Broadband Infrastructure in South Asia and West Asia

Broadband Infrastructure in
South Asia and West Asia
Markets, Infrastructure, and Policy Options for
Enhancing Cross-Border Connectivity
Michael Ruddy
Director of International Research
Terabit Consulting
www.terabitconsulting.com
Part 1: Background and Methodology
www.terabitconsulting.com
Completed ASEAN-9 Study
Phase I: Between November of 2012 and August of
2013, Terabit Consulting completed a study of 9
countries in Southeast Asia, as well as adjoining
regions:
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Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Yunnan Province, China
www.terabitconsulting.com
Completed North & Central Asia Study
Phase II: Between June and November 2013,
Terabit Consulting completed a study of 7 countries
in North and Central Asia
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Azerbaijan
Kazakhstan
Kyrgyz Republic
Russian Fed.
Tajikistan
Turkmenistan
Uzbekistan
www.terabitconsulting.com
Current Study: South Asia and West Asia
Between April and October 2014 (with analysis
ongoing), Terabit Consulting performed a detailed
analysis of broadband infrastructure and markets
in 9 strategic markets in South Asia & West Asia:
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Bangladesh
Bhutan
Iran
India
Maldives
Nepal
Sri Lanka
Turkey
www.terabitconsulting.com
Scope (cont’d.)
• The data and analysis for each country included:
 Telecommunications market overview and analysis of
competitiveness
 Regulation and government intervention
 Fixed-line telephony market
 Mobile telephony market
 Internet and broadband market
 Consumer broadband pricing
 Evaluation of domestic network connectivity
 International Internet bandwidth
 International capacity pricing
 Historical and forecasted total international bandwidth
 Evaluation of international network connectivity including
terrestrial fiber, undersea fiber, and satellite
 Evaluation of trans-border network development and
identification of missing links
 Identification of key highway and rail projects
www.terabitconsulting.com
Sources of Data
• Terabit Consulting has completed dozens of
demand studies for submarine and terrestrial fiber
networks worldwide
– Constant contact with operators, ISPs, and other
stakeholders
• Terabit Consulting’s published
reports include:
– The Undersea Cable Report
(1,500+ pages)
– International Telecommunications
Infrastructure Analysis (1,000+ pages)
• Terabit Consulting’s data and
intelligence covers infrastructure,
demand, traffic flows, pricing, and market share
www.terabitconsulting.com
Part 2: State of South and West Asia
Bandwidth and Broadband Markets
www.terabitconsulting.com
Overview of Broadband Status
GDP per
Int’l.
Capita, YE
Band2012
width per
(PPP,
Capita
USD)
(Kbps)
Int’l.
Connectivity
Domestic
Connectivity
IP Transit
Price
Competitiveness of
Telecom
Market
Fixed and
Mobile
Broadband
Infrastructure
Annual 1 Mbps
Broadband
Subscription +
Installation as %
of Nominal GDP
per Capita
Bangladesh
$2,200
0.3
Weak
Moderate
Expensive
Somewhat
Competitive
Limited
Very Expensive
Bhutan
$7,000
7.6
Weak
Limited
Expensive
Less
Competitive
Limited
Reasonable
India
$4,000
1.0
Excellent
Moderate
Moderate
Competitive
Limited
Reasonable
Islamic
Republic of
Iran
$14,300
1.5
Excellent
Limited
Expensive
Less
Competitive
Limited
Somewhat
Expensive
Maldives
$10,200
24.0
Sufficient
Moderate
Expensive
Less
Competitive
Limited
Reasonable
Nepal
$1,600
0.7
Weak
Limited
Expensive
Less
Competitive
Limited
Very Expensive
Pakistan
$3,800
1.7
Somewhat
Weak
Moderate
Expensive
Somewhat
Competitive
Limited
Somewhat
Expensive
Sri Lanka
$8,100
2.2
Sufficient
