THE CURRENT SITUATION OF BROADBAND …Telecom Advisory Services, LLC THE CURRENT SITUATION OF BROADBAND INTERNET PENETRATION IN THE OIC MEMBER COUNTRIES 9th Meeting Of The Comcec Transport

Telecom Advisory Services, LLC

THE CURRENT SITUATION OF BROADBAND INTERNET PENETRATION IN THE OIC MEMBER COUNTRIES

9th Meeting Of The Comcec Transport And Communications Working Group

Ankara, Turkey March 16th, 2017

2

AGENDA

Stages of broadband development in OIC member states

Broadband supply in OIC member countries

Broadband demand in OIC member countries

Lessons learned and policy implications

3

EVER SINCE ITS INTRODUCTION, BROADBAND HAS UNDERGONE A DRAMATIC DEVELOPMENT AMONG OIC MEMBER STATES

OIC MEMBER STATES: DIFFUSION OF FIXED AND MOBILE BROADBAND

Source: International Telecommunications Union; Telecom Advisory Services analysis

4

HOWEVER, BROADBAND DEVELOPMENT ACROSS OIC MEMBER STATES IS NOT HOMOGENEOUS: SEVERAL COUNTRIES EXHIBIT HIGH SERVICE COVERAGE AND ADOPTION

OIC MEMBER STATES: BROADBAND SUPPLY AND DEMAND

(ADVANCED COUNTRIES)

Source: Telecom Advisory Services analysis

SUPPLY DEMAND

Fixed

Broadband

Coverage

(ADSL)

Mobile

Broadband

Coverage

(3G)

Mobile

Broadban

d

Coverage

(4G)

Fixed

Broadband

Penetration

(households)

Mobile

Broadband

Penetration

(population)

Averag

e 53.33% 64.16% 46.82% 14.95% 29.41%

Advanc

ed

>70% Azerbaijan,

Bahrain, Brunei,

Jordan,

Kazakhstan,

Lebanon,

Malaysia,

Maldives, Oman,

Qatar, Saudi

Arabia, Turkey,

UAE

>70% Albania,

Azerbaijan,

Bahrain,

Bangladesh,

Brunei, Cote

d’Ivoire; Egypt,

Gabon, Gambia,

Jordan,

Kazakhstan,

Kuwait, Lebanon,

Malaysia,

Maldives,

Morocco, Oman,

Palestine, Qatar,

Saudi Arabia,

Suriname, Syria,

Tunisia, Turkey,

UAE

>70% Kazakhstan,

Kuwait,

Pakistan,

Qatar, Saudi

Arabia, UAE

>70% Azerbaijan,

Bahrain,

Lebanon, Qatar,

Saudi Arabia,

UAE

>70% Bahrain, Kuwait,

Lybia, Malaysia,

Oman, Qatar,

Saudi Arabia,

Suriname, UAE


5

ON THE OTHER HAND, A NUMBER OF NATIONS EXHıBıT HIGH SERVıCE COVERAGE COMBıNED WıTH LOW ADOPTION


(INTERMEDIATE COUNTRIES)


SUPPLY DEMAND

Fixed

Broadband

Coverage

(ADSL)

Mobile

Broadband

Coverage

(3G)

Mobile

Broadband

Coverage

(4G)

Fixed

Broadband

Penetration

(households)

Mobile

Broadband

Penetration

(population)

Average 53.33% 64.16% 46.82% 14.95% 29.41%

Intermedia

te

70%-40% Kuwait, Palestine,

Suriname

70%-40% Afghanistan,

Algeria, Benin,

Cameroon,

Indonesia, Iran,

Iraq,

Kyrgyzstan,

Mozambique,

Nigeria,

Pakistan,

Senegal,

Sudan, Togo,

Uganda,

Turkmenistan,

Uzbekistan

70%-40% Jordan,

Malaysia,

Morocco,

Oman

70%-40% Brunei,

Kazakhstan,

Malaysia,

Maldives, Oman,

Palestine,

Suriname, Turkey

70%-40% Albania, Algeria,

Azerbaijan, Cote

d’Ivoire, Egypt,

Indonesia,

Kazakhstan,

Lebanon, Maldives,

Tunisia, Turkey


6

FINALLY, A LARGE GROUP OF COUNTRIES ARE STıLL AT A LıMıTED STAGE OF BROADBAND DEVELOPMENT ıN TERMS OF BOTH SUPPLY AND DEMAND


(LIMITED COUNTRIES)


SUPPLY DEMAND

Fixed

Broadband

Coverage

(ADSL)

Mobile

Broadban

d

Coverage

(3G)

Mobile

Broadband

Coverage

(4G)

Fixed

Broadband

Penetration

(households)

Mobile

Broadband

Penetration

(population)

