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Wireless & development in the Asia Pacific: Institutions matter

Wireless & development in the Asia Pacific: Institutions matter. Rohan Samarajiva, with contributions from LIRNE asia team High-level workshop, Annenberg Research Network on International Communication, Oct 7-8, 2005. Agenda. Wireless and development Wireless in the Asia Pacific Backbone

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Wireless & development in the Asia Pacific: Institutions matter

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  1. Wireless & development in the Asia Pacific: Institutions matter Rohan Samarajiva, with contributions from LIRNEasia team High-level workshop, Annenberg Research Network on International Communication, Oct 7-8, 2005

  2. 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

  3. How do South Asians on less than USD 100/mo. communicate? Fixed (49%) Mobile (19%) 2% 21% 11% 3% 3% 23% 37% Base: 3199 ‘Public’ access (66%)

  4. 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

  5. Development: Not by communication (wireless) alone Other communication inputs Communication Coordination Knowledge ICTs/ Tech enabling sync interaction/ Info seeking/publ’n Development Capital Tech Enabling/complementary conditions Other inputs Wireless

  6. 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

  7. Mobile/100 & CAGRs high-mobile Asia Pacific (end 2003)

  8. India, fixed & mobile growth, 1991-2005

  9. Mobile/100 & mobile as % of total in high-mobile Asia Pacific, end 2003

  10. 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

  11. Link to higher tier ISP ISP C Fiber optic ISP A ISP B Twisted copper pair Coax cable Dialup ADSL Cable modem Typical ISP Network Infrastructure Network Access Network

  12. Network Reality-Indonesia ISP B Ethernet Ring Ethernet IIX School C WiFi 2.4 Microwave ISP A ISP C School B Wifi 5.8 WiFi 5.8 Corporate Customer $200/pm ADSL UTP Cable UTP Cable House School A $4000/pm (Internet link+ international bandwidth) Neighbourhood Network $35/pm Infrastructure Network Access Network

  13. 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

  14. 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

  15. Market environment No competition Limited competition Competitive • Lack of competition in infrastructure sector • Resulting in high leased line prices • High international backbone prices • Proliferation of unlicensed “reseller-ISPs”

  16. Annual leased line prices: 2Mbps link Ratios India EU 1:5.9 1:4.9 Ratios India EU 1:47.9 1:3.8 Data compiled from Lokanathan, lirneasia.net, EU 10th report, interview with Indonesian ISP & Network Service Provider

  17. 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

  18. Hypothetical refarming process

  19. 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

  20. 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

  21. Spectrum management is not enough . . . • In addition • Market entry • Interconnection and access • Effective regulation of competition • Investment is what connects people

  22. Investment is necessary condition for improved access Wireless

  23. Investment is necessary condition for improved access Wireless Access + Backbone Fiber + fixed access

  24. Wireless investment

  25. Without effective policy/regulation, inadequate/skewed investment . . .

  26. Where the money has gone . . . Private investment in telecom 1990-2003

  27. What is needed . . . • Market entry permitted • Case of Bhutan • Environment for investment created • Regulatory risk reduced • Participation by multiple suppliers enabled • Level playing field

  28. 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

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