Broadband Policy for Africa

Transcription

1 Broadband Policy for Africa World Bank Group, InfoDev June 19th, 2008 from 2:00 to 3:30 pm

2 Productivity growth Investment Tax revenues Why ICT? Emerging evidence of positive impact at aggregate level, firm level, small-business $22bn in investment in the Telecommunications Sector in SSA over the last 10 years Typically governments earn approx. 30% of total sector revenue in taxes and levies: $6-10bn per year in SSA 2

3 Why Broadband? The broadband gap between Africa and the rest of of the world is is getting wider and is is accelerating % of population

4 Broadband is moving up the policy agenda We have high expectations of ICT and its transformative effects in all areas of the economy and society. Communications technology has fundamentally changed the way people live, work and interact socially, and we in Rwanda have no intention of being left behind or standing still as the rest of the globe moves forward at an ever increasing pace H.E. Paul Kagame, President of the Republic of Rwanda; The NICI Plan-2010 Plan 4

5 Pre-payment systems $10-30 per month Shared access models (e.g. through internet cafes, educational institutions) Competition between infrastructure providers Widely available (50%+ of the population can access it Private-sector aggressively marketing services in a competitive market Wireless last-mile infrastructure Fiber backbone infrastructure 5 Broadband policy for Africa What are we aiming for?

6 Internet policy in OECD countries has centered on infrastructure competition where possible and access to the incumbent s infrastruture where not These policies are not as relevant in Africa There are no easily replicable policy models for Africa Incumbent s backbone on regulated terms Local-loop unbundling Competition between international providers < 2% fixed line penetration Incumbents have very limited backbones 6 Weak regulators cannot impose access terms

7 International connectivity Regional connectivity Domestic backbone Switching/ Routing Access Retail services Broadband supply-chain Connection to the rest of the world, provided by satellite or fiber-optic cable (usually submarine) Connection from the border to the nearest connection to the rest of the world Carries traffic between fixed points within a network. Provided by satellite, microwave or fiber-optic cable The intelligence in the network, ensuring that communications traffic is sent in the right direction Link between the customer and the network. Usually xdsl or cable networks. In Africa, wireless is used (where it exists) 7 All the soft inputs required (e.g. sales, customer care, billing etc.)

8 International connectivity Regional connectivity Domestic backbone Switching/ Routing Access Retail services Broadband supply-chain Connection to the rest of the world, provided by satellite or fiber-optic cable (usually submarine) Connection from the border to the nearest connection to the rest of the world Carries traffic between fixed points within a network. Provided by satellite, microwave or fiber-optic cable Will be provided by competition provided that regulated access to landing stations is enforced The intelligence in the network, ensuring that communications traffic is sent in the right direction Link between the customer and the network. Usually xdsl or cable networks. In Africa, wireless is used (where it exists) 8 All the soft inputs required (e.g. sales, customer care, billing etc.)

9 International connectivity Regional connectivity Domestic backbone Switching/ Routing Access Retail services Broadband supply-chain Connection to the rest of the world, provided by satellite or fiber-optic cable (usually submarine) Connection from the border to the nearest connection to the rest of the world Carries traffic between fixed points within a network. Provided by satellite, microwave or fiber-optic cable Private operators and ISPs will provide if they can get access to spectrum and rights of way The intelligence in the network, ensuring that communications traffic is sent in the right direction Link between the customer and the network. Usually xdsl or cable networks. In Africa, wireless is used (where it exists) 9 All the soft inputs required (e.g. sales, customer care, billing etc.)

10 International connectivity Regional connectivity Domestic backbone Switching/ Routing Access Retail services Broadband supply-chain Connection to the rest of the world, provided by satellite or fiber-optic cable (usually submarine) Connection from the border to the nearest connection to the rest of the world Carries traffic between fixed points within a network. Provided by satellite, microwave or fiber-optic cable The intelligence in the network, ensuring that communications traffic is sent in the right direction Backbone newtorks could be a major constraint on market development Link between the customer and the network. Usually xdsl or cable networks. In Africa, wireless is used (where it exists) All the soft inputs required (e.g. sales, customer care, billing etc.) 10

11 What are backbone networks? Marginal Cost of Capacity (USD) 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% Capacity Optical Fiber Microwave Impact of network duplication on costs Transmission links between fixed points in a country. Carry high volumes of data. Need to be high capacity and high reliability. In big markets, they are all fiber-optic. In Africa, voice operators use wireless technologies. Operators are beginning to invest in fiber. There are large economies of scale in backbone infrastructure. As traffic increases, average costs fall. 2 operators 3 operators 4 operators Medium term Long term 11

12 There has been a lot of investment into backbone infrastructure Backbone network infrastructure is is dominated by by mobile operators Networks designed to to carry voice traffic. Widespread but but low low capacity. Not Not capable of of supporting high high bandwidth data data services 12

13 Telkom Kenya s fiber fiber network Kenya Data Networks fiber fiber network Competition is focusing on limited areas of the country 35% 30% 25% 20% 15% 10% 5% 0% Kenya Mali Nigeria Uganda % of population living within range of incumbent s backbone network % of population living within range of more than one backbone network Infrastructure competition focuses on urban areas and high-traffic routes 13

