“We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven,” the company said in its review of the risks it faces.

In a world that is rapidly moving toward an era of mobile computing, this is a troubling issue for Silicon Valley’s brightest star — particularly since much of Facebook’s growth right now is in countries like Chile, Turkey, Venezuela and Brazil, where people largely have access to the Internet using cellphones.

Facebook is not the only company struggling to translate the success of its Web site to mobile devices, where screen space is at a premium and people have little patience for clutter or slow loading times. It is a problem that plagues companies as diverse as news publishers and the streaming radio service Pandora, and it is likely to loom larger. There were more global shipments of smartphones than of personal computers in 2011, according to a recent report from Canalys, a research firm.

Report.

It was ironical that we had to listen to the speeches on digital Bangladesh phoneless, having been compelled to leave all electronics behind in the name of security. They announced the event was being tweeted, forgetting the very nature of tweeting,v a decentralized activity done by many without central control.

Then in the afternoon, I found myself stepping in to chair a session on broadband access that was to have been chaired by Mr Wazed. In a short period of 90 mts, we squeezed in eight speakers, two from equipment vendors, two from service providers, a representative of APNIC talking about IPv6, an IGO representative and myself. The Secretary of the Bangladesh Ministry of Post and Telecom gave summing up comments. And we had 25 mts of questions and answers as well.

It was not surprising that I found most interesting the proposal to enhance Asia’s backhaul capacity using terrestrial cables. It was in my talk, but Tiziana Bonapace of UNESCAP’s presentation dealt with in greater detail.

The MOPT Secretary said that BTCL’s fiber had been taken over by the Ministry and there were plans to give them over to a private operator to manage, on several conditions, including, one hopes, non-discriminatory, cost-oriented access for all operators. The devil is in the details, but one hopes this will be done properly (and quickly).

There were many questions, but the one I liked best was what one young man asked: what in all these was the opportunity for a young person to start a business?

This reflects the story Teleuse@BOP tells about Bangladeshis more than anyone else seeing ICTs as a way of making money.

This could be the beginning of a good brawl, so let me first thank Steve for starting the debate right, with some facts wrong and slightly in rant territory. Without these elements one would not get a lively debate. I specialize in rants, but hopefully my evidence is better.

What development?

I am not going to take on the confusions inherent in Steve’s title. But it seems that there are (at least) two contending conceptions of development (broad) out there.

In the first, the “activist/scholar” knows what development is and engages in various 4D actions. I have, for the most part, kept away from saying I am doing x or y 4D, because that posits that I know what development is, and that my x or y actions will yield the development that is pictured in my head. Activists who thought community radio would yield development for the First Nations in the northern parts of Canada found that the first community broadcasting station played country and western music, more or less non-stop. Wasn’t what was in their heads, but it made the actual developees, the people of the First Nations, happy.

The second conception of development (one that I subscribe to) is minimalistic. It is about the creation of opportunities (more accurately, the removal of barriers) for people to do things for themselves. I recall being asked whether we approved of people using mobiles for relationship maintenance, as documented by Teleuse@BOP research. My answer was in two parts: the question was misguided, focusing on quantity of calls (because one call is not equal to another); what people choose to do with their hard-earned money is their business, not mine. I would answer differently if subsidies were involved, but I am generally not a fan of subsidies (except when I get them for LIRNEasia!).

Whatever one may say about prices, etc., one has to accept that mobile operators have given billions of people their first form of electronic connectivity. From my conception of development this is a great thing: it expands their opportunity space. Could be for good or ill, I agree. What I try to do is to further expand the opportunity space by catalyzing new applications that I and my funders think are good. Emphasize catalyzing, versus providing. Whether the applications will be taken up or not; whether the connectivity will be used to facilitate murders instead; that we cannot control, but using the tools of paternalistic libertarianism, we will try to make more difficult.

Bashee selection

It’s fun to have someone to bash. I know; I have the same weakness. For me it’s governments who have created the conditions under which operators function, as tax collectors, or oligopolists, or whatever. It’s operators for Steve. To each his own, but to have real effect, one must pick the right bashee.