Averag

e 53.33% 64.16% 46.82% 14.95% 29.41%

Limited

<40% Afghanistan, Albania,

Algeria, Bangladesh,

Benin, Burkina Faso,

Cameroon, Chad,

Comoros, Cote

d’Ivoire, Djibouti,

Egypt, Gabon, Gambia, Guinea,

Guinea Bissau,

Guyana, Indonesia,

Iran, Iraq, Kyrgyztan,

Mali, Mauritania,

Morocco,

Mozambique, Niger,

Nigeria, Sierra leone,

Somalia, Syria,

Sudan, Tajikistan,

Togo, Tunisia,

Trkmenistan, Uganda,

Uzbekistan, Yemen

<40% Burkina Faso,

Chad,

Comoros,

Djibouti,

Guinea,

Guinea

Bissau,

Guyana,

Libya, Mali,

Niger,

Mauritania,

Sierra Leone,

Somalia,

Tajikistan,

Yemen

<40% Afghanistan,

Albania, Algeria,

Bangladesh, Benin,

Burkina Faso,

Cameroon, Chad,

Comoros, Cote


Egypt, Gabon,

Gambia, Guinea,

Guinea Bissau,

Guyana, Indonesia,

Iran, Iraq,

Kyrgyztan, Mali,

Mauritania,

Mozambique,

Niger, Nigeria,

Sierra leone,

Somalia, Syria,

Sudan, Tajikistan,

Togo, Tunisia,

Trkmenistan,

Uganda,

Uzbekistan, Yemen

<40% Afghanistan, Albania,

Algeria, Bangladesh,

Benin, Burkina Faso,

Cameroon, Chad,

Comoros, Cote


Egypt, Gabon,

Gambia, Guinea,

Guinea-Bissau,

Guyana, Indonesia,

Iran, Iraq, Jordan,

Kuwait, Kyrgyzstan,

Libya, Mali,

Mauritania, Morocco,

Mozambique, Niger,

Nigeria, Pakistan,

Senegal, Sierra

Leone, Somalia,

Sudan, Syria,

Tajikistan, Togo,

Tunisia, Turkmenistan,

Uganda

<40% Benin, Brunei,

Burkina Faso,

Cameroon, Chad,

Comoros, Djibouti,

Gabon, Gambia,

Guinea, Guyana,

Iran, Iraq, Jordan,

Kyrgyzstan, Mali,

Mauritania,

Morocco,

Mozambique,

Niger, Nigeria,

Pakistan, Senegal,

Sierra Leone,

Somalia, Sudan,

Syria, Tajikistan,

Togo,

Turkmenistan,

Uganda,

Uzbekistan, Yemen


7

EACH GROUP OF COUNTRIES FACES A DISTINCT SET OF CRITICAL CHALLENGES, TO BE DETAILED IN THIS PRESENTATION

Source: Telecom Advisory Services

ADVANCED

COUNTRIES

INTERMEDIATE

COUNTRIES

LIMITED

COUNTRIES

SUPPLY CHALLENGES DEMAND CHALLENGES

• Build a forward-looking world-class

infrastructure to place them in a

leading position in terms of

digitization

• This entails deploying fiber optics in

their last mile, completing their 4G

wireless coverage and preparing to

deploy 5G • Increased service adoption is dependent on

lowering the total operating cost incurred

by consumers for purchasing the technology

• Improve digital literacy by embedding

programs in the formal education system,

while targeting non-formal initiatives to

specific segments of the population (elderly,

handicapped, rural poor)

• Assuming that governments of these

countries have limited resources to

inject investment in universal

broadband reach, it might be

necessary to rely on incumbents

and provide them with the right

incentives to deploy broadband

networks

• Demand promotion mechanisms

including economic subsidies, digital

literacy campaigns, and local

content development

8

TO COMPLEMENT THE RESEARH ON SUPPLY AND DEMAND CHALLENGES AMONG OıC MEMBER STATES, THREE CASE STUDıES SELECTED FROM THE THREE GROUPS WERE CONDUCTED

GDP per

capita

Supply Demand

Fixed

Broadba

nd

Coverag

e

(ADSL)

Mobile

Broadba

nd

Coverag

e (3G)

Mobile

Broadban

d

Coverage

(4G)

Fixed

Broadband

Penetratio

n

(househol

ds)

Mobile

Broadban

d

Penetratio

n

(populati

on)

OIC

Average

53.33% 64.16% 46.82% 14.95% 29.41%

Advanced

Saudi

Arabia:

US$

37,729

>70 %

Kazakhst

an, Saudi

Arabia

>70%:

Cote

d’Ivoire,

Kazakhsta

n, Saudi

Arabia

>70%

Kazakhsta

n, Saudi

Arabia

>70%

Saudi

Arabia

>70%

Saudi

Arabia

Intermedi

ate

Kazakhst

an: US$

9,873

70%-

40%

70%-

40%

70%-

40%

70%-40%

Kazakhstan

70%-

40%

Cote

d’Ivoire,

Kazakhstan

Limited

Cote

d’Ivoire:

US$

1,373

<40%

Cote

d’Ivoire

<40%

<40%

Cote

d’Ivoire

<40%

Cote

d’Ivoire

<40%

CASE STUDY SELECTION

Source:World bank; International Telecommunications Union; Telecom Advisory Services

9

AGENDA





10

THE ASSESSMENT OF BROADBAND SUPPLY IS ORGANIZED AROUND THE FOLLOWING SIX COMPONENTS

Broadband

Service coverage

Broadband

technologies

utilized

• Fixed and mobile broadband coverage

• Comparison with developed countries

• Fixed and mobile broadband technology deployment

• Analysis of substitution and complementarity patterns of

technology deployment

Broadband

service quality

• Differences in fixed and mobile broadband

speed levels among OIC member states

• Comparison with developed countries

Broadband

Industry Structure

• Analysis of competitive intensity and industry

concentration

• Competitive dynamics

Pricing trends

• Comparison of pricing trends among OIC

member states

• Pricing benchmarks

Deployment of

Global

Operators

• Presence of Multinational operators within OIC

member states

• Multinational operator strategies

11

BROADBAND SERVICE COVERAGE ıN OıC MEMBER STATES VARıES WıDELY

Mobile Broadband (3G)

Fixed Broadband

BROADBAND COVERAGE (% of population) (2015)

Mobile Broadband (4G)

Source: ITU Source: OpenSignal

Source: Survey and interviews

12

WHILE MOBILE BROADBAND COVERAGE HAS BEEN INCREASING AMONG OIC MEMBER STATES, THEY, AS A WHOLE, STILL LAG THE DEVELOPED NATIONS

OIC MEMBER STATES VS. OECD: MOBILE BROADBAND COVERAGE (3G)

(% of population) (2007-2015)

Source: Regulatory Agencies; International Telecommunications Union; Telecom Advisory Services analysis

13

WHILE THE DEPLOYMENT OF 4G IS PROCEEDING AT FAST PACE – 41 OIC COUNTRIES HAVE AT LEAST ONE LTE NETWORK – THE SHARE OF 4G SUBSCRIBERS remains SMALL

OIC MEMBER STATES: 3G VERSUS 4G TECHNOLOGY (2015)

Sources: International Telecommunications Union (The State of Broadband 2016); Ovum. Telecoms, media and

Entertainment Outlook 2015; Global Mobile Suppliers Association. Evolution to LTE Report. October 26, 2016;

Telecom Advisory Services analysis

14

CASE STUDıES PROVıDE A BETTER UNDERSTANDıNG OF HOW OPERATORS ARE TACKLıNG THE DEPLOYMENT OF MOBıLE BROADBAND: THREE DIFFERENT PATTERNS ARE OBSERVED

KAZAKHSTAN

• 4G deployment begins before

completing full coverage of 3G

• As of 2016, 3G coverage stands at

73%, while 4G has reached 70%

• Constrained by CAPEX limitations,

carriers have rolled out 4G in portions of

the territory and negotiated mutual

roaming agreements

SAUDI ARABIA

• 4G coverage started when 3G had

reached 90%

• 4G and 3G have achieved almost

complete coverage (90% and 98%

respectively)

• Reaching coverage comparable to

OECD was enabled by infrastructure-

based competition incentives

COTE D’IVOIRE

•4G deployment started when 3G had

reached only 50%

•However, at this point 4G has reached

20%-30% coverage, concentrated on large

cities

•Full 4G coverage is targeted for 2020, thus

skipping 3G full deployment

15

ADSL IS STILL THE PREVALENT “LAST MILE” FIXED BROADBAND TECHNOLOGY

OIC MEMBER STATES: FIXED BROADBAND TECHNOLOGY (2015)

Country Percent Cable

Modem

Tajikistan 100.00 %

Niger 100.00 %

Kyrgystan 30.12 %

Albania 23.60 %

Maldives 20.84 %

Afghanistan 20.00 %

Turkey 5.48 %

Malyasia 2.42 %

Kazakhstan 2.23 %

Pakistan 2.08 %

Indonesia 1.08 %

Azerbaijan 1.06 %

Bangladesh 0.10 %

UAE 0.02 %

Country Percent Fiber

Optics

Suriname 92.14%

UAE 88.34%

Qatar 73.86%

Bangladesh 67.89%

Kazakhstan 39.98%

Brunei 37.18%

S. Arabia 32.39%

Malaysia 31.31%

Kyrgystan 29.62%

Turkey 16.44%

Mozambique 12.19%

Uzbekistan 8.03%

Azerbaijan 6.86%

Albania 6.20%

Gambia 2.70%

Jordan 2.54%

Maldives 2.30%

Pakistan 0.74%

Bahrain 0.58%

Tunisia 0.41%


16

THE LIMITED DEPLOYMENT OF CABLE MODEM AND FIBER OPTICS HAS A NEGATIVE IMPACT ON THE PACE OF INCREASE OF AVERAGE FIXED BROADBAND SPEED

OIC MEMBER STATES VS. OECD: AVERAGE FIXED BROADBAND SPEED

(in Mbps) (2007-2016)

