o f procurement actions. A procurement audit should be carried out every year. Based o n the overall “average’’ risk assessment the post-review f ield analysis should cover at least a sample o f about 18 percent o f contracts implemented in that period.

50

8.6.1 Details o f the Procurement Packages with Methods and Time Schedule

Off- the- shelf equipmen t related to radio

1 spectrum

(a) Goods and Non Consulting Services

N o

Universal Service Fund

ICT Pilot Projects (5 packages)

N o 3.3

1 .oo

0.25

0.10

ICB

Shopping

Shopping

No No Prior 05/17/06

No No Post 04/22/07

Prior 06/21/05

(b) Consultancy Assignments with Selection Methods

1.1

1.2

1.3

Telecommunic ations Act and Regulations

Regional Forum for Consensus Building

Alternative Dispute Resolution Capacity

0.11

0.14

0.11

I C Prior 6/28/05

Prior 9/1/05

Prior 6/22/05

51

sss Post

Building

1.4 Development o f Pro- Competition Policies and Procedures

0.25 QCBS Prior 08/30/05

Training 0.24 1.5 Review Yearly Training Plan.

0.15 2.1 Prior

Prior

8/6/05

7/26/05

Universal Service Guidelines and Regulations

Implementatio n Support Specialist

2.2 0.12

3.1 Extending the use o f broadband applications

0.61 QCBS Prior

3.2. b) ICT Pilot Project

0.08 I C Prior

4.1 Project Administration

0.20 I C 8/05/05 I Prior

Audit 0.05 4.2 7/28/05

52

8.7 Procurement Tables

Expenditure Category

Table A: Project Costs by Procurement Arrangements

Procurement Method Total Cost

(0.68)

(including contingencies)

ICB I NCB I Other I N.B.F

(0.32) (0.44)

Goods

Consultant Services (1 -44) (1.44)

Training

Total (0.80) l . O i 3.39 i (2.71)

~

Note: N.B.F = N o t Bank-financed (includes elements procured under parallel co-financing procedures, consultancies under trust funds, any reserved procurement and any other miscellaneous items). Figures in parenthesis are the amounts to b e financed by the Bank l o a d I D A credit.

Table A1 : Consultant Selection Arrangements (in US$ million equivalent)

I

Consultant Services Expenditure Category

Firms

~

Individuals

Total

Note: QCBS = Quality and

Selection Method I Totalcost

QCBS 1 QBS 1 SFB 1 LCS I CQ I Other ~

0.85 0.05 (0.68) I ~ I 1 I ;;:2) I (0.04)

0.85 I I I I 0.40 1 0.55

N.B.F I

I (1 l S 3 O -04)

I (0.40) OSO

I (1.44) lAO :est-Based Selection QBS = Quality-based Selection

SFB = Selection under a F i xed Budget L C S = Least-Cost Selection CQ = Selection Based o n Consultants’ Qualifications N.B.F. = N o t Bank-financed. Other = Selection o f individual consultants (per Section V o f Consultants Guidelines), Commercial Practices, etc. Figures in parenthesis are the amounts to b e financed by the Bank loanADA credit.

53

Table B: Thresholds for Procurement Methods and Prior Review (US$'OOO)

>150

>50<150

I 1. Goods I I I I ICB All

NCB None ~

>50<100 Three Quotations All

4 0 Three Quotations None

2. Consultants

Firms

Individuals

>200 QCBS All

<200 Irrespective o f First three contracts and only

>loo Annex 5 o f All

method TOR for other contracts

Guidelines

4 0 0

3. Training

Annex 5 o f Guidelines

Yearly training plan

TOR only

Table C: Allocation of Loan/Credit Proceeds' (US$)

Expenditure Category Amount Financing Percentage 1. Goods

2. Goods - USF (sub-component 2.3)

3. Consultants' Services

4. Training

5. Front-end fee

6. Unallocated

243,480

695,650

1,309,100

170,910

6,805

288,860

100%

100%

85%

100%

Total 2,714.805

'The description o f the expenditure category as defined in the Loan and Credit Agreement

54

Table C1: Allocation o f Loadcredit Proceeds per Country

Dominica 1. Goods 48,696 35,965 100% 2. Goods - USF 139,130 102,755 100% 3. Consultants 261,820 193,368 85% 4. Training 34,182 25,245 100% 5. Front-end fee 0 0 6. Unallocated 57,772 42,667

Total 541,600 400,000

Grenada 1. Goods 24,348 24,348 17,982 100% 2. Goods - USF 69,565 69,565 51,377 100% 3. Consultants 130,910 130,910 96,684 85% 4. Training 17,091 17,091 12,623 100% 5. Front-end fee 1,36 1 0 0 6. Unallocated 28,886 28,886 21,334

Total 272,161 270,800 200,000

St. K i t t s &Nevis. 1. Goods 48,696 100% 2. Goods - USF 139,130 100% 3. Consultants 261,820 85% 4. Training 34,182 100% 5. Front-end fee 2,722 6. Unallocated 57,772

Total 544,322

Saint Lucia 1. Goods 24,348 24,348 17,982 100% 2. Goods - USF 69,565 69,565 51,377 100% 3. Consultants 130,9 10 130,910 96,684 85% 4. Training 17,091 17,091 12,623 100% 5. Front-end fee 1,36 1 0 0 6. Unallocated 28,886 28,886 21,334

Total 272,161 270,800 200,000

St. Vincent & the Grenadines. 1. Goods 24,348 24,348 17,982 100% 2. Goods - USF 69,565 69,565 5 1,377 100% 3. Consultants 130,910 130,910 96,684 85% . 4. Training 17,09 1 17,09 1 12,623 100% 5. Front-end fee 1,36 1 0 0 6. Unallocated 28,886 28,886 2 1,334

