6 UAS Programme Development and Prioritization
6.1 ICT Sector Analysis and Assessing Demand
The first step towards developing a universal access and service (UAS) programme is to determine the country’s current UAS status. The country’s unserved communities and/or regions need to be identified and their demand for services assessed.
This can be accomplished through an ICT sector review, described in Section 6.1.1, which includes policy issues and market players, stakeholder consultations, near-future plans (e.g., one to three years) with regard to existing infrastructure, and that may be complemented with a demand study. This enables the regulator to identify and design feasible UAS targets that can built upon the existing strength and potential of a country and leverage the capacities and synergies of market players and stakeholders already active in the market.
The ICT sector review may allow other development players to identify effective strategies that might not need high-end technology and bandwidth. For example, if a country has an active health-related NGO that wants to reach the rural population, it might use a combination of an FM radio station for information dissemination and add call centre and information retrieval services for call-in and ‘question and answer’ services. Uganda’s success at lowering the rate of HIV/AIDS infection within the country is partly attributed to a campaign that uses radio to educate and raise awareness of HIV/AIDS issues, particularly with teenagers and other at-risk citizens, via radio-talk shows [1].
When implementing a UAS strategy, governments or regulators like to have a demand study undertaken that identifies consumer needs, preferences and demand for service. This can also be used to highlight the social and economic impacts of new service provision into formerly underserved areas.
For telephony services, the simplest initial desk-based demand estimate can be made in terms of the call-generating or purchasing power of specific areas or administrative units. The most common approach for estimating demand is establishing the individual household expenditure on communications, as described in Section 6.1.2. In addition, for telephony, there is also demand and revenue potential for incoming calls to as of yet unserved areas which should be included in this desk-based demand estimation, as described in Section 6.1.3.
For Internet services, an initial demand scenario can be created based on estimates due to the presence of administrative, business or institutional structures, as illustrated in Section 6.1.4. The demand scenarios can be based on different assumptions, creating conservative, moderate and optimistic demand scenarios, and include a sensitivity analysis.
However, in order to confirm or refine these desk-based demand estimates, it is recommend to undertake field demand studies where actual users and potentianl users of ICT services are interviewed about their needs, affordability and other topics, as explained in Section 6.1.5.
E N D N O T E S
1. See for a practical guide The Essential Handbook – Radio and HIV/AIDS: Making a difference, A guide for radio practitioners, health workers and donors by Gordon Adam and Nicola Harford
6.1.1 ICT sector review
To prepare for an ICT sector review, which is required both for policy and programme development, statistical and other country data (e.g.
socio-economic, cultural) needs to be collected and compiled to summarize the country’s geographic, political, economic, social and cultural characteristics, in addition to ICT data. Regional population, geographic, topographic, demographic, and socio-economic indicators that reflect relative wealth, wellbeing and poverty should be tabulated and compared, for the entire country, including served and unserved areas. This data is needed for the ICT sector review, as it joins socio-economic data with ICT data; both are needed in order to develop a universal access and service (UAS) programme and identify the potential role and impact communications may have on development.
Socio-economic data review
The result of gathering this data is a basic desk-based comparative study that tabulates the socio-economic and infrastructural wellbeing or poverty of a country. Ideally, to get the clearest picture of the county’s UAS status, the study should be broken down into lower administrative levels, e.g., province-by-province, district-by-district, etc. Typically, the following socio-economic data are collected and compiled:
■ Population size, density and distribution;
■ Number of towns, villages etc., classified by size;
■ Income levels and distribution;
■ Nature of economic activities and major sources of income;
■ Health & health infrastructure statistics and indicators;
■ Education infrastructure statistics (e.g., number of schools, primary and secondary, tertiary institutions such as universities and colleges etc.) and education levels and enrolment;
■ Composite Human Development Index (HDI); an index combining normalized measures of life expectancy, literacy, education, and GDP per capita for countries worldwide;
■ Commercial indicators (e.g., number of bank branches, businesses, etc.);
■ Local governments and administrative offices, other institutions, NGOs, etc.;
■ Major construction or development activities and programmes in a province or district;
■ Basic infrastructure such as power, transportation (e.g., paved roads, etc.), and postal services;
■ Terrain (e.g., rugged mountains, hills, savannah, crop lowlands, etc.); and
■ Socio-cultural distinctions that may have relevance (e.g., ethnicity, religion, language, minority groups, presence of indigenous people, nomads, etc.).
