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Securing the infrastructure-international reflections
Professor Howard Williams
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; $15bn transfer• Colombia has reached a key point; over 4 million connections,
high growth rates in the recent past.• Who are those without access?• Who is extracting value from those who have access?• Theoretical issues – greatest distortion flow from
distorted/subsidised input prices (Diamond/Mireless)
Main themes
• Distributional issues• BB eco system• Infrastructure
Overselling BB – Charles Kenny Year Predicted Values at Given GDP/Capita Average Values Average Values
Income level 1,000 5,000 10,000 30,000 Poor Rich
Secure Internet servers (per 1 million people) 2001 neg 21 38 64 5 662008 neg 109 205 357 15 331
Fixed broadband subscribers (per 100 people) 2001 neg 0.6 1 1.7 0 1.82008 neg 5.7 10.1 16.9 1.3 16
Internet users (per 100 people) 2001 neg 9 15 24 2 252008 neg 24 36 54 12 50
Mobile cellular subscriptions (per 100 people) 2001 neg 21 32 51 6 53 2008 24 71 91 124 52 115
Fixed line subscriptions (per 100 people) 2001 neg 19 28 42 8.6 41.82008 neg 17 24 37 8.3 35.1
% of Firms Using Email 2009 49 69 77 91 59 81% of Firms using Own Website 2009 16 39 49 66 27 55Literacy rate, adult total (% ) 2008 66 83 91 103 75 95School enrollment, tertiary (% gross) 2008 6 32 43 61 20 60Value Lost Due to Power Outages (% of Sales) 2009 6 4 3 1 6 2ICT Exenditure ($/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
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%
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)
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.
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
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
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
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%
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)