Total 272,161 270,800 200,000

Grand Total 1,360,805 1,354,000 1,000,000

55

Annex 9: Economic and Financial Analysis


Economic Analysis As a technical assistance project, precise economic benefits are difficult to quantify. However, for some components, orders o f magnitude o f potential benefits can be estimated. As indicated in a recent Bank report" on growth and competitiveness issues in the OECS, improving access and quality and reducing costs o f telecommunication services wil l be critical to stimulate growth and improve competitiveness not only in I C T activities but also in emerging clusters o f other services (e.g., niche tourism, offshore education, and offshore financial services). The provision o f basic telecommunication services will also improve the provision o f public services to the population and strengthen the broader functioning o f the public sector. For the regulatory reform components, worldwide evidence suggests the importance o f a successful and sustained regulatory institution to increasing access, improving quality and lowering costs. W h i l e the Telecommunications Reform Project took the f i rs t steps towards this goal, this project will extend and consolidate the gains made. International evidence suggests that moving towards fully competitive, well-regulated markets from monopoly markets can reduce prices by 15 to 30 percent. Assuming that prices for telecommunications service in the ECTEL countries fa l l only an additional f ive percent as a direct result o f the consolidation and expansion o f regulatory capacity under this project, there will be a significant economic impact. Based on estimates o f consumer surplus and net consumer savings from price declines under the Telecommunications Reform Project, a further f ive percent reduction o f prices will create consumer surplus and savings worth $3 mi l l iodyear across the reform countries.12 This suggests the reform component alone will gamer very high economic returns for the project as a whole. For the universal access components, cross-country evidence suggests considerable consumer surplus from access to ICTs. These direct impacts that can be estimated are l ikely to be outweighed by impacts that are more difficult to estimate. The improved range and quality o f I C T services that wil l be available at lower cost as a result o f this project will provide increased access to intemational markets and create new export opportunities, especially in the service sector. There is considerable evidence that developing countries which see more Intemet use generate more exports than countries with l imited Intemet use.13 The project wil l also have a, significant social impact -equalizing the opportunity to benefit f rom ICTs for presently excluded groups and easing the ability to communicate with friends and family in the region and around the world.

For the component aiming at extending the use o f broadband applications, advanced information

OECS: Towards a New Agenda for Growth, World Bank, 2005. The original project was associated with a weighted average reduction o f telecommunications charges o f about 34

percent over the 1998-2003 period, estimated to be worth $US20m in consumer surplus and savings.

l3 A one-percentage point increase in the share o f the population wi th access to the Internet would increase total exports as percent o f GDP by 1.4 percentage points and would increase exports to high-income countries by 1.3 percentage points (G. Clarke and S. Wallsten, 2004 Has The Intemet Increased Trade? Evidence from Industrial and Developing Countries, World Bank Policy Research Working Paper 32 15).

56

systems have wide-ranging applications in health care, education and the provision o f other government services, as wells as a number o f other uses o f advanced networking in govemment service provision have garnered significant economic returns. Piloting such initiatives may lead to considerable efficiencies in the provision o f government services. The use o f alternative technologies subcomponent will save 30% o f the recurrent communication costs between E C T E L and the NTRCs. These savings are expected to pay for investment costs after 16 months.

Financial Analysis As a technical assistance loan, the activities envisaged under the project for support are not investments designed to generate significant financial returns to the implementing agencies. Even so, the financial sustainability o f certain components should be addressed.

0 Expanded ongoing activities under ECTEL and the NTRCs, including the regional forum, procedures related to universal access, interconnection, tar i f fs and spectrum management. These may require additional budget for the regulatory bodies and ECTEL. This might involve additional specialist staff. Some additional budgetary resources may be required as a result o f expanded regulatory activities, as the sector becomes increasingly attractive to investors. If fee and license payments increased 1 percent as a result o f new investments, this would more than cover the cost o f additional staff. The investments made under the universal access regime should be financially sustainable. This wil l be ensured by capping access fund payments for a particular access initiative at the capital cost o f equipment -ensuring that the running costs o f the service provided under the fund can be met f rom revenues generated.

0

57

Annex 10: Safeguard Policy Issues Telecommunications and ICT Development Project

Not applicable.

58

Annex 11: Project Preparation and Supervision


PCN review

Initial PID to PIC

Initial ISDS to PIC

Appraisal

Negotiations

Board/RVP approval

021 1612004

0 111 412005

0311 812005

05/12/2005

Planned date o f effectiveness 0713 112005

Planned date of mid-term review 0910112007

Planned completion date 0613012009

Planned closing date 1213 112009

0211 712004

0511012004

0511 112004

0111412005

0411 112005

Key institutions responsible for preparation of the project: 0

0

0

0

The Eastem Caribbean Telecommunication Authority (ECTEL) The ECTEL Council o f Ministers The National Telecommunication Regulatory Commissions (NTRCs) The Organization o f Eastem Caribbean States (OECS) Secretariat.