Source: Akamai; Telecom Advisory Services analysis

17

HOWEVER, CASE STUDY DATA INDICATES THAT OIC MEMBER STATES TEND TO OUTPERFORM THEIR PEERS WHEN ıT COMES TO FıXED BROADBAND SPEEDS

Cote

d’Ivoire

African

OIC

countries

African

countries

Kazakhsta

n

Asian OIC

countries

Central

Asian

countries Share Fixed-

broadband 256 Kbps

to <2 Mbps

38.98 % 77.54 % 46.96 % 16.33% 53.66% 38.22 %

Share Fixed-

broadband 2 Mbps

to <10 Mbps

18.86 % 15.54 % 46.57 % 43.68% 33.36% 35.47 %

Share Fixed-

broadband = or >

10 Mbps subscriptions

41.16 % 6.93 % 6.47 % 39.99% 12.98% 26.32 % Saudi

Arabia

Arab OIC

countries

Arab

countries

Share Fixed-broadband

256 Kbps to <2 Mbps 44.92 % 53.66 % 53.66 %

Share Fixed-broadband 2

Mbps to <10 Mbps 22.10 % 38.60 % 38.60 %

Share Fixed-broadband =

or > 10 Mbps subscriptions 32.99 % 8.92 % 8.92 %

FIXED BROADBAND SPEED LEVELS: CASE STUDY COUNTRIES

VERSUS OTHER COUNTRY AVERAGES (2015)


18

ON THE OTHER HAND, WHILE MOBILE BROADBAND SPEEDS ARE INCREASING, THE NETWORKS OF OIC MEMBER STATES STILL LAG THOSE OF THE OECD COUNTRIES

OIC MEMBER STATES VS. OECD: AVERAGE MOBILE BROADBAND SPEED

(in Mbps) (2014-2016)

Source: Akamai; Telecom Advisory Services analysis

19

THE FIXED MOBILE INDUSTRY IN OIC MEMBER STATES REFLECTS LOW COMPETITIVE INTENSITY, WHILE THE MOBILE BROADBAND SEGMENT EXHIBITS MORE COMPETITION

Of the countries with available information,

thirteen have three or more fixed broadband

service providers (an indication of sustainable

competition), while eleven have less than three (an

indication of low competitive intensity)

OIC COUNTRIES: FIXED BROADBAND

MARKET STRUCTURE (2016)

Herfindahl-Hirschman Index of the

Fixed Broadband Industry (2016)

Sources: Regulatory Agencies; GSMA Intelligence; Telecom Advisory Services analysis

Of the countries with available information,

twenty have more than three operators,

seventeen nations have three carriers, while

twelve have less than three (an indication of low

competitive intensity)

OIC COUNTRIES: FIXED BROADBAND

MARKET STRUCTURE (2016)

Herfindahl-Hirschman Index of the

Mobile Broadband Industry (2016)

20

THE BROADBAND INDUSTRY STRUCTURE IN SAUDı ARABıA IS TYPICAL OF OIC MEMBER STATES: HıGHLY CONCENTRATED IN FIXED BROADBAND AND MODERATELY CONSOLIDATED IN MOBILE

SAUDI ARABIA: BROADBAND INDUSTRY

STRUCTURE (2016)

Source: CITC; Telegeography; GSMA Intelligence; Telecom Advisory Services analysis

Fixed Broadband Mobile Broadband

Herfindahl-Hirschman Index: 5,636 Herfindahl-Hirschman Index: 3,825

21

THE BROADBAND INDUSTRY IN KAZAKHSTAN IS ALSO HıGHLY CONCENTRATED ıN FıXED BROADBAND BUT MORE BALANCED ıN MOBıLE

KAZAKHSTAN: BROADBAND INDUSTRY

STRUCTURE (2016)

Source: BMI; Kazakhtelecom Annual report; Just Smart Solutions LLP; International Telecommunications Union;

GSMA Intelligence; Telegeography; Telecom Advisory Services analysis



22

THE OVERALL BROADBAND INDUSTRY IN COTE D’IVOIRE IS less CONCENTRATED THAN the other two case study countries

COTE D’IVOIRE: BROADBAND INDUSTRY

STRUCTURE (2016)

Source: Autorité de régulation des télécommunications/TIC de Cote d’Ivoire; Telecom Advisory Services analysis



23

IT IS IMPORTANT TO EMPHASIZE THAT INDUSTRY STRUCTURE IN ALL THREE CASE STUDY COUNTRIES UNDERGOES CONSTANT RECOMPOSITION: ENTRIES, EXITS AND MERGERS