First let us look at evidence on prices. The best indicators we know are the basket comparisons done by Nokia (but might be easier to use Nokia as a search term on LIRNEasia.net since the Nokia search is wonky). In 2007, of the 77 emerging economies, only four were under USD 5 per standard basket a month: Bangladesh, India, Pakistan and Sri Lanka. In 2008, the club had expanded to include, in addition, Honduras, Uzbekistan, Indonesia, MADAGASCAR, China, GUINEA, Mongolia and Malaysia (African countries in caps). By 2010, KENYA and EGYPT were in the under-five club. SUDAN and ETHIOPIA were under 10. So it is incorrect to claim that Kenya is the only exception to high prices in Africa. Prices have come down, even in Africa. If I was Steve, I’d be cautious about linking them to the prospects my death.

When one looks at the tax data, one sees a partial answer as why price are high. Governments that have trouble collecting taxes on their own are increasingly using mobile operators as tax collectors. But even with that (a condition that exists in South Asia, but at lower levels), adequate levels of competition can trigger a shift to the Budget Telecom Network model. This is what started happening in E Africa with the entry of Bharti Airtel. Guess who slowed down the process: governments. So the evidence supports my choice of bashee, rather than Steve’s.

The governments that created the conditions for the BTN model did not do it intentionally. They were out for the money that came from new licenses, some to government some to personal accounts. But the end result was a good thing, except now we have operators bleeding red ink and an imperative need to create clear conditions for market exit by those who cannot continue to play in the hard markets.

BTW, I do not believe that low prices are the alpha and the omega. Some upward movement from the levels found in S Asia may be justified. Currently, only 2.4 percent of household expenditure goes to telecom and Internet in Sri Lanka though of course the percentage would be higher in the lower deciles.

Operators are not do-gooders. If they were, they could implement the BTN model on their own. Their managers have the same kinds of incentives we have, as documented by Kahneman, Thaler, et al.: they fear downside risk more. So they are cautious, until the status quo becomes untenable.

They would like to maintain end-to-end control. But increasingly, it’s slipping out of their grasp. Skype is being advertised by Sri Lankan operators these days. The smartphone basically rips out a large area from the operators’ control. These are good things, but they were not done either by governments or by do-gooders. They were the results of the actions of other capitalists out to make a buck and other managers trying to keep their jobs.

So we are talking really about wireless platforms provided by competing operators, not integrated mobile networks as such or mobile handsets of the present (what are they anyway?). So when Steve talks of the big lesson of “the future is going to be a surprise and tying the notion of development to a particular mode of technology is as bad an idea now as it was in 1999,” he is bashing a straw horse. The networks are changing, the devices are changing, who controls them is changing, none of it with a central plan. Steve may know people who are tying their plans to some particular static technology, but I do not. He must have made a special effort.

Mobile industry subsidies

Observer bias is at play here. In the larger scheme of things, the subsidies offered by the GSMA and their members are peanuts. If you place those numbers in the context of what these companies invest and their turnover, you’ll be looking at several zeros after the decimal. They don’t really matter much. It is only those who live in the world of pilot projects who think these are significant.

LIRNEasia was founded on the premise that lowering leased line prices (which we have successfully catalyzed throughout S Asia, and part of SE Asia) was more important than 10,000 subsidized telecenters. So I cannot but agree with Steve that reducing prices is the key. But not only of voice and SMS, but of data as well. Why get hung up on specific services (the straw horse again?)? The BTN model is not for voice, or SMS. It can work with data as well.

“My answer is influenced by where I stand: South Asia, with 1.5 billion people in economies growing fast, but still with the world’s largest concentration of poor people. The biggest challenge for communication scholarship is that of understanding how different groups in society deal with rapid change. The issues range from understanding the lack of trust in the political system, even in nominally democratic countries, to how families deal with extended separations they experience because of the massive growth of migrant labor. Many among the poor (and even the middle classes) are new to electronic connectivity. How does this ability to communicate cheaply across distance affect social, economic and political processes? Perhaps the last question is unique to my region, but the others are possibly not.”

One man, however, has come up with an ambitious concept that could potentially dwarf any existing terrestrial projects and radically reduce Asia’s reliance on subsea cables. Abu Saeed Khan is senior policy fellow at the Asia-Pacific ICT policy and regulatory think tank LIRNEasia, and his clear vision is to utilise the extensive Asian Highway Network project by deploying an open access terrestrial optical mesh backbone alongside it.

