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Training Workshop on
Universal Access & Service (UAS) & Broadband DevelopmentAndy Dymond
World Bank25 January 2010, Washington D.C.
Outline of Workshop
Monday 25 Jan 20010– WB GICT Department
9.30-10.45 Session 1: Universal Access and Service (UAS)• Evolving UAS concept (broadband; e-inclusion)• Main UAS approaches, lessons & emerging trends • Broadband & e-applications for development• Policy & Regulatory options for broadband• USFs and other funding or strategic mechanisms • Case examples
Discussion, Q&A
10.45-11.00 Coffee Break
11.00-12.00 Session 2: Case examples of approaches to Broadband developmentThis session will complete Session 1 if necessary and will also present opportunity for a discussion of what options countries have for broadband development, and experiences. This will be facilitated with country case examples.
Intelecon – knowledge & experience base
• Universal Access & Service (UAS), Regulation & Market strategy UAS Policies & funding strategies & advisory services for Uganda,
Botswana, Malawi, Mozambique, Burkina Faso, Peru, India, Nepal, Mongolia, Russia, Saudi Arabia
• Broadband strategy & roll-out National broadband options for Philippines; USF roll-out for Saudi
Arabia, USF Technical Audit for Pakistan; District POPs for Mongolia, Uganda, Mozambique
• Private sector advice Contribution of Mobile to Universal Access (GSMA), Various strategic market & due diligence studies Tailored UAS advice to technology companies
• ICT Applications Mostly recent: m-banking for Pakistan, Mobile Money User Study for
IFC
ICT Regulation Toolkit: Module 4 – Universal Access & Service
Includes:
50 page Executive Summary
Practice Notes with case examples
Online Reference documents
http://www.ictregulationtoolkit.org1. Universal Access: An overview
2. Regulatory reform & UAS
3. Overview of approaches to UAS
4. UAS Policy
5. Financing UAS
6. UAS Program Development & Prioritization
7. Competing for UAS Subsidies
8. Technologies for UAS
Definitions
• Universal access (UA): ubiquitous access to servicee.g., at a public place, also called public, community or shared access
• Universal service (US): every individual or household can have service, using it privately at home or increasingly, carried with the individual through
wireless devices such as mobile phones or PDAs
Requires emphasis on defined quality of service (QoS)
• Universal access and service (UAS): the generic term when referring to both UA & US or the conceptDeveloping countries targeting both UA and US to voiceUS to voice and UA to Internet in same program
UAS ConceptsIssue Basic meaning Differentiation
Availability Coverage of inhabited geographic territory
• Region /area• Locality size
Accessibility All inhabitants can use reasonable quality service
• Gender• Race, tribe, religion• Ability /disability
Affordability Ability to pay • Access device (Handset, PC, subscription costs)• Cost of calls & services• Minimum “basket” below a certain national limit (e.g., 3% of family income)
With increasing focus on the Internet and broadband, awareness and ability need to be added – awareness of services and benefits & ability to use computers, navigate the Internet & use ICT services
Importance of QoS – Saudi example
• In mid/late 2008, two leading operators reached
39.5% of geographical area with low outdoors signal
31.5% with medium quality outdoor signal
• Population coverage
98% with med. Quality outdoor signal
96% with indoor signal
Less than 2,000 of 15,000 villages without service
• Demand survey showed 22% of villagers “with service” have poor QoS
Therefore targeting indoor service (double the number of villages)
2008 mobile coverage scenarios
Objectives & targets
UA Universal Access
100% Geographic coverage
Available to defined areas, populations or localities
Publicly accessible or shared
No discrimination of access
US Universal Service
Defined Quality of Service
100% Household penetration
Affordable Private Service
Equitably available to the disabled & disadvantaged
Voice telephone – fixed or mobile? (increasingly either)
Internet – dial or always on? (dial not realistic now)
Broadband – How defined? (e.g., >256 Kbps)Next Generation Networks
UAS and broadband policies are merging
UAS policy
Stronger focus on Internet which increasingly
requires minimum broadband
Increased focus also on ICT
enablement
Broadband policy
Includes wider range of measures for e-
Inclusion
While typically addressing broadband
nationally, heaviest intervention/
incentives required for rural areas
Internet servicesInternet services
Broadband facilities
Broadband facilities
UAS policies migrating to (rural) Broadband policies
Demand led Supply driven
UAS targets - examplesTargets Area or
region target
Universal Access Universal Service
Internet Administrative centres
• Public Telecentre• Schools on Internet (subsidy?)• Training Programme
Household Penetration targets, separate for
• Urban telephony• Urban Internet• Rural telephony• Rural Internet
Telephony Villages Every village above specified pop’n (e.g., 100, 250, 500) to have payphone
Broadband
Administrative centres
• Connected to fibre or broadband microwave backbone (increasingly fibre)• Public broadband telecentre• School access• Specified e-Government applications
Affordable access at minimum specified data speed• 256Kbps• 512Kbps• 1Mbps• 2Mbps• HigherVillages Above specified population size
must have access to specified data speed (e.g., 256/512 Kbps)
Gap model – theoretical framework for UAS
• Over last few years operators have bridged the market efficiency gap for voice
• The smart subsidy zone has narrowed
• The true access gap is typically last 2-5% population
Hig
h in
com
e h
ou
seh
old
s
Lo
w in
com
e h
ou
seh
old
s
Current network reach
& access
100% households (universal service)
100% geographical coverage
Source: Initial concept in “Tel ecommunications & Information ser vice s for the Poor: Towards a Str ategy for Universal Access”, by J. Navas-Sabater , A. Dymond, N. Juntunen, 2002 . Modified by Intele con
Geographical reach
Market efficiency
gap
Smart subsidy zone
True access gap
Commercially feasible reach
After one-time
subsidy, will become
commercially feasible
Requires ongoing support
What are the key UAS trends?
