Training Workshop on
Universal Access & Service (UAS)
& Broadband Development
Andy Dymond
World Bank
25 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 development
This 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
1. Universal Access: An
overview
http://www.ictregulationtoolkit.org
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
Includes:
 50 page Executive Summary
 Practice Notes with case
examples
 Online Reference documents
Definitions
• Universal access (UA): ubiquitous access to service
 e.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 concept
 Developing countries targeting both UA and US to voice
 US to voice and UA to Internet in same program
UAS Concepts
Issue
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
Internet
services
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 eInclusion
Demand led
Supply driven
Broadband
facilities
While typically
addressing broadband
nationally, heaviest
intervention/
incentives required for
rural areas
UAS policies migrating to (rural) Broadband policies
UAS targets - examples
Targets
Area or
region
target
Universal Access
Universal Service
Internet
Administrative
centres
• Public Telecentre
• Schools on Internet (subsidy?)
• Training Programme
Household Penetration
targets, separate for
Telephony
Villages
Every village above specified
pop’n (e.g., 100, 250, 500) to
have payphone
Administrative
centres
• Connected to fibre or
broadband microwave
backbone (increasingly fibre)
• Public broadband telecentre
• School access
• Specified e-Government
applications
Villages
Above specified population size
must have access to specified
data speed (e.g., 256/512 Kbps)
Broadband
•
•
•
•
Urban telephony
Urban Internet
Rural telephony
Rural Internet
Affordable access at
minimum specified data
speed
• 256Kbps
• 512Kbps
• 1Mbps
• 2Mbps
• Higher
Gap model – theoretical framework for UAS
•
The smart subsidy
zone has
narrowed
•
The true access
gap is typically
last 2-5%
population
100% households (universal service)
True access
gap
Low income
households
Over last few
years operators
have bridged the
market efficiency
gap for voice
Smart subsidy
zone
Market
efficiency
gap
High income
households
•
Current
network reach
& access
After
one-time
subsidy, will
Commercially
feasible reach
become Requires
commercially ongoing
feasible support
Geographical reach
Source: Initial concept in “Telecommunications & Information ser vices for the Poor:
Towards a Str ategy for Universal Access”, by J. Navas -Sabater , A. Dymond, N.
Juntunen, 2002. Modified by Intele con
100%
geographical
coverage
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
Fixed and Mobile Penetration 2008
140%
Mobile Penetration
120%
100%
80%
60%
40%
20%
0%
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
Coverage gap av. Less
than 2% of population
Source: Africa Infrastructure Country Diagnostic WB study, 2008
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
Figure: Internet subscriber, user and broadband
penetrations by region, 2008
80%
Internet user penetration
70%
Internet subscriber penetration
Broadband subscriber penetration
60%
50%
40%
30%
20%
10%
0%
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 markets
 Operator interest and viability of subsidy
• Lack of competition in service provision?
• Weak demand + lack of affordability for Broadband
service?
• Computer literacy and training
 IT 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 infrastructure
Broadband 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
•
Right network tomorrow – through public support for the next
at 2Mbps by 2012, achieved through upgrades of existing fixed and
wireless networks nationwide
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
Main Approaches to UAS
• Traditional incumbent obligations (USOs)
 Obligation & compensation (Historic & superseded)
• Regulatory reform
 Several 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
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
S. Africa Key indicators
P enetratio n
A rea
Thailand Key indicators
P o pulatio n
100%
100%
80%
80%
60%
60%
40%
40%
20%
20%
0%
1999
2000
2001
2002
2003
Nigeria - Key indicators Penetration
2004
Area
2005
2006
Population
0%
1999
2000
2001
India Key Indicators
100%
80%
80%
60%
60%
40%
40%
20%
20%
Population
2002
2003
P enetratio n
2004
A rea
2005
2006
P o pulatio n
2001
2002
2003
Penetration
2004
Area
2005
2006
Population
1999
entry
 Decision on semifixed vs. mobile
disputes
100%
80%
80%
60%
60%
40%
40%
20%
20%
2000
2001
2002
2003
2004
2005
2006
2000
2001
Uganda Key indicators
100%
0%
1999
Comparison for
GSMA showed
specific impacts of
regulatory decisions
& general policy
 New competition
0%
2000
Morocco Key indicators
0%
1999
Area
•
100%
0%
1999
Penetration
2000
2001
2002
2003
Penetration
2002
2003
2004
Area
2004
2005
2006
Population
2005
2006
 Weight of taxation
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 regulation
 Open access to dominant access networks
• Access to international connectivity & capacity
 Competition, 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 services
 What 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
•
•
Promote development of local content
Utilize universal access & service funds to bring broadband
to rural and underserved areas
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
$ per year
Revenue
Costs
Subsidy
Loss
Years 1 to 10
Profit
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 national and local content, services and applications
development that stimulate Internet take-up and usage
•
•
ICT capacity building
Supporting key users - rural schools and health clinics, to access the
Internet
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. reimbursing 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 technologyneutral 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
7,000
6,000
5,000
US$ Millions
•
Performance of 15 Developing Country USFs
4,000
3,000
2,000
1,000
Collected
Fixed incumbent
Distributed
Fixed new entrants
Mobile
Key lessons - future rural broadband development
•
•
Strong focus on improving regulation
•
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
Technical Assistance should assist the UAS policy adoption process
and the passing of necessary legislation and regulation – as this is
an area of delay
NGO & community initiatives (1)
•
•
Bottom up approaches (vs. top-down policy driven initiatives)
•
Community networks
 fairly recent and few established examples – usually small scale
Most successful example are micro-finance & entrepreneurial
village phone initiatives
(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
•
Separate competition for 3 mobile operators to use each tower
was overwhelmingly successful – “negative” bids (no net subsidy
required)
Competition for 5 year subsidy was successful and bids were well
below the “reserve” price – mostly bid by independent tower
operation companies
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






