Research ICT Solutions

07/29/2023

The network fees folly

One of the central themes to the debate on network fees is that telcos are faced with increasing backhaul costs due to the uptake of streaming services. Some telcos claim market failure because they cannot recover these costs from their customers. This could be the case for operators that mostly offer uncapped or high usage cap baskets and that do not have access to domestic content caches. This is, however, a self-made predicament and not a market failure. Regulatory intervention is only warranted when there is market failure.

28 Jul 2023 The network fees folly July 28, 2023 by Steve Esselaar OTT Regulation, Weekly News One of the central themes to the debate on network fees is that telcos are faced with increasing backhaul costs due to the uptake of streaming services. Some telcos claim market failure because they cannot...

05/25/2023

Competition and Investment in the Caribbean

RIS’ latest report is on the status of competition and investment in the Caribbean. We find that Caribbean mobile operators are late to the transition to a data-centric business model and relied for too long on voice revenues. Voice traffic and revenue are rapidly declining, and data revenues have not yet made up for the loss in voice revenues. The key to ICT sector growth in the Caribbean is last-mile fibre connectivity.
Mobile prices have declined, but mobile is still expensive compared to other regions. Mobile broadband prices have declined by 50% over the last two years on average, but the Caribbean is still expensive. Uncapped, fixed broadband is offered in several countries at a lower price than 20GB mobile broadband.

Increased last-mile investment has led to significantly faster upload speeds and lower latencies in most Caribbean countries. Fixed broadband pe*******on is growing in countries where fibre to the home is available and cheaper and faster than mobile broadband.
The report also includes an analysis of mobile operator groups in the Caribbean based on publicly available financial data. We find that Digicel’s financial difficulties are due to factors specific to Digicel. There is an opportunity to grow the ICT sector that is already being taken up by some operators and ISPs and expect the sector to grow in the near future in response to investment by these ISPs and operators. You can download the report here.

25 May 2023 Competition and Investment in the Caribbean May 25, 2023 by Steve Esselaar OTT Regulation RIS’s latest report is on the status of competition and investment in the Caribbean. We find that Caribbean mobile operators are late to the transition to a data-centric business model and relied ...

04/27/2023

SOUTHERN AFRICA TELECOMMUNICATIONS ASSOCIATION (SATA) ANNUAL CONFERENCE 2023

For mature telecommunication markets, the primary form of Internet access is fixed, and the secondary is mobile. In Africa, mobile is the primary and only form of Internet access for most people. Offering fixed broadband at faster speed and lower prices than mobile is key for fixed-line operators to start growing again.

Our slide deck:

BROADBAND PLATFORM COMPETITION 27 April 2023 SOUTHERN AFRICA TELECOMMUNICATIONS ASSOCIATION (SATA) ANNUAL CONFERENCE 2023 Research ICT Solutions © Research IC...

01/13/2023

Quality of service is improving across Africa

This week’s newsletter is a follow-up to last week’s post on affordability. This week we’re looking at Quality of Service (QoS). Data on QoS is notoriously difficult to get. Regulators that track QoS via randomized testing don’t release the results publicly and sometimes even accessing the data within the regulator can be difficult.
Fortunately, Ookla has a publicly available data set as part of its Open Data Initiative. We downloaded the quarterly datasets from Q4 2020 to Q3 2022. The datasets have upload and download speeds, latencies, number of tests and number of devices. We did a spatial join for the continent of Africa so that we can do a similar comparison to last week and took the average for the whole continent for each indicator.
The data shows that average download speeds improved by 43% and average upload speeds by 20%. This is a fairly marginal improvement, especially for upload speeds. Upload speeds are an increasingly important metric because, as networks move to 5G, there will be more communication from the edge to the core of the network, requiring better symmetry between upload and download. The interesting metric is that latency, measured in milliseconds, declined by 9%. Latency is the time it takes for data to travel from one point to another. In gaming, high latency could make the game unplayable if there is too much of a delay between a player’s movements and it being shown on the screen to other players. Still, average latency was 41 milliseconds in Q3 2022, which is a pretty good score.

13 Jan 2023 Quality of service is improving across Africa January 13, 2023 by Steve Esselaar Weekly News This week’s newsletter is a followup from last week’s post on affordability. This week we’re looking at Quality of Service (QoS). Data on QoS is notoriously difficult to get. Regulators tha...

01/08/2023

Broadband is becoming cheaper in Africa.

