iic bahrain telecom and media forum 2009

8/9/2019 IIC Bahrain Telecom and Media Forum 2009

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May5, 2009

Building High Speed Connectivity:

Policy Development Considerations


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High speed connectivity is considered to be an importantobjective by many governments

Opening Remarks

High speed connectivity is high on the agenda of many governments

Rapid technological and application innovations are introducing new services that demand greaterbandwidth capacity to perform multimedia and other data-related functions (e.g. IP-based TV); Suchservices are being introduced into the norm of developed societies

Many services are increasingly supporting society and business needs, e.g. online conferencing, onlineeducation, online medical advice - reducing the barriers of distances and therefore enhancingknowledge and information exchanges

Governments believe new ICT-based services are valuable to their societies and economies as a whole;many believe all citizens should have equal access to capacity and speed

Connectivity can be through fixed or wireless networks; fixed broadband has attracted much attentionand prioritization in a number of countries

Regulatory attention has traditionally made a clear distinction between fixed and wireless businesses;

this is beginning to fade with next generation regulations but full convergence or acceptance ofcomplimentary use of technologies still needs to progress

Government engagement has intensified in the recent economic downturn, but any form ofengagement needs to be measured to ensure the ongoing development and sustainability ofcompetition, as well as to minimize economic inefficiencies

New business models involving government engagement in high capacity network deployment areemerging


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Telecom Sector: Development Drivers

Broadband

2G/3G 802.xxAccess

PacketMobile

Network

CircuitMobile

Network

IP NetworkIP/TV

Dynamic market where multiplefacility- and service- based service

providers compete on offering

innovative services and operatingdifferent networks

Service ProviderDevelopment

Technology andService Deployment

Progressive environment thatfacilitates the development and

deployment of advancedtechnologies and services

More ProductiveUsers and Higher

Quality of Life

National WelfareAdvancement

Advanced nation with hightechnology and service adoption

leading to greater sector andeconomic growth

Its a common view that many governments place importanceon telecoms to advance social and economic development


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New technologies like NGN are heralding the convergence ofmultimedia services over a unified platform

NGN and Convergence

NGN

Voice

IP

Different Access Modes

Video

InternetAccess

EntertainmentApplications

InteractiveServices

Guides/Directories

NGNs Enabling Convergence


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and such services are increasing bandwidth demandworldwide

Competition and introduction of new low-cost technologies are driving new services andnetwork use

International voice traffic (circuit switched and IP) is growing and prices are declining

Penetration of broadband is increasing as it becomes more affordable in the region

Driven by the wide adoption of broadband, media applications are becoming more popularthus requiring more bandwidth. Such applications include video streaming, videoconferencing, Internet radio, etc.

Source: : DRG/Telegeography

12.4

8.6

5.7

3.6

2.41.8

2006 20072002 20042003 2005

Worldwide International Bandwidth Demand Growth

(Tbps, 2002 - 2007)

CAGR:

47%

Worldwide International Bandwidth Demand Growth

(Tbps, 2002 - 2007)

CAGR:

47%

Cumulative Bandwidth Demand(Gbps, 2007 - 2011F)

382

559

802

1,107

1,480

2007 2008F 2009F 2010F 2011F

CAGR:31%

Regional Growth:

Growth

Drivers

Bandwidth Demand


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Text

Generic Government Policy Drivers

High speed connectivity government policies can be drivenby a number of reasons

Address Capacity Demand

Capacity demand may notbeadequately met, hinderingbusinesses as well as private

users enjoyment of new services

Likely to arise in under-competitive markets

Ensure Leadership

National positional among peersconsidered important- Supports attracting

investment into the country- Supports exports (image of

country contributes to trust inthe services/goods)

Cost Efficiencies

Some country markets measuredmight find high costinefficiencies in:

- Network duplication- Network replacement

Create Employment

Major economic downturn maybe countered by capital injectioninto significant projects withexternal benefits to localcommunities or the country at

large

NationalIndustrial

Policy


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2009 economic stimulusprogram, $0.81BNwasallocated to governmentinvestment agencyKhazanah to facilitate andimprove broadbandinfrastructure via itssubsidiary

$0.65BN has also beenprovided to governmentregulator MCMC tofacilitate broadbandcommunity centers inrural areas and achieve50% populationpenetration rate by 2010

