Broadband Infrastructure in South Asia and West Asia Markets, - - PowerPoint PPT Presentation

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Broadband Infrastructure in South Asia and West Asia

Markets, Infrastructure, and Policy Options for Enhancing Cross-Border Connectivity

Michael Ruddy Director of International Research Terabit Consulting

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 1: Background and Methodology

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Completed ASEAN-9 Study

Phase I: Between November of 2012 and August of 2013, Terabit Consulting completed a study of 9 countries in Southeast Asia, as well as adjoining regions:

– Cambodia – Indonesia – Lao PDR – Malaysia – Myanmar – Philippines – Singapore – Thailand – Vietnam – Yunnan Province, China

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Completed North & Central Asia Study

Phase II: Between June and November 2013, Terabit Consulting completed a study of 7 countries in North and Central Asia

– Azerbaijan – Kazakhstan – Kyrgyz Republic – Russian Fed. – Tajikistan – Turkmenistan – Uzbekistan

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Current Study: South Asia and West Asia

Between April and October 2014 (with analysis

• ngoing), Terabit Consulting performed a detailed

analysis of broadband infrastructure and markets in 9 strategic markets in South Asia & West Asia:

– Bangladesh – Bhutan – Iran – India – Maldives – Nepal – Sri Lanka – Turkey

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Scope (cont’d.)

• The data and analysis for each country included:

 Telecommunications market overview and analysis of competitiveness  Regulation and government intervention  Fixed-line telephony market  Mobile telephony market  Internet and broadband market  Consumer broadband pricing  Evaluation of domestic network connectivity  International Internet bandwidth  International capacity pricing  Historical and forecasted total international bandwidth  Evaluation of international network connectivity including terrestrial fiber, undersea fiber, and satellite  Evaluation of trans-border network development and identification of missing links  Identification of key highway and rail projects

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Sources of Data

• Terabit Consulting has completed dozens of

demand studies for submarine and terrestrial fiber networks worldwide

– Constant contact with operators, ISPs, and other stakeholders

• Terabit Consulting’s published

reports include:

– The Undersea Cable Report (1,500+ pages) – International Telecommunications Infrastructure Analysis (1,000+ pages)

• Terabit Consulting’s data and

intelligence covers infrastructure, demand, traffic flows, pricing, and market share

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 2: State of South and West Asia Bandwidth and Broadband Markets

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Overview of Broadband Status

GDP per Capita, YE 2012 (PPP, USD) Int’l. Band- width per Capita (Kbps) Int’l. Connect- ivity Domestic Connect- ivity IP Transit Price Competitive- ness of Telecom Market Fixed and Mobile Broadband Infra- structure Annual 1 Mbps Broadband Subscription + Installation as %

• f Nominal GDP

per Capita Bangladesh $2,200 0.3 Weak Moderate Expensive Somewhat Competitive Limited Very Expensive Bhutan $7,000 7.6 Weak Limited Expensive Less Competitive Limited Reasonable India $4,000 1.0 Excellent Moderate Moderate Competitive Limited Reasonable Islamic Republic of Iran $14,300 1.5 Excellent Limited Expensive Less Competitive Limited Somewhat Expensive Maldives $10,200 24.0 Sufficient Moderate Expensive Less Competitive Limited Reasonable Nepal $1,600 0.7 Weak Limited Expensive Less Competitive Limited Very Expensive Pakistan $3,800 1.7 Somewhat Weak Moderate Expensive Somewhat Competitive Limited Somewhat Expensive Sri Lanka $8,100 2.2 Sufficient Moderate Expensive Less Competitive Limited Affordable Turkey $16,900 30.7 Sufficient Moderate Very Reasonable Less Competitive Limited Extremely Affordable

www.terabi abitcons

• nsul

ulting.c ng.com

• m

International Internet Bandwidth, YE13

Turkey: 2.3 Tbps India 1.2 Tbps Pakistan: 300 Gbps Iran: 113 Gbps Bangladesh: 50 Gbps Sri Lanka: 45 Gbps Nepal: 20 Gbps Maldives: 8 Gbps Bhutan: 5.7 Gbps

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Int’l. Internet Bandwidth per Capita (Kbps)

5 10 15 20 25 30 35 30.7 24.0 7.0 2.2 1.7 1.5 1.0 0.7 0.3

• Difference between Turkey and Bangladesh: 100x
• Average in Western Europe: 99 Kbps

