wireless & development in the asia pacific: institutions matter rohan samarajiva, with...
TRANSCRIPT
Wireless & development in the Asia Pacific: Institutions
matterRohan Samarajiva, with contributions from LIRNEasia
team
High-level workshop, Annenberg Research Network on International Communication, Oct 7-8, 2005
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Agenda Wireless and development Wireless in the Asia Pacific
Backbone Mobile & “fixed” Mobile data WiFi
The strange case of Indonesia Regulatory environment
Spectrum management incl. refarming Importance of investment
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How do South Asians on less than USD 100/mo. communicate?
Fixed(49%)
Mobile(19%)
‘Public’ access (66%)
21%2%
11%
3%23%
3%
37%
Base: 3199
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Survey (3200 sample, 6 languages, 11 locations)Surveys in India (2099) & Sri Lanka (1100)
Not representative of India and Sri Lanka as wholes
‘Users’those who have used a phone in the last three months
‘Financially constrained’ users:Monthly household income < USD100
Socio-Economic Classification (SEC) groups B,C,D & E
Mix of urban (37.5%) and rural (62.5%) respondents
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Tech
Development: Not by communication (wireless) alone
Development
Enabling/complementary conditions
Communication CoordinationKnowledge
Other communication
inputs
ICTs/Tech enabling
sync interaction/Info seeking/publ’n
Capital
WirelessOtherinputs
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Asia Pacific: Wireless in the network Wireless in the backbone (digital microwave &
satellites) Mobile telephony is most visible manifestation
of wireless in the access network A-P is now the largest mobile market in the
world, overtaking N. America in 2003 Growth rate of 31% (v. 13% in N. America)
But mobile/100 was only 16 compared to 52 in Europe & 35 in the Americas Signifying potential for more growth
Mobile > fixed in many A-P countries (Afghanistan to Taiwan) More than ITU data shows, e.g., India
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0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Mobile/100 CAGR
Mobile/100 & CAGRs high-mobile Asia Pacific (end 2003)
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India, fixed & mobile growth, 1991-2005
0
10
20
30
40
50
60
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Fixed Mobile
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Mobile/100 & mobile as % of total in high-mobile Asia Pacific, end 2003
0.00
20.00
40.00
60.00
80.00
100.00
120.00
Mobile/100 % of total subscribers
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Wireless in the access network Much of current “fixed” growth driven by
wireless CDMA 800/1900 for voice CDMA 450 & other standards for data overlay
networks Claim that 77% of world’s mobile data users
are in AP (may be more with recent 3G launches in Taiwan, etc.)
Claim of 21,000+ WiFi hotspots in AP in 2003 Strange case of WiFi in Indonesia
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Typical ISP Network
Infrastructure Network
Access Network
Twisted copper pair
ADSL
Dialup
Fiber optic
Link to higher tier ISP
ISP A
ISP B
ISP C
Coax cable
Cable modem
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Network Reality-Indonesia
Infrastructure NetworkAccess Network
Neighbourhood Network $35/pm
Corporate Customer $200/pm
UTP Cable
ISP A
WiFi 2.4
IIX
Ethernet Ring
Microwave
ISP B
ISP C
Ethernet
School B
School C
Wifi 5.8WiFi
5.8
HouseSchool A$4000/pm (Internet link+ international bandwidth)
ADSL
UTP Cable
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Strange case of Indonesian WiFi
WiFi deployment Not inside home; not available for free Blurring of access and infrastructure network; used
as backbone; up to the curb WiFi, last mile aerial cable
Many tiered retailing of Internet service…. WHY? To recover high input costs
In addition to “last mile,” need to recover domestic & int’l leased line and interconnection costs
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What gave rise to strange network configuration in Indonesia?
Regulatory environment Non-independent regulator
Two regulatory bodies: DG POSTEL & BRTI DG POSTEL is unit of Ministry of Communication & IT BRTI under-staffed, powers under transition, chairman is DG
of DG POSTEL Exclusivity clauses extending historical monopolies
Indonesian govt owns 51% share in PT Telkom & 15% in Indosat plus “golden share”
Licenses prevent ISPs from deploying infrastructure No local loop unbundling
Exclusivity until 2015 No regulation of leased lines
Few suppliers, refusal to deal, high prices, quality
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Market environment
Lack of competition in infrastructure sector
Resulting in high leased line prices
High international backbone prices
Proliferation of unlicensed “reseller-ISPs”
Telecom services
Telecom operations
Fixed wireline local
Exclusive right 1996-2010 PT Telkom
Fixed domestic LD
Exclusive right 1996-2005 PT Telkom
Fixed wireless local
Limited competition (Satelindo)
Fixed international
Duopoly 1995-2004 (Indosat, Satelindo)
Mobile Competitive (Satelindo, Excelkomindo, Telkomsel etc.)