14 How does the situation in Africa compare with other regions? Government-owned fixed line line operator India, like like many other countries, has has seen competition emerge in in some areas but but depends on on a state-owned operator for for backbone networks in in other areas. Access to to this this operator s networks is is provided on on regulated terms. Bharti Railtel Powergrid VSNL MTNL GAIL TATA Hutch HFCL Shyam Aircel SPICE 14 VSNL Broadband Idea Reliance BSNL Route km ('000)

15 Diagnosis Constraints on backbone network development through restrictions on wholesale markets. Poor regulatory environment discourages vertical separation and the development of wholesale markets. Small market-size perceptions on this are changing rapidly. Limited international communications infrastructure changing rapidly. In growth phase of market developments, competing operators with vertically integrated businesses are reluctant to sell wholesale or share infrastructure. 15

16 Policy recommendations Governments can do a lot to stimatulate infrastructure competition Remove restrictions on infrastructure competition Provide cheap/free access to public infrastructure Reduce investment risk Aggregate service demand from public institutions Outside of main cities and trunk routes, public support to backbone networks will be needed. Three basic models are available: Competitive subsidies Shared infrastructure Incentive-based private-sector models 16

17 There is some emerging experience of PPPs in telecoms (e.g. France) Limousin - rural region in the center of France. PPP project, 20-year concession to build and operate a backbone network and a WiMAX access network capable of supporting high-speed value-added services and to construct. Project cost = 85 million Euros, shared between public (45%) and private (55%). Fiber network construction completed mid and downstream competition has developed. Customers in the DORSAL area now have access to third party service providers offering a wide range of broadband services such as IP-TV, VoIP and high-speed data services in competition with France Telecom. 17

18 Sudan Eritrea Ethiopia Republic of Djibouti Uganda Somalia Kenya Rwanda Burundi Kenya Tanzania Malawi Zambia Zimbabwe Mozambique Botswana Madagascar South Africa Mozambique Swaziland Lesotho South Africa but few from Africa East African Submarine Cable System (EASSy) Project: Total project cost c. $250m, c.20 countries, multiple operators, multiple DFIs Ownership: Wholly owned by private investors, primarily operators from the region Financing: Equity financing from operators/investors. Debt financing from DFIs. Structure: DFI involvement has open access, complementarity of investment & policy/regulatory reforms Impact: Reduction in cost of international bandwidth, promotion of competition 18

19 Implications for infrastructure investments and projects For Governments Some governments in Africa may be pursuing a sub-optimal approach: Investing public resources in fiber infrastructure in urban areas, using public sector companies/institutions, in competition with private companies Continuing to restrict development of infrastructure competition For Donors Direct support for backbone infrastructure should be targeted at underserved areas, in partnership with private operators There are many ways of supporting infrastructure investment without public investment (e.g. guarantees, providing rights of way etc.) Regulatory reform to liberalize markets and regulate them effectively should be included in backbone projects There is no point building backbone networks unless competition in other market segments is established (e.g. through spectrum allocation) 19

20 Putting backbone policy into context Policy towards backbone networks needs to be put into context of overall broadband policy. Successful broadband development in Africa will require a portfolio of supply-side and demand-side actions. Requires a new look at the role of the public and private sector. 20

21 Affordable prices are key to success Broadband in in Africa is is currently very expensive North America LAC North Africa ECA Sub-Saharan Africa 21 US$ per 100kbit/s (2006)

22 International connectivity is crucial TEAMS EASSy SEACOM Zanzibar Mahajanga Mtunzini 22

23 International connectivity Regional connectivity Domestic backbone Switching/ Routing Access Retail services Investment and competition in downstream segment is also essential Connection to the rest of the world, provided by satellite or fiber-optic cable (usually submarine) Connection from the border to the nearest connection to the rest of the world Carries traffic between fixed points within a network. Provided by satellite, microwave or fiber-optic cable The intelligence in the network, ensuring that communications traffic is sent in the right direction Link between the customer and the network. Usually xdsl or cable networks. In Africa, wireless is used (where it exists) All the soft inputs required (e.g. sales, customer care, billing etc.) Investment into the downstream market segments will depend on: Licensing Access to spectrum. Regulated access to incumbent infrastructure Access to private operators infrastructure 23

24 Major infrastructure policy issues on the horizon How will the roles of the public and private sector in the ICT market change as sector priorities shift towards broadband? Will competition deliver high capacity broadband infrastructure in the way that they have done in developed economies? Is there going to be role for governments beyond that of regulation? How will access to cheap international connectivity be provided? What are going to be the drivers of broadband take-up in developing countries? Which market segments will drive take up? How can cost barriers be overcome? What models for easy payment are available? How can governments be effective in getting services out to underserved areas? How does the track-record of success of USO schemes in Africa compare with other regions? What alternative mechanisms are available? New Regulatory challenges in developing countries How does the performance of regulators across developing countries compare? How is the role of the regulator going to change as policy priorities shift from voice to broadband? What are the implications of convergence for regulators? Access to bottleneck facilities such as submarine fiber-optic infrastructure 24

25 Issues for discussion The impact of broadband and other ICT technologies in developing countries. Private usage Public service delivery The roles of government and the private sector in delivering connectivity at affordable prices. Current issues facing governments and regulators in a rapidly changing ICT landscape. Regional and international connectivity. 25

26 Annexes 26