Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004956 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA H780-KI) ON A GRANT IN THE AMOUNT OF SDR 0.7 MILLION (US$ 1.0 MILLION EQUIVALENT) TO THE Republic of Kiribati FOR A KI: Telecommunications and ICT Development Project December 27, 2019 Digital Development Global Practice East Asia And Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2019) Currency Unit = Australian Dollar AUD 1.00 = US$0.70 USD 1.00 = SDR 0.72 FISCAL YEAR January 1 – December 31 Regional Vice President: Victoria Kwakwa Country Director: Michel Kerf Regional Director: Boutheina Guermazi Practice Manager: Nicole Klingen Task Team Leader(s): Natasha Beschorner ICR Main Contributor: Shivnesh Roynendra Prasad ABBREVIATIONS AND ACRONYMS 2G Second generation cell-phone technology 3G Third generation cell-phone technology 3GPP Third Generation Partnership Project (Standards organization that develops protocols for mobile telephony) 4G Fourth generation cell-phone technology ADB Asian Development Bank ADSL Asymmetric digital subscriber line ANZ Australia and New Zealand ARPU Average revenue per user ATHKL Amalgamated Telecom Holdings Kiribati Limited AUD Australian Dollar AusAID Australian Agency for International Development BNL BwebwerikiNet Limited CAS Country Assistance Strategy CCK Communications Commission of Kiribati DFAT Department of Foreign Affairs and Trade (Australia) ESHS Environmental, Social, Health and Safety FSM Federated States of Micronesia GDP Gross Domestic Product ICR Implementation Completion and Results Report ICT Information and Communication Technologies IDI ICT Development Index ISP Internet Service Provider ISR Implementation Status Report ITU International Telecommunication Union JCC John Crook Consulting Kbps Kilobits per second KSFU Kiribati Fiduciary Services Unit LEO Low Earth Orbit LTE Long Term Evolution LTE-A Long Term Evolution - Advanced M&E Monitoring and Evaluation MCTTD Ministry of Communications, Transport and Tourism Development MFED Ministry of Finance and Economic Development NICT Policy National ICT Policy OI Outer Islands OICP Outer Island Connectivity Plan PAD Project Appraisal Document PDO Project development objective PMU Project management unit PPP Public-Private Partnership PRIF Pacific Region Infrastructure Facility RPF Regional Partnership Framework SDGs Sustainable Development Goals SDR Special Drawing Rights SIM Subscriber Identity Module SMS Spectrum Management System STEP Systematic Tracking of Exchanges in Procurement TAK Telecommunications Authority of Kiribati TOC Theory of Change TOR Terms of Reference TSKL Telecom Services Kiribati Limited TTL Task Team Leader US$. USD United States Dollar USP University of the South Pacific TABLE OF CONTENTS DATA SHEET ........................................................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES .................................................................................... 5 A. CONTEXT AT APPRAISAL ........................................................................................................................... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ........................................................ 8 II. OUTCOME ..................................................................................................................................................... 9 A. RELEVANCE OF PDOs ................................................................................................................................. 9 B. ACHIEVEMENT OF PDOs (EFFICACY) ........................................................................................................ 11 C. EFFICIENCY .............................................................................................................................................. 18 D. JUSTIFICATION OF OVERALL OUTCOME RATING ..................................................................................... 19 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................................. 20 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ............................................................. 22 A. KEY FACTORS DURING PREPARATION ..................................................................................................... 22 B. KEY FACTORS DURING IMPLEMENTATION .............................................................................................. 23 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ............................... 24 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................................. 24 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................................... 25 C. BANK PERFORMANCE .............................................................................................................................. 27 D. RISK TO DEVELOPMENT OUTCOME ......................................................................................................... 27 V. LESSONS AND RECOMMENDATIONS ........................................................................................................... 29 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS .......................................................................................... 31 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ....................................................... 45 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................................................... 47 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................................................... 48 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ................................. 51 ANNEX 6. SUPPORTING DOCUMENTS .................................................................................................................. 52 ANNEX 7. PROJECT COMPONENT DETAILS .......................................................................................................... 54 ANNEX 8. SEQUENCING OF REFORM PROCESS ..................................................................................................... 56 ANNEX 9. NETWORK DIAGRAM OF ATHKL INCLUDING OICP SITES ....................................................................... 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P126324 KI: Telecommunications and ICT Development Project Country Financing Instrument Kiribati Investment Project Financing Original EA Category Revised EA Category Not Required (C) Not Required (C) Organizations Borrower Implementing Agency Communications Commission of Kiribati, Ministry of Republic of Kiribati Communication, Transport, & Tourism Development Project Development Objective (PDO) Original PDO The proposed Project development objective is: to strengthen the legal, regulatory and institutional environment, enabling transition to a market-driven telecommunications sector and facilitating improved connectivity for the Outer Islands. Page 1 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 4,100,000 4,100,000 4,100,000 TF-11213 1,000,000 1,000,000 1,034,205 IDA-H7800 Total 5,100,000 5,100,000 5,134,205 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 5,100,000 5,100,000 5,134,205 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 26-Jul-2012 9-Nov-2012 30-Jun-2017 30-Jun-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 02-May-2017 2.70 Change in Loan Closing Date(s) KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 26-Dec-2012 Satisfactory Satisfactory 0 Page 2 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) 02 26-Apr-2013 Satisfactory Satisfactory .16 03 11-Jan-2014 Satisfactory Satisfactory .44 04 08-Jul-2014 Satisfactory Satisfactory 1.00 05 27-Jan-2015 Satisfactory Satisfactory 1.65 06 27-Aug-2015 Satisfactory Satisfactory 2.17 07 15-Jun-2016 Satisfactory Satisfactory 2.39 08 23-Mar-2017 Satisfactory Satisfactory 2.60 09 02-Nov-2017 Satisfactory Satisfactory 2.89 10 13-Mar-2018 Satisfactory Satisfactory 2.98 11 01-Oct-2018 Satisfactory Satisfactory 3.93 12 24-Apr-2019 Satisfactory Satisfactory 4.16 SECTORS AND THEMES Sectors Major Sector/Sector (%) Information and Communications Technologies 100 ICT Infrastructure 100 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 34 Business Enabling Environment 31 Regulation and Competition Policy 31 Jobs 3 Job Creation 3 Page 3 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Public Sector Management 16 Rule of Law 8 Legal Institutions for a Market Economy 8 Public Administration 8 State-owned Enterprise Reform and 8 Privatization Urban and Rural Development 51 Urban Development 3 Urban Infrastructure and Service Delivery 3 Rural Development 48 Rural Infrastructure and service delivery 48 ADM STAFF Role At Approval At ICR Regional Vice President: Pamela Cox Victoria Kwakwa Country Director: Ferid Belhaj Michel Kerf Director: Jose Luis Irigoyen Boutheina Guermazi Practice Manager: Randeep Sudan Nicole Klingen Task Team Leader(s): Natasha Beschorner Natasha Beschorner ICR Contributing Author: Shivnesh Roynendra Prasad Page 4 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. The Republic of Kiribati is one of the most remote and geographically dispersed countries in the world, consisting of 33 coral atolls spread over approximately 3.5 million km2 of ocean. The population at the time of project appraisal was 92,0001, which lived on 22 coral atolls and a single volcanic island. Total land area is less than 800 km2 of which Kiritimati Island, at the eastern extremity of the country, comprises almost half. The capital of South Tarawa was the most populated island at appraisal with approximately 40,000 people2. One of the main challenges facing Kiribati at appraisal was how to overcome its remoteness by developing the basic infrastructure which it needs to connect its people domestically and internationally. Kiribati has few natural resources and is one of the least developed Pacific Islands. 2. Kiribati at time of appraisal had an undiversified economy, dominated by the public sector (public expenditure is currently equal to 86 percent of gross domestic product). The Government was heavily reliant on volatile fishing license fees, aid, and draw-downs from a trust fund that was established with revenues from exploitation of now- depleted phosphate deposits. Strengthening the poorly-performing state-owned enterprise sector was a central focus of ongoing reform efforts. Gross domestic product per capita was US$1,420 in 2010. Sector Context 3. Kiribati remains one of the least “connected” countries in the world. At appraisal, much of the population either had no access to Information and Communication Technologies (ICT) or, even if they lived within range of the existing, often unreliable networks, were unable to afford the service. About 40 percent of the population relied entirely on public access (radio, satellite-based telecenters). 4. Broadband Internet penetration at time of appraisal was less than one percent of the population. Almost all telecommunications subscribers and individual users were on South Tarawa (20 percent mobile teledensity) and Kiritimati (13 percent mobile teledensity). The sole service provider at the time, Telecommunication Services Kiribati Ltd (TSKL), undertook planning to expand mobile network expansion to some Outer Islands (OI) close to South Tarawa. However, projections at the time indicated that fixed and mobile teledensity in Kiribati would not exceed 20 percent by end-2012, which was low by global and regional standards. 5. Limited and expensive telecommunications resulted in high business and social costs, including the isolation of entire island communities and missed opportunities for economic and social development including better inclusion in government services and programs. The Ministry of Communications, Transport and Tourism Development (MCTTD) was responsible for ICT policy, in addition to its substantial workload in other sectors. The Telecommunications Authority of Kiribati (TAK) was at the time of appraisal the independent regulator, established under the Telecommunications Act 2004, responsible for spectrum management, Internet addressing and numbering. 6. The Government started the process of ICT sector reform and institutional development in the early 2000s. The 1Referenced in PAD based on Kiribati 2005 Census data. Population at time of competition was 110,136 based on Kiribati 2015 census data. 2Population in 2015 in South Tarawa is 52,257 based on 2015 census data. The population of the other Outer Islands ranges from around 35 to 5,000 per island, although the majority were between 1,000 and 3,000. Page 5 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Telecommunications Act 2004 was an early step to liberalize the telecoms sector and was intended to allow for competition at a reseller level, particularly in mobile services. However, initial attempts to introduce competition through direct negotiation with prospective suppliers did not progress. After a review of options, with support through World Bank (Bank) and Australian Agency for International Development (AusAID) technical assistance, the Government decided in 2010 on a more comprehensive reform program to prepare a new policy and legal framework which would set the stage for a competitive market and provide the required regulatory mechanisms. Rationale for Bank Involvement 7. The Bank, at the request of the Kiribati Government, had been involved in the ICT sector in Kiribati since 2009. During 2009-2010, the Bank had provided technical assistance to the Government on (a) telecommunications policy and strategy issues, including an assessment of existing network infrastructure, a supply and demand analysis, and an initial review of the current policy and legal environment (2009-2010); and (b) policy reform and development, legislative and regulatory reforms advice, access options for the OIs, and preliminary assessment of TSKL (2010-12). The Bank has extensive experience in the field of telecommunications policy, regulatory reform and rural access issues. It has advised numerous governments on ICT issues in the Pacific and worldwide supported member countries in the Pacific and other regions with ICT sector development and the liberalization of telecommunications markets. 8. The project was consistent at the time of appraisal with the objectives of the Bank’s Country Assistance Strategy (CAS) 2011-2014 as well as the Government’s own vision for a more diversified economy as elaborated in the Kiribati Development Plan 2012-15 and more equitable social and economic development which includes the OI. The Project substantially supported the Government in pursuing the opportunity identified in paragraph 30 of the CAS Strategic Area3. The Project was also consistent with the Bank’s regional engagement strategy in the Pacific4, which identifies telecommunications as a priority area given the challenges posed by the remoteness and isolation of the countries in the Pacific. The Project improved considerably the incentives for private sector-led growth and employment. It also supported the regional strategy’s objective of strengthening capabilities for service del ivery, by both public and private sectors. Theory of Change (Results Chain) 9. The Theory of Change (TOC) was not a requirement at the time of appraisal. As such the TOC (Figure 1) has been created retrospectively specifically for the purpose of this ICR. The TOC below clearly and adequately illustrates the link between the activities carried out and the outcomes achieved. 