The Asian highway project brings together 32 countries in Asia and Europe and is assisted by the UN Economic and Social Commission for Asia and the Pacific (ESCAP) which aims to create a highway system from Japan all the way to Turkey. With 142,000km of the highway network reportedly already completed, Khan believes it is the “natural right of way for any long-haul optical fibre transmissions”.

Khan first came up with the concept in 2008 and has been actively trying to encourage various members of the telecoms sector to get onboard since. Calling the proposed network LION, in reference to the Longest International Open-access Network, he estimates the project would cost between $10 to 20 billion to construct and should be funded via a public/private investment model. The incentive for the road authorities managing the Asian Highway is also clear, he says, as it will provide them with additional revenues.

“This should be a multi-vendor project involving the likes of Siemens-Erikson, Alcatel-Lucent and Huawei deploying and maintaining the networks,” says Khan. “The push must come from the carriers as it will benefit them if the offshore fibre networks are replicated onshore. It will help to create a competitive market and drastically lower the cost of international bandwidth.”

Nokia’s chief executive, Stephen A. Elop, presented the Lumia 800, a 420 euro ($584) touch-screen device, and the Lumia 710, a 270 euro handset at a company product introduction. Both devices are being sold in six European countries and will be sold later this year in parts of Asia. Other smartphones are planned for the United States, but not until early next year.

Analysts said the Nokia smartphones, the result of an eight-month collaboration with Microsoft, could also help Microsoft extend its dominant computer software business into the cellphone and mobile device market. The software has received positive reviews, but few handset makers are using it.

Full report.

Whereas 42% of disasters [in the first half of 2011] happened in Asia, 90% of total deaths and 73% of total people affected were from this continent. Moreover, Asia accounted for 83% of total economic damages brought by natural disasters.

Standard Chartered Bank and MasterCard have developed a solution that will allow people in the East African nation to make online purchases with their cellphones, obviating the need for a credit or debit card.

The service, called PayOnline, will soon be expanded to other African markets. It allows Airtel Money customers to make online purchases via a 16-digit code, much like using a credit card. Merchants have to accept MasterCard as a payment mechanism.

The service allows customers to make online purchases by requesting a single-use card number from a menu of options on their phones. Airtel Money then generates a 16-digit number that is valid for 24 hours and a single purchase.

Report.

Two ideas that came up:

Most people who think about m apps are still stuck on the Apple App Store. Great model but requires two things LIRNEasia’s people (BOP in emerging Asia) do not have at the present time: smartphones and credit cards to make payments from. I told some people I talked to about the solution that has been developed in Sri Lanka by hSenid.

People who develop apps are, stereotypically, 19 year old male geeks. They will, naturally, develop apps for people like them. Unless someone intervenes, nothing much will be developed for people at the BOP. Not because of bad intention, but because of ignorance. How can this problem be addressed.

I suggested to the people running the mLab (a World Bank funded initiative to encourage m applications) that they talk to our sister organization, Research ICT Africa, and commission them to do prepare innovator briefs, based on their extensive knowledge of what people in Africa actually do with their mobiles.

If innovators in Asia want this kind of information, they can always look at our Teleuse@BOP research, or ask us to do innovator briefs.

slideset

As latest ITU data reveals, active mobile subscriptions continues to increase the world over. Just under two years ago, mobile subscriptions were reaching the six-billion mark. 2009 data from the ITU suggests we are well on our way to reaching seven billion connections. Developing countries, in particular, experienced a 19 percent increase in mobile subscriptions per 100 inhabitants between 2008 and 2009, compared with a modest 5 percent growth in developed countries according to the ITU.

Mobile subscriptions in the Asia-Pacific alone have now passed the two-billion mark; according to the ITU, mobile subscriptions per 100 rose by 22 percent from 46 in 2008 in 56 in 2009. However, total fixed telephone lines (which reached a peak in 2006) continue to decline both in developed and developing countries. In the Asia-Pacific, the number of fixed lines declined by 6 percent from 15 to 14 per 100 inhabitants between 2008 and 2009.

It should be noted, however, in the case of ITU data, that mobile subscriptions should not be equated with mobile ownership. Richard Heeks’ essay points out several reasons. One of them, evidenced by LIRNEasia’s Teleuse@BOP3 study, is that mobile owners may own multiple subscriptions or SIM cards, thus overstating “ownership” levels (Figure 1).

