Mongolia: The World Bank Supports Development of Information and Communications Infrastructure in Rural Areas

June 8, 2006

WASHINGTONDC, June 08, 2006 – The World Bank’s Board (International Development Association) has approved an investment grant of US$ 8 million for the Information and Communications Infrastructure Development Project (ICIDP). The project aims to significantly increase the coverage and use of relevant information and communications technology (ICT) among the rural population and improve e-government services by encouraging private sector participation in information communication services in Mongolia.

ICT infrastructure in rural areas is the most challenged issue in Mongolia. Although teledensity in Mongolia has increased substantially for past ten years, there are virtually no services available outside of the soum (sub-provincial district) centers. At the bagh (village) level, the vast majority of residents are seasonally nomadic. Over 90 percent of all subscribers of telecommunications are in the capital, provincial capitals, and large districts. Ulaanbaatar itself accounts for over 60 percent.

The World Bank is committed to support Mongolia’s rural community to reap the benefits that ICT provides, namely through improved access to information or better delivery of public services. The Bank considers that information and communication technologies are important tools, not only for communications but also as an enabler for socioeconomic development in the country. In addition to that, the private sector will be empowered to play an even greater role in the provision of ICT infrastructure and services in Mongolia.

Saha D. Meyanathan, World Bank Country Resident Representative, commented: “Access to reliable communications, especially in rural Mongolia, will help overcome distance and facilitate the provision of information and social services that would have a direct impact on the lives of rural Mongolians.”

The ICIDP is to increase largely the coverage and use of relevant ICT services among the rural population through an incentive program designed to encourage the participation of private operators in the rural segment of the ICT market. It also aims to increase private sector participation in the delivery of e-Government services, thereby improving public sector utilization of ICT.

The total cost of the project consists of a US $10 million grant comprising the IDA grant of US $8 million and a Government of Japan PHRD co-financing grant of US $ 2 million. The support will be carried out by the Government Agencies such as ICT Authority and Communications Regulation Commission, which are main implementing institutions of the project.

ICIDP has three interrelated components. The first component will support private sector led development of the information and communications infrastructure in rural Mongolia to accelerate the provision of voice telephony and Internet services in rural Mongolia. This will primarily be achieved through a competitive award of “least-cost” capital subsidies through an output based aid (OBA) tender process to operators that would be responsible for providing public voice telephony services at the bagh level; and voice and internet services at soum centers and strategic vanguard institutions such as schools.

The second component will provide investment support and technical assistance to the sector regulator, Communications Regulatory Commission (CRC), in establishing a regime that promotes fair competition and market based incentives for the provision of access in rural Mongolia.

Third component will entail building ICT policy leadership in Mongolia and will address gaps in the enabling environment for use of Public Private Partnerships (PPPs) for provision of e-Government services and will help roll out e-Government applications using PPPs.

The project will be implemented over five years. It is expected to eventually cover 35 soum centers and 350-400 herders’ communities of rural area of Mongolia will be provided with voice telephony and Internet services located at the soum centers. The herder network will reduce the critical distance hurdle to communication from an average of 25 to 39 km to access the nearest telephone of any kind (usually located in the soum centers), to 14 to 16 km.