For this Toolkit, the World Bank commissioned case studies in a number of countries in order to reach a deeper understanding of the challenges that developing countries face in deploying broadband, and how some of those countries have addressed such issues. The countries studied cover a range of regions and development status. This section summarizes the results of those case studies.
7.6.1 Brazil: A Multipronged Public Sector Approach to Digital Inclusion
Although classed as an emerging economy, Brazil is among the top ten countries worldwide when ranked by total number of broadband users. At the end of 2010 Brazil was in 9th position, with about 15m fixed broadband subscribers, as well as 20m mobile broadband (3G) subscribers. This is not particularly surprising considering that Brazil is the world's fifth most populous nation, but due to the high levels of wealth disparity and the relatively large numbers of poor and rural inhabitants scattered across its vast terrain, broadband penetration in Brazil is lower than in other countries of equivalent income levels (ranked by the World Bank as 57th in the world by GDP/capita - US$10,710 in 2010).
Regionally, Brazil is slightly above the Latin American average in terms of penetration, but behind Chile, Argentina, and Uruguay. Speed of access follows a similar pattern – Brazil is better than the regional average, but below US or European levels. Likewise, Brazil has relatively good international fiber connectivity, although it is not as well connected as some of its neighbors. Similarly, prices for telecommunication and broadband access are lower than other countries in the region yet still relatively high compared to North America and Europe, especially outside the major cities. Phones, computer and telecommunication equipment are also significantly higher in cost, partly due to import duties on IT equipment, further reducing affordability of access among the lower-income groups.FIGURE 9Broadband country case studies TABLE 8 Regional examples of policies and programs for broadband development
Note: All figures from 2010. Wireless broadband penetration refers to subscriptions and not active Internet use.
Source: World Bank adapted from national regulatory authorities and statistical offices.
Source: Adapted from World Bank Broadband Country Case Studies.
Component East Asia & the Pacific (Vietnam) Lower-middle-income economy Europe & Central Asia (Turkey) Upper-middle-income economy Latin America & the Caribbean (St. Kitts) Upper-middle-income economy Middle East & North Africa (Morocco) Lower-middle-income economy South Asia (Sri Lanka) Lower-middle-income economy Sub-Saharan Africa (Kenya) Low-income economy
A number of fixed and mobile broadband operators have been licensed
Requires incumbent to provide wholesale broadband access to its fixed telephone network
Licensed cable TV & fixed wireless operators to provide broadband services in competition with incumbent
Granted license to new operator Wana who is now the 2ndlargest broadband operator
Sri Lanka was among the first in the region to award mobile broadband spectrum and has lowest prices and highest speeds
Kenyan government encouraged local operators to participate in undersea TEAMS cable through PPP
Installation of a broadband network connecting over 1,000 educational institutions in Ho Chi Minh City
Broadcast firms allowed to provide broadband and incumbent allowed to provide IPTV
VoIP services such as Vonage, MagicJack, and Skype extensively used by residential consumers
The Genie program is installing broadband multimedia computer labs in all schools impacting 6 million students.
The regulator compiles broadband quality of service showing difference between advertized and actual speeds
VoIP legal since 2006 with liberal licensing for ISPs
Several plans and programs for promoting software and digital content industries
Share of government services provided online to total public services reached to 66% in 2010
Government encourages local portals developed by entrepreneurs; SKNVibes gets 2 million hits a month
The Idarati (e-government) program led to 97% of administrative units having a web site with some 200 services on-line
The e-Sri Lankaprogram has resulted in 112 on-line services and some 4 million people conducting transactions with government online
Judiciary Telepresence project connects judges and courts
Support procurement of digital information devices for households with financial difficulties through USF & spectrum auction proceeds
1,850 Public Internet Access Points (PIAP) to provide ICT access and ICT competency to citizens, have been provided by the government
Students in the final grade of high school provided with laptops. Operators bid on providing Internet access to these students on a pay-as-you-go basis
Subsidizes laptops for engineering students and teachers
The Easy Sevaproject used PPPs to install over 50 public Internet facilities in rural areas connected with mobile broadband
The Kenya ICT Board establishes and funds Pasha Digital Villages with broadband access for communities
Large variation in access levels: As reflected by the wide variation in income levels within the country, broadband access is very uneven. At one end of the spectrum there is a high density of access in the industrialized urban areas, mostly in the south east of the country. In these areas, Brazil has recorded some of the world's highest levels of Internet use, and in particular, Brazilians have been early users of social networking services such as Orkut, and now Facebook. At the other end of the spectrum, there are the vast hinterlands of unconnected rural and remote areas, most particularly in the less wealthy north and west part of the country. For example in the North-East region, fixed broadband penetration languishes at 1.46%, while it is over 11% in the more industrialized Sao Paulo region in the south.
