Broadband Policy No Brainers: Cost Reducing Measures
Posted by Jenny Stefanotti on Monday, January 11, 2010
Under: Industrial Policy
As I sit here during my winter break delving deep into broadband policy for my thesis, a few of the things I was reaching for but not quite understanding last summer in Liberia are now becoming clear. While the appropriateness of many of the policies are very much context specific, a few are really no brainers that would have an enormous impact if adopted widely across the African continent.
The premise for these policies is simple: they promote and take advantage of opportunities to foster cost efficient infrastructure. Why does this matter so much? Because we're talking about extending access to the Internet to the bottom of the pyramid. Profitably serving low income customers requires lower cost models than exist in industrial countries. The lower the cost structure, more people that can be reached by the market.
The first no-brainer is related to backbone and metro infrastructure, which involves piggybacking on transportation, electricity, and railroad investments. Civil works account for anywhere from 60-95% of the costs to deploy a fiber-optic network (60-80% according to a 2007 Accenture study and 90-95% according to an interview I had last week with the Zantel CTO). By coordinating with other ministries to lay conduit (the passageway for fiber networks), governments can realize synergies with other investments. This has the potential to reduce the cost of fiber deployment to a fraction of what it would be otherwise.
The second no-brainer is mandated infrastructure sharing. The next time you're in Nairobi or Monrovia or Dar es Salaam, take a look at the top of the higher buildings around town -- most likely they will have multiple cell phone towers on top of them. Think about how much less investment would have been required if there was a single tower that was shared by all operators. Mandated sharing of infrastructure such as cell phone towers has been adopted in China, Bangladesh, and here in Tanzania. It's a best practice that hopefully gets adopted widely.
The other thing to note about both of these policies is that they are time sensitive. Once transportation and energy infrastructure or unnecessarily overlapping telecom infrastructure investments are complete, the opportunity is lost. This is what I mean when I say there's a golden opportunity in African telecoms today. With SEACOM's launch and all of the submarine cables that are slated to follow, governments and the private sector are pouring hundreds of millions of dollars into regional, domestic, and metro infrastructure. If government's don't take advantage of the opportunity to promote cost efficiency, the market may get locked into a higher cost structure that will make it difficult to offer broadband to low income users. At that point governments would need to invest directly or subsidize investments to extend access, which would be much more expensive than the no brainers outlined here.
In : Industrial Policy
Tags: broadband policy ict4d
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