10. For the purpose of this ICR, Component 4 (Project Management), is not analyzed in the TOC. 3 CAS Strategic Area - Generating Opportunities from Greater Global and Regional Integration - specifically the “considerable untapped potential for Kiribati to take advantage of opportunities for closer global integration made possible by the telecommunications revolution.” 4 Pacific Regional Strategy (2000), paragraph 98. Page 6 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Figure 1. Theory of Change Project Development Objectives (PDOs) 11. The Project Development Objective as outlined in the Financing Agreement was to: 1) strengthen the legal, regulatory and institutional environment; 2) enabling transition to a market-driven telecommunications sector; and 3) facilitating improved connectivity for the OI. Key Expected Outcomes and Outcome Indicators5 12. The PDO contained three separate objectives, as illustrated in the TOC: PDO 1: Strengthen the legal, regulatory and institutional environment Associated Indicators • Improved ICT policymaking capacity (PDO Indicator A.1a) • Legal and regulatory framework (and tools) more effective at delivering sector performance (PDO Indicator A.1b.) PDO 2: Enabling transition to a market-driven telecommunications sector Associated Indicators • Increase penetration of mobile telephones and Internet, including number of direct beneficiaries (% of population, of which 53% female) (PDO Indicator A.1c) • Decrease in tariffs of mobile services and internet access - Price of 3-minute local mobile call (PDO Indicator A.1e) 5 PDO Indicator numbers in parentheses in paragraph 12 refer to Annex 1. Page 7 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) • Decrease in cost of 3-minute call to Australia (PDO Indicator A.1f) • Reduction of Price of monthly internet services (256 kbps) (PDO Indicator A.1g) PDO 3: Facilitating improved connectivity for the Outer Islands • Increase penetration of mobile telephones and Internet in OI (PDO Indicator A.1d) Components 13. The project consisted of four components. See paragraph 21 for information on project co-financing. Component 1. ICT Policy and Legal Support (Original Budget of US$1.30 million, US$1.20 million at closing) Under this component, the project delivered assistance to MCTTD to carry out work in the following areas: a) ICT policy review and coordination; b) TSKL transformation; and c) legal and regulatory advice Component 2. ICT Regulatory Support (Original Budget of US$1.20 million, US$1.20 million at closing) This component established a medium-term program of technical assistance and capacity-building (including on the job and formal training) for the TAK (and later the Communications Commission of Kiribati (CCK)) after a name change) in the following areas: a) New market entry; b) general regulatory support; and c) technical management and training. Component 3. Outer Islands Connectivity (Original Budget of US$2.20 million, US$2.10 million at closing) This phase consisted of: a) Phase 1: Provided technical assistance to MCTTD and CCK; and b) Phase 2: Provided OI connectivity subsidy for new infrastructure and service delivery projects for the OI identified in Phase 1, using an output-based aid approach. Component 4. Project Management (Original Budget of US$0.40 million, US$0.60 million at closing) Full details of the components are available in Annex 7 for reference. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 14. There were no changes to the PDOs and outcome targets. Revised PDO Indicators 15. While the project indicators were not revised, during implementation the task team identified errors in the PAD related to the revision of “call costs per minute” to “call costs per three minutes” indicators without adjusting the price to match. Subsequently the indicators for A.1e and A.1f were corrected. With regard to A.1.g, the original definition of “internet service” in the PAD was based on fixed broadband asymmetric digital subscriber line (ADSL) service as this was the only technology available at the time. Subsequent industry developments and technology changes meant that mobile broadband rather than fixed broadband became the key driver for the expansion of Page 8 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) affordable internet services. The baseline and target values for this indicator were therefore revised accordingly. Revised Components 16. There were no revisions made to components as a result of the restructuring (see paragraph 18). Other Changes 17. The project was extended by 24 months due to implementation delays, caused by the need for greater capacity building at MCTTD and CCK, delays in privatizing TSKL and operationalizing Ocean Link, and changes to the implementation of the Outer Islands Connectivity Program (OICP) under Component 36. Rationale for Changes and Their Implication on the Original Theory of Change 18. At the request of the Kiribati Government, the project was extended by the Bank through a level 2 restructuring to facilitate the ongoing work being undertaken in strengthening the institutional capacity at CCK under Component 2 and to allow for the implementation of Component 37. The restructuring ensured maintenance of the overall momentum of the reform program, and especially Component 3: Internet penetration in Outer Islands, % population, which subsequently grew from 17% at the end of 2015 to nearly 50% in March 20198. 19. Two of the country’s main development partners—Australia and New Zealand—who are represented in country, are familiar with the ongoing reforms, and are co-financing the (majority of the costs of the) Project were in full support of the extension, particularly given its focus on expanding services to the OI. II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 20. The PDO aligns well to the Bank’s Regional Partnership Strategy (RPF), FY17–FY21, in particular Objective 4.2: “Increased access to basic services and improved connective infrastructure”, which identifies that mobile phone coverage is critical to help remote communities remain connected. Technology is also key to developing tourism, better disaster management, and facilitating access to e-services especially e-commerce which is developing in Kiribati. The rationale for the Bank’s shift from a CAS to an RPF for Kiribati and eight other smaller islands in the region was based on a regional strategy focus for reasons of scale and similarity in types of challenges being faced. The RPF further states that the Bank will continue to support legal and regulatory reform to improve the enabling environment for private investment in ICT infrastructure and also assist in providing catalytic financing for “backbone” infrastructure, such as submarine cables or satellite connections that provide international connectivity, as well as applications that use the new ICT infrastructure particularly for the expansion of the tourism industry (especially OI), fisheries management, labor mobility and disaster risk management, mitigation and response, particularly to the Outer Islands, where there was minimal communications infrastructure. 21. The PDO was also consistent with the development objectives of donor partners in the country, who had earlier 6 Please refer to paragraph 43 - 46 for details. 7 Project Restructuring Paper, May 2, 2017. 8 This achievement is directly linked to the Intermediate Result Indicator Component 2: Internet broadband (minimum 256Kbps) subscribers (% of population). Page 9 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) provided assistance to the Kiribati Government to help improve the ICT sector, and in doing so helped lay the groundwork for the project. The Project was supported through a partnership arrangement between the Bank, and the Governments of Australia and New Zealand. AusAID, which later was replaced by the Department of Foreign Affairs and Trade (DFAT), and the Bank have worked together closely in support of telecommunications reform in the Pacific for several years. DFAT has provided financing, through the Pacific Region Infrastructure Facility (PRIF), to support the Bank’s advisory assistance program, both country-specific and regional. DFAT and the Bank have also collaborated on the preparation of analytical work on Pacific connectivity challenges. The Project built on the strength of this relationship: DFAT through PRIF, co-financed this operation through a US$4.1 million recipient- executed trust fund. The Government of New Zealand, as a partner in PRIF, had also collaborated closely with the Bank on ICT development in the Pacific. Accordingly, the Government of New Zealand provided a financing contribution through PRIF in the amount of US$1.0 million equivalent for this operation. Chart 1 22. The ongoing relevance of this project and its PDOs to the broader ICT landscape in Kiribati is also demonstrated through the implementation of another project by the Bank, the Kiribati Connectivity Project (P159632, part of Phase 4 of the Pacific Regional Connectivity Program, effective August 24, 2017, closing date November 30, 2022), which will see to Kiribati being connected to the rest of the world via a submarine fiber cable. This development is expected to significantly reduce the cost of international connectivity, as well as facilitate further growth of demand through reduction of prices. The project will also further build the capacity of MCTTD and CCK, especially in the areas of legal, financial, technical and transactional assistance related to the drafting and negotiation of arrangements for the construction, ownership and management of the cable system to be entered into between Kiribati, Nauru and the Federated States of Micronesia (FSM). 23. Further technical assistance financed by the project will be provided to CCK in the areas of licensing, interconnection and access, and landing party agreements, including any implementing or ancillary regulatory instruments ensuring cost‐based, non‐discriminatory and open access to capacity. Provision of ICT policy and legal technical assistance in connection with eGovernment services and electronic transactions to facilitate citizens’ access to and use of broadband services, including for the development of the legal and regulatory framework to support safe electronic transactions, cybersecurity, data protection and confidentiality are also key components incorporated into the project. The arrival of a submarine cable system into Kiribati will be a landmark development for the country and is expected to have a significant impact on not only the ICT sector but also on education, delivery of Government services, creation of jobs and the development of a niche tourism industry particularly for the OI regions. Page 10 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) 24. Based on the details given in this section, the overall relevance of the project is rated Substantial. B. ACHIEVEMENT OF PDOs (EFFICACY) 25. Projects such as this often have several activities that contribute to the achievement of multiple objectives. An example of this is that activities such as “Review of all current ICT sector policies, legal and regulatory framework”, “Developing the telecommunications policy, legal and regulatory framework” and “Development of the regulatory and engineering tools for the communication sector” all contribute to achievement of both PDO 1 and PDO 2. Also, a number of intermediate indicators are also used to validate progress towards the achievement of both the PDOs. While a summarized overview is presented below, the full details of achievement are highlighted in Annex 1. It was noted during the ICR mission that there were inconsistencies in the PAD for Indicator A.1e, A.1f, and A.1g (due to input errors and market change related to modernization), and the ISR mission undertaken in March 2018 made corrections to the baseline and target values. For the purpose of assessment, the targets for these three indicators are consistent with what was used in the ISRs from March 2018 onward. 26. Changing from a monopoly (state-owned incumbent operator) to a market based private sector-driven ICT sector requires a carefully planned sequencing of efforts related to strengthening the legal, regulatory and institutional environment. The sequencing of key steps taken, with timelines and outcomes are described in detail in Annex 8. PDO 1: Strengthening the Legal, Regulatory and Institutional Environment Improved ICT Policymaking Capacity 27. The successful achievement of the anticipated outcome was measured through the enactment of a forward- looking National ICT (NICT) Policy that strategically positions Kiribati’s ICT sector to reap the full benefit of deregulation and competition. The NICT Policy 2019 makes several improvements over the 2011 version of the document and addresses critical gaps, as summarized in the table below. Table 1 Policy Gaps in 2011 ICT Policy Measures undertaken in 2019 Policy to Address 1 No clear linkage to Government Initiatives are directly linked to the 17 SDGs Strategic Plan Linked to Government manifesto and Kiribati 20- Year Vision Plan (KV20), as well as Trade Policy Framework, Investment Policy (draft) and the Fisheries Policy, education, health and police services 2 Very narrow view of the ICT sector and Addresses aspects and aspirations for additional limited scope sectors of broadcasting, disaster risk management, safety and sea, cybersecurity, privacy and intellectual property. 28. The NICT Policy 2019 recognized the critical role of telecommunications in Kiribati’s economic development, where it is a key ingredient in connecting people to each other and to vital services that underpin economic and social wellbeing. The policy addressed the introduction of e-Government initiatives and ICT services on all islands, identified national internet security as a key concern, and targeted the management of ICT reforms at the Page 11 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) national level. 29. The policy reiterated the Government’s commitment to fostering the development and use of affordable, reliable telecommunications services in the interests of all its people. The policy also recognizes that there are remote and underserved areas in Kiribati where the provision of services is not commercially viable and where innovative mechanisms are needed to increase access to voice and Internet services. The 2019 policy outlines measures on creating a robust, stable, market-driven telecommunications sector, which the Government believes will create a favorable environment that is attractive to private investors and will lead to increased telecommunications infrastructure investment and services development. Legal and Regulatory Framework more effective at delivering sector performance 30. The project helped deliver a number of technical assistance consultancies to the MCTTD and the CCK to develop and implement several legal and regulatory instruments that have positively impacted the ICT sector in Kiribati. 1) Enactment of the Communications Act 2013 to improve sector legislation and CCK accountability. 