Bank staff and consultants who worked on the prqiect included:

Robert Schware Task Team Leader CITPO

Ritin Singh

Badrul Haque

Co-task Team Leader

Lead Country Officer

CITPO

LCC3C

Camilla Lampart Nuamah , Senior Economist ECSPE

Charles Kenny Senior Economist CITPO

David Gray Senior Knowledge Specialist LCRKM

Hilarion Bruneau Senior Finance Officer LOAGl

Kashmira Daruwalla Procurement Specialist CITPO

Lisa Lui Senior Legal Counsel LEGLA

Marta Priftis Senior Program Assistant CITPO

Michel Maechler ICT Specialist CITPO

59

Moustapha Ndiaye Senior Financial Management Specialist

Bank funds expended to date on project preparation (US$ thousand): 1. Bank resources: 65.0

5.1 2. Trust funds: - 3. Total: 70.1

Estimated Approval and Supervision costs (US$ thousand): 1. Remaining costs to approval: 46.0 2. Estimated annual supervision cost: 87.0

LCOAA

60

Annex 12: Documents in the Project File Telecommunications and ICT Development Project

A. Project Implementation Plan 0 Project Operational Manual 0 Terms o f reference and scope o f services for ECTEL’s Managing Director, Director o f

Technical Services, and Accountant

B. Bank Staff Assessments 0 Country Assistance Strategy (CAS) o f the World Bank Group for the Eastem Caribbean

Sub-Region (2001) 0 Project Appraisal Document, OECS Telecommunications Reform Project (1998) 0 Detailed project costs and disbursement tables 0 Financial and Procurement capacity assessment o f ECTEL (2005)

C. Other 0 New Telecommunications Acts, OECS Telecommunications Reform Project participating

countries (2000) Towards an OECS Development Strategy, OECS Secretariat (2000) ICT Assessments for Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, CAR4NA Corporation (2002) OECS ICT Final Policy Report, Pilot Project Proposals, and Investment Promotion Strategies, GOPA Consultants (2002) U S AID ECTIC Project - Impact Assessment: ECTEL StatedOECS Telecommunications Liberalization Program (2004) Price Caps Implementation Agreement between Cable and Wireless and ECTEL (July 30, 2004)

0 OECS: Towards a New Agenda for Growth, World Bank (2005) 0 Draft design o f a Universal Service Program for the Internet in the OECS, World Bank

(2005)

0

0

0

0

0

61

Annex 13: Statements of Loans and Credits Telecommunications & ICT Development Project

DOMINICA

Difference between expected and actual

disbursements Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

PO77680 2002 Dominica- Emergency Recovery Project 0.96 2.24 0.00 0.00 0.00 1.06 0.58 0.00

Total: 0.96 2.24 0.00 0.00 0.00 1.06 0.58 0.00

STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions o f U S Dollars

~~

Committed Disbursed

IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

~~

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

62

Annex 13: Statement of Loans and Credits (cont.) Telecommunications & ICT Development Project

GRENADA

Original Amount in US$ Millions


disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Fm. Rev’d

PO92692 2005 GD (4APL) Hurricane Ivan Emerg. Rec. 5.00 5.00 0.00 0.00 0.00 10.32 0.00 0.00 PO76715 2003 GD 2nd Phase APL HIV/AIDS 3.00 3.04 0.00 0.00 0.00 6.26 2.29 0.00

PO77759 2003 GD EDUCATION DEV (2nd APL) 4.00 4.00 0.00 0.00 0.00 7.87 0.72 0.00 PO77682 2002 Grenada Emergency Recovery Project 1.14 2.66 0.00 0.00 0.00 0.94 0.52 0.00 PO69922 2001 GD Grenada Disaster Management 5.06 5.01 0.00 0.00 0.00 1.61 1.68 0.00

Total: 18.20 19.71 0.00 0.00 0.00 27.00 5.21 0.00

Prev.&Control

STATEMENT OF IFC’s Held and Disbursed Portfolio

In Millions o f U S Dollars

Committed Disbursed

IFC IFC

FY Auuroval Comuanv Loan Equitv Quasi Partic. Loan Equity Quasi Partic.

2002 Bel Air 1 .oo 0.00 1 .oo 0.00 1 .oo 0.00 1 .oo 0.00

Total portfolio: 1 .OO 0.00 1 .oo 0.00 1 .oo 0.00 1 .oo 0.00


FY Approval Company Loan Equity Quasi Partic


63


ST. KITTS & NEVIS



Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

PO76798 2003 KN: HIV/AIDS PREVENTION AND 4.05 0.00 0.00 0.00 0.00 3.78 2.09 0.00

PO75978 2002 60-KN EDUCATION (APLO1) 5.00 0.00 0.00 0.00 0.00 4.08 1.45 0.00 CONTROL PROJ

PO77684 2002 St. Kitts and Nevis Emergency Recovery P 4.40 0.00 0.00 0.00 0.00 1.55 I .55 1.06

Total: 13.45 0.00 0.00 0.00 0.00 9.41 5.09 1.06


In Millions of U S Dollars

Committed Disbursed


Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.


64


ST. LUCIA

Original Amount in US$ Millions


disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd

PO76795 2005 LC HIV/AIDS PREVENTION & 3.20 1.60 0.00 0.00 0.00 6.68 0.32 0.00

PO86469 2004 LC Disaster Management Project I1 3.70 3.77 0.00 0.00 0.00 7.00 -0.49 0.00 PO77712 2002 60 LC Education (AF'LOI) 6.00 6.00 0.00 0.00 0.00 12.81 6.38 0.00

PO77687 2002 St. Lucia Emergency Recovery Project 1.89 4.41 0.00 0.00 0.00 2.96 2.35 0.00 PO70244 2002 LC Water Sector Reform Tech Assist 1.30 1.30 0.00 0.00 0.00 1.89 1.10 0.00

Total: 16.09 17.08 0.00 0.00 0.00 31.34 9.66 0.00

CONTROL

STATEMENT OF IFC's Held and Disbursed Portfolio


Committed Disbursed


Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00




65


ST. VINCENT AND THE GRENADINES

~ ~~



Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Fm. Rev’d

PO76799 2005 VC HlV/AIDS PREVENTION I% 3.50 1.75 0.00 0.00 0.00 7.29 0.30 0.00

PO86664 2004 60: VC EDUCATION (AF’L3) 3.10 3.10 0.00 0.00 0.00 6.49 0.75 0.00

PO69923 2002 VC Disaster Management 3.00 2.91 0.00 0.00 0.00 5.15 4.25 0.00

PO76822 2002 St Vincent Emergency Recovery Project 0.96 2.24 0.00 0.00 0.00 1.45 0.99 0.00

Total: 10.56 10.00 0.00 0.00 0.00 20.38 6.29 0.00

CONTROL



FY Approval Company

Committed Disbursed

IFC IFC

Loan Equity Quasi Partic. Loan Equity Quasi Partic.