1 Kbps or Less: Serious Obstacle to Development

www.terabi abitcons

• nsul

ulting.c ng.com

• m

International Fiber Connectivity

• The Study identified and analyzed 40 trans-border

terrestrial fiber optic links in the region

– Across borders within the region and at the edge of the region (e.g. to China, Mynamar, Afghanistan, Iraq, and Eastern Europe)

• Some transborder links form segments of

multinational networks

– Trans Asia-Europe (TAE) – Europe-Persia Express Gateway (EPEG) – South Asian Sub-regional Economic Cooperation (SASEC) Information Highway

• The analysis also covered 28 submarine cable systems

– Including interregional systems such as the Sea-Me-We and FLAG cables, as well as regional submarine cables

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Our Gracious Hosts: Bhutan

• Two terrestrial cables to India

– Phuentsholing to Jaigaon, India (2007) – Galephu to Assam, India (2011) – Both fiber paths converge at Siliguri, India

• Druknet/BT 5.3 Gbps with connectivity via LINX and HKIX

– Third international POP in Singapore in 2014

• Tashi Infocomm: 370 Mbps
• South Asia Subregional Economic Cooperation (SASEC)

Information Highway network will connect Bangladesh, India, Bhutan, and Nepal

– Included installation of new fiber link from Thimphu to Phuentsholing and Gelephu (2014)

Fragile infrastructure reliant upon India, vulnerable to multiple bottlenecks including Siliguri, Mumbai, and Egyptian submarine cables

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Bangladesh: Int’l. Infrastructure

• Heavily dependent upon Sea-Me-We-4 cable

– Operated by BSCCL; 200 Gbps is currently 20% used

• Six ITC operators licensed to connect terrestrially to

India

– BTCL and BSNL networks were interconnected in 2010 – Bharti Airtel cable implemented in July, 2013

• Projects under development include Sea-Me-We-5

and a terrestrial link to MPT Myanmar Weak international infrastructure reliant upon Sea-Me- We-4 and terrestrial links to India, and vulnerable to submarine cable disruptions in Egypt.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

India: Int’l. Infrastructure

• Eleven interregional submarine cables

– FLAG Europe-Asia (FEA) (1997), Sea-Me-We-3 (1999), Sea-Me-We-4 (2005) – SAFE (2002) and Seacom (2009) – i2i (2002) and TGN-TIC (2004) – Falcon (2006), I-Me-We (2010), Europe-India Gateway (2011), and the Gulf Bridge International /MENA network (2012)

• International gateway share: Tata 39%, Bharti 30%, Reliance 26%, Sify 5%
• Bharat Lanka Cable System and India-Maldives
• Terrestrial cables:

– To China: Reliance (2009), Bharti Airtel/China Telecom (2010), Tata Communications (2010) – India-Myanmar (2010) – Multiple links to Bangladesh, Bhutan, and Nepal – India-Pakistan cable between Amritsar and Lahore has been installed, but security agencies on both sides of the border are refusing its use for non-voice traffic

Although India benefits from excellent international connectivity, it is still extremely vulnerable to submarine cable events in Egypt and the Strait of Malacca. Only improved, robust pan-regional terrestrial connectivity can provide a viable alternative.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Iran: Int’l. Infrastructure

• Terrestrial connectivity to all neighbors

– As of 2012, trans-border capacity was as follows: Armenia 1.4 Gbps, Azerbaijan 1.2 Gbps, Turkey 600 Mbps, Turkmenistan 600 Mbps, Iraq 300 Mbps, and Afghanistan 200 Mbps (Pakistani link reportedly under implementation) – Telecommunications Infrastructure Company of Iran (TCI) has set the following targets for 2017: Azerbaijan 4.3 Tbps, Iraq 1.2 Tbps, Turkey 1.1 Tbps, Armenia 930 Gbps, Turkmenistan 600 Gbps, Afghanistan 430 Gbps, and Pakistan 400 Gbps.

