Workshop on Universal Access Service UAS Broadband Development

1. Workshop on  Universal Access & Service (UAS) & Broadband Development World Bank 23 November 2009, Washington D.C.

2. Introductions Intelecon � Universal Access & Service (UAS), Regulation, ICT applications & Market strategy UAS Policies & funding strategies & advisory services for Uganda, Botswana, Malawi, Mozambique, Burkina Faso, Peru, India, Nepal, Mongolia, Russia, Saudi Arabia Private sector advice, incl. Contribution of Mobile to Universal Access (GSMA), various strategic market & due diligence studies ICT Applications � Mostly recent: m-banking for Pakistan, Mobile Money User Study for IFC www.inteleconresearch.com Consultants present Andy Dymond � Managing Director Steve Esselaar � Principal Telecommunications Consultant Kyle Whiting � Senior ICT Consultant

3. ICT Regulation Toolkit: Module 4 � Universal Access & Service Includes: 50 page Executive Summary Practice Notes with case examples Online Reference documents

4. Outline of Workshop

5. Definitions Universal access (UA): ubiquitous access to service e.g., at a public place, also called public, community or shared access Universal service (US): every individual or household can have service, using it privately at home or increasingly, carried with the individual through wireless devices such as mobile phones or PDAs Universal access and service (UAS): the generic term when referring to both UA & US or the concept Developing countries targeting both UA and US to voice US to voice and UA to Internet in same program US for voice has been typical target in developed nations UA for voice and then also Internet the target for developing countries Now many developing countries can go for US for telephony, though Internet and broadband is mostly still UA targets Hence the generic term UASUS for voice has been typical target in developed nations UA for voice and then also Internet the target for developing countries Now many developing countries can go for US for telephony, though Internet and broadband is mostly still UA targets Hence the generic term UAS

6. UAS Concepts

7. Objectives & targets

8. Importance of QoS � Saudi example In mid/late 2008, two leading operators reached 39.5% of geographical area with low outdoors signal 31.5% with medium quality outdoor signal Population coverage 98% with med. Quality outdoor signal 96% with indoor signal Around 2,000 of 15,000 villages without service Demand survey showed 22% of villagers �with service� have poor QoS Therefore target indoor service

9. UAS targets - examples Targets should be: Focused on needs that have clear indicators & high priority, so that efforts are not spread too thinly among too many targets; Designed to anticipate needs 3-5 years in the future; Ambitious but realistic in the light of a country�s actual situation; Reviewed regularly (e.g., every two or three years); Objectively measurable, so that progress can be assessed. Targets should be: Focused on needs that have clear indicators & high priority, so that efforts are not spread too thinly among too many targets; Designed to anticipate needs 3-5 years in the future; Ambitious but realistic in the light of a country�s actual situation; Reviewed regularly (e.g., every two or three years); Objectively measurable, so that progress can be assessed.

10. Gap model � theoretical framework for UAS Over last few years operators have bridged the market efficiency gap for voice The smart subsidy zone has narrowed The true access gap is typically last 2-5% population

11. What are the key UAS trends? Much more ambitious goals � towards e-inclusion Target dates compressing Internet more closely aligned with voice More experience with various approaches More complex interactions with other policies Greater interest in reaching the poor by commercial companies We will address/illustrate these throughout presentation

12. Much more ambitious goals Driven by mobile success Countries are achieving UA for voice and move to US goals for voice as mobile phone penetration rises Migration to 3G increases Internet expectation Household penetration more important for Internet Make the point about household penetration: e.g., 25% sub penetration could mean theoretically 100% HH penetration if 4 persons per HH � however, this does not account for business phones and 2nd and 3rd phones per family � nevertheless, a country with 60% sub penetration might be close to US, though there are likely small pockets of unserved areas and very poor families that are not served Population penetration often includes up to 40% duplicate SIMs and inactive accounts However, household penetration may be very high, E.g., Saudi Arabia is around 98%,  Philippines estimated at 70% Make the point about household penetration: e.g., 25% sub penetration could mean theoretically 100% HH penetration if 4 persons per HH � however, this does not account for business phones and 2nd and 3rd phones per family � nevertheless, a country with 60% sub penetration might be close to US, though there are likely small pockets of unserved areas and very poor families that are not served Population penetration often includes up to 40% duplicate SIMs and inactive accounts However, household penetration may be very high, E.g., Saudi Arabia is around 98%, Philippines estimated at 70%