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00




66

Annex 14: Countries at a Glance

Telecommunications & ICT Development Project - Dominica

18.6 17.9 21.0 22.5 7.9 7.8

60.4 59.8

73.0 77.5

POVERTY and SOCIAL Dominica

40

': 1: b o

2003 Population, mid-year (millions) GNI per caplta (Atlas method, US$) GNI (Atlas method, US$ billions)

23.0 20.3

Average annual growth, 199793

Population I%) Labor force (%)

Most recent estimate (latest year available, 199743) Poverty (% of population below national poverty line) Urban population I% of total populationl Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% ofpopulation) illiteracy (% of population age 75+) Gross primary enrollment (% of SChC€J/-aQe population)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

-GDI -GDP

GDP (US$ billions) Gross domestic investmentlGDP Exports of goods and servicedGDP Gross national savingslGDP

Current account balance/GDP Total debtlGDP

-0.7 -3.7

(average annual growth) GDP GDP per capita Exports of goods and services

Growth of exports and imports (%)

'OT I

1 983

0.08 28.1 41.1 23.7

-2.1 42.8

1983-93 199393

4.1 0.7 4.5 0.9 7.3 0.8

0.07 3,360 0.24

-0.1

33 72 77 13

97

100 102 97

1993

0.20 26.8 48.6 15.5

-11.3 48.1

2002

-4.7 -4.8 12.8

Latin America 8 Carib.

534 3,260 1,741

1.6 2.1

77 71 28

86 11

129 131 126

2002

0.26 9.6

46.6 0.2

-15.0 121.9

2003

0.0 0.1

-10.9

Upper- middle- income

335 5,340 1,788

1.3 1.8

76 73 19

89 9

104 104 104

2003

0.26 14.8 43.1 3.0

-16.9 122 0

200397

Development diamond.

Life expectancy

Gross per primary capita GNI t+Lnroilment

Access to improved water source

-Dominica

Economlc ratlos.

Trade

Investment Domestic savings

Indebtedness

-Dominica

STRUCTURE of the ECONOMY

(% of GDP) Agriculture Industry

Services

Private consumption General government consumption Imports of goods and services

Manufacturing

(average annual QrowthJ Agriculture Industry

Services

Private consumption General government consumption Gross domestic investment Imports of goods and services

Manufacturing

1983 1993

29.1 21.5 18.4 20.6 7.8 8.2

52.5 57.9

67.1 64.9 24.2 20.7 60.6 61.0

1983-93 199343

1.7 -2.1 6.5 0.6 5.6 -0.5 4.6 3.1

3.4 2.6 2.4 1.4 5.1 -6.8 5.3 0.7

2002 2003 I Growth of Investment and GDP (%) 1

-10.3 1.7 i o -0.4 -1.8 -4.0 37.2

5.5 -lo -7.5 0.2 -12.3 .20

-52.6 35.0 -Exports -O- lmports -8.6 -0.9

_ _ ~ ~~

Note: 2003 data are preliminary estimates *The diamonds show four key indicators In the country (in bold) compared with its incomegroup average. If data are missing, the diamond will

be incomplete.

67

Annex 14: Countries at a Glance (cont.) Telecommunications & ICT Development Project

ICT at a glance Dominica

Latln America

Domlnlca 1 Caribbean Country background information

5 2002 2002 Population, mid year (millions) 0 07 0 07 526 7 Poverty(% of population below 51 adayj Adult literaeyrate (% ages 15 Sfid over) 89 5 Urban population (%of total pOpUlallOni 76 2 GNI per capita (Atlas mathod. ti 2,910 3.2800 GNI per caplta (PPP, $) 4,380 6,750 0 GDP growth (1990-95 and 1995-2002, X) 1 2.0 Scientlsts and englneers in RBD (per mill. people) 286 8 Expendltures for RBD IC of GDP) 0 5

Upper middle Income

2002 330.9

93.1 75.1

5.040.0 9,220.0

2.5 837.9

a. 5

ICT infrastructure 8 access

Telephone mainlines Per 1,000 people In largest cltyfper 1,000 people) Walling llst (thousands) Revenue per line (S) Cost of local call (8 per 3 mlnules)

Mobile phones (per 1,000 people) lnternatlonal telemmmunlcotlons Outgoing trafflc (minutes per suhscrlber) Cost of call to U S p per 3 minutes)

Daily newspapers lper 1,000 PeOpleS Radios (per 1,000 people) Televislon sets lper 1,000 people)

2001

163 175

43 403 a27 0.09 160

87 3.20

70 410 274

2001

201 240

3,626 1,032 0.09 253

111 2.16 123 466 308

Mainlineshobites per 1.m PROPIS

sa

200

100

0

Computers 8 the Internet

Personal computers Per 1,000 people Installed in educatlon (thousands)

Users (thousands) Monthly off-peak access charges

internet

Sewlce provider charge ($1 Telephone usage charge ($1

ICT expenditures

Total ICT (b. mlllions) ICT as 9- of GDP ICT per capita IS)