The pattern of uneven access also repeats itself at the local level. Most cities have wealthy areas with high levels of domestic broadband access, while close by, in the informal townships (favelas), which house most of the country's poor, there is almost no fixed broadband and residents mostly depend on cybercafes or relatively slow and more expensive 3G connections.
In the last 10 years, the federal government has had little success in disbursing its Universal Service Funds to address the digital divide, although a variety of state and municipal level initiatives have improved the availability of public access facilities to some extent.
Limited fixed infrastructure: The private sector has invested about USD80bn in telecommunications over the last 12 years, but Brazil's vast size and low population density in the rural areas has resulted in limited national pervasion of telecommunication infrastructure. This presents one of the biggest problems in broadening access to the Internet. The relatively low level of fixed infrastructure, both in the long-haul, and in the local loop for DSL-based broadband services, is one of the key constraints. However the lack of middle-mile infrastructure necessary to ensure all 5,500+ municipalities are connected to the national backbones probably represents the biggest challenge to ensuring equitable broadband access across the country.
Competition in the fixed-line sector is low and fixed line penetration has actually been falling due to mobile subscriber substitution. With the relatively high level of penetration and competition between mobile networks, 3G services are expanding rapidly to fill the demand for broadband, especially among lower income households. As a result wireless access is likely to be the main growth area for broadband in Brazil, especially now that some of the constraints in access to radio spectrum have recently been addressed.
National broadband initiative launched: In an effort to help to improve coverage and reduce the cost of broadband access, the government has begun a major broadband infrastructure development initiative which has set ambitious targets to triple broadband uptake by 2014. The largest ICT infrastructure project ever carried out in Brazil, called the National Broadband Plan (PNBL1), it aims to ensure that broadband access is available to low-income households, especially in areas that have so far been poorly served.
In May 2010, when the project was officially announced, it was initially allocated up to R$1bn (US$600m) a year until 2014 to ensure broadband reaches the 4000 cities and towns without broadband services, so that at least 40 million homes (or 68% of the population) have access to speeds equal to or greater than 1Mbps, for about USD20 per month.
The new government, under President Dilma Rousseff, has re-affirmed its commitment to the PNBL which was originally developed under the previous President Lula da Silva's administration. To implement the programme, the dormant former state-owned monopoly operator, Telecomunicacoes Brasileiras (Telebras), has been resurrected and given the task, working closely with the national regulator, Anatel, and the Ministry of Communications which has also set up a special secretariat to co-ordinate the PNBL in concert with the government's other digital inclusion programmes.
The initial focus of the PNBL has been to address the deficiencies in the existing telecommunication operator backbones by bringing on the oil and electricity network operators’ fibre networks to help fill in the gaps. Local access is now also being addressed through a variety of other measures, such as tax exemptions, reducing broadband license fees, accelerating efforts to make additional radio spectrum available, and other incentives to encourage the provision of broadband in rural areas. In May this year (2011), Telebras awarded three operators contracts worth USD43mn to provide transit, wholesale and broadband services in some states.
The Internet sector in Brazil is also supported by a large number of industry, government and civil society groups, both monitoring and promoting access to ICTs. As a result the level of up-to-date information on broadband utilization is high, and the debate over strategy is widespread.