Moderate
Expensive
Less
Competitive
Limited
Affordable
Turkey
$16,900
30.7
Sufficient
Moderate
Very
Reasonable
Less
Competitive
Limited
Extremely
Affordable
www.terabitconsulting.com
International Internet Bandwidth, YE13
Turkey: 2.3 Tbps
Iran: 113 Gbps
Pakistan: 300 Gbps
Nepal: 20 Gbps
Bhutan: 5.7 Gbps
Bangladesh: 50 Gbps
India 1.2 Tbps
Sri Lanka: 45 Gbps
Maldives: 8 Gbps
www.terabitconsulting.com
Int’l. Internet Bandwidth per Capita (Kbps)
35
30
30.7
24.0
25
20
15
10
5
1 Kbps or Less:
Serious Obstacle
to Development
7.0
2.2
1.7
1.5
0
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Difference between Turkey and Bangladesh: 100x
Average in Western Europe: 99 Kbps
www.terabitconsulting.com
1.0
0.7
0.3
International Fiber Connectivity
• The Study identified and analyzed 40 trans-border
terrestrial fiber optic links in the region
– Across borders within the region and at the edge of the
region (e.g. to China, Mynamar, Afghanistan, Iraq, and
Eastern Europe)
• Some transborder links form segments of
multinational networks
– Trans Asia-Europe (TAE)
– Europe-Persia Express Gateway (EPEG)
– South Asian Sub-regional Economic Cooperation (SASEC)
Information Highway
• The analysis also covered 28 submarine cable systems
– Including interregional systems such as the Sea-Me-We and
FLAG cables, as well as regional submarine cables
www.terabitconsulting.com
Our Gracious Hosts: Bhutan
• Two terrestrial cables to India
– Phuentsholing to Jaigaon, India (2007)
– Galephu to Assam, India (2011)
– Both fiber paths converge at Siliguri, India
• Druknet/BT 5.3 Gbps with connectivity via LINX and HKIX
– Third international POP in Singapore in 2014
• Tashi Infocomm: 370 Mbps
• South Asia Subregional Economic Cooperation (SASEC)
Information Highway network will connect Bangladesh, India,
Bhutan, and Nepal
– Included installation of new fiber link from Thimphu to Phuentsholing
and Gelephu (2014)
Fragile infrastructure reliant upon India, vulnerable to multiple
bottlenecks including
Siliguri, Mumbai, and Egyptian submarine cables
www.terabitconsulting.com
Bangladesh: Int’l. Infrastructure
• Heavily dependent upon Sea-Me-We-4 cable
– Operated by BSCCL; 200 Gbps is currently 20% used
• Six ITC operators licensed to connect terrestrially to
India
– BTCL and BSNL networks were interconnected in 2010
– Bharti Airtel cable implemented in July, 2013
• Projects under development include Sea-Me-We-5
and a terrestrial link to MPT Myanmar
Weak international infrastructure reliant upon Sea-MeWe-4 and terrestrial links to India, and vulnerable to
submarine cable disruptions in Egypt.
www.terabitconsulting.com
India: Int’l. Infrastructure
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Eleven interregional submarine cables
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FLAG Europe‐Asia (FEA) (1997), Sea‐Me‐We‐3 (1999), Sea‐Me‐We‐4 (2005)
SAFE (2002) and Seacom (2009)
i2i (2002) and TGN‐TIC (2004)
Falcon (2006), I‐Me‐We (2010), Europe‐India Gateway (2011), and the Gulf Bridge
International /MENA network (2012)
International gateway share: Tata 39%, Bharti 30%, Reliance 26%, Sify 5%
Bharat Lanka Cable System and India-Maldives
Terrestrial cables:
– To China: Reliance (2009), Bharti Airtel/China Telecom (2010), Tata Communications
(2010)
– India-Myanmar (2010)
– Multiple links to Bangladesh, Bhutan, and Nepal
– India-Pakistan cable between Amritsar and Lahore has been installed, but security
agencies on both sides of the border are refusing its use for non-voice traffic
Although India benefits from excellent international connectivity, it is still
extremely vulnerable to submarine cable events in Egypt and the Strait of Malacca.
