Workshop on Universal Access & Service (UAS) & Broadband Development

Workshop on

Universal Access & Service (UAS) & Broadband Development

World Bank23 November 2009, Washington D.C.

Introductions

• Intelecon – Universal Access & Service (UAS), Regulation, ICT applications & Market strategy UAS Policies & funding strategies & advisory services for Uganda,

Botswana, Malawi, Mozambique, Burkina Faso, Peru, India, Nepal, Mongolia, Russia, Saudi Arabia

Private sector advice, incl. Contribution of Mobile to Universal Access (GSMA), various strategic market & due diligence studies

ICT Applications – Mostly recent: m-banking for Pakistan, Mobile Money User Study for IFC

www.inteleconresearch.com

• Consultants presentAndy Dymond – Managing DirectorSteve Esselaar – Principal Telecommunications ConsultantKyle Whiting – Senior ICT Consultant

http://www.inteleconresearch.com/

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

UAS4. UAS Policy 5. Financing UAS6. UAS Programme

Development & Prioritization7. Competing for UAS Subsidies8. Technologies for UAS

http://www.ictregulationtoolkit.org/

Outline of WorkshopMonday 23 Nov 2009 – WB GICT Department9.00-10.30 Session 1: Universal Access and Service (UAS)

• Evolving UAS concept (broadband; e-inclusion)• Main UAS approaches, lessons & emerging trends • Financing UAS and broadband • Broadband & e-applications for development

Discussion, Q&A10.30-11.00 Coffee Break

11.00-11.30 Continuation of session 1Discussion, Q&A

11.30-12.30 Session 3: Future of UAS & broadband development This session will be a practical discussion of what options countries have for broadband development going forward given latest trends and experiences. This will be facilitated with country case examples.

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• 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 DifferentiationAvailability Coverage of

inhabited geographic territory

• Region /area• Locality size

Accessibility All inhabitants can use

• 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 probably need to be added – awareness of services and benefits & ability to use computers, navigate the Internet & use ICT services

Objectives & targetsUA Universal

Access100% 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? (changing rapidly)

Broadband – How defined? (e.g., >256 Kbps)

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 Only 2,000 of 15,000 villages

“without service”• But demand survey showed

22% of villagers “with service” have poor QoS

Therefore target indoor service as minimum acceptable

2008 mobile coverage scenarios

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 population to have payphone

Broadband

Administrative centres

• Connected to fibre or broadband microwave backbone• Public telecentre• School access• Specified e-Government applications

Affordable access at minimum specified data speed

Villages Above specified population size must have access to specified data speed (e.g., 256 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 ho

useh

olds

Low

inco

me

hous

ehol

ds

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-inclusion2. Target dates compressing3. Internet more closely aligned with voice4. More experience with various approaches5. More complex interactions with other policies 6. Greater interest in reaching the poor by commercial

companies

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 3G increases Internet expectation

• Household penetration more important for Internet

Wes

tern E

urope

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pe CIS

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acific

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a0%

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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 ICT capacity/ ability Applications/services

•UAS goals will continue to rise with technology & service development – towards e-inclusion

North A

merica

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urope

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acific CIS

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n Af...

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80%

Figure: Internet subscriber, user and broadband penetra-tions by region, 2008

Internet user penetrationInternet subscriber penetrationBroadband subscriber penetration

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

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 & elderlyEnhance e-accessibility & ICT usability for people of all

abilities, gender & social standing.

UAS and broadband policies are merging

UAS policyStronger focus on

Internet which increasingly

requires minimum broadband

Increased focus also on ICT

enablement

Broadband policyIncludes wider range

of measuresWhile typically

addressing broadband nationally, heaviest

intervention/ incentives required for

rural areas

Internet services

Broadband facilities

UAS policies migrating to (rural) Broadband policies

Demand led Supply driven

• Traditional incumbent obligations (USOs)Obligation & compensation (Historic & superseded)

• Regulatory reformSeveral prior measures have fundamental impact on the

achievement of UAS • Competitive subsidy distribution (UASFs)• Licensing and UAS• Non-Government & local community contributions • Open access, shared facilities & ICT backbones

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%

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100%

1999 2000 2001 2002 2003 2004 2005 2006

P enetration Area P opulation Thailand Key indicators

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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 PopulationNigeria - Key indicators

0%

20%

40%

60%

80%

100%

1999 2000 2001 2002 2003 2004 2005 2006


Morocco Key indicators

0%

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100%

1999 2000 2001 2002 2003 2004 2005 2006

Penetration Area Population Uganda Key indicators

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1999 2000 2001 2002 2003 2004 2005 2006


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 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 les 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 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• 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 FundsCompetitive 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

$ pe

r yea

r

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, but is also expected to expand and serve private demand in the target areas

Internet & Broadband less certain finances than voice – tend to allow subsidies > 100% of Capex costs

Use of UAS FundsFunds 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)

• India – Cumbersome but transforming – tower sharing• Pakistan – Professional & successful in mobile and

broadband projects

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

illion

s

Fixed incumbent Fixed new entrants Mobile

Key lessons - future rural broadband development

• Strong focus on improving regulation• Technical Assistance should include assisting the UAS policy

adoption process and the passing of necessary legislation and regulation – as this is an area of delay

• Otherwise 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 – 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 & open access (3)

Infrastructure sharing – form of open access• India’s USOF identified locations for 11,000 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

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)

Tower sharing – for broadband deployment • Much of the voice telephony

needs in rural areas met by mobile service

• 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, 3G, Wi-Fi, WiMAX type wireless from same towers

How far will broadband reach?Smaller operating radius (<5Km)Need more sites? (depends on Min

Bandwidth specification)Lower wireless frequency (e.g., 900 MHz

or less more efficient• ‘Open Access’ to towers a key

UAS policy tool

☎

Rural voice coverage

Broadband Internet Demand

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 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?