Internet service provision
Competitive Currently 124 ISPs official, 54 unlicensed
No competition
Limited competition
Competitive
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Annual leased line prices: 2Mbps link
Data compiled from Lokanathan, lirneasia.net, EU 10th report, interview with Indonesian ISP & Network Service Provider
Ratios India EU1:47.9 1:3.8
RatiosIndia EU1:5.9 1:4.9
2Mbps link 2km 200km
Indonesia US$ 18,000 US$ 45,000
India US$ 376 US$ 7,603
EUBenchmark (Denmark)
US$ 4,802 US$ 9,219
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Institutional aspects of wireless Current quasi-property rights regime
Bundle of rights, less right to alienate Except by selling the licensee firm
Use highly constrained (e.g., specific standards, power, polarity)
Therefore significant role for effective spectrum management by government
Government responsible for refarming of frequencies Quasi-property rights require consent
of/compensation for displaced users
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Hypothetical refarming processStep Main policy actions Parallel policy actions
1 Government sets overall policy and authorizes negotiations with seven operators (O1 – O7)
2 System and frequency license modifications negotiated (Modifications include removal of technology restrictions from O1, O2, etc.; and may include extending license term of O4 (which will gain no benefits but has to yield frequencies
3 & 3A O4 and O5 release GSM 900 frequencies; O1, O2, and O3 will also be requested to agree to phased release of frequencies to enable overall ordering of the bands
1800 MHz Tender Board releases funds for band clearing (some 1800 MHz frequencies have been auctioned to GSM operators)
4 & 4A O6 assigned GSM 900 frequencies & releases CDMA 800 frequencies
1800 GSM and 1900 CDMA bands fully cleared
5 & 5A O1, O2, and O3 assigned CDMA 800 frequencies
Auction frequency slots that may be used for CDMA 1900 or GSM 1800 to current operators but possibly also to newcomers
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Difficulties with refarming for unlicensing In many countries, 2.4 GHz and 5 GHz
bands have occupants who require coordination/relocation In India, EESS (active) and SRS (active) services
in 5250–5570 MHz band In Sri Lanka, high-powered MMDS broadcasts on
either side of 2.4MHz band which is also used by data licensees for 10+ years
How to find the money to pay off users who are to be moved? Beneficiaries of unlicensing cannot be
asked to pay
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Spectrum management is not enough . . . For WiFi to be effective in the access network,
backbone must exist & be offered on non-discriminatory basis at reasonable prices
Data or voice communication is a chain As fast as the speed of the weakest link; if link is
broken, no communication In these markets, sustainable prices determined
by input costs ISPs require access to backbone
In some countries only access regime needs improving
In others, need to create incentives for building as well
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Spectrum management is not enough . . .
In addition Market entry Interconnection and access Effective regulation of competition
Investment is what connects people
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Investment is necessary condition for improved access
Figure 3: Sri Lanka telecom growth 1991-2004
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Mobile
Fixed entrants
Incumbent
Wireless
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Investment is necessary condition for improved access
WirelessAccess +Backbone
Fiber + fixed access
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Wireless investmentWireless-based investment in Sri Lanka, 1993-2002
0
20
40
60
80
100
120
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
US
D m
illio
ns
Mobile Entrants Fixed Entrants
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Without effective policy/regulation, inadequate/skewed investment . . .
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Where the money has gone . . . Private investment in telecom 1990-2003
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What is needed . . . Market entry permitted
Case of Bhutan Environment for investment created
Regulatory risk reduced Participation by multiple suppliers
enabled Level playing field
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In sum . . . WiFi vision of developed countries is
possible only because of fully developed backbone and access network Enabled by environment conducive to
investment, including effective regulation Without institutional conditions, little/no
WiFi outside developed enclaves
Technology matters; but not without appropriate institutional conditions