African Journal of Business Management Vol.5 (13), pp. 5271-5280,4 July 2011 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.130 ISSN 1993-8233 ©2011 Academic Journals Full Length Research Paper Modeling of next generation network deployment in developing countries Dragan Bogojevic 1* and Natasa Gospic 2 1Alcatel-Lucent Serbia, Omladinskih brigade 88a, Belgrade 11070, Serbia. 2Traffic and Transportation Engineering Faculty, Vojvode Stepe 305, Belgrade 11000, Serbia. Accepted 11 March, 2011 The development of next-generation networks (NGN) is a growing trend in the global telecommunications sector. Although the technological requirements are known, NGNs target a new generation of users, sources for revenue, and regulation. Telecom firms in developing countries are encountering new challenges in managing NGN deployment and often seek to draw upon experiences from developed countries. However, the differences in technological needs, market profitability, and legislative framework are remarkable, and the mapping of those experiences is not always possible. In this paper, the authors analyze the main differences between developed and developing countries to define an appropriate approach for developing countries. Also, examples of NGN introduction in developing countries are analyzed and discussed from the viewpoint of speeds, investments, and revenue opportunities. Based on the analyses discussed in this paper, an analytical framework for a national model to plan and deploy NGNs in emerging economies is proposed, with the focus of facilitating developing countries’ paths towards implementing an NGN. The roles of government and public-private partnerships are emphasized. Key words : Next-generation networks, broadband access, developing countries, analytical framework, national model, public-private partnership, government. INTRODUCTION From a technological perspective, NGN is based on a and profits over the past few decades? Some global new architecture that modifies both the core and access vendors have concluded that currently there exists an portions of a telecommunication network and changes unstable and unsustainable business model that is split the way it delivers services to end-users. The telecom- between the web world and networks and is suboptimal munication industry is evolving towards NGN as it adopts for everyone concerned. On one hand, the Web World the convergence of different network architectures into an exists - it is a space where application and content all-IP (Internet Protocol) network that guarantees providers (like Google, YouTube, and Amazon) run seamless connectivity to all services over any access various applications and services, many of which are network and any device. In its Recommendation Y.2001, Web 2.0 centric and targeted at the Digital Youth, who International Telecommunication Union (ITU) has defined are growing up completely comfortable with computers NGN (ITU-T, 2004). and without pre-Internet memories. Networks, on the Why have telecom operators/service providers in other hand, are capital-intensive. To serve a subscriber, developed countries (DCs) completely or partially high speed connectivity is required everywhere – both replaced their existing PSTN (Public Switched Telephone wired and wireless. To build a network with that kind of Network), which has brought them enormous revenues scale, performance and carrier-grade reliability requires substantial quantities of capital. Until recently, this capital was available in the form of subscriptions and user consumption. As long as the average revenue per user *Corresponding author. E-mail: [email protected] Tel: +381- (ARPU) was climbing at a rate that was in line with the 63-238-352. Fax: +381-11-2288-298. investment required to upgrade the network to support 5272 Afr. J. Bus. Manage. the subscriber, the situation was sustainable. This role what broadband will have in the 21st century for all business model of pay per use worked well because countries, ITU, also, runs a campaign called “Build on each user paid his/her own cost and facilitated Broadband”. investment by the network owner. Web 2.0 business The ITU WSIS Report (ITU, 2010b) reflects a joint effort models, however, have punctured the equilibrium and among several international organizations (ITU, operators find themselves in a situation where traffic is UNESCO, WHO, UNDESA) and representatives of civil growing 1000% for some customers, but revenues are society in achieving Millennium Development Goals in only growing at a fraction of that rate. They obtain limited 2015. This report shows that progress has been made monetary compensation for their assets and support; the with close to five billion mobile cellular subscriptions application/content provider has restricted access to worldwide at the end of 2010 and almost two billion network capabilities (such as location, presence, quality people throughout the world having access to the of service, and security) that could strengthen their Internet, but it is necessary to bring affordable fast relationship with the end user who is separated from the broadband access within reach of the great majority of full value that the network and service provider could the world’s people — noting today that three quarters of deliver. the world’s inhabitants still have no access to the Internet The situation in developing countries (devCs) could be at all. The rapid spread of broadband networks and even worse because investments are limited and can recognition that broadband networks deliver benefits only be recouped by returns over the long run. However, across society are key targets for future. devCs do not wish to stay behind and watch the At the macro level, in the USA, Japan, South Korea, worsening of the already-existing digital divide. The Australia, European Union (EU) and individual countries devCs would like to find a model that allows them to like Greece and other, large attention is given to models continue progressing towards digital economies based on of development of broadband access. In March 2010, the Information Communications Technologies (ICT), using EU adopted a strategy for smart, sustainable and NGN as the infrastructure. In this paper, the authors inclusive development called Europe 2020 Strategy (EU analyze the main differences between DCs and devCs to Agenda, 2010) where the role of information determine an appropriate approach for devCs to take. communication technology has been identified as one of Also, examples of NGN introduction in developing most important. countries are examined from the point of view of speeds, Frieden (2005) examined best practices in broadband investments, and revenue prospects using business network development with an eye toward determining the cases of several operators from southeastern Europe, optimal mix of legislative, regulatory and investment particularly from Serbia. Based on the analyses done in initiatives. The paper tracked development in Canada, this paper, an analytical framework for a national model Japan and Korea as these nations, based on govern- for planning and deploying NGN in emerging economies mental efforts, had achieved success despite significantly is proposed with the main aim of facilitating developing different geographical, political and marketplace countries’ needs and paths towards NGN. conditions. The paper concludes with suggestions that investment in a robust broadband infrastructure requires extensive coordination and cooperation among private LITERATURE REVIEW and public sector players. The private sector needs to make the necessary investments for the incubation of The development of broadband (BB) Internet and NGN, ICT, but the government can create incentives for such over the past few years, was in the focus of attention investment by underwriting and guaranteeing loans, from both developed and emerging economies. Since providing favorable tax treatment and financially sup- 2009, this development is additionally forced as a key porting a portion of the necessary research, development element in overcoming the current economic crisis. It is and technology demonstration projects. At the macro- stated that broadband services play an important role in level, these nations adopted laws that created incentives the people' social and economic lives and are effective for risk taking and innovation and penalized litigation and tools against recession. All this has led to the initiation of strategies to delay making necessary investment in various regional and national initiatives on the capital-intensive projects. At the middle-level, they linked deployment of BB Internet. public funding with private initiatives that aggregated Analyzing the reference literature, four levels of demand, generated matching funds and justified the initiatives and models for the BB deployment are installation of ICT even in geographically unattractive identified: global, macro (country), middle (regional) and locales. micro (company, user, citizen) level. At the middle level, regarding the growing gap between To improve the development of broadband access at the urban and rural areas DNTA (2009) presented an global level, ITU and UNESCO have formed the overview of key elements of an analytical model to Broadband Commission for Digital Development (BB support subsidized deployment of rural broadband Commission, 2009). To increase awareness of the vital networks in commercial non-viable locations in the United Bogojevic and Gospic. 5273 States.