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Taking stock and mapping communications futures for African countries
 

Taking stock and mapping communications futures for African countries

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Andrew Barendse of Telkom SA discusses the need and actuality of broadband deployment and regulatory approaches in Africa with particular reference to South Africa

Andrew Barendse of Telkom SA discusses the need and actuality of broadband deployment and regulatory approaches in Africa with particular reference to South Africa

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  • Greetings… Taking stock and mapping future for the bb experience in African countries Presentation include 2/3 taking stock and 1/3 of mapping futures

Taking stock and mapping communications futures for African countries Taking stock and mapping communications futures for African countries Presentation Transcript

  • Dr. Andrew J. Barendse, Phd Institutional Institute of Communications “ Trends in Global Communications: Capturing the High Ground in an uncertain World” 2008 Annual Conference Hong Kong 3 – 4 November 2008 Incentivising investment in broadband networks: Taking stock and mapping futures for African countries
    • Low and slow rate of BB rollout in South Africa and selected African countries.
      • .
    Broadband penetration in South African and selected African countries Ineffectiveness of best regulatory practices to stem this trend
  • Addressing R egulatory tensions… Promote effective Competition Promote efficient Investment Supply side of network development Demand side of Network development Services based competition Infrastructure based competition A
    • Regulatory tensions as a:
    • Dilemma
    • Trade-off
    • Paradox
    B C D E B C D E B C D E
    • Key regulatory approaches to incentivising investment in broadband networks have included:
      • Permanent forbearance
      • Time limited forbearance
      • Equality of access
    Broadband network development Regulatory best practices Permanent forbearance Time limited forbearance Equality of access Continuum of regulatory approaches
    • Forbearance
    • Section 44(7) of the ECA
    • Creates some kind of 'regulatory holiday' in respect of new investments in fibre loops
    • ECNS licensees are exempted from the obligation to lease these facilities to other competitors.
    • Conditions:
      • Restricted to fibre loops serving residential customers.
      • It must be in under serviced areas, or if not, the licensee must continue making 'old' infrastructure available.
      • There must also not be any exclusive arrangements with the landlord / property owners
    • To date no operators have approached ICASA to request exemption
    Its adoption in South Africa…
    • Equality of access
    • Section 43 (1) of Electronic Communications Act
      • Obligation to lease facilities
    • Section 37 (1) of Electronic Communications Act
      • Obligation to interconnect
    • Section 43 (8) of Electronic Communications Act
      • Obligation to unbundle the local loop
    Regulatory concepts have formed part of Electronic Communications Act (ECA) since 2005 Question To what extent has these regulatory approaches incentivized investment in broadband networks in SA?
  • Broadband Internet Connections (PCs) Source: BMI-T, 2006 Note: Liberal definition of “Broadband” - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 2004 2005 2006 2007 2008 2009 2010 Total Internet Connections Total Broadband
  • Snap Survey Results Effectiveness of regulatory approaches… Question What broadband actives are being undertaken in SA? Regulatory Approaches and Incentives for Investment How effective will permanent forbearance be on incentivising investment in broadband access? How effective will time limited forbearance be on incentivising investment in broadband access? How effective will equality of access be on incentivising investment in broadband access?
    • Selected government sponsored broadband projects
    • Regional submarine and terrestrial fibre initiative
      • Infraco/West African Coast Cable
        • R627 million allocated; planned capex of R1.26
      • Nepad/Uhurunet
        • Will require $1.4 billion
    • National million wireless initiative
      • Sentech (state owned enterprise)
        • Will require R4.4 billion (has received R500 to date)
    • Local municipality fibre initiatives
      • Gauteng’s R35 billion fibre project
      • Cape Town’s R300 million fibre project
    Broadband developments in SA (1 of 2)
    • Selected operator sponsored broadband projects
    • Fixed incumbent operator
      • Telkom plans to spend R30 billion on NGN
    • Fixed second network operator
      • Neotel plans to spend R5 billion on infrastructure projects
