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Assessment of the Telecommunications Sector in Caricom

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Assessment of the Telecommunications Sector in Caricom ASSESSMENT OF THE TELECOMMUNICATIONS SECTOR IN CARICOM Peter A. Stern ps associates, Montreal, Canada Port of Spain, 7 September 2007 Outline Basic requirements for the development of an information-based industry The situation in the Caribbean in 2005 and today How does the Caribbean measure up in terms of access? How does the Caribbean measure up in terms of prices? Regulatory barriers to investment Recommended action 22 The Importance of ICTs for Economic Growth • According to a 2003 study by the OECD ICTs impact economic growth in 3 ways: 1. Help raise labour productivity through the capital stock (tools) that is made available to workers 2. Through ICT producing activities from data entry to software development and in support of rapid technological progress 3. Help firms enhance performance through efficiency improvements in combining labour and capital (i.e. raise overall productivity), lowering transaction costs, increasing the pace of innovation, expand their product range, customize their service offerings, make procurement more efficient, reduce inventories, etc. 33 The Importance of ICTs for Economic Growth (cont.) • A 2003 study by Jorgenson, Ho and Stiroh provided strong empirical evidence that ICTs contribute to economic growth at least when the USA and Europe were compared: – Between 1995 and 2000 total productivity grew by 2.25% in the USA where ICTs represented 86% of the total and by 1.42% in Europe where ICTs represented 63% of total 44 The Effect of ICT Use on Enterprise Performance in Developing Countries Enterprises that do Enterprises that Indicator Difference not use ICTs use ICTs Sales growth (%) 0.4 3.8 3.4 Employment 4.5 5.6 1.2 growth (%) Profitability (%) 4.2 9.3 5.1 Labour productivity (value added per 5,288 8,712 3,423 worker US$) Total factor 78.2 79.2 1.0 productivity (%) Source: World Bank 55 Basic requirements for the development of an information-based industry The availability of physical infrastructure which allows people, businesses and governments to communicate Ease of accessibility to all who have or want to communicate at affordable prices and adequate quality of service 66 The situation in the Caribbean today Telecommunications markets have been almost completely liberalized in most countries and territories There is competition in the cellular market in most countries (current exceptions: The Bahamas, Suriname). The situation is changing in Trinidad & Tobago, BVI, Turks & Caicos Most counties and territories have at least 3 operators. Some have up to 7 (eg. St. Martin, Puerto Rico) 77 The situation in the Caribbean today (cont.) International calling rates are starting to decline in some countries but are still very high by North American and European standards International leased circuit prices and consequently the costs for business and Internet users are high in a large part due to limited access to submarine fibre optic cable systems. The situation is changing. 88 The situation in the Caribbean today (cont.) Revenues from incoming international traffic are declining due to falling settlement rates; Resulting negative impact on prices for local calls. Former monopolies continue to dominate especially in the fixed network. New entrants, especially local investors are disadvantaged with respect to well organized and resourced multinationals including the incumbent. 99 The situation in the Caribbean today (cont.) Many regulators currently do not have sufficient resources and professional staff to regulate adequately in this situation. 1010 How does the Caribbean measure up in terms of access to communications facilities ? fixed and mobile penetration Internet use and number of hosts fibre optic backbone and satellite access 1111 In terms of access Fixed penetration rates are stable; mobile penetration rates are growing exponentially; wide discrepancies remain across the Caribbean Wide discrepancies in Internet access and use Large number of submarine fibre optic cable systems; however, access to them remains a problem. This is changing. Good satellite coverage but this is an expensive solution. 