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.

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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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Phone credit low? Africans go for “beeping”
By Andrew Heavens | Wed Sep 26, 11:32 AM ET

KHARTOUM (Reuters) – If you are in Sudan it is a ‘missed call’. In Ethiopia it is a ‘miskin’ or a ‘pitiful’ call. In other parts of Africa it is a case of ‘flashing’, ‘beeping’ or in French-speaking areas ‘bipage’.

Wherever you are, it is one of the fastest-growing phenomena in the continent’s booming mobile telephone markets — and it’s a headache for mobile operators who are trying to figure out how to make some money out of it.

You beep someone when you call them up on their mobile phone — setting its display screen briefly flashing — then hang up half a second later, before they have had a chance to answer. Your friend — you hope — sees your name and number on their list of ‘Missed Calls’ and calls you back at his or her expense.

It is a tactic born out of ingenuity and necessity, say analysts who have tracked an explosion in miskin calls by cash-strapped cellphone users from Cape Town to Cairo.

“Its roots are as a strategy to save money,” said Jonathan Donner, an India-based researcher for Microsoft who is due to publish a paper on “The Rules of Beeping” in the high-brow online Journal of Computer Mediated Communication in October.

Donner first came across beeping in Rwanda, then tracked it across the continent and beyond, to south and southeast Asia. Studies quoted in his paper estimate between 20 to more than 30 percent of the calls made in Africa are just split-second flashes — empty appeals across the cellular network.

The beeping boom is being driven by a sharp rise in mobile phone use across the continent.

Africa had an estimated 192.5 million mobile phone users in 2006, up from just 25.3 million in 2001, according to figures from the U.N.’s International Telecommunication Union. Customers may have enough money for the one-off purchase of a handset, but very little ready cash to spend on phone cards for the prepaid accounts that dominate the market.

Africa’s mobile phone companies say the practice has become so widespread they have had to step in to prevent their circuits being swamped by second-long calls.

“We have about 355 million calls across the whole network every day,” said Faisal Ijaz Khan, chief marketing officer for the Sudanese arm of Kuwaiti mobile phone operator Zain (formerly MTC). “And then there are another 130 million missed calls every day. There are a lot of missed calls in Africa.”

‘CALL ME BACK’

Zain is responding to the demand by drawing up plans for a “Call-me-back” service in Sudan, letting customers send open requests in the form of a very basic signal to friends for a phone call.

The main advantage for the company is that the requests will be diverted from the main network and pushed through using a much cheaper technology (USSD or Unstructured Supplementary Service Data).

A handful of similar schemes are springing up across Africa, says Informa principal analyst Devine Kofiloto. “It is widespread. It is a concern for operators in African countries, whose networks become congested depending on the time of day with calls they cannot bill for.

“They try to discourage the practice by introducing services where customers can send a limited number of ‘call-back’ request either free of charge or for a minimum fee.”

There are plenty of other reasons why mobile operators are keen to cut down on the practice. One is it annoys customers, pestered by repeated missed calls.

A second is that ‘flashes’ eat into one of mobile phone companies’ favorite performance indicators — ARPU or average revenue per user. Miscalls earn very little in themselves – and don’t always persuade the target to ring back.

Orange Senegal, Kofiloto said, lets customers send a ‘Rappelle moi’ (‘Call me back’) when their phone credit drops below $0.10. With Safaricom Kenya, it is a “Flashback 130″ (limited to five a day — and with the admonishment ‘Stop Flashing! Ask Nicely’). Vodacom DR Congo’s ‘Rappelez moi SVP’ service costs $0.01 a message.

MORE THAN MONEY

But beeping is not only about money. Donner’s ‘Rules of Beeping’ suggests a social protocol for the practice.

“The richer guy pays,” he writes. It is acceptable to beep someone if you are short of cash and they are flush with credit. Never beep someone poorer than you.

Never beep someone you are tapping for a favor. You don’t want to risk annoying the person you are trying to win over. Never flash your girlfriend, unless you want to look cheap.

“Most beeps are requests to the mobile owner to call back immediately, but can also send a pre-negotiated instrumental message such as pick me up now,’ or send a relational sign, such as I’m thinking of you,’” the paper says.

It can go even further than that.

