howard williams, securing the infrastructure - international reflections
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Securing the infrastructure-international reflections
Professor Howard Williams
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Distributional Issues• We need ask the fundamental question about the specific values
and returns we expect from BB infrastructures?• Trade perspectives and call patterns• This is not a straight forward question !• There are profound distributional issues – Sprint and Apple in the
USA; $15bn transfer• Colombia has reached a key point; over 4 million connections,
high growth rates in the recent past.• Who are those without access?• Who is extracting value from those who have access?• Theoretical issues – greatest distortion flow from
distorted/subsidised input prices (Diamond/Mireless)
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Main themes
• Distributional issues• BB eco system• Infrastructure
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Overselling BB – Charles Kenny Year Predicted Values at Given GDP/Capita Average Values Average Values
Income level 1,000 5,000 10,000 30,000 Poor Rich
Secure Internet servers (per 1 million people) 2001 neg 21 38 64 5 662008 neg 109 205 357 15 331
Fixed broadband subscribers (per 100 people) 2001 neg 0.6 1 1.7 0 1.82008 neg 5.7 10.1 16.9 1.3 16
Internet users (per 100 people) 2001 neg 9 15 24 2 252008 neg 24 36 54 12 50
Mobile cellular subscriptions (per 100 people) 2001 neg 21 32 51 6 53 2008 24 71 91 124 52 115
Fixed line subscriptions (per 100 people) 2001 neg 19 28 42 8.6 41.82008 neg 17 24 37 8.3 35.1
% of Firms Using Email 2009 49 69 77 91 59 81% of Firms using Own Website 2009 16 39 49 66 27 55Literacy rate, adult total (% ) 2008 66 83 91 103 75 95School enrollment, tertiary (% gross) 2008 6 32 43 61 20 60Value Lost Due to Power Outages (% of Sales) 2009 6 4 3 1 6 2ICT Exenditure ($/capita) 2008 59 290 576 1714 206 1429GDP Density ('000/km) 2008 neg 8518 17690 32229 417 26926Rural population (% of total population) 2008 68 48 39 25 57 28
(Average GDP/Capita) 2001 3,526 25,2782008 3,553 24,926
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Economies of Scale1
Net
wor
k Ef
fect
s/C
usto
mer
Sw
itchi
ng C
osts
Medium HighLow
High
Medium
Low
Operating Systems
WebSearch
PCs
InternetAccess
DigitalMusic/Video
Sales
AdNetworks
e-Commerce3
Social Networking
VoIP
Games Consoles
Gaming
Dating
SmartPhones
ContentRights
Web Hosting/Design
Portals
Gambling
Online Billing/
Payments
AdAgencies
High Med Low
Relative ROCE2
<10%30%+ 10-20%
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20-40%
40-60%
60-80%
80%+
Market Concentration1
<10%
10-20%
MarketCAGR 2008-2013
Average ROCE 40%
30%
0%
AdNetworks
(11)
PCs(95)
Internet Access(164)
IPTV(5)
SmartPhones
(27)
GamesConsoles
(13)
Software(2)
Operating Systems
(6)
WebHosting
(10)
ConsumerPublishing
(7)
GlobalPortals
(4)
75%
VoD(1)
DigitalMusic Sales
(4)
e-Retail(72)
Social Networks
(3)
Gambling(6)Ad
Agencies(16)
Billing/Payments
(21)
WebSearch
(30)
Media Rights(15)
Adult(11)
45%
VoIP(1)
DigitalVideo sales
(1)
ContentMgt(1)
e-Travel(49)
VideoGaming
(9)
Directories(5)
Dating(2)
e-Brokerage(19)
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Two sided markets: Low spend customers benefit most from receiving calls
7Making Broadband Accessible for All10 April 2023
Rece
ivin
g ca
llsM
akin
g ca
lls
11% 17% 10%17% 13% 7% 5%9% 4% 7%Percentage of the total mobile users in each ARPU band
Contribution to total ARPU, by value> Although high spending
customers receive a lot of calls, the revenue from this is greatly exceeded by what they pay for making calls.
> The majority of revenue for the lowest spending group comes from receiving calls.
> Low spending users are able to maintain a pre-pay account without an ongoing subscription.
> The lowest spending group represent 11% of users but only 1% of revenue.
Source: Vodafone customers in Delhi
Through CPP, revenue from received calls allows low spending users to be connected, even though the scale of subsidy is small.
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8Making Broadband Accessible for All
10 April 2023
Bringing broadband to the majority of citizens
> Optical fibre offers broadband connections up to 100Mb/s
> Fibre is very costly to install; as access network it is only commercially viable in densely-populated, affluent areas
> 70% of the cost of a next generation fibre network is in the last 100m of the access network
Fibre offers the fastest speeds at the greatest cost (suitable for high demand users); wireless is the cheapest and fastest way to reach universal broadband coverage.
