Here are some reviews of the book:

“This is a lively, comprehensive, and illuminating investigation of telecommunications policy in Malaysia and the Philippines. Much has been written about the processes and outcomes of reform in these countries but, employing a rich and eclectic political economy framework, few researchers have managed to distil as much information with as much authority as Dr Salazar. Moreover, and to further underline the complexity of the issues, the Philippines emerges as a relatively successful reformer, contrary to widespread perceptions that reform in that country is extremely difficult.”

Hal Hill
H.W. Arndt Professor of Southeast Asian Economies
Australian National University

“This original and pioneering comparison of privatisation in Malaysia and the Philippines is an incisive and compelling study of the outcome of the nexus between the state and capital in developing economies. This book is essential reading for those seeking insights into the discourse on democracy and development and the political economy of privatisation in Southeast Asia.”

Edmund Terence Gomez
Coordinator
United Nations Research Institute for Social Development (UNRISD)

“Salazar’s work is an important contribution to the scholarship on Southeast Asian political economy. Her book addresses the dynamics of reform in the telecommunications sector, examining the puzzle of why greater success was achieved in the Philippines under a “weak and captured” state than in Malaysia under a “strong and developmental” state. Salazar provides a convincing and well-argued explanation, pointing the Philippine case to the advocacy efforts of a reform coalition that enjoyed the vigorous support of President Fidel Ramos. The comparison between the two countries is skillfully executed and based on rich, historically grounded analysis of their respective political economies.”

Paul D. Hutchcroft
Associate Professor and Associate Chair
Department of Political Science
University of Wisconsin-Madison

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NEW research on the use of telecommunications among low-income groups in India, Pakistan, the Philippines, Sri Lanka and Thailand challenges the conventional wisdom that, in developing countries, customers for high- technology goods are to be found only among high-income groups.
According to a multi-country survey, the poor are already accessing telecommunications and form a large untapped market with significant unmet demand. This wide and deep client base offers vast opportunities for enterprising telecommunications companies if they can develop appropriate business models to cater to them.

The survey was undertaken by Lirneasia, a Sri Lanka-based research organisation, and focused on the lowest two socio-economic quintiles, as defined by the chief wage earner’s educational and occupational status. More than 8,650 people between the ages of 18 and 60 were interviewed about their access to, and use of, telephones. Half of those interviewed kept a diary of their telephone use over a two-week period, and focus group discussions were held in each country.

The study’s first finding was that the majority of the poorest people have access to telephones, even if they do not necessarily own them. More than 90 per cent of respondents reported having used a telephone in the past three months. In fact, over 75 per cent said they could access a telephone in under 10 minutes (either a fixed line or cellphone they own, borrow or which are available for public use). Surprisingly, access rates in rural and urban areas were more similar than expected.

That said, there are significant differences in how telephones are accessed. In South Asia, about 30 per cent of respondents in Pakistan and Sri Lanka and 70 per cent of those in India used a public telephone. In South-east Asia, more than 70 per cent and 55 per cent of respondents in Thailand and the Philippines, respectively, had their own cellphones. While cellphone penetration is lower in South Asia, it is still significant. Slightly more than 20 per cent of respondents in Pakistan, 18 per cent in Sri Lanka and 8 per cent in India reported owning a cellphone.

The study also found surprisingly high levels of telephone use among the very poor. People in India and Pakistan averaged more than 30 calls per month, and those in Sri Lanka and the Philippines averaged 23 and 16 calls, respectively.

The calls made were local for over 80 per cent of respondents in the Philippines and Thailand, over 70 per cent in India and Pakistan and 60 per cent in Sri Lanka. Local long-distance calls made up the balance, with very few respondents making international calls.

Across all countries, the calls were short, at about two to three minutes each on average. Except in Thailand, some 80 per cent of respondents made telephone calls for social purposes. Business calls made up less than 20 per cent, except in Thailand, where these accounted for about 30 per cent.

The unmet demand for both fixed lines and cellphones is substantial. More than 80 per cent of respondents in India, 64 per cent in Pakistan and 59 per cent in Sri Lanka do not own either a cell or fixed-line telephone. The figures for the Philippines and Thailand are lower, at 38 per cent and 23 per cent, respectively.