Only improved, robust pan-regional terrestrial connectivity can provide a viable
alternative.
www.terabitconsulting.com
Iran: Int’l. Infrastructure
• Terrestrial connectivity to all neighbors
– As of 2012, trans-border capacity was as follows: Armenia 1.4 Gbps, Azerbaijan
1.2 Gbps, Turkey 600 Mbps, Turkmenistan 600 Mbps, Iraq 300 Mbps, and
Afghanistan 200 Mbps (Pakistani link reportedly under implementation)
– Telecommunications Infrastructure Company of Iran (TCI) has set the following
targets for 2017: Azerbaijan 4.3 Tbps, Iraq 1.2 Tbps, Turkey 1.1 Tbps, Armenia
930 Gbps, Turkmenistan 600 Gbps, Afghanistan 430 Gbps, and Pakistan 400
Gbps.
• Pan-regional terrestrial networks: Trans Asia-Europe (TAE) and EuropePersia Express Gateway (EPEG)
• Submarine cables include Falcon, Gulf Bridge International (GBI),
Pishgaman Oman-Iran (POI), EPEG Iran-Oman, UAE-Iran, and KuwaitIran.
Iran’s physicial connectivity within the region is excellent, positioning it as a
viable and competitive transit hub for traffic from South Asia, the Middle
East, and Central Asia, as well as Europe-Asia demand. However, activated
bandwidth levels must be significantly increased.
www.terabitconsulting.com
Maldives: Int’l. Infrastructure
• Two submarine cables connecting to India and Sri
Lanka
– Dhiraagu submarine cable (in partnership with SLT) (2006)
– WARF Telecom Maldives-India-Sri Lanka
(Wataniya/Ooredoo with Lanka Bell & Reliance)
(2007/2008)
Although every country should optimally have more
than two international outlets, Maldives’ existing
infrastructure is advanced for a country of its size, and
enables very high per-capita bandwidth
www.terabitconsulting.com
Nepal: Int’l. Infrastructure
• Terrestrial interconnections to four Indian networks
– Reliance, BSNL, and Airtel via the Birgunj‐Raxaul and
Birtatnagar‐Jogbani border crossings
– Tata links to the network of UTL via Birgunj‐Raxaul and
Bhairahwa-Sunauli
• SASEC Information Highway and Nepal-China link
under implementation
Nepal’s international infrastructure is currently very
weak, leaving it reliant almost exclusively upon India
www.terabitconsulting.com
Pakistan: Int’l. Infrastructure
• Incumbent operator PTCL operates three submarine cables and
controls about 60% of international traffic
– Sea-Me-We-3 (1999), Sea-Me-We-4 (2005), I-Me-We (2010)
• Transworld Associates operates the TW-1 submarine cable and
handles most of the remaining 40% of international traffic
– System connects to Oman and UAE
• Relatively weak terrestrial connectivity to neighbors
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Afghanistan links are reportedly operational
Operation of Pakistan-Iran link could not be confirmed
India-Pakistan cable constructed but not activated
Contract awarded to Huawei Technologies in 2013 to implement a fiber
link to China via the Khunjerab Pass
Pakistan has access to three interregional submarine cables and a
fourth regional system, but terrestrial connectivity is weak
www.terabitconsulting.com
Sri Lanka: Int’l. Infrastructure
• Sri Lanka Telecom (SLT) is an investor in the SeaMe-We-3 (1999) and Sea-Me-We-4 (2005) cables,
as well as the planned Sea-Me-We-5 (2016)
• Dialog Axiata is an investor in the proposed Bay of
Bengal Gateway (BBG) submarine cable (2016)
• Three regional submarine cables connect to India
and Maldives
Sri Lanka’s international connectivity is sufficient.
