Scientific Advisory Council member Johannes Bauer had developed a method to allow customers figure out the mobile packages best suited their use patterns. In 2010-11 we worked with him to convert his method to an online tool that could be used to compare broadband prices. This is now available to customers in Bhutan at the BICMA site.

Now LIRNEasia Research Fellow Christoph Stork and CPRsouth member Ibrahim Kholilul Rahman have come up with a new method to compare mobile voice prices:

Trying to apply the price basket following OECD framework to Indonesia is, unfortunately, not suitable, as the discounts and specials are mostly on a daily basis.

Therefore, a new daily basket is required to compare prices in Indonesia. Given the complexities, an alternative framework to assess prices has been constructed in this simulation. All prepaid products are being priced for a basket constituting six calls each for every hour of the day and night (24 hours) – three calls of the length 35 seconds, 75 seconds and 200 seconds to the same network (on-net) and to another network (off-net). The daily basket also includes one off-net and one on-net SMS per hour.

It is fully worth consideration, especially if it is offered as an online tool by the regulatory agency. The problem of ensuring that the fast-changing discounts are continually updated in the database remains. If that problem cannot be solved (involved commitment of resources by regulatory agency), we’ll just have declare that mobile is an FMCG (fast moving consumer good) and engage in forbearance ourselves.

Mr. Paltridge of the O.E.C.D said that the overall consequence of combining AT&T and T-Mobile might be broader than most consumers think. For example, it would leave only one American carrier using GSM, the world’s most common cellular standard. That means AT&T could raise rates for Americans using their phones overseas and for foreigners visiting the United States.

“If the two merged, there would be an international angle to the competition issue,” he said.

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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Given the policy was almost fully formulated, I decided to focus on performance indicators, a subject I was working on for both UNCTAD and one which had preoccupied me since the time I was a regulator. It is also a subject that LIRNEasia has developed considerable expertise in. My guess was correct. Decisions had been made on the policy instruments that would be used and the ends that were desired, but not on how to figure out whether the policy instruments were working or not. Brazil_May10.

I first raised the standard criticisms about “teledensity” and such, where the failure of the ITU to recognize the qualitative change from a government-dominated monopoly service to a vibrant competitive industry had led to continuing reliance on supply-side data that came through multiple steps (operators to regulatory agency to ministry to ITU) with all the attendant delays and errors, had resulted in a mess. The flaws in the data increased from fixed lines to mobile to Internet, with massive problems caused by non-standard definitions and flawed data collection. For example, no one knows what an active SIM is, despite their numbers being bandied around. Broadband lacks common definition and in some cases, arbitrary multipliers have been used (10 in the case of Indonesia) to arrive at numbers of Internet users.

I then moved on to discuss the work I had done with Haymar Win Tun of the LKY School at National U of Singapore, where we had organized the countries covered by the ERI, NRI, IDI and KEI by deciles. Here too the end results were problematic because they drew from the same poisoned wells of UN system indicator databases, but at least they recognized factors other than ICTs. The inclusion of other indicators in the mix diluted the errors in the ITU databases, though perhaps introducing additional errors. Haymar and I argue that it was more defensible to simply talk about deciles and not about positions in a ranked list because the existence of input errors makes the small differences between countries insignificant.

Brazil was in the third decile from the top in KEI and IDI, which posed the question as to what target they should adopt. Advancing a decile at the top of a league table is a lot more difficult than doing so at the bottom. To advance to the next decile, Brazil would have to displace an OECD country and or city-states such as Hong Kong, Macau and Singapore. The sense of the room seemed to be that they would like to set the country an ambitious target. It would be nice indeed for a BRIC to take out a European country. I pointed out that Cypress and the Slovak Republic seemed doable and that Greece, which was currently two deciles ahead was also vulnerable.

We discussed the ways in which the target could be achieved, including unpacking the indices to identify the subcomponents most amenable to increase and then concentrating policy attention on them. The value of relying on demand-side data that would allow the questions most pertinent to Brazil’s broadband policy was underlined, even if this meant that comparability and benchmarking would suffer.

Given the heavy reliance on subsidies and other interventions, I asked whether it would not be better to let market forces operate by allowing greater entry, thereby triggering a shift to the Budget Telecom Network Model. I wondered why Brazil was consistently at the bottom of the rankings in terms of Nokia’s mobile and mobile data TCO tables and why billion of USD were lying unspent in the Brazil Universal Service Fund. If these problems could be resolved there would be less need for subsidies, I said. I also pointed out the need to ensure cost-oriented and non-discriminatory access to fat pipes, not only within Brazil, but also under the sea. Unless these input prices declined, there was no point in lowering retail data and voice prices, which would only result in congestion and poor QoS. Without lower retail prices more people would not get connected and use would not increase.