In the future, growth is likely to be in the cellphone sector. While fixed- line telephones offer lower unit costs per call, it is unlikely that infrastructure will expand quickly enough to meet this demand. In addition, it would appear that cellphones are more popular among the poor, with two-thirds of Pakistanis and Indians and 90 per cent of Filipinos who do not now own a telephone stating that they intend to buy a cellphone. The exception is in Sri Lanka, where slightly more than half of respondents would prefer a fixed-line telephone.

The study also challenges the notion that the poor are unable to afford, or are unwilling to pay for, cellphone services. Of those who do not now own a cellphone, about 40 per cent in India, the Philippines and Thailand plan to buy one in the next two years. In Pakistan and Sri Lanka, this figure is above 50 per cent.

Furthermore, the cellphone market can grow vertically and horizontally. Besides attracting new consumers, existing owners or households can get extra connections. About 20 per cent of households in Pakistan and Thailand have more than one telephone, while the figure is more than 40 per cent in the Philippines.

Thus, there is scope for millions of new connections to be established, including potential for the following:

1.5 million lines in Thailand and Sri Lanka.

9.7 million in the Philippines.

30 million in Pakistan.

100 million in India.

While these countries offer wide and deep markets, they also pose a challenge to telecommunications companies, which may have to alter their business models. Besides being extremely cost-conscious, poorer clients have different needs.

There is high demand for cheaper handsets. In order to lower costs, purchasing second-hand telephones is an established practice – over 25 per cent of respondents in Sri Lanka and India, about 33 per cent in Pakistan and Thailand and 40 per cent in the Philippines use second-hand cellphones.

These consumers have less capacity to pay high monthly charges, as average telephone spending among these income groups is under US$10 (S$15) a month. Such users in Sri Lanka, Thailand and Pakistan spend more than US$7 per month, and Indian consumers spend an average of US$5. Subscribers in the Philippines spend rather less, on average US$2 per month.

Monthly payment models will have to evolve. More than 90 per cent of respondents in all surveyed countries use pre-paid payment plans, the most cited reason being to limit or plan their expenditure.

While revenues per consumer for traditional services may be lower in the surveyed group, this market segment is ready for a whole gamut of new value-added services. While more than nine out of 10 respondents have used a telephone in the past three months, 14 per cent of Filipinos, 29 per cent of Sri Lankans and 36 per cent of Thais and Pakistanis in this socio-economic group have not heard of the Internet. This figure climbs to 72 per cent in India.

Thus, as telecommunications operators in the Philippines have found, consumers in this group are able and willing to use cellphones for services traditionally restricted to the Internet, such as sending remittances, making reservations or getting weather forecasts.

Contrary to popular perceptions that the poor in developing countries are unable or unwilling to access telecommunications, the survey shows the opposite to be true. Poor consumers in South and South-east Asia already access telephones, often on a daily basis, and are willing to invest in cellphones. The market potential for telecommunications equipment and services, if correctly tapped, is huge, but usage patterns and consumer preferences will challenge traditional business models.

Francis Hutchinson is a consultant for Educo, an international project management firm specialising in the education and ICT sectors.

Lorraine Carlos Salazar is a visiting research fellow at the Institute of Southeast Asian Studies.

The views expressed here are personal.

The country reports can be downloaded here:

Pakistan country report – Joseph Wilson
India country report – Payal Malik
Philippines country report – Lorraine Carlos Salazar
Thailand country report – Deunden Nikomborirak
Sri Lanka country report – Malathy Knight-John
The Indonesia findings can be found in the following paper: Regulatory reforms and improved sector performance: A comparative analysis of Indonesia and India – Payal Malik and Divakar Goswami

The analytical framework can be found in the following paper: Competition in whichever way drives growth: An analytical framework of ICT sector performance in emerging Asia - Harsha de Silva

The research findings were presented to and then discussed with the journalists by Dr. Harsha de Silva and Ayesha Zainudeen of LIRNEasia and Dr. Lorraine Carlos Salazar of ISEAS, Singapore. followed by discussion with the journalists.

The presentations can be downloaded below.