13. Much more ambitious goals (2) However, in parts of sub-Saharan Africa, voice access is still an issue for a considerable part of population Can mostly be addressed with improved market efficiency � however, typically around 5% are in �real� gap � i.e., commercially not viable � some even need operating subsidy There are some extreme cases on this chart e.g. Namibia, Madagascar and Congo DRC which have between 5-20% true access gap Can mostly be addressed with improved market efficiency � however, typically around 5% are in �real� gap � i.e., commercially not viable � some even need operating subsidy There are some extreme cases on this chart e.g. Namibia, Madagascar and Congo DRC which have between 5-20% true access gap

14. Much more ambitious goals (3) Internet UAS  objectives require  broadband, but still a long way to go Focus shifts away from simple access to Bandwidth/speed ICT capacity/ ability Applications/services UAS goals will continue to rise with technology & service development � towards e-inclusion

15. UAS integration with other programmes Education Vanguard user to be targeted under UAS First priority & demand � the emerging generation Education Ministry responsible for the computer strategy e-Government / e-governance ICT improves administration, services, health, etc. Accountability Electricity Raises the potential for ICT demand Reduces the complexity & cost of infrastructure build-out Microfinance and m-banking Allied initiatives with pro-rural and pro-poor direction m-banking regulated under Central bank but reliant on increasing ICT reach & telecom operator innovation

16. Trend to �e-Inclusion�- ICT & all sectors EU-centric term but is the trend globally. Includes both ICT and the use of ICT to achieve wider inclusion objectives. The Riga Declaration (June 2006) stresses actions in the following areas: Improve digital literacy & competencies; Reduce geographical digital divides; Use ICT to promote cultural diversity; Promote inclusive e-government; Use ICT to address the needs of older workers & elderly Enhance e-accessibility & ICT usability for people of all abilities, gender & social standing.

17. UAS and broadband policies are merging

18. Traditional incumbent obligations (USOs) Obligation & compensation (Historic & superseded) Regulatory reform Several prior measures have fundamental impact on the achievement of UAS Competitive subsidy distribution (UASFs) Licensing and UAS Non-Government & local community contributions Open access, shared facilities & ICT backbones Main Approaches to UAS Traditional approaches are here listed only� not sure if they need to be explained - how it was in the past, how it is now Main point is that traditional approaches Were to put USO on a monopoly player, or , in a Liberalizsed market, on the dominant player In case of the latter, it is very complicated to come up with USO costs to compensate the USO operator - Traditional approaches are here listed only� not sure if they need to be explained - how it was in the past, how it is now Main point is that traditional approaches Were to put USO on a monopoly player, or , in a Liberalizsed market, on the dominant player In case of the latter, it is very complicated to come up with USO costs to compensate the USO operator -

19. Reform first Regulatory reform, especially competition, accelerates achievement of UAS � regulatory reform is key first step in UAS policy Key elements include: Modern regulatory framework (addressing convergence) Effective regulator Effective regulation of competition Interconnection and pricing Spectrum allocation reform Technology & service neutral licensing Open access & regulating dominant markets Taxes, import duties and fees Implementing UAS policies in badly regulated markets is highly ineffective (e.g., higher subsidy costs) Tell the Mozambique story: Only two mobile operators, one 100% government owned � UAS programme failed (gov-owned operator was forced to cover unviable places and had then no interest in any additional UAS bidding; private operator had hard time to compete against gov-owned operator and hard time to get fair treatment by ineffective regulator � no interest in UA bid) Introducing third mobile operator and improving regulator likely to have bigger impact on UAS Tell the Mozambique story: Only two mobile operators, one 100% government owned � UAS programme failed (gov-owned operator was forced to cover unviable places and had then no interest in any additional UAS bidding; private operator had hard time to compete against gov-owned operator and hard time to get fair treatment by ineffective regulator � no interest in UA bid) Introducing third mobile operator and improving regulator likely to have bigger impact on UAS

