Wireless

1
Wireless development in the Asia Pacific
Institutions matter

• Rohan Samarajiva, with contributions from
  LIRNEasia team
• High-level workshop, Annenberg Research Network
  on International Communication, Oct 7-8, 2005

2
Agenda

• Wireless and development
• Wireless in the Asia Pacific
• Backbone
• Mobile fixed
• Mobile data
• WiFi
• The strange case of Indonesia
• Regulatory environment
• Spectrum management incl. refarming
• Importance of investment

3
How do South Asians on less than USD 100/mo.
communicate?
Fixed (49)
Mobile (19)
2
21
11
3
3
23
37
Base 3199
Public access (66)
4
Survey (3200 sample, 6 languages, 11 locations)

• Surveys in India (2099) Sri Lanka (1100)
• Not representative of India and Sri Lanka as
  wholes
• Users
• those who have used a phone in the last three
  months
• Financially constrained users
• Monthly household income lt USD100
• Socio-Economic Classification (SEC) groups B,C,D
  E
• Mix of urban (37.5) and rural (62.5)
  respondents

5
Development Not by communication (wireless) alone
Other communication inputs
Communication Coordination Knowledge
ICTs/ Tech enabling sync interaction/ Info
seeking/publn
Development
Tech
Enabling/complementary conditions
Capital
Wireless
Other inputs
6
Asia Pacific Wireless in the network

• Wireless in the backbone (digital microwave
  satellites)
• Mobile telephony is most visible manifestation of
  wireless in the access network
• A-P is now the largest mobile market in the
  world, overtaking N. America in 2003
• Growth rate of 31 (v. 13 in N. America)
• But mobile/100 was only 16 compared to 52 in
  Europe 35 in the Americas
• Signifying potential for more growth
• Mobile gt fixed in many A-P countries (Afghanistan
  to Taiwan)
• More than ITU data shows, e.g., India

7
Mobile/100 CAGRs high-mobile Asia Pacific (end
2003)
8
India, fixed mobile growth, 1991-2005
9
Mobile/100 mobile as of total in high-mobile
Asia Pacific, end 2003
10
Wireless in the access network

• Much of current fixed growth driven by wireless
• CDMA 800/1900 for voice
• CDMA 450 other standards for data overlay
  networks
• Claim that 77 of worlds mobile data users are
  in AP (may be more with recent 3G launches in
  Taiwan, etc.)
• Claim of 21,000 WiFi hotspots in AP in 2003
• Strange case of WiFi in Indonesia

11
Typical ISP Network
Infrastructure Network
Access Network
12
Network Reality-Indonesia
Infrastructure Network
Access Network
13
Strange case of Indonesian WiFi

• WiFi deployment
• Not inside home not available for free
• Blurring of access and infrastructure network
  used as backbone up to the curb WiFi, last mile
  aerial cable
• Many tiered retailing of Internet service.
• WHY? To recover high input costs
• In addition to last mile, need to recover
  domestic intl leased line and interconnection
  costs

14
What gave rise to strange network configuration
in Indonesia?

• Regulatory environment
• Non-independent regulator
• Two regulatory bodies DG POSTEL BRTI
• DG POSTEL is unit of Ministry of Communication
  IT
• BRTI under-staffed, powers under transition,
  chairman is DG of DG POSTEL
• Exclusivity clauses extending historical
  monopolies
• Indonesian govt owns 51 share in PT Telkom 15
  in Indosat plus golden share
• Licenses prevent ISPs from deploying
  infrastructure
• No local loop unbundling
• Exclusivity until 2015
• No regulation of leased lines
• Few suppliers, refusal to deal, high prices,
  quality

15
Market environment
No competition
Limited competition
Competitive

• Lack of competition in infrastructure sector
• Resulting in high leased line prices
• High international backbone prices
• Proliferation of unlicensed reseller-ISPs

16
Annual leased line prices 2Mbps link
Ratios India EU 15.9
14.9
Ratios India EU 147.9
13.8
Data compiled from Lokanathan, lirneasia.net, EU
10th report, interview with Indonesian ISP
Network Service Provider
17
Institutional aspects of wireless

• Current quasi-property rights regime
• Bundle of rights, less right to alienate
• Except by selling the licensee firm
• Use highly constrained (e.g., specific standards,
  power, polarity)
• Therefore significant role for effective spectrum
  management by government
• Government responsible for refarming of
  frequencies
• Quasi-property rights require consent
  of/compensation for displaced users

18
Hypothetical refarming process
19
Difficulties with refarming for unlicensing

• In many countries, 2.4 GHz and 5 GHz bands have
  occupants who require coordination/relocation
• In India, EESS (active) and SRS (active) services
  in 52505570 MHz band
• In Sri Lanka, high-powered MMDS broadcasts on
  either side of 2.4MHz band which is also used by
  data licensees for 10 years
• How to find the money to pay off users who are to
  be moved?
• Beneficiaries of unlicensing cannot be asked to
  pay

20
Spectrum management is not enough . . .

• For WiFi to be effective in the access network,
  backbone must exist be offered on
  non-discriminatory basis at reasonable prices
• Data or voice communication is a chain
• As fast as the speed of the weakest link if link
  is broken, no communication
• In these markets, sustainable prices determined
  by input costs
• ISPs require access to backbone
• In some countries only access regime needs
  improving
• In others, need to create incentives for building
  as well

21
Spectrum management is not enough . . .

• In addition
• Market entry
• Interconnection and access
• Effective regulation of competition
• Investment is what connects people

22
Investment is necessary condition for improved
access
Wireless
23
Investment is necessary condition for improved
access
Wireless Access Backbone
Fiber fixed access
24
Wireless investment
25
Without effective policy/regulation,
inadequate/skewed investment . . .
26
Where the money has gone . . . Private
investment in telecom 1990-2003
27
What is needed . . .

• Market entry permitted
• Case of Bhutan
• Environment for investment created
• Regulatory risk reduced
• Participation by multiple suppliers enabled
• Level playing field

28
In sum . . .

• WiFi vision of developed countries is possible
  only because of fully developed backbone and
  access network
• Enabled by environment conducive to investment,
  including effective regulation
• Without institutional conditions, little/no WiFi
  outside developed enclaves
• Technology matters but not without appropriate
  institutional conditions