Review of Bruce's Proposals and their Potential Advantages

The second proposal calls for the TO/regional company to implement a franchising scheme in which entrepreneurs or other groups (e.g., cooperatives) would be authorized to construct local facilities for connecting subscribers to the backbone or core network. 13 The franchisees would be responsible for connecting the tails of the network from the customer toward the core network provided by the regional companies or subsidiaries of the TO. The local group, under the franchising agreement, could be compensated by receiving a reduced or wholesale rate for calls completed on the TO's network and/or by collecting revenues from end users attached to its portion of the network.

This paper focuses on the second proposal--allowing entrepreneurs to construct and maintain the tails of the network in a franchising arrangement--concentrating on an arrangement whereby the entrepreneurs construct all or part of the local loop rather than more complex parts of the network (e.g., an entire exchange). 14

It is beyond the scope of this paper to describe in detail the potential advantages of the bottom- up approach, but in brief this approach would: 15

• Empower human resources through planning, constructing, and maintaining portions of an infrastructure that is critical not only to the local community, but to the country as a whole.
• Speed the development of telephony throughout the country by increasing the TOs' capacity to install new infrastructure.
• Encourage the development of an entrepreneurial culture in those countries engaged in the transition from a centrally managed to a more decentralized economy based on marketplace principles.
• Allow contributions of labor ("sweat equity") and local capital in the construction and maintenance of the most labor-intensive portion of the telecommunications network, thereby reducing the need for foreign sources of capital with attendant concerns about undue concentrations of economic power and national sovereignty.
• Empower local groups to meet their own needs, thereby taking untoward political pressure off a central government that might well be struggling with the scarcity of capital and human resources to devote to other important sectors of the economy.
• Allow local groups to "buy into" the planning, construction, and maintenance of a resource vital to the community, thereby helping ensure the successful and appropriate use of the technology, and, through the notion of community "ownership," reduce the chance of vandalism or theft.
• Create local jobs and help build a local base of technical competence and management skills.
• Encourage the investment of local funds (including soft currencies used to purchase labor), where available, by groups that might be more confident in community-controlled initiatives than in projects administered by distant bureaucrats.
• Envision the possibility that the facilities could eventually be acquired by a TO for a fair market price, so that any increase in the value of the facilities would flow to the local investors and the community.
• Provide a degree of "yardstick" competition with local construction activities undertaken by the TO itself, thereby putting pressure on the TO to improve its performance.
• Provide a local structure for the distribution of resources from lending and aid institutions that have been criticized in the past for using a trickle-down methodology, "'which concentrates resources in the hands of a relatively few well-to-do organizations and individuals' while doing little or nothing for the poorer 80 percent of the people." 16