Issues of cost versus speed / bandwidthFactors emerging in a recent UAS consultation

• Broadband “coverage” dependent on Bandwidth requiredCapacity & usage demand per cellFrequency of wireless signal

• Targeting 512 kbps could cost 3x 128 kbps due toTechnical Options - 2G (e.g., EDGE) versus 3G (HSPA)Frequency Spectrum policy

• Thus broadband UAS could depend on spectrum policy900 MHz versus 1800/2100 MHzGSM only versus technological neutralityWhether WiMAX licensing opportunity is leveraged to achieve

rural roll-out

Financing UAS & broadband (2)

Compared to telecom, more money is also needed for• Providing public Internet/broadband centres

throughout the country• Improving PC penetration through PC loan/ grant

programs – to increase broadband subscriptions• ICT capacity building campaigns• Accelerating e-gov services for rural/ poor population

(possibly initially through mobile SMS)• But remember – some e-applications (e.g., m-money)

are not necessarily bandwidth hungry

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 & e-applications

Broadband benefitsReview 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

LaosBrunei

DarussalamTonga

Cambodia

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 Telephony Mobile Allowed Internet

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)

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

Options include • Piloting of broadband ICT & e-applications projects • Strategic/tactical use of mobile SMS to introduce e-gov services

which then can migrate to broadband for more complex service Example Telehealth in Philippines – started with computers & Internet to

district hospitals, but there was no need/ demand; Doctors who needed help were young doctors in really rural and marginalized areas, but there was no connectivity;

Telehealth program switched to mobile and SMS, even e-mail & photos using GPRS – highly successful

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 training

IT skills, e-applications & Desktop PC/internet infrastructure needed

Four approaches to Broadband Policy

Approach Country examples1 Competitive tender to build new

backbone & access infrastructureCanada, Chile, Sri Lanka, Singapore, UASF countries

2 Create / Underwrite Demand Malaysia, Singapore3 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 & wirelessPoor competition & access to existing network infrastructureHigh 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 establishmentSubsidies 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 economyApproach

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

OutcomesBandwidth 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 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 (1) Infrastructure – Case ExampleSri Lanka National Communications Backbone Network

Main Challenge: Lack of open access to existing networks due to

incumbent operator positions Approach

Regulator TRC and ICT Authority (ICTA) conducting competitive bids using Smart subsidy and Output-based Aid approach

Reformed regulatory framework in areas of interconnection, tariffs, infrastructure sharing, regulatory fees, and service reselling

OutcomesSubsidy funds drawn from e-Government project funding: e-Sri Lanka

InitiativeSupport for conducting & evaluating bids provided via Public Private

Infrastructure Advisory Facility Network integrated with Lanka Government Network (LGN) e-Government

project – 325 government offices connected including WAN access; IT capacity & skills training for staff

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 examples1 Competitive Tender to build new

backbone infrastructureChile, Sri Lanka, Singapore



4 Regulatory Reform and Liberalisation Pakistan, India

Issue (2) Stimulate Demand for Broadband

SolutionsEstablish & support development of broadband applications

in government operations and public service provision which include:e-Government applications and networked government information

systeme-procurement systems for local businesses

Subsidize bandwidth and interconnection costs for broadband in high cost areas

Desired outcomesStimulate greater use and interaction of public with useful

broadband e-Government applicationsLocal 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, 2004Strategy

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 2010Fund 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






Building Core IT Capacities for Demand

SolutionsPrograms to provide needed IT infrastructure, capacity development

and training to public and community institutionsProvision 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 groupsDesired 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 BroadbandApproaches

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.






Best Practice solution – improve policy & regulatory frameworksDeregulation - open up service provision to multiple operatorsOpen access – enforcement of RIO, interconnection, spectrum allocationProgressive Licensing, e.g., unified licensingTargeted subsidies for new entrants & challenging areasEstablish & 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 - 132,000 current subscribers Although still marginal (0.8%)

• Marked improvement in enabling conditions for broadband penetration Backhaul network access is now relatively inexpensive Price of end-user broadband equipment is reducing Regulatory frameworks for broadband and new wireless applications i.e.

Branchless Banking are opening new markets • Recent examples include Wateen Telecom launch of WiFi service in

December 2007 with 10,000 wireless broadband subscribers in 4 months • USF Broadband Pilot Project

72,500 private broadband penetration 320 community & educational access centers Two opertors win subsidies (PTCL & Wateen)

Issue (4) Enabling Regulation – Case Example Pakistan (Cont.)

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.?

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 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 variableInternet 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 variableNettop 10,000 209 variable variableWireless Dongles 1,900 40 5/15 min 0.10/15 minMinimum 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 incomeAverage 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%

Workshop on Universal Access & Service (UAS) & Broadband Development

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Transcript of Workshop on Universal Access & Service (UAS) & Broadband Development