2001 2001

ICT business & government environment (ratlngs from 1 to 7 7 IS txghestlbest) ZOO2 2002 Broadband internet access availability 4 0 4 2 Local speciallzed IT servlces gvaiiabllltV 4 5 4 9 Competition In lSPs 4 0 3.7 Govemment m i n e sewices avallabillty 3.3 3.5 Laws relating to ICT use 3 3 3 6 Govemment priorNizntion of ICT 3.4 4 6

Secure gewers 2.103 a 2,t2s a

Notes Figures in Lslics refer to an earler year a Dab refer to 2001 Sources Country background information, UNESCO and World Bank: ICT infrartnrcturo and eccess, ITU and UNESCO, Computers and tho Internet, ITU and WITS4 ICT expenditures, WITSA ICT budinoss & government environmnf World Economc Forum's Global Compefhveness Report BO2-2003 and Gbb.dlnfom8fm Technofogy Report 2002-2003 (Wings) and Netcraft (secure servers). See Definitans and Sources lor more complete infarmation

Development Dab Group, World Bank

68

Annex 14: Countries at a Glance (cont.) Telecommunications & ICT Development Project - Grenada

8 Carib. income POVERTY and SOCIAL

Grenada

0.10 3,790 0.39

GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)

0 8 Labor force I%) Most recent estlmate (latest year available, 199703)

Development diamond'

Poverty (% of population below national poverty line) Urban papulation (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live biiths) Child malnutriition (% of children under5) Access to an Improved water source (% ofpopulation) illiteracy (% of population age 15+) Gross primary enrollment (% of schwl-age population)

Male Female

534 335 3,260 5,340 1,741 1,788

32 41 73 20

95

95 97 92

Life expectancy

T

-33.6 4.2

16.1 ,13,3

534 335 3,260 5,340 1,741 1,788

Investment Domestic savings

18.3 18.3 16.8 14.4

1.6 1.3 2.1 1 .8

-GDI -GDP

77 76 71 73 28 I 9

Life expectancy

T 1

GNI per t--f! capita

Gross primary

1 Access to improved water source 86 I 1

I04 1 29 131 126 104

104 Grenada

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

GDP (US$ billions) Gross domestic investmenVGDP Exports of goods and servicesiGDP Gross national savingsiGDP

Current account balancdGDP Interest paymentsiGDP Total debtiGDP Total debt service/exports

(average annual growth) GDP GDP per capita Exports of goods and services

1983 1993

0.10 0.25 37.2 31.2 38.5 49.0

.. 15.0

56.0 11.8

-11.8 -16.1 0 9 0.7

59.1 6.4

1983-93 199343

5.2 4 0 4.6 2.8 5.8 4.5

2002

-0.4 -1.2

-10.5

2002

0.41 34.7 47.4

3.3

-31.4 3.6

111.7 12.9

2003

5.7 4.9

-5.1

2003

0.44 Economlc ratlos'

Trade

-

200307

I

Indebtedness

-Grenada - Upperiniddie-income group


(% of GDP) Agriculture industry

Services

Private consumption General government consumption imports of goods and services

Manufacturing

(average annual growth) Agriculture Industry

Services


Manufacturing

I 9.7 20.4 10.6 9.9 16.8 18.9 22.0 23.6 2o

4.7 6.1 7.2 8.2 0 62.8 70.5 68.0 66.7 .20

40

1983-93 1gS303 I Growth of exports and imports (%) 1 -0.2 0.3 -4.1 21.7 7.2 6.8 0.3 20

10.6 6.4 3.0 -8.6 10 5.9 3.5 -0.3 3.0 o

-10 3.1 3.8 -3.0 27.8 -20 5.5 2.4 -2.8 -9.3 -30 1

3.7 4.5 -11.1 30.7 6.1 5.2 -1.1 32.2 -Exports +Imports

~

Note: 2003 data are preliminary estimates. The diamonds show four key indicators in the country (in bold) compared with its incomegroup average. If data are missing, the diamond will be incomplete.

69


ICT at a glance Grenada

LaHn upper America middle

ada h Caribbean income Country background information

2002 2002 2002 Populatlon, mld year (millions) 0.10 526 7 330.9 Poverty(% of populatlon below $1 aday) Adult literacyrate (I ages 15 andover) 89.5 93.1 Urban populatlon (%oftotal populatlon) 76 2 75 1 GNI per wplta (Atlips method S ) 2,830.0 3,500.0 3,280 0 5,040 0 GNI per copita (PPP, $) 4,650.0 8,330.0 6,750.0 9,220 0 GDP growth (1090-05 and 1995-2002, %I 4.5 2.0 2 5 Scientists and englneers in RBD (per mlll people) 286 5 637 9 Expendltures for R8D (46 of CDP) 0 5 05

GWI porcaplta (PPP, Si

2.000 4 - . I . . I . .

ism iwr i ~ g a iw 2030 a01 2002

ICT infrastructure & access

Telaohone mainlines I S 5 2001 2001 2001 Malnlinealmobtler per 1,IXO p~ople

Per 1,000 people In largest cHy(per 1.000 people) Waiting list (thousands) Revenue per line (5) Cost of local call (3 per 3 mlnutes)

Moblle phones [per 1,000 people) International telemmmunlcatlons

Computers & the lntemet

Personal computers Per 1,000 people Installed In education (thousands)


PCs p r 1.000 people

Internet

Service pmvlder charge ($) Telephone usage charge (5)