2) Technical assistance and capacity-building for the CCK as listed in Annex 6 was essential to regulate a competitive market with multiple operators, consistent with the new legal and regulatory framework. 3) Development of a new licensing regime9, enabling the licensing of seven10 new services from the initial single licensee in the sector. 31. The consolidated impact of the above outputs was that there was considerable improvement in the ICT sector, making it vibrant and attractive to investors: specifically, a well-developed supporting legislation and a regulatory framework that ensured a level playing field and a conducive business environment. This gave confidence to private telecommunications operators and businesses and resulted in them investing in the Kiribati ICT sector. 32. Progress toward achieving PDO 1 can also be measured using the following intermediate results indicators: Restructuring of TSKL 33. The initial intention of Government was to pursue options for private participation in TSKL, including a partial or full privatization option. Following a review of privatization options that was presented to Government, Cabinet decided to implement an asset sale of substantially most of TSKL’s assets. This option was preferred over a going concern sale, because there was a significant lack of clarity on TSKL’s existing contractual obligations including contracts for equipment and services supply, pension fund payment and license fees obligations and payment for statutory taxes. A call for an open and transparent tender was implemented in 2014. Few firms 9 The licensing regime adopted by Kiribati is very conducive to private sector participation. Entry requires an operator to simply register an intention to enter the market. If there is no objection from the Regulator in 45 days, the registration is deemed valid. A registration fee is then payable to the Regulator If the Operator requires spectrum to deliver services, then an application is made to the regulator who processes the application, awards spectrum subject to a spectrum license and charges a spectrum fee for the use of the resource. 10 i) Ocean Link (Communications network and services), ii) ATHKL (Communications network and services), iii) Pintech (ISP) iv) Wireless Innovation Solutions (International gateway), v) Speedcast (ISP), vi) TeniCom (Internet network and services), and vii) Taotin Trading (TV and ISP services). Page 12 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) expressed interest but only one pre-qualified. This firm initiated due diligence but later lost interest, leaving the Government with no choice but to close the tender. However, around the same time, another firm expressed interest in prequalifying for the initial tender. This prompted the Government to start a second tender on basically the same terms as the initial one. It issued a public call for prequalification in November of 2014. This resulted in one pre-qualified firm which submitted a successful bid for the assets of TSKL. In May of 2015 the Government concluded an agreement to sell TSKL assets to Amalgamated Telecom Holdings (Kiribati) Limited (ATHKL). 34. At first ATHKL was only interested in the entering the market in Tarawa and Kiritimati. Subsequent negotiations with Government resulted in agreement for ATHKL to also maintain and operate existing OI’s services, in addition to absorbing all of TSKL’s staff. This outcome worked out well for both parties as access to all TSKL assets resulted in ATHKL using the assets to provide services on seven OIs prior to entering into the PPP arrangement for the four sites that were addressed as part of the OICP. 35. While there were no inducements offered as part of ATHKL’s entry into Kiribati, it is noted that regional expansion was a strategy of its parent company, Amalgamated Telecommunications Holding, headquartered in Fiji. This was a strategic move on their part at a time when they were actively seeking additional markets in the Pacific, including Papua New Guinea, Vanuatu and Samoa. TSKL at the time of the ICR mission11 existed in name only and further work is currently being carried out at disposing of other assets it holds to BwebwerikiNet Limited (BNL), before the full transformation is completed. The objective of transforming TSKL has therefore been achieved, albeit in a different manner than anticipated at appraisal. It is noted that ATHKL has been successful in expanding services (including 4G LTE) and coverage as illustrated in the graph below. It is further noted that the newly licensed operator Ocean Link has already commenced operations on Tawara and also provides telecommunications services to the OI at Butaritari and Makin. Graph 112 11 The ICR Mission to Kiribati was from September 18-26, 2019. 12 Based on data collected from industry and verified with MCTTD. Page 13 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Development of Regulatory Tools 36. Furthermore, as a direct result of the project, CCK now has the following regulatory tools at its disposal: 1) Spectrum Management System (SMS4DC) to better manage the scarce spectrum resource, although this was not fully implemented at the time of the ICR mission as training on its use is ongoing. 2) Adoption of an 8-digit numbering plan to ensure number ranges are available to new operator Ocean Link as well as for future service allocation. 3) Finalization of Interconnect and Access Rules (2019) to enable a level playing field and open access to all service providers, as they are able to terminate calls to each other’s network, meaning that customers of Ocean Link could call ATHKL customers and vice versa. 4) Finalization of Consumer Protection Rules (2016) to look after consumer interests and mediate disputes. 37. The development of appropriate legislation and regulatory tools were essential for the sector to be effectively regulated. Both MCTTD and CCK have expressed satisfaction with the impact of the regulatory tools, especially tools 2 and 3, and the positive impact they have had on the sector. The adaptation of a very forward looking, 8-digit numbering plan ensures that there are more than adequate number ranges available for allocation to new operators, while at the same time having enough in reserve for allocation of future services including more possible ISPs. The same sentiments were also expressed by the service providers ATHKL and Ocean Link during interviews. The above results therefore validate the successful achievement of PDO 1. PDO 2: Enabling transition to a market-driven telecommunications sector 38. The following statistics clearly demonstrate the achievement of PDO 2 through a significant increase in the penetration of ICT services as well as significant decreases in the prices of voice and data services. The data presented below 1 is based on the information provided by MCTTD, CCK and operators during project implementation and validated during the ICR mission through the author’s own verification processes. The individual statistics can be found in the respective sections under Annex 1. Increase in penetration of mobile telephones and Internet (PDO Indicator A.1c), increase penetration of mobile telephones and internet in the Outer Islands (Intermediate Results Indicator under Component 3) and reduction of cost of services (PDO Indicators A1.e, A1.f, A1.g) 39. The anticipated target for this outcome was to increase the penetration rates for mobile telephones and internet for the whole country from the baseline of 12% of the population to 40% by project closing. The ICR mission visit cited evidence and collected data indicating that penetration had significantly improved, rising to 47% of the population at the time of the ICR mission. This was impacted positively by the implementing of the OICP, which ensured an additional 5,210 people now had access to modern ICT services. Page 14 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Graph 2 Graph 3 Internet Penetration in Outer Island (% of Population) Increase in penetration of mobile telephone and internet, including Outer Island Coverage at time of ICR number of direct of direct beneficiaries Mission October 2019 50% 40% Original Target 30 June 2019 30% 20% Outer Island Coverage during 10% Implementation Feb 2019 0% Baseline 12 Original Target Achievement Outer Island Coverage 12 June 2012 June 2012 30 June 2019 time of ICR October 2019 0 20 40 60 80 Sources: PDO Indicator A.1c and Intermediate Results Indicator under Component 3. 40. Similarly, the data collected showed that geographic coverage for OI (including the four OI sites recently covered by ATHKL: Tamana, Tab South, Nikunua, and Arorae) under Component 3 of the project had in fact reached in excess of 65%13 at the time of the ICR mission, when extrapolated would suggest that 42.6% of the Outer Island population is now covered against the original target of 40%. The four sites are isolated islands, located southeast of Tarawa with very limited accessibility and very limited communication by way of high frequency radios that have very limited range . 41. The graphs below clearly demonstrate that the target values for decreasing costs of services were achieved and surpassed. It is also useful to note at this stage that the prices offered to customers are same irrespective of locations, whether they are using the service in Tarawa or in the OI. It is also noted that the impact of the expansion of the OICP further spreads the operating costs. In particular the cost of satellite connectivity, which is now spread over a larger number of customers, decreases in terms of incremental cost of additional connections. Graph 4 Graph 5 Reduction of Service Charges from 2012 to Oct 2019 ($) Decrease in cost of monthly internet service ($) 10 60 5 40 0 20 Baselines 2012 Original Target 30 Actual Oct 2019 June 2019 0 Decrease in cost of 3 minute call to Australia ($) Baselines 2012 Original Target Actual Oct 2019 Decrease in cost of 3 minutes local call ($) 30 June 2019 Sources: PDO Indicators A.1e, A.1f, and A.1g. 13 30,798 out of 47,000 Outer Islands residents are now covered. Page 15 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Table 2 Kiribati Samoa Tonga Solomon Islands ICT Penetration- 2019 47 72 100 72 Affordability (%GNI/capita) 2019 5 5.7 2.5 16 rd th th ICT Price Basket Analysis Ranking 2016 183 148 70 190th th th st ICT Price Basket Analysis Ranking 2017 170 112 131 175th Improvement in Ranking over year 13 36 -61 15 source: https://www.itu.int/net4/ITU-D/ipb/ 42. A quick analysis of selected countries in the Pacific shows very positive results for the ICT reforms in Kiribati, with their services in 2019 being ranked more affordable in comparison to Samoa (which is serviced by a cable system) and Solomon Islands. The reforms have also contributed to a slight improvement in Kiribati’s ICT Development Index (IDI) ranking in 2017, improving to 154, from 155 in 201614. Unfortunately, IDI data for Kiribati for other years are not available and as such have not been included in the analysis. PDO 3: Facilitating Improved Connectivity for the Outer Islands 43. The implementation of activities pertaining to this outcome was comparatively slower to progress due to multiple factors. Firstly, the capacity building at the MCTTD and CCK took precedence as there needed to be regulatory tools in place to have effective oversight of the industry. Strengthening institutional capacity in the two relevant agencies was a challenge due to the small number of staff and the lack of required skills among the staff. 44. Secondly, the delays in privatizing TSKL15 and in the operationalization of Ocean Link16 had a negative impact on progress, which caused further delays in the implementation of the OI Connectivity Program (OICP) under Component 3. This was because it was essential that both the incumbent, which had now been transformed into ATHKL, and the new operator Ocean Link be properly and established and operated on commercially-driven principles. In the absence of commercially viable operators in the sector, the expansion of services to the OI would not be sustainable. 45. During project design, it was envisaged that Government would prepare a strategy for its OICP, which would be based on it providing subsidies “in kind” to commercial operators. These “in kind” subsidies would include the provision of a complete basic data services network and supporting infrastructure on 13 islands and the provision of upgraded solar power systems on 2 islands where provision of services would not otherwise be commercially viable. This Outer Island Network would be held by a government not-for-profit trust for the first 5 years, after which it would be re-evaluated with a view to selling it to a commercial operator. The project for constructing the Outer Island Network and for providing operational support and maintenance for the first 5 years would be offered in a competitive bidding process. 46. There were, however, changes made to the design during implementation. The OICP was implemented using 14 ITU Measuring the Information Society Report 2017. 15 The Government took time in analyzing options for the restructure, and after being unable to identify a suitable partner for TSKL, looked at the option of selling TSKL’s assets to a private operator. 16 Delays in securing regulatory permits(access) as well as tower access and interconnection delays. Page 16 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) a PPP approach that required at least one qualified service provider to be active in the sector. It was also now more practical to build a modern network that could extend broadband coverage to the OI, with emphasis on the development of a global standards-based network, incorporating one or more technical solution which included GSM 2G, 3GPP 3G standards and 4G (LTE-A) standards. The Government conducted a thorough bidding process to select its partner under the Public Private Partnership (PPP) arrangement. The PPP arrangement was to attract private sector provision to uneconomic localities in the OI as well to ensure a safety net in the event that it did not succeed. Under the PPP arrangement the Government of Kiribati (via BNL) retained the ownership of the PPP funded key passive infrastructure (land access, tower, building and electricity solar panels) so that these could be passed to another operator should the selected partner exit the market of one or more of the islands subject to the PPP arrangement. 47. An agreement was signed between BNL and ATHKL in August 2018 to expand services via the PPP arrangement to the four OI at a cost of US$1,800,000.00, with eventual services going online in May 2019. Additionally ATHKL was obliged, as part of the arrangement with Government, to maintain the High Frequency radio service to the OI’s, which could be utilized (purpose of redundancy) as and when needed. The PPP arrangement therefore was seen as critical in the establishment of modern mobile and Internet services on the OI. The entire network topology of the telecommunications setup for the expansion is illustrated in Annex 9 for reference. 