• Pan-regional terrestrial networks: Trans Asia-Europe (TAE) and Europe-

Persia Express Gateway (EPEG)

• Submarine cables include Falcon, Gulf Bridge International (GBI),

Pishgaman Oman-Iran (POI), EPEG Iran-Oman, UAE-Iran, and Kuwait- Iran. Iran’s physicial connectivity within the region is excellent, positioning it as a viable and competitive transit hub for traffic from South Asia, the Middle East, and Central Asia, as well as Europe-Asia demand. However, activated bandwidth levels must be significantly increased.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Maldives: Int’l. Infrastructure

• Two submarine cables connecting to India and Sri

Lanka

– Dhiraagu submarine cable (in partnership with SLT) (2006) – WARF Telecom Maldives-India-Sri Lanka (Wataniya/Ooredoo with Lanka Bell & Reliance) (2007/2008)

Although every country should optimally have more than two international outlets, Maldives’ existing infrastructure is advanced for a country of its size, and enables very high per-capita bandwidth

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Nepal: Int’l. Infrastructure

• Terrestrial interconnections to four Indian networks

– Reliance, BSNL, and Airtel via the Birgunj-Raxaul and Birtatnagar-Jogbani border crossings – Tata links to the network of UTL via Birgunj-Raxaul and Bhairahwa-Sunauli

• SASEC Information Highway and Nepal-China link

under implementation Nepal’s international infrastructure is currently very weak, leaving it reliant almost exclusively upon India

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Pakistan: Int’l. Infrastructure

• Incumbent operator PTCL operates three submarine cables and

controls about 60% of international traffic

– Sea-Me-We-3 (1999), Sea-Me-We-4 (2005), I-Me-We (2010)

• Transworld Associates operates the TW-1 submarine cable and

handles most of the remaining 40% of international traffic

– System connects to Oman and UAE

• Relatively weak terrestrial connectivity to neighbors

– Afghanistan links are reportedly operational – Operation of Pakistan-Iran link could not be confirmed – India-Pakistan cable constructed but not activated – Contract awarded to Huawei Technologies in 2013 to implement a fiber link to China via the Khunjerab Pass

Pakistan has access to three interregional submarine cables and a fourth regional system, but terrestrial connectivity is weak

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Sri Lanka: Int’l. Infrastructure

• Sri Lanka Telecom (SLT) is an investor in the Sea-

Me-We-3 (1999) and Sea-Me-We-4 (2005) cables, as well as the planned Sea-Me-We-5 (2016)

• Dialog Axiata is an investor in the proposed Bay of

Bengal Gateway (BBG) submarine cable (2016)

• Three regional submarine cables connect to India

and Maldives Sri Lanka’s international connectivity is sufficient.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Turkey: Int’l. Infrastructure

• Turkey’s primary international link is the Telecom Italia-owned Med Nautilus

cable (2004/2011) which connects to Italy, Greece, Cyprus, and Israel

– The network’s expansion to Turkey was funded by a $40 million, 15-year IRU commitment by Turk Telekom, which operates the system’s cable station in Istanbul

• Turk Telekom also purchased significant capacity from OTE via the Trans Balkan

Network (TBN)

• Pan-European operator Interoute expanded its pan-European network from

Bulgaria to Istanbul in 2010

– Recently offered 10 Gbps wavelength from Istanbul to European POPs for €10,000 per month, with a 50% premium for protection and 100% for IP transit (=$1.30 to $2.60 per Mbps

• Turkey’s international terrestrial connectivity is robust and it also participates in

several regional submarine cable systems

– Investor in JADI Link and RCN pan-regional systems, however both are inactive due to Syrian Civil War – No identified connectivity to Armenia

Turkey has robust access to European IP transit connectivity and has attempted to leverage this to serve as a transit provider for Central Asia

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Table of Fiber Connectivity in the Region

Bangla- desh Bhutan India Islamic Rep of Iran Maldives Nepal Pakistan Sri Lanka Turkey Other Borders Bangla- desh

4,053km bor- der: Multiple fiber links (& SMW4) No direct submarine cable links Sea-Me-We-4 submarine cable Sea-Me-We-4 (& planned Sea-Me-We-5 Myanmar (193km) – fiber under implementation

Bhutan

605 km border: multiple fiber links China (470km) – no fiber

India

4,053km border: multiple fiber links 605 km border: multiple fiber links Falcon & GBI submarine cables WARF Telecom submarine cable 1,690 km border: multiple fiber links 2,912 km border: unlit cable (SMW/ IMW cables Sea-Me-We-3, Sea-Me-We-4, BLCS China (3,380km) – multiple fiber links Myanmar (1,463km) – fiber present