The resurrection of the old public monopoly operator Telebras to compete with the private sector has not been without controversy, and the extent to which the poorest of the poor get access to broadband remains to be seen. But steadily rising economic prosperity for the less wealthy, along with the flurry of ICT investment made to prepare for the FIFA World Cup in 2014 and the Olympics in 2016, suggests there are much improved prospects wider adoption of broadband in Brazil. The strategies adopted and lessons learned from both public and private initiatives will be valuable for other developing countries planning to promote better access to broadband, and are likely to have special relevance for other large emerging economies, in particular the BRICS countries - Russia, India, China and South Africa.
7.6.2 Kenya: Build it and they will come
Kenya has a natural geographic advantage, being strategically positioned on the East Coast of Africa. Its government-led “build it and they will come” approach to broadband development has leveraged that advantage, and has played a major role in dramatically increasing fiber optic backbone capacity. Many of Kenya‘s milestones have been realized in less than five years – three cables had landed by the end of 2010 changing the face of the broadband market. The country has gone from relying on satellite for international capacity, to having access to almost four terabits over fiber from the three cables combined.
Although the landing of the cables is merely a first step, it has already resulted in an 80 percent decrease in wholesale bandwidth costs. Lower prices and greater availability are expected to increase access to the Internet as well as to promote the continued spread of sophisticated mobile applications and services and consequently improve opportunities for the creation of and access to information and knowledge. Affordable broadband is expected to increase Kenya‘s competitiveness, particularly in the Business Process Outsourcing (BPO) sector, and to encourage entrepreneurship and innovation.
What the Kenyan case demonstrates is that the promotion of broadband capacity is multifaceted and takes place on a number of different levels:
- the wholesale market for broadband connectivity (domestic and international backbone connectivity);
- the retail market for broadband access (i.e. “last mile connectivity”); and
- the development of services, applications and content.
With an estimated fixed and mobile broadband penetration rate of 2 subscriptions per 100 people in 2010, Kenya still has significant progress to make with respect to broadband uptake. Stimulating demand and usage by Kenyan citizens and the public and private sector remains a challenge. Kenya has, largely through the government, taken an innovative and pro-active approach to putting the user at the centre and addressing the other elements of the broadband ecosystem, such as education, literacy, applications and content. This has been done through good regulation, the promotion of polices relating to ICT in education, the subsidization of relevant content and application projects, and facilitating creative Public Private Partnerships (PPPs).
Much of Kenya‘s success is due to four important factors:
- A clear national vision articulated in Vision 2030;
- Strong leadership and direction;
- A credible regulatory, policy and institutional framework; and
- Leveraging the strength of the public and private sectors through PPPs.
The Kenyan experience is inspiring, yet it has not been perfect. There have been a few hiccups in terms of the pace of implementation, and overlaps in the policy and institutional framework.
7.6.3 Morocco: The benefits of disruption
Despite being constrained by human development challenges and regional political uncertainty in today’s “Arab Spring,” Morocco has emerged as a trailblazer in certain areas with particularly impressive mobile broadband results.
This would not have been possible without early visioning. Morocco was one of the first countries in the Middle East and North Africa region that institutionalized a regulatory environment for promoting competition in the telecom sector and as such made great strides in leveling the playing field for private operators to enter and succeed in the market. As early as 1999, a national strategy was developed to lay out the country’s ICT vision which later became the foundation for subsequent plans such as e-Morocco and now Digital Morocco. By 2006, both the fixed and mobile markets had become competitive with the award of operator licenses focused on quality rather than price.
As a result, Morocco’s broadband share of total Internet subscribers was over 99 percent by 2008, exceeding that of its neighboring Arab states. Today, the country boasts a quarter of households equipped with broadband, significantly higher than two percent in 2004. Almost half the country uses the Internet, demonstrating public demand in virtual networking and communicating via the World Wide Web.
Three factors contributed to Morocco’s success:
- Prioritizing ICT at an early stage so that subsequent planning could build on previous experiences;
- A youthful and eager population first getting online at the widespread cyber cafes and later wireless broadband; and
- Expanding private competition and opting for an emphasis on technical requirements, innovation, quality, and access.