20. Regulatory /licensing impact on mobile growth Comparison for GSMA showed specific impacts of regulatory decisions & general policy New competition entry Decision on semi-fixed vs. mobile disputes Weight of taxation

21. Licensing & UAS Countries that reform their licensing regime in response to convergence, with technology neutral or unified licences, have major opportunity to incorporate new UAS targets UAS targets more easily accepted in return for greater flexibility of new licences Even without reform, newly offered licences could also include useful territorial and UA obligations to Internet & broadband Important that those conditions are public in advance South Africa�s new entrant Neotel has to provide broadband connectivity to 5,000 public schools and rural medical clinics Competition for new spectrum based licenses (e.g., 3G, WiMAX) Mandatory roll-out targets & public and school access requirements Matching attractive urban with les attractive regions - Anatel in Brazil used this approach for their 3G frequency auction (Sao Paulo paired with state in poor North-East etc.)

22. Enabling regulation for broadband Good competitive practice also applies to broadband � look first at regulation Open access to dominant access networks Access to international connectivity & capacity Competition, joint volume purchase or both? Liberalization of backbone: Permission for wholesale Enforcement or inducement to sharing & co-location Tax/fiscal incentives to network build-out Planning for converged services What does IP transition & NGN need? VOIP and multi-media

23. General recommendations ITU Sept 2008

24. Competing for subsidies & UAS Funds Competitive subsidy allocation mechanism & smart subsidy (OBA): One-time partial subsidy that leverages additional commercial investment Subsidy minimized through competitive procedure Amount of money required by service provider to bring loss-making services to an acceptable rate of return over long term only shortfall between revenue & costs is paid exact amount determined by bidders through competitive tender projects are selected that are commercially viable in the long-run after initial subsidy � no ongoing subsidies

25. �Smart subsidy� OBA amount �The amount of money required by an operator to bring loss-making services to an acceptable rate of return over the long term� Specific services in a target area � e.g. payphones, Internet &  private service in specified target areas Once-only agreement Business sustainable in the medium/ long term

26. How UASF OBA competition is administered UASF Fund Manager initially estimates the 5 or 10 year revenues & costs, and estimates the �financial gap� (Max. allowable subsidy) Bidders (operator-investors) make their own estimate - at or below the maximum allowable subsidy The total agreed subsidy will be distributed to the lowest bidder over a limited period (e.g. the first 2-3 years) and will not need to be repeated. The operator accepts a 5-10 year (or permanent) licensed obligation to provide the minimum level of service, but is also expected to expand and serve private demand in the target areas Internet & Broadband less certain finances than voice � tend to allow subsidies > 100% of Capex costs

27. Use of UAS Funds Funds have been used for Meeting regional and rural service targets for telephony and Internet services Broadband and backbone development Supporting key users - rural schools and health clinics, to access the Internet Supporting national and local content, services and applications development that stimulate Internet take-up and usage ICT capacity building Supporting various activities related to regionally balanced network and service development, such as the creation of Internet Exchange Points (IXPs) and regional Internet points of presence (POPs) Around 50 countries have UASFs.