    • Mobile incumbent operators
      • Vodacom plans to spend R7 billion on fibre network
    • MTN plans to spend R10 billion on fibre network
    • Other operators
      • Dark Fibre Africa to spend R2bn in fibre network
    Broadband developments in SA (2 of 2) Question To what extent have government and operators sponsored projects impacted broadband competition in SA?
    • Internet Users – 12%
      • 5.1 million users
    • Broadband Internet Subscribers – 3.9%
      • 1.1 million
    • Wireless, 3G - 49.55%
      • Incumbent mobiles, 565 000
    • Fixed, ADSL - 41.43%
      • Fixed incumbent, 473 000
    • Fixed Wireless - 9.02%
      • Other operators, 103 000
    Snapshot of Broadband competition in South African
    • Noticeable trends
    • Relatively low level of penetration
    • Extensive competition between fixed incumbent and mobile incumbents
    • Mobile has already overtaken DSL
    • Operator project greater impact gov sponsored projects
  • Snap Survey Results Effectiveness of government sponsored projects Effectiveness of Government Projects in Stimulating Competition in Broadband Networks How significant an impact will public regional broadband projects have on competition in broadband networks? How significant an impact will public national broadband projects have on competition in broadband networks? How significant an impact will public local broadband projects have on competition in broadband networks?
  • © Andrew J. Barendse April 2008 Snap Survey Results Effectiveness of operator sponsored projects Question what has been the characteristics of broadband developments in SA? Effectiveness of Government Projects in Stimulating Competition in Broadband Networks How significant an impact will public the incumbents broadband projects have on competition in broadband networks? How significant an impact will public second national operator broadband projects have on competition in broadband networks? How significant an impact will public mobile’s broadband projects have on competition in broadband networks?
  • 42.300 million 1.427 million 0.380 million 3.300 million 1.226 million Africa Mobile, fixed line and Internet penetration rates per region
    • Direct government intervention in broadband rollout
      • Policymaker versus player?
    • Large public money at stake
      • Public money versus private money?
    • Extensive investments by incumbents (fixed and mobile)
      • Effective competition?
    • Mobile has already overtaken DSL
      • Alternative infrastructure competition?
    • Balance of broadband investments
      • Physical capital vs human capital
    • Focus of broadband projects
      • Supply of networks vs demand for services
    • Focus on investing in core networks rather than in access networks
      • ADSL vs fibre vs HSPA
    Characteristics and unique features of Broadband rollout in South Africa Question What does this means for designing the most appropriate regulatory approaches for the SA context?
  • Promote effective Competition Promote efficient Investment A
    • Efficient investment issues
    • Recognize the need to favour the emergence of infrastructure-based competition
    • Promote investment in ADSL by committing to forebear from regulating ADSL deployments for 5 years (currently only 10%)
    • Regulator should calculate a reasonable rate of return that adequately reflects the risks (higher risk premium).
    • Forbear regulating “emergent services” until market becomes established
    • Recognize that access at regulated prices can act as a deterrent to investment on access infrastructure (ETNO 2005)
    Implications for Innovative broadband regulatory approaches B C D E
  • Supply side of network development Demand side of network development
    • Demand side issues
    • Recognize that factors other than price and competition, such as broadband penetration, income, PC penetration, awareness, etc. effects broadband take-up
    • Stimulate applications by driving PC penetration
    • Improve literacy rates amongst end users
    • Review a more constructive role for intermediaries such as USAL’s.
    • Review funding mechanisms to include broadband access in rural areas
    Implications for Innovative broadband regulatory approaches B C D E
  • Services based competition Infrastructure based competition
    • Infrastructure based competition issues
    • Recognize that MCO’s now provide broadband services over competing infrastructure
    • Reassessment of access policies, where appropriate deregulate in efforts to expand infrastructure competition
    • Rule of thumb” vs. prospective market analysis when considering forbearance (Kahn 2006).
    Implications for Innovative broadband regulatory approaches B C D E
    • Thank You
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