The mobile industry is a big spotlight in Morocco’s broadband achievements. The introduction of third generation wireless technology in 2007 led to substantive growth of overall Internet subscriptions. This however has come at the cost of investment in fixed infrastructure. There is a need to boost fiber deployment in both local access and backbone networks. Understandably, such civil works require financing that will only happen if the private sector is confident it will see a return in its investments.
In order for Morocco to meet its ICT vision, the following three areas merit attention:
- Incentives that encourage a well-balanced, broadband infrastructure and greater investments in both fiber backhaul and local access networks;
- The prioritization of broadband in universal access policies including concrete efforts for dealing with affordability and awareness issues; and
- Programs to develop digital literacy among the older and rural population in addition to those that can effectively cultivate a next generation of e-content and software producers and developers.
Going beyond its initial broadband success and making broadband sustainable and transformational will be a challenge for Morocco. Deeping broadband access must find a way to deal with the social and economic reality of a lower-middle-income country. This will require fresh and innovative solutions including more emphasis on bottom-up initiatives.
7.6.4 Saint Kitts and Nevis: Strength in Depth
Access to affordable broadband has become a priority for many countries, which is perceived as important for social and economic development. The interaction of individuals, communities, and organizations with broadband has contributed to the development and enhancement of social networks, access to and generation of new knowledge, and the creation of diverse innovative processes.
The study analyses the environment within the small island developing state that facilitated the uptake of broadband technologies and applications, to the extent that St. Kitts and Nevis has the highest fixed broadband subscription rate among all countries of the Latin America and Caribbean region, and even higher than some developed economies.
This achievement can be attributed in part to the small physical size of St. Kitts and Nevis that has enabled faster rollout of the physical infrastructure, facilitated more effective marketing, and promoted maximum impact for government-led ICT initiatives. Among the Caribbean islands however smallness is certainly not unique. The study therefore explores other factors that have contributed to high broadband penetration.
The phrase “strength in depth” is borrowed from the world of soccer, the most popular sport on the island. The phrase is used to underscore the point that the strength of the island‘s achievement in the broadband sector, lies in its commitment to nurturing the foundational components of the broadband ecosystem. Promotion of basic education and digital literacy, building technology awareness, facilitating access to ICT, and encouragement of a competitive telecommunications environment are but a few examples of the country‘s core strengths.
However, as in any ecosystem, sustainability and growth can be threatened by internal weaknesses. Mobile broadband has yet to be launched and the lack of appropriate legislation is holding back the development of interactive e-commerce and e-government applications. Other challenges include the high cost of services, an unstable power supply and quality of service issues.
7.6.5 Sri Lanka: Glass half full or half empty?
Sri Lanka, an island nation located in the Indian Ocean just south of India, has lately experienced an explosion in the use and availability of broadband services. The increase is primarily due to the high rate of adoption of third generation (3G) mobile technologies such as HSPA and HSPA+ dongles and associated SIM cards. This trend is typical of Sri Lanka and many other South Asian countries which do not have access to wide-spread copper last mile connectivity, and therefore are reliant on wireless networks to increase access, be it simple voice or broadband. Several factors have contributed to Sri Lanka’s success in connecting its citizenry to the Internet via mobile broadband:
Innovative Business Models making services accessible to all: The increase in mobile broadband rides on the wave of extremely high mobile voice growth, enabled by successful innovations by the Sri Lankan (and Asian) operators. Faced with low ability to pay of many consumers in the region, the operators could have settled into serving the high-end, rich consumers. However, because the regulators and policy makers enabled new entry into the market, the intense competition forced operators to innovate in such a way as to be able to profitably serve even the poorest consumers. Network costs were reduced drastically by sharing passive and active infrastructure, by outsourcing key parts of the operation including even the management of the core network. Cost of billing was completely dispensed with and credit risk eliminated by moving to a pre-paid model. Distribution costs were minimized by enabling electronic reloading (e-reload), thereby eliminating cost of printing and distributing top-up cards for pre-paid users. Finally, even consumers with very low and very variable incomes were attracted to the market by enabling extremely small top-ups at any time (as low as USD 0.50 or less). This ―budget telecom model‖1 based on low costs high volumes (high minutes of use per user enabled operators to make positive EBITDA margins even though the Average Revenue per SIM was low, around USD 2 – 5.
