Ўзбекистон республикаси ахборот технологиялари ва коммуникацияларини ривожлантириш вазирлиги муҳаммад ал-хоразмий номидаги

 

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THE FINANCING OF TELECOMMUNICATION AND DESIGNING IN 
DEVELOPING COUNTRIES 
 
O.S.Radjabov (TUIT, head of depertment) 
J.N.Sayfiyev (TUIT, student) 
 
Traditional methods of financing telecommunication in developing countries. Funds for the 
development of infrastructure projects are traditionally obtained from general taxation or borrowed 
from multi-lateral and bilateral agencies. The level of funding provided from national budget 
financing will depend on the priorities of the national government and its total tax resources. Due 
to low levels of public finance derived from general taxation, most developing countries rely on 
borrowing from multi-lateral and bilateral agencies to finance infrastructure developments. The 
level of available finance for borrowing the traditional sources has reduced in the recent past. 
When introducing telecommunication into a country, financing it from state funding is probably 
the easiest method to use traditional methods of public financing and management of infrastructure 
projects have failed to keep pace with the rising demand for infrastructure services in most 
developing countries. The private sector has participated in infrastructure projects that are financed 
and managed by the public sector as consultants and contractors during the implementation phase 
of infrastructure development projects.
In recent years, many countries have observed the need to look for alternative methods of 
financing and managing infrastructure.
New technological solutions and liberalization of telecom markets in Uzbekistan have led to 
an average annual growth in mobile telephony. Mobile telephony makes it possible to maintain a 
wider network of suppliers and customers, resulting in higher incomes and expansion. More 
efficient long-distance communication makes it easier to check information and to build relations 
of trust between trade partners. The main reasons to fund telecommunications infrastructure are 
the positive externalities that occur from the services used
Direct economic benefits:
Costs and time saving.
Substituting more expensive means of communication and learning.
Social and economic as well as political benefits:
Better provision of social services, e.g. education and health.
Decentralization and integration processes.
Integration and empowerment of communities. Innovative ways to finance 
telecommunication in developing countries
Benefits from telecommunications infrastructure are several and can be grouped into three 
categories,
1. Human welfare and economic development.
2. Reduction of poverty
3. Improvement of the environment.
Infrastructure has strong links to growth, poverty alleviation and environmental 
sustainability. Financiers have researched the impact of infrastructure on growth, they show that 
the role of infrastructure in growth is considerable, significant and frequently greater that that of 
investments in other forms of capital.
Infrastructures such as telecommunications are a vital factor to the activities of households 
and to economic production. Providing a service as telecommunications or other infrastructure 
service to meet the demand of businesses, households and other users are one of the major 
challenges of economic development infrastructure represents the wheels of economic activity. 
Infrastructure services are used in the production process of nearly in every sector. The efficiency 
with which infrastructure services are provided is also a key to realize potential returns.
One benefit from what the innovations bring to developing nations is the improvement of 
the overall economy. By encouraging the establishment of telecommunication industries within 

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their countries, not only their GNP is boosted from the production of higher value-added goods, 
but also, the economy can progress to that which is predominantly characterized by secondary or 
tertiary industries. Many developing countries face challenges because of their relatively small 
ICT investment and limited ability to achieve high ICT investment returns” and it is surely true 
that some ICT’s are likely to remain out of the reach of the rural poor, in particular, for many years 
to come. The Internet is an obvious example, in that most applications require not just literacy, but 
an ability to speak English. But there are other examples, such as second-generation mobile 
telephony, which are much more suitable to the needs of the rural poor. Mobile telephones do not 
require literacy, language skills or even fixed premises. Payment can be made in small instalments, 
and the telephone can itself be used for many aspects of business operation; indeed, in these 
aspects, it mirrors microfinance to some extent. ICT’s could aid in the reduction of poverty but 
may not be a necessary, let alone sufficient condition to do so.
Many countries around the world have established organizations for the promotion of ICT’s, 
because it is feared that if not technologically advanced areas have a chance to catch up, the 
increasing technological advances in developed nations will only serve to exacerbate the already 
existing economic gap between technological «have» and «have not» areas. The overall benefits 
of ICT access at the micro level are widely appreciated by enterprises in developing countries. A 
survey of small enterprises in the Philippines, for example, found that they overwhelmingly ranked 
communications services as the most important, followed by information services. 74 % noted that 
access to telecom services had definitely increased their business profits. Interestingly however, 
an International Finance Corporation revealed that the use of Internet by developing country firm’s 
executives was perceived to benefit mostly communications and not marketing.
At the macro-economic level, the benefits are larger. Economical studies made by the World 
Bank have found evidence of a causal link between telecommunications development and 
economic development. Innovative ways to finance telecommunication in developing countries 
because of the important savings which can be made in communication costs by using ICT’s, this 
aspect is often the first to be adopted by enterprises in developing countries. The marginal cost of 
sending e-mails is almost zero, while the cost of international calls in particular remains very high 
in many developing countries. Similarly, the specific benefits of constant communications through 
mobile telephones are immediately evident to many enterprises in developing countries; even 
informal-sector owners of rickshaws and boats in Asia have been observed using mobile phones 
to find customers (Conroy, 2003). Interestingly these “mobile” phone booths are also converting 
to be the bank’s promotional platforms for attracting rural people to some of their other loan 
schemes.
Opportunities:
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Business development and economic growth.
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Government operations and political transparency.
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Cultural expression and exchange.
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Education, knowledge transfer and learning.
Innovative ways to finance telecommunication in developing countries eradicating poverty 
is perhaps the single most important global development challenge. By establishing 
telecommunication network in developing countries, poverty can be reduced and it helps them 
economically, politically, and socially. Helping developing countries find ways to invest in 
telecommunication networks is becoming important not only for the developing countries but also 
for telecommunication firms, investors and aid organizations. “Signing one billion users shows 
beyond question that GSM delivers services that consumers want across the globe. We will 
continue to develop easy using services and solutions to bring mobile communication to even more 
people in the future”. It is important to find solutions to bring telecommunication to more people 
and that includes people living in rural areas. Therefore, it is essential to find innovative ways to 
finance telecommunication because using traditional ways to finance telecommunication means 
higher risks for the investor and the developing country Statistics says, poor people do not only 
need digital services such as telecommunication but they are also willing to pay for these services 

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because they reduce time thus saving costs. One example is that several people around the world 
demand access to telecommunication in order to communicate, if access is given, people do not 
have to travel to communicate with each other. Our main purpose with this thesis is to investigate 
what kind of innovative ways developing countries can finance telecommunication and based on 
that we also want to investigate if there is a connection between financing telecommunication and 
poverty reduction.