28. UAS Funds � best practice advantages Key principles & elements of best practice UASFs: Transparent and fair means of allocating subsidy � all operators pay proportionally equal amount and technology-neutral tenders give all equal chance to win (vs. mandating USO) Provides incentives for innovation and cost-minimization (vs. re-imbursing USO providers their costs) �Pay or play� in practice � operators can choose if they want to particpate UASF programs developed with industry & stakeholder consultation Focus on ongoing sustainability Independent of Government, audited & publicly reported

29. Examples of UASF successes Overall too few evaluation/ impact studies on UASFs Peru, Colombia and Chile � 1st generation Uganda - 1st in Africa � leveraged mobile (practice note) Mongolia � Highly successful in achieving operator collaboration � voice & broadband (practice note) India � Cumbersome but transforming � tower sharing Pakistan � Professional & successful in mobile and broadband projects

30. UASF total experience to date � Hmmm! Some funds have not been allocated in a technology-neutral manner (e.g. India, Russia) Some funds have accumulated money and not disbursed or too little E.g., Malaysia, Brazil & India In some cases, UAS programme planning and implementation too slow � overtaken by market development No fund has been capable of distributing more than 2% of sector revenue Make the point that India has now changed its policy (but earlier was subsidising BSNL gov owned operator with mobile operator money UAS is also overtaken as it takes t(too much) ime to adopt UAS policy and regulationMake the point that India has now changed its policy (but earlier was subsidising BSNL gov owned operator with mobile operator money UAS is also overtaken as it takes t(too much) ime to adopt UAS policy and regulation

31. Key lessons - future rural broadband development Strong focus on improving regulation Technical Assistance should include assisting the UAS policy adoption process and the passing of necessary legislation and regulation � as this is an area of delay Otherwise UAS projects need to be developed for implementation in 2-3 years � and require update shortly before implementation Levies should be limited to 1-2% and allowed to reduce over time as UAS targets are achieved UASFs need stronger capacity building element and efficiency � also explore �company� models � e.g., Pakistan Competitive mechanism & collaborative approach with industry can work well

32. NGO & community initiatives (1) Bottom up approaches (vs. top-down policy driven initiatives) Most successful example are micro-finance & entrepreneurial village phone initiatives Community networks fairly recent and few established examples � usually small scale (i.e., solving the problem in one community, not nation-wide) � depend on local leadership/champion Too complex for effective national programs Telecentres wide range of models � mixed record but successful if there is a network of telecentres, & financing model that secures ongoing sustainability good Internet connectivity essential � best to follow UAS infrastructure projects

33. NGO & community initiatives (2) Community radio or local radio Local radios connected to the Internet are successful intermediaries in community to overcome issues of pre-literacy, lack of ICT training and language barriers Co-operatives Only thrive in handful of countries � require certain conditions Regional or rural operators Limited experience (e.g., Nigeria, South Africa) difficult -require special/strong regulation to be protected from bigger players Temporary phenomenon � become national operators (through acquisition or own drive to grow) Possible tool to introduce more competition � also for broadband � cover rural area first and then be allowed to provide national service

34. Backbone development & open access Important because Limited ICT access if backbone does not reach all parts of country Challenge with single backbone � access for all at reasonable cost-based prices Increased demand for bandwidth capacity & investment costs for NGNs can potentially create bottlenecks Increased attention on backbone development � some UASFs have financed backbone & transmission extensions (e.g., Chile, Pakistan, Nigeria)

35. Backbone development & open access (2) Opening networks of dominant operators to wholesale service provision: non-discriminatory access & pricing Through price regulation (least invasive) to functional, operational or structural separation (costly and complex) Backbone extensions via competitive UASF bid Many UASF projects already included backbone extensions and open access policies (Nigeria, Uganda, Mongolia) Alternative network options If not already liberalized, license alternative network operators (electricity, gas, railway) and allow existing operator to sell excess capacity Building new wholesale backbone-only networks Have been considered, few existing examples (Canada, EU) � best operated independent of existing operators, wholesale only and open access

36. Backbone development & open access (3) Infrastructure sharing � form of open access India�s USOF identified locations for 11,000 rural mobile infrastructure towers, buildings & power supply (passive infrastructure) to be shared by multiple operators Consulted with the industry and secured broad support Competition for 5 year subsidy was successful and bids were below the �reserve� price � mostly bid by independent tower operation companies Separate competition for 3 mobile operators to use each tower was overwhelmingly successful � �negative� bids (no net subsidy required)