This budget model of telecom that was first developed for the voice business is now being applied to mobile broadband in Sri Lanka. In particular, enabling pre-paid mobile broadband and allowing for very low value re-charges, the youth (who have highly variable incomes) have been brought into the mobile broadband market. The two first movers into the 3G space (Dialog Axiata and Mobitel) offered special promotional discount packages of up to 50% specifically for students. These early adopters created significant interest in mobile broadband. By 2008, the English and Sinhala blogosphere in Sri Lanka was barely mentioning fixed broadband; all the discussions and debates about quality and price was about mobile broadband.
Early availability of 3G spectrum: Of course all of the above was made possible because 3G spectrum was made available early to the operators in Sri Lanka. Here, the regulator deserves credit. As far back as 2003 test frequency was made available. By 2006, commercial 3G was launched. This is in sharp contrast to India which only managed to allocate 3G spectrum in 2010. Early access to spectrum enabled Sri Lanka to become the first Asian nation to offer 3G services.
Government’s e-development agenda motivating investment: Apart from the regulator, the ICT Agency of Sri Lanka (ICTA) has had a major focus on broadband in the country. ICTA is the implementer of e-Sri Lanka, a cross-sectoral ICT-enabled development program for the whole country. ICTA set the ICT agenda through a series of comprehensive supply and demand side activities/projects (for example, setting up network of over 500 rural telecenters, announcing plans for a least-cost subsidy scheme to build and operate a fiber backbone in rural areas, development of e- government applications, providing ICT skills to citizens from all walks of life, promoting investment in Business Process Outsourcing which in turn drives the demand for high speed connectivity) and helped create a significant buzz about the potential demand for BB in the country. All this helped increase awareness about opportunities afforded by ICTs. Operators were motivated to invest in the network infrastructure in light of upcoming demand.
However, having reached this stage, Sri Lanka needs to overcome several challenges if it is continue on its early success and make broadband a truly mass-market product instead of the niche popularity it still enjoys.
A key challenge is that of bringing a product of adequate quality to consumers. Budget broadband/budget telecom models mean low cost and therefore low prices. But they also mean low quality. This is indeed the case with Sri Lankan broadband. While the Sri Lankan mobile broadband performs better than Sri Lankan fixed broadband various quality of service measures, when compared with the developed world Sri Lankan consumers get less value for money on broadband. Part of the reason is bad advertising (promising broadband speeds that are possible theoretically, but not in reality). But a bigger part is the infrastructure – in particular, bottlenecks in international connectivity due to high prices.
The other challenge for operators is to keep up their investments necessary to move to the next technology cycle in face of declining margins. While at least two mobile operators have announced LTE network deployments, extending these upgrades beyond the population centers will prove challenging because of revenue and margin erosions due to intense competition.
7.6.6 Turkey: Compared to what?
Turkey has throughout history been prominent as a center of commerce because of its land connections to the continents of Europe, Asia and Africa and the sea surrounding it on three sides. An Organization for Economic Cooperation (OECD) member, it has been awaiting European Union (EU) membership since 1987. As an upper-middle-income economy, Turkey suffers from comparison with these mainly high-income groupings. Its fixed broadband penetration stood at 9.4 subscriptions per 100 inhabitants in June 2010 compared to the OECD average of 24.2 and 34% of Turkish homes had a broadband connection compared to the EU average of 61% in 2010.
These statistics disguise the fact that, compared to other countries in its income group, Turkey is doing relatively well. E-government initiatives have been a major driving force for development of the broadband ecosystem. This has triggered demand by enterprises in the ICT sector and motivated citizens to increase Internet usage. Ensuring a shared vision among political leaders and technocrats has also been an important factor in pushing e-government programs. Political leaders saw e-government as a central instrument that would support public reforms and larger changes in the political system. A central organizational structure was formulated to develop strategies and put public money into the pipeline for a set of strategically important projects with high value and high transaction.