1. Much more ambitious goals – towards e-inclusion
2. Target dates compressing
3. Internet more closely aligned with voice
4. More experience with various approaches
5. More complex interactions with other policies
6. Greater interest in reaching the poor by commercial companies and associations
We will address/illustrate these throughout presentation
Much more ambitious goals
• Driven by mobile success
• Countries are achieving UA for voice and move to US goals for voice as mobile phone penetration rises
• Migration to 3/3.5G & 4G increases Internet expectation
• Planning for household penetration more important for Internet
Wes
tern
Eur
ope
Easte
rn E
urop
eCIS
North
Am
erica
Oce
ania
Latin
Am
erica
Midd
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t
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Afri
ca
Asia P
acific
South
Asia
Sub-S
ahar
an A
frica
0%
20%
40%
60%
80%
100%
120%
140%
Fixed and Mobile Penetration 2008
Mobile Penetration
Fixed Penetration
Much more ambitious goals (2)
However, in parts of sub-Saharan Africa, voice access is still an issue for a considerable part of population
Source: Africa Infrastructure Country Diagnostic WB study, 2008
Coverage gap av. Less than 2% of population
Much more ambitious goals (3)•Internet UAS objectives require broadband, but still a long way to go
•Focus shifts away from simple access to
Bandwidth/speed Frequency spectrum ICT capacity/ ability Applications/services
•UAS goals will continue to rise with technology & service development – towards e-inclusion Nor
th A
mer
ica
Oce
ania
Wes
tern
Eur
ope
Easte
rn E
urop
e
Latin
Am
erica
Asia P
acific CIS
Midd
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North
Afri
ca
South
Asia
Sub-S
ahar
an A
f...
0%
10%
20%
30%
40%
50%
60%
70%
80%
Figure: Internet subscriber, user and broadband penetra-tions by region, 2008
Internet user penetration
Internet subscriber penetration
Broadband subscriber penetration
The benefits of broadband
• Measuring impact of broadband still in early phase; few quantifiable and internationally comparable data;
Currently restricted mostly to developed nations
• However, findings so far support ICT sector growth & macro-economic multiplier
Productivity gains, growth in employment, growth in businesses
Transformation of how individuals, companies & government work, communicate and interact
Reduction in pollution (due to reduced travel)
• Potential socio-economic impact significant
• Expected benefits especially in education & health delivery; improved governance & transparency
The benefits of broadband (2)
While specific “proof” of broadband benefits for developing countries and their impact on poverty, hunger and sickness still outstanding, countries
cannot afford to wait as they lack already behind in their ICT development
Key challenges for broadband development
Physical network infrastructure (or access) at the margins: Rural & developing regions
High costs for establishment & service provision in non-urban marketsOperator interest and viability of subsidy
Lack of competition in service provision?
Weak demand + lack of affordability for Broadband service?
