Broadband policy and regulatory issues in emerging markets

Rohan Samarajiva, Chair, LIRNEasia

1st Annual Telecoms Regulatory Affairs Asia Forum, Singapore, July 3, 2013

CAN ASIAN SUCCESS IN VOICE BE REPLICATED WITH BROADBAND?

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In voice+SMS basket comparison, 4 countries < USD 5 in 2007: All Asian

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In 2009, 12 countries < USD 5: 9 were Asian

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Success in voice: Low prices greater connectivity (India SEC D&E)

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Mobile tariff (effective charge) Urban Indian SEC D and E mobile penetration

Rural Indian SEC D and E mobile penetration

This must be repeated with broadband

WHAT IS BROADBAND? IS BROADBAND DIFFERENT IN ASIA?

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What is broadband?

• The Broadband Commission sought to focus on considering some of the core concepts of broadband as an always-on service (not needing to make a new connection to a server each time a user wants to go online), and high-capacity: able to carry lots of data per second, rather than the particular arrival speed of the data. The practical result is that broadband enables the combined provision of voice, data and video at the same time.

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What is not broadband?

• Partnership for measuring the ICTs for Development suggests that always-on connections that are not 256kbps up and down are not broadband

• India, in its National Telecom Policy 2012, proposed gradually raising the threshold to 2Mbps down

• But what is the point of applying definitions to advertising, when real performance suggests that many operators in South Asia do not offer true broadband (at least 256 kbps, 80% of the time)

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BD offerings are not broadband? BSNL, Bangalore & Airtel, Chennai?

City, Country

Dhaka, BD Thimphu, BT

Bangalore, IN Chennai, IN

Package Qubee 256 kbps

Citycell 300 kbps

Druknet 1 Mbps

Airtel 512 kbps

BSNL 512 kbps

Airtel 512 kbps

BSNL 256 kbps

8:00 AM 252.5 271.5 1157.6 1297.8 2366.7 142.8 1072.3

11:00 AM 251.2 267.3 1173.4 1302.1 1591.6 162.9 1052.8

3:00 PM 230.8 177.4 1278.9 1179.4 269.4 163.8 553.4

6:00 PM 251.1 243.6 1061.0 237.8 221.4 268.2 320.6

8:00 PM 256.4 220.6 357.0 147.1 169.1 611.7

11:00 PM 257.8 191.7 1310.4 90.1 175.3 919.5

Average 250.0 228.7 1167.7 947.4 781.0 180.4 755.1

Red = performance < 256 kbps threshold Average is above 256 kbps But below threshold 3/6 9

SLT, Colombo also failed the cut, despite a 2Mbps offering/average of 571 kbps delivery

City, Country

Mumbai, IN New Delhi, IN Colombo, LK

Package Airtel 2 Mbps

MTNL 512 kbps

Airtel 512 kbps

MTNL 2 Mbps

SLT 2 Mbps

Dialog 1 Mbps

Mobitel 1 Mbps

8:00 AM 293.4 375.3 337.6 416.7 1685.8 1082.7 714.9

11:00 AM 316.1 381.3 182.8 425.8 257.2 1054.0 340.5

3:00 PM 304.3 387.8 336.2 343.7 167.4 1054.0 340.5

6:00 PM 275.0 401.6 331.6 437.3 271.1 1401.3 855.0

8:00 PM 322.6 337.2 337.1 429.7 210.1 1355.7 579.9

11:00 PM 308.0 377.1 394.5 429.3 835.1 1398.5 832.4

Average 303.2 376.7 319.9 413.7 571.1 1224.4 610.5

Red = performance < 256 kbps threshold

Access via USB modem (dongle)

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Sri Lanka’s broadband growth, 2009-March 2013

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Internet users estimated to be at least 2.5 million

Broadband in developing Asia appears different

• Mostly wireless, not fixed

• Low prices, but also problems with quality

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Broadband not like voice

• In old style PSTN, most calls are local, few national, fewer international – Local switching possible

• In mobile networks, need to interrogate databases – More signaling traffic going longer distances, but actual

calls still mostly local

• With broadband (especially in small countries) – Most traffic is international

– Even local websites hosted abroad

– Even email intended for local persons requires international traffic

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A chain is as strong as its weakest link Broadband performance is defined by performance over the weakest link

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IS THE INTERNATIONAL SEGMENT THE WEAKEST LINK?

One cannot focus on local access alone . . .

