He said the Universal Service Provision (USP) makes it mandatory for all telecommunications firms to contribute six per cent of their annual income to a USP fund to develop Internet connectivity in rural areas.

"There is no specific area to develop and expand Internet connectivity, although development is focused on Sabah and Sarawak. The idea is for all areas in the country to attain the necessary infrastructure. We cannot leave any areas unserved, especially in East Malaysia."

On Monday evening, we received a press release from the MCMC dated 1 November, 2010, in which it confirmed that the balance in the USP Fund was indeed down to RM380 million from RM4.53 billion as of 20 September, 2010, after it had allocated about RM4.15 billion for disbursement to eight USP-related projects, including RM1 billion to distribute 1Malaysia Netbooks to qualified Malaysians.

Under its first phase, 123,000 1Malaysia Netbooks will be distributed to secondary school students from families earning under RM3,000 per month and who reside in districts where the MCMC has established Community Broadband Centres – i.e. community telecentres. This project is expected to contribute 9% towards the governments target of 50% household broadband penetration by the end of this year.

Phase 2 began with the MCMC issuing a Request For Proposal on 17 August, 2010 and is currently undergoing evaluation, while Phase 3 will be implemented following an impact study conducted on the results of implementation of phases 1 and 2.

The other allocations and disbursements are:-

• RM629.3 million towards providing basic telephony infrastructure and services in selected USP areas. Around 57,500 homes have benefited from these projects since they began in 2002.

• RM1.87 billion on the building of telecommunication towers and facilities for the expansion of cellular coverage nationwide, including along the East-West Highway and “Time 3” projects on USP designated areas, and on the construction of 873 telecommunication towers nationwide, including Sabah and Sarawak. As a result of this, the MCMC expects to increase cellular coverage of populate areas from 71% in 2004 to 97% by 2011.

• RM573.7 million on Community Broadband Centres (CBC) and Community Broadband Libraries (CBL), so communities in undeserved areas will have access to broadband services and information and communications technology (ICT) facilities. These centres also provide the community with free training in basic ICT and content development. To date, 246 CBCs and 100CBLs have been established since 2007 and they now have 80,799 members and they will be joined by the over 100,000 1Malaysia Netbook recipients, who will all not only be ICT and Internet-savvy but also have access to e-learning, e-government, other online information and services.

• RM10 million was allocated to transform 121 Information department regional offices across the country into mini-CBC (or public Internet centres). Phase 1 has already been completed, Phase 2 is underway and Phase 3 which begins from the end of 2010 will involved these 121 sites.

• RM150 million was allocated for CBC-to-Home projects – i.e. to expand broadband network coverage to the communities living around the CBCs and CBLs, with implementation involving 246 CBC areas to begin from the end of 2010.

• RM520 million is for the provision of collective broadband networks in identified rural communities and for the deployment of 400 WiFi villages nationwide, including in Sabah and Sarawak. The pilot project began in July 2010, with 400 sites identified for implementation by year end, while seven WiFi villages have been established, including four in Sabah and Sarawak.

• RM40 million was allocated or other projects, including other collective broadband projects.

Total funds committed to or budgeted projects amounts to RM4.79 billion.

Not unique to Malaysia

Universal Access and Universal Service Funds are not unique to Malaysia.

Guidelines are provided by the International Telecommunication Union, the United Nations specialised agency for telecommunications, and as of 2005, over 30 countries across Africa, Latin America, North America, Asia, Europe and Australasia (Australia & New Zealand) have Universal Access and Universal Service Funds and there are more now, which are funded in different ways.

When most telecommunications service providers were either state-owned or regulated private monopolies, they were not only mandated by law to provide their services at affordable rates for all but were also required to provide telecommunications services to all in a non-discriminatory manner – i.e. irrespective of whether the service was profitable or not.

For example, by 1913, AT&T was allowed to operate as monopoly by the United States government and regulations were introduced to ensure that it provided universal service to everyone, anywhere at a reasonable price.

These were further codified in the Telecommunications Act 1934 and the Telecommunications Act 1996, the latter which was passed in the era of deregulation, competition and the Internet. The Telecommunications Act 1996 mandated the creation of a universal services fund into which all all telecommunications service providers would contribute part of their inter-state and international call revenues.

While monopolies could subsidise the deployment of infrastructure and deployment of service in unprofitable areas with revenues from the profitable one's, in a competitive, de-regulated and privatised environment, a universal services fund or whatever name each country chooses to call it by, is used to subsidise such equitable deployment by the different service providers.

In Malaysia, the USP Fund was established under the Communications and Multimedia Act 1988 to finance the implementation of network facilities and network services in undeserved communities, and with the exception of Content Applications Service Providers, all other operators licensed under the above Act, whose weighted net revenue exceeds RM2 million had to contribute 6% of their revenues from designated services towards the USP fund. Projects funded out of the USP Fund began from 2002.

In discharging its function in managing the USP Fund, the MCMC is strictly guided by requirements of the Communications and Multimedia (Universal Service Provision) Regulations 2002, while the USP Regulations require that the MCMC publishes the USP Annual Report which details the audited accounts, financial notes and investments of the USP programmes.

The 2007, 2008 and 2009 USP Annual Report can be viewed and downloaded from MCMC’s website at www.skmm.gov.my