Singapore authoritieshave granted in 2008 upto $0.525BN to aconsortium to deploy afiber network that willaccess 60% of buildings by2010 and 95% 2012Wholesale prices forbroadband fiber access areset to $10 for residentsand $35 for businessconnections

Recently announced government funding underlines theimportance of ICT and broadband for national economies

Government Funding - Country Case Studies

2009 US economy stimulusprogram, the AmericanRecovery and ReinvestmentAct includes $7.2BN for abroadband rollout thatincreases speed andpenetration ($4.7BN innational high-speedbroadband network,$2.5BN in rural areasbroadband)

EU Commission proposesto target 1BN to extendand upgrade high-speedinternet in ruralcommunities to provideaccess to 30% of thepopulationEU members areadditionally providingeconomic stimulus forbroadband rollouts suchas UK, Portugal, Germany

In

itiatives

Rural Broadband

High-Speed Broadband Economic DownturnMitigation

Des

cription

US EU Malaysia Singapore


8/10Low Risk High Risk

Government roles may vary - directional, engaged ordetached - and each involves risks of economic efficiencies

MarketRisk

Description

Government Role

Politically determined need and notnecessarily based on economicrationale; requirement imposed onselected industry providers

Costs are responsibility of affectedproviders; risk of financial failure

Politically determined need, buteconomic rational is more-likelyespecially if funding comes from thegovernment; private sectorwillingness to engage

Costs shared or taken on by willingproviders

Industry identifies actual needsbased on market demands and costsof investment

High likelihood of efficiencies, butinequality in services - key question:is there always real need for equality(e.g. in data access speed etc.)?

Potential for market failure in someuneconomical areas

Directional Engaged Detached

Government assumes social-economicneeds of the country- Usually politically motivated- Typically requirements imposed are

symmetrical across society Prescribe coverage

- USO - universal service obligation -initiatives require rollout of network

types (e.g. fiber, 3G) in specific areas;areas that are at risk of not beingaddressed (low density, rural areas, lowincome areas)

- Specific USO obligation on a dominantoperator

- Obligation in mobile ( or possibly otherwireless) licenses

Prescribe criteria (e.g. speed) Government has no financial onus

Government assumes social - economicneeds of the country, but market failuremay have been identified/proven

Develop and initiate government program- Public Private Partnership (PPP): Seed

money; Build Operate Transfer (BOT)

Establish new infrastructure company

Financial onus may be shared between

government and industry

Leave to providers in the market to identifyneeds, deploy and develop infrastructureand services accordingly- Services may vary according to market

segmentation, including geographicalneeds (i.e. asymmetrical requirementsapplied)

Financial onus on industry, but decisions

based on economic costs and investmentrationale, not policy


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Any government involvement in the sector, however,should be less prescriptive and allow operating flexibility

TechnologyNeutrality

Complimentary

Operators should choose the technology that best suits their businessplan

- Regulators should not prejudge and prescribe technologies, howevershould require interoperability in order to guard against anti-

competitive behavior through technology-based barriers to entry- Spectrum use should, where possible, be technology neutral

Operating Flexibility: Technology Use

Regulators should consider adopting more network neutrality.- Fixed and wireless convergence should be acceptable, allowing

fixed operators the flexibility in deploying cables and wireless

infrastructure (e.g. fiber optics and WiMAX) to deliver broadbandservices

- It may be impractical and unrealistic to expect full nationaldeployment / coverage of cables

- Emphasis should be on service access rather than the means ofservice delivery


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While continuing to advance market competition, capitalintense initiatives might need support - handle with care

Ensure regulatory practices enable providers flexibility to utilize the choice of availabletechnologies and means to deliver connectivity

Balance the political benefits of universal equality with the practical need and subsequentcosts of access to connectivity speed

Engagement by authorities in the sector should be as an enabler and not as a participant (e.g.new teleco) - i.e. offering financial support and PPP over entering as a state operator (it failedbefore)

Ensure providers have the choice and fair opportunity to participate in governmentsponsored schemes/initiatives and funding

Encourage winners over weak providers, without being bias in decision-making or otherwise

demonstrating favoritism Ensure market liberalization continues and anti-competitive practices are addressed

Concluding Remarks

iic bahrain telecom and media forum 2009

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