37. Tower sharing � for broadband deployment Much of the voice telephony needs in rural areas met by mobile service Digital Backbone links all sites Fibre or microwave Can be developed for broadband Initial demand for Internet services mostly in vicinity of small towns & district centres, Use GSM EDGE, CDMA, 3G, Wi-Fi, WiMAX type wireless from same towers How far will broadband reach? Smaller operating radius (<5Km) Need more sites? (depends on Min Bandwidth specification) �Open Access� to towers a key UAS policy tool

38. Voice & Internet situations � Saudi case

39. Financing UAS & broadband Government aid for ICT infrastructure has diminished e.g., OECD: USD 1.2 billion in 1990 to ~200 million in 2002 However, some major broadband investments now underway � USA, UK, Finland In developing countries, mainly private sector funded UAS achievement through commercial drive through UASFs Through philanthropic/commercial/NGO initiatives (e.g., GSMA Development Fund, Grameen Phone) Donor focus on policy & regulatory support, ICT service applications and capacity development Will this be enough for broadband development?

40. Issues of cost versus speed / bandwidthFactors emerging in Saudi UAS consultation Broadband �coverage� dependent on Bandwidth required Capacity & usage demand per cell Frequency of wireless signal Targeting 512 kbps could cost 3x 128 kbps due to Technical Options - 2G (e.g., EDGE) versus 3G (HSPA) Frequency Spectrum policy Thus broadband UAS could depend on spectrum policy 900 MHz versus 1800/2100 MHz GSM only versus technological neutrality Whether WiMAX licensing opportunity is leveraged to achieve rural roll-out

41. Financing UAS & broadband (2) Compared to telecom, more money is also needed for Providing public Internet/broadband centres throughout the country Improving PC penetration through PC loan/ grant programs � to increase broadband subscriptions ICT capacity building campaigns Accelerating e-gov services for rural/ poor population (possibly initially through mobile SMS) But remember � some e-applications (e.g., m-money) are not necessarily bandwidth hungry

42. Philippines � hindrance is demand & applications 6500 secondary schools; ~2,000 connected by private initiative (GILAS), remaining 4,500 will be connected by end 2009/ mid 2010 So what is needed to support Broadband: Regulatory assistance to create enabling environment � fast - UAS policy that addresses the computer problem and connectivity -e.g., loan programs for PCs, Internet cafes, connectivity for all schools, hospitals, etc � and reaching unviable places Strong focus on helping government with e-services, own interconnectivity, ICT capacity 6500 secondary schools; ~2,000 connected by private initiative (GILAS), remaining 4,500 will be connected by end 2009/ mid 2010 So what is needed to support Broadband: Regulatory assistance to create enabling environment � fast - UAS policy that addresses the computer problem and connectivity -e.g., loan programs for PCs, Internet cafes, connectivity for all schools, hospitals, etc � and reaching unviable places Strong focus on helping government with e-services, own interconnectivity, ICT capacity

43. Broadband & e-applications Broadband benefits Review of broadband issues & challenges Overview of broadband strategy options Best practice responses Country case examples

44. Broadband & e-applications What has changed with the advent of broadband? �The need for speed� � new digital divide In the future, UAS broadband minimum requirements will have to be established based on minimum services and applications which should be accessible for all � e.g., should people be able to watch TV over the Internet? Background info for graph: 256 kbps is commonly accepted as the minimum acceptable. The range of speeds show the advertised lowest & highest speed consumer broadband plan offered using DSL technology. Higher speed, mass market broadband plans using fiber optic connections are available in several high-income economies, with speeds from 100 Mbps to 1 Gbps. For Bangladesh, speeds refer to a cable modem plan. In the future, UAS broadband minimum requirements will have to be established based on minimum services and applications which should be accessible for all � e.g., should people be able to watch TV over the Internet? Background info for graph: 256 kbps is commonly accepted as the minimum acceptable. The range of speeds show the advertised lowest & highest speed consumer broadband plan offered using DSL technology. Higher speed, mass market broadband plans using fiber optic connections are available in several high-income economies, with speeds from 100 Mbps to 1 Gbps. For Bangladesh, speeds refer to a cable modem plan.

