Broadband and universal access: challenges for regulators - Martha García-Murillo
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Presentación de Martha García-Murillo en el taller "El rol del Estado en la promoción de la banda ancha" para DIRSI. Lima, 19 de mayo de 2011. Martha García-Murillo's presentation at the workshop "The role of the state in the promotion of the broadband" for DIRSI. Lima, May 19th 2011.
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Broadband and universal access: challenges for regulators - Martha García-Murillo
- 1. Broadband and Universal Access Challenges for regulators Martha Garcia-Murillo Syracuse University School of Information Studies [email_address] DIRSI Workshop (Lima, Peru) 19 de Mayo de 2011
- 7. Why?
- 8. Bangladesh/Nigeria: Private Sector http://www.youtube.com/watch?v=crHS9YEx4lg
- 12. What services?
- 15. 2. Access for whom? Source: http://www.idrc.ca/IMAGES/books/809/figure1.gif
- 16. Urban and Rural ICT conditions Rural Urban One or no providers Multiple providers One platforms Multiple platforms Sparse population Abundant population Rural poor Urban poor Low teledensity High teledensity Rural content needs Urban content needs High cost connectivity Lower cost connectivity Low digital literacy Higher digital literacy Limited power grid Near universal power grid
- 22. Technologies used Source: http://www.network-research.org/projects.html
- 24. WiFi - Cellular 3G Cellular WiFi
- 28. Impact of regulation on supply
- 31. VoIP and USP
- 37. Community based initiatives: Brazil
- 47. Preguntas? Empecemos el dialogo Syracuse University School of Information Studies Hinds Hall 245 Syarcuse NY 13244 Teléfonos: (315) 443-1829 [email_address] www.ischool.syr.edu
Editor's Notes
- The objective of this presentation is not to provide specific recommendations for the implementation of a universal service program. This is because the political, economic and technological circumstances of each country will greatly affect the mechanisms that could be used to best accomplish any connectivity related goals. The purpose of this presentation is thus three fold: To highlight the different elements that need to be considered in any universal service program To highlight some of the challenges that countries have encounter in the implementation of their universal service programs To highlight the issues that have contributed to success
- The idea of a mobile phone for rural areas of Bangladesh was originally conceived by Iqbal Quadir (person in the video). He was inspired by the Grameen Bank microcredit model and envisioned a business model where a cell phone can serve as a source of income. After leaving his job as an investment banker in the United States, Quadir travelled back to Bangladesh and worked for three years gaining support from various organizations that would lead to a consortium with Telenor and GrameenBank to establish GrameenPhone. Quadir remained a shareholder of GrameenPhone until 2004.
- It is not surprising that governments around the world recognized that connectivity is becoming increasingly more important. Even in poor nations the need to a basic phone and now to the internet is opening economic, political, and educational opportunities. Connectivity nonetheless is closely related to development. It is thus not surprising that LCDs have lower teledensity and Internet access than rich nations. The governments of these poorer countires will thus need greater efforts, political commitment, and creativity to overcome their economic limitations to offer these services to their populations.
- Given the transition towards a converging world and the new possibilities that technology can bring, policy makers need to ask these questions when trying to formulate a universal service. program. According a recently published report* of universal service programs in Latin America “…new generation of universal access programs will be more complex and should focus on infrastructure and services that use converged Internet-protocol (IP) platforms” This presentation will highlight some of the innovations that have been proposed for each of the questions posed in this slide * Stern, P. A., Townsend, D. N., & Stephens, R. (2006). New Models for Universal Access to Telecommunications Services in Latin America . Montreal/Boston/Madrid: Regulatel/World Bank (PPIAF and GPOBA)/ECLAC.
- This simple diagram shows how, over time, the services included in a universal service program are progressing from basic fixed telephony to broadband connectivity and from cross subsidies that did not have specific developmental goals to more focused and economically relevant objectives. Two countries that exemplify this movement beyond basic telephony are England where the “Functional” Internet Access (FIA) dial up was implemented and in Australia where the government established Digital Data Service obligations.
- Users can be divided broadly into four groups: 1. Commercially feasible, which are those users currently supplied with service; 2. Commercially feasible potential users, who for various reasons are not yet supplied with service; 3. A number of currently subsidized customers, some in urban areas on very low incomes with low usage levels and others in isolated rural areas that are very costly to provide with service (although these rural users perhaps have relatively high incomes); and 4. Commercially non-feasible potential users currently lacking service.
- There has been much debate on the relative merits of state monopoly and private-sector competition for the provision of universal service. Each can muster extensive evidence to support its cause. In both cases the level of success is closely related to the commitment from the government to prioritize these initiatives. When this is done the legal, regulatory framework is defined to facilitate investment and to allocate resources to the program. Similarly any institutional constraints related to procedures is also streamline and made more transparent. A general period of economic crisis exerts extreme pressure on government expenditure, especially in developing countries struggling with large external debts, so that direct state-capital injections become difficult. This is exacerbated by the high proportion of hard currency required for network development. In a competitive environment telecom operators do not extend services to customers or areas where revenues generated (at prevailing averaged tariffs) are lower than the costs of providing service. Such uneconomic customers and areas are mainly found in rural, peripheral, and less favored regions. The experience of liberalized countries in terms of new investment in enhanced or new services have uneven geographic distribution.