Figure 1: SIM card ownership (% of BOP mobile owners)

LIRNEasia’s third consecutive study on ICT ownership and use among the poor, Teleuse@BOP3 (2008) reveals trends in mobile and fixed growth, similar to the ITU findings. The study was among the bottom of the pyramid (BOP, or those belonging to socio-economic classification groups D and E) in Bangladesh (2008 only), Pakistan, India, Sri Lanka, the Philippines and Thailand. Figure 2 shows that over 75 percent of all respondents had used a phone in the last three months to make a phone call.

Figure 2: Use of a phone in the last three months to make a phone call (% of BOP respondents)

Figure 3 compares changes in the use of one’s own mobile for making phone calls between 2006 (when the previous study was conducted) and 2008. All countries with the exception of Thailand recorded increases in the use of personal mobiles as their primary mode of communication; India, in particular, recorded the highest growth, a massive 194 percent. Interestingly, though, Thailand actually recorded a decline in the use of personal mobiles.

Figure 3: Use of personal mobiles as a primary mode of communication (% of BOP teleusers)

Internet use

While LIRNEasia identifies drawbacks in the methodology used by the ITU in calculating Internet users,, such data, nevertheless, points to emerging trends. One significant finding is the rising number of mobile broadband subscriptions over fixed broadband, particularly in developing countries. While both types of subscriptions have grown in number, mobile broadband growth far exceeded that of fixed. Developed countries experienced a growth of 44 percent in mobile broadband subscriptions, compared with 9 percent in fixed, according to ITU data. Likewise, developing countries reported increases of 63 percent and 24 percent in mobile and fixed broadband subscriptions, respectively.

In the Asia-Pacific, mobile and fixed broadband subscriptions have grown to 5.4 and 4.6 per 100 inhabitants respectively, a 26 percent and 18 percent change between 2008 and 2009. Again, one should keep in mind that subscriptions do not necessarily equal ownership or usership; the problems in accurately assessing the number of Internet users in a country (besides through large-scale demand-side surveys which are nationally representative; Teleuse@BOP is only representative of SEC D and E in the respective countries) is something that LIRNEasia is looking at in research which will be released shortly.

LIRNEasia’s study confirms that that the BOP were much more likely to own a mobile phone than a household personal computer, and, likewise, more likely access the Internet over a mobile than a PC (Figure 4). However, Internet awareness and use among the BOP is still low, particularly in South Asia. Over 95 percent of respondents in the South Asian countries studied had never used the Internet before; over 55 percent in Bangladesh, Pakistan and India had never even heard of it. This contrasts with the Philippines and Thailand where only 9 and 20 percent of respondents reported never having heard of the Internet.

Figure 4: Ownership vs. use of ICTs (% of BOP teleusers)

Details of the event here.

Click here to view presentation.

The latest issue features an e-interview with LIRNEasia’s CEO Rohan Samarajiva, but it is not the only reason why we thought of highlighting the issue. The content is interesting and very readable. We publish two e-interviews from July 2010 issue here fully, as they are not available on public domain.

Apart from Samarajiva, This issue carried e-interviews with Alison Gillwald, Indra de Lanerolle, Christoph Stork and Muriuki Mureithi.

If you are interested in future issues please register at http://lists.apc.org/cgi-bin/mailman/listinfo/chakula

The need for competitive research for policy influence
e-interview with Alison Gillwald

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“High quality, rigorous research…is required to compete and complement with each other for policy influence… In mature economies researchers from multiple universities would be debating and refining the positions governments should be taking on everything from regulating next generation networks to demand stimulation for broadband.”
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Alison Gillwald is Executive Director of RIA. She is also Adjunct Professor at the UCT Graduate School of Business, Management of Infrastructure Reform and Regulation, and a member of CPRafrica’s organisation and selection committee.

CHAKULA: You have just held the CPRafrica conference in Cape Town. What are you hoping to achieve through the conference?