Saudi

Arabia

• In the 2012-13 time period a fourth

wireless operator, Wataniya Telecom,

entered the Saudi market

• However, it never gained traction and in

October 2013, it was acquired by STC

• Of the three companies shortlisted for

MVNO licenses, the third one had its

license cancelled

Kazakhstan

• In September 2015, TeliaSonera

announced its exit from Kazakhstan

• In parallel, Altel and Tele2 merged

operations

Cote

d’Ivoire

• A convergent license has been

assigned to the Libyan Post,

Telecommunications and

Information Technology

Company, which will enter the

market in 2017

• In March of 2016, the regulator

canceled underperforming operators

(Comium and GreenN), and the defunct

Niamoutie Telecom of their respective

licenses, as a result of unpaid taxes and

license fees

• Additionally, the government stripped

Warid Telecom of its license awarded in

July 2006 that was never activated


24

COMPETITION IS CONTRIBUTING TO A REDUCTION IN PRICE AND THEREFORE, PARTIALLY ADDRESSING THE AFFORDABILITY BARRIER

OIC MEMBER STATES. AVERAGE PRICING OF SELECTED

BROADBAND PRODUCTS (2004-2015)

(in US$)

Sources: International Telecommunications Union; Telecom Advisory Services analysis

25

COMPETITIVE DYNAMICS ALSO EXPLAIN IN PART THE PRICE TRENDS IN CASE STUDY STATES: KAZAKHSTAN AND SAUDI ARABIA EXHIBIT LOWER PRICES THAN THE AVERAGE OECD COUNTRIES

MONTHLY POSTPAID SUBSCRIPTION OF 1 GB CAP USB (2012-2015)

(in US$)


26

FINALLY, CONSISTENT WITH THE TRENDS OBSERVED AT THE GLOBAL LEVEL, MULTINATIONAL OPERATORS HAVE CARVED STRONG POSITIONS THROUGHOUT OIC MEMBER STATES (I)

ORANGE MTN ETISALA

T

ZAI

N

MILLICOM VIMPELCOM VODAFONE BATELCO AIRTEL

Afghanistan

Albania

Bahain

Bangladesh

Benin

Burkina Faso

Cameroon

Chad

Cote d'Ivoire

Egypt

Gabon

Guinea

Iran

Iraq

Jordan

Kazakhstan

Kuwait

Kyrgyzstan

Lebanon

Maldives

OIC MEMBER STATES: PRESENCE OF GLOBAL MOBILE OPERATORS (2016)

Source: GSMA Intelligence

27

FINALLY, CONSISTENT WITH THE TRENDS OBSERVED AT THE GLOBAL LEVEL, MULTINATIONAL OPERATORS HAVE CARVED STRONG POSITIONS THROUGHOUT OIC MEMBER STATES (II)

ORANGE MTN ETISALAT ZAIN MILLICOM VIMPELCOM VODAFONE BATELCO AIRTEL

Mali

Mauritania

Morocco

Niger

Nigeria

Pakistan

Qatar

Saudi Arabia

Senegal

Sierra Leone

Sudan

Suriname

Syria

Togo

Tunisia

Turkey

Turkmenistan

Uganda

U.A.E.

Uzbekistan

Yemen

OIC MEMBER STATES: PRESENCE OF GLOBAL MOBILE OPERATORS (2016)

Source: GSMA Intelligence

28

The review of global operators’ deployment and product strategies indicates a common approach, BASED on five strategies

• Expand across the OIC regions based primarily on investment that grants operational

control

• Leverage global scale in product development, brand equity, and synergies in best

practices and expertise

• Consolidate positions in markets where they are either 1 or 2

• Gradually migrate to 4G technology and FTTH only in selected markets

• Launch product strategies around digital products (mobile money, e-commerce, digital

music)

29

TO CONCLUDE, THE ASSESSMENT OF SUPPLY AMONG OıC COUNTRıES HAS ALLOWED US TO ıDENTıFıY SEVERAL COMMON TRENDS

Broadband

Service coverage

Broadband

technologies

utilized

• Wide variation in mobile service coverage, with Arab countries generally

above on 3G

• OIC countries still lag the OECD

• 4G coverage increasing (41 countries having launched) but well below 3G

Some countries skipping full 3G coverage and moving to 4G

• ADSL dominant fixed broadband technology

• Fiber optics at 17% of total OIC connections

Broadband

service quality

• OIC exhibit significant gap with developed countries in fixed and mobile

broadband speeds

• While case study countries outperform their peers, in Africa and Asia, OIC

countries lag the region

Broadband

Industry Structure

• The fixed mobile industry inOIC member states reflects low competitive

intensity, while the mobile broadband segment exhibits more competition

• Industry structure in all three case study countries undergoes constant

recomposition: entries, exits and mergers

Pricing trends • Competitive dynamics explain in part the price trends: Kazakhstan and Saudi