Islamic Republic

• f Iran

No direct submarine cable links 909 km bor- der: fiber under development No direct submarine cable links 499 km border: multiple fiber links

• Afghanist. (936km) - yes

Armenia (35km) - yes Azerbaijan (432km) - yes Iraq (1,458km) - yes

• Turkmen. (992km) - yes

Maldives

No direct submarine cable links WARF Telecom submarine cable No direct submarine cable links No direct submarine cable links Dhiraagu Submarine Cable, WARF

• Subm. Cable

N/A

Nepal

1,690 km border: multiple fiber links China (1,236km) – proposed fiber; could not be confirmed

Pakistan

Sea-Me-We-4 submarine cable 2,912 km border: unlit cable (SMW/ IMW cables 909 km bor- der: fiber under development No direct submarine cable links Sea-Me-We-3, Sea-Me-We-4 Afghanistan (2,430km) – yes China (523km) – fiber under implementation

Sri Lanka

Sea-Me-We-4 (& planned Sea-Me-We-5) Sea-Me-We-3, Sea-Me-We-4, BLCS No direct submarine cable links Dhiraagu & WARF subm. cables Sea-Me-We-3, Sea-Me-We-4 N/A

Turkey

499 km border – multiple fiber links Armenia (268 km): No Azerbaijan (9km): Yes Bulgaria (240km): Yes Georgia (252km): Yes Greece (206km): Yes Iran (499km) : Yes Iraq (352km): Yes Syria (822km): Yes

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Analysis of Priority Trans-Border Projects

International Border (and border length) Analysis Recommendation Bangladesh / India (4,053 kilometers) Low Priority The border between Bangladesh and India is served by one existing terrestrial fiber link, as well as an additional terrestrial fiber link currently under implementation. The two countries are also linked by the Sea-Me-We-4 submarine cable and will be linked by the proposed Sea-Me-We-5 submarine cable. Given that Indian operators BSNL and Bharti Airtel have activated terrestrial fiber connectivity between the two countries (with additional terrestrial link under implementation by Tata), and given existing and planned submarine connectivity between the two countries, there is no strong requirement for additional terrestrial fiber between Bangladesh and India. Bangladesh / Myanmar (193 kilometers) High Priority Myanmar Posts and Telecommunications (MPT) and the Bangladesh Submarine Cable Company Ltd. (BSCCL) are in the process of implementing a terrestrial fiber link between the two countries. Additional fiber links are needed in order to ensure that Bangladesh has redundant bilateral connectivity with more than one country. Bhutan / India (605 kilometers) High Priority Although Bhutan has two terrestrial links to India, with the first completed in 2007 and the second in 2011, both fiber paths converge in Siliguri, raising concerns about the vulnerability of Bhutan’s international connectivity. Diversification of Bhutan’s fiber links to India is urgently needed in order to ensure the robustness of the country’s international connectivity. India / China (3,880 kilometers) Medium Priority There are three fiber links between China and India, linking China to the Indian networks of Bharti, Reliance, and Tata. The ability of the Chinese terrestrial route to provide an

• utlet for Indian international

demand, coupled with the relative fragility of existing fiber links, indicates a need for more robust fiber links between the two countries. India / Nepal (1,690 kilometers) Medium Priority Nepal Telecom is linked to the Indian networks of Reliance, BSNL, and Bharti Airtel via multiple border crossings. Despite multiple fiber links, the importance of India’s connections with Nepal requires mesh-like connectivity across the countries’ border. International Border (and border length) Analysis Recommendation India / Myanmar (1,463 kilometers) A 640-kilometer terrestrial fiber link was completed in 2010 at a cost of $7 million and is operated by BSNL and Myanmar Post and Telecommunications (MPT). The India-Myanmar border is a critical corridor for connectivity between India and Southeast Asia, requiring multiple fiber links. India / Pakistan (2,912 kilometers) High Priority A terrestrial fiber link has been constructed between India and Pakistan, but security agencies