ICT expenditures

Total ICT ($, mllllons) ICT as 91 of GDP ICT per cepltn ($1

199s 2001 2001 2001

ICT business & govemment environment (ratings from 1 hrr 7; 7 is &@&sNhestJ Broadband internet access availability Local speciallzed IT sewices avalloblllty Competltlon In lSPs Government oiillne services avallablllly Laws relatlng to ICT use Government prlortiizatlon of ICT

Secure sewers

2002 4.0 4.5 4.0 3 3 3.3 3.4

2,103 a

2002 4.2 4.9 3 7 3 5 3.6 4.6

2,128 a

Notes: Figures in italics refer i o m earlkryear. 8. Data referto 2001. Sources: Countty background infomation, UNESCO and World Bank; ICT infrartrucurre and access, IW and UNESCO; Computers and the lntemet, ITU and WITSA ICT oxpondituros, WITSA: ICT business b government environment, World Economic Forum's Global Cmpet&,iveness Reprt 2002-2003 and Gbbal lnfonnafion Techndogy Repon! 2002-2003 (ratings) and Netcraft (secure servere). See Definitbns and Sources for more complete information.

Development Data Group, World Bank

70

Annex 14: Countries at a Glance (cont.) Telecommunications & ICT Development Project - St. Kitts and Nevis

St. Kitts Latin Umer- POVERTY and SOCIAL

GNI per capita (Atlas me GNI (Atlas method, US$ Average annual growth, 199743

Population (%) Labor force (%)

Most recent estimate (latest year available, 199743) Poverty (% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% of population) Illiteracy (% ofpopulation age 15+) Gross primary enrollment (% of school-age population)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1 983

GDP (US$ billions) 0.06 Gross domestic investmenffGDP 37 2 Exports of goods and servicedGDP 48 9 Gross national savings/GDP 11.7

Current account balancelGDP Interest payments/GDP Total debffGDP Total debt service/exports

198393 (average annual growth) GDP 6.5 GDP per capita 7 2 Exports of goods and services 7.5

-36.9 0.3

15.9

1993.03

3.5 1.6 0.0

and America middle- I Nevis 8 Carib.

0.05 534 6,880 3,260 031 1,741

0.8 1.6 2.1

30 32 77 71 71 20 28

96 86 11

117 129 112 131 123 126

1993 2002

0.20 0.35 45.3 46.3 56.3 46.7 30.6 10.9

-11.6 -36.8 0.7 5.1

27.1 160.5 4.0 23.3

2002 2003

-03 0.6 -1.1 -0.2 0.4 -24.8

Income

335 5,340 1,788

1.3 1.8

76 73 19

89 9

104 104 104

2003

0.36 47.9 35.0 17.5

-29.6 5.5

169.4 33.2

2003.07

I Development diamond'

Life expectancy

GNI Gross per primary capita nrollment

Access to improved water source

-St. Kitts and Nevis . ._ . Uppermiddleincome group

Economic ratlos.

Trade

1

Indebtedness

St. Kifts and Nevis - . _ Upper-middlehcome group



Services

Private consumption General govemment consumption Imports of goods and services

Manufacturing

1983 1993 2002

11.6 6.8 3.3 24.8 25.2 29.7 28.3 12.6 11.1 9.7 63.6 68.0 67.1 68.7

234.4 50.2 58.8 22.9 17.2 18.9 23.9 93.4 71.1 71.2 55.9


Services


Manufacturing

198343 199343 2o02 2003 I Growth of exports and Imports (%) 1 13.4 -12.6 2o -0.8 0.2

5.2 7.2 -3.6 -2.6 lo 1.6 5.9 -4.1 0.7 0 7.9 3.7 2.1 30.0 .io 3

-Exports -Imports

1.7 2.9 23.9 -27.7 2.8 5.7 -6.3 26.5

11.5 5.3 -9.4 0.8 4.7 2.7 5.3 -21.5

Note: 2003 data are preliminary estimates 'The diamonds show four key indicators in the country (in bold) compared with its incomegroup average. if data are missing, the diamond will

be incomplete.

71


ICT at a glance St. Kitts and Nevis

10#2003

Country background information

Population, mid year (mllilons) Poverty(% of population below 81 aday) Adult llteracyrate (46 ages 15 andoverl Urban population (%of total pOpUlatlOn1 GNI per capita (Atlas melhod, $) GNI per capita (PPP, 0) GDP growth (1990-95 and 1995-2002, %I Scientists and englneers In R8D (per mill. Expendltures for RBD (96 of GDP)

S t K i m and

Nevlr

Latin America

8 Caribbean

2002 526.7

89.5 76.2

6,750.0 2.0

286.8 0.5

3,290.0

upwr middle income

2002 330.9

93.1 75.1

5,040.0 9,220.0

2.5 637.9

0.5


Telephone malnilnes Per 1,000 people In largest city(per 1,000 people) Waiting llst (thousands) Revenue per line (5) Cost of local call [S per 3 mlnutes)

Mobile phones Der 1,000 people1 lntematlonal teiemmmunlcations outgoing trafnc (minutes per subscriber) cost dl call la US. (s Der 3 mlnulesl

2001

163 7 75

4.4113 827 0.09 160

87 3.20

2001

201 240

3.626 1,032 0.09 253

111 2.16

GNI per capi!a (PPP. 8) - 1 - 11,ODD

w n

ODO 1 , . . . . .