Cameroonian researchers Victor W.A. Mbarika and Irene Mbarika identified a different kind of beeping-powered relational call in a study for the technology association the Institute of Electrical and Electronics Engineers (IEEE).

“Lovers often communicate with text messages or beeping’,” said the study. “One party dials another’s number and then hangs up. One ring could mean, I am here,’ two rings, Call me now.’”

And the name they gave this new entry in the beeping lexicon? Borrowing a street slang term for an appeal for sex, they christened it “the booty call.”

A new piece of legislation, the “Regulation of Interception of Communication Amendment Bill” now making its stately way through the South African parliament requires visitors to the country to go to a local services provider in person to register their name, address, passport number and a whole raft of other personal details before being allowed the privilege of using the GSM network. The new law will also require anyone who buys a mobile phone in South Africa to prove their identity and place of residence. Read more.

“Income matters, but public policy shapes the conversion of income into human development,” said the report, entitled “Beyond Scarcity: Power, Poverty and the Global Water Crisis.”

“India may outperform Bangladesh as a high growth globalisation success story, but the tables are turned when the benchmark for success shifts to sanitation: despite an average income some 60% higher, India has a lower rate of sanitation coverage. Similar gaps between wealth and coverage are observed for water,” the report revealed.

Since 1975, Bangladesh has steadily improved life expectancy, education, and the standard of living. The nation moved into the medium developed countries’ category in the Human Development Index from 2003, which ranks 177 countries according to achievements.

In 2006, Bangladesh again ranked among the world’s medium developed countries at 137, which is two steps up than last year’s. Ten years ago, Bangladesh was at the lowest level in the world so far as access to proper sanitation in its rural areas was concerned.

Despite being one of the world’s poorest countries, it is now close to achieving nationwide sanitation coverage by 2010, thanks to a ‘total sanitation campaign’ promoted by NGOs and local authorities.

According to the report, poor farmers face a potentially catastrophic water crisis from the combination of climate change and competition for scarce water resources. Intense competition for water is now one of the gravest threats to sustained human development.

Rising industrial demand, urbanisation, population growth and pollution were placing unprecedented stress on water systems —and on agriculture. There is a substantial group of countries that stand to be affected by climate change.

Bangladesh, Egypt, Nigeria and Thailand have large populations living in delta areas threatened by saline intrusion. The low-lying regions of Bangladesh support more than 110 million people in one of the most densely populated regions of the world, and more than half of Bangladesh lies at less than 5 metres above sea level.

The World Bank has estimated that by the end of the 21st century sea levels for the country could rise by as much as 1.8 metres, predicting worst scenarios with land losses of 16%.

The probable affected area supports 13% of the population and produces 12% of GDP.

Challenging predictions that increasing competition for water will inevitably provoke armed conflicts, the HDR said that cross-border cooperation over water resources had already been far more pervasive and successful than been commonly presumed, offering many models for the resolution of future international water disputes.

In the past 50 years, there have been 37 cases of reported violence between states over water; all but seven incidences took place in the Middle East.

Yet over the same period, more than 200 treaties on water were negotiated between countries, said the Report.

For countries like Bangladesh, which depends on India for 91 percent of its water to irrigate crops and replenish aquifers, the report said that the case was clear for cross-border cooperation on water.

The report recommended that everyone should have at least 20 litres of clean water per day and the poor should get it for free.

“Governments should aim to spend a minimum of one percent GDP on water and sanitation, and enhance equity,” it recommended.

It also called for an extra US$3.4 billion to $4 billion annually as the development assistance has fallen in real terms over the past decade. To bring the MDG on water and sanitation into reach, aid flows will have to double, said the report.

The 2006 HDR estimates the total additional cost of achieving the MDG on access to water and sanitation—to be sourced domestically and internationally—at about $10 billion a year.

“The $10 billion price tag for the MDG seems a large sum —but it has to be put in context. It represents less than five days’ worth of global military spending and less than half what rich countries spend each year on mineral water,” said the Report.

The report was launched from Cape Town of South Africa Thursday at 7 pm (BST). Kevin Watkins is the Lead Author of the 2006 report, which includes special contributions from U.K. Chancellor Gordon Brown, Nigeria’s Finance Minister Ngozi Ok onjo-Iweala, President Lula of Brazil, former US President Carter, and UN Secretary -General Kofi Annan.