Development of a national broadband strategy in the Middle East and Africa Part I – Understanding the local context and leveraging the available ICT technologies 9 June 2012 • David Eurin MK689
2 Contents Introduction Understanding the local context Leveraging the available ICT technologies Conclusions so far … this afternoon: roadmap for a nationa l broadband strategy MK689
3 Analysys Mason has helped many countries to develop or refine national broadband plans Ireland 2006-12: Design, Malta 2011: Techno-economic feasibility of a UK 2008 : Broadband stakeholder Wales 2004 -2010: Commercial and UK 2005-2006: Development of procurement and national FTTH network group models for efficient public technical strategy, business planning, broadband scenarios for the BSG in implementation support for sector interventions in next procurement and implementation support the UK the EUR 234m National UK 2001 onwards: Broadband planning generation broadband as part of National fibre broadband initiative for regional development agencies on Broadband Scheme Wales 2006: Study to UK 2008 onwards: support to European Commission 2010- the UK promote public intervention in Cornwall council in its Next EU 2011 onwards: Socio-economic 2011 : Developed a guide for “second generation Generation Broadband project benefits of broadband in 27 EU countries investment in broadband broadband” market and private sector funding analysis infrastructure, covering small Thailand 2009: regional roll outs and national Development of national interventions alike broadband plan Western Europe 2004: Brunei 2009-2010: Analysis of Internet Development of national access prices in Western broadband strategy Europe Singapore 2005-2006 : Provided support on Next Generation UK 2010 onwards: Cost modelling of Broadband Network Initiative next-generation broadband and regional funding allocations Malaysia 2002-2003: National broadband policy development US 2002-2003 : Study of US Gulf 2010: Regulatory support in broadband policy for TechNet major Gulf country to define three- Chile 2007-2009: Broadband year internet development plan Morocco 2011: promotion study in Chile National action plan New Zealand 2010 - 2011: Libya 2009: Provided commercial for the development of Technical and cost reviews broadband and technical fixed and wireless underpinning the Government’s licence bid support addressing i.a. national Ultra-Fast and Rural national broadband requirements. Broadband strategies Italy 2001-2002: Analysis of EMEA 2011: National Israel 2011: Technical audit of national Norway 2002: Assessed government intervention broadband market broadband solution used to evidence the potential social and mechanisms and assessment, international competitiveness and Australasia 2010- 2011: Operator economic benefits from a prioritisation for broadband benchmarks and sufficient investment capability to the scheme to provide support to become national partner for task force forecasts Government broadband to selected ultra- fast broadband solution. Egypt 2008: Provided India 2010: Strategic road- Subsequently carried out review of public sector sites Australia 2009: STEM commercial and technical fixed Lesotho 2012: mapping and assessment of license, training and solution and identification of global licence bid support addressing Development of drivers for the deployment best practice modelling assistance for i.a. national broadband national of a national fibre- optic National Broadband project requirements. broadband plan backbone in India MK689
4 Contents Introduction Understanding the local context Leveraging the available ICT technologies Conclusions so far MK689
5 Governments and banks use simple indicators To make high-level investment decisions, different situations must be compared and benchmarked Only consistent indicators are useful Therefore few indicators are used in practice This does not reduce the need for an extensive set of indicators to be studied by academics and economists Local issues Specific reviews MK689
6 Broadband economics are driven by density Proportion of total land area Population density in selected countries holding 90% of the population 800 60% 700 50% 600 Inhab. per sq.km 40% 500 % of area 400 30% 300 20% 200 10% 100 0 0% Lebanon Israel Syria Egypt Jordan Tunisia Morocco Algeria Egypt Algeria Israel Morocco Jordan Tunisia Syria Lebanon Gaza / West Bank Gaza / West Bank Source: Euromonitor, Analysys Mason MK689