Research Methodology and Key Findings | Harsha de Silva

Cost Cutting Strategies at the Bottom of the Pyramid: The SMS Story, Missed Calls, and others | Lorraine Carlos Salazar

The next billion customers | Ayesha Zainudeen

The WDR Expert Forum, held in association with the Institute of South East Asian Studies (ISEAS), took place at the Changi Village Hotel, Singapore from March 2-3, 2007. The Forum focused on ICT sector and regulatory performance indicators and discussed the issues that NRAs and NSOs face with regards to data collection and definitions.

The presentations made are available for download below:

March 2, 2007

1. Introduction

Rohan Samarajiva | Download Speech

2. Overview of Regulatory Performance in Six South & South East Asian Countries: TRE Methodology and Results

Rohan Samarajiva | Download Presentation

3. Problems & Prospects for Standardizing Sector Performance by NRAs

Helani Galpaya and Sriganesh Lokanathan | Download Presentation

4. Integrating ICT Questions in the Work of NSOs

Harsha de Silva | Download Presentation

5. Challenges of High AMPU in a Low ARPU World

Mahinda Herath | Download Presentation

6. Fixed & Mobile Indicators: Definitions and Regional Illustration/Case Study

Malathy Knight-John | Download Presentation

7. Internet & ICT Indicators: Definitions and Regional Illustration/Case Study

Divakar Goswami | Download Presentation

8. Price/Affordability Indicators: Definitions and Regional Illustration/Case Study

Harsha de Silva | Download Presentation

9. Digital Divide and Demographic Indicators: Definitions and Regional Illustration/Case Study

Joseph Wilson | Download Presentation

March 3, 2007

1. Traffic (Utilization) and Revenue Indicators: Definitions and Regional Illustration/ Case Study

Lorraine Carlos Salazar | Download Presentation

2. Industry Structure and Industry Impact Indicators: Definitions and Regional Illustration/Case Study

Payal Malik | Download Presentation

(Note: Price data is not yet included; will be done as the tariff data is collected)
The Indonesian telecom sector has seen three waves of liberalization.

• 1st Wave: 1991-1996 (Private investment in sector-financial
  crisis)
  Creation of Satelindo, 2nd International service provider in 1993.
  Partial privatization of PT Indosat (65% Govt retains control) in
  1994
  Exclusivity granted to PT Telkom for fixed local 2010 and long distance 2005 before it was partially privatized in 1995 (66% but government retains control).
  GSM licenses provided to Satelindo & Telkomsel subsidiaries of two incumbents in 1994.
  GSM license issued to PT Excelcomindo in 1996, competitive provider with no financial links to government.
  ISP licenses issued
• 2nd Wave of Reforms
  1999-2004 (Post crisis-Change of guard)
  Telecom Act of 1999 separating policy & regulatory functions, allowing increased private participation
  Ending of cross-ownership between government owned telcos
  Premature ending of PT Telkom’s exclusivity
  Creation of duopoly for fixed sector
  Ministerial decree (KM 31/2003) creating BRTIRegulatory Body
  Merger of Satelindo with PT Indosat, Telkomsel with
  PT Telkom
• 3rd Wave of reforms
  2005- present (New government of Yudhoyono)
  Unlicensing of 2.4 GHz
  Licensing of three Fixed Wireless Access (FWA) providers, two incumbent and Esia (Bakrie Group).
  Auction of 5 3G licenses to Telkomsel, Excelcom, Indosat, Hutchinson, Lippo-Maxxis
  Licenses granted to 15 VoIP operators including major operators
  USO fund established (Regulation No. 15) in 2005 where all operators contribute 0.75% of gross revenue.
  Government regulation (GR2/2006) on mandated cost-based interconnection
  Reference Interconnect Offer to be submitted by all operators to
  BRTI, dominant operators’ RIO will be published.
  Tariff regulation for leased lines