48. At the time of the ICR mission, services on the four OI that have been covered as part of the OICP had only been active for 3 months. However, the data collected suggests an impressive growth and uptake of services, with an average uptake of 24.30% of the population, as evidenced in the graph below: Graph 617 Justification of Overall Efficacy Rating 49. Based on the findings in this section, the overall efficacy of this project is rated Substantial. Despite the delays in implantation of the OICP, and challenges faced with building capacity at the implementing agencies, the project achieved its objectives and its outcomes and, in many ways, has laid the foundation for the full benefits of connectivity once a submarine cable system lands in Kiribati and eliminates the issues surrounding satellite bottleneck issues and expensive bandwidth. With respect to the scenario related to the correction of indicators A.1.e, A.1.f and A.1.g as described in paragraph 15 and 25, A.1.e and A.1.g would still have been fully achieved and A.1.f would still have been achieved at 95% of the target even if the error in the PAD had not been corrected. A substantial rating, therefore would still be justified in accordance with paragraph 48 of the Bank Guidance on ICRs 17 Survey based on user statistics provided by ATHKL during ICR mission.1266 connections/total population of the islands 5210. Page 17 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) for IPF Operations. This was the reason why the application of a split rating was not considered for this ICR, as a substantial rating would have been valid for the efficacy section in both the scenarios of using either the corrected or uncorrected baseline and targets for the three indicators. C. EFFICIENCY Assessment of Efficiency and Rating 50. The ICR is not able to run a comparative economic and financial analysis as none were undertaken at time of appraisal due to the project being a technical assistance operation. There was an economic analysis undertaken for Component 3 as part of a technical assistance, on the premise that “in kind” subsidies would be provided to an operator to expand services to the four OI. However, as the implementation model was later changed to a PPP type approach, it was not possible to run a comparative analysis. 51. For the purpose of the ICR, however, we will attempt to demonstrate economic efficiency through some very basic analysis and manipulation of available industry data. Further details of this analysis are available in Annex 4, and a summary is presented here for ease of reference. Examination of Costs of OICP 52. Analysis of the least cost subsidy model and adjustment to current price levels demonstrate that the expansion to the four OI using 2.5G service would have cost the Government USD$1,866,679. ATHKL has delivered a faster and more modern 3G service (which was far superior to the 2.5G service initially envisioned) capable of fulfilling broadband functionality at a comparatively lower cost of USD $1,800,000.00. While the cost differential may seem trivial when compared, it must be noted that the initial option would have been undertaken by TSKL, while it remained a Government-owned company. The fact that that the expansion to the four OI under the PPP arrangement was undertaken by ATKHL meant that the implementation was undertaken entirely by the private sector. The inherent value of such an undertaking also meant the Government was relieved of any further risks associated with the expansion and the maintenance of services in the OI. As such the decision to venture into a PPP arrangement by the project team is seen to be accurate given the change in circumstances and in the best interest of the client, especially with regards to future sustainability and risk mitigation. Impact of Increase in Broadband Penetration on the Economy 53. In the absence of specific data on the contribution of ICT to Kiribati’s economy, we can hypothesize the contribution of ICT to economic growth using the following estimation methods: Estimation Method 1 54. Using the ITU Impact of Broadband on the Economy, Broadband Series 2012, it is estimated that a 10% increase in broadband penetration would yield an additional 1.38% in GDP growth. Based on the evidence collected, Kiribati has seen a growth in the penetration of broadband penetration from 12% to 47%, which is an increase of 35% between 2012 and 2019. Extrapolating the figures, the contribution of broadband to GDP growth in Kiribati could be approximated to 4.83% between 2012 and 2019. 55. This represents a potential injection of US$9.4 million into the local economy between 2012 and 2019, which averages to an annual injection of US$1.34 million. Page 18 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Estimation Method 2 56. The World Bank’s Pacific Possible Report 2017 further estimates that the ICT sector’s contribut ion to GDP in Kiribati would be about US$27 million by 2040, as well as contributing US$4 million to Government revenue and increasing the number of available jobs to 700. 57. The estimated injection of US$27 million over a 22-year period (from 2018 – 2040) averages to about a US$1.2 million annual injection into GDP. This figure compares favorably with the estimate derived under method 1 above. Impact of On Private Sector 58. The project amount of US$5.10 million has already generated a sizable injection of private sector funds into the ICT sector. The investments made by ATHKL in the ICT sector in Kiribati can also be treated as a proxy indicator for the mobilization of private sector funds directly linked to project implementation. ATHKL has invested approximately US$22 million18 into the ICT sector in Kiribati since project inception. 59. Furthermore, investment made into the sector by Ocean Link is estimated to be about US$5 million19, based on the size of the infrastructure, technology deployed and licensing requirements. It must be noted that Ocean Link has only just been operationalized, and due to changes in personnel at the company it was not able to confirm the actual investment to date. 60. Therefore, the minimum investment into the sector that has been made since the start of the project is estimated to be about US$27 million, of which the project contributed only US$5.10 million20 . In addition to this it is possible to calculate the total revenue generated in the telecommunications sector for 2019 based on the estimated Average Revenue Per User (ARPU) for the industry. During consultation with stakeholders, it has been estimated that the ARPU in Kiribati has risen from US$9 in 2014 to US$15 in 2019, meaning total revenue generated in the telecommunications sector in Kiribati based on subscriber numbers for 2019 is estimated to be about US$10,062,000. 61. It must be noted that the above analysis discounts several key factors, such as the impact of other licensees (for whom revenue has not been disclosed), boost to local businesses engaged in providing ICT services and recharge services, as well as all other impacts associated with education, health and improvement in public and private sector efficiencies through use of ICT. The analysis however does allow us to gauge to an acceptable level the positive impact of the project. 62. Given the above justifications, the overall project efficiency is rated Substantial. D. JUSTIFICATION OF OVERALL OUTCOME RATING 63. According to the criteria specified in the Bank ICR Guidelines for Annex 4, the overall project is rated Satisfactory, given the ratings for: Relevance = Substantial, Efficacy = Substantial and Efficiency = Substantial. The disbursement rate at time of the ICR mission was a very high 97%, and 100% by the time of writing this report. The evaluation of achievements clearly demonstrated that targets as envisaged were met or surpassed. 18 Based on information provided by ATHKL. 19 World Bank estimates. 20 Refer to the pie chart in Annex 4. Page 19 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 64. The project addressed gender empowerment by including a PDO indicator (Indicator A.1c in Annex 1): “Increase penetration of mobile telephones and internet, including number of direct beneficiaries (% of population, of which 53% female)”. CCK has not mandated the compulsory registration of SIM cards. As such it was not possible to cite evidence to substantiate what percentage of SIMs are registered to women. However, MCTTD calculates that prior to the project, 5,85121 women in Kiribati had ICT access, which has since grown to about 27,43422women as a direct result of the project. It must be noted that there has been a significant reduction in costs of call and mobile internet as a direct result of this project. Access to affordable services are more important to women, as they would normally apportion a smaller amount of their income for ICT services. Affordable access is a positive driver for not only uptake, but also for improving economic prospects23, creation of jobs, improving market access for entrepreneurs, enhancing access to education24 and promoting social inclusion25. Similar sentiments were seen during fieldwork carried out as part of the ICR mission, with a number of respondents stating that they had seen an increase in the use of ICT services by women, particularly youths, with the use of social media being the most popular application, followed by educational use. As an indicator, amongst the 32,800 Facebook users in Kiribati in June 2019, 53.7% were reportedly women26. Institutional Strengthening 65. Components 1 and 2 of the project were directly linked to the capacity building of MCTTD and CCK (Regulator). In addition to achievements as outlined in the Efficacy analysis section, there were several other aspects of institutional strengthening that have been observed across the broader landscape of the Government and the ICT sector as a result of the project: a) Improvement in the overall operational capacities of the MCTTD and CCK: The staff had the benefit of attending several capacity building trainings during the project, which has not only enhanced their technical and sectorial knowledge, but also given them skillsets associated with data collection, project planning and management and monitoring and evaluation. The staff at MCTTD, CCK and PMU have all spoken very positively on the skill transfer and knowledge sharing that has occurred during the life of the project. b) The knowledge sharing, and skills transfer within the Kiribati Fiduciary Services Unit (KSFU) and MCTTD unfortunately has had mixed results. While the project has made the staff at these agencies better aware of the requirements pertaining to administration and monitoring of Bank-funded projects, the loss of trained staff and the lack of the required skillsets remains a major challenge and will likely continue to have an impact on the 21 Based on 0.53 x 92,000 (pop) x 0.12 (ICT penetration rate). 22 Based on 0.53 x 110,136 (pop) x 0.47 (ICT penetration rate). 23 NIebel, Thomas, 2018. “ICT and Economic Growth – Comparing Developing, Emerging and Developed Countries”, World Development, Vol. 104, pp. 197-211. 24 So, Hyo-Jeong, Kyung-Sim Yeon, Seong-Hye Yoon, and Jian Xi Teng, 2018. Positioning ICT in Education to Achieve the Education 2030 Agenda in Asia and the Pacific: Recommendations for a Regional Strategy, UNESCO. 25 Njoki, Muchiri and Franklin Wabwoba, 2015. “The Role of ICT in Social Inclusion: A Review of Literature”, International Journal of S cience and Research, Vol. 4, No. 12, pp. 380-387. 26 https://napoleoncat.com/stats/facebook-users-in-kiribati/2019/06 Page 20 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) administrative efficiency of future projects. Poverty Reduction and Shared Prosperity 66. Due to the lack of data, and the fact that Kiribati has not carried out it its Household Income and Expenditure Survey since 2006, it is very challenging to establish a link backed up by adequate empirical analysis between the project and achievement of the Banks Twin Goals. Using GDP per capita as an indicator, there has been a very marginal increase from US$1,542.57 in 2015 to US$1,625.28 in 201827. With the above caveat in mind, it is obvious that the increase in ICT penetration is helping improve the lives of the people in Kiribati. There is evidence to show that ICT as a medium is being used to explore business opportunities. Citizens are engaging in purchasing of goods and services online, and at a local level, there has been growth of buying and selling products via the use of social media, in particular through use of Facebook groups. 67. An online survey of Facebook suggests the presence of at least 9 Facebook groups with a total membership of 23,523 users28 operating out of Kiribati. The most popular group has 15,000 members and generates about 80 posts a day. The findings suggest that the people of Kiribati are embracing the use of social media for the purpose of engaging in business that helps them generate income thereby offering them an avenue to reduce their poverty and generate wealth. The World Bank’s Pacific Possible Report 2017 states that there could be a boost of US$27 million in GDP (constant 2014 US$ millions), as well as creation of an additional 700 jobs and a US$4 million boost to Government revenue if ICT access and usage is increased. 68. The uses of ICT as an enabler to access marketplaces through use of social media and emails, as a platform for accessing education and information, and as a tool for connecting isolated communities all present huge potential for the country. The liberalization of ICT services in the country now means that services are more affordable. The regulatory and policy changes, together with liberalization of the Kiribati telecommunications landscape favorably positions the country to reap further benefits from ICT in coming years, especially once the submarine cable to the island is commissioned. Mobilizing Private Sector Financing 69. The project has had significant impact on mobilizing private sector funding in Kiribati. ATHKL holds an Advance Payment Security Demand Guarantee of US$720,000.00 as well as a Performance Security Bank Guarantee of US$360,000 from the local ANZ Bank. ATHKL also have an overdraft facility with the ANZ Bank of US$465,000, which will go up and down depending on cash flow requirements, and also vendor finance of US$800,000. As demonstrated in the sections on efficiency, there has been a minimum injection of US$27 million into the ICT sector in Kiribati as a direct result of the project. The figure was arrived at predominantly by analyzing the infrastructural investment by Ocean Link and the reported investments by ATHKL into the sector since inception. 27 https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=KI&name_desc=false 28 Facebook survey of groups based out of Kiribati. Page 21 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Other Unintended Outcomes and Impacts ICT as a Medium to Access Educational Materials 70. There is a growing trend in the country for students to use the power of the Internet for accessing educational materials for research purposes. This has made access to education, particularly tertiary education, easier for the people of Kiribati, who no longer have to travel to Suva to take their courses face to face. During the mission, we heard from students who have completed their entire bachelor’s degree through online learning. With enhancement to the ICT network as a result of this project, this accessibility is set to increase further. Taking into account the growth of student numbers at the Tarawa Campus of the University of the South Pacific (USP), which relies heavily on satellite classes for delivery of courses, evidence collected show that the number of students studying at the campus increased substantially from 465 in 2012 to 870 in 201829. Cybersecurity and Loss of Cultural Values 71. While there are immense opportunities associated with increased accessibility to ICT services, there are also significant challenges that need to be managed to ensure that optimum benefits are derived. An issue that can manifest itself as a grave social problem for the people, especially the youth, is related to cybersecurity and erosion of cultural values. Most of the youth that are now using the Internet, particularly through mobile broadband have little or no supervision from their parents. This is mostly due to the fact that the parents themselves are not aware of cybersecurity risks, as they themselves have very limited knowledge of the topic. Similarly, youth need to be educated on the risks of oversharing their digital lives. 