Arabia exhibit lower prices than the average OECD countries

• African OIC countries typically exhibit higher prices than their peers

Deployment of

Global

Operators

• MNC operators have a strong presence in OIC countries

• They are gradually consolidating searching for scale and leveraging common

product strategies

30

AGENDA





31

THE ASSESSMENT OF BROADBAND DEMAND AMONG OIC MEMBER STATES IS ORGANIZED AROUND THE FOLLOWING FOUR COMPONENTS

Internet adoption

and use

Fixed and mobile

broadband

adoption

• Assessment of Internet penetration across OIC countries

• Comparison with advanced nations

• Most common use of Internet

• Assessment of fixed and mobile broadband penetration

across OIC countries

• Comparison with advanced nations

• Patterns of substitution and complementarity

Bassessment of

demand gap

• Measurement of the demand gap in mobile

broadband

• Reasons explaining the demand gap

Risks of increased

broadband

usage

• Explanation of risks of increased adoption

• Initial quantification

32

THIRTY-ONE PERCENT OF INDIVIDUALS RESIDING IN OIC MEMBER STATES ACCESS THE INTERNET ON A REGULAR BASIS – however, penetration varies signifcantly across regions


OECD VERSUS OIC MEMBER STATES:

INTERNET PENETRATION (2000-2015)

OIC MEMBERS STATES:

INTERNET PENETRATION (2015)

33

CASE STUDY DATA PROVıDES A GLıMPSE OF MOST COMMON ıNTERNET USAGE: SOCıAL NETWORKıNG AND SEARCH ARE THE MOST COMMON APPLıCATıONS

22.9%

19.8%

17.2%

11.4%10.6% 10.5%

4.4%3.3%

0%

5%

10%

15%

20%

25%

Facebook

Google/youtube

Communica

ons

E-commerce

SocialNetwroking

Portals

Other

Streaming

Cote d’Ivoire: Unique Visitors Among Sites

with > 100,000 Visits (September 2016)

Source: Cote d’Ivoire operator; Telecom Advisory

Services analysis

90%85%

62%53% 50%

43%

26% 23%18% 16%

6%

66%

82%

37%46%

0%

30%

15%

0%

20%

10%4%

0%

20%

40%

60%

80%

100%

Webbrowsing

SocialNetworking

Getinformaonongoodsandservices

Sending/receivinge-mail

Playingvideogamesordownloading

Readingnews

Educaonandlearning

Posnginformaonorinstantmessaging

Internetbanking

Electroniccommerce

Video-conferencing

Fixedbroadband Mobilebroadband

Saudi Arabia: Primary Internet Use

(2015)

Source: Communications and Information Technology

Commission

INTERNET USAGE

34

WHıLE ıNTERNET USE SEEMS TO BE CONVERGıNG BETWEEN OıC MEMBER STATES AND THE OECD, FıXED BROADBAND PENETRATıON ıS DıVERGıNG AND MOBıLE BROADBAND IS CATCHING UP

1%

9%

32%

45%

57%

67%

74%

81%

87%

0% 0% 1%6%

9%11%

15%

23%

29%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015

OECD OIC

4%8%

13%

19%

26%

35%

44%

52%

58%62%

66%69%

71%73%75%

78%

0% 0% 0% 0% 0% 1% 2% 3% 5% 6% 7% 9% 11%12%14%

15%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

OECD OIC

OECD VERSUS OIC MEMBER STATES (2000-2015)

Fixed Broadband Penetration

(% of households)

Mobile Broadband Penetration

(% of individuals)

Sources: International Telecommunications Union; Telecom Advisory Services analysis

35

THE CASE STUDIES YIELDED AN UNDERSTANDING OF DIFFERENT SUBSTITUTION AND COMPLEMENTARITY PATTERNS BETWEEN FIXED AND MOBILE BROADBAND

COMPARATIVE ADOPTION OF FIXED AND MOBILE BROADBAND (2003-2016)

Cote d’Ivoire: Fixed/Mobile Substitution

Saudi Arabia: Fixed/Mobile Complementarity

Kazakhstan: Fixed/Mobile Complementarity

36

A VIEW OF ALL OIC MEMBER STATES CONFIRMS THE EXISTENCE OF DIFFERENT BROADBAND DIFFUSION PATTERNS

Fixed Broadband (lines per household)

Mob

ile B

roa

db

and

(su

bsc

rip

tions

per

pop

ula

tion)

B

A

D

C

Acute substitution

process,

whereby mobile

broadband is

assuming the

role of principal

technology for

accessing

Internet (Kuwait,

Libya, Tunisia,

Lebanon, Egypt,

Cote d’Ivoire,

Indonesia,

Morocco,

Nigeria, Gabon,

Kirgizstan,

Senegal, Sudan,

Mauritania and

Uzbekistan)

High adoption in

both technologies

indicating fixed

broadband used for

home use and

mobile broadband

enabling on-the-

move access (Saudi

Arabia, Bahrain,

United Arab

Emirates, Qatar,

Oman, Turkey,

Azerbaijan,

Kazakhstan, Jordan,

Iran, Malaysia,

Albania, Algeria,

Maldives and

Suriname)

lower levels of economic development and, consequently, at an

embryonic stage of adoption of either broadband technology

(Afghanistan, Bangladesh, Benin, Burkina Faso, Cameroon, Chad,

Comoros, Djibouti, Guinea, Guinea-Bissau, Gambia, Iraq, Mali,

Mozambique, Niger, Pakistan, Sierra Leone, Somalia, Syria,

Tajikistan, Togo, Turkmenistan, Uganda, and Yemen)

initial stage of mobile broadband adoption and

expected to move to either group A or B in the

future (Guyana, Palestine, and Brunei)