Over at Many Possibilities, Steve Song has a great review of telecom developments in 2022 in Africa. It includes many of the standard categories, like undersea cables, spectrum, towers and satellite but also has developments in relatively new categories (for Africa) like fibre-to-the-home and datacentres. One thing we could add to that review is a quick summary of data pricing trends across the continent. Even with the disruption of the economic slowdown of the past couple of quarters, the overall trend of data prices is steadily downward.
We used a 20GB basket as the basis for price comparisons because the demand for data is clearly sky-rocketing and the usual baskets of 1GB or 5GB are just too small. We considered two averages across Africa for the pricing data: prices from the dominant operator per country and prices from the cheapest operator per country for every quarter between Q1 2020 and Q4 2022. Then, we weighted the prices per country by population so that smaller countries (like the Seychelles or Mauritius) didn’t skew the results too much. All prices were converted into USD.
The chart shows that most people in Africa are paying much more for data than taking just the cheapest product for a country would indicate. Also, the difference between the cheapest price and the most available price is getting bigger. Of course, there are going to be country-level differences but overall dominant operators are able to extract more money from subscribers. Often the cheapest price in a country isn’t available nationally, so subscribers have to pay the higher price from the dominant operator.
Even so, prices for 20GB of data have declined by between 28% (dominant operator) and 48% (cheapest operator) in the last two years and if the trend is any indication, the reduction in prices will continue over the course of 2023.

08 Jan 2023 Affordability in 2022 January 8, 2023 by Steve Esselaar Weekly News Over at Many Possibilities, Steve Song has a great review of telecom developments in 2022 in Africa. It includes many of the standard categories, like undersea cables, spectrum, towers and satellite but also has developm...

11/22/2022

Competition and investment in the Internet value chain in Europe

The CEOs of Deutsche Telekom, Vodafone, Telefonica and Orange released a joint statement on 14 February 2022 that called upon large content platforms “to contribute to the cost of the European digital infrastructure that carries their services.” The statement raised several questions and left them unanswered. The aim of the letter seems to be a call for a regulatory intervention. South Korea’s Sending Party Network Pays (SPNP) regime is referred to positively as a way to create a “fair” regulatory environment. The letter relies heavily upon a proposal put forward by the European Telecommunications Network Operators’ Association (ETNO) to move towards a SPNP regime. But the letter is short on detail and includes some fiery rhetoric, like the claim that telcos “cannot make a viable return on our very significant investments, putting further infrastructure development at risk.” The purpose of this report is simple: are the telcos claims true? What data is available that would provide some answers? Since South Korea has adopted a SPNP regime, we can also unpack what this entails and what the likely consequences would be, both for South Korea as well as the rest of the world.

11/04/2022

Our presentation for the ITU Workshop on the Economic and fiscal incentives to accelerate digital transformation of data and applications over telecommunication infrastructure, Geneve 4 November 2022:

The telecom sector remains one of the most profitable sectors. The market for each segment of the Internet value chain is still expanding The Internet is a co…

11/03/2022

Competition and Investment in the Internet Value Chain in South Korea and Australia

RIS is delighted to release a new report that directly addresses claims by telco’s that Over the Top Applications (OTTs) are the cause of unsustainable and unviable investments in the telco sector. Based on an in-depth analysis of annual financial reports, quarterly pricing data and other publicly available sources of information, the report shows that telcos are generating above average EBITDA margins from the demand for broadband connectivity. The higher demand for content from consumers translates into demand for better speeds and data allowances and this increases telcos’ revenues.

There are two case studies that show how poorly thought out regulatory interventions can have a significant, and negative, impact on a country’s telco sector: In South Korea, telcos have managed to persuade the state to intervene and impose a new regulatory regime for Internet peering. Instead of commercial imperatives governing agreements between parties, the South Korean regulator has inserted itself and regulates payment for domestic traffic exchange between networks. South Korea is the only country in the world that has adopted such as regime and the result has been lower quality and more expensive services.

Australian telco’s have argued that revenues are declining and that their businesses have negative returns. They claim that their return on investment is lower than their cost of capital and that infrastructure investment is not economically viable unless conditions in the sector improve. However, the cause of these problems is actually a complex and outdated wholesale pricing regime that squeezes telcos’ margins and provides poor quality of service that has been imposed by the Australian government.

The full report can be downloaded in PDF format in ENGLISH or KOREAN.

03 Nov 2022 Competition and Investment in the Internet Value Chain in South Korea and Australia November 3, 2022 by Steve Esselaar Case Studies, IP Interconnection, New Reports RIS is delighted to release a new report that directly addresses claims by telco’s that Over the Top Applications (OTTs) ...