72. The sudden increase in ICT access has also meant that the social and cultural habits of the population are being impacted. Children are now increasingly drawn to the Internet for entertainment and are spending less time conversing with elders and other children. This can create a challenge where due to the attraction of western values which are prevalent through social media, games and video streaming services, the youth are less likely to spend time learning about their own cultural practices, most of which are passed down orally and through the use of traditional dances and storytelling. The above view was expressed during an interview with a local village elder, and similar views were expressed in several conversations with the local population during the course of the ICR mission. While every single person interviewed stated that they welcomed the growth of technology and increased connectivity and the opportunities it provides, they also mentioned that youth needs to be protected from exploitation online. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 73. Objectives that were established during preparation were consistent with the objectives of the Bank’s CAS for Kiribati. The components were well designed and practical keeping in mind the internal capacity at MCTTD for 29 USP 2018 Annual Report. Page 22 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) implementation. The results indicators, for most parts were simple and relatively easy to quantify. There was no requirement for the TOC at the time of appraisal; however, the indicators that were established were for most parts aligned with the operational objectives and had baselines and targets. 74. The project leveraged the Bank’s extensive experience in supporting telecommunications market liberalization and development of new regulatory structures, including in small island economies in the Pacific (Fiji, Samoa, Solomon Islands, and Vanuatu). The project applied lessons learned from implementing similar reforms in comparable countries, as well as from implementation experience in Bank and other development partner-funded operations in Kiribati more broadly. 75. The recruitment and retention of skilled staff was identified by the Bank as a key challenge during the design phase. The skills gap for project implementation was expected to be addressed by the use of technical assistance provided for under the project, with emphasis on skills and knowledge transfer. The risks as identified in the PAD were largely associated with capacity issues at MCTTD, given their heavy workload, and the number of projects they were handling, as well as the limited functionality of the TAK, which had at the time of appraisal been in existence for 4 years. Therefore, there was an expectation that there would be a long reliance on technical assistance beyond the scope of this project. 76. In terms of the expansion of coverage to the OI, the key challenges of a small population spread over vast and multiple areas were considered during design. The intention was to leverage Universal Access funds from private sector investment (which did not exist during the time), with Government providing additional subsidy for rollout. The Bank advised the Government to maintain a flexible approach to the subsidy arrangement to ensure maximum impact, keeping in mind the challenges associated with a small population and dispersed market. It was further intended that the overall framework to guide the OICP would be developed for the Government as part of technical assistance during the earlier phase of the project. B. KEY FACTORS DURING IMPLEMENTATION 77. The heavy reliance on technical assistance and the lack of institutional capacity within the MCTTD and CCK also contributed significantly for the need for the project to be extended. Even with the extension of 24 months, activities related to the OICP were only just completed by the project closing date. 78. The lack of capacity within MCTTD and the office of the regulator remained a major concern during implementation. While gaps were addressed through the use of technical assistance offered by the project, the transfer of skills and knowledge was not successful as initially envisioned. While it can be stated that the project assisted greatly in developing necessary policy and regulatory tools and resources, there are serious concerns especially about the ability of CCK to successfully oversee the sector. As an example, infrastructure sharing rules that have been developed as part of the project have yet to be implemented by CCK. The CCK had also experienced significant delay in enabling interconnection of the new operator, thereby delaying the benefits of competition in the sector. The Bank was correct in its initial assessment that there needs to be on-going technical support beyond the scope of this project. 79. It must be noted that the decision to change the implementation model of the OICP from a pure subsidy type arrangement to a PPP type arrangement by the project team was a good one and represented the best value for the client as well as for the Bank. Furthermore, the delay in the implementation of Component 3 led to technological Page 23 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) changes in the OICP. Access to affordable Low Earth Orbit (LEO) satellite options meant that costs via the deployment of a terrestrial microwave linking network could be minimized. The eventual deployment was a 3G enabled network connected via a satellite backhaul. The same technological arrangement is now being considered a viable option for further expansion as envisaged under a broader program by the Government for its OICP. The above two examples illustrate the importance of maintaining a degree of flexibility when it comes to the implementation of a technical project, especially one that is implemented over several years. 80. The mobilization of funds from the private sector, as well as the significant boost to the local economy by the expansion of coverage and services augurs well for Kiribati’s economy. The reduction of service costs has resulted in a huge uptake of services and has also contributed to an increase in number of shops and canteens that provide after sales and recharge services to consumers30. 81. In terms of the working relationship between the client and Bank, the continuity of the project team (TTL and Advisor) over the duration of the project was very advantageous. Given the complexities associated with project implementation in the region and the need to maintain the relationship with key stakeholders, the close working relationship between the project team and the client was essential in providing adequate supervision and quick turnaround times as needed. This was critical to the timely completion of the project. The Bank also provided adequate support to the client through numerous technical missions, which provided for on-going monitoring of results and evaluation of project implementation. The missions also provided an avenue to highlight roadblocks and strategize on the best way forward to ensure work progressed and the project development objectives were achieved. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 82. For the most part, the results indicators employed during design were deemed sufficient and easy to report against and to track results during the course of implementation. The exception was perhaps the results indicator for “Improved ICT Policy Making” (PDO Indicator A.1a), where the indicator was simply that MCTTD complete a review of all current ICT sector Policies, which at that time was essentially only the National ICT Policy 2011. Use of easily quantifiable indicators, such as number of ICT-related policies developed, or implementation of key measures as outlined in the policy document might have contributed better to measurement of this outcome. A similar argument could be made for the “Legal and Regulatory framework more effective at delivering sector performance” indicator, which would have benefited through the adoption of an indicator that could comprehensively track sector achievements instead of merely tracking the revision of the Communications Act. M&E Implementation 83. As described in paragraph 15, three indicators required corrections, which were made during project implementation. This was essential as the developments in the ICT industry in Kiribati could not be measured realistically and accurately using the baselines and targets as stated in the PAD. The call costs associated with A.1.e and A.1.f were significantly understated in the baselines (by a factor of three) and as a result targets established 30 Based on local interviews and observations carried out during the ICR mission. Page 24 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) were also incorrect. Regarding indicator A.1.g, the change was necessitated as a result of the change in technology associated with the delivery of broadband internet service from ADSL, (which became obsolete during project implementation) to mobile broadband service. The baseline and target therefore had to be corrected to take into consideration the use of mobile broadband as the delivery platform for broadband internet services. The above changes, however, did not affect the methodology related to the collection of project data. The data for reporting purposes were collated by the MCTTD and CCK and verified during the 12 ISR-related missions that were undertaken during the life of the project. As expected, the monitoring of the indicators associated with the “Improved ICT Policy Making” and “Legal and Regulatory framework more effective at delivering sector performance” outcomes, although not clearly defined, was for the purpose of the project satisfactory. There was also heavy reliance on the industry for the collection of data and the efforts of CCK (who are mandated by Government as the regulator to collect such data) were acceptable given the lack of internal processes pertaining to data collection at the time as well as a lack of trained staff. 84. A total of 12 ISRs were submitted following supervision missions to Kiribati. Although implementation had been delayed due to factors discussed above, timely disbursements were made for services provided by the consultants providing the technical assistance. It is further noted that as many as 24 missions were undertaken for this project, although some were shared with other projects being undertaken in Kiribati at the same time. M&E Utilization 85. The M&E framework was used effectively to monitor project progress and reported to management in the mission ISRs. The data collected was sufficient to demonstrate progress during implementation and provide the project team an insight into areas where interventions were required and modification to approaches were made. An example of this is the changes that were adopted for reporting progress on the price reduction of 3-minute calls (PDO Indicators A.1e and A.1f), where inconsistencies in the PAD required the targets to be modified in the ISRs. Another example, given the lack of industry data collection by CCK, was the hands-on nature of the Bank’s project team to work with the counterparts and the industry to assist in data collection so that timely monitoring could be carried out. Justification of Overall Rating of Quality of M&E 86. The overall quality of the Monitoring and Evaluation is substantial, as the system as designed and implemented was very useful is accessing progress. Kiribati presents a very challenging environment generally when it comes to collection and analysis of data, and the project team is given due credit of working closely with the industry, Government and CCK in ensuring the collection of information as required under the M&E framework. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environment and Social Safeguards 87. There were no environmental and social safeguards issues that were experienced during project implementation. The OICP had triggered the policy on Involuntary Resettlement OP4.12; however, ATHKL was given access to land for the deployment of mobile infrastructure with full support of the local communities and Government and in full compliance with the Government’s Environmental, Social, Health and Safety (ESHS) requirements, which were also in line with the Bank’s Environment and Social Safety guidelines and had been included in the bidding document for the PPP arrangement. It must be noted that this ICR considers only environmental and social safeguards in this section and does not validate other compliance requirements as applicable under local law. Page 25 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Financial Management 88. Despite the limited capacity at the KSFU and the MCTTD, there were no significant delays or issues related to submission of financial statements and audit reports. Annual audits up to the end of 2018 had been carried out in full accordance with the Government’s requirements as well as those of the Bank. However, a number of financial management gaps were identified. 89. These included issues concerning poor monitoring of project contracts, lapses in updating of the commitment register, and travel advances acquittals which had been outstanding for a significant period of time. There were also lapses with statutory obligations related to deductions for the Kiribati Provident Fund and taxes, which would increase the risk of penalties under statutory compliance requirements31. 90. The audited accounts for the project were ready in time for the ICR mission and within 6 months from the end of the fiscal year as required. Audits during the lifetime of the project were generally carried out within a reasonable time frame and management made efforts to address issues that had been identified for improvements. It is noted that the last audit undertaken for the financial year 2019 was unqualified. 91. It is also concerning that CCK has not produced an annual report since its formation under the Communications Act 2013. It is imperative that these gaps be addressed to improve CCK’s accountability to the sector and development partners. Procurement Issues 92. The procurement rating for the project had remained at moderately satisfactory during the period of the last ISR reported in April 2019. It is, however, noted that unfamiliarity with procurement processes by staff of KSFU and MCTTD, as well as the absence of a procurement advisor presented significant challenges to project procurement. 