What were the drivers of growth?
Initially the government allowed domestic investment. Then the government decided to attract foreign investment via concessions with the promise of reform.
Lorraine Carlos Salazar says: who exactly are these stakeholders who supported entry of FDI in the sector? 
DG: Mastel, the Ministry
Before the Asian Crisis, there was a lot of interest in Eastern Asia, however after the Crisis, much of the Investment dried up. Government was then forced to undergo reform (driving the 2nd wave of reform).
Lorraine Carlos Salazar says: Did the incumbent wanted FDI?
Payal Malik says:  lack of domestic resources were the drivers for the incumbent being open to FDIs, as in the case of Thailand.  They were not averse to FDIs because it went into their own networks and it wasn;t competition
Divakar: Incumbent benefited from the FDI b/c it allowed them profit from the other companies, without risk. Lack of domestic resources were the drivers for FDI
Third wave of reforms driven by the promise by the current government to end corruption. Unlicensing of the 2.4Ghz band was driven by a civil society campaign. Recognition of merits of competition due to the success of the mobile sector) also added to the motivation.
2006 has seen a lot of growth, and investment in infrastructure. E.g no. of base stations has doubled since the start of the year.
absence of interconnection regime led to pvt companies choosing to invest in mobile rather than fixed.
fixed wire-line growth has not changed since 2005; given falling population, fixed teledensity is likely to fall.
PT Telekom’s fixed wireless subscriber has actually dropped – because many signed up for the ‘Flexi’ package for free minutes; once the free minutes were all used up, many discontinued use (and moved to Easia which have very low rates).
Fixed wireless operators are only allowed to operate within certain area codes. To circumvent restricted mobility for the fixed wireless subscriber, operators allow call forwarding and temporary roaming.
While many argue that Java has ‘all the phones’, its teledensity is actually fairly low; the issue is Java has a high population.
The graph on Slide 19 shows Easia’s ARPU increasing (unlike what is normally seen), however the data is being checked.
Easia’s spends a lot on advertising; they are a highly recognized brand.
Payal Malik says: Just for reference, Fixed wireless is not important in India so no separate data on ARPUs
Lorraine Carlos Salazar says: yes, same with Philippines and Thailand I think
In the mobile sector, Telkomsel, Indosat and Excelcomindo are the main players. the other companies are starting up.

Although mobile service is cheaper in Indonesia in absolute terms, it is relatively expensive (relative to monthly GNI).
When mobile market share is calculated as % of sector revenues (as opposed to subscribers), there is a change in the shares. The incumbent has a 68% share, as opposed to 55%. Directionally, the market share doesn’t change, but exact shares do.
Vasana – how practical is it to calculate in this way?
Divakar  – it’s a controversial issue.
Distribution of telecom access (Slide # 27) shows that there are a multiple mobiles within households.
When Indonesia is compared to the other ASEAN countries, its performance is quite poor.
Harsha de Silva: Singapore – Internet penetration is higher than fixed line penetration; why?
Divakar: access is through WiFi (ubiquitous WiFi coverage in Singapore) as well as mobile Internet.
ADSL is almost invisible (Slide 29) b/c the incumbent owns all the infrastructure.
Household PC ownership is low; Internet access via those PCs is EVEN lower.
Telecom regulatory performance:
Lorraine Carlos Salazar says: please clarify– the regulator is separate from the Dept of Telecoms? What does the latter do? still own the former fixed line monopoly is it?
Divakar: Not really separate, b/c of Chairman BRTI is also the Director of Dept of Telecoms.
Most of regulatory activity is done by BRTI.
Not telecom policy to guide the decisions and direction that the ministry is taking. Although the ministry is quite active in making decisions, there is a lack of coherence in the actions / decisions that are being taken.
Lorraine Carlos Salazar says: with regards issuances– are they hiring external consultants? who are writing these issuances?
Divakar: consultants are being hired to do various things; but in terms of writings and decrees, they are competent enough to do these on their own.

Lorraine: Is there really a plan or policy on telecoms lib, which provides guidance on the issuance of licenses? or is to ad hoc and open to  or lobbying, rent-seeking, etc.?
It is actually an opportunity if licenses are given in an ad hoc manner, b/c there is opportunity to illustrate to the Minister where a license will be useful, and there will be a hope that the Minister will give that license.
Rohan: Yes, but there is also another side of ‘ad hoc’ behavior (eg giving a license to your brother)
Divakar: the process is much more transparent now than before, and public consultations are mandatory by law.
TRE assessment:
Mobile sector has scored well on Mkt entry – this is b/c entry has been open; auctions were held as recently as last year. 3G operators are also allowed to provide 2G services
Bottlenecks in the fixed sector cause problems in other sectors, such as banks not being able to have points of presence (via credit card sales points).