• n both sides of the border

have refused to allow its use for non-voice traffic. The cable remains dormant as of mid- 2014. Deploying more robust connectivity between India and Pakistan could be an important step to ensure regional stability, although there is currently little political momentum to do so. Nepal / China (1,236 kilometers) High Priority A link between China and Nepal via Tatopani was proposed in 2010 but as of 2014 the status of its development could not be confirmed. Given Nepal’s almost exclusive reliance upon terrestrial connectivity with India, the country is in urgent need of diversified connectivity via China. Islamic Republic of Iran / Pakistan (909 kilometers) Medium Priority Although Iran has strong fiber connectivity with each of its neighbors, the Iran-Pakistan border has historically lacked fiber and the implementation

• f a trans-border link could not

be confirmed as of mid-2014. Improved connectivity between Iran and Pakistan would provide both countries with improved interregional access, i.e. from Iran to South Asia and from Pakistan to northwestern destinations. Islamic Republic of Iran / Turkey (499 kilometers) Low Priority There are multiple fiber links between Iran and Turkey, and Telecommunications Infrastructure Company of Iran has set a target of 1.1 Tbps of bandwidth across the countries’ border by 2017. There is no urgent requirement for improved connectivity between Iran and Turkey. Pakistan / China (523 kilometers) High Priority A fiber link between Pakistan and China is currently under construction in the Khunjerab Pass. Both Pakistan and China would benefit from improved fiber connectivity, as the single fiber link under implementation is not considered to be a definitive, long-term solution for linking the two countries with robust connectivity. Turkey/ Armenia (268 kilometers) High Priority Terabit Consulting did not identify any activated fiber capacity between Turkey and Armenia. Given the gradual improvement

• f relations between the two

countries, as well as increasing

• pportunities for closer social

and economic cooperation,

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Summary of Priority Projects

High Priority Trans-Border Projects

• Bangladesh / Myanmar
• Bhutan / India
• India / Myanmar
• India / Pakistan
• Nepal / China
• Pakistan / China
• Turkey / Armenia

Medium Priority Trans-Border Projects

• India / China
• India / Nepal
• Islamic Republic of Iran / Pakistan

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 3: Why a Coherent, Open-Access, Cost-Effective Pan-Asian Fiber Infrastructure Would Benefit the Region

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Telecommunications and Internet development in Bangladesh, Bhutan, Nepal, and Pakistan, as well as each country’s overall economy, has greatly suffered as a result of weak international infrastructure.

Reason #1

Why a Coherent Pan-Asian Infrastructure Would Benefit the Region

www.terabi abitcons

• nsul

ulting.c ng.com

• m

The Impact of Low International Bandwidth & Weak International Infrastructure

• At the macro level: a major obstacle to economic and

human development

– Detachment from digital economy – Continued economic inefficiencies and restrained growth – Lack of access to critical social development tools including telemedicine, distance learning, scientific/research networks

• More specifically within the telecom environment:

higher wholesale and consumer prices, and lower broadband adoption rates

– Average IP transit price in secondary and tertiary markets in the region is $60 per Mbps

• Compared to Mumbai: $12 per Mbps
• Compared to Turkey: $2.60 per Mbps
• Compared to USA: $1 per Mbps

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Despite their developed international connectivity, the markets in the study with strong, low-cost bandwidth (e.g. India and Turkey) would greatly benefit from improved pan-regional terrestrial fiber.

Reason #2

Why a Coherent Pan-Asian Infrastructure Would Benefit the Region

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Pan-Regional Fiber Benefits Markets with Strong Connectivity

• Mesh connectivity throughout the region would

increase all countries’ network reliability and provide critical outlets of connectivity

– Allowing India to have a stronger alternative to the Egyptian bottleneck, for instance

• Stimulating the region’s overall demand presents a

greater market opportunity for transit providers and cable operators including Turk Telekom, Tata, and Reliance

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Coherent pan-Asian terrestrial fiber optic infrastructure would benefit markets across the continent and beyond, and help address one of the international bandwidth industry’s most pressing concerns, namely the lack of reliable, cost-effective Europe-to-Asia bandwidth. In financial terms, the viability of constructing coherent pan- Asian terrestrial fiber optic connectivity can likely be guaranteed by capturing even a small portion of bandwidth demand between Asia and Western Europe.