Computer literacy and trainingIT skills, e-applications & Desktop PC/internet infrastructure needed
Financing challenge with broadband
Compared to telecom, more money is also needed for
• ICT capacity building campaigns
• Accelerating e-gov services for rural/ poor population (possibly initially through mobile SMS)
• Providing public Internet/broadband centres throughout the country
• Improving PC penetration through PC loan/ grant programs – to increase broadband subscriptions
• But remember – some e-applications (e.g., m-money) are not necessarily bandwidth hungry
Digital Britain – direction example
• Report states that UK is at a tipping point re the online world – changing from conferring advantage to those that are in it to conferring active disadvantage for people excluded from online world (Universal Service mandate)
• Key obstacles for people offline are:
Availability – will be addressed through Universal Service Broadband Commitment
Affordability – partly addressed through £ 300 million Home Access Scheme for low income families (started with telephony)
Capability and Relevance - addressed through Digital Inclusion program, ICT user skills recommendations, Ofcom review of media literacy, culminating in National Plan for Digital Participation (including funding for demand-side measures)
Communications infrastructureBroadband has further issues
Digital Britain envisages that availability of broadband has two components due to the speed of change, resulting in two projects:
• Right network today: Universal Service Broadband Commitment at 2Mbps by 2012, achieved through upgrades of existing fixed and wireless networks nationwide
• Right network tomorrow – through public support for the next generation network (NGN) to reach the final third of consumers that cannot be reached by the market (amounts to installing a new network)
Universal Service Broadband Commitment (USC)
• More than one out of 10 households cannot have 2Mbps connection
• Will be corrected through USC by 2012, using a mix of fixed & mobile technologies
USC also necessary step to switchover to more and more digital delivery of public service
• It will be funded by £ 200 million direct public funding, enhanced by several other sources including Value of wider coverage obligations on mobile operators arising from
wider mobile spectrum package Mobile operators also considered for license terms to be eliminated
• USC will be delivered through Network Design and Procurement Group, with a CEO
Next Generation “Final Third” Project
• While overall electronic communications infrastructure compares favorably, first strains can be seen & will increase: under-investment in backhaul networks & congestion in existing spectrum
• Broadband NGNs not only offer high definition video/ games, but also more revolutionary applications such as tele-presence (allowing flexible work arrangements), e-healthcare in the home, and for small businesses access to benefits of cloud computing
• First generation broadband networks provided a contribution to GDP of 0.5 to 1% a year, NGN will likely increase that
• UK has already seen market-led roll-out of NGN: 50% of UK homes have speeds of 50 Mbps and above available to them
• Government believes case is made for desirability of broadband networks being available to large majority of population
Trend to “e-Inclusion”- ICT & all sectors
• EU-centric term but is the trend globally.
• Includes both ICT and the use of ICT to achieve wider inclusion objectives.
• The Riga Declaration (June 2006) stresses actions in the following areas: Improve digital literacy & competencies;
Reduce geographical digital divides;
Use ICT to promote cultural diversity;
Promote inclusive e-government;
Use ICT to address the needs of older workers & elderly
Enhance e-accessibility & ICT usability for people of all abilities, gender & social standing.
UAS integration with other programmes
• Education Vanguard user to be targeted under UAS First priority & demand – the emerging generation Education Ministry responsible for the computer strategy
• e-Government / e-governance ICT improves administration, services, health, etc. Accountability
• Electricity Raises the potential for ICT demand Reduces the complexity & cost of infrastructure build-out
• Microfinance and m-banking Allied initiatives with pro-rural and pro-poor direction m-banking regulated under Central bank but reliant on increasing
ICT reach & telecom operator innovation
• Traditional incumbent obligations (USOs)Obligation & compensation (Historic & superseded)
• Regulatory reformSeveral prior measures have fundamental impact on the
achievement of UAS
• Competitive subsidy distribution (OBA - UASFs)
• Licensing and UAS
• Open access, shared facilities & ICT backbones
• Non-Government & local community contributions
Main Approaches to UAS
Reform first
• Regulatory reform, especially competition, accelerates achievement of UAS – regulatory reform is key first step in UAS policy
• Key elements include: Modern regulatory framework (addressing convergence)
Effective regulator
Effective regulation of competition
Interconnection and pricing
Spectrum allocation reform
Technology & service neutral licensing
Open access & regulating dominant markets
Taxes, import duties and fees
• Implementing UAS policies in badly regulated markets is highly ineffective (e.g., higher subsidy costs)
Regulatory /licensing impact on mobile growth
• Comparison for GSMA showed specific impacts of regulatory decisions & general policy
New competition entry
Decision on semi-fixed vs. mobile disputes
Weight of taxation
S. Africa Key indicators
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006
P enetration Area P opulation Thailand Key indicators
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006
Penetration Area Population
India Key Indicators
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006
P enetration Area P opulationNigeria - Key indicators
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006
Penetration Area Population
Morocco Key indicators
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20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006
Penetration Area Population Uganda Key indicators
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006
Penetration Area Population
Licensing & UAS• Countries that reform their licensing regime in response to
convergence, with technology neutral or unified licences, have major opportunity to incorporate new UAS targets UAS targets more easily accepted in return for greater flexibility of
new licences
• Even without reform, newly offered licences could also include useful territorial and UA obligations to Internet & broadband
Important that those conditions are made public in advance South Africa’s new entrant Neotel has to provide broadband connectivity to
5,000 public schools and rural medical clinics
• Competition for new spectrum based licenses (e.g., 3G, WiMAX) Mandatory roll-out targets & public and school access requirements Matching attractive urban with less attractive regions - Anatel in Brazil used
this approach for their 3G frequency auction (Sao Paulo paired with state in poor North-East etc.)
Enabling regulation for broadband
• Good competitive practice also applies to broadband – look first at regulationOpen access to dominant access networks
• Access to international connectivity & capacityCompetition, joint volume purchase, or both?