7 Demand for broadband is driven by wealth GDP per capita at PPP (2010) 35,000 FEMIP countries Other countries 30,000 25,000 EUR at PPP 20,000 15,000 10,000 5,000 0 Israel Lebanon Tunisia Algeria Egypt Jordan Syria Morocco Germany United Kingdom France Spain Italy Greece Cyprus Malaysia Botswana South Africa Thailand Ukraine Georgia Source Euromonitor MK689
8 Fixed broadband is rare in the region … Fixed broadband penetration of households (2010) 80% DSL, cable, fibre (FTTC, FTTH), fixed 70% WiMAX and satellite technologies 60% % of households 50% 40% 30% 20% 10% 0% Israel Lebanon Jordan Tunisia / West Bank Algeria Morocco Egypt Syria France Cyprus United Kingdom Germany Greece Spain Italy Malaysia Georgia Thailand Ukraine outh Africa Botswana Source: TeleGeography, Euromonitor MK689
9 … but mobile networks reach most people Benchmarks of mobile penetration of population (2010) 140% 120% 100% % of population 80% 60% 40% 20% 0% Israel Jordan Tunisia Morocco Algeria Egypt Lebanon / West Bank Syria Cyprus Italy Greece Germany Botswana Spain United Kingdom Malaysia Ukraine Thailand Georgia outh Africa France MK689
10 Prices are a lead indicator for take-up Prices for fixed broadband offers of up to 1Mbit/s Prices for the cheapest mobile broadband offers 70 40 60 50 30 EUR per month 40 EUR per month 30 20 20 10 10 0 Lebanon Syria Algeria Jordan Israel Tunisia Egypt Morocco Gaza / West Bank 0 Syria Israel Tunisia Jordan Morocco Egypt All in 2011 (mid-year) MK689
11 Total broadband penetration is still too low Broadband subscribers and household penetration (2010) 3.0 120% 2.5 100% Subscribers (million) 2.0 80% % of households 1.5 60% 1.0 40% 0.5 20% 0.0 0% Egypt Israel Morocco Algeria Tunisia Jordan Lebanon Syria Gaza / West Bank Fixed broadband subscribers Mobile broadband subscribers Broadband penetration MK689
12 Contents Introduction Understanding the local context Leveraging the available ICT technologies Conclusions so far MK689
13 Public and private players can leverage different ICT technologies to offer broadband Technology Features Fibre-optic cable Highest capacity available, and highest cost of deployment; main choice for backhaul and core networks Copper-based Much lower bandwidth than fibre; most practical where DSL copper networks exist Fixed wireless Cost-effective widespread population coverage; HSPA+, LTE and WiMAX can offer peak speeds similar to DSL Mobile broadband Same economics as fixed wireless networks, but lower capacity, aimed at smaller devices; most practical where mobile networks already exist Satellite Offers ubiquitous services; very substantial investment, but broadband wide geographical coverage (sharing) MK689
14 These technologies have different economics Illustration of the revenue-density approach 50% 40% Viable Internal rate of return (%) 30% areas 20% Urban Rural 10% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% -10% Non- -20% viable areas -30% -40% -50% Population coverage (%) DSL FTTC FTTH WiMAX HSPA HSPA+ LTE MK689
15 Fixed and mobile broadband costs vary (different outcomes and services) Evolution of total coverage costs for LTE Evolution of total coverage costs for FTTC 1.0 2.0 0.8 1.5 EUR (billion) EUR (billion) 0.6 1.0 0.4 0.5 0.2 0.0 0.0 Morocco Algeria Morocco Algeria ICT indicators should include supply-side metrics, such as the total cost of ownership of specific technologies Source: Analysys Mason MK689
16 Not one technology, but a combination The best overall solution will usually combine several technologies, involving a trade-off of cost, performance and reach that is considered appropriate for each context The most suitable mix depends on the economics of the technologies being considered the geography and population of the country concerned the services to be provided to different users and prices the objectives of the country and the budget available Governments and investors need ICT indicators to make these decisions MK689
17 Contents Introduction Understanding the local context Leveraging the available ICT technologies Conclusions so far MK689
18 Conclusions from Part I A sound national broadband strategy will be based on the local context (i.e. some key ICT indicators) leverage specific strengths of ICT technologies not be the same as strategies in other countries, but unique have clear objectives, ambitions and budget MK689
19 ... and still to come in Part II (this afternoon) How to build a successful national broadband strategy roadmap and approach outline of the national broadband strategy document MK689
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