Continuities and discontinuities in policy research Alison Gillwald

Executive Director: Research ICT Africa

Adjunct Professor: Digital Economy and Society, Nelson Mandela School of Public Governance, University of Cape Town

CPRsouth Young Scholars Programme, Maputo, 1 September, 2018

Internet as a global distribution network, stimulated by convergence between media, telecommunications and IT, facilitated the provision of content (audio-visual) over converged IP networks, across multiple devices,, global platforms and applications (AI, IOT)with layers of governance at the international, regional and national levels.

…from POTS and PANS to complex adaptive ICT ecosystem!

Central policy challenge Digital paradox

‣  As more people connected to the Internet the greater the digital divide

‣  Not only between those off line and online

‣  But between those barely online using the Internet minimally as passive consumers and those on high speed always on Internet being for productive purposes, improve their well being

3

‣  Think about universal access in new ways

‣  Think about low cost remodels licensing, spectrum assignment

‣  Enable trusted environment

‣  Exploit/manage disruption ‣  Global governance/public

interest/ national interest

7 ICT indicators, 6 targets under SDG Goals 4, 5, 9,17

‣  Target 4a: Proportion of schools with access to the Internet for pedagogical purposes

‣  Target 4a: Proportion of schools with access to computers for pedagogical purposes

‣  Target 4.4: Proportion of youth/adults with ICT skills, by type of skills

‣  Target 5b: Proportion of individuals who own a mobile telephone, by sex (ITU)

‣  Target 9c: Percentage of the population covered by a mobile network, broken down by technology (ITU)

‣  Target 17.6: Fixed Internet broadband subscriptions, broken down by speed (ITU)

‣  Target 17.8: Proportion of individuals using the Internet (ITU)

4

Indices

5

Table 4: South Africa’s performance on ICT indicators related to other indices’ rankings

Country

Rankings ICT indicators

IDI (ex 176)

NRI (ex 139)

ADI (ex 58)

MCI (ex 163)

3i (ex 139) 1 GB prepaid data USD Active SIM cards per

100 Internet subscribers

per 100

South Africa 92 65 22 90 39 8.28 147 54

Nigeria 143 119 13 125 45 5.00 83 26

Kenya 138 86 30 116 51 2.94 82 26

Ghana 116 102 26 113 49 2.24 128 35

Namibia 118 99 31 128 N/A 5.9 99 31

Rwanda 153 80 21 134 63 2.39 75 20

Tanzania 165 126 39 136 57 2.25 72 13

Uganda 152 121 32 145 64 2.77 55 22

Sources ITU, 2017 WEF, 2016 A4AI, 2017 GSMA, 2017 EIU, 2017 RAMP Index (Q4 2017) ITU, 2016

ITU, 2016

Source: Adapted from Esselaar, Gillwald and Stork, 2017

From digital divide to digital inequality

‣  Supply side -  Collected by suppliers of services

and products

-  Administrative data collected from suppliers

-  Basic indicator rankings

-  Number of subscribers

-  Prices

-  ARPU

-  Traffic -MoU/ Mbps 6

‣  Demand side •  Surveys – representative

•  Focus groups

•  Ethnographic

Supply vs Demand-side indicators what’s the story?

v  Active SIMS vs Unique subscribers.

v  Disaggregation by gender, income, education, location.

7

86.9 83.873.9

63.3 58.548.2

39.7

80.4

147.1135.8

8372.1 74.9

52.1

1

1,2

1,5

1,2

1,5 1,5

1,3

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

0

20

40

60

80

100

120

140

160

Kenya SouthAfrica Ghana Nigeria Tanzania Rwanda mozambique

RIA ITU MeanSIMcardownership

Mobile phone ownership, Internet use and GNI per capita

8

91%

75%

85% 84% 89% 88%

61% 65%

57%

75% 74% 68%

87%

61%

50%

40%

86%

73%

53%

73%

63% 65%

19%

30%

17%

26%

13%

36%

26%

15% 9% 10%

0%

25%

50%

75%

100%

0

5000

10000

15000

20000 Ar

gent

ina

Colo

mbi

a

Sout

h Af

rica

Peru

Para

guay

Gua

tem

ala

Indi

a

Nige

ria

Pakis

tan

Gha

na

Bang

lades

h

Cam

bodi

a

Keny

a

Tanz

ania

Rwan

da

Moz

ambi

que

GNI

per

cap

ita v

alue

Mobile phone ownership Internet use GNI per capita

Gender gap in Internet use also track GNI

9

62% 62% 57%

50% 46% 43% 34% 34% 32% 31%

23% 14% 12%

1% -1% -6%

Bang

lades

h

Rwan

da

Indi

a

Moz

ambi

que

Nige

ria

Pakis

tan

Gha

na

Cam

bodi

a

Tanz

ania

Keny

a

Gua

tem

ala

Peru

Sout

h Af

rica

Arge

ntina

Para

guay

Colo

mbi

a

Male Female Gap

Urban-rural Internet divide than gender divide (but intersectionality)