• Liberalization of backbone:Permission for wholesale Enforcement or inducement to sharing & co-location
• Tax/fiscal incentives to network build-out
• Planning for converged servicesWhat does IP transition & NGN need?VOIP and multi-media
General recommendations ITU Sept 2008
• Recognize importance of broadband; formulate national plans, including specific targets
• Award licenses & spectrum for wireless broadband technologies (3G, WiMAX)
• Open up the broadband market to new operators and stimulate competition to lower prices
• Create investment incentives in telecom sector
• Utilize universal access & service funds to bring broadband to rural and underserved areas
• Promote development of local content
• Encourage convergence and the transition to NGN including adoption of regulations allowing the use of voice and video over broadband networks.
Competing for subsidies & UAS Funds
Competitive subsidy allocation mechanism & smart subsidy (OBA):
• One-time partial subsidy that leverages additional commercial investment
• Subsidy minimized through competitive procedure
• Amount of money required by service provider to bring loss-making services to an acceptable rate of return over long term
only shortfall between revenue & costs is paid
exact amount determined by bidders through competitive tender
projects are selected that are commercially viable in the long-run after initial subsidy – no ongoing subsidies
“Smart subsidy” OBA amount
“The amount of money required by an operator to bring loss-making services to an acceptable rate of return over the long term” Specific services in a target area – e.g. payphones, Internet &
private service in specified target areas Once-only agreement Business sustainable in the medium/ long term
Revenue
Costs
Loss
ProfitSubsidy
$ p
er y
ear
Years 1 to 10
How UASF OBA competition is administered
UASF Fund Manager initially estimates the 5 or 10 year revenues & costs, and estimates the “financial gap” (Max. allowable subsidy)
Bidders (operator-investors) make their own estimate - at or below the maximum allowable subsidy
The total agreed subsidy will be distributed to the lowest bidder over a limited period (e.g. the first 2-3 years) and will not need to be repeated. The operator accepts a 5-10 year (or permanent) licensed obligation to provide the minimum level of service, and is expected to pursue normal commercial opportunity & growth
Internet & Broadband less certain finances than voice – subsidies can rise to > 100% of Capex costs
Use of UAS Funds
Funds have been used for
• Meeting regional and rural service targets for telephony and Internet services
• Broadband and backbone development
• Supporting key users - rural schools and health clinics, to access the Internet
• Supporting national and local content, services and applications development that stimulate Internet take-up and usage
• ICT capacity building
• Supporting various activities related to regionally balanced network and service development, such as the creation of Internet Exchange Points (IXPs) and regional Internet points of presence (POPs)
Around 50 countries have UASFs.
UAS Funds – best practice advantages
Key principles & elements of best practice UASFs:
• Transparent and fair means of allocating subsidy – all operators pay proportionally equal amount and technology-neutral tenders give all equal chance to win (vs. mandating USO)
• Provides incentives for innovation and cost-minimization (vs. re-imbursing USO providers their costs)
• “Pay or play” in practice – operators can choose if they want to particpate
• UASF programs developed with industry & stakeholder consultation
• Focus on ongoing sustainability
• Independent of Government, audited & publicly reported
Examples of UASF successes
• Overall too few evaluation/ impact studies on UASFs
• Peru, Colombia and Chile – 1st generation
• Uganda - 1st in Africa – leveraged mobile (practice note)
• Mongolia – Highly successful in achieving operator collaboration – voice & broadband (practice note)
• Pakistan – Professional & successful in mobile, broadband & fiber projects
• India – Cumbersome but transforming – tower sharing
UASF total experience to date – Hmmm!
• Some funds have not been allocated in a technology-neutral manner (e.g. India, Russia)
• Some funds have accumulated money and not disbursed, or too little E.g., Malaysia, Brazil & India
• In some cases, UAS programme planning and implementation too slow – overtaken by market development
• No fund has been capable of distributing more than 2% of sector revenue
Performance of 15 Developing Country USFs
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Collected Distributed
US
$ M
illio
ns
Fixed incumbent Fixed new entrants Mobile
Key lessons - future rural broadband development
• Strong focus on improving regulation
• Technical Assistance should assist the UAS policy adoption process and the passing of necessary legislation and regulation – as this is an area of delay
• In practice, UAS projects need to be developed for implementation in 2-3 years – and require update shortly before implementation
• Levies should be limited to 1-2% and allowed to reduce over time as UAS targets are achieved
• UASFs need stronger capacity building element and efficiency – also explore “company” models – e.g., Pakistan
• Competitive mechanism & collaborative approach with industry can work well
NGO & community initiatives (1)
• Bottom up approaches (vs. top-down policy driven initiatives)
• Most successful example are micro-finance & entrepreneurial village phone initiatives
• Community networks fairly recent and few established examples – usually small scale
