By Kathy Gibson, Satnac 2013, Stellenbosch – Numerous studies have shown that the implementation of broadband in a country can have a marked effect on the GDP, and on citizens’ quality of life.
However, simply rolling out the infrastructure – while important – cannot achieve the long-term goals of better education and healthcare coupled with increased employment.
This is the consensus of speakers at the Satnac 2013 conference taking place in Stellenbosch. The theme of the conference is broadband: a catalyst for sustainable economic development and promoting digital
inclusion.
Luis Martinez Amago, president: Europe, Middle East & Africa at Alcatel-Lucent, stresses the concept of the ecosystem. “All economies are built around an ecosystem,” he says.
“But we need to create an ecosystem and ensure it is balance. The important things with broadband are infrastructure and applications: if the uptake by subscribers doesn’t come off, the investment will stop. So it’s
important to balance this.”
To achieve this balance, Amago says that government and private investors need to be in conversation.
The main challenge with broadband, he adds, is that the affluent users – at the top of the pyramid – are easy to develop for as private investment into this market will generally pay off. “If you build it, they will come and
they will pay,” he says. “Private interests will always find a way to serve this market.”
At the bottom of the pyramid, however, are the users who don’t offer the surety of a return on private investment. These are the poor and those that are remote – both poor and affluent.
“This is a less viable market,” Amago says, adding that private investment may serve the top users, government investment and public-private partnerships are crucial for the rest, with some overlaps. But infrastructure
alone will not ensure than broadband contributes to the economy, points out. “With no applications, there is a problem. So we need to, in parallel, develop applications.”
For the affluent users, these would typically be commercial applications like cloud, retail and video. National plans would cover the bottom of the pyramid for applications for social development like health, education
and e-government. Collaboration would be needed for economic development applications for agriculture, transport and utilities.
“Application development is a running conversation, a team effort. We all need to start moving,” Amago says.
He cites New Zealand as an example of how such a broadband rollout is being handled. The plan is to have 90% of the population connected by 2015, and 100% by 2017. Although fast networks will be available in
urban areas, rural areas will also be connected, although at slower speeds.
The impact will be felt by business, but also agriculture, healthcare and education. Importantly, while the infrastructure build has a short-term effect on the GDP, the applications have an ongoing, positive impact.
A similar scenario has played out in Kenya, where the basic network helped the economy to grow, but M-Pesa online payment had a further, sustained effect while the M-Kheso mobile banking application has
increased GDP again.
Amago warns, however, that the development deployment of relevant applications is easier said than done.
“The bottom line is that this is an ecosystem; it’s not easy but you need to solve it, to get the ball rolling. My advice on the broadband policy is to not over-define it, but to create an environment where people are happy
to invest.”
Noel Kirkaldy, head of technology: Middle East & Africa at Nokia Solutions and Networks, points out that Africa and the Middle East represent 1-billion users.
“The bad news is that its divided between 50 or 55 operators in Africa and another 22 in the Middle East,” he says. “And there lies the challenge.”
Africa is in an exciting place right now, he says, with growth rates unmatched in the developed markets. However, the ICT industry changes rapidly and we need to keep up.
Kirkaldy agrees that, in order to realise the promise of broadband, the industry needs to focus on infrastructure as well as services and accessibility.
“We can talk about infrastructure, but unless we have the devices in our hand, it’s useless,” he says. “By 2020, we believe mobile networks should be able to deliver an average of 1Gb of data to each user every day,
profitably. This is a massive challenge for the industry.”
To achieve this goal on an infrastructure level, Kirkaldy points out that we would require 1 000 times the network capacity, reduce latency across the whole network, build networks that are self-aware and energy-
efficient, re-invent the cloud to increases services – and offer all of this in a way that is personalised to each user.
Network traffic is shifting away from voice to video. Within a couple of years, video will account for 64,4% or traffic. Voice will be just 0,4%, mobile web/other data will be 21.1%, file sharing will be 5,9%, business data
will account for 4,7%; video calling for 1,9% and online gaming for 1,4%. In this mix, voice will actually be the lowest contributor to traffic.
“So we need to change our industry from where we hold on to voice and texting while giving data away, to charging for data and offering voice for free,” Kirkaldy says. This will help to increase the average revenue per
user (Arpu), he believes.
In order to achieve a 1 000-times increase in network capacity, he says operators need to increase network performance, increase the number of sites deployed and increase spectrum – all by 10-times.
“As an industry we have to drive to make networks more efficient, to operate better and to have spectrum that is harmonised. We also need to have co-ordination with government and then we can start benefiting from
broadband.”
Mikko Lavanti, chief customer officer at Coriant, reiterates that access within South Africa needs to affordable and available even in remote areas. Devices such as smart phones, cheap PCs and tablets must be
affordable for the majority of people. And the environment to support broadband services must be in place, including investment protection and tax benefits.
As a starting point, he says we need to think about the limitations in access capacity, metro networks, core networks and capacity to the outside world, and to work on fixing these physical limitations.
When it comes to providing services, there are different models and pricing scenarios that could be considered which may be more relevant to users than current models.
“You need different options because people buy with different behaviours,” Lavanti says. “We still have flat fees, but we need to think about how we could change this – there are models that could be available.”
In addition, applications need to be affordable and they need to be localised to reduced deployment barriers.
Then there is the issue of devices and how to bring down the cost of smart phones, tablets and devices. “It could be that different models are needed.”
Lavanti shares the example of Australia’s National Broadband Network (NBN) project which aims to connect the country by 2020 – at a cost of $43-billion.
The plan is predicated on an Ibis/IBM report which calculates that, for every 10% increase in broadband penetration GDP increases by 1%. Meanwhile, doubling a country’s broadband speed increases GDP by a
further 0,3%.
In addition, there are $2-billion to $4-billionn in benefits from telehealth, and up to $2,4billion in savings for households if internet access increases by 10%.
In 2012, ICT was expected to deliver revenue of $131-billion in Australia through faster broadband. Plus, if 10% of Australians teleworked 50% of the time, there would be total gains of $1,9-million. Online retail could
grow from $16,9-billion in 2009 to $33,3-billion in 2015, and the SMEs with a Web presence would increase beyond the 40% or less who have one now.
In addition, the NBN addresses benefits in health, education, community, business and entertainment, Lavanti says.
Examples of success stories include Birdsnest, an online retailer in Cooma, Australia. A recent start-up, the company now employs 90 people, gets 500 orders daily and has a customer return rate of 70%.
Technology is also important to Cape Grim water, which is able to charge a staggering $22.50 for a bottle of water – because he uses sensors to prove it’s the cleanest in the world.