Research and Analysis of the Telecommunications market in Southeastern Europe. Overview of the current ICT Infrastructur

1. Southeastern Europe Telecommunications & Informatics Research InstituteBroadband Penetration in LessDeveloped Areas:The Case of SEE CountriesDr. P. Angelidis

2. Southeastern Europe Telecommunications & Informatics Research Institute (INA) a private sector initiative • Research and Analysis of the Telecommunications market in Southeastern Europe. • Overview of the current ICT Infrastructure in Southeastern Europe. • Market research of the current demand on Telecommunications and Informatics services as well as estimation of future trends. • Studies on behalf of local and interregional actors. • Identification of the investment opportunities on telecom services, products and equipment. • Organization of workshops, congresses, scientific events and conferences on Telecommunications and Informatics issues. • Guidance and information on funding opportunities from the EU and other international bodies for the development of ICT in Southeastern Europe.

3. Collaborations Hellenic Ministry of Transportation and Communications

4. Belgrade Node Bucharest Node Sarajevo Node Sofia Node Podgoritsa Node INA Academy Thessaloniki Tirana Node Skopje Node INA Academy Nodes in SEE

5. Broadband Facts • Always-on connections • Voice and data on one line • High speeds resulting in wide range of applications • Advanced (multimedia) applications / increased productivity • Upgrading networks and equipment resulting in high investment costs • Various technology options

6. Broadband & Content • It is believed that content is needed for the development of broadband networks • However, broadband and content are interrelated • Demand for broadband deployment already exists due to: • Reduction of product costs and increase of productivity • Minimizing distances for remote businesses • Effectiveness of public and private Internet services • Facilitation of content creation and better exploitation of on-line time • Content creation will increase demand for broadband through: • Creation of applications for public on-line services that will reduce the time wasted in public offices • Creation of applications for efficient B2B interactions • Entertainment, gaming, traveling and cultural applications involving video and audio streams, even virtual reality tours

7. Broadband & Content + • INA has shown that the important thing is availability: once it is there people will use it! • Investment incentives are needed: PPPs offer the only(?) viable solution (P. Angelidis “To b(roadband) or not to b(roadband)”, eStrategies Feb. 2005 pp. 70 - 73)

8. South East Europe Today • Lacking information society development due to political, economical and social instabilities • Digital divide not only on international level but also within the countries (e.g. Urban/Rural) • Gradual realization of ICT importance for developments • Promoting Information Society will transform SEE countries: • From small, fragmented, unattractive markets • Into developing, competitive and open fields attractive to foreign investments • And finally lead them to development and EU membership

9. Broadband Facts for South East Europe • Very low deployment • Urban deployment • Inadequate regulation • Expensive • Need for big infrastructure investments (digital divide) • Lack of “bandwidth-hungry” e-applications

10. Broadband in South East Europe • Broadband penetration is lower than 2% in most of the countries. • In countries with the widest broadband deployment like DSL is the prevalent technology.

11. Rural Deployment Facts • Low Internet penetration and demand • DSL technology would require replacement of all bad quality lines • Lack of incentives for operators to deploy broadband in rural areas • Big investment is required, long-term and uncertain ROI • Decentralization via increased competitiveness of rural businesses (including SMEs) • Bridging the digital divide for rural and urban individual users

12. Root Causes of Digital Divide • Monthly Costs per Subscriber as Function of Population Density for all Current Broadband Access Technologies Including Hybrid Wi-Fi solutions

13. Broadband Wireline Technologies • DSL and cable broadband are uneconomical for low density population regions • Copper reserves are not enough! (in this world)

14. Where are the Unserved? Distribution of European households by class of Density eEurope Advisory Group 29 June 2004

15. Comparison of All broadband Access Technologies Total Monthly Costs per Subscriber Cost Comparison

16. Technology Assessment for Rural Deployment

17. Broadband Deployment Action Plan for Underserved (Rural) Areas • Regulatory authority and government incentive provision to operators • Separate environmental and geographical assessment for each rural area • Technology assessment • Backbone network expansion • Installation on demand • Combine installation with wide offering of services • Appropriate targeting following market analysis • Operator alliances and cooperation

18. What we miss • for governments an action plan for broadband deployment based on: • Case-by-case assessment of needs • Technology evaluation • Regulatory reform needs • Incentive creation • for operators an action plan for broadband deployment based on: • Investment plan based on most economical technology for each case • Cost analysis • Short-term ROI

19. Kick-off Meeting for“bSEE”WORKSHOP ON TELECOMMUNICATIONS10th THESSALONIKI FORUM 24-25 of May 2004 Representatives from Governments, Industry and NGOs from SE Europe participated at the 10th Thessaloniki Forum Workshop on the Telecom Sector and • Emphasized the need to realize: “…The leapfrogging potential of electronic communication services for countries under development [like SE Europe countries]…”

20. How to act? • SEE Countries need to act: • Immediately, to address the gap between developed and underdeveloped countries • Decisively, to change thinking and attributes • Cooperatively, to leverage advantages • Ingeniously, to leapfrog technologically • SEE Countries need to capitalize on ICT potential and their rich human capital in order to attract foreign investment and exploit new technological opportunities

21. ‘bSEE’ (pronounced beezy)Concept “bSEE”’ s aim is: • The coordination of policies; • The interconnection of networks for the deployment of Broadband services at a regional level on a coherent to the European Union manner. This will be realized with the formulation of a Memorandum of Understanding (MoU) that will be signed by the countries of the region, the Stability Pact and (potentially) the European Commission, and a Task Force that will coordinate the actions for the implementation of the MoU.