(i.e., solving the problem in one community, not nation-wide) – depend on local leadership/champion
Too complex for effective national programs
• Telecentres wide range of models – mixed record but successful if there is a
network of telecentres, & financing model that secures ongoing sustainability
good Internet connectivity essential – best to follow UAS infrastructure projects
NGO & community initiatives (2)
• Community radio or local radio Local radios connected to the Internet are successful intermediaries in
community to overcome issues of pre-literacy, lack of ICT training and language barriers
• Co-operatives Only thrive in handful of countries – require certain conditions
• Regional or rural operators Limited experience (e.g., Nigeria, South Africa) difficult -require
special/strong regulation to be protected from bigger players Temporary phenomenon – become national operators (through
acquisition or own drive to grow) Possible tool to introduce more competition – also for broadband
– cover rural area first and then be allowed to provide national service
Backbone development & open access
Important because
• Limited ICT access if backbone does not reach all parts of country
• Challenge with single backbone – need access for all at reasonable cost-based prices
• Increased demand for bandwidth capacity & investment costs for NGNs can potentially create bottlenecks
Increased attention on backbone development – some UASFs have financed backbone & transmission extensions (e.g., Chile, Pakistan, Nigeria)
Backbone development & open access (2)
• Opening networks of dominant operators to wholesale service provision: non-discriminatory access & pricing
Through price regulation (least invasive) to functional, operational or structural separation (costly and complex)
• Backbone extensions via competitive UASF bid Many UASF projects already included backbone extensions and open access
policies (Nigeria, Uganda, Mongolia)
• Alternative network options If not already liberalized, license alternative network operators (electricity, gas,
railway) and allow existing operator to sell excess capacity
• Building new wholesale backbone-only networks Have been considered, few existing examples (Canada, EU) – best operated
independent of existing operators, wholesale only and open access
Backbone development – Tower sharing
India Infrastructure sharing
• India’s TRAI & USOF identified locations for 7,871 rural mobile infrastructure towers, buildings & power supply (passive infrastructure) to be shared by multiple operators
• Consulted with the industry and secured broad support
• Competition for 5 year subsidy was successful and bids were well below the “reserve” price – mostly bid by independent tower operation companies
• Separate competition for 3 mobile operators to use each tower was overwhelmingly successful – “negative” bids (no net subsidy required)
Forms of tower sharing
• Selective/case-by-case - direct agreements between operators for selected towers
• Separated tower assets - tower assets divested into a separate company which then enters into agreement with other operators
Reliance Infratel, Qippo Telecom (Spice & Tata Teleservices), India
• Joint ventures - operators jointly build or consolidate their tower assets into a JV
Indus Towers (Bharti, Airtel & IDEA)
• Outsourcing to independent tower companies who build and lease to operators
Helios >1,000 towers in Nigeria American Tower, etc., India
Tower sharing – for broadband deployment • Much of the voice telephony
needs in rural areas met by mobile service
• But Digital Backbone links all sitesFibre or microwaveCan be developed for broadband
• Initial demand for Internet services mostly in vicinity of small towns & district centres,
Use GSM EDGE, CDMA, 3/3.5G, Wi-Fi, WiMAX type wireless from same towers
How far will broadband reach?Smaller operating radius (<5Km)Frequencies keyNeed more sites? (depends on Min
Bandwidth specification)
• ‘Open Access’ to towers a key UAS policy tool
☎
Rural voice coverage
Broadband Internet Demand
Voice & Internet situations & challenges
(B)
• No existing voice or Internet services
• Very low population density
• Could be integrated or overlaid technologies
• USFs finance voice & Internet together?
(A)
• Voice already exists
• Higher population density
• Largely no Internet service
• Expect overlay of 3G or WiMAX on existing towers
• USFs finance Internet service only
Remote Rural - unservedLocality population sizes
Issues of cost versus speed / bandwidthFactors emerging in recent UAS consultation
• Broadband “coverage” dependent on Bandwidth required, capacity & usage demand per cell Range & frequency of wireless signal
• Targeting 512 kbps could cost 3x 128 kbps due to Technical Options - 2G (e.g., EDGE) versus 3/3.5G (HSPA) & future LTE Frequency Spectrum policy
• Thus broadband UAS could depend on spectrum policy 900 MHz versus 1800/2100 MHz Other (lower) frequencies could service rural areas better GSM versus technological neutrality Whether WiMAX licensing opportunity as well as other freq. allocations
are leveraged to achieve rural roll-out
Financing UAS & broadband
• Government aid for ICT infrastructure has diminished e.g., OECD: USD 1.2 billion in 1990 to ~200 million in 2002 However, some major broadband investments now underway – USA,
UK, Finland
• In developing countries, mainly private sector funded UAS achievement through commercial drive via good policy & regulation through UASFs Through philanthropic/commercial/NGO initiatives (e.g., GSMA
Development Fund, Grameen Phone)
• Donor focus on policy & regulatory support, ICT service applications and capacity development
• Will this be enough for broadband development?
