Wireless In LDCs: A solution to the Telecommunications Industry

1
Wireless In LDCs A solution to the
Telecommunications Industry?

• Betty Rahedi

2
Contents

• Define Telecomm problem
• Why Developing Nations
• Africa
• Kenya
• Benefits
• Questions

3
Telecomm Problem

• High forecasted demand resulting in
  over-investment in telecomm infrastructure
• Local Loop problems the last mile
• Why an issue? Telecomm industry makes up a
  better part of the world economy and it is in
  recess.

4
(No Transcript)
5
Why Developing Nations?

• Ready market available MTA-EMCI a research firm
  predicts there will be 202 million subscribers on
  WLL by 2005. Before 2000 Industry Analysts
  predicted that the global WLL market would reach
  millions of subscribers. Much of this growth
  would occur in emerging economies where half the
  worlds population lacks POTS.

6
Why Developing Nations?

• Ready market available Most attributed to LDCs
  like African Nations where between July 1998 and
  January 1999, the number of Internet hosts grew
  at a rate of 38 percent, from 7800 to 10703,
  while the worldwide average growth rate stood at
  18 percent.

7
(No Transcript)
8
(No Transcript)
9
(No Transcript)
10
(No Transcript)
11
Why Developing Nations?

• Frog Jump experience Developing nations like
  China, India, Brazil, Russia, and Indonesia look
  at WLL technology as an efficient way to deploy
  POTS for millions of subscribers without the
  expense of burying tons of copper wire

12
(No Transcript)
13
(No Transcript)
14
Why Developing Nations?

• Frequency is not overcrowded
• Convergence of economies no longer dependent on
  developed nations, IMF WB
• Price?? Penetration proposed

15
Africa Facts Figures

• For years the statistic used to illustrate the
  low telephone penetration into Africa was to
  equate it with the number of phones in Manhattan.
  All 54 countries on an entire continent had fewer
  phone lines than a single state in the US.

16
Africa Facts Figures

• According to ITU
• The truism Tokyo has more telephones than the
  whole of the African continent may have held 15
  years ago, today, there are more than twice as
  many telephone lines in Africa as in Tokyo.

17
Africa Facts Figures

• The focus has moved from wiring up Africa which
  was a pet project of former minister of
  communications Jay Naidoo, who drove from Libya
  to Cape Town to publicize how the internet could
  jump start Africa into the digital age to the
  unwiring of a continent, as the ITU puts it.

18
Africa Facts Figures

• G-8 pledged to help LDCs improve their telecomm
  infrastructure and become a more substantial part
  of the internet
• To bridge digital divide by sharing IT.
• G-8 charter states
• Countries that succeed in harnessing information
  (and communications) technology potential can
  look forward to leapfrogging conventional
  obstacles of infrastructure development

19
Africa Facts Figures

• G-8 charter states
• Everyone should be able to enjoy access to
  information and communications networks
• In 1987 Ivorian President Felix Houphouet Boigny
  warned his countrymen that
• since Africa missed the industrial revolution,
  we cant afford to stand aside and let the
  communication revolution go by too

20
Africa Facts Figures

• 2000 milestone year for sub-Saharan Africa
• Region passed 1 teledensity mark to 1.2
  fixed-line phone for every 100. ITU considers 1
  both a psychological line and a minimum point
  where telecomm can start to contribute
  significantly to economic growth.
• All countries in the continent got connected to
  the internet.

21
Africa Facts Figures

• Investment in telecomm in Africa remains a viable
  option. The demand for services is still great
  and the amount people spend on communications as
  part of their income is significantly higher than
  in the developed world, therefore GDP per capita
  alone is certainly not an indicator of how much
  wealth exists in a country.

