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FEATURE STORY

Mongolia: Information and Communications Infrastructure Development Project

March 31, 2011

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Nomadic Herder families make up Mongolia's single poorest group. The country is now implementing projects to improve herders’ livelihoods while maintaining their way of life, providing them with insurance, renewable energy and cellphone services.

Overview

In 2005, when the World Bank started to support the development of the information and communications technology (ICT) sector in rural Mongolia, less than 30% of the soum (district) center villages had reliable telecommunications, even though one-third of Mongolia’s population live in such small centers. With World Bank financed subsidies provided to private sector operators to motivate the expansion of their coverage area, all 335 soums have been provided with mobile voice service, and a satellite-based network of public telephones serves herders in remote areas beyond the mobile network. Additionally, 34 prime soum centers (selected based on population, availability of commercial power and fiber optic connectivity) have broadband Internet access for public and private users, schools are connected at discounted rates, and there is wider access to Internet cafés.

Challenge

Mongolia is the world’s least densely populated country: 2.8 million people live across 1.5 million square kilometers—almost half the size of India. Given the country’s vast and challenging geography, the cost of providing rural communications infrastructure is high. At the project’s inception, Mongolia’s ICT sector was structured in such a way that most of the long-distance network was government owned and controlled, and there was only a limited capacity to expand rural services. Private mobile operators were not mandated to provide services to rural areas, which appeared to be commercially unviable. Although these operators were investing heavily in urban areas and their reach was gradually growing, the networks’ expansion of coverage to the rural areas was inadequate. The lack of ICT services affected the rural population in multiple ways, limiting social communication and access to both information and education media, and delaying response time in the case of emergencies. 

Approach

The Bank supported the government’s nascent Universal Access policy, developed with World Bank support, which included establishing a fund to provide subsidies for the expansion of ICT services into rural areas. After mobilizing financing for a successful pilot project from the Global Partnership on Output-Based Aid (GPOBA), the Bank helped Mongolia’s Communications Regulatory Commission to manage and finance several “least-cost” subsidy competitions. The recipients of subsidies were private operators that are responsible for installing and operating the rural voice and Internet services. This approach managed to harness the power of the private sector by providing incentives to deliver services in rural areas.

Results

Through its work with the government and the Communications Regulatory Commission, the Bank projects created and supported:

  • Mobile base stations to serve the population of 90 soum centers and the surrounding herder areas without mobile telephone service.
  • A network of 152 satellite public telephones to serve herders in remote areas beyond the reach of the mobile networks.
  • Internet services for schools, commercial customers and Internet cafés in 34 prime soum centers.

Additionally, the project’s successful implementation yielded the following benefits:

  • All 335 soums in Mongolia have been provided with access to mobile voice service, in many cases also enabling a medium-speed Internet service. Although only 90 soums benefited directly from IDA financed subsidies, a large number of additional soums benefited indirectly as the Universal Access program demonstrated that demand for services in rural areas is significantly higher than originally expected.
  • The herder public access network, combined with the mobile services, reduced the average travel distance required to make a call for herders to 15 km from 39 km.
  • 34 prime soum centers have broadband Internet access for public and private users at the same tariffs as in the capital, Ulaanbaatar; schools are connected at discounted rates, and in all of these 34 communities people are benefitting from access to public Internet cafés.

With the infrastructure and service now in place across the country, many more rural residents are able to communicate more easily, and benefit from educational and commercial access to the Internet. It also opens a range of opportunities for the government, private sector firms, civil society organizations and development partners to enhance service delivery by using new technologies.

Open Quotes

I can get connected everywhere and speak to my relatives and to people while staying right at home. Close Quotes

Batbayar
Herder

Bank Contribution

The total IDA funding in support of the Universal Access program was US$6.2 million including US$670,000 for consultancy in all stages of development and implementation, US$260,000 for pilot projects and US$5.3 million for the main investments. The project was also supported by a Japanese PHRD grant of US$2 million.

Partners

Local private telecommunication and data service providers have been main partners in this project. The partners are G-Mobile and Unitel, Mobicom and Skytel (mobile telephone service providers), Incomnet LLC (a satellite communication service provider) and Sky C&C and Mobinet (high speed internet services providers). The Bank provided subsidies for the operation of information and telecommunication services in remote rural areas while the partners have invested basic infrastructure and the necessary equipment. This partnership mechanism ensures a delivery of telecommunication services to herders and rural communities for 5- 10 years, after which the services will be self-sustained.

Toward the Future

The Government of Mongolia and ICT operators have expressed to the Bank their appreciation for its support to this program and have asked it to consider continuing its support for this initiative. Next steps would be to assist initiatives to improve the quality and reach of the mobile network infrastructure, and to extend the broadband services to more soum centers.