10

41%

31% 30% 27% 25% 24% 22% 21%

11% 9% 8% 7% 5% 4% 1%

-11%

0%

25%

50%

75%

100%

125%

0%

13%

25%

38%

50%

Moz

ambi

que

Nige

ria

Tanz

ania

Rwan

da

Gha

na

Colo

mbi

a

Indi

a

Cam

bodi

a

Para

guay

Keny

a

Sout

h Af

rica

Bang

lades

h

Pakis

tan

Gua

tem

ala

Peru

Arge

ntina

Urban Rural Gap

Reasons for not using the Internet

v  TEXT AND BULLETS

v  TEXT AND BULLETS

v  TEXT AND BULLETS

Ø  developed

11

How does South Africa compared with other African countries (35th out of 49)

v  Needs to be considered in relation to high coverage and QoS levels in SA

v  ICASA End User regs consumer protection reaction to #datamustfall

v  Failure to regulate cost based wholesale prices not enabled late entrants to put pricing pressure on dominant operators. (efficiency in market enhances consumer welfare)

12

1.13

1.25

1.49

2.08

2.23

2.23

2.28

2.37

2.4

2.46

2.68

2.75

2.79

8.28

0 2.25 4.5 6.75 9

Egypt

Namibia

Mozambique

Tunisia

Tanzania

Guinea

Sudan

Rwanda

Brundi

Kenya

Ghana

Uganda

Nigeria

South africa

Broadband measurement, Quality of Service

•  Prices might be competitive compared to other countries but if the quality is so poor that it takes hours longer to download a megabyte of data then the price difference is irrelevant. 

•  Prices low, but profits for investment in network extension

•  Speedtest measurements in Kenya, Nigeria and South Africa – do you want measure QoS in your country?

•  Speed, latency, jitter…Filters, censorship •  Netradar, Afrinic

14

Quality adjusted prices, quality matters when assessing data market

Represents the ratio between the 1GB data basket and the average download and upload speeds, shows that the two dominant operators Vodacom and MTN offer higher quality, respectively.

In the same period Telkom’s quality was the lowest. However, since Q1 2016, it seems that smaller operators improved their quality, catching up with dominant operators in Q2 2016 (in line with increased network investments). Vodacom SA’s high prices are accompanied by higher Internet speeds, compared to MTN SA and Cell C, which are performing less well on the measure based on average download/upload speed (in Mbps) divided by 1GB basket costs.

15

New forms of governance Institutional arrangement and competition

16

‣  Structure: •  Tendency towards lower number of

suppliers: monopoly, duopoly, oligopoly

‣  Anti-competitive conduct and performance if unregulated:

•  Incentives for abuse of market power (dominance)

•  Incentives to increase prices •  ‘Excess’ returns for firms in this risk class •  Misallocation of resources

‣  Institutional endowments ‣  Policy formulation

•  Participation, consultation, multisakeholdersim.

‣  Policy implementation •  regulatory autonomy/legitimacy •  Competencies capacity

‣  Information asymmetries

Young Scholars Programme CPRsouth 2018

Market power and dominance

•  Market power –  ability of a firm to independently raise prices above market

level for a non-transitory period without losing sales to such a degree as to make this behaviour unprofitable

–  Determinants of market power: •  Market share •  Barriers to market entry •  Pricing behaviour •  Profitability •  Vertical integration

•  Market dominance –  Relatively high market share –  Creates significant barriers to entry into relevant market

Cautionary

‣  use of data and mechanisms designed for competitive/mature markets with high average income/education users in the absence of support evidence.