22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
(No Transcript)
26
Kenya - Background

• Early 1990s the major challenge was reducing
  unemployment and poverty.
• Unemployed over 2 million
• Over 10 million lived in poverty
• The Kenyan Economic Reforms for 1996 to 1998 is a
  policy framework paper prepared by the government
  of Kenya in collaboration with the IMF and the WB
  in 1995

27
Kenya - Background

• Programs Price decontrol Privatization
• Financing gaps Tax Effects
• 1998 Kenya Communications Bill CCK
• Opening of Telecomm market.
• Two main players less than 6 months 500000
  subscribers.
• IMF WB requirements

28
(No Transcript)
29
Kenya - 2001

• Population 30.3 million
• GDP 9.1 million at factor cost
• Average inflation 6.2
• Debt External 45.3 of GDP
• - Internal 18.4 of GDP
• Average Interest Rate on CB drafts 20
• USD/KSHS 80.00

30
(No Transcript)
31
(No Transcript)
32
(No Transcript)
33
Advantages - Government

• Raise revenues for Public Expenditures
• US 77 million to the exchequer in the past one
  year through CCK licensing activities
• Evident in Safaricom Management Accounts
• Paid a total of US 15.98 million in tax
  revenues consisting in part Import duties (US
  1.6 million), VAT (US 2.03 million) and
  Government of Kenya fees (US 0.27 million).

34
Advantages - Government

• No need for IMF and WB intervention
• Sometimes are big brother bullies
• Stimulant to Economic activity
• Other related or complimentary business will
  arise
• Technology transfer
• HiTec - Agriculture
• Medicine Business GDSS, VC, B2B

35
Advantages - Government

• Technology transfer
• Enhance Accountability Kenya has a Prevalent
  Rent Seeking Culture. Transparency International
  2001 CPI score for Kenya was 2.0, which is the
  84th rank out of 90 countries. WB is watching the
  country on this particular item.

36
Advantages - Government

• Foreign Investment by MNCs Many MNC left Kenya
  because of high taxation, poor infrastructure and
  insecurity.
• Foreign Exchange earnings by jump starting the
  tourism sector Kenya is one of the worlds best
  natural tourism destinations.
• Overall Economic growth GDP
• Control Brain drain - OP

37
Advantages - People

• Possibility of Choice
• Better service shorter connection times
• Competitive pricing
• Lower prices for goods and services
• Mobile telephony no longer elitist

38
(No Transcript)
39
(No Transcript)
40
(No Transcript)
41
Advantages - People

• Ability to communicate Rural Urban
• Employment opportunities
• Other communication facilities Internet
• Overall better quality of life
• Provides a new dimension of security, flexibility
  and availability

42
Advantages - Firm

• Ready market
• Faster speed to the market
• Offload excess capacity already invested
• Increase in Profits

43
Advantages - Firm

• Prepaid mobile cards widely used in Africa is a
  big plus for a continent where incomes are low
  and cash upfront is generally the preferred means
  of payment. Prepaid reduces operator risk due to
  bad credit and allows many who would not normally
  qualify for a post-paid service to have mobile
  service. Stats 4/5.

44
References

• AfricaOnline, http//www.africaonline.com
• Central Bank of Kenya, Http//www.centralbank.go.k
  e/cbk/monthlyreviews.html
• Centre For Business Information in Kenya,
  http//www.cbik.or.ke
• Communications Commission of Kenya,
  http//www.cck.go.ke
• ITU - http//www.itu.int/home/imt.html
• International Monetary Fund, http//www.imf.org
• International Engineering Consortium,
  http//www.iec.org
• Kencell Communications Limited,
  http//www.kencell.com

45
References

• PriceWaterhouseCoopers Technology Center (2001).
  Technology Forecast 2001-2003. Mobile Internet
  Unleashing the Power of Wireless.
• Safaricom, http//www.safaricom.com
• The Daily Nation Newspapers, http//www.nationaudi
  o.com
• The Economist Intelligence Unit,
  http//db.eiu.com
• The Mail Guardian,http//www.mg.co.za
• The Standard, http//www.thestandard.com
• UNDP, http//www.sdnp.undp.org
• World Bank, http//www.worldbank.org

46
Questions Comments