- For the most part, regulators should not specify any particular technology. Service providers should be given the freedom to choose any technology they wish to deploy so long as it meets quality of service, interference and type approval requirements. The government can nonetheless provide some incentives for innovation through experimental grants for example.
- There is a great variety of technologies that achieve connectivity. Among them are fixed wires, digital subscriber line (DSL) over a copper local loop and coaxial cables, power line communications (PLC), second and third generation cellular mobile (radio-in-the-loop) systems, broadband wireless access (BWA) systems, WiFi hotspots, VSAT links, VoIP etc. The choice of technology will, to a great extent, be determined by geographic, economic and demographic characteristics. Something that is clear from this presentation is that more often than not a universal service program will involve the combination of multiple technologies including hybrid versions
- Network extension requirements were common with the privatization process. Where the newly privatized operator was given a number or years under monopoly but this came with expansion requirements Twinning For operators seeking lucrative international-service and mobile-service licenses they are also asked to take a license in the poorer, more remote rural areas Issuing competing licenses is done with the objective of fostering innovation through competition Issuing licenses for additional non-telecommunications services. This is more a possibility now with convergence given that companies from other industries such as power generators or cable companies can enter the market Sharing revenue has two modalities BOT scheme and BTO scheme. A private operator (perhaps a foreign or local consortium) builds the network with its own funds, passing ownership to the government and getting a return on its investment through sharing revenue with the government for a set period that is often linked to an exclusive license. Although one advantage of such schemes is that control eventually reverts to government, effective control for a significant period must be with the investor because the main attraction is a steady stream of income Lowest-subsidy license auction This is a common instrument around the world where a project is given to the bidder that asks for the lowest subsidy.
- Peru, was perhaps the most successful in the implementation of reverse bid auctions for universal service projects. Prior to liberalization with the privatization of the state operator they granted a monopoly. Telefónica, as a condition of its concession, had to provide at least one public telephone in 1 500 of the 2 900 population centres of between 500 and 3 000 inhabitants (and in all towns with more than 3 000 inhabitants). With competition Peru introduced its Telecommunications Fund (FITEL) in 1994 and it was financed with a 1% tax of gross annual billings of all telecommunications providers (including CATV). The projects were carefully designed after they have made market studies of their rural communities. Once they analyze this data the government established priorities for places considered preferential social interest. This projects have significantly increased the teledensity of rural Peru.
- In 1993 the South Korean government developed an ambitious plan to bring the Information Society to all users by 2015. This was a remarkable objective given that they just recently had one of the lowest teledensities in the region. The liberalization process was gradual and it started in the 1980s. The rural areas were given priority. In 1993 they launched the KII that will investment of 60 billion USD in constructing the "New Korea Net-Government" (G-NET) and the "New Korea Net-Public" (P-NET). Paid for by the government, G-NET will by 2010 link all public institutions, research institutes, and universities with the most advanced services at affordable costs. In the 1990s they allowed competition for long distance services and later on for other services. In addition schools were required to take the Internet into their curriculum and housewives were trained to help their kids with their school work.
- There are two major sources of funding: 1) internal and 2) external Internal sources of funding can come from the telecommunications and information sector (notice that the information sector is now being included given that cable TV companies in many countries are now offering these services). The External sources can come from entities outside of the ICT sector. These can be funds from the privatization of the telecommunications operator, loans from international organizations or from the national treasury. External sources have their own inherent risks given that they come with a series of conditions.
- Regulatory issues to take into consideration Spectrum use policies related to license free spectrum especially for rural applications to facilitate the deployment of technologies that use these frequencies for universal access projects Burdensome restrictions or prohibitions on technologies like VoIP-based networks can limit the implementation of cost-effective means to expand affordable access especially for rural and underserved areas. Asymmetrical rules and regulations can create negative incentives of certain industries to invest in networks more so now when fixed lines are becoming more attractive due to their broadband capabilities. Complex licensing regime can discourage the establishment of smaller, independent telephone operations in rural communities and underserved areas, especially where incumbent operators may have chosen not to build networks and provide services Lack of transparency and uncertain requirements for universal service projects can undermine the credibility of the regulatory entity
- Take advantage of grassroots efforts from partnerships with NGOs, the private sector, and governments. This can be done through close relationships with community organizations and NGOs to be rolled out quickly and without bureaucratic hindrances. Similarly governments could support small community based projects by giving them independent technical and management advice and legal support for during project design, construction and especially during contract negotiations with service suppliers. Similarly local entrepreneurs can be encouraged to adopt innovative business, administrative, marketing, service delivery, and procurement practices for their universal access projects
- Governments in small markets often find it difficult to attract investment. This is the case for example of the Central American region where each country has small low income populations. In an effort to make their market more attractive they have engaged in a series of efforts that try to harmonized their policies and regulations. The process has not been easy given that there is a strong sense of sovereignty in Latin America but slowly they have implemented regional institutions and developed regional initiatives such as the regional electric network which will also lay the Information Mesoamerican Highway. International cooperative initiatives can facilitate private satellite bandwidth aggregation and integration initiatives.