ICT Infrastructure in Emerging Asia – Policy and Regulatory Roadblocks

Citation

Naidoo, K. (2009), "ICT Infrastructure in Emerging Asia – Policy and Regulatory Roadblocks", info, Vol. 11 No. 2, pp. 112-113. https://doi.org/10.1108/14636690910941939

Traditionally, debate around telecoms has centered around the cost of service provision and the ability of consumers to pay for services. The unprecedented success of mobile in many developing markets has highlighted the demand for services. More recently, the continual uptake of pre‐paid service in what would traditionally have been regarded as uneconomic markets, have caught the attention of both policy‐makers and entrepreneurs in the developing world.

ICT Infrastructure in Emerging Asia[1] is a comprehensive study that focuses on a 3000 sample base of users who are considered to be at the bottom of the pyramid. The book highlights the market opportunity by providing an in‐depth analysis of demand from low‐end users, current usage of telecoms services, strategies of usage, and regulatory strategies across India, Sri‐Lanka and Bangladesh.

The authors, Rohan Samarajiva andAyesha Zainudeen have both done an excellent job in overseeing the mammoth research task and in highlighting the issues faced for low‐income consumers. This study has initialized the discussion on providing low cost services for users at the bottom of the pyramid and would be of interest to anybody in the sector who is interested in providing services to this market segment or policy‐makers and regulators.

The book is divided into four sections:

1. 1.

   Section 1: Demand at the bottom of the pyramid.

2. 2.

   Section 2: Access, against all odds.

3. 3.

   Section 3: Regulation: to stifle or enable.

4. 4.

   Section 4: What could be?

Section 1 deals with key demand characteristics for low‐income users. It examines spend patterns, usage characteristics and benchmarks their findings against other similar studies elsewhere in order to verify the findings. It debunks the commonly held philosophy, that demand is known and has been satisfied, mainly among high‐income earners in developing countries. Hence the low penetration rates currently are as a result of affordability issues and the remaining un‐served users are due to affordability issues. Rather, it questions if the dimensions of the existing service offerings correspond to what the remaining unconnected actually want. The section demonstrates that the remaining unconnected utilizes a significant portion of their monthly income on telecoms services. They employ creative strategies and do not necessarily need to own a phone to use telecoms services. Hence the rise of mobile kiosk operators. It also demonstrates significant opportunity for private sector players who are willing to understand the market demand and take the investment risk in serving these customers.

Section 2 examines the access component of the network and business models that have worked in servicing this segment. It examines the Grameen, village phone concept in detail and the elements of its success in Bangladesh, the success of the Wi‐fi network in Indonesia and its potential for replicability. This section examines how market participants, despite policy and regulatory inadequacy, compounded by hostile incumbents, have managed to find their own solutions to service provision. It examines how community networks and education campaigns were able to get the 2.4 GHz frequencies used for Wi‐Fi delicensed. These chapters examine the successes of Indonesia and Bangladesh, who despite being poor performers in terms of telecoms and ICT infrastructure have been able to find solutions like Grameen phone. It also underlines the importance of innovation and the necessity for regulators to allow innovation through a competitive and incentive‐structured environment that allows the innovators to benefit.

Section 3 raises some interesting questions and critical policy and regulatory issues. It examines case studies like India's Access Deficit Tax and Nepal's least‐cost subsidy auction in detail and the successes and failures associated with both. This chapter is not a series of best practices but rather a series of real‐life exercises that aim to assist readers in making realistic assessments of actions needed to effectively extend networks under difficult conditions.

Section 4 attempts to tie the findings from the research and analysis in the preceding chapters and its implications for both businesses and policy‐makers and regulators. It suggests alternative models for measuring success. It shifts emphasis from a concentration on ARPU to AMPU (average margin per user). AMPU is the difference between the revenue generated by a user and the cost of serving that user. This section also succinctly summarizes the ability of the poor to adapt their phone use to suit their budget and needs. To quote the editors, a key take‐away from this book is that “users matter – not just as users, but also as producers and innovators.” They often find uses for technology that it was never meant for, nor had been thought of by the original creators. The final section on markets raises an interesting question on whether financially constrained users really care about fees – when their necessity for calling is important.

While the book does provide an alternative view of usage and behavior of telecoms services for users that are currently not being targeted by incumbent operators, it does not really address the risk of investing in this sector. The authors take the view that as users are currently using these services, investors need to tailor that services to suit the demand and spend patterns. However, this market segment is also very unpredictable in their spend patterns as their income is unpredictable. Hence any business model to back up infrastructure funding must take into consideration unpredictable spending patterns. A large amount of the demand side data is based on user recall and thus difficult to verify. It would be interesting to see some supplementation or analysis of supply side views to balance the arguments and the nature of the opportunity. Nonetheless the alternative views provided in the book are certainly thought‐provoking for both investors and regulators.

ICT infrastructure in emerging Asia is well researched and written. It further offers increasingly new alternatives for policy‐makers and regulators by attempting to understand demand and behavior patterns for this segment. While not overly technical readers are required to have a working knowledge of key issues in telecoms.

Notes

The book is available for free download (or to read online) from: www.idrc.ca/en/ev‐117916‐201‐1‐DO_TOPIC.html