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Increasing Broadband Internet Penetration in OIC Member Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation (COMCEC) Increasing Broadband Internet Penetration In the OIC Member Countries COMCEC COORDINATION OFFICE February 2017 Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation (COMCEC) Increasing Broadband Internet Penetration In the OIC Member Countries COMCEC COORDINATION OFFICE February 2017 This report has been commissioned by the COMCEC Coordination Office to Telecom Advisory Services, LLC. Views and opinions expressed in the report are solely those of the author(s) and do not represent the official views of the COMCEC Coordination Office or the Member States of the Organization of Islamic Cooperation. Excerpts from the report can be made as long as references are provided. All intellectual and industrial property rights for the report belong to the COMCEC Coordination Office. This report is for individual use and it shall not be used for commercial purposes. Except for purposes of individual use, this report shall not be reproduced in any form or by any means, electronic or mechanical, including printing, photocopying, CD recording, or by any physical or electronic reproduction system, or translated and provided to the access of any subscriber through electronic means for commercial purposes without the permission of the COMCEC Coordination Office. For further information please contact: COMCEC Coordination Office Necatibey Caddesi No: 110/A 06100 Yücetepe Ankara/TURKEY Phone: 90 312 294 57 10 Fax: 90 312 294 57 77 E-mail: [email protected] Web: www.comcec.org Table of Contents EXECUTIVE SUMMARY 1 I. INTRODUCTION 8 II. CONCEPTUAL FRAMEWORK REGARDING BROADBAND PENETRATION 11 II.1. Impact of broadband on economic and social development 11 II.2. Differences between developed and developing countries with regards to broadband impact 23 II.3. Technological evolution of broadband 27 II.4. Main challenges regarding fixed and mobile broadband penetration 32 III. BRAODBAND GLOBAL TRENDS 35 III.1. Global broadband industry trends 35 III.2. Global trends regarding broadband development 40 III.3. Main policy, regulatory approaches and implementation for increasing broadband penetration 52 III.4. Best Practices of non-OIC developing countries for increasing broadband penetration 57 III.5. Critical success factors for increasing broadband penetration 63 IV. CURRENT SITUATION OF bROADbAND PENETRATION IN THE OIC MEMBER COUNTRIES 71 IV.1. Broadband Supply in the OIC Member Countries 71 IV.2. Broadband Demand in the OIC Member Countries 84 V. COUNTRY CASE STUDIES 94 V.1. COTE D’IVOIRE 95 V.1.1. Demand for broadband Services 95 V.1.2. Supply of broadband services 103 V.1.3. Institutional structure and policies for promoting broadband 113 V.1.4. Lessons learned 114 V.2. SAUDI ARABIA 117 V.2.1. Demand for broadband Services 117 V.2.2. Supply of broadband services 126 V.2.3. Institutional Structure and Policies for Promoting broadband 133 V.2.4. Lessons Learned 134 V.3. KAZAKHSTAN 136 V.3.1. Demand for broadband Services 137 V.3.2. Supply of broadband Services 142 V.3.3. Institutional Structure and Policies for Promoting broadband 150 V.3.4. Lessons Learned 153 i VI. POLICY RECOMMENDATIONS 155 VI.1. Advanced OIC Member Countries 156 VI.1.1. Promotion of investment of next generation broadband networks 157 VI.2. OIC Member Countries at an intermediate stage of broadband development 158 VI.2.1. Initiatives to promote digital literacy 160 VI.3. OIC Member Countries at embryonic broadband development 161 VI.3.1. Tackling the broadband affordability challenge in low-income countries 162 References 162 ii List of Figures Figure 1: OIC Member Countries: Diffusion of fixed and mobile broadband 8 Figure 2: Social and economic contribution of broadband 11 Figure 3: Information workers an ICT investment 18 Figure 4: Causality Model: ICT innovation and diffusion is driven by the growth of information workforce 19 Figure 5: Conceptual representation of consumer surplus 22 Figure 6: OECD: Percentage of impact of broadband on GDP growth 24 Figure 7: Fixed broadband economic impact vs. fixed broadband penetration 25 Figure 8: The regional effect of broadband on job creation according to different levels of penetration 26 Figure 9: Total telecommunications industry revenues (in US$) (2010-2014) 37 Figure 10: Economies of scale in the wireless industry 38 Figure 11: Difference in scale economies between local and global operator 39 Figure 12: Worldwide Internet adoption (as percent of world population) (2000-2015) 41 Figure 13: Selected Regions: Internet penetration (as percent of population) (2000-2015) 42 Figure 14: Worldwide internet adoption vs. fixed broadband adoption (2000-2015) 42 Figure 15: Selected Regions: