Transcript Securing the infrastructure-international reflections

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; $15bn transfer
• Colombia has reached a key point; over 4 million
connections, high growth rates in the recent past.
• Who are those without access?
• Who is extracting value from those who have access?
• Theoretical issues – greatest distortion flow from
distorted/subsidised input prices (Diamond/Mireless)
Main themes
• Distributional issues
• BB eco system
• Infrastructure
Overselling BB – Charles Kenny
Year
Income level
Predicted Values at Given GDP/Capita Average Values
1,000 5,000
10,000
30,000
Average Values
Poor
Rich
Secure Internet servers (per 1 million people)
2001
2008
neg
neg
21
109
38
205
64
357
5
15
66
331
Fixed broadband subscribers (per 100 people)
2001
2008
neg
neg
0.6
5.7
1
10.1
1.7
16.9
0
1.3
1.8
16
Internet users (per 100 people)
2001
2008
neg
neg
9
24
15
36
24
54
2
12
25
50
Mobile cellular subscriptions (per 100 people)
2001
2008
neg
24
21
71
32
91
51
124
6
52
53
115
Fixed line subscriptions (per 100 people)
2001
2008
neg
neg
19
17
28
24
42
37
8.6
8.3
41.8
35.1
% of Firms Using Email
% of Firms using Own Website
Literacy rate, adult total (% )
School enrollment, tertiary (% gross)
Value Lost Due to Power Outages (% of Sales)
ICT Exenditure ($/capita)
GDP Density ('000/km)
Rural population (% of total population)
2009
2009
2008
2008
2009
2008
2008
2008
49
16
66
6
6
59
neg
68
69
39
83
32
4
290
8518
48
77
49
91
43
3
576
17690
39
91
66
103
61
1
1714
32229
25
59
27
75
20
6
206
417
57
81
55
95
60
2
1429
26926
28
(Average GDP/Capita)
2001
2008
3,526
3,553
25,278
24,926
Social
Networking
Dating
High
Gambling
Gaming
Network Effects/
Customer Switching Costs
Ad
Networks
VoIP
Operating
Systems
Games
Consoles
Web
Search
Smart
Phones
Digital
Music/Video
Sales
e-Commerce3
Medium
Portals
Ad
Agencies
Content
Rights
Low
High
Med
Low
30%+
10-20%
<10%
PCs
Medium
Economies of
Relative ROCE2
Internet
Access
Web
Hosting/
Design
Low
Online
Billing/
Payments
High
Scale1
75%
45%
30%
VoD
(1)
IPTV
(5)
VoIP
(1)
Media Rights
(15)
Dating
(2)
e-Brokerage
(19)
Social
Networks
(3)
Internet
Access
(164)
Web
Hosting
(10)
0%
<10%
Digital
Music
Sales
(4)
10-20%
20-40%
40-60%
60-80%
e-Retail
(72)
Billing/
Payments
(21)
Directories
(5)
Consumer
Publishing
(7)
Market
Concentration1
Adult
(11)
Content
Mgt
(1)
Market
CAGR 20082013
Digital
Video
sales
(1)
Ad
Agencies
(16)
80%+
Ad
Networks
(11)
Gambling
(6)
Web
Search
(30)
Software
(2)
PCs
(95)
Smart
Phones
(27)
Video
Gaming
(9)
e-Travel
(49)
Games
Consoles
(13)
Global
Portals
(4)
Average ROCE
Operating
Systems
(6)
40%
Two sided markets: Low spend customers
benefit most from receiving calls
Through CPP, revenue from received calls allows low spending users to be
connected, even though the scale of subsidy is small.
Contribution to total ARPU, by value
Receiving calls
Making calls
> 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.
11%
17%
17%
13%
9%
7%
Percentage of the total mobile users in each ARPU band
Source: Vodafone customers in Delhi
7
5%
4%
7%
Making Broadband Accessible for All
10%
> Low spending users are
able to maintain a pre-pay
account without an
ongoing subscription.
> The lowest spending group
represent
11% of users but
18 July 2015
only 1% of revenue.
Bringing broadband to the majority of citizens
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.
Fibre
Wireless
> Optical fibre offers broadband connections up
to 100Mb/s
> Fibre is very costly to install; as access network
it is only commercially viable in denselypopulated, affluent areas
> 70% of the cost of a next generation fibre
network is in the last 100m of the access
network
> 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
Fibre
100
LTE
Speed (Mbit/s)
Cable
10
ADSL
3G
1
18 July 2015
8
HSPA+
Making Broadband Accessible for All
Streamed
HD video
Advanced
e-health
YouTube
Internet,
Email
Relative viability of fibre and wireless broadband in India
Only 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
Wireless
Dense rural geotype
Rural geotype
> 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.
Only in Mumbai and Thane
districts does the cost of fibre
approach wireless, as a % of
monthly NDDP
Source: State Economic Census for Maharashtra, WIK study of fibre network cost, Vodafone
analysis
18 July 2015
Maharashtra illustrates the urban / rural split
> 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.
9
Relative viability of fibre and wireless broadband in Jo’burg
Repeating 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 income
Joburg 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
18 July 2015
10
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
Gadchiroli wireless 8% / fibre 177%
Washim
Osmanabad
Hingoli
Yavatmal
Beed
Jalna
Buldhana
Dhule
Amravati
Sindhudurg
Nandurbar
Chandrapur
Wardha
Parbhani
Gondia
Ratnagiri
Ahmednagar
Solapur
Satara
Nanded
Latur
Akola
Bhandara
Jalgaon
Sangli
Aurangabad
Raigad
Nashik
Kolhapur
Nagpur
Pune
Jalore
Nagaur
Tonk
Jodhpur
Baran
Pali
Cittoragarh
Jhalawar
Hanumangarh
Bundi
Karoli
Sirohi
Sriganganagar
Udaipur
Bhilwara
Gulbarga
Haveri
Mandya
Ramanagara
Belgaum
Davanagere
Kolar
Udupi
Mysore
Dharwad
Bangalore rural
D.Kannada
Dungarpur
Swaimadhopur
Dholpur
Sikar
Jhunjhunu
Rajsamand
Dausa
Ajmer
Bharatpur
Kota
Alwar
Jaipur
Banswara
Bangalore
Mumbai
18 July 2015
wireless 3% / fibre 131%
wireless 3% / fibre 127%
wireless 3% / fibre 170%
wireless 12% / fibre 573%
U.Kannada
Koppal
Chamarajanagar
Bijapur
Chikmagalur
Chitradurga
Raichur
Bidar
Gadag
Chikballapur
Hassan
Tumkur
Shimoga
Kodagu
Bagalkot
Bellary
Thane
0%
Churu
Bikaner
Barmer
Jaisalmer
0% 20% 40% 60% 80%
20% 40% 60% 80%
All
0%
Rural
Dense rural
Less suburban
Dense urban
20% 40% 60% 80%
11
Professor Howard Williams
[email protected]
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)