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Selected Asian cities: Identifying the weak link (Fixed download)

Source: LIRNEasia, 2011

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800 1100 1500 1800 2000 2300Time

Download from ISP Server (kbps)

Qubee (1 Mbps) Dhaka, BDBanglalion (512 kbps) Dhaka, BDAirtel (256 kbps) Bangalore, INBSNL (256 kbps) Bangalore, INAirtel (2 Mbps) Chennai, INBSNL (256 kbps) Chennai, INAirtel ( 2 Mbps) Mumbai, IN

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800 1100 1500 1800 2000 2300Time

Download from International Server (kbps)

Qubee (1 Mbps) Dhaka, BD Banglalion (512 kbps) Dhaka, BD

Airtel (256 kbps) Bangalore, IN BSNL (256 kbps) Bangalore, IN

Airtel (2 Mbps) Chennai, IN BSNL (256 kbps) Chennai, IN

Airtel ( 2 Mbps) Mumbai, IN MTNL (320 kbps) Mumbai, IN

Airtel (2 Mbps) New Delhi, IN MTNL (512 kbps) New Delhi, IN

SLT (2 Mbps) Colombo, LK Telkom Speed (512 kbps) Jakarta, ID

The problem is international connectivity

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Selected Asian cities: USB Dongle download (3G networks)

Source: LIRNEasia, 2011

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0800 1100 1500 1800 2000 2300Time

Download from ISP Server (kbps)

Dialog (upto 3.6 Mbps) Colombo, LK

Mobitel (upto 1 Mbps) Colombo, LK

Three (upto 3 Mbps) Jakarta, ID

Globe Tattoo (upto 3.6 Mbps) Manila, PH

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0800 1100 1500 1800 2000 2300Time

Download from International Server (kbps)

Dialog (upto 3.6 Mbps) Colombo, LK

Mobitel (upto 1 Mbps) Colombo, LK

Three (upto 3 Mbps) Jakarta, ID

Globe Tattoo (upto 3.6 Mbps) Manila, PH

The problem is international connectivity

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Selected Asia Pacific small island states: Download speeds: ISP vs. International

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800 1100 1500 1800 2000 2300Time

Download from a server in the ISP domain (Kbps)

800 1100 1500 1800 2000 2300Time

Download from a server in the International domain (Kbps)

Dhiraagu (1 Mbps) Male, MV Dhiraagu 3G (1 Mbps) Male, MV

Connect (1 Mbps) Suva, FJ Vodafone (1 Mbps) Suva, FJ

Digicel (2 Mbps) Port Moresby, PG Samoa.Ws (512 kbps) Apia, WS18

Selected Asian cities: Latency (RTT) – Fixed: Mostly unsatisfactory

Source: LIRNEasia, 2011

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RTT

(m

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Qubee (1 Mbps) Dhaka, BD Banglalion (512 kbps) Dhaka, BD Airtel (256 kbps) Bangalore, IN

BSNL (256 kbps) Bangalore, IN Airtel (2 Mbps) Chennai, IN BSNL (256 kbps) Chennai, IN

Airtel ( 2 Mbps) Mumbai, IN MTNL (320 kbps) Mumbai, IN Airtel (2 Mbps) New Delhi, IN

MTNL (512 kbps) New Delhi, IN SLT (2 Mbps) Colombo, LK Telkom Speed (512 kbps) Jakarta, ID

300 ms

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Selected Asian cities: Latency (RTT) – USB Dongle: All above 300 ms

Source: LIRNEasia, 2011

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0800 1100 1500 1800 2000 2300

RTT

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Dialog (upto 3.6 Mbps) Colombo, LK Mobitel (upto 1 Mbps) Colombo, LK Three (upto 3 Mbps) Jakarta, ID

Globe Tattoo (upto 3.6 Mbps) Manila, PH Smart (upto 3.6 Mbps) Manila, PH

300 ms

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Selected Asia-Pacific small island states: Latency (RTT), ISP Domain vs. International

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0800 1100 1500 1800 2000 2300Time

ISP Domain (ms)

0800 1100 1500 1800 2000 2300Time

International server Domain (ms)

Dhiraagu (1 Mbps) Male, MV Dhiraagu 3G (1 Mbps) Male, MV

Connect (1 Mbps) Suva, FJ Vodafone (1 Mbps) Suva, FJ

Digicel (2 Mbps) Port Moresby, PG Samoa.Ws (512 kbps) Apia, WS

300 ms

Lower the better

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Selected Asian cities: Packet Loss – Fixed (unsatisfactory some of the time)

Source: LIRNEasia, 2011

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Pac

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Qubee (1 Mbps) Dhaka, BD Banglalion (512 kbps) Dhaka, BD Airtel (256 kbps) Bangalore, IN

BSNL (256 kbps) Bangalore, IN Airtel (2 Mbps) Chennai, IN BSNL (256 kbps) Chennai, IN

Airtel ( 2 Mbps) Mumbai, IN MTNL (320 kbps) Mumbai, IN Airtel (2 Mbps) New Delhi, IN

MTNL (512 kbps) New Delhi, IN SLT (2 Mbps) Colombo, LK Telkom Speed (512 kbps) Jakarta, ID

3%

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Selected Asian cities: Packet Loss – USB Dongle (two unsatisfactory)

Source: LIRNEasia, 2011

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Pac

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Dialog (upto 3.6 Mbps) Colombo, LK Mobitel (upto 1 Mbps) Colombo, LK Three (upto 3 Mbps) Jakarta, ID

Globe Tattoo (upto 3.6 Mbps) Manila, PH Smart (upto 3.6 Mbps) Manila, PH

3%

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Why?