IWG 1907 i s i IBB ZWQ mi 2002

lMainlirm WMc4k. Daily newspapen (per 1,000 people) 70 123 Radlos (per 1,000 people) 659 676 4 ta 466 Telwislon sets (per 1,000 people) 252 280 274 369

Computers 8 the Internet

Personal "pulers Per 1,000 people inslalied In education (thousands)


internet

Service provlder charge ($) Teiepholie usagechaue($l

1995 2001 2001 2001 I ~ c s p a r u m o p c ~ ~ e I 59.3

25.666.9

84.7

27,607.4

21 .E. 0.42

zm

im

a im6 tm in98 imo zom 2001

ICT expenditures 1995 2001 2001 2001

Broadband Internet access avalabllity Local specialized IT S~NICPS mailability Competition in lSPs Govemment online seivlces availablilty L3ws relatlng to ICT use Government prlorthation of ICT

Secure sewers

Notes: Figures In italics referto an eerlhr yew. a. Dab refer to 2001. Sources: Country background I n f o m f b n , UNESCO and World Bank E T infrastructure and BCCOSS, ITU and UNESCO Computers and the Intomet. ITU and WITSA ICT expendituros, WITSA; ICT business 6 povernmont environment, World Economio Forum's Glabal Competkkeness Report 2002-2003 snd Gbbsllnfomafh 7echnakrgy Rsport 2002-2003 (ratings) and Netcnfl [secure servers). See Deflnitbns and Sourees for more complete information.


72

Annex 14: Countries at a Glance (cont.) Telecommunications & ICT Development Project - St. Lucia

15.0 18.3 21.0 10.9 18.5 6.4 1If 66.7 68.1 75.1 76.6

63.3 66.8 56.3 57.2

9.5 7.5 4.8

Latin America

St. Lucia 8 Carib.

:& & 0

-20 -10

Population, mid-year (millions) GNI per capita (Atlas method, US$) GN I (Atlas method, US$ billions)

Average annual growth, 199743

Population (%) Labor force (%)

Most recent estlmate (latest year available, 199743) Poverty (% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% ofpopulation) illiteracy (% ofpopulation age t5+) Gross primary enrollment (% of school-age population)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983

GDP (US$ billions) 0.15 Gross domestic investmenVGDP 21.7 Exports of goods and services/GDP 63.6 Gross domestic savingslGDP 14.3

Current account balance/GDP -8.0 Interest payments/GDP 0.4 Total debVGDP 12.2 Total debt service/exports 1.3

1983-93 199343 (average annual growth) GDP 9 0 1 2 GDP per caplta 7 5 -02 Exports of goods and services 10 7 -2.0

11.1 3.1 -12.5 29.5

0.16 4,050 0.65

1.4

25 31 74 17

98

111 111 112

I Q93

0.49 24.8 67.7 18.9

-10.7 1 .o

20.5 3.2

2002

0.0 -1.4

-15.0

-Exports -Imports

534 3,260 1,741

1.6 2.1

77 71 28

86 11

129 131 126

2002

0.68 22.8 46.3 10.2

-1 2.5 1.3

62.3 7.0

2003

2.3 1.9

23.2

Upper- middle- income Development dlamond.

335 5,340 1,788

Life expectancy

T Gross

primary GNI

capita enrollment

1.8 1.3

1 Access to improved water source

104 St. Lucia 104 Uppermiddie-income group 104

2003

0.69 28.8 55.7 10.2

-18.6 1.7

66.3 6.8

200307

Economlc ratios'

Trade

I

Indebtedness

St. Lucia - -- - - Uppermiddle-income group



Services

Private consumption General government consumption Imports of goods and services

Manufacturing


Services

Private consumption General government consumption Gross domestic investment Imports of QOOdS and services

Manufacturing

-GDI --O'GDP 22.4 14.3 26.9 27.6 71.0 73.6 52.2 69.3 I

1983-93 199303 2003 1 Growth of exports and Imports (%)

5.3 -8.3 -8.5 -11.8 1 4 ' T 30

9.8 1.7 -1.5 -1.1 20 7.4 -0.5 5.0 0.6 i o 6.8 2.2 1.1 4.3 0

3.9 -20 9.7 -1.2 0.7 -10

Note: 2003 data are preiiminaly estimates. The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.

73


ICT at a glance St. Lucia

2001 200f

516 3 84.7

25,666 9 27,607.4

21 6 a 42

Latin Amerlca

(L Caribbean Country background information

2002 526 7

89 5 76.2

3,280 0 6.750 0

2 0 266 8

0 5

Population. mid year (mililons) Pavefly[% of population below $1 a day) Adull literacyrate (% ages 15 and mer) Urban population (% oftotai poplrlation) GNI per capita (Atlas method, $1 GNI per caplta (PPP, $,

Scientists and engineers in RBD (per mill. people) Expenditures for M D (4b of GDP)

GDP grovrth (199045 and 1995-2002, 96)

PCsper 1.00Opwple

160

80

a

Upper middle income

2002 330.9

93.1 75.1

5.040.0 9,220.0

2.5 637.9

0.5

ICT infrastructure & access

Telephone mainlines 2001 2001

Per 1,000 people 163 201 In largest cly (per 1,000 people) 1 75 240 Waitlng llst (thousands) 4 403 3,626 Revenue per line @) 827 1,032 Cost of local call ($ per 3 mlnutes) 0.09 0.09

Moblle phones (per 1,000 people) 160 253

Outgolng traffic (mhutes per subscrlberl 87 11 1 Cost oi call to U S (8 per 3 minutes) 3 20 2.16

Daily newspapers (per 1,000 people) 70 1 23 Radios (per 1,000 people] 410 466 Televislon sets (per 1,000 people) 274 3aa

International telemmmunicatlons

GNI per capita (PPP, SJ

6.000

4,000

10,000

1996 1987 1 8 1 1989 2030 a101 zoo2

I Malnllnsrhnobiles per1,aOQ poople

I mol ?a0

200

100

n

Computers B the Internet

Personal computers Per 1,000 people installed in education (thousands)