www.terabitconsulting.com
Turkey: Int’l. Infrastructure
•
Turkey’s primary international link is the Telecom Italia-owned Med Nautilus
cable (2004/2011) which connects to Italy, Greece, Cyprus, and Israel
– The network’s expansion to Turkey was funded by a $40 million, 15-year IRU commitment
by Turk Telekom, which operates the system’s cable station in Istanbul
•
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Turk Telekom also purchased significant capacity from OTE via the Trans Balkan
Network (TBN)
Pan-European operator Interoute expanded its pan-European network from
Bulgaria to Istanbul in 2010
– Recently offered 10 Gbps wavelength from Istanbul to European POPs for €10,000 per
month, with a 50% premium for protection and 100% for IP transit (=$1.30 to $2.60 per
Mbps
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Turkey’s international terrestrial connectivity is robust and it also participates in
several regional submarine cable systems
– Investor in JADI Link and RCN pan-regional systems, however both are inactive due to
Syrian Civil War
– No identified connectivity to Armenia
Turkey has robust access to European IP transit connectivity and has attempted to
leverage this to serve as a transit provider for Central Asia
www.terabitconsulting.com
Table of Fiber Connectivity in the Region
Bangladesh
Bhutan
Bangladesh
Bhutan
India
Islamic
Republic
of Iran
Maldives
4,053km
border:
multiple fiber
links
No direct
submarine
cable links
Nepal
Pakistan
Sri Lanka
Turkey
Sea-Me-We-4
submarine
cable
Sea-Me-We-4
(& planned
Sea-Me-We-5)
605 km
border:
multiple
fiber links
India
4,053km border: Multiple
fiber links
(& SMW4)
605 km
border:
multiple fiber
links
WARF
Telecom
submarine
cable
1,690 km
border:
multiple fiber
links
2,912 km
border: unlit
cable (SMW/
IMW cables
Sea-Me-We-3,
Sea-Me-We-4,
BLCS
Islamic
Maldives
Rep of Iran
No direct
submarine
cable links
Falcon & GBI
submarine
cables
No direct
submarine
cable links
WARF
Telecom
submarine
cable
No direct
submarine
cable links
909 km borNo direct
der: fiber
submarine
under
cable links
development
Dhiraagu &
No direct
submarine WARF subm.
cables
cable links
Nepal
Pakistan
Sri Lanka
Turkey
Sea-Me-We-4 Sea-Me-We-4
submarine
(& planned
Sea-Me-We-5
cable
1,690 km
2,912 km
Sea-Me-We-3,
border:
border: unlit
Sea-Me-We-4,
multiple fiber cable (SMW/
BLCS
IMW cables
links
909 km border: fiber
under
development
No direct
submarine
cable links
Sea-Me-We-3,
Sea-Me-We-4
499 km
border –
multiple fiber
links
www.terabitconsulting.com
No direct
submarine
cable links
Dhiraagu
Submarine
Cable, WARF
Subm. Cable
Sea-Me-We-3,
Sea-Me-We-4
Other Borders
Myanmar (193km) – fiber
under implementation
China (470km) – no fiber
499 km
border:
multiple fiber
links
China (3,380km) – multiple
fiber links
Myanmar (1,463km) – fiber
present
Afghanist. (936km) - yes
Armenia (35km) - yes
Azerbaijan (432km) - yes
Iraq (1,458km) - yes
Turkmen. (992km) - yes
N/A
China (1,236km) – proposed
fiber; could not be confirmed
Afghanistan (2,430km) – yes
China (523km) – fiber under
implementation
N/A
Armenia (268 km): No
Azerbaijan (9km): Yes
Bulgaria (240km): Yes
Georgia (252km): Yes
Greece (206km): Yes
Iran (499km) : Yes
Iraq (352km): Yes
Syria (822km): Yes
Analysis of Priority Trans-