☎

Rural voice
coverage
Much of the voice telephony
needs in rural areas met by
mobile service
•
But Digital Backbone links all sites
 Fibre or microwave
 Can be developed for broadband
•
Initial demand for Internet
services mostly in vicinity of small
towns & district centres,





•
Broadband
Internet 
Demand
 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 key
Need more sites? (depends on Min
Bandwidth specification)
‘Open Access’ to towers a key
UAS policy tool
Voice & Internet situations & challenges
Locality
population
sizes
Remote Rural - unserved
(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
(B)
• No existing voice or Internet services
• Very low population density
• Could be integrated or overlaid
technologies
• USFs finance voice & Internet together?
Issues of cost versus speed / bandwidth
Factors 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
No fixed
UAS speed;
will
constantly
increase
Cambodia
Tonga
Brunei Darussalam
Laos
Vanuatu
Bangladesh
Sri Lanka
Solomon Islands
PNG
Pakistan
Nepal
Fiji
Bhutan
Philippines
Thailand
Maldives
Malaysia
Macao, China
Vietnam
Taiwan, China
India
Singapore
Australia
Hong Kong, China
Korea (Rep.)
Japan
(20)
(30)
(50)
(50)
0
2
4
Data ITU Sept 2008
6
8
10
12
14
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
Telephony
Mobile
Internet
Allowed
Broadband
(minimum
download
speed)
Telecentre
Australia

Canada

Chile


India



(256k)

Malaysia



(256k)

Morocco



(128k)


(512k)

N. Zealand (BIF)

Nigeria


(512k)

(256k)