‣  design institutions and structure markets to meet local resource constraints and conditions

‣  beware of committing to resource-intensive ‘best practices’ with different institutions endowments/markets

‣  explore more effective alternative regulatory strategies eg. regulatory impact analysis vs. benchmarking

‣  net neutrality vs. technological neutrality open access 18

NGN network regulation/incentives •  Mandatory open access: –  LLU (bitsteam) –  Functional separation –  Structural Separation – National open access builds –  Infrastructure sharing

•  Voluntary open access: •  Complementary investments – Geographic complementary investments –  Infrastructure sharing

CPRsouth 2018 Young Scholars Programme 19

Disruption and platform/gig economy

‣  Static and dynamic competition

‣  Dangers of instrumental competition regulation

‣  Negative effects on innovation (Bauer and Bohlin)

‣  Two/Multisided markets ‣  Future of work

‣  Mircowork

20

Intersections of telecom taxes/human rights

‣  Policy objectives: •  affordable access

•  citizens online

•  e-government

•  consumption to production

21

•  Secondary taxes (USF, not distributed)

•  Punitive company taxes (on efficiencies and profitability)

•  Taxes on social networking (revenue generation)

•  Shifting to use for political and social control

Affordable universal access

‣  Cut secondary taxes and remove excise duties on low entry smart and features phones that place premium on prices.

‣  Remove USO? Introduce pay-or-play? Regulate access to big data as public good. This can be used not only as an evidence base for the public sector but for national planning across sectors, such as transport, for example

‣  USA strategies leverage availability of Internet-enabled devices and multiple points of public access to provide citizens with access to public connectivity - public wi-fi

22

Holistic review of Spectrum with demand and supply side valuation Spectrum

With evidence that even cost-based GSM prices not affordable to most Africans, ensure more optimal co-existence of licensed and unlicensed spectrum that will optimise spectrum for diverse needs in the country and prioritise affordable access to communications. ‣  assign licensed spectrum required for the evolution of existing services to be at a competitively

determined (efficient use) price to ensure the build-out of capital-intensive networks benefitting from economies of scale and devices (with spectrum trading to correct value/use errors).

‣  Secondary use of spectrum be made available by the deployment of dynamic assignment to optimise the use of spectrum with regional licences

‣  Expand licence-exempt spectrum that can reduce digital inequality by enabling access but also complementing high cost, private use

‣  Nationally allocated spectrum not in use in remote areas should be made available through low cost or licence-exempt spectrum for communities, non-profit providers or micro-networks.

‣  Extending unlicensed spectrum to new frequency bands can spur investment and innovation, lead to the introduction of technologies. This can complement licensed networks (e.g. via the hand-off from GSM to public Wi-Fi, which now also has backhaul application) and expand broadband access in low-cost, last-mile access and backhaul.

‣  . 23

Legal framework for digital economy Creating trusted/enabling environment

‣  Draft, consult and finalise legislation necessary to build a trust-based environment for e-commerce, e-government, digital finance and personal use. This requires finalisation and implementation of legislation and guidelines in the areas of cybersecurity, privacy, protection of data and access to information. This needs to be framed in the context of an open data policy that safeguards these rights and which will enable the free flow of information required for more effective planning by government and service delivery entities, increase the uptake of online rather than face-to-face transactions, and create opportunities for entrepreneurialism and innovation.

24

Legal framework for digital economy Legal framework for digital economy

‣  Draft, consult and finalise legislation necessary to build a trust-based environment for e-commerce, e-government, digital finance and personal use. This requires finalisation and implementation of legislation and guidelines in the areas of cybersecurity, privacy, protection of data and access to information.

‣  an open data policy that safeguards these rights and which will enable the free flow of information required for more effective planning by government and service delivery entities, increase the uptake of online rather than face-to-face transactions, and create opportunities for entrepreneurialism and innovation.

25

Bringing a human rights lens to policy African Digital Policy Project

‣  Cybersecurity ‣  Privacy/Data protection ‣  Innovation – blockchain/AI ‣  Access, taxes ‣  Platform work ‣  Future of work

26

RESEARCH ANALYSIS - NRF, UNIVERSITIES/THINK TANKS, NATIONAL RESEARCH COUNCILS, PRIVATE COMPANIES/FOUNDATIONS

OPEN DATA – OPEN GOVERNMENT

BIG DATADigitisation, mass processing, storage,

analytics from large public/private data sets (Privacy/surveillance)

-  cost reductions -  time reductions- real time

- planning- evaluating

Public data as classical public good

27

NATIONAL STATISTICAL DATA

(StatsSA) – Macro-economic/-Census/labour force/

households survey- ICT Satellite Account

ADMINISTRATIVE DATA(Supply Side/regulated)

-  Data from operators, service providers, equipment suppliers

-  ICASA/ITU (Indicator Expert Group)-  (Demand side)

-  Nationally representative User Survey -  (ZADNA/IDRC)

-  ITU/UNCTAD Partnership on Measuring Information Society

This research is made possible by the IDRC

28

agillwald@researchitafrica.net +27 21 4476332

For more info and research, please visit www.researchictafrica.net