In addition to the government’s official statistics office, sometimes various ministries (agriculture, local government or rural development, planning, transport, health and education) have useful additional resources and a good understanding of the specific needs of regions and certain population groups. Also, banks that have a national-wide presence, as well as farmers associations, NGOs, development agencies and micro-finance institutions can contribute valuable information. A benefit of this level of research is that it will help the UAS programme identify and connect with other development initiatives.
Once data is collected, its comparative analysis provides an understanding and description of the country’s geographic zones, regions,
administrative departments, municipal units and other population centres. The output can provide both descriptive material and tabular comparative analyses that can be used to classify the country’s regions for total market capacity (potential revenue), level of development, as well as identify the existence of social and physical infrastructures that create demand for communications services in unserved areas.
ICT data Review
After analysing the socio-economic data, it is necessary to review the existing communications infrastructure throughout the entire country. As discussed previously, understanding the country’s communication infrastructure will:
■ Identify which services and applications the infrastructure can support;
■ Identify the infrastructure gap
■ Identify the next steps for achieving universal access and service (UAS);
■ Identify feasible upgrades and alternatives, as well as any potential for leveraging existing technology for new types of services.
The ICT sector review also necessitates a thorough review of current policy and regulatory frameworks – including issues such as tariff policy, spectrum allocation, licensing and liberalization, among many others (see also Chapter 2 on regulatory reform and UAS). In addition, developing a clear view of the policy changes likely to be implemented in the short-to-medium term is essential because these changes will determine what infrastructure development and service provisions will be available in the near future, and these, in turn, could be
leveraged for Universal Access (UA) and rural ICT projects.
A helpful tool for the ICT sector review is to interview various industry players. This may be outsourced to an independent expert entity or accomplished through a qualitative questionnaire. In addition to obtaining detailed information on the existing and planned infrastructure from each operator, questions as to any planned policy initiatives, market development and regulatory constraints may be included. The
interview or survey process ideally includes the main telecommunications and Internet infrastructure and service providers, a few of the smaller players, and if possible, potential new entrants and alternative service providers (e.g., railway, power companies). If they exist, public phone operator companies and others related to telecentres or Internet cafes could also be interviewed.
This process provides a good understanding of the existing context, demand, constraints and opportunities within the
telecommunications/ICT sector in terms of reaching the country’s unserved communities and achieving UAS for both telephony and the Internet.
These interviews, crucial to identifying the current status of UAS, will ascertain which areas will be served commercially and which will require intervention. The topics to be discussed with the relevant communications operators and service providers include the following:
■ Network related topics:
■ Network statistics, current coverage, points of presence (POPs), bandwidth capacities;
■ Cost structure, both capex and opex;
■ Network expansion and investment plans;
■ Technologies used and future trends/ preferences;
■ Financial topics:
■ Revenues (average and marginal) for various services;
■ Expectations for financial returns;
■ Market and subscriber issues:
■ Levels/range of services, numbers and types of customers for each service type, etc.;
■ Marketing and distribution;
■ Tariff strategies and prices;
■ Public access:
■ Experience with deployment of phone or Internet public access facilities;
■ Current numbers, types and deployment of public ICT access facilities;
■ UAS issues:
■ Experience with reach into rural areas and underserved communities;
■ Approaches of the operators and ISPs towards reaching low income people and communities; and
■ Strategic ideas for UAS, etc.
The operators and service providers should be asked whether they are planning to serve the unserved areas and population groups in the near future and which areas or target groups will require government intervention. These discussions may be held in private due to the confidential nature of expansion plans.
It is also very helpful to include non-ICT players that have either a commercial interest in rural areas (e.g., agricultural suppliers) or in socio-economic development, such as donor and development agencies, and NGOs.
Results of the overall ICT sector analysis should be summarized in a report and presented to the telecommunications industry and other relevant stakeholders for validation and refinement. Such presentations also provide opportunities for identifying areas of uncertainty so that further informational needs can be identified and later integrated into the demand study design.
