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ICT Infrastructure in Emerging Asia This Page Intentionally Left Blank ICT Infrastructure in Emerging Asia Policy and Regulatory Roadblocks ICT Infrastructure in Emerging Asia This page intentionally left blank ICT Infrastructure in Emerging Asia Policy and Regulatory Roadblocks Edited by Rohan Samarajiva Ayesha Zainudeen International Development Research Centre Ottawa • Cairo • Dakar • Montevideo • Nairobi • New Delhi • Singapore Los Angeles London New Delhi Singapore SAGE www.sagepublications.com Copyright © LIRNEasia 2008 All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher. Jointly published in 2008 by SAGE Publications India Pvt Ltd International Development B1/I-1 Mohan Cooperative Research Centre Industrial Area, Mathura Road P.O. Box 8500 New Delhi 110 044, India Ottawa, ON, Canada K1G 3H9 www.sagepub.in [email protected]/www.idrc.ca SAGE Publications Inc ISBN (e-book) 978-1-55250-378-2 2455 Teller Road Thousand Oaks, California 91320, USA SAGE Publications Ltd 1 Oliver’s Yard, 55 City Road London EC1Y 1SP, UK SAGE Publications Asia-Pacifi c Pte Ltd 33 Pekin Street #02-01 Far East Square Singapore 048763 Published by Vivek Mehra for SAGE Publications India Pvt Ltd, typeset in 10.5/12.5 pt Minion by Star Compugraphics Private Limited, Delhi and printed at Chaman Enterprises, New Delhi. Library of Congress Cataloging-in-Publication Data Khan, Amir Ullah. States of the Indian economy: towards a larger constituency for second generation economic reforms / Amir Ullah Khan and Harsh Vivek. p. cm. Includes bibliographical references and index. 1. India—Economic conditions—1947– 2. India—Economic policy—1991– I. Vivek, Harsh, 1982– II. Title. ISBN: 978-0-7619-3673-2 (Hb) 978-81-7829-839-9 (India-Hb) The SAGE Team: Sugata Ghosh, Jasmeet Singh and Rajib Chatterjee Contents List of Tables 7 List of Figures 9 List of Abbreviations 12 Acknowledgements 17 Introduction: What is… and What Could Have been… 19 Rohan Samarajiva SECTION 1: DEMAND AT THE BOTTOM OF THE PYRAMID Introduction 31 Chapter 1: What Do Users at the Bottom of the Pyramid Want? 39 Ayesha Zainudeen Chapter 2: Strategies on a Shoestring 60 Ayesha Zainudeen and Tahani Iqbal Chapter 3: I Just Called to Say: Teleuse under a Ceasefi re 73 Rohan Samarajiva, Mariam Hameed, and Ayesha Zainudeen SECTION 2: ACCESS, AGAINST ALL ODDS Introduction 99 Chapter 4: Geektivism 103 Tahani Iqbal and Onno W. Purbo Chapter 5: Making a Business out of a Village Phone 116 Malathy Knight-John Chapter 6: Wi-Fi: The Network Fix 131 Divakar Goswami 6 ICT INFRASTRUCTURE IN EMERGING ASIA SECTION 3: REGULATION: TO STIFLE OR ENABLE? Introduction 159 Chapter 7: One Backbone, or Two? 163 Harsha Vardhana Singh and Rohan Samarajiva Chapter 8: The Dumbing-down of Smart Subsidies 191 Harsha de Silva Chapter 9: Universal Service Obligations: To Incumbents 216 Payal Malik Chapter 10: Access Defi cit Tax? 240 Harsha de Silva SECTION 4: WHAT COULD BE… Introduction 265 Chapter 11: High AMPU from Low ARPU 267 Mahinda B. Herath Chapter 12: Regulating for the Next Billion 296 Rajendra Singh and Siddhartha Raja Chapter 13: … Through the Markets 303 Visoot Phongsathorn Appendices 310 About the Editors and Contributors 321 Index 327 List of Tables 3.1 Area and Population of Jaffna, (1981–2003) 76 3.2 Modes of Telecom Access Used at the BOP in Sri Lankan Localities 78 3.3 Service Provider to Phone Owners at the BOP in Sri Lankan Localities 79 3.4 Reasons Why the Respondent Obtained a Mobile Phone at the BOP in Sri Lankan Localities 81 3.5 Sending and Receiving Messages for Other People through Mobiles at the BOP in Sri Lankan Localities 82 3.6 Mean Value of Perceived Cost of Using Mobiles at the BOP in Sri Lankan Localities 83 3.7 Use of the Phone to Keep in Touch with Family and Friends Abroad at the BOP in Sri Lankan and Indian Localities 86 3.8 Frequency of Calls to Keep in Touch with Family and Friends Abroad (Incoming and Outgoing) per Month for Mobile Users at the BOP in Sri Lankan Localities 87 3.9 Average Duration of Outgoing Calls on Mobiles at the BOP in Sri Lankan Localities 91 3.10 Average Duration of Outgoing Calls on Fixed and Public Access Phones at the BOP in Sri Lankan Localities 92 3.11 Reasons for Choosing to Use a Mobile at the BOP in Sri Lankan Localities 93 4.1 Indonesian ICT Sector (1990–2005) 104 6.1 Wi-Fi Standards 133 6.2 Comparison of Annual Domestic Leased Line Prices: Indonesia, India, and EU Benchmark 141 6.3 Comparison of Annual International Full-Circuit Prices to US West Coast in India and Indonesia: Prices (USD) and Price Ratios 141 6.4 Comparison of Monthly ADSL Retail Prices in Indonesia and India: Prices (USD) and Price Ratios 143 8 ICT INFRASTRUCTURE IN EMERGING ASIA 6.5 Barriers to Market Participation in Indonesia 148 7.1 Incumbent’s