> Wireless broadband can offer speeds from <1Mb/s (3G and its developments HSPA+) to over 40Mb/s (LTE)
> Bringing wireless broadband to rural areas will require significant investment but remains the cheapest access technology
> Advanced services, such as e-health, can be reliably provided using wireless broadband
1
10
100Sp
eed
(Mbi
t/s)
Fibre
Cable
ADSL
3G
HSPA+
LTE Streamed HD video
Advanced e-health
YouTubeInternet, Email
Fibre Wireless
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910 April 2023
Relative viability of fibre and wireless broadband in IndiaOnly the dense urban areas have sufficient aggregate monthly income per km2 to support the cost of a fibre access network, but almost all districts support wireless.
Network cost as a % of district income Maharashtra illustrates the urban / rural split
Source: State Economic Census for Maharashtra, WIK study of fibre network cost, Vodafone analysis
> The equivalent monthly cost of fibre per km2 can be determined by the revenue per customer that WIK calculated as being necessary to support a viable network, for each geotype.
> Placing each district into its geotype, we can compare the aggregate monthly income per district to the calculated monthly income (Net District Domestic Product/NDDP).
> ITU data shows the demand for telecom services is commonly 2-5% of state GDP.
> The cost of fibre would represent 1% of NDDP in Mumbai and 4% in Thane. These are ‘dense urban’ and ‘less suburban geotypes’. In all other districts, the equivalent cost of fibre would be a much greater % of district income, rising to 61% of NDDP in Washim and 177% in Gadchiroli.
> The equivalent cost of wireless broadband is 3% or less of district income.
Rura
l geo
type
Den
se ru
ral g
eoty
pe
Only in Mumbai and Thane districts does the cost of fibre approach wireless, as a % of monthly NDDP
Wireless
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1010 April 2023
Relative viability of fibre and wireless broadband in Jo’burgRepeating exercise for suburbs of Johannesburg shows that fibre roll-out likely to be challenging for the majority of the population
Fibre network cost as a % of incomeJoburg highlights economics of bbd investment
> Repeat exercise for districts of Jo’burg.> The richest parts of Jo’burg are in high cost
deployment areas; whereas low income areas are in dense areas which are lower cost to deploy.
> The cost of fibre would represent over 10% of income Diepkloof. Whereas, high income levels in Parkview means it is profitable to deploy fibre.
> The equivalent cost of wireless broadband for Diepkloof is 4% or less of income.
Wireless is less than half the cost of fibre for low income areas of Johannesburg
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Bangalore
D.Kannada
Dharwad
Udupi
Davanagere
Ramanagara
Haveri
Bagalkot
Shimoga
Hassan
Gadag
Raichur
Chikmagalur
Chamarajanagar
U.Kannada
0% 20% 40% 60% 80%
11All10 April 2023
Relative viability of fibre and wireless broadband in India
Charting the equivalent monthly cost of fibre and wireless networks as a % of monthly district income demonstrates that fibre only affordable in dense urban districts, but that wireless is less than 4% of monthly NDDP in all except the most rural districts.Maharashtra Karnataka Rajasthan
Banswara
Jaipur
Kota
Ajmer
Rajsamand
Sikar
Swaimadhopur
Udaipur
Sirohi
Bundi
Jhalawar
Pali
Jodhpur
Nagaur
0% 20% 40% 60% 80%Mumbai
Thane
Pune
Kolhapur
Raigad
Sangli
Bhandara
Latur
Solapur
Ratnagiri
Parbhani
Chandrapur
Sindhudurg
Dhule
Jalna
Yavatmal
Osmanabad
0% 20% 40% 60% 80%
Dense urbanLess suburban
Dense rural
Rural
Gadchiroli wireless 8% / fibre 177% Churu wireless 3% / fibre 131%Bikaner wireless 3% / fibre 127%Barmer wireless 3% / fibre 170%
Jaisalmer wireless 12% / fibre 573%
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Additional highlights from the presentation include:- The average internet user in Colombia spent 20.4 hours online during September, consuming 1,606 pages of content and averaging 42 online visits during the month.- 86% of Colombians visited a social networking destination in September, with Facebook leading the category. Visitors averaged 4.6 hours on the site during the month.- Nearly 7 out of 10 Colombians visited a photo sharing site in September led by Facebook.com Photos.- An average searcher in Colombia conducted 184 searches in September, resulting in a total of 2 billion queries conducted in Colombia during the month.(comScore, December 2010)