How it applies to Internet and broadband is what Rohan Samarajiva, Chair and CEO, LIRNEasia explained in his keynote speech at the workshop ‘Expanding access to the Internet and broadband for development’ on November 16, 2009, at the Internet Governance forum 2009.  His presentation entitled, ‘How the developing world may participate in the global Internet Economy:  Innovation driven by competition’, can be downloaded here.

The session was chaired by Dimitri Ypsilanti, Head of Information, Communication and Consumer Policy Division, OECD. The discussants were Tim Kelly, Lead ICT Policy Specialist, infoDev – World Bank, Olfat A. Monsef, Vice President of National Telecommunication Regulator, Telecom Services, Egypt, Anriette Esterhuysen, Executive Director, Association for Progressive Communications (APC) and Virat Bhatia, President – External Affairs, AT&T, South Asia will be the discussants.

The workshop is jointly organized by OECD and infoDev.

In his presentation, Dr Samarajiva described the new “Budget Telecom Network Model” developed in South Asia that is enabling mobile operators to serve low-income customers who yield very low ARPUs [Average Revenues per User] and discuss its extension to enable broadband use.  Bangladesh, India, Pakistan and Sri Lanka have offered the lowest total costs of mobile ownership since 2005-06 while still yielding adequate, though somewhat volatile, returns to ensure continued investment in network extension and new services.  LIRNEasia research shows that this has been made possible by business process innovations to reduce operating expenses, and the minimizing of transaction costs made possible by widespread prepaid use.  The analysis extensively draws from LIRNEasia’s six-country, 10,000 sample Teleuse @ BOP3 survey which shows how poor people are actually using information and communication technologies in emerging Asia.

The presentation slides can be downloaded here, and the full paper can be downloaded here.

The invitation signifies recognition of the high profile LIRNEasia has achieved as a thought leader on innovations in telecom policy and regulation that benefit those at the Bottom of the Pyramid in emerging Asian economies. Other speakers include Professor Richard Heeks of the University of Manchester and representatives of NokiaSiemens Networks and Vodafone.  The workshop is being held on 10-11 September 2009 at the Paris Headquarters of the OECD.

Full participation in the global Internet Economy requires electronic connectivity of considerable complexity. Today, due to a worldwide wave of liberalization and technological and business innovations in the mobile space, much of the world is electronically connected, albeit not at the levels that would fully support participation in the global Internet Economy. Yet, many millions of poor people are engaging in tasks normally associated with the Internet such as information retrieval, payments and remote computing using relatively simple mobiles. Understanding the business model that enabled impressive gains in voice connectivity as well as the beginnings of more-than-voice applications over mobiles is important not only because widespread broadband access among the poor is likely to be achieved by extending this model but because it would be the basis of coherent and efficacious policy and regulatory responses…

This is an excerpt from a background report by Rohan Samarajiva, to be presented at “Policy coherence in the application of information and communication technologies for development,” a joint workshop organized by the Organisation for Economic Co-operation and Development (OECD) and the Information for Development Program (infoDev) / World Bank from 10-11 September 2009 in Paris. The report has been published in the OECD’s Development Dimension series:  “ICTs for Development: Improving policy coherence.”

Now the FCC has entered the fray, asking for comments on interpreting broadband.

This is what one online commentator says:

Nicely put, but defining and, even more, “interpreting” broadband may be a tough call. The FCC’s Notice certainly doesn’t make it easy. When last we checked, the FCC upgraded its speed based definition of “basic” broadband to over 200Kbps but less than 768Kbps (uploads and downloads). “I am pleased that the Commission finally moved away from its antiquated definition of broadband as 200 kilobits per second, which had become something of a running joke,” declared one Commissioner after the June 2008 Order. The Department of Commerce’s Broadband Technology Opportunities Program (BTOP), which is taking applications for broadband stimulus money, defines broadband as “two-way data transmission with advertised speeds of at least 768 kbps downstream and at least 200 kbps upstream to end users.”

But now the Commission notes that just because some ISP advertises service at thus and such a speed doesn’t necessarily mean that that’s what the consumer will get. In July, for example, the United Kingdom Ofcom released the conclusions of a six-month investigation about broadband rates. Customers who bought DSL from one of eight different companies may have thought they were getting 8Mbps, Ofcom reported, but on average they were only getting 4.8.

THE number of people subscribing to broadband in OECD countries increased by 13% last year to 267m. More than a fifth of the combined population of the 30 mostly rich nations in the OECD now have high-speed access to the internet. The broadband penetration rate is above a third in Denmark, the Netherlands, Norway and Switzerland. Adoption is lowest in poorer countries such as Mexico, where just over 7% are broadband subscribers. Slovakia enjoyed the fastest growth in broadband subscriptions per person. Those subscribers, however, paid most for their connection, once exchange rates were adjusted for local spending power. On that basis, Slovaks shelled out over twice as much for speedy internet access as broadband users in Britain or Japan.