45. Benchmarking Study in 2009 for S. Arabia Minimum download speed at the customer level in rural (UAS) programs Consider the incremental costs of bandwidth in rural areas (bandwidth versus radius)

46. The benefits of broadband Measuring impact of broadband still in early phase; few quantifiable and internationally comparable data; Currently restricted mostly to developed nations However, findings so far support ICT sector growth & macro-economic multiplier Productivity gains, growth in employment, growth in businesses Transformation of how individuals, companies & government work, communicate and interact Reduction in pollution (due to reduced travel) Potential socio-economic impact significant Expected benefits especially in education & health delivery; improved governance & transparency Impact varies from country to country vVriation is mainly dependent on three factors: the size of country (the greater the number of subscribers, the greater the benefit) the cost of transportation (the higher the cost of transportation, the higher the benefits of reducing travel through ICT) the value of time (the more time is valued, the higher the benefits as ICT saves time). There seems to be a lack of studies that focus more on social impact of broadband � and impact in developing countries Impact varies from country to country vVriation is mainly dependent on three factors: the size of country (the greater the number of subscribers, the greater the benefit) the cost of transportation (the higher the cost of transportation, the higher the benefits of reducing travel through ICT) the value of time (the more time is valued, the higher the benefits as ICT saves time). There seems to be a lack of studies that focus more on social impact of broadband � and impact in developing countries

47. The benefits of broadband (2) While specific �proof� of broadband benefits for developing countries and their impact on poverty, hunger and sickness still outstanding, countries cannot afford to wait as they lack already behind in their ICT development Options include Piloting of broadband ICT & e-applications projects Strategic/tactical use of mobile SMS to introduce e-gov services which then can migrate to broadband for more complex service Example Telehealth in Philippines � started with computers & Internet to district hospitals, but there was no need/ demand; Doctors who needed help were young doctors in really rural and marginalized areas, but there was no connectivity; Telehealth program switched to mobile and SMS, even e-mail & photos using GPRS � highly successful Piloting projects is a good approach that allows for the testing of working hypotheses of required input, output, outcome, efficiencies and required additional components. Piloting projects is a good approach that allows for the testing of working hypotheses of required input, output, outcome, efficiencies and required additional components.

48. Key challenges for broadband development Physical network infrastructure (or access) at the margins: Rural & developing regions High costs for establishment & service provision in non-urban markets Operator interest and viability of subsidy Lack of competition in service provision? Weak demand + lack of affordability for Broadband service? Computer literacy and training IT skills, e-applications & Desktop PC/internet infrastructure needed

49. Four approaches to Broadband Policy

50. Challenges Lack of network infrastructure at the margins - fixed-line copper, fiber & wireless Poor competition & access to existing network infrastructure High costs of infrastructure & operation are barriers to investment & user uptake in rural areas Lower populations, distance and geographic constraints Best Practice responses Progressive regulation and open access policies Public-Private-Partnerships for network establishment Subsidies through competitive bidding Government purchase and use of bandwidth

51. Issue (1) Infrastructure � Smart Subsidies Competitive Tendering & OBA Approach Smart Subsidy Approach One-time subsidies, non-distortion of markets Open to both infrastructure and service providers foreign and local Stakeholder input into design Bundling of Strategic Regions Strategies to ensure subsidies are tied to both commercially promising and challenging regions Competitive Bid Process Formulation of bid design with stakeholders Clearly outline eligibility criteria & requirements Use of least subsidy or reverse auction approach

52. Issue (1) Infrastructure - Case Example  Province of Alberta Supernet Challenge: Lack of infrastructure & affordability in rural areas; important resource-based economy Approach PPP between government & consortium of network builder (Bell) & network operator/reseller (Axia); build-operate (BO) type agreement USD 157 million government; USD 102 million private sector with 10 year renewable contract for operation Axia Open Access Model � standard bandwidth price for all users: Government applications � health facilities, regional offices, & schools; Rural ISP Outcomes Bandwidth prices same for all ISP & ASP company; similar to urban rates Rural network publicly owned; operating contract renegotiable on term Increase from 7 rural ISPs to 100 now