U seis (thousands) Monthly off-peak access charges

Internet

Sslvice provider charge ($) Telephone usage charge ($1

ICT expenditures 1995 TO01 2001 2001

Broadband internet access awllability Local specialized IT sewices availability Competition in lSPs Govemment onllne services amliability L w s relating 10 ICT use Gwemment prlortlzotion of ICT

Secure servers

Notes: Figures in daiics refer to an earlier year a Data refer to 2001. Souroes Country backaround information, UNESCO and World Bank ICT infmtructure and (~ccecpcs, ITU and UNESCO, Computers and the Internet. ITU and WITSA, ICT expend'hres. WITSA: ICT business (L swcrnment environment, World Economc Forum's Global Cmpaftheness Rewfi 2002-2003 and Gbbal Infuima~mn T e h d o w Report 2002-2003 Ewtinss) and Netcrafl (secure sewen;) See Deflnitbns and Sources for more complete information

Development Data Group World Bank

74

Annex 14: Countries at a Glance (cont.) Telecommunications & ICT Development Project - St. Vincent and the Grenadines

PRICES and GOVERNMENT FINANCE

Domestic prices (% change) Consumer prices

Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall sumlus/deficit

TRADE

(US$ millions) Total exports (fob)

Bananas Eddoes and dasheens Manufactures

Total imports (ci0 Food Fuel and energy Capital goods

Export price index (1995=100) Import price index (1995=100) Terms of trade (1995=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, locaVUS$J

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IBRD IDA

Total debt setvice IBRD IDA

Official grants Oficial creditors Private creditors Foreign direct investment Portfolio equity

World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

Composition of net resource flows

1983

5.5

1983

1983

59 79

-20

-2 19

-3

3 0

2.7

1983

25.6 0.0 0.0

1.5 0.0 0.0

2.3 3.7

-0.2 2.1 0.0

0.0 0.0 0.0 0.0 0.0 0.0

1993

4.3

26.6 4.1

-3. I

1993

52 23 2

19 118 28 7

21

102 102 101

I993

105 152 -47

-8 14

4 2

40 2

35 2.7

1993

102.1 0.4 7.6

8.5 0.0 0.1

2.7 4.9 0.0

31.4 0.0

0.0 0.3 0.0 0.3 0.1 0.2

2002

0.4

31 .O 2.6

-2.3

2002

53 13 2

30 182 44 17 63

2002

149 186 -37

-1 8 16

-39

31 8

54 2.7

2002

170.0 0.5

10.1

11.0 0.3 0.2

4.4 1.1 7.5

32.0 0.0

9.2 2.3 0.3 2.0 0.2 1.8

2003

1.5

31.5 4.1

-1.3

2003

43 12

38 182

2003

176 241 -65

-16 12

-68

66 2

2.7

2003

188.0 0.6

11.5

13.0 0.0 0.2

3.9 17.4 20.7 44.0

0.0

0.0 0.6 0.1 0.5 0.1 0.4

lnflatlon (Oh) I

I -GDP deflator - 0 - C P I I

Export and Import levels (US$ mlll.)

T

97 98 98 00 01 02

"ports WlmpOrtS

Current account balance to GDP (%)

0

4

10

15

20

25

30

351

:omposltlon of 2003 debt (US$ mlll.)

G: 34 A 8: 12

\ - IBRD % ~ IDA D. Other multilateral F ~ Pdvate 2-IMF G - Short-terrr

E - Bilateral

Development Economics 3/7/05

75


ICT at a glance St. Vincent and the Grenadines

Country background information

Populatlon, mid year (mllilons) Poverty(% of population below $1 a dafl Adult llteracyrste f% ages 15 and over) Urban populatlon (% oftolal population) GNI per cap113 (Atlas method, $1 GNI per caplla (PPP, $) GDP growlh (1990-95 and 1995-2002, K) Sclentisls and engineers In R8D (per mill. people) Expenditures for R&D (Sa of GDP)

St. Vincent and the renadlner

48.1 57.0 2,3200 2.820.0 4,560 0 5,100.0

2 3 2,o

Latin America

8 Caribbean

2002 526.7

89.5 76.2

3,280.0 6.750.0

2.0 286.8

0.5

LMHW middle Income

2002 2,410 7

86 6 49 4

1 3900 51300

3 7 807 5

00


Telephone mar nli nes Per 1,000 people In largest cnyiper 1 000 people) Waltlng I Is l [thousands) Revenue per llne (8) Cost of local call ($ per 3 minutes)

Maiiilinorlmobilo~ por f,WO paople

Mobile phones (per 1,000 people) International teietnmmunlmtlons

utgoing trafflc (minutes per subscrlber)

Personal computers Per 1,000 people 116 1 59.3 28.1 Installed In educatlon (thousands)

Users (thousands) 5 25 686 9 68,936 9 Internet T3

Monthly off-peak access charges 0 Serwice orovider charae ( $ 1 .6 16 7 Telephone usage charge 19 0.63 0.23 -

ICT expenditures

Local specialized IT servlces wailability Competition In lSPs G w e m ment o nll ne se wlces ami lab /I Ity Laws rel8llng to ICT use Gwemment prlorktzation of ICT

Secure servers

Notes Figures in talks refer to an e d e r year a. Data refer lo 2001 Souroes Country background i n f o m t b n UNESCO and World Bank ICT infrastructure and occe85, IN and UNESCO Computers and the Internet ITU and WITSA, ICT expenditures, WITSA ICT business (L government environment, World Economc Forum's Global Cmpet#rvwiess Report 2002-2003 and Gbbel lnfonatm Technotag Repon 2002-2003 (ratings) and Netcmft (secure servenl. See Definitms and Sources for more complete information.


76

MAP SECTION