(1000k)
Pakistan



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
Issue (1) – Lack of Infrastructure supply
• Challenges
 Lack 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 responses
Progressive regulation and open access policies
 Public-Private-Partnerships for network establishment
 Subsidies through competitive bidding
 Government purchase and use of bandwidth
Issue (1) Infrastructure – Smart Subsidies
Competitive Tendering & OBA Approach
• Smart Subsidy Approach
 One-time subsidies, non-distortion of markets
 Open to both infrastructure and service providers foreign and local
 Stakeholder input into design
• Bundling of Strategic Regions
 Strategies to ensure subsidies are tied to both commercially
promising and challenging regions
• Competitive Bid Process
 Formulation of bid design with stakeholders
 Clearly outline eligibility criteria & requirements
 Use 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 term
 Increase from 7 rural ISPs to 100 now
Issue (1) Infrastructure - Case Example
Chilean 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 Backbone
 Competitive bidding conducted by Chilean Regulator Subtel
 $4.7 million US with $2.6 million US subsidy from Telecom Development
Fund
•
Outcomes
 Awarded July 2007 to 3rd Operator Telefonica del Sur (Telsur); requirements
for open access
 Innovative agreement established with operators Telsur & Movistar
November 2008
 Favorable roaming arrangements; expansion of their combined mobile and
wireless coverage
Issue (2) – Lack of Critical Demand
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
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
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
Issue (2) Stimulating Demand - Case Example
Malaysia’s National Broadband Plan, 2004
•
Strategy
 Broadband 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 widespread 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
Malaysia’s National Broadband Plan (Cont’d)
• 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 einfrastructure projects
•
Incentives
 Tax rebates for broadband equipment & PCs; soft loans for ISP rollout
 Support shared use of private networks(MNCs);
•
Outcomes:
 Achieved increase in household penetration rate to current 18%
 Updated Broadband Plan due 2008/2009
 Realized plan for the enhanced national broadband backbone network
• Sept 2008 – the PPP agreement signed between Government & Telekom
Malaysia
Issue (3) – Lack of Core IT & 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
Challenge
•
Low demand for Broadband considered problem of lack of IT
skills & basic PC/internet infrastructure
•
•
Issues for developing regions and rural areas
•
Limited IT skills and capacities
Lack of access to useful applications & core IT hardware:
Networked PCs
Issue (3) – Lack of Core IT & Capacities
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) – Core Capacities – Case example
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 (4) – Regulatory impediments
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
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.
Issue (4) – Enabling Regulation
• Best Practice solution – improve policy & regulatory
frameworks
 Deregulation - 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 – Case Example
Pakistan
•
Challenges: Broadband expansion needs & opportunities
 Expanded network infrastructure; local internet content/applications &
IT capacity development
 Capitalize on dramatic expansion of mobile/wireless network
 High tariffs considered main impediment
•
•
Approaches
 Establishment of formal policies, i.e., Broadband Policy 2004
 Utilize UAS funds for targeted support and subsidy
 Encourage 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)
Issue (4) Enabling Regulation – Case Example
Pakistan (Cont.)
•
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)
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
Device
Cost
(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
n/a
n/a
30-60/hour
0.70-1.40/hour
Desktops (lowest
option)
10,000
208
Netbooks
18,000
375
variable
variable
Nettop
10,000
209
variable
variable
1,900
40
5/15 min
0.10/15 min
Internet Cafés
Wireless Dongles
999 for DSL, incl.
landline phone service
20.80
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)
Philippines
First decile
Second decile
Third decile
Fourth decile
Fifth decile
Sixth decile
Seventh decile
Eighth decile
Ninth decile
Tenth decile
Est. 2009
HH income
1
4,121
767
1,222
1,557
1,941
2,396
2,947
3,738
4,888
6,949
14,784
343
Start-up
computer
package
$292
85%
Paid over
2 years
$12
4%
Monthly
broadband
costs
postpaid
$14
4%
64
102
130
162
200
246
311
407
579
1,232
457%
287%
225%
181%
146%
119%
94%
72%
50%
24%
19%
12%
9%
8%
6%
5%
4%
3%
2%
1%
22%
14%
11%
9%
7%
6%
4%
3%
2%
1%
Montly HH
income
Monthly
broadband
prepaid
min. costs
$6
2%
9%
6%
5%
4%
3%
2%
2%
1%
1.0%
0.5%
Intelecon analysis; data from NSO 2006, CAGR of 7% to est. 2009 HH income
Average HH expenditure on transport & communications: 8.2% in 2006
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 issues
Broadband & 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