The high tempo growth of Turkish economy in the last decade is another supportive factor. The various market-oriented reforms have been implemented complemented with a proactive foreign policy resulting in large sums of overseas capital flowing into the country.
Communications, software and hardware segments of ICT industries have expanded rapidly. This has included significant investment in upgrading mobile networks to broadband. Broadband mobile networks were only launched in 2009, yet by the end of 2010 around a quarter of the population were capable of accessing high-speed wireless services.
The Turkish population has also reacted to social networking in a major way. The country is the fourth largest Facebook market in the world. Turkey’s own social media content is growing and Turkish web sites are becoming more popular and increasingly diversified.
Nevertheless the country continues to face economic and social barriers to effectively absorb broadband technologies on a large scale and better utilize them for leveraging overall economic competitiveness. Fixed broadband competition is limited and dominated by ADSL technology. ICT skill gaps among small and medium enterprises and the less educated need to be adequately addressed with participation of private initiatives. The lack of a suitable national accounting framework for more detailed analysis hinders international benchmarking in ICTs and innovation.
If Turkey can overcome these barriers, the results could be considerable. According to the National Broadband Vision study, broadband could boost economic growth by 0.8-1.7 percentage points per year. This economic momentum enabled by an enhanced broadband ecosystem would create 180,000-380,000 new jobs each year.
7.6.7 Vietnam: Minimizing disparity and ensuring sustainability
With some 86 million inhabitants, Vietnam is the 13th most populated country in the world. Its land area is larger than Italy and almost the size of Germany. Wireline broadband has grown over 1,000 percent since 2005 and with 3.6 million subscriptions in 2010, it had the ninth largest network among developing counties. Its wireline broadband penetration is the sixth highest among lower middle-income economies with 4.4 subscriptions per 100 people.
Solid economic growth has coincided with increased broadband usage. Liberalization of the telecommunications sector has led to growing competition with 11 enterprises providing infrastructure. Service providers have developed modern IP-based networks with extensive fiber optic backbones. Incomes have risen so that more people can afford broadband. This in turn has created a virtuous circle with explosive demand creating a larger market, resulting in economies of scale and lower prices. Another factor driving fixed broadband growth is that Vietnam was a latecomer to the IMT-2000 WCMDA mobile broadband technology. Major mobile operators did not launch their networks until 2009 with around 15 percent of mobile subscribers having WCDMA capability towards the end of 2010.
Despite these successes, Vietnam faces challenges broadening broadband access, particularly in rural areas where some 70 percent of the population resides. Young people in urban areas ―live‖ with high-speed Internet access; however, less than one percent of rural households had any type of Internet access in 2008.
Most businesses are focused on using the Internet for basic needs such as email and finding information while more advanced applications such as e-commerce are not used as widely. Despite rising Internet access in households, many users have yet to fully exploit broadband applications. Survey data indicate that the use of a computer‘s Internet connection in Vietnam is to search for personal information and serve children‘s learning. The lack of relevant content and fragmented information are problems; a public information network with a unified portal, equipped with an automatic translation engine and rich multimedia content covering health, education, culture and agriculture is lacking.
The cost of fiber optic access is only economical in new urban areas and for large enterprises so DSL remains the fixed broadband choice of households. But copper lines provide less quality than fiber and it is difficult to upgrade the transmission capacity. At the same time, telecom enterprises have been lately focusing on developing mobile broadband subscribers to the detriment of the fixed network.
The large number of operators has led to overlap in investment in the access network. Interconnection is difficult because operators use a variety of technologies, impacting standardization of the national telecommunications infrastructure. Intense competition has resulted in price wars threatening long-term sustainability. Service providers are looking to reduce duplication by cooperating on shared infrastructure but so far no specific measures have been implemented.
While Vietnam has made tremendous achievements in broadband, there are challenges arising from its rapid growth: (i) development of the width (e.g., the number of subscribers) needs to be coupled with development of depth (e.g., service quality); (ii) differences in the level of broadband between regions can contribute to widening gaps; and (iii) the rapid development of broadband can cause policy problems affecting social life, security, and politics.