Exchanges Connected to Reliable Infrastructure in India (March 2005) 166 7.2 Likely Growth in Backbone and Requisite Policy Responses in Situations in Which Investment in Backbone is Commercially Unviable in India 170 7.3 Likely Growth in Backbone and Requisite Policy Responses in Situations in Which the Investment in Backbone is Commercially Viable in India 171 7.4 Reliance Infocomm (India): Optical Fiber and Digital Microwave (March 2005) 180 7.5 Optical Fiber Cable of RailTel Corporation of India 181 7.6 Reliance Infocomm (India) Subscriber Base in Different License Areas and Notional Subscriber Base for Indicative Viability of Backbone 182 7.7 Net Cost Positive SDCAs in Different Circles and the SDCAs in Areas Served by Various Service Providers in India 186 7.8 Percentages of Net Cost Positive SDCAs in Circles in India 187 8.1 Latin American Smart Subsidy Projects 193 9.1 Disbursement Schedule for the USO Funds in India 225 9.2 Status of Various USO Projects in India 227 10.1 Actual vs. Applied Tariffs for Intra-circle Calls in India 244 10.2 Revised Indian ADC Regime, 2003 249 10.3 Further Revised Indian ADC Regime, 2003 252 10.4 Provision of Rural Fixed Lines in India by Operator and Technology 253 10.5 Growth in Indian Fixed and Mobile Subscriptions 257 11.1 Adoptability of Available Strategies at the BOP 275 A1.1 Distribution of Respondents among Localities Studied in the Survey of Telecom Use at the Bottom of the Pyramid 310 A2.1 Rural Telecoms Service (RTS) Maximum Tariffs and Default Interconnection Rates in Nepal 315 A2.2 Technology Cost Guidelines of Nepali Least Cost Subsidy Auctions 317 A3.1 License Fee of Various Kinds of Telecom Operators in India 320 List of Figures 1 Communication Technologies in the Context of Inputs Contributing to Development 20 2 Annual Telecommunication Investments in South and South-east Asia (USD millions) (1985–2002) 20 3 Composition of World Bank Loans in Telecom Sector (1980–2000) 22 4 Growth in Fixed and Mobile Subscribers in the Asia-Pacifi c, Europe, Central Asia, and the Americas (1984–2003) 25 5 High and Low Performers in Asia-Pacifi c Telecom 25 S1.1 Total Telephone Subscribers: South Asia (1995–2004) 33 S1.2 Comparison of Sri Lankan Prepaid and Post-paid User Baskets, Calculated on a Monthly Basis for Lower-end Users (September 2006) 34 1.1 Mode of Access Used at the BOP in Sri Lankan and Indian Samples 42 1.2 Diffi culties Faced by Fixed Phone and Mobile Phone Owners in Getting Connected at the BOP 44 1.3 Diffi culties Faced by Fixed Phone and Mobile Phone Owners at the BOP during Period of Ownership 46 1.4 Diffi culties Faced by Prepaid Mobile Owners at the BOP 47 1.5 Diffi culties Faced at the BOP in Using Other Peoples’ Fixed Phones 48 1.6 Why Fixed, Mobile, and Public Access Users at the BOP Use Respective Mode(s) 49 1.7 What Fixed, Mobile, and Public Access Users at the BOP Use the Phone for 51 1.8 Average Monthly Expenditure on Telecom Services at the BOP 54 1.9 Perceptions of Cost of Services at the BOP: Fixed, Public Access, and Mobile 55 10 ICT INFRASTRUCTURE IN EMERGING ASIA 1.10 Changes in Use at the BOP, Should Cost be Halved: Fixed, Public Access, and Mobile 56 2.1 Instances Where SMS is Used at the BOP 65 2.2 Phone Ownership at the BOP 68 3.1 Access to Amenities in Jaffna and Vavuniya Districts of Sri Lanka, Relative to Highest/Lowest Provinces 77 3.2 Views on the Cost of Using Mobiles at the BOP in Sri Lankan Localities 83 3.3 Frequency of International Calls on Fixed/Public Access Phones at the BOP in Sri Lankan Localities: Incoming and Outgoing 85 3.4 International Calls on Mobile Phones at the BOP in Sri Lankan Localities: Incoming and Outgoing 85 3.5 Expenditure on Telecom by Mobile Users at the BOP in Sri Lankan Localities 88 3.6 Expenditure on Telecom by Fixed and Public Access Users at the BOP in Sri Lankan Localities 89 3.7 Use of SMS by Mobile Users at the BOP in Sri Lankan Localities 90 S2.1 Fixed Phone, Mobile, and Internet Subscribership per 100 Inhabitants: South Asia and Southeast Asia (ASEAN and SAARC Countries, Respectively, 2004) 100 4.1 The Development of the Internet in Indonesia 106 5.1 Growth in Village Phone Operators (1997–2006, September) and Grameenphone’s Revenue from Village Phones (USD) (1997–2003) 120 5.2 Relationships among Grameenphone, Grameen Telecom, Grameen Bank Branches, and Village Phone Operators in the Context of the Village Phone Program 121 5.3 The Village Phone Operator Selection Process 122 6.1 ICT Penetration in ASEAN Countries (2004) 135 6.2 Internet Subscribers: Indonesia vs India (1998–2005) 136 6.3 Typical ISP Network Architecture 138 6.4 Indonesian ISP Network Architecture 139 LIST OF FIGURES 11 6.5 Annual Leased Line Prices for 2 Mbps, 2 km Circuits for Asia Pacifi c Countries
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