6.1.2 Per capita and household expenditure on communications
Universal access and service (UAS) programme developers can build up a desk-based demand model for unserved areas based on data collected during the ICT sector review which may be refined later through a field demand study. The model uses national data on
communication expenditure and projects it to unserved areas. It starts out with the country’s total telecommunications revenue divided by its GDP, resulting in the percentage telecom expenditure of GDP. This can be refined with additional data where available, as follows:
■ Percentage of GDP accounting for household income (typically 60-70 percent of total GDP);
■ Typical rural or low-income compared to average income;
■ Regional variation of income;
■ Percentage of telecom revenue from business users (to be subtracted from the total telecom revenue for a closer approximation of household expenditure);
■ Data on telecom expenditure by households; and
■ Household number and size.
By having data on population or household and income in various identified unserved areas, the total revenue generating potential of each unserved area can be calculated on an annual basis, as follows:
(per capita income) x (population) x (the telecom expenditure percentage) or
(per household income) x (no. of households) x (the telecom expenditure percentage)
In most countries, the demand for telephone service has been identified at somewhere between 2-5 per cent of a country’s GDP, using ITU’s indicator of telecommunications revenue as percentage of GDP, as can be seen in the Figure below.
Figure: Total telecom revenues as % of GDP – 2007
Source: ITU-infoDev ICT Regulation Toolkit – UAS Module based on ITU World Telecommunication/ICT Indicators.
A recent review of several telecoms demand studies in developing countries found a high variability in spending levels per household, as well as significant rise globally of the percentage in household income spent on communications [1].
Field surveys of rural areas in Africa have indicated household expenditure levels of more than 5 per cent in some countries. This makes sense, considering that rural incomes are often lower than average income, thus the expenditure is a higher percentage of the income and also, living in rural and remote parts of the country, the opportunity costs of travelling to communicate are much higher. This makes the argument for communications services all the more attractive. In a large demand study commissioned in 2005, by the Nigerian
Communications Commission (NCC), respondents stated they spent on average USD 20.7 per month on the mobile phone (fixed phones are almost nonexistent outside the main cities), which is 7 per cent of monthly household income. In the developed world, phone cost
expenditure is typically less than 2% of Gross National Income (GNI) per head, due to a combination of low telephone costs and higher incomes.
People want and need to communicate and are prepared to pay for it no matter what their economic status is. The benefits they receive from communications expenditures are now well known as they relate to routine family, business and emergency matters, and to time and expense savings (the opportunity cost) of alternative means of communications, such as the necessity to travel.
In NCC’s demand study, over one third of respondents (36 per cent) indicated that they travel to another town to make a telephone call (as shown in the Figure below). 21 per cent of the respondents actually travel to meet in person because they have no access to a phone. A third of respondents send a letter or use a messenger (or a combination of both – i.e., write a letter and then have a messenger deliver it) to communicate. Approximately 8 per cent do none of the above or selected “Other” (methods of communication) in the survey. Less than 1 per cent of respondents stated that they have their own mobile phones and travel to the nearest coverage area.
Figure: Alternative means of communication due to lack of phone.
Source: NCC Demand study 2005
On average, respondents stated they spend one hour and 40 minutes travelling to make a phone call and return home. The average total cost of return travel to make a phone call is USD 2.84. This is based on over 5,000 interviews in all six regions of Nigeria, and a sample that included urban, semi-urban and rural areas (but excluding major cities).
E N D N O T E S
1. See “Telecoms demand: measures for improving affordability in developing countries – A toolkit for action – Main report”, Claire Milne, January 2006, chapter 2 on assessing and measuring affordability
6.1.3 Incoming call revenue
When considering the demand and revenue potential of unserved or underserved areas and communities, it is important to include the demand for incoming calls, a significant source of revenue. Adding revenues stemming from calls flowing into rural areas from urban (and international) destinations to revenues from basic service connections and outgoing calls, the total potential revenue from unserved areas and communities could be double what potential users themselves are willing and able to spend.