53. Issue (1) Infrastructure - Case ExampleChilean BackBone Network financed by smart subsidy  Challenge: Lack of open access & physical infrastructure to reach rural areas; Alternative approaches required to reach rural areas Approach Arica to Puerto Montt � North �South Fibre Backbone Competitive bidding conducted by Chilean Regulator Subtel $4.7 million US with $2.6 million US subsidy from Telecom Development Fund Outcomes Awarded July 2007 to 3rd Operator Telefonica del Sur (Telsur); requirements for open access Innovative agreement established with operators Telsur & Movistar November 2008 Favorable roaming arrangements; expansion of their combined mobile and wireless coverage

54. Issue (1) Infrastructure � Case ExampleSri Lanka National Communications Backbone Network  Main Challenge: Lack of open access to existing networks due to incumbent operator positions Approach Regulator TRC and ICT Authority (ICTA) conducting competitive bids using Smart subsidy and Output-based Aid approach Reformed regulatory framework in areas of interconnection, tariffs, infrastructure sharing, regulatory fees, and service reselling Outcomes Subsidy funds drawn from e-Government project funding: e-Sri Lanka Initiative Support for conducting & evaluating bids provided via Public Private Infrastructure Advisory Facility Network integrated with Lanka Government Network (LGN) e-Government project � 325 government offices connected including WAN access; IT capacity & skills training for staff

55. Issue (2) � Lack of Critical Demand  Challenges Low demand for Broadband considered due to lack of common and locally useful broadband applications Large % of internet users dialup, lower demand in rural areas Lack of broadband traffic constraining public exposure & market entry by service providers Barriers: Price point & limited applications relevant to local circumstances

56. Issue (2) Stimulate Demand for Broadband Solutions Establish & support development of broadband applications in government operations and public service provision which include: e-Government applications and networked government information system e-procurement systems for local businesses Subsidize bandwidth and interconnection costs for broadband in high cost areas Desired outcomes Stimulate greater use and interaction of public with useful broadband e-Government applications Local capacity building institutions, e.g. schools and IT-based business incubators, more active Greater local appreciation and demand for broadband

57.  Malaysia�s National Broadband Plan, 2004 Strategy Broadband Policy - Key pillar of 2006 National ICT & Knowledge Society Strategy MyICMs 886 �Critical Mass� Approach - Create �Tipping Point� for Demand Fund broadband applications to attain critical subscriber penetration rates (50% household) or 1.3 million subscribers by 2010 Fund public broadband applications to �critical� subscriber level to initiate wide-spread private sector uptake Government departments (EG*NET); hospitals & clinics; public schools (SchoolNet); universities and internet community centres Implement a 11.3 billion Ringgit national broadband network funded (2.4 billion) by the Malaysian Government as a PPP

58. Regulatory measures Mandate BB access nationwide, and fund designated remote rural areas under UAS program (USP) Establish facilitative role of local authorities to speed up e-infrastructure projects Incentives Tax rebates for broadband equipment & PCs; soft loans for ISP rollout Support shared use of private networks(MNCs); Outcomes: Achieved increase in household penetration rate to current 18% Updated Broadband Plan due 2008/2009 Realized plan for the enhanced national broadband backbone network Sept 2008 � the PPP agreement signed between Government & Telekom Malaysia  Malaysia�s National Broadband Plan (Cont�d)

59. Issue (3) � Lack of Core IT & Capacities Challenge Low demand for Broadband considered problem of lack of IT skills & basic PC/internet infrastructure Issues for developing regions and rural areas Lack of access to useful applications & core IT hardware: Networked PCs Limited IT skills and capacities