Philippines – hindrance is demand & applications
Major operator financials 2008;Similar capex amounts for 2009
Finance & supply capacity not the issues in this case – GSM coverage is 99% of population & could be leveraged
However, broadband uptake mainly hindered by: Computers (USD 292) not affordable for large majority; but could afford to
pay over 2 years; could afford usage Government not advanced with own connectivity (e.g., only now
connecting all high schools to Internet) Government not advanced with implementing e-gov services for the
general population
Challenges are: affordability of Internet access device; ICT capacity; useful applications & services
Broadband case studies
Broadband benefits
Review of broadband issues & challenges
Overview of broadband strategy options
Best practice responses
Country case examples
Broadband & e-applications What has changed with the advent of broadband?
• “The need for speed” – new digital divide
JapanKorea (Rep.)
Hong Kong, ChinaAustralia
SingaporeIndia
Taiwan, ChinaVietnam
Macao, ChinaMalaysiaMaldivesThailand
PhilippinesBhutan
FijiNepal
PakistanPNG
Solomon IslandsSri Lanka
BangladeshVanuatu
Laos
Brunei Darussalam
TongaCambodia
0 2 4 6 8 10 12 14
(20)(30)(50)(50)
No fixed UAS speed; will constantly increase
Data ITU Sept 2008
Mbps
Benchmarking Study in 2009 for S. Arabia
• Minimum download speed at the customer level in rural (UAS) programs
• Consider the incremental costs of bandwidth in rural areas (bandwidth versus radius)
USF targeted service operations
Country TelephonyMobile
AllowedInternet
Broadband (minimum download
speed)
Tele-centre
Australia (512k)
Canada
Chile
India (256k)
Malaysia (256k)
Morocco (128k)
N. Zealand (BIF) (1000k)
Nigeria (512k)
Pakistan (256k)
Peru
Uganda (128k)
Four approaches to Broadband Policy
Approach Country examples
1 Competitive tender to build new backbone & access infrastructure
Canada, Chile, Sri Lanka, Singapore, UASF countries
2 Create / Underwrite Demand Malaysia, Singapore
3 Stimulate Private Demand in the ICT Sector
Egypt, Thailand
4 Regulatory Reform, liberalisation & UASF Pakistan, India
• These address the main obstacles to broadband development
• Not necessarily exclusive to one another
• May be pursued in combination
ChallengesLack of network infrastructure at the margins - fixed-line copper,
fiber & wireless
Poor competition & access to existing network infrastructure
High costs of infrastructure & operation are barriers to investment & user uptake in rural areas
Lower populations, distance and geographic constraints
Best Practice responsesProgressive regulation and open access policies
Public-Private-Partnerships for network establishment
Subsidies through competitive bidding
Government purchase and use of bandwidth
Issue (1) – Lack of Infrastructure supply
Issue (1) Infrastructure – Smart Subsidies Competitive Tendering & OBA Approach
Smart Subsidy ApproachOne-time subsidies, non-distortion of markets Open to both infrastructure and service providers foreign and localStakeholder input into design
Bundling of Strategic RegionsStrategies to ensure subsidies are tied to both commercially
promising and challenging regions
Competitive Bid ProcessFormulation of bid design with stakeholdersClearly outline eligibility criteria & requirementsUse of least subsidy or reverse auction approach
Issue (1) Infrastructure - Case Example Province of Alberta Supernet
Challenge: Lack of infrastructure & affordability in rural areas; important resource-based economy
Approach
PPP between government & consortium of network builder (Bell) & network operator/reseller (Axia); build-operate (BO) type agreement
USD 157 million government; USD 102 million private sector with 10 year renewable contract for operation
Axia Open Access Model – standard bandwidth price for all users:• Government applications – health facilities, regional offices, & schools;• Rural ISP
Outcomes
Bandwidth prices same for all ISP & ASP company; similar to urban rates Rural network publicly owned; operating contract renegotiable on termIncrease from 7 rural ISPs to 100 now
Issue (1) Infrastructure - Case ExampleChilean BackBone Network financed by smart subsidy
Challenge: Lack of open access & physical infrastructure to reach rural
areas; Alternative approaches required to reach rural areas Approach
Arica to Puerto Montt – North –South Fibre BackboneCompetitive bidding conducted by Chilean Regulator Subtel $4.7 million US with $2.6 million US subsidy from Telecom Development
Fund
OutcomesAwarded July 2007 to 3rd Operator Telefonica del Sur (Telsur); requirements
for open accessInnovative agreement established with operators Telsur & Movistar
November 2008Favorable roaming arrangements; expansion of their combined mobile and
wireless coverage
Issue (2) – Lack of Critical Demand
Challenges• Low demand for Broadband considered due to lack of common
and locally useful broadband applications Large % of internet users dialup, lower demand in rural areas
Lack of broadband traffic constraining public exposure & market entry by service providers
Barriers: Price point & limited applications relevant to local circumstances
Approach Country examples
1 Competitive Tender to build new backbone infrastructure
Chile, Sri Lanka, Singapore
2 Create / Underwrite Demand Malaysia, Singapore
3 Stimulate Private Demand in the ICT Sector
Egypt, Thailand
4 Regulatory Reform and Liberalisation Pakistan, India
Issue (2) Stimulate Demand for Broadband
Solutions
Establish & support development of broadband applications in government operations and public service provision which include:e-Government applications and networked government information
