1. Telecommunications Development Fund December 2004

2. (2) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones UNIVERSAL ACCESS zIn Chile there is no Universal Service obligation to any telecommunication service provider. zInstead, Universal Access Policy.

3. (3) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Telecommunications Development Fund Main Objective To promote telecommunications coverage in rural and low income urban areas, especially in distant or geographically isolated locations

4. (4) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones FDT Evolution This Fund has two main phases: - First Phase from 1994 until 2000. Created by Law 19.302 and focused in Public Rural Telephones - Second Phase from 2001 for 10 years. Created by Law 19.724 and focused in a wider variety of telecommunication services

5. (5) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Telecommunications Development Fund Operation LEGAL FRAMEWORK zGeneral Telecommunications Law zTelecommunications Development Fund Rules zBudget Law of the Nation

6. (6) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Telecommunications Development Fund Operation MANAGEMENT Telecommunications Development Council DUTIES zDefinition of criteria to assess projects. zEstablishing a Yearly Project Programme zAwarding Subsidies zPreparing and distributing an Annual Report

7. (7) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones PROCEDURE zTelecommunications Development Council establishes the terms and conditions required: - Zone of service required - Maximum tariffs - Deadlines - Amount of subsidie granted

8. (8) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones PROCEDURE zWHO MAY APLY? z- Natural o juridical persons z- Eligible to offer the service according with the Telecommunication Act

9. (9) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones PROCEDURE zSELECTION AMONG APPLICANTS THAT FULFILL ALL THE REQUIREMENTS: 1.Those who required the minimun amount of subsidie 2.Those who offer more additional services 3.Those who will start sooner 4.Drawing by lot

10. (10) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones FDT (Rural Telephony, First Phase): A Good Example of Leverage Phones awarded in 6.059 localities 2.2 million beneficiaries Public subsidies: US$20 mm Private investment in rural telephony: US$150 mm Succesful Leverage (1/7) 196 projects

11. (11) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones After Rural Telephony... A Law Reform (Law No 19.724) Extended Fund Operation for another 10 years Diversified Eligible Projects to: TeleCenters (InfoCenters) Sound and Television Broadcasting, and Other Telecommunication Services Incorporated Community participation through City Councils (municipalities)

12. (12) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones TeleCenter Contest 2002 First Contest (February) Telecenters partipating: 102(Regions IV to X) Awarded: 83 Subsidies: USD 1.3 mill Second Contest (June) Telecenters partipating: 253 (Regions I to XII) Awarded: 211 Subsidies: USD 3.3 mill

13. (13) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones What is a Community Telecenter? A Community Telecenter (TLCC) is a multi-purpose center equipped with technologies that provide affordably priced information and communication services to the residents of a community, the content of which is relevant to the community.

14. (14) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones What does a TLCC consist of? Fax Scanner Printer PC-4 PC-5 -Support -Operator PC-1 Internet: Dedicated line > 64 Kbps PC-2 PC-3 Minimum 20 m2 Local Content Photocopier

15. (15) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Survey Results The number of users who have used Telecenters before increased by 83%. Perception of the usefulness of the Internet for Internet users has change from just a source of information to a place where learning can happen. Transactions carried out by Internet tripled.

16. (16) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Results

17. (17) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Results

18. (18) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Results Distribution of users by profession Laborers 3% Students 67% Municipal Officials 2% Farmers 3% Retired and Unemployed 4% Misc. 6% Education 5% Economy and Commerce 2% Housewives 4% University Prof 2% Technical Prof. 2%

19. (19) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Results Services used at the Telecenter Use e-mail 21% Check transactions website 6% Use word processor 19% Surf the Internet 24% Chat, games and music 5% Education 10% Use of Photocopier 15%

20. (20) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones Current Status zDespite ongoing projects there is still a large amount of non-connected localities, especially in rural and economically disadvantaged areas (5,000 localities). zA great concern has to do with connectivity for the 2,324 Rural Schools in the country.

21. (21) División Acceso Universal a la Sociedad de la Información - Subsecretaría de Telecomunicaciones 2004 Two ongoing projects under Telecom Development Fund 1. Connectivity to southern isolated regions. Subsidie granted: USD 0.5 mill Contest opened last friday 2. Broadband Connectivity to Rural Schools (1000) Subsidie granted: USD 6.5 mill Contest will be opened tomorrow

22. Telecommunications Development Fund lorenapineiro@subtel.cl December 2004