93. It is also noted that there was an absence of quotes for the purchase of small tools and building materials for the OI mobile building. This is understood in the context of the limited availability of such items on the island. 94. The project had been initiated and for a large part administered outside of the Systematic Tracking of Exchanges in Procurement (STEP), which is an online system to help the World Bank and Borrowers plan and track procurement activities under Bank-financed projects. The users at the KSFU experienced system lags (due to a weak Internet connection) during migration to the online system, which made the process very cumbersome. There were also very limited capabilities and capacity of local staff at the implementing agencies in the administration of STEP and Client Connection systems. 95. The Bank project team had been consulted on relevant terms of reference (TORs) and evaluation reports by the client and comments incorporated as required. There were no instances observed of procurement being undertaken without due process in accordance with the procurement plan. 31The payments for the Provident Fund and for taxes are statutory obligations under the Provident Fund Act (2012) and Income Tax Act (1990). Delayed payments can create potential compliance issues for Government and a reputational risk for the Bank. Page 26 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) C. BANK PERFORMANCE Quality at Entry 96. The Bank performance at entry was satisfactory. The Bank had invested considerable resources during the design phase of the project and conducted 6 pre-appraisal missions that allowed the project team to carry out a thorough assessment of the sector and the client’s needs. 97. The retention of the core project team and their experience in dealing with ICT-related matters in the Pacific were critical ingredients in the successful implementation of the project. An experienced TTL and project team ensured that they drew on lessons from their previous and ongoing work in the region and incorporated elements of a pro- competitive telecommunications framework, as well as addressing aspects of capacity building and institutional strengthening into the design of the project. 98. The project design, assessment of risks and implementation mechanisms were correctly addressed by the project team during appraisal. The team was also correct in their identification of the general lack of capacity related to technical aspects and project management and administration and addressed these gaps as successfully as possible in the design through the inclusion of the relevant technical assistance as part of the project. Quality of Supervision 99. The quality of the Bank’s supervision was satisfactory. There was a total of 18 technical in-country supervision missions undertaken by the Bank project team. This is a very high number considering the size of the project, but it demonstrated the commitment of the project team to ensure smooth implementation and the achievement of the PDOs. There was continuity through the retention of the same TTL and Advisor. The technical missions were critical in ensuring there was constant, albeit sometimes slower than anticipated, progress. 100. During the ICR mission the MCTTD spoke very highly of the assistance rendered through the Bank’s project team, especially considering their own shortcomings as far as their capacity to implement a project of such magnitude was concerned. A total of 12 ISRs was filed during project implementation, in which roadblocks and suggested solutions were clearly articulated. Justification of Overall Rating of Bank Performance 101. With the above in mind, the overall Bank performance is rated Satisfactory. Given the lack of institutional capacity and human capital, the successful implementation in such an environment for a project of such magnitude can be highly attributed to the proactive and supportive approach of the project team. D. RISK TO DEVELOPMENT OUTCOME 102. The risk that the development outcome generally will not be sustainable is modest. There are three areas of sustainability that are relevant for this project. 103. Commercial sustainability of service provision is ensured by attracting a commercially competent and well- Page 27 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) funded entrant with sound financial, managerial and technology backing. In the case of this project, the reforms facilitated the arrival of private sector players such as ATHKL and Ocean Link, not to mention a number of smaller ISPs. With specific reference to the PPP arrangement, it must be noted that the implementing arrangements for the expansion of services to the OICP will suffer low to negligible risks give that the PPP arrangements are protected by a bank guarantee. Also, the involvement of the private sector augurs well for project sustainability of the initiative. It is also worth mentioning that any private operators would always seek to minimize operating costs in order to maximize their profits and invest in their business expansion. The launching of the Kacific KA satellite service as well as the looming submarine cable connectivity to Tarawa and Kiritimati under the Kiribati Connectivity Project (P159632, see also paragraph 22) will provide options for cheaper backhaul costs, while ensuring that there is adequate bandwidth to grow the range of service to consumers. As an example, it is estimated that it costs ATHKL approximately 40% of revenue to sustain the satellite connectivity costs. Once the cable system is activated, the costs have the potential to be reduced by at least 60%, and with virtually zero caps on capacity. 104. There is already evidence from uptake of services in the newly established four OI sites covered under the OICP, where 24.30% of the population have subscribed to services within four months of the services being launched. The growth of services in the four OI and an uptake of services by the population in those areas clearly demonstrate the user appetite and it is expected that this will grow further as the people get used to accessing the services. It is envisaged that the numbers will further grow and will provide a sufficient return to service providers to sustain ongoing operations. The model has been successful to the point that the Kiribati Government on its own initiative is using the same PPP model to expand ICT services to more OI’s as part of its own expansion program. There are already indications the Ocean Link will look to bid for those services in competition with ATHKL, which will further ensure that the Government gets good value for the use of its funds in the OICP. 105. Institutional sustainability in managing and maintaining oversight of the ICT sector is established by ensuring that the project establishes and supports key institutions, in this case CCK and MCTTD, to effectively regulate the ICT sector in Kiribati. The project provided several technical assistances as well as equipment and training to enable them to carry out their roles. This area, however, remains most vulnerable as outcomes associated with strengthening the legal, regulatory and institutional environment and enabling transition to a market-driven telecommunications sector are heavily reliant on appointment and retention of skilled staff to oversee the sector. This was identified as a challenge during appraisal and continues to be a challenge at the project closing . While outsourcing highly specialized engineering and regulatory roles is an option, there needs to be significant investment made in the retention of skillsets among the local labor force. 106. Service sustainability relates to maintaining the current services as well as ensuring that as new services are developed and introduced elsewhere in the world, they are also introduced in Kiribati. This is encouraged by the expected growth of the market across Kiribati and will be aided substantially when the submarine cable system lands in the country. Services established by this project (and consequential Government of Kiribati funded OI PPP projects) will enable lower costs of services, greater value for customers, more opportunity and significant boost to economic growth prospects to underpin sustainable service provision. Until there is ample low-cost bandwidth available, the localities stuck with high cost bandwidth will be less served than the larger markets with low cost bandwidth. In the case of Kiribati, the submarine cable project is expected to deliver a low-cost high bandwidth solution to Tarawa and the nearby islands comprising some 65% of the country’s population. 107. There is ongoing support within the local community as well as decision makers on Tarawa on the positive impact of ICT and its importance to sustaining growth of the Kiribati economy in the future and as such there are no political Page 28 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) risks envisaged to the sustainability of the outcomes. V. LESSONS AND RECOMMENDATIONS 108. Human capacity and retention of skilled and technical staff will be crucial for the long-term sustainability of project outcomes, not just for MCTTD and CCK, but also for the broader ICT sector and the local economy. While this project had several activities related to capacity building and knowledge transfer, one must be mindful of the local circumstances in that there is an absence of the prerequisite technical competencies which severely limits the benefits and effectiveness of such exercises. A glaring example is the situation at CCK, where many capacity building initiatives have been undertaken, but have not translated to CCK being able to establish itself as an effective regulator, due to their staff not being able to address the technical needs of the sector. Sharing of knowledge gained during any training must be addressed to ensure long-term sustainable outcomes. One way of doing this is to ensure that officers going on training submit a back-to-office report upon their return to the work and hold internal workshops to share their learnings. It is also worth noting that this particular challenge is not unique to Kiribati and is also applicable to much of the smaller island states. There should be greater collaboration between the Pacific Island regulators and ICT policy makers and more efforts must be made to share expertise and retain knowledge. This could be done through mentoring, and short-term industrial attachments as well as online collaboration through the use of a knowledge repository and the establishment of a network of Pacific ICT regulators who can share experiences and best practices. While capacity building through attending international forums and conferences (funded by the project and having provided the attendees with much needed international exposure) is good, the format and duration of engagement provided during such events offer very limited scope for learning. In- country assistance for staff training may provide better opportunities for skills enhancement as it allows an opportunity to bring experts to Kiribati and train a number of staff over a greater duration of time, and in the context of their own local setting. Such exercises also enable the experts to learn about local situations and customize specific approaches that would be critical in delivering solutions that can enhance training. Future technical projects should be encouraged to allocate a greater portion of time on in-country training while delivering technical assistance. 109. The Government should strongly consider putting in place measures to address the vulnerabilities associated with cybersecurity. While there are huge opportunities provided by increased ICT accessibility, the challenges associated with negative impacts need to be addressed. The lack of parental control over children’s social media without any supervision given the unfamiliarity of their parents with technology is very concerning and illustrates how vulnerable youth could be to online exploitation. The Government should consider working closely with development partners in establishing a holistic plan that would increase local awareness and help mitigate against such issues. It is also very important that the education system be engaged in planning such outreach activities and where possible online safety should be introduced into the curriculum. The regulator is mandated to perform the role of protecting consumers, and it must put in place the necessary guidelines and procedures to address gaps that currently exist. The enactment of relevant laws and policies, such as a cybersecurity legislation should be a priority and enforcement agencies such as the police and judiciary must ensure they are adequately skilled and resourced to tackle these issues. Furthermore, Government should ensure that it focuses efforts on not only physical vulnerabilities that affect people, but also on technological vulnerabilities that can lead to the telecommunications infrastructure In Kiribati being targeted by cybercriminals. As more and more businesses come online, the risks associated with such cyberattacks increase. Efforts must be made to establish a National Computer Emergency and Response Team. The above risks and ensuing measures are relevant to other small island developing states that are Page 29 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) implementing ICT reforms to increase accessibility of services and even more to countries that are soon to have submarine cable connectivity. 110. Sectoral reforms and the involvement of the private sector are critical for any country that wishes to increase accessibility of services to its people while ensuring the reduction of costs. This project demonstrated that even for a small island state such as Kiribati, which had very little ICT penetration at the start of the project, the proper sequencing of the reforms followed by timely implementation of Government policies can tremendously boost the sector. The reforms create an enabling environment that attracts private sector participation. The arrival of both ATHKL as well as Ocean Link in a market previously identified as a single operator market, and that without any sweeteners or incentives, demonstrate that if there is a level playing field and equal opportunity, the private sector would move into that market and fill the void. Private sector participation is also the key to sustainability of service delivery as well as to ensuring the modern services continue to be made available to people as the private sector is more likely to innovate and continually invest in improvements. The PPP arrangement used to implement the OICP has relevance not only for the ICT sector, but the lessons could equally be applied to other sectors such as electricity, water and roads. 