OIC COUNTRIES: FIXED BROADBAND VERSUS

MOBILE BROADBAND PENETRATION (2015)

37

IT IS ONLY IN A FEW OIC MEMBER STATES WHERE THE MOBILE BROADBAND DEMAND GAP DOES NOT EXIST

MOBILE BROADBAND DEMAND GAP (% of population)

(2015)

Sources: Regulatory Agencies; International Telecommunications Union; Telecom Advisory Services analysis

38

A COMPARISON CONFIRMS THAT THE BROADBAND DEMAND GAP IS FAIRLY CONSISTENT ACROSS OIC REGIONS

Mobile

Broadband

Coverage

(3G)

Mobile

Broadband

Penetration

Mobile

Broadband

Demand

Gap OIC Asian

Region 62.69 % 29.62 % 33.07%

OIC African

Region 57.71 % 17.30 % 40.41%

OIC Arab

Region 74.30 % 42.09 % 32.21%

Total OIC 64.16 % 29.41 % 34.75%

OECD 97.78 % 87.17 % 10.61%

OIC REGIONS: MOBILE BROADBAND DEMAND GAP (2015)

Sources: GSMA Intelligence; International Telecommunications Union; Telecom Advisory Services

analysis

39

AFFORDABILITY AND CULTURAL REASONS APPEAR TO BE THE DOMINANT FACTORS EXAPLINING THE DEMAND GAP

Source: Surveys compiled by the International Telecommunications Union. ITU World Telecommunications/ICT Indicators

Database 2016: ICT Households Acces and Individual Use; indicator 17: Household without internet access by type of

reason

OIC MEMBER STATES: REASONS OF NON-ADOPTERS FOR NOT

PURCHASING BROADBAND (% of responses)

Country

(year of

survey)

Cost is too high Lack of

Digital

Literacy

Do not need

it or “cultural

reason”

Privacy or

security

concern

Acces

Internet

elsewhere

Service

is not

available Servic

e

Handse

t

Bahrain (2015) 3.70% 4.20% 6.80% 10.30% 0.20% 3.80%

Egypt (2014) 1.60% 1.90% 0.60% 1.60% 1.30% 56.40%

Iran (2013) 1.70% 7.10% 13.40% 46.90% 5.20% 19.90% 12.80%

Morocco

(2014) 17.90% 23.30% 14.80% 25.80% 4.10% 8.60% 1.80%

Oman (2013) 4.90% 2.10% 3.80% 3.10% 0.20% 0.50% 6.40%

Qatar (2015) 0.60% 0.40% 0.20% 2.30% 1.50%

Turkey (2013) 13.10% 11.00% 11.20% 17.60% 0.60% 4.90% 0.80%

40

IT IS PERTINENT TO WRAP UP THIS SECTION BY REFERING TO SOME OF THE RISKS RELATED TO THE INCREASED USE OF BROADBAND INTERNET

Degradation of

human relationships

driven by intense

digital consumption

Decline in conducting

other knowledge

gathering activities

Cultural uprooting

driven by

consumption of

foreign content

Economic disruption

caused by an

Internet shutdwon

• Americans spend an average of five and a half hours per day

with digita media, checking their phones 221 times a day

• Such intense usage degrades the quality of human

relationships, in particular of adolescents

• High school students spend an average of 9.25 hrs. a day

using technology devices

• This usage limits the time dedicated to reading books for

leisure (an average of 5.6 per year)

• In MENA countries only 27 of the 100 most popular sites,

measured by the number of visitors and time spent on the site,

are produced locally

• This would suggest that as result of limited local content

production, the Internet could act as vehicle for cultural

uprooting

• The increased reliance on the Internet raises the economic

impact of a disruption for either natural or man-made causes

• The economic impact per day varies by the type of disruption,

ranging from $ 3,816,000 for a national app (such as Twitter

or Google) interruption, to $ 14,968,000 for a shutdown of

the national Internet

41

AGENDA





42

LESSONS LEARNED FROM THIS RESEARCH HAVE BEEN STRUCTURED AROUND THE FIVE BROADBAND DEVELOPMENT CHALLENGES

Policies aimed at

stimulating private

investment

Facilitate the

deployment of high

capacity networks

(fiber optics, 4G)

Policies aimed at

reducing service and

device costs

Achieve broadband

affordability

Programs aimed at

training broadband

non-adopters

Improve digital

literacy

Policies and programs

aimed at developing

local content

Improve cultural

relevance of Internet

content

Public and private

partnerships for rural

infrastructure

Deploy broadband

infrastructure in rural

areas

SUPPLY

CHALLENGES

DEMAND

CHALLENGES

43

POLıCıES FOR PROMOTıNG ıNFRASTRUCTURE DEVELOPMENT

Policies aimed at

stimulating private

investment

Facilitate the

deployment of high

capacity networks

(fiber optics, 4G)

