Like traders plying the ancient Silk Road, telecommunications operators routing bits and bytes from Asia to Europe and back have to pass through the Middle East, whose tricky geography and even more challenging geopolitics have sometimes made the region just as much of a bottleneck in the digital realm as in the physical world. When things go wrong, the consequences can be serious and far-reaching.

In January 2008, for example, several underwater cables off the Mediterranean coast of Egypt were inexplicably severed. Only days later, a separate cable was cut in the Gulf, near Dubai; this time, a ship’s anchor was blamed. Telecommunications activity throughout the Middle East was severely disrupted, and there were ripple effects for carriers across the world. A similar, though less serious, incident occurred in February of this year in the Red Sea.

Meanwhile, traffic is surging, both internationally and within the region, fueled by the spread of mobile phones and a belated but enthusiastic adoption of the Internet.

Demand for international bandwidth has grown at a compound annual rate of nearly 100 percent across the region over the past five years, according to TeleGeography, a research firm. That is the fastest growth of any region in the world, and roughly double the rate of increase in North America.

Until recently, options for passing through the Middle East were limited, and links within the region were often spotty. Most East-West traffic had to go via Egypt and the Red Sea; the vulnerability of that route was exposed by the 2008 incident. Telecommunications operators in the Gulf also want more competition, in order to bring down tolls.

Full report.

Helani Galpaya presentation on “Network bottlenecks in South Asian broadband?”
Rohan Samarajiva and Abu Saeed Khan presentation on “Removing a broadband bottleneck: International connectivity”
Payal Malik presentation on “How do we avoid the spectrum bottleneck?”
Sriganesh Lokanathan presentation on “Teleuse@BOP4”

But the hundreds of thousands of apps that run on Apple and Android devices will not work on phones like the Lumia 900 that use Microsoft’s Windows Phone software. And many developers are reluctant to funnel time and money into an app for what is still a small and unproved market. So Microsoft has come up with incentives, like plying developers with free phones and the promise of prime spots in its app store and in Windows Phone advertising.

It is even going so far as to finance the development of Windows Phone versions of well-known apps — something that app makers estimate would otherwise cost them anywhere from $60,000 to $600,000, depending on the complexity of the app. The tactic underscores the strong positions of Google and Apple, neither of which have to pay developers to make apps.

Report.

“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.