111. Technological innovation through use of satellite connectivity and encouraging the use of distributed networks is the key to success in small and isolated markets. While cable will remain the most robust solution for international connectivity, the costs are quite prohibitive for communities with limited population. Satellite connectivity represents a cost-effective solution for connecting isolated and sparsely connected islands. This is more so a reality now given the entry of a number of service providers in this area, and prices continue to decline with the launch of newer services. LEO satellite connectivity options provide cost-effective broadband connectivity, and in recent times the technology has also been used successfully (as in the case of the OICP) to provide cellular backhaul capabilities to remote sites. Previously, operators would have to invest heavily in establishing microwave linking sites over vast areas to link isolated sites back to the main exchange. This is no longer needed as improvement in satellite connectivity now ensures that no matter how remote a location, connectivity can easily be established. While LEO satellites are impacted by adverse weather conditions, the advantages significantly outweigh the disadvantages. Furthermore, future networks deployed in areas where weather is a concern could incorporate the use of a C band satellite service for mission critical sites. While C band satellite service is comparatively more expansive and difficult to set up, it does remain largely unaffected by weather conditions and allows for connectivity to be maintained. This also ensures that isolated sites can continue to receive important information such as weather bulletins during adverse weather conditions. LEO satellite systems on the other hand can also be deployed very quickly post disaster and will enable critical information to flow to Government to enable emergency response, thereby proving to be a valuable resource. Furthermore, the use of distributed networks32 enables an operator to share costs across markets and expand to areas where previously it was uneconomical to do so. A good example of the above is exemplified by Ocean Link, whose network core is operated out of Pohnpei in FSM. The prospect of establishing a core in small markets represent considerable costs and could pose as a barrier of entry. This could be a valid option for other small island states, which are characterized by small markets and the presence of an entrenched incumbent. The above examples demonstrate the importance of incorporating innovative technologies into the network design to lower costs and adapting technology neutral solutions to accommodate a changing landscape. . 32 Where the core for the telecommunications exchange is offshore. Page 30 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: a. Improve ICT policy making capacity Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Improved ICT policymaking Text Basic ICT policy in MCTTD completes National ICT Policy capacity place. Limited ICT review of all the 2019 developed and policy capacity at current ICT Sector endorsed by Cabinet MCTTD. Policies 12-Jun-2012 30-Jun-2019 18-Feb-2019 Comments (achievements against targets): The target was fully achieved. The National ICT Policy 2019 made several important policy improvements over the 2011 version of the document. The policy addresses the introduction of e-Government initiatives and the development of ICT services on all islands, identifies national internet security as a key concern, and targets the management of ICT reforms at the national level. The policy also recognizes that there are remote and underserved areas in Kiribati where the provision of services is not commercially viable and where innovative mechanisms are needed to increase access to voice and Internet services. The policy outlines measures on creating a robust, stable, market-driven telecommunications sector overseen by an independent regulator, which the Government believes will create a favorable environment that is attractive to private investors and will lead to increased telecommunications infrastructure investment and Page 31 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) services development. The original closing date for the project was 30 June 2017, which was extended through a level 2 restructuring by 24 months to 30 June 2019. For clarity, the revised date of 30 June 2019 is used in the results framework for monitoring. Objective/Outcome: b. Legal and regulatory framework more effective at delivering sector performance Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Legal and regulatory Text Telecommunications Sector laws and rules Communications Act framework more effective at Act 2004 and updated as 2013 amended to delivering sector associated appropriate in line improve legislation performance instruments in need of with latest and CCK revision Government policy accountability - initiatives completed July 2018 12-Jun-2012 30-Jun-2019 18-Feb-2019 Comments (achievements against targets): The target was fully achieved, following enactment of the Communications Act in 2013, and subsequent amendments in 2018. Page 32 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Objective/Outcome: c. Increase penetration of mobile telephones and internet, including number of direct beneficiaries. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase penetration of Percentage 12.00 40.00 47.00 mobile telephones and Internet, including number of 12-Jun-2012 30-Jun-2019 30-Jun-2019 direct beneficiaries (% of population, of which 53% female) Comments (achievements against targets): The target was overachieved at 117% of the original. The expansion of services by ATHKL, introduction of competition and the licensing of Ocean Link all contributed to the achievement. Due to the absence of a SIM card registration regime in Kiribati, it was not possible to get actual gender aggregated data on ownership. Women make 53% of the population in Kiribati, and it is estimated that the increase in penetration will be in the same proportion for both genders. Source: Industry data survey Objective/Outcome: d. Increase penetration of mobile telephones and internet in Outer Islands Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase penetration of Percentage 5.00 30.00 32.00 Page 33 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) mobile telephones and 12-Jun-2012 30-Jun-2019 30-Jun-2019 Internet in Outer Islands Comments (achievements against targets): The target was overachieved at 106% of the original. Source: Industry data survey Objective/Outcome: e.Decrease in tariffs of mobile services and internet access - Price of 3 minutes local mobile call. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Decrease in tarrifs of mobile Amount(USD) 0.70 0.55 0.17 services and internet access - Price of 3 minute local mobile 12-Jun-2012 30-Jun-2019 30-Jun-2019 call. Comments (achievements against targets): The target was overachieved at 323% of the original. It is noted that the baseline and targeted values for the indicator were informally adjusted/corrected to 0.70 and 0.55 from 0.3 and 0.2 respectively, following inconsistencies with the values reported in the PAD. The adjusted values were used in the Bank’s ISR of 7th Feb 2018 for the first time. Source: Industry data survey Objective/Outcome: f. Price of 3 minute call to Australia Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 34 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Cost of 3 minute call to Amount(USD) 7.00 5.20 2.10 Australia 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): The target was overachieved at 248% of the original. It is noted that the baseline and targeted values for the indicator were informally adjusted/corrected to 7 and 5.20 from 3 and 2.2 respectively, following inconsistencies with the values reported in the PAD. The adjusted values were used in the Bank’s ISR of 7th Feb 2018 for the first time. Source: Industry data survey Objective/Outcome: g. Price of monthly internet services (256kbps) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Price of monthly internet Amount(USD) 55.00 41.00 19.00 serices (256 kbps) 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): The target was overachieved at 215% of the original. It is noted that the baseline and targeted values for the indicator were informally adjusted/corrected to 55 and 41 from 70 and 53 respectively, following inconsistencies with the values reported in the PAD. The adjusted values were used in the Bank’s ISR of 7th Feb 2018 for the first time. Source: Industry data survey Page 35 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) A.2 Intermediate Results Indicators Component: 1. ICT Policy and Legal Support Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 1: TSKL Text No strategy in place TSKL transformation TSKL has been restructured. for transforming TSKL strategy fully transformed into implemented ATHKL and services have been upgraded and expanded to 85% of the population (geographic coverage) 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): ATHKL operates a modern 3G/4G network on most of Tarawa and provides coverage to most of the OI as well. At project closing, ATHKL had expanded to 4 additional islands as per the requirement of the OICP. TSKL at this point in time operates in name only and does not engage in any business. Component: 2. ICT Regulatory Support Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Reformed Text Existing spectrum plan New spectrum Spectrum Spectrum Management. designed for sole management plan management system operator operational has been purchased Page 36 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) and installed but staff need more training on system 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): The target has been mostly achieved. CCK has invested in SMS4DC software. However, it has not been operationalized as staff are still being trained on its use and the turnover of staff at CCK has had negative impact on the progress. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Updated Text Five digit numbering New six or seven digit Eight digit numbering telecom numbering plan plan in use. number plan plan is now in place adopted. operational only for mobile and wireless fixed lines 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): This target has been fully achieved. Page 37 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Text No interconnection Interconnection Interconnection and Interconnection regime regime regime operational access rules have been adopted. finalized and approved 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): This target has been fully achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Dispute and Text No dispute and Dispute and mediation Consumer Protection mediation procedures in mediation procedures procedures Rules finalized in place. in place operational August 2016. Consumer protection is now in place. 12-Jun-2012 30-Jun-2019 30-Jun-2019 Page 38 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Comments (achievements against targets): This target has been fully achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Licensing Text Multi-operator New licensing regime Licensing regime regime in place. licensing regime not operational, allowing operational - 2 developed. new operators to individual, 5 class enter licensees, Ocean Link has been licensed as the 2nd operator in the sector 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): This target has been fully achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Award of Number 0.00 1.00 7.00 other telecommunications 12-Jun-2012 30-Jun-2019 30-Jun-2019 Page 39 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) licenses. Comments (achievements against targets): This target has been achieved at 600% of the target. Source: CCK Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Internet Percentage 1.00 20.00 89.00 broadband (minimum 256Kbps) subscribers (% of 12-Jun-2012 30-Jun-2019 30-Jun-2019 population). Comments (achievements against targets): This target has been over achieved by 334%, on the estimation that 75% of connected users are accessing data services. Source: Industry data survey Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 2: Number of Number 0.00 40000.00 93615.00 direct beneficiaries (including % female). 12-Jun-2012 30-Jun-2019 30-Jun-2019 Page 40 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Comments (achievements against targets): The target was overachieved at 234% of the original, as 85% of people now have connectivity following the implementation of the OICP. Due to the absence of a SIM card registration regime in Kiribati, it was not possible to get gender aggregated data on ownership, but based on the census figure that 53% of the population are women, it is estimated that out of the 93,615 beneficiaries, 49,615 are women. Source: Calculation based on available industry and census data Component: 3. Outer Islands Connectivity Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 3: Mobile Percentage 1.00 40.00 65.00 penetration in Outer Islands (% population) 12-Jun-2012 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): The target was overachieved at 162% of the original, following the implementation of the OICP. Source: Industry data survey Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component 3: Internet Percentage 0.50 20.00 65.00 penetration in Outer Islands (% population). 