system
e-procurement systems for local businesses
Subsidize bandwidth and interconnection costs for broadband in high cost areas
Desired outcomes
Stimulate greater use and interaction of public with useful broadband e-Government applications
Local capacity building institutions, e.g. schools and IT-based business incubators, more active
Greater local appreciation and demand for broadband
Malaysia’s National Broadband Plan, 2004
StrategyBroadband Policy - Key pillar of 2006 National ICT & Knowledge Society Strategy
MyICMs 886
“Critical Mass” Approach - Create ‘Tipping Point’ for Demand Fund broadband applications to attain critical subscriber penetration rates (50%
household) or 1.3 million subscribers by 2010
Fund public broadband applications to ‘critical’ subscriber level to initiate wide-spread private sector uptake
Government departments (EG*NET); hospitals & clinics; public schools (SchoolNet); universities and internet community centres
Implement a 11.3 billion Ringgit national broadband network funded (2.4 billion) by the Malaysian Government as a PPP
Issue (2) Stimulating Demand - Case Example
Regulatory measures Mandate BB access nationwide, and fund designated remote rural
areas under UAS program (USP) Establish facilitative role of local authorities to speed up e-
infrastructure projects
Incentives Tax rebates for broadband equipment & PCs; soft loans for ISP rolloutSupport shared use of private networks(MNCs);
Outcomes:Achieved increase in household penetration rate to current 18% Updated Broadband Plan due 2008/2009Realized plan for the enhanced national broadband backbone
network • Sept 2008 – the PPP agreement signed between Government & Telekom
Malaysia
Malaysia’s National Broadband Plan (Cont’d)
Issue (2) Stimulating Demand - Case Example
Issue (3) – Lack of Core IT & Capacities
Challenge• Low demand for Broadband considered problem of lack of IT
skills & basic PC/internet infrastructure
• Issues for developing regions and rural areas
• Lack of access to useful applications & core IT hardware: Networked PCs
• Limited IT skills and capacities
Approach Country examples
1 Competitive Tender to build new backbone infrastructure
Chile, Sri Lanka, Singapore
2 Create / Underwrite Demand Malaysia, Singapore
3 Stimulate Private Demand in the ICT Sector
Egypt, Thailand
4 Regulatory Reform and Liberalisation Pakistan, India
Building Core IT Capacities for Demand
Solutions
Programs to provide needed IT infrastructure, capacity development and training to public and community institutions
Provision of internet-enabled PCs & broadband connection to public schools and community institutions
Establish e-Government services and applications for local needs
Basic computer and internet skills training and capacity development to targeted groups
Desired outcomes Develop IT and internet skills to stimulate demand among high-
impact users including local businesses and youth
Develop IT capacities and infrastructure at public access points & businesses e.g. schools, community centres & chambers of commerce
Issue (3) – Lack of Core IT & Capacities
Thailand – Building Core Capacities for Broadband
Approaches
Thailand’s ICT Directions 2004 Policy - To improve ICT skills and access to ICTs for all Thais to benefit from information
Provision of necessary IT hardware & internet connectivity• Subsidized PCs & software for purchase; lowered long-distance rates
for internet; establishment of public internet booths with dialup internet access
Encourage telecom operators to expand wired/wireless communication services in rural areas i.e. rural telephone project
Provide educational and local content - Tambon and Schoolnet projects to provide internet access to village groups and public schools
Outcomes:
Increased PC penetration from 5% in 2001 to 27% in 2005
Issue (3) – Core Capacities – Case example
Issue (4) – Regulatory impediments
Challenges• Restricted competition
poor access to incumbent network lack of new service providers License limitations
• Cost barriers – network/spectrum access, interconnection fees;
• Limited ability to utilize innovative and converging technologies e.g., service bundling, VOIP, etc.
Approach Country examples
1 Competitive Tender to build new backbone infrastructure
Chile, Sri Lanka, Singapore
2 Create / Underwrite Demand Malaysia, Singapore
3 Stimulate Private Demand in the ICT Sector
Egypt, Thailand
4 Regulatory Reform and Liberalisation Pakistan, India
Best Practice solution – improve policy & regulatory frameworksDeregulation - open up service provision to multiple operators
Open access – enforcement of RIO, interconnection, spectrum allocation
Progressive Licensing, e.g., unified licensing
Targeted subsidies for new entrants & challenging areas
Establish & utilize UAS/government programs
Issue (4) – Enabling Regulation
Issue (4) Enabling Regulation – Case ExamplePakistan
Challenges: Broadband expansion needs & opportunitiesExpanded network infrastructure; local internet content/applications
& IT capacity developmentCapitalize on dramatic expansion of mobile/wireless network High tariffs considered main impediment
Approaches Establishment of formal policies, i.e., Broadband Policy 2004Utilize UAS funds for targeted support and subsidyEncourage entry and growth of new service providers
• No restriction on number of broadband providers (must meet minimum QOS standards )
Backhaul facilitation • Subsidies for intl. bandwidth for startup period in project areas
services in rural areas, i.e., rural telephone project
Issue (4) Enabling Regulation – Case Example Pakistan (Cont.)
