Digital Divide in EBRD's Region Dr' Thomas Langley Principal Banker on behalf of Izzet Gney Head Tel

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Digital Divide in EBRD's RegionDr. Thomas
LangleyPrincipal Bankeron behalf of Izzet
GüneyHead - Telecoms, Informatics and
MediaPrepared for the Global ICT Conference
2004 Baku, 25-28 November 2004
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Agenda

• The case for transition economy
• Case study Fixed-Mobile Substitution (FMS)
• Other convergences, disruptions
• Relevance of the knowledge economy
• To do list
• New Economy is here to stay
• Production of information technology and
  communication goods and services and their use by
  households, governments and businesses

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Unique Position of Transition Countries

• Potentially highly competitive and skilled labour
• High adoption rate for new technology
• Proximity to EU after 2004
• Deregulation of telecoms and ITC Sector
• Small legacy networks
• No 3G, smaller but more sound financials
• CEE/CIS listed companies thriving

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Case Study Fixed-Mobile Substitution

• Positive phenomenon if handled properly
• FMS represents a considerable threat to fixed
  line telecoms operators and needs careful
  consideration by policy makers
• For fixed line telecoms operators, FMS might
  imply losing a substantial base of subscribers
• Regulation may introduce many rigidities
  inhibiting the growth of mobile and
  Internet-related traffic
• Need improved management of spectrum allocation
• Cost-based/non-discriminatory terms of
  interconnection

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FMS in Transition Economies ...
CEE
SEE
Source ITU (2003)
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FMS in Transition Economies (2)
CIS
Source ITU (2003)
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FMS across the CIS
Source ITU (2003)
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Other Convergences, Disruptions

• Voice and data
• Content and delivery
• IT processing and broadband
• Triple play (CATV, internet, telephony)
• VoIPs
• WiFi (802.11)
• WiMax (802.16)

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Relevance of the Knowledge Economy

• Restructure existing businesses
• Leap-frog stages of technology development
• Narrow the income and technology gap between East
  and West ? not fall behind but catch up
• Access to information root of democracy
• Unlock technological bottlenecks
• Create strong service sector

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To do list

• Adopt disruptive technologies to leap-frog
• Promote universal service/access
• Deal with legacy networks
• Have an adequate interconnect policy
• Open technological platform
• Sponsor/fund tech investments
• Embrace new paradigms
• Reward innovation

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Annexes
Izzet R. Güney Head Telecoms, Informatics and
Media EBRD One Exchange Square London, England
EC2A 2JN Phone [phone] Fax 44 20
7338 7473 GSM 44 7802 510 714 guneyi_at_ebrd.com w
ww.ebrd.com/telecoms.htm
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Global trends mobile users are higher than ever

• Lifestyle choice
• no need/desire to use fixed voice now, but might
  want broadband
• most will eventually get a fixed line but the
  number without one at any time will grow
• Price sensitive
• could afford a fixed line, but currently mobile
  bundle represents better value given their need
  and budgets
• Low income
• cannot afford/cannot get a fixed subscription

UK household penetration of fixed and
mobile phones, May 2003
100
90
80
70
60
50
40
30
20
10
0
May-03
Mobile only
Source Oftel