1212 In terms of access (cont.) Limited deployment of wireless access technologies; FWA in Barbados, Jamaica and Trinidad & Tobago; MMDS in Jamaica; LMDS in Barbados; WiFi Cable modem in Dominican Republic, The Bahamas, Trinidad & Tobago 1313 Growth of fixed and mobile: comparison with 80% 70% 60% North America (ITU) 50% 40% Penetration30% % 20% 10% 0% 1990 1991 1992 1993 Canada/USA Fixed 1994 1995 1996 1997 Canada/USA 1998 Mobile 1999 CARICOM Mobile 2000 2001 CARICOM Fixed 2002 2003 2004 1414 Fixed line penetration (ITU 2004) 100 90 80 70 60 50 40 30 Penetration % 20 10 0 Cayman Islands Virgin Islands (U.S.) Barbados Saint Kitts and Nevis Antigua and Barbuda Bahamas Saint Lucia Grenada Dominica Puerto Rico Trinidad and Tobago Jamaica Suriname St. Vincent and the Grenadines Guyana Belize Dominican Rep. Cuba Haiti 1515 Fixed line penetration (ITU 2006) 60.0% 50.0% 40.0% 50.1% 30.0% Penetration % 20.0% 43.5% 10.0% 0.0% 38.0% Barbados 24.8% Antigua and Barbuda 18.9% Aruba 18.0% Trinidad and Tobago St. Vincent and the Grenadines 14.7% Suriname 12.7% Guyana 12.0% Belize 10.1% Jamaica 7.6% Dominican Rep. Cuba 1616 100 Mobile penetration (ITU 2004) 90 80 70 60 50 40 30 Penetration % 20 10 0 Netherlands Antilles Martinique Jamaica Guadeloupe Barbados Antigua and Barbuda Puerto Rico Saint Lucia Dominica Bahamas French Guiana Trinidad and Tobago Suriname St. Vincent and the Grenadines Grenada Belize Dominican Rep. Guatemala Saint Kitts and Nevis Guyana Haiti Cuba 1717 Mobile penetration (ITU 2006) 160% 140% 120% 100% 135% 80% Penetration60% % 40% 106% 20% 106% 0% Aruba 77% Jamaica 61% Antigua and Barbuda 59% Barbados 52% Trinidad and Tobago St. Vincent and the Grenadines 44% Suriname 41% Belize 37% Dominican Rep. Guyana 1% Cuba 1818 Internet hosts per 100,000 population (2004) 30 25 20 15 10 Internet Hosts/1000 Population 5 0 0.0 0.0 0.0 Haiti French Guiana Puerto Rico 0.1 0.2 0.2 St. Vincent and the Grenadines Cuba Grenada 0.3 0.3 Saint Lucia Suriname 0.5 Jamaica 0.8 0.8 0.8 Barbados Martinique Guyana 0.9 1.0 7.5 Guadeloupe 27.4 9.3 Bahamas 9.7 14.2 Dominican Rep. Trinidad and Tobago Dominica Belize Antigua and Barbuda 1919 Estimated number of Internet users per 100 60 50 40 30 population (ITU 2004) 20 Internet Users/10010 Population 0 1.3 5.9 Cuba 6.6 Haiti 6.8 St. Vincent and the Grenadines 7.8 Suriname 9.1 Grenada 12.2 13.4 Dominican Rep. 17.8 Trinidad and Tobago 18.9 Belize 20.8 Guadeloupe 22.1 26.0 26.1 Guyana French Guiana 27.1 Puerto Rico 29.3 36.7 Antigua and Barbuda 55.4 39.9 Dominica Martinique Bahamas Saint Lucia Jamaica Barbados 2020 Estimated number of Internet users per 100 70% 60% population (ITU 2006) 50% 40% 30% 20% Internet users/ 100 population 10% 0% 1.7% 7.0% 7.1% Cuba Haiti 8.4% Suriname 14.1% St. Vincent and the Grenadines 16.8% 19.0% Belize 21.3% Dominican Rep. 22.5% 31.9% Guadeloupe 59.5% 32.8% Guyana 35.6% French Guiana Bahamas Martinique Antigua and Barbuda Barbados 2121 Fibre optic cable networks: situation in 2005 21 international systems; 15 of which primarily serve the region Combined total capacity at construction = 70 Gbps; combined potential capacity > 3 Tbps Of 25 countries and territories in the Caribbean more than half have access to only one cable system; in many of these countries and territories all cables landing are controlled by the same operator, generally Cable & Wireless Taino Caribe (1991), TCS-1 (1991), and ECFS (1995) are older systems approaching the end of their design life 2222 23 23 Access to fibre optic cable systems in the Caribbean (2005) No. of Country/Territory Cable systems landing in country or territory cables Anguilla 1 ECFS Antigua & Barbuda 1 ECFS Aruba 2 Pan American, Alfonso de Ojeda Bahamas 3 Arcos-1, Bahamas II, Bahamas Internet Cable System (BICS) Barbados 1 ECFS Belize 1 Arcos-1 British Virgin Islands (Tortola) 2 CARAC, Taino Cayman Islands (BOT) 2 CJFS, MAC Curacao (incl. Bonaire) 3 Amerigo Vespucci, Americas-2, Alfonso de Quejeda Dominican Republic 3 Antillas-1, Arcos-1, TCS-1 French Guyana 1 Americas -2 Grenada (OECS) 1 ECFS Guyana 1 Americas-2 via French Guyana and Suriname Jamaica 2 CJFS, TCS-1 Martinique/Guadeloupe 2 Americas-2, ECFS Montserrat (BOT) 1 ECFS Puerto Rico 6 Americas-2, Antillas-1, Arcos-1, Emergia, Taino, TCS-1 St. Kitts & Nevis 1 ECFS St. Lucia (OECS) 1 ECFS St. Martin/St. Maarten 2 ECFS, SMPR-1 St. Vincent (OECS) 1 ECFS Suriname 1 Americas-2 via French Guyana Trinidad & Tobago 3 Americas-1, Americas-2, ECFS Turcs & Caicos (BOT) 1 Arcos-1 Americas-1, Americas-2, Pan American, PAC, MAC, SAC-1, US Virgin Islands (St. Croix, St. Thomas) 7 Taino 2424 New Caribbean fibre optic cable systems Fibralink (Columbus Networks): Montego Bay, Ocho Rios, Bull Bay, Jamaica; Puerto Plata, Dominican Republic. Put into service on 31 March 2006 Current capacity = 40 Gigabits/sec (design capacity = 320 Gigabits/sec) Capacity of other two cables landing in Jamaica = 10 Gigabits/sec. 2525 Fibralink 26 26 New Caribbean fibre optic cable systems (cont.) Antilles Crossing Fibre Optic Cable System Phase 1: Barbados, St. Lucia and St. Croix Phase 2: Trinidad, Tobago, Grenada, St. Vincent Phase 3 Martinique, Dominica, Guadeloupe and St. Kitts 2727 Antilles Crossing 28 28 New Caribbean fibre optic cable systems (cont.) Global Caribbean Network (GCN), an initiative of Region Guadeloupe, the regional government of Guadeloupe and some private investors. “Guadeloupe Numerique” connects Guadeloupe (Baie Mahault, Bailif) with St. Croix, Puerto Rico, St.
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