• Spectrum management promoting wireless services Open auctions for wireless fixed access spectrum Regulatory framework for free access to IEEE 802 bands
• Interconnection strategies Reduced primary rate interface charges (PRI) for dial-up
connection to facilitate future switch to broadband Promotion of national/regional peering points & “domestic”
network to reduce use of costly international backbone
• Licensing New class license available for data providers enabling
agreements for network & local loop access with any operators (LDI/LL Licensees)
• Outcomes Increased broadband connectivity – Est. 200,000 current subscribers Still marginal (1%), but USF has contracted service agreements for more
than 100,000 additional subscribers.
• Marked improvement in enabling conditions for broadband penetration Backhaul network access is now relatively inexpensive Price of end-user broadband equipment reducing Regulatory frameworks for broadband and new wireless applications
• Wateen Telecom launch of WiMAX service in December 2007 - now has 10,000’s wireless broadband subscribers
• Other operators with WiMAX and CDMA services
• USF Broadband Projects Pilot: 88,000 private broadband connections – awards to PTCL and Wateen 380 community & educational access centers Several others already awarded Fiber backbone to all Tehsils (sub-districts)
Issue (4) Enabling Regulation – Case Example Pakistan (Cont.)
Philippines - Provinces without fiber-backbone
• Mostly in central and southern regions
• 14 provinces outside Luzon w/o fiber have per capita income considerably below national average
8% of population Most are lowest income province
in their region
• But some do/ may have digital microwave
Fiber not necessarily or absolutely required
Technical solutions feasible though e-applications and ICT diffusion measures required
Reviewing broadband pricing& affordability Broadband Access
DeviceCost(PHP)
Cost(USD)
Usage Cost(PHP)
Usage Cost(USD)
GPRS/EDGE Mobile Phones 5,000 104 5/15 min 0.10/15 min
WiFi-ready Phones 13,000 271 variable variable
Internet Cafés n/a n/a 30-60/hour 0.70-1.40/hour
Desktops (lowest option) 10,000 208
999 for DSL, incl. landline phone
service20.80
Netbooks 18,000 375 variable variable
Nettop 10,000 209 variable variable
Wireless Dongles 1,900 40 5/15 min 0.10/15 min
Minimum cost for a broadband access device is PHP 10,000, plus cost for software - the nettop with Vista starter edition for PHP 12,000 and 1,900 for a wireless dongle = at least PHP 14,000 (USD 292)
Broadband costs as % of monthly family income (USD)
Intelecon analysis; data from NSO 2006, CAGR of 7% to est. 2009 HH income
Average HH expenditure on transport & communications: 8.2% in 2006
Est. 2009 HH income
Montly HH income
Start-up computer package
Paid over 2 years
Monthly broadband
costs postpaid
Monthly broadband
prepaid min. costs
1 $292 $12 $14 $6Philippines 4,121 343 85% 4% 4% 2%
First decile 767 64 457% 19% 22% 9%Second decile 1,222 102 287% 12% 14% 6%Third decile 1,557 130 225% 9% 11% 5%Fourth decile 1,941 162 181% 8% 9% 4%Fifth decile 2,396 200 146% 6% 7% 3%Sixth decile 2,947 246 119% 5% 6% 2%Seventh decile 3,738 311 94% 4% 4% 2%Eighth decile 4,888 407 72% 3% 3% 1%Ninth decile 6,949 579 50% 2% 2% 1.0%Tenth decile 14,784 1,232 24% 1% 1% 0.5%
Philippines policy options
• Regulatory changes Spectrum reform Tower sharing Taxes & regulatory fees (Fees go to Govt – beyond need for market
regulation)
• Stimulate demand Internet access devices – Desktop/Netbook/Nettop – at household level “Laptop per child” type programs Government as model user / underwrite demand eGov’t services
• Policy intervention USF/OBA style competitions as a last resort for backbone development,
telecenters (Community e-Centres) No new levy – use existing resources from fees
Summary of issuesBroadband & e-applications
• Importance of e-applications for broadband uptake
• What is different about broadband? ICT skills Existing versus needed applications Awareness Access devices for penetration More co-ordination with other sectors like health, education, tax
authorities, e-government
Discussion on future• What about PPPs (scarce examples?)
• Can UASF funds be used for broadband?
• Should UASF funds be used for ICT infrastructure capital only, or for applications and ICT capacity building, computers for all, etc.?
Thank you!
Adymond@inteleconresearch.com
www.inteleconresearch.com
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