Reason #3

Why a Coherent Pan-Asian Infrastructure Would Benefit the Region

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Strong Europe-to-Asia Bandwidth Demand

Source: The Undersea Cable Report by Terabit Consulting Lit Capacity, Submarine Cables serving South Asia (incl. Europe-Asia), 2007-2013

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Terrestrial as a Solution for Submarine

Source: The Undersea Cable Report 2014 by Terabit Consulting

The global telecommunications industry is desperate for a cost-effective solution that would avoid undersea choke points.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

A Pan-Asian Terrestrial Network Would Be More Competitive than Europe-Asia Submarine

Submarine Terrestrial Connectivity Cable station to cable station, with expensive backhaul POP-to-POP Repair Faults take weeks to repair; ships running costs $50,000+ per day Networks accessible by highway can be quickly repaired at low cost Capacity and Upgrades Long-haul limited to 8 fiber pairs; submerged electronics poses limitation Unlimited capacity with proper duct installation and maintenance Costs Unrepeatered 3-fiber pair cable: $12,500 per km, marine services $20k-$40k / km $1,250 per km with marginal fiber costs of as low as $60 per km Risk and Reliability No viable alternative to Egyptian bottleneck Mesh configuration could offer “five nines” if properly designed

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 4: The Case for Installing a Terrestrial Pan-Asian Fiber Optic Network Along Highway Rights-of-Way

www.terabi abitcons

• nsul

ulting.c ng.com

• m

International Highway Infrastructure

• In the near-term, many of the countries in the region will be

upgrading existing highway infrastructure and installing new links

• Simultaneous installation of high-capacity fiber and ducts

would be a negligible marginal cost in most projects

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Installing Fiber within a Road Project

• In the US (high labor-cost market), conduit+fiber

installation during open road construction costs between USD$6,000 and USD$18,000 per kilometer

• Road installation costs at least USD$1.8 million per

lane, per kilometer

• Cost of fiber network installation during open road

construction: much less than 1% of project total

Photos: Terabit Consulting

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 5: The Case for Intervention to Ensure Network Development

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Market Failure: Broadband Divide

• The analysis showed that the growing chasm

between the broadband “have” and “have-not” markets results in vast differences in:

– international fiber connectivity – domestic connectivity – the pricing of IP transit capacity – the competitiveness of telecommunications and Internet market – fixed and mobile broadband infrastructure – the affordability of consumer broadband services

• This impacts overall economic growth and

development.

• Landlocked markets can’t compete using the existing

trans-border (bilateral) infrastructure.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

The Need for Intervention

Intervention (by government or int’l. organizations) is required to ensure the implementation of a pan- Asian terrestrial fiber optic network for 5 reasons:

• 1. To overcome the region’s vast broadband inequality and

assist landlocked nations.

• 2. To ensure that the region receives broadband services on

a par with more developed markets.

• 3. To finance or assist in financing a major capital project

that is unlikely to be fully financed by the private sector.

• 4. To pool and leverage private-sector resources which are

disparately insufficient.

• 5. To stimulate and facilitate future private investment

through market development and maturation.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Options for Government/UN Participation

Asian Terrestrial Fiber Optic Connectivity Construction of Coherent, Pan- Asian Terrestrial Fiber Network

Intervention by Government / Int'l. Organization to Ensure Implementation Full Government / Int'l. Organization Ownership and Project Management

Choice of Project Design and Engineering, Supplier, Maintenance Authority, Operational Plan

Public-Private Partnership (PPP) / Private Sector Project Management Special Purpose Vehicle (SPV) with Government Shareholding (Investment) Special Purpose Vehicle (SPV) with Government Contribution (Subsidy) Build-Operate-Transfer (BOT) Project Management Contract Marketplace Left to Implement Its Own Coherent Solution

Continued Use of Fractured, Bilateral Terresrial Fiber Infrastructure

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Available Public-Private Partnership Options

Special Purpose Vehicle (SPV) Model with Government/Organizational Shareholding

• Network operators form a special purpose vehicle to assume full responsibility for the development, operation, and maintenance
• f the pan-Asian terrestrial network.
• Government, organizational, and/or developmental entities make capital contributions to the SPV and receive equity stakes

and/or capacity on the network.

• The contributor(s) receive a seat on the board of the SPV, thereby ensuring that policy goals are achieved.
• A regulatory framework is adapted to ensure that the SPV’s outcome fulfills policy goals and improves the overall welfare of the

region.

• The contributor’s equity stake may be divested once certain milestones are achieved, or alternatively may be held until the

winding-down of the SPV.