22. Best Practice from the Energy Sector • The Commission brought forward proposals for the creation of a regional electricity market in South East Europe (SEE) in March 2002 with the aim of eventually creating a regional energy market • By November 2002, a Memorandum of Understanding (“The Athens Memorandum”) was signed at the Athens Ministerial by all the countries with the Commission and the Stability Pact acting as sponsors • Creation of Energy Association of SEE Countries by End of 2004 The Athens Memorandum of Understanding for Energy and the “South Eastern Europe Regional Energy Market” initiative represent an excellent such precedent and a best practice to repeat in the ICT sector

23. ‘bSEE’ MoU Scope A unified broadband market fully interconnected to the European and Global networks, a world model capitalizing on • Human Resource Development - Human Capital • Modern Electronic Communication Technologies • Excellence in Research • Regulatory Framework Competence

24. ‘bSEE’ MoU • “bSEE” will outline a strategy for the progressive creation of an integrated regional market for broadband in South Eastern Europe. Improving the supply of broadband and stimulating the demand is crucial to improve and sustain economic development in South East Europe • “bSEE” requires a strong commitment by the countries of the region towards market oriented reforms, regional integration and sustainable development • “bSEE” will offer significant advantages both in terms of improved utilization of existing infrastructure and human capital capacities, but also in fostering more cooperation and integration in the region, which will result in economic growth, stability and investment

25. ‘bSEE’ Implementation (1/2) A SE Europe “bSEE” Task Force shall be set up to identify and facilitate programs for the purpose of: • Setting statutory and regulatory objectives and frameworks with respect to European Union Directives and global standards; • Aggregating demand leading to broadband development; • Evaluating of broadband technologies and international best practices; • Developing skills through exchange programs, and through joint sponsorship of conferences, training programs and seminars in the field of Broadband technologies;

26. ‘bSEE’ Implementation (2/2) • Prompting planned activities regarding broadband investment that would result in building awareness, increasing level of public interest and empowering SME’s to participate in such initiatives; • Addressing market failures that are beyond the reach of policy tools; • Providing incentives to the private sector for broadband development, especially in rural and remote areas; and • Monitoring progress and producing timely reports

27. ‘bSEE’ Task Force Key Functions • Monitoring Broadband Development in SE Europe; • Networking all actors involved in broadband development in SE Europe; • Harmonization of the region with the EU and global standards; • Promoting and increasing Broadband connectivity in SE Europe;creating attractive investment environment • Joint development of interactive broadband multimedia content, information security and e-Government; and • Facilitating the development, interaction and exchange of know-how between SE Europe countries and the EU

28. ‘bSEE’ key issues • Stability Pact and European Commission support • National Governments active involvement and commitment • Identification of financing • Creation of Momentum

29. ‘bSEE’ Benchmarks(currently under review) • Benchmark 1: Increase broadband penetration at growth rates high enough to narrow the broadband “divide” • Benchmark 2: Recognize the qualitative importance of broadband as a crosscutting productivity tool • Benchmark 3: Mobilize more effectively relative strengths in human resources for broadband deployment • Benchmark 4: Increase the rate of creation and diffusion of ICT in the region as a source of value added and productivity • Benchmark 5: Establish a set of common broadband policy commitments reflecting the diversity of broadband infrastructure in SE Europe • Benchmark 6: Reinforce the institutional capabilities for designing, delivering and evaluating ICT policy in regard to broadband

30. ‘bSEE’ Latest Developments • Special Coordinator of the Stability Pact Dr. Erhard Busek welcomes the idea • Officially adopted by the Greek Government • European Commission have expressed their support • Thessaloniki 30 June / 1 July regional conference at a ministerial level where bSEE MoU will be signed and Task Force will be formed • CLDP is financing a report on “National Strategy for Broadband”; results expected by September will set the path for bSEE and the countries • UNDP/INA will further focus their ongoing work on PPP schemes for ICT on broadband • EBRD expressed willingness to co-finance broadband projects in the region • WorldBank reported plans on financing broadband projects in the region

31. Goal:Europe “to become the most competitive and dynamic knowledge –based economy in the world” (Lisbon, March 2000) Europe as a whole and not only part of it Telecommunications without national borders

32. Let’s get “bSEE”!!!Thank you for your attention www.inatelecom.org