The following illustrates the results of a rural demand study undertaken in 2005 for Mozambique’s Ministry of Transport and
Communications. The study of 226 rural households without telephone access in three different districts in the province of Zambezia, revealed that 19 per cent of the respondents stated that they have close family members living abroad, often in Malawi or South Africa. The Figure on the right shows that 24 per cent of respondents stated that they have close family members living in Maputo or another major city outside of Zambezia. These findings predict (incoming) international and national long-distance traffic that might be generated by providing services to those rural areas.
Figure: Family members in Maputo or other major city outside the province
Source: Mozambique Demand study 2005
Further, the study revealed that 92 per cent of respondents would receive incoming calls if their village had phone service. On average, the respondents would expect to receive three incoming calls per week. When asked how many calls they would make on a public phone per week themselves if phones were installed in their village, respondents stated they would make on average four calls.
Similarly, in the 2005 study commissioned by the Nigerian Communication Commission (NCC), 39 per cent of respondents stated that they have family members living abroad, as shown in the Figure on the left. This incoming call market (into rural areas) can generate revenues for carriers either in the form of termination charges or urban customer revenue. In many countries, urban callers tend to be more affluent and can afford more calls and lengthier calls to rural relatives and friends.
Figure: Family members living abroad – in %
Source: NCC Demand study 2005
In Latin America, data from Chile demonstrate that rural telecommunications operators earned more than 60 percent of their revenues from incoming call terminating charges. It is remarkable that rural pay phones in Chile report this significant number of incoming calls because typically, stand-alone pay phones are not set-up to receive incoming calls as easily as a phone shop that has an operator in attendance [1].
For pay phones to be effective for incoming calls, they need someone living close to the payphone who is willing to receive incoming calls and relay messages to the called party, or who is willing to set up appointments between the caller and called party.
Another example of significant revenue potential made from incoming calls, is Bangladesh’s Grameen’s Village Phone programme, discussed in detail in Section 3.3.1. This well-documented case illustrates how telephone service can be extended to low-income, rural populations. The average usage of the village phones amounts to about 1600 minutes per month, out of which approximately 1000 minutes are from incoming calls [2].
In conclusion, when estimating demand, incoming call revenue needs to be included, either through data gained from a demand study or reasonable assumptions based on data from comparable markets.
E N D N O T E S
1. Björn Wellenius, Closing the Gap in Access to Rural Communications – Chile 1995-2002, World Bank Discussion Paper No. 430, February 2002. Pg. 12
2. Grameen website (http://www.grameen-info.org/grameen/gtelecom/index.html)
6.1.4 Demand for Internet services
In developing countries that include access to the Internet as part of their universal access and service (UAS) policy, the target is typically not individual household access but public access to the Internet. Thus, this public usage through Internet cafés and telecentres needs to
be forecasted, as well as some private demand for Internet services. This section discusses methods of forecasting Internet demand.
An estimate of the total revenue potential should be made, including both public demand at telecentres and private demand of households, businesses and institutions. The estimate should include private demand in order to assess the feasibility and viability of extending Internet infrastructure and service to a targeted area. Further, demand can be broken down into the various Internet related services (from e-mail via browsing to Internet telephony, e-commerce or e-government services) as well as several pricing models (time-based,
data-throughput-based, flat-rate and bundled pricing).
Demand obviously has two dimensions – those who want to use Internet services, and those who can afford to use it, e.g., many youths want Internet access but often can’t afford it. Assessing potential demand for Internet in unserved areas starts with interviewing the existing national ISPs and cyber cafés, and collecting other key data on topics such as the following:
■ Internet subscriber penetration (business/ household);
■ Internet user penetration;
■ Socio-demographics of Internet users;
■ Computer penetration (if possible, disaggregated by urban and rural, and business and household);
■ Number of businesses and institutions (per region, administrative units);
■ Typical Average Revenue Per User (ARPU) per standard or low-end user;
■ Typical ARPU of business users;
■ Typical ARPU of specific institutions (e.g., NGOs, local government offices, schools, health centres, etc.);
■ Typical respective data speeds to different types of users; and
■ Data on cybercafé number, usage, revenue, and services that are most in demand.
The above data provide an understanding of how much demand there is for the Internet in rural and underserved areas and should be
The above data provide an understanding of how much demand there is for the Internet in rural and underserved areas and should be