• Connectivity to the Internet Cloud is a costly input

• Understandably, operators economize on international segment lower performance

– Because overall performance is determined by performance of the weakest link

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Asian bandwidth is 6x costlier

Source: TeleGeography • Data exclude installation & local

access fees. • GigE = 1,000 Mbps.

$12~$25

$1.75~$4 $1.5~$2

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What policymakers can do: Asian Highway “Asian Information Highway”

• Inadequacy of supply is what causes higher prices – Sole reliance on undersea cables is inappropriate for the word’s largest

continent • Problems exacerbated by frequency of cable cuts, approvals needed for cable-

repair ships to work within territorial waters, high insurance premia driven by piracy in Indian Ocean, etc.

• Take the lead at UNESCAP to promote the laying of cables along the Asian Highway/Trans-Asian Railway to link all of Asia to Europe and the Pacific Rim – Must be an OPEN ACCESS mesh network, ideally owned by entity

other than incumbent telecom operator in each country learning from problems experienced in ADB-funded SASEC, for example

• Necessary solution for land-locked countries • Terrestrial cables will COMPLEMENT submarine cable • Encourage more PPPs in undersea cables, esp in underserved areas

such as the Pacific and Bay of Bengal

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What policymakers can do: Asian Highway “Asian Information Highway”

• Increased supply of backhaul will bring down prices for all, island nations as well as landlocked countries – A terrestrial network along highway traces will provide

both international and terrestrial backhaul • Publish domestic leased-line prices using standard

definitions such as 2MB/2km; 2MB/100km • Few standard measures exist for international leased lines,

but more transparency is needed here as well

– Give “build or buy” option to all users • If there are economic advantages to a single supplier, there

is no reason to have legal barriers to others doing “foolish” things

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What of satellites?

• Latency of 300 ms required for most applications

– Singapore IDA standard, now adopted by others

• Not favored by BPO industry

• Generally useful as backup/redundancy

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National and regional Internet exchanges

• More traffic is bypassing North America, but given availability of capacity and prices, different regions within Asia will have to decide who to exchange with

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ACCESS NETWORK (THE LAST MILE) The next link of the chain . . .

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Fiber or wireless?

• Some are passionate about Fiber-to-the-Home (FTTH), arguing that anything less is second-class

• Others see no alternative to wireless access, given

– Purchasing power of consumers in most countries

– Cost of laying wire (copper or fiber) to homes (in much of Asia there are no wireguides that can be upgraded)

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Middle ground

• Everyone, rich and poor, will access the Internet wirelessly – Those in developed market economies and those with wealth living in

densely populated cities of developing countries, over a few meters – The rest of us, over a few kilometers

• Fiber should be pushed out as far as possible (India’s current thinking on utilizing the Universal Service Fund is an example)

• Access should be open • As many operators as possible should be permitted to link to

the fiber, using multiple technologies, wire and wireless – If wire is superior in meeting people’s needs, it will triumph over time

• Government intervention should be – Technology neutral – Focused on ensuring that all settlements have fiber within a

reasonable distance – Access is open to all operators

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New Zealand as a possible model to emulate

• Vertical disintegration of incumbent telco is the optimal solution to ensure open access

• Second and third best solutions need to be worked out if NZ solution is not feasible

• Removal of barriers to entry at the access level, subject to

– Release of frequencies

– Reasonable access to rights of way

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Broadband without electricity?

• Can have broadband in areas without electricity

– But it’s costly

• Much of the technical innovation needed to get broadband to people is in energy

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Pakistan has made renewables a condition of universal service subsidies

The economics of renewable energy look much better in relation to expensive and erratic conventional energy

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Energy for terminal devices

• Less of a challenge than energy for network equipment

– People develop workarounds

• Can provide recharging opportunities from base stations that are powered by renewable energy

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PRICE AND ATTRACTIVE APPLICATIONS

The critical links of the chain: what matters to the consumer

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Monthly TCO(USD)

Internet premium(USD)

Voice + SMS TCO: Brazil = Bangladesh x 23 Voice, SMS & Internet TCO: Morocco = Sri Lanka x 57 Different business model in sub USD 10 countries? Budget Telecom Network (BTN) model

Ave: USD 11.47

Ave with Internet premium: USD 15.05

Source: Nokia

Nokia total cost of ownership study 2011

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Attractive content: What governments can do

• Asian prices as measured by Nokia are reasonable (only Philippines is above average, but even here cause may be voice prices in the basket)

• Ensure conditions for supply of attractive applications are maintained – Do not follow the siren call of “access charges” or sending-party-

network-pays principle still being promoted by certain parties

– Incubators, meet ups, other ways to promote innovation in the mobile apps space

– Open up government data so mobile app developers have raw material to work with

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Chain is a useful metaphor. But we’re really dealing with networks. A resilient mesh made up of multiple

chains . . .

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