09/24/2022

https://researchictsolutions.com/home/spectrum_efficiency/

23 Sep 2022 The spectrum efficiency continuum September 23, 2022 by Steve Esselaar Weekly News In August 2022, I wrote a blog post about the need for innovation in the allocation of spectrum. One proposal was to allocate spectrum to a Managed Spectrum Park (MSP). This blog post provides a bit more d...

08/29/2022

https://researchictsolutions.com/home/coverage_maps_bad/

26 Aug 2022 Why are mobile coverage maps so bad? August 26, 2022 by Steve Esselaar Weekly News Mobile operators are notoriously reluctant to release useful coverage information. Individual operator coverage maps are generally useless. Airtel Zambia is a classic example – as you zoom in the map aba...

08/12/2022

OECD Tax Update

This week’s newsletter provides a quick update on the OECD digital tax framework. Some background first: On October 8th 2021, the OECD announced a ground-breaking tax deal for the digital age. The OECD’s two-pillar approach intends to take unilateral digital tax measures off the table and avoid trade wars over digital service taxes. The new tax deal, signed by 137 out of 141 member states, representing over 90% of global GDP, will allocate around USD 125 billion in profits to countries around the world. The implementation of Pillars 1 and 2 follows separate paths with the plan for implementation for both being 2023.
There has been some drama in moving the project forward. The EU is seen as the first mover on the project mainly because the EU has been at the forefront of designing how the tax would be implemented. But the EU also requires unanimity from its members before the tax framework can be approved. In the interim period, EU countries have agreed to the plan and then changed their minds (e.g. Hungary). This makes implementation tricky!
In the meantime, two things are happening: 1) the OECD is moving forward with a series of consultationsending in August this year; 2) A number of countries have either implemented a unilateral DST or proposing a DST while they wait for the OECD framework to be implemented. Canada, for example, has stated that it is moving ahead with its own DST to be implemented on January 1, 2024. However, the DST would be withdrawn if the OECD Framework is implemented. Several European countries have adopted the same approach. As you can see from the map, though, the approach in the EU is pretty fragmented. Several countries have not legislated the repeal of the DST if the OECD framework goes ahead. That will likely cause further delays in EU implementation.

12 Aug 2022 OECD Tax Update August 12, 2022 by Steve Esselaar Weekly News This week’s newsletter provides a quick update on the OECD digital tax framework. Some background first: On October 8th 2021, the OECD announced a ground-breaking tax deal for the digital age. The OECD’s two-pillar approac...

08/05/2022

Africa desperately needs more innovation in spectrum allocation

Back in 2019, Steve Song at Many Possibilities wrote a blog post explaining how spectrum auctions led to worse outcomes for competition and rural access. The high reserve price of auctions was a barrier to entry to any apart from the large operators. The result was unused spectrum. Zambia is the latest example: In April 2022, it invited bids for spectrum in 800MHz and 2600MHz. MTN and Airtel were awarded spectrum for a price of USD 41.5 million. 40MHz in the 2600MHz band was left unsold. ZICTA plans on putting this up for auction again in Q3 2022, along with 60MHz in the 700MHz band.
This is the perfect opportunity to test new mechanisms for awarding spectrum. The incumbent operators have already had an opportunity to bid for the 2600 MHz spectrum and turned it down. Why go ahead for a second time for the same operators? Instead, there are multiple options that ZICTA could pilot. Steve Song recommends the concept of “secondary use” where spectrum can be used as long as it doesn’t interfere with the primary license holder. But this can be taken further: how about putting unused spectrum into a spectrum park and accepting any bids for an extremely low fee? There is so much research showing the benefits of improved broadband and unused spectrum is literally doing nothing. By putting spectrum in a spectrum park, Zambia could allocate spectrum based on geographic location instead of giving national licenses. Spectrum could be used in a particular area (say a mine or a corporate campus) and the same spectrum could be used in a village in a different location. And the risk to the regulator is really limited. The spectrum is not being used in any case and restrictions could be built such as “use-it-or-lose it” and limited time periods. This is such an opportunity for innovation and it’s a pity that regulators are too scared to take advantage of it.

05 Aug 2022 Africa desperately needs more innovation in spectrum allocation August 5, 2022 by Steve Esselaar Weekly News Back in 2019, Steve Song at Many Possibilities wrote a blog post explaining how spectrum auctions led to worse outcomes for competition and rural access. The high reserve price of...