Special Purpose Vehicle (SPV) Model with Government/Organizational Contribution

• Network operators form a special purpose vehicle with full responsibility for the pan-Asian terrestrial fiber optic network.
• The government, organizational, and/or developmental entities make capital contributions to the SPV.
• The contributor(s) do not receive equity or capacity on the network.
• However, the contributor(s) do participate in the creation of the SPV’s governance framework, and receive a seat on the board of

the SPV.

• Mechanisms are instituted to ensure that policy goals are met.

Build-Operate-Transfer (BOT)

• Following an open tender process, a concession is granted to one or more network operators for a fixed long-term duration

(typically 20 years).

• The network operators are assigned full responsibility for financing, operating, and maintaining the cable.
• Certain market privileges may be accorded to the network operators.
• The operators are allowed to retain all revenues during the period of its concession.
• Once the concession agreement expires, ownership of the network is assigned to the government(s) at no cost.

Awarding of Project Management Contract

• A tender is issued to select one or more network operators responsible for the construction, operation, maintenance, and

commercialization of the pan-Asian terrestrial fiber optic network.

• The contract recipient is paid to manage the cable and assume these responsibilities, including the sales of capacity to operators.

The contract recipient’s management fees may be fixed or based on a percentage of revenue.

• The network remains the property of the Government(s), which collect all profits (less management fees).

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 6: Principles to Guide Network Development

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Principles to Guide Future Network Development

• 1. Fully integrated and coherent

– Mesh configuration to allow for in-network healing in the event of physical cable outages or political instability affecting connectivity in specific countries.

• 2. Functioning and monitored as single, uniform network

– Existing multi-national terrestrial networks cannot offer uniform quality-

• f-service guarantees between endpoints (as good as “weakest link” or

“weakest operator”).

• 3. Leveraging existing infrastructure

– Right-of-way procurement and uniform construction techniques would be enabled through the use of the Asian Highway network, Pan-Asian Railway project, or power transmission networks.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Principles to Guide Future Network Development

(Continued)

• 4. Cost-effective

– With suitable transmission capacity and fiber count, a pan-regional terrestrial fiber network could compete effectively with submarine cable

• n both a regional and intercontinental basis.
• 5. Open access and non-discriminatory pricing

– In order to achieve development and policy goals, as well as to serve the region’s consumers, all purchasers of capacity must be able to access the network on an equal, non-discriminatory basis.

• 6. Developed and managed by a Special Purpose Vehicle

(SPV)

– SPV shareholding would ensure the neutrality and efficiency of the network – Allows participation by all stakeholders while still maintaining arm’s- length terms over all capacity sales and leases.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Part 7: Gaining Support for the Project

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Stakeholder Participation is Key

• Key stakeholders should be involved in the

project:

– National Regulatory Authorities – Incumbent Operators and Major International Gateway Operators – Competitive Telecommunications Operators and ISPs – Road and Railway Authorities/Operators

• Suppliers and contractors should also be consulted

in the development stage

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Convincing Governments of the Project’s Advantages

• 1. Benefits to consumers

– Better, more cost-effective connectivity in the region will greatly reduce consumer prices in less developed markets and improve broadband reliability throughout the region.

• 2. Economic growth

– Improvement in ICT infrastructure yields:

• Increased demand for the output of other industries (demand multiplier)
• New opportunities for production in other industries (supply multiplier)
• New goods and services for consumers (final demand)

– It also increases firms’ innovation capabilities and increases the probability of new products, innovations, and organizations

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Convincing Governments of the Project’s Advantages

(Continued)

• 3. Increased government revenue

– Growth in economic output from ICT investment results in greater tax revenue – Increased employment in the telecommunications sector – Greater collections from telecom licenses and excise

• 4. Regional stability through better international

and intercultural relations

– More efficient routing of trans-border traffic would encourage trans-border initiatives in the education, healthcare, and research sectors that would not otherwise be possible.

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Road Map / Next Steps

• Critical international connectivity weaknesses

throughout Asia are being identified by Terabit Consulting

• As more market analyses are completed, the viability
• f a coherent pan-Asian network is becoming clearer
• Detailed Feasibility Study (DFS) should be undertaken
• Rough Order of Magnitude (ROM) costing exploration

should be initiated

• Determination of support among stakeholders
• Identification of financing options

www.terabi abitcons

• nsul

ulting.c ng.com

• m

Thank you!