Full story and chart.

After the United States, the ranking found that Sweden, Denmark, the Netherlands, and Norway rounded out the five most productive users of connectivity. Japan ranked 10, and Korea, 18.

And while wired and wireless broadband networks used by consumers lagged other countries, the United States ranked No. 1 in the world for technology use and skills by consumers. (This was measured by comparing countries on five measures: The penetration of Internet use, penetration of Internet banking, wired and wireless voice minutes per capita, SMS messages per capita, and consumer software spending.)

To see the full methodology, look at page 38 in this report.

Bangladesh currently has the lowest mobile prices in the world and perhaps the world’s highest mobile growth rate. Pretty good, by any measure. A universal service tax can ruin the business model that has given millions of Bangladesh citizens the opportunity to get connected to an electronic network for the first time and to use telecom services at affordable prices. Instead of solving a problem, it will create one.

…the same basket of calls, texts and apportioned connection charges (low-user basket, based on OECD methodology adapted for the region by LIRNEasia) that costs $5.25 in Nepal, costs only $2.46 in Bangladesh.

Yet, the low prices and the resulting low ARPUs [Average Revenues per User] have not bankrupted the mobile operators. They are making enough profits to justify the continued investments that will keep growth going. Low prices and decent profits indicate that a different business model is at work.

…by introducing universal service taxes, the government of Bangladesh will harm the business model that has given the country the highest growth rates, the lowest prices and coverage of the entire national territory. It will not help connect more people (the stated objective of all universal service programs) but will slow down the model that has connected more people than any government program ever has.

The OECD released its latest report on May 19th. It surveys the broadband landscape to December 2007, and tells a warm tale. The number of broadband subscribers in the world’s 30 biggest countries grew by 18% to reach 235m, or one-fifth of those countries’ total population. Between 2005 and 2006, prices fell by an average of 19% for DSL connections and 16% for cable lines. At the end of 2004 the average speed was 2 megabits per second (Mb/s); in 2007 it increased to almost 9Mb/s. But the excellent report, written by Taylor Reynolds and Sacha Wunsch-Vincent, goes beyond the numbers and examines why broadband is actually useful. And here the authors face a problem: there simply is not good data to show that broadband matters. Like Banquo at Macbeth’s banquet, the ghost of Dr Solow’s "productivity paradox" disrupts the OECD’s pleasant narrative.

Tech.view | The broadband myth | Economist.com

DIRSI’s study on mobile price and affordability also adapts the OECD price baskets to compare the monthly costs of using mobiles in six Latin American countries. The Latin American baskets take into consideration call and SMS volumes and usage data as specified in the OECD methodology,[5] but excludes initial connection charges. The DIRSI study also does not report data on postpaid or indicate whether different MoUs have been applied to prepaid and postpaid.

Despite differences in methodology, it is interesting to note the rather large differences in the monthly costs between users in South Asia and Latin America; even though the former takes into account a broader set of costs. Table 1 shows that a low user in Afghanistan (who pays the most in South Asia) is still paying approximately half that paid by a low user in the cheapest of the Latin American countries studied (Argentina) when comparing the findings in straight USD. In Purchasing Power Parity terms (which reflect affordability), the differences are still dramatic.

“The characteristics of these new Internet users will be vastly different from the first billion users,” the report concludes, adding that the majority of the new Internet users will be accessing the Internet on wireless networks and will have incomes of less than US$2 per day.   

While the report sees encouraging signs from developing markets that have adopted market liberalisation and who are now starting to enjoy the employment, micro- entrepreneurial and social development benefits of increased competition, there remain many countries that need to catch up.  

According to the report, “more than 70 countries still have monopolies over international gateway services,” which “raise the prices for accessing international capacity, far beyond costs, and reduce the affordability of Internet access for end-users.”  Read more.

As Taylor Reynolds, an OECD analyst, puts it, innovation usually comes in steps: newcomers first rent space on an existing network, to build up customers and income. Then they create new and better infrastructure, as and when they need it.

In France, for example, the regulator forced France Télécom to rent out its lines. One small start-up firm benefited from this opportunity and then installed technology that was much faster than any of its rivals’. It won so many customers that other operators had to follow suit. In Canada, too, the regulator mandated line-sharing, and provinces subsidised trunk lines from which smaller operators could lease capacity to provide service.

In South Korea, where half the population lives in flats, each block owns its own internal cabling and allows rival operators to put their equipment in the basement; each tenant then chooses which to use. In Japan, politicians put pressure on the dominant operator, NTT, to connect people’s homes by high-speed fibre lines. And this week the communications ministry indicated that it will make NTT open those fibre connections to rivals.

As broadband grows more popular, the political mood may change in many countries. At present, consumers are often misled by the speeds that operators promise to deliver. Soon regulators can expect to face pressure to ensure truth in advertising, as well as to promote easier access.

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