Policies aimed at


device costs

Achieve broadband

affordability

Programs aimed at

training broadband

non-adopters

Improve digital

literacy


aimed at developing

local content

Improve cultural


content

Public and private


infrastructure

Deploy broadband


areas

SUPPLY CHALLENGES

DEMAND CHALLENGES

• Determine sustainable

broadband industry structures

(e.g. Kazakhstan)

• Promote infrastructure-based

competition (e.g. Saudi

Arabia)

• Consider temporary holidays

and/or subsidies to stimulate

private sector investment in

next generation networks

• Develop partnerships with

municipalities

• Implement open acces in

passive infrastructure (towers,

ducts) (e.g. Kazakhstan) Avoid spectrum license renewal

policies (15 years, renewal payment)

Implement tax exemption for imported network equipment

Introduce rules for accelerated depreciation of equipment

44

Policies for reducing the urban – rural infrastructure divide

Policies aimed at

stimulating private

investment

Facilitate the

deployment of high

capacity networks

(fiber optics, 4G)

Policies aimed at


device costs

Achieve broadband

affordability

Programs aimed at

training broadband

non-adopters

Improve digital

literacy


aimed at developing

local content

Improve cultural


content

Public and private


infrastructure

Deploy broadband


areas

SUPPLY CHALLENGES

DEMAND CHALLENGES

• Develop partnerships with

municipalities

• Implement open acces in

passive infrastructure (towers,

ducts)

• Implement state funding

intervention policies in order

to foster the deployment of

broadband in rural areas

(e.g. Kazakhstan, Cote

d’Ivoire)

• Implement universal service

funds

• Alleviate constraints on the

rural broadband deployment

business case

• Implement innovative

approaches to spectrum

management, relying on

unlicensed spectrum

45

POLICIES TO INCREASE AFFORDABILITY OF SERVICE AND CONSUMER EQUIPMENT

Policies aimed at

stimulating private

investment

Facilitate the

deployment of high

capacity networks

(fiber optics, 4G)

Policies aimed at


device costs

Achieve broadband

affordability

Programs aimed at

training broadband

non-adopters

Improve digital

literacy


aimed at developing

local content

Improve cultural


content

Public and private


infrastructure

Deploy broadband


areas

SUPPLY CHALLENGES

DEMAND CHALLENGES

• Reduce taxes on service

acquisition (e.g. Cote d’Ivoire)

• Eliminate import duties on

devices

• Provide subsidies to low

income population

• Launch “social” broadband

programs

46

INITIATIVES TO INCREASE DIGITAL LITERACY

Policies aimed at

stimulating private

investment

Facilitate the

deployment of high

capacity networks

(fiber optics, 4G)

Policies aimed at


device costs

Achieve broadband

affordability

Programs aimed at

training broadband

non-adopters

Improve digital

literacy


aimed at developing

local content

Improve cultural


content

Public and private


infrastructure

Deploy broadband


areas

SUPPLY CHALLENGES

DEMAND CHALLENGES

• The most important lesson

learned from the Saudi case is

that once the affordability

barrier is eliminated, other

key obstacles emerge, such as

digital literacy and the

development of local Internet

content and applications

• These issues need to be

addressed by the government

to enable greater use of the

Internet and achieving its

derived envisioned benefits - Introduce ICT in formal

education programs

- Provide group-specific training

in public access centers

- Provide training programs

focused on rural and isolated

areas

- Launch programs to improve

social inclusion of the elderly

47

BEST PRACTICES TO PROMOTE DEVELOPMENT OF LOCAL CONTENT AND APPLICATIONS

Policies aimed at

stimulating private

investment

Facilitate the

deployment of high

capacity networks

(fiber optics, 4G)

Policies aimed at


device costs

Achieve broadband

affordability

Programs aimed at

training broadband

non-adopters

Improve digital

literacy


aimed at developing

local content

Improve cultural


content

Public and private


infrastructure

Deploy broadband


areas

SUPPLY CHALLENGES

DEMAND CHALLENGES

• Select applications and

platforms for local

development

• Launch centers of excellence

focused on local content and

applications development

• Develop human capital

focused on Internet platforms

• Launch programs to promote

public and private investment

in digital platforms and

content

For further information please contact: Raul Katz, [email protected], +1 (845) 868-1653

Telecom Advisory Services LLC 182 Stissing Road Stanfordville, New York 12581 USA

TELECOM ADVıSORY SERVıCES, LLC

Documents

THE CURRENT SITUATION OF BROADBAND …Telecom Advisory Services, LLC THE CURRENT SITUATION OF BROADBAND INTERNET PENETRATION IN THE OIC MEMBER COUNTRIES 9th Meeting Of The Comcec Transport