Fixed broadband penetration (2000-2015) 44 Figure 16: Selected Regions: Mobile broadband penetration (2007-2015) 45 Figure 17: Correlation between fixed broadband penetration and price elasticity 54 Figure 18: OIC Member Countries: Mobile broadband coverage (3G) (2015) 72 Figure 19: OIC Member Countries: Herfindahl-Hirschman Index of the fixed broadband industry (2016) 78 Figure 20: OIC Member Countries: Herfindahl-Hirschman Index of the mobile broadband industry (2016) 80 Figure 21: OECD versus OIC Member Countries: Internet penetration 85 Figure 22: OECD versus OIC Member Countries: Fixed broadband penetration (2000-2015) 86 Figure 23: OECD versus OIC Member Countries: Mobile broadband penetration (2007-2015) 87 Figure 24: OIC Average: Pricing of selected broadband products 90 Figure 25: Percentage of local internet content by region (2013) 92 Figure 26: Cote d’Ivoire: Comparative adoption of fixed and mobile broadband (2003-2016) 96 Figure 27: Cote d’Ivoire: Unique visitors among sites with > 100,000 visits (September 2016) 97 Figure 28: Cote d’Ivoire: Internet users and facebook members (2000-2016) 98 Figure 29: Sub-Saharan Africa: Telecommunications Affordability Index (2014) 101 Figure 30: Cote d’Ivoire: Mobile broadband market shares (by subscribers) (2012-2016) 105 Figure 31: Cote d’Ivoire: Mobile broadband Herfindahl-Hirschman Index (2012-2016) 105 Figure 32: Monthly subscription of 1 Gb cap USB (in US$) 109 Figure 33: OIC Member Countries: Fixed broadband vs. mobile broadband penetration (2015) 118 Figure 34: Saudi Arabia: Comparative adoption of fixed and mobile broadband (2003-2016) 119 Figure 35: Saudi Arabia: Internet users and social network members (2000-2016) 121 Figure 36: Correlation between internet penetration and electronic commerce as percentage of total retailing (2015) 123 Figure 37: OIC Member Countries: Telecommunications Affordability Index (2014) 125 iii Figure 38: Monthly subscription of 1 Gb cap USB (in US$) 131 Figure 39: Kazakhstan: Comparative adoption of fixed and mobile broadband (2003-2016) 138 Figure 40: Kazakhstan: Internet users and facebook members (2000-2016) 139 Figure 41: Asia: Telecommunications Affordability Index (2014) 141 Figure 42: Monthly post-paid subscription of 1 Gb cap USb (2012-2015) (in US$) 149 iv List of Tables Table 1: OIC Member Countries: State of broadband supply and demand (2015) 5 Table 2: Research results of fixed broadband Impact on GDP growth 13 Table 3: Research results of mobile broadband impact on GDP growth 14 Table 4: broadband construction impact on job creation 15 Table 5: Impact of positive broadband externalities on employment 16 Table 6: broadband communications value chain 27 Table 7: Global presence of MNC broadband providers 40 Table 8: Worldwide Internet adoption (as percent of population) (2015) 41 Table 9: Worldwide Fixed broadband adoption (as percent of population) (2015) 43 Table 10: Worldwide Mobile broadband adoption (as % of population) (2015) 44 Table 11: Regional fixed broadband coverage (as percent of population) (2015) 46 Table 12: Fixed broadband coverage (by country) (as percent of population) (2015) 46 Table 13: Mobile broadband (3G) Coverage (by region) (as percent of population) (2015) 47 Table 14: Fixed broadband demand gap (2015) 48 Table 15: Mobile broadband demand gap (2015) 49 Table 16: Percentage of households mentioning affordability as a reason for not purchasing broadband 50 Table 17: Percentage of households mentioning digital literacy as a reason for not purchasing broadband 51 Table 18: Percentage of households mentioning cultural relevance or lack of need as a reason for not purchasing broadband 52 Table 19: Impact on penetration level of fixed broadband (FBb) of a price reduction 55 Table 20: Uruguay: “Social” broadband plans 60 Table 21: Selected OIC Member Countries: Fixed broadband coverage (2016) 71 Table 22: OIC Member Countries: Mobile broadband coverage (3G) (2015) (%) 71 Table 23: OIC Member Countries: Mobile broadband coverage and download speed (4G) (2016) 73 Table 24: OIC Member Countries: Breakdown of fixed broadband lines 73 Table 25: OIC Member Countries and OECD: Average fixed broadband speed (in Mbps) (2015) 75 Table 26: OIC Member Countries: Breakdown of mobile broadband subscribers 75 Table 27: OIC Member Countries and OECD: Average mobile broadband speed (in Mbps) (2015) 77 Table 28: OIC Member Countries: Fixed broadband market structure (2016) 77 Table 29: OIC Member Countries: Mobile broadband market structure (2016) 79 Table 30: OIC Member Countries: Presence of global mobile broadband operators (2016) 80 Table 31: Internet Penetration: OIC Member Countries vs. all countries 85 Table 32: Selected OIC Member Countries: Fixed broadband demand gap (2016) 87 Table
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