60. Building Core IT Capacities for Demand Solutions Programs to provide needed IT infrastructure, capacity development and training to public and community institutions Provision of internet-enabled PCs & broadband connection to public schools and community institutions Establish e-Government services and applications for local needs Basic computer and internet skills training and capacity development to targeted groups Desired outcomes Develop IT and internet skills to stimulate demand among high-impact users including local businesses and youth Develop IT capacities and infrastructure at public access points & businesses e.g. schools, community centres & chambers of commerce

61. Thailand � Building Core Capacities for Broadband Approaches Thailand�s ICT Directions 2004 Policy - To improve ICT skills and access to ICTs for all Thais to benefit from information Provision of necessary IT hardware & internet connectivity Subsidized PCs & software for purchase; lowered long-distance rates for internet; establishment of public internet booths with dialup internet access Encourage telecom operators to expand wired/wireless communication services in rural areas i.e. rural telephone project Provide educational and local content - Tambon and Schoolnet projects to provide internet access to village groups and public schools Outcomes: Increased PC penetration from 5% in 2001 to 27% in 2005

62. Issue (4) � Regulatory impediments Challenges Restricted competition poor access to incumbent network lack of new service providers License limitations Cost barriers � network/spectrum access, interconnection fees; Limited ability to utilize innovative and converging technologies e.g., service bundling, VOIP, etc.

63. Best Practice solution � improve policy & regulatory frameworks Deregulation - open up service provision to multiple operators Open access � enforcement of RIO, interconnection, spectrum allocation Progressive Licensing, e.g., unified licensing Targeted subsidies for new entrants & challenging areas Establish & utilize UAS/government programs Issue (4) � Enabling Regulation

64. Issue (4) Enabling Regulation � Case ExamplePakistan Challenges: Broadband expansion needs & opportunities Expanded network infrastructure; local internet content/applications & IT capacity development Capitalize on dramatic expansion of mobile/wireless network High tariffs considered main impediment Approaches Establishment of formal policies i.e., Broadband Policy 2004 Utilize UAS funds for targeted support and subsidy Encourage entry and growth of new service providers No restriction on number of broadband providers (must meet minimum QOS standards ) Backhaul facilitation Subsidies for intl. bandwidth for startup period in project areas services in rural areas, i.e., rural telephone project

65. Issue (4) Enabling Regulation � Case Example Pakistan (Cont.) Spectrum management promoting wireless services Open auctions for wireless fixed access spectrum Regulatory framework for free access to IEEE 802 bands Interconnection strategies Reduced primary rate interface charges (PRI) for dial-up connection to facilitate future switch to broadband Promotion of national/regional peering points & �domestic� network to reduce use of costly international backbone Licensing New class license available for data providers enabling agreements for network & local loop access with any operators (LDI/LL Licensees)

66. Outcomes Increased broadband connectivity - 132,000 current subscribers Although still marginal (0.8%) Marked improvement in enabling conditions for broadband penetration Backhaul network access is now relatively inexpensive Price of end-user broadband equipment is reducing Regulatory frameworks for broadband and new wireless applications i.e. Branchless Banking are opening new markets Recent examples include Wateen Telecom launch of WiFi service in December 2007 with 10,000 wireless broadband subscribers in 4 months USF Broadband Pilot Project 72,500 private broadband penetration 320 community & educational access centers Two opertors win subsidies (PTCL & Wateen)

67. Summary of issues Broadband & e-applications Importance of e-applications for broadband uptake What is different about broadband? ICT skills Existing versus needed applications Awareness Access devices for penetration More co-ordination with other sectors like health, education, tax authorities, e-government Discussion on future What about PPPs (scarce examples?) Can UASF funds be used for broadband? Should UASF funds be used for ICT infrastructure capital only, or for applications and ICT capacity building, computers for all, etc.?

68. Philippines - Provinces without fiber-backbone Mostly in central and southern regions 14 provinces outside Luzon w/o fiber have per capita income considerably below national average 8% of population Most are lowest income province in their region But some do/ may have digital microwave Fiber not necessarily or absolutely required Technical solutions feasible though e-applications and ICT diffusion measures required

69. Reviewing broadband pricing

70. Broadband costs as % of monthly family income (USD)