12-Jun-2012 30-Jun-2019 30-Jun-2019 Page 41 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Comments (achievements against targets): The target was overachieved at 325% of the original. Source: industry data survey Page 42 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1) Strengthen the legal, regulatory and institutional environment and; 2) Enabling transition to a market-driven telecommunications sector a. Improved ICT policymaking capacity b. Legal and regulatory framework (and tools) more effective at delivering sector performance c. Increase penetration of mobile telephones and Internet, including number of Outcome Indicators direct beneficiaries (% of population, of which 53% female) d. Price of 3 minute local mobile call e. Cost of 3 minute call to Australia f. Price of monthly internet serices (256 kbps) a. TSKL restructured. b. Reformed Spectrum Management c. Updated telecom numbering plan adopted d. Interconnection regime adopted Intermediate Results Indicators e. Dispute and mediation procedures in place f. Licensing regime in place g. Internet broadband (minimum 256Kbps) subscribers (% of population) h. Number of direct beneficiaries (including % female). a. Improved regulatory and policy making in the sector Key Outputs by Component b. Competitive and market driven ICT Sector (linked to the achievement of the Objective/Outcome 1 & c. Increase in access to ICT services 2) d. Reduction in cost of accessing ICT services Objective/Outcome 3) Facilitate improved connectivity for Outer islands Outcome Indicators a. Increase in penetration of mobile telephones in and Internet in Outer Islands Intermediate Results Indicators a. Mobile penetration in Outer Islands (% population) b. Internet penetration in Outer Islands (% population) Page 43 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Key Outputs by Component a. Implementation of OICP, leading to greater coverage of the population (linked to the achievement of the Objective/Outcome 3) b. increase in access to ICT services for people in the Outer Islands Page 44 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Natasha Beschorner Task Team Leader Joyce Miriam Denise Witana Procurement Specialist Stephen Paul Hartung Financial Management Specialist Andrea Ruiz-Esparza Senior Program Assistant Josefo Tuyor Social Specialist Maria Fernanda Miralles Gasparini Social Specialist Gerardo Pio Francisco Parco Social Specialist James L. Neumann Senior Counsel Rushiran Tania Angeline Fernando Temporary Supervision/ICR Natasha Beschorner Task Team Leader Eric Leonard Blackburn Procurement Specialist Evaron Doris Masih Financial Management Specialist Andrea Ruiz-Esparza Procurement Team Jinan Shi Procurement Team Gerardo Pio Francisco Parco Environmental Specialist John Haydon Consultant James L. Neumann Senior Counsel Manuela Da Cruz Procurement Specialist Craig Andrew Clark Social Specialist Eka L Vakacegu Yabaki Team Assistant Joyce Onguglo Social Specialist Page 45 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY12 4.725 41,880.58 FY13 1.319 5,525.52 FY14 .154 17,035.84 FY15 .632 12,118.30 FY16 .067 0.00 FY17 .100 0.00 Total 7.00 76,560.24 Supervision/ICR FY13 2.363 24,140.21 FY14 5.236 52,327.31 FY15 4.607 41,157.40 FY16 .290 64,175.90 FY17 2.769 46,609.50 FY18 5.040 48,184.97 FY19 7.219 43,475.14 FY20 12.249 33,913.21 Total 39.77 353,983.64 Page 46 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) ICT Policy and Legal Support 1.30 1.20 92% ICT Regulatory Support 1.30 1.20 92% Outer Islands Connectivity 2.10 2.10 100.05% Project Management 0.40 .60 150% Total 5.10 5.10 100% Page 47 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 4. EFFICIENCY ANALYSIS At Appraisal It is noted that a traditional economic and financial analysis has had not been undertaken for the project as a whole due to it being a technical assistance operation. However, the PAD noted that a financial analysis would be undertaken through technical assistance for the implementation of a subsidy model. At ICR Due to the absence of any economic and financial analysis, this ICR does not have the necessary empirical information to run a validation. However, this ICR will attempt, through a very rudimentary cost analysis on the Outer Island expansion and the general increase in penetration, to demonstrate the project’s efficiency. Examination of Costs of OICP It is noted that due to the change in the model of implementation from a least-cost subsidy to a PPP arrangement, the financial analysis carried out by John Crook Consulting under project-financed technical assistance would be of limited relevance for an analysis. It is also noted that the four sites Arorae, Nikunua, Tamana and South Tabiteuea were selected by Government on the basis of need, as they had no existing connectivity, and had very limited accessibility due to infrequent flights. Therefore, the choice was more based on the client’s need as opposed to any calculations. Cost Analysis Cost Based on Initial Cost adjusted Analysis (2014 data) for 2019 Bid by ATHKL Arorae 418,000 455,270 Nikunau 464,941 506,401 Tab South 360,245 392,478 Tamana 470,570 512,531 Total $ 1,713,756.53 $ 1,866,679.21 $1,800,000.00 The above analysis demonstrates that considering cost adjustments, expansion to the 4 OI using 2.5G service would have cost the Government about USD$1,866,679. ATHKL has essentially delivered a faster and more modern service, capable of fulfilling broadband functionality at a comparatively lower cost of US$1,800,000. Page 48 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Impact of Increase in Broadband Penetration on the Economy Using the ITU Impact of Broadband on the Economy, Broadband Series 2012, it is estimated that a 10% increase in broadband penetration would yield an additional 1.38% in GDP growth. Based on the evidence seen, Kiribati has seen a growth in the penetration of broadband from 12% to 47% and an increase of 35% between 2012 and 2019. Extrapolating the figures, the contribution of broadband to GDP growth in Kiribati should be approximately 4.83% between 2012 and 2019. This represents a potential injection of US$9.4 million into the local economy between 2012 and 2019, which averages to an annual injection of US$1.34 million. There is an absence of industry data in Kiribati and thus it is difficult to examine the actual contribution of the sector to the economy. However, reference is made to the World Bank’s Pacific Possible 2017 report, which states the following tabulated data for Kiribati: the possible injection of US$27 million over a 22-year period (from 2018 – 2040), which averages to about a US$1.2 million annual injection into the economy. Contribution of the ICT Sector in Kiribati 2040 2040 Business as Opportunity Usual Scenario Scenario GDP (US$M) 22 27 ICT Sector Government Revenue (US$M) 3 4 Contribution to: Jobs 500 700 Source: World Bank Pacific Possible Report 2017. We can therefore hypothesize that between the 2 scenarios, we see the impact of ICT as having achieved at the very least an additional injection of US$1.2 – US$1.34 million annually into the economy. Furthermore, there has been a substantial growth of the industry ARPU during project implementation, with the ARPU increasing from US$9 in 2014 to US$15 in 2019. Impact of Mobilizing Private Sector Funds It is also possible to use the investments made by ATHKL as a proxy indicator for the growth of investment in Kiribati. ATH has invested approximately US$10,649,532.07 into the ICT sector in Kiribati since project inception. While it has been difficult to get figures for investments made by Ocean Link in Kiribati, it is estimated, based on the network infrastructure and licensing arrangements, a minimal investment of US$5.00 million would be required to establish the operations. Therefore, an investment of US$5.10 million by way of project funds has already generated a sizable injection of more than US$22,000,000 of private sector funds into the ICT sector . It must be noted that we have not considered other impacts such as boost to local businesses, impact of the increase in number of shops that sell Page 49 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) and service phones as well as recharge services, as well as all other impacts that associated with education, health and improvement in public and private sector efficiencies through use of ICT. Total Investment in the ICT Sector (USD) Project Funds $ 5,100,000.00 Private Sector Fund Leveraged $ 22,000,000.00 Page 50 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS The comments submitted by the client can be found at: 1. 11 Dec 2019 - Kiribati Government‘s Comments on the World Banks ICR Report http://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b0873e9d25 2. 11 Dec 2019 - Client Comment on TSKL Restructure Narrative - Email message on WBG ICR from Gov. of Kiribati http://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b0873e9d2a 3. 11 Dec 2019 - Client Comment (Clarification) TSKL Restructure http://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b0873e9d27 4. 11 Dec 2019 - Client Comment on World Bank ICR - Annex 1 http://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b0873e9d28 A copy of the client ICR can be found at: 5. 11 Dec 2019 - Government of Kiribati Implementation Completion Report for P126324 - Client ICR http://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b0873e9d29 Page 51 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 6. SUPPORTING DOCUMENTS 1. Project file: a. Project Appraisal Document, July 3, 2012 b. Financing Agreement for Grant H780-KI, September 26, 2012 c. Aide Memoires, Implementation Status Reports, various correspondences; May 2011-October 2019 d. Project Restructuring Paper, May 2, 2017 2. Other: a. Government of Kiribati, Kiribati Development Plan, 2012-15 b. Government of Kiribati, Kiribati 20-Year Vision: 2016-2036 c. Government of Kiribati, National ICT Policy 2019 d. International Telecommunication Union, The Impact of Broadband on the Economy: Research to Date and Policy Issues, April 2012 e. Kiribati Country Assistance Strategy, FY 2011-2014, January 31, 2011 f. NapoleonCat, Facebook Users in Kiribati, June 2019: https://napoleoncat.com/stats/facebook-users-in- kiribati/2019/06 g. NIebel, Thomas, 2018. “ICT and Economic Growth – Comparing Developing, Emerging and Developed Countries”, World Development, Vol. 104, pp. 197-211 h. Njoki, Muchiri and Franklin Wabwoba, 2015. “The Role of ICT in Social Inclusion: A Review of Literature”, International Journal of Science and Research, Vol. 4, No. 12, pp. 380-387. i. Regional Partnership Strategy for Kiribati, Republic of Nauru, Republic of The Marshall Islands, Federated States of Micronesia, Republic of Palau, Independent State of Samoa, Kingdom of Tonga, Tuvalu, and Vanuatu for the Period FY17-FY21, February 28, 2017 j. So, Hyo-Jeong, Kyung-Sim Yeon, Seong-Hye Yoon, and Jian Xi Teng, 2018. Positioning ICT in Education to Achieve the Education 2030 Agenda in Asia and the Pacific: Recommendations for a Regional Strategy, UNESCO. k. Telegeography GlobalComms Database, Kiribati Report, June 2019 l. World Bank, Pacific Possible: Long-term Economic Opportunities and Challenges for Pacific Island Countries, Page 52 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) August 1, 2017 3. List of technical assistance provided to client during implementation for: a. 2019 National ICT Policy b. 2013 Communications Act and subsequent amendments c. New multi-operator licensing regime d. OICP Phase 1 e. Spectrum Plan f. 8 Digit Numbering Plan g. Interconnection and access rules h. Consumer protection rules Page 53 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 7. Project Component Details The project consisted of four components. See paragraph 21 for information on project co-financing. Component 1. ICT Policy and Legal Support (Original Budget of US$1.30 million, US$1.20 million at closing) Under this component, the project delivered assistance to MCTTD to carry out work in the following areas: (a) ICT policy review and coordination: including: (i) coordinating and updating sector policy in line with industry developments and Government objectives, including implementing second-generation reforms; and (ii) leading the Government’s work on international agreements related to telecommunications and ICT. (b) TSKL transformation: in coordination with the Ministry of Finance and Economic Development (MFED) and TSKL, identifying options and then implementing the Government’s preferred strategy for restructuring TSKL. The project further financed technical assistance for implementation. (c) Legal and regulatory advice: providing legal and regulatory advice, as needed from time to time, including advice regarding legislative and regulatory reforms, drafting and other advice necessary to give effect to Government policy and sector development, including providing specialist legal advice for the Office of the Attorney General. Component 2. ICT Regulatory Support (Original Budget of US$1.20 million, US$1.20 million at closing) This component established a medium-term program of technical assistance and capacity-building (including on the job and formal training) for the TAK (and later the Communications Commission of Kiribati (CCK)) after a name change). (a) New market entry: Assisted in the design and conduct of a selection process for new telecommunications service provider(s) that eventually facilitated the licensing of a second operator to offer mobile services. (b) General regulatory support: Provided technical assistance and capacity building for the CCK to initially regulate a competitive market with multiple operators, consistent with the new legal and regulatory framework developed as a result of this project. (c) Technical management and training: Provided assistance for CCK regarding the development of a spectrum management and monitoring system through procurement of specialized equipment and software, and capacity building for TAK staff at external training institutions, under a comprehensive and prioritized training plan. Page 54 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) Component 3. Outer Islands Connectivity (Original Budget of US$2.20 million, US$2.10 million at closing) (a) Phase 1: Provided technical assistance to MCTTD and CCK for: the development of an appropriate OI connectivity policy and strategy (built around an output-based aid approach), including preparation of the scheme and necessary enabling instruments which included: (i) technical and financial feasibility analysis, and stakeholder consultations; (ii) identification, analysis and evaluation of possible coverage and service extension projects, least cost subsidy and financing/risk-sharing mechanism (such projects might include voice and/or data; broadband/backbone infrastructure and/or access facilities); (iii) development of the necessary regulatory instruments, instructions and practical procedures to implement OI coverage and service extensions; (iv) preparation of project documentation, selection process for identifying and contracting with an operator for the supply of specified services; and ongoing monitoring and audit of the service being subsidized, possibly including specialized equipment and software; and (v) community outreach and training programs to encourage uptake of services. (b) Phase 2: Provided OI connectivity subsidy for new infrastructure and service delivery projects for the OI identified in Phase 1, using an output-based aid approach33. CCK would manage a competitive bidding process for the lowest subsidy for these OI projects. The use and volume of subsidies to individual projects would depend on the extent of commercial rollout and connectivity gaps in the OI, and the types of services (e.g., mobile, voice, data) to be provided. The estimated costs for this subcomponent assumed a least cost, one-time subsidy payment for provision of voice and basic data using 2.5G mobile services across all population centers in Kiribati. Component 4. Project Management (Original Budget of US$0.40 million, US$0.60 million at closing) Overall project administration and fiduciary matters related to the project were to have been handled by the central Project Management Unit (PMU) within the MFED, established to support all World Bank and Asian Development Bank-financed (ADB) operations. In reality, this did not happen during the course of implementation and all administrative and fiduciary matters were handled by the Kiribati Fiduciary Services Unit (KSFU). MCTTD hired a dedicated ICT Project Manager and an International Procurement Advisor. In addition, Component 4 also financed costs related to audit and project financing. 33Implementation of Component 3 changed during the life of the project from output-based aid (least cost subsidy) to PPP, refer to paragraph 46. Page 55 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 8. Sequencing of the Reform Process The flowchart below attempts to summarize the activities that were undertaken as part of the reform process in the project. As evident from the illustration, a number of activities were concurrent and carried out over a number of years. It is also noted that for intermediary outcomes such as “Competitive ICT Sector established” and “Private Sector led growth” to be realized, technical assistance and implementation of structural reforms were key. Page 56 of 57 The World Bank KI: Telecommunications and ICT Development Project (P126324) ANNEX 9. Network Diagram of ATHKL including OICP Sites34 34 High resolution map available on http://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b0873e9d26 Page 57 of 57