ALISON GILLWALD [AG]: There is almost no scholarly research being undertaken in the field of ICT policy and regulation on the continent. A Google scholar search on the subjects throws up around five scholars on the continent who are published in peer reviewed or accredited journals. It is this kind of high quality, rigorous research that is required to compete and complement with each other for policy influence. In mature economies researchers from multiple universities would be debating and refining the positions governments should be taking on everything from regulating next generation networks to demand stimulation for broadband. Although there are pockets of applied research being undertaken there is no tradition of critical intellectual engagement in this area on the continent. The purpose of CPRafrica is to provide a forum for nurturing and showcasing research in the area of ICT policy and regulation on the continent and enhancing its quality through rigorous academic review and debate. The conference is complemented by a young scholars programme to expose young scholars who may be excluded from such peer-review, paper-acceptance-only style conferences without such a category. Some of these are part of the IDRC- [International Development Research Centre] funded PhD programme to encourage doctoral research in ICT policy and regulation. The idea here is to build a cadre of policy intellectuals on the continent able to critically engage government on the basis of relevant research and contribute meaningfully to research and policy excellence. This will further enhance Africa’s standing in international research and governance fora, in which its participation has historically been suboptimal.

CHAKULA: Reviewing some of the papers presented at the conference, it strikes me that there are a couple of threads that are emerging. Two in particular stand out: the notion of “innovation” in the telecommunications space, and the challenges around convergence and policy when two distinct sectors with different ways of doing things are brought into conflict with each other. I also went back to Research ICT Africa’s 2008 M-banking policy paper, which raises similar themes, and I would like to use that as a starting point. First, on the issue of ‘innovation’. In the M-banking paper, the following assertion is made: “Policy-makers and regulators need to ensure that evolving systems serve the broader objectives of economic growth and development as well as protect consumer interests, while creating an environment that encourages and rewards innovation”. In what ways can policy inhibit or encourage innovation in the telecommunication’s sector?

AG: Indeed, providing certainty to investors and operators while retaining the levels of flexibility to enable innovation in a fast-changing environment is one of the most difficult balancing acts that policy-makers and regulators have to perform. I think the linkages and catalysts between technology, market and regulatory innovation are becoming clearer all the time. New technologies and service offerings have prized open markets and the entry into less policy and regulatory constrained markets has made taking certain technologies to market more viable. This has triggered further possibilities across historically distinct platforms, not only between broadcasting and telecommunications, but between fixed and mobile services and even entirely separate sectors such as telecommunications and banking. The challenges to the expansion of such services are really regulatory now rather than technological – and that is not to say that one does not want or need public interest regulation either in the telecommunications or banking sector, but it has to be done in new, innovative ways that enable to extension of these services to those who currently don’t enjoy them. Once these various forces are unleashed they are able to intersect and create new opportunities and innovative ways of doing things that have not been done before.

CHAKULA: Innovation here seems necessarily to be tied to market gain – the objective is to increase or capture market share. In both your M-banking paper, and the case study of the mobile operator One Network in Kenya, preconditions exists that facilitate innovation. With M-banking there are low-income earners who are ‘unbanked’ and who could benefit from some kind of low-cost transactional instrument, and with One Network, there is a significant level of cross-border traffic that makes a seamless network attractive.
AG: It is true that innovation is often driven by market forces and pursuit of profits, and, traditionally, with new technologies have focused on high-end markets. But much of the ICT innovation we are witnessing in developing markets is focused on what has been referred to as the ‘gold at the bottom of the pyramid’ – very profitable turn-over of high volumes of sometimes minuscule margins on products that, by breaking them up or making them available at cost, the masses at the bottom of the economic and social pyramid can enjoy things like pre-paid phone vouchers, or transferable airtime vouchers. And many of these products have been commercialised innovative practices by the poor in order to access and affordably use communications services – such as missed calls, multiple sim card usage that allows for same net rates, or ‘plastic roaming’.

CHAKULA: If we consider Indra de Lanerolle’s fascinating case study on the South African convergence scenario, we see two sectors (broadcast and telecommunications) in conflict with each other because policy decisions are made according to different frameworks: simply put, economic versus public interest. In fact, Indra does seem to suggest that these are in competition with each other, and resolves this in an interesting way. It feels hard to believe that ‘consumer interest’ is the same as ‘public interest’?

AG: I think with the shift from public utilities to competitive markets many of the public interest objectives of delivery and service are met through serving the consumer interest. Nevertheless there is public interest regulation that is required to improve wider and collective consumer welfare – to provide access to ‘uneconomic areas’ for example – though with new more cost-effective, rapidly deployable wireless services, this concept in markets that enable competitive entry is regularly not proving to be the case. But as long as we have the large number of poor that we do, we will need some level of social regulation – even though a lot of the current pent-up demand could be met with greater market efficiency (more competitive markets offering better prices). And then there are the more traditional content regulation issues either to restrict certain ‘harmful’ content or activities or to enable it, such as local content regulation. That too may be found to be highly profitable, but may need either protection or encouragement.

CHAKULA: Indra’s paper, like your M-banking policy paper, shows that regulating convergence is tricky because of the ‘convergence’ of two or even more sectors; whether broadcast/telecommunications or telecommunications/banking etc. What are some of the key challenges that policy-makers can expect to face in Africa?

AG: The key challenge for African regulators is that they are still trying to deal with legacy regulation around first and second-generation infrastructure and access. At the same time, if they do not want the agenda to be set for them in international fora, they need to deal with next-generation issues, not only of converged IP [internet protocol] networks and services and the next-generation regulation issues of network and service-neutral regimes, but of cross-cutting issues of electronic commerce frameworks, intellectual copyright rights, security and privacy issues, and so on. And you have to do it all or be left behind…

CHAKULA: One frustration is that when one reads a good paper that seems to offer a solution to a problem, one is also met with the feeling that those with decision-making powers are probably not going to read that paper, or seriously consider its arguments. Do you feel the same? If so, how do you think CPRafrica picks up on this challenge? Is it just a case of repeating issues until policy-makers take them on board?

AG: No. CPRafrica is one of several strategic strands towards having evidence-based ICT policy on the continent. This is about organic and indigenous knowledge creation and contribution, at the national level, at the level of regional association and continentally, and also about global engagement and influence. For too long have the solutions come from the developed world. Of course, there are lessons to be learnt and we don’t need to reinvent the wheel, but we also have different challenges and Africa has demonstrated remarkably innovative responses to these when they are informed by sound policy, effective regulation or thorough and appropriate business plans. The indicator research done by RIA and its analysis in order to assess policy and regulatory outcomes is fed into several initiatives, globally and locally. RIA provides the only comprehensive public domain demand-side data on ICT access and usage on the continent. This is used in national, regional and continental meetings on ICTs, and in the database and reports of multilateral agencies such as the OECD and the International Telecommunication Union (ITU), to better inform their understanding of developments in Africa. It is true that sometime decision-makers do not like to hear of the widespread policy and institutional failure on the continent, but many do – especially those that are rapidly improving and beginning to see the rewards of their reforms. This research is also used to develop training curricula that address the needs of policy and regulators in a developing country context. So, for example, as part of the global research and training collaborative LIRNE.net we conduct a professional development course on alternative regulatory strategies at the UCT Graduate School of Business Infrastructure Reform and Regulation Programme to build institutional capacity on the continent. So CPRafrica is just one arm of a multi-pronged strategy of research and education, institutional capacity building and technical assistance and dissemination and advocacy, through our website database, policy papers and workshop and public presentations.

CHAKULA: What is the way forward for the conference? Will there be more?

AG: Yes, in order to build and sustain this much-needed capacity we will have to find a way for CPRafrica to become an annual institution.

Related links:

M-Banking the Unbanked: RIA Policy Paper No. 4:

http://www.researchictafrica.net/new/images/uploads/RIA_Mobile-banking.pdf

CPRafrica conference details: http://www.researchictafrica.net/index.php/news/38-cprafrica-looking-back-at-a-decade-of-communications-reform-looking-forward-to-2020
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Innovation through competition: the budget telecom network model
e-interview with Rohan Samarajiva

Paper link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1564529

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“The status quo must be unbearable.”
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Rohan Samarajiva is the Chair and CEO of Lirnasia. His paper, “How the developing world may participate in the global Internet Economy: Innovation driven by competition” was presented at a workshop organised by the OECD and InfoDev in Paris, 10-11 September 2009.

CHAKULA: In your paper, you talk about the Budget Telecom Network Model (BTNM), which is brought about by competition allowing operators to reduce the transaction costs of low-end clients. This, as you point out, is different to the standard Average Revenue Per User (ARPU) model. How does it make the ARPU model redundant?

Rohan Samarajiva [RS]: ARPU is a short-hand that outside observers use to see if the firm is doing well, whether its prospects are good, etc. It is, like any indicator, imperfect. You get it by taking total revenue (preferably without extras like roaming) and dividing by number of subscribers. Of course no one really knows what a subscriber is any more, with even poor people holding up to five SIMs, foreigners having SIMs, no agreement on what an active SIM is and so on. You can get better results by looking at revenue per minute. Take total revenue (less roaming and other stuff) and divide by Average Minutes of Usage per User per Month (MOU). This is a better indicator. But investment analysts are still not used to this and it would require disclosing MOUs to calculate.

CHAKULA: Can ARPU be used as a business model?

[RS]: Operators do not actually do much with the ARPU. It is not a business model as such, just an indicator. But getting more from each subscriber (if this is known) is not a bad idea. Just that it does not predict whether the company will make money or not. The best indicator for that is EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortization] margin. Sri Lanka in 2007 had an operator with LKR311 (approximately USD3 at the time) ARPU making close to 50% EBITDA margin. In the end, the success of a business model lies in whether it generates profit.

CHAKULA: What is your understanding of ‘innovation’ in the telecommunications space? You talk of “business innovation”, rather than, say, technological innovation?

[RS]: Tech innovation is important, but it is not the only thing. Pure tech innovation is done by manufacturers of network equipment and handsets. That is good. Business process innovations (e.g. lowering the costs of base stations through software) are done by operators. These include technical aspects, but are not limited to them. Shifting from one business model to another (discovering the latter) is also innovation, but it may or may not not have a tech aspect at all.

CHAKULA: What are the preconditions for innovation, do you think?

[RS]: The status quo must be unbearable. The BTNM innovation occurred when competition got so intense that there was no way to gain market share or even survive without doing something new.

CHAKULA: Does BTNM have implications for increased access to broadband internet for the majority of people on a continent like Africa?

[RS]: Yes. The latter part of the paper is entirely on the extension of BTNM to broadband. Some headlines are that operators must have enough money from voice that can be invested in the 3G plus networks. Once the overlay network is built out the operators have to offer low prices. Prepaid sachet pricing is best, where one buys packages of connectivity in minutes or in capacity. Here, because of lower transaction costs and prices there should be an influx of new customers. This is already on offer in Asia. Africa has to lower prices. Access will be over mobile networks, using dongles or built in modems, for laptops and other devices, including phones. ADSL will be a niche product. Wireless access is the future.

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PRESENTATION

DISCUSSANTS
G. B. Samarasinghe is the Director General, Department of Meteorology, Sri Lanka. An expert in meteorology, Samarasinghe predicts tropical countries are becoming more and more vulnerable to weather-related natural disasters because of the climate change. Investing in disaster preparedness is more advisable than spending on emergency relief, he reasons.

Ainsley Alles, a Chartered Insurer and a Fellow of the Chartered Insurance Institutes of Australia, New Zealand, France and India counts 28 years in insurance. He currently heads the General Insurance arm of Aviva NDB Insurance (formally Eagle Insurance PLC) as its Director (General Insurance). He views Disaster Risk Reduction from the angle of private sector.

CHAIR
Rohan Samarajiva is the founding Chair and CEO of LIRNEasia, an ICT policy and regulation think tank active across twelve emerging Asian economies. He was Director General of Telecommunications in Sri Lanka, a founder director of the ICT Agency of Sri Lanka, Visiting Professor at the Universities of Moratuwa in Sri Lanka and Delft University of Technology in the Netherlands and Associate Professor of Communication and Public Policy at the Ohio State University in the US.

July 7, 2010
5.30 – 7.00 pm
Sri Lanka Foundation Institute Auditorium,
Independence Avenue, Colombo 7.

Medium: Sinhala/English

This event is open to public, but due to the limited availability of seats prior registration is mandatory. Please contact Ranjula on 0777-458808 or ranjula@lirneasia.net.

The Obama administration is seeking to nearly double the wireless communications spectrum available for commercial use over the next 10 years, an effort that could greatly enhance the ability of consumers to send and receive video and data with smartphones and other hand-held devices.

President Obama will sign a presidential memorandum on Monday that aims to make available for auction some 500 megahertz of spectrum that is now controlled by the federal government and private companies, administration officials said Sunday. Most of that would be designated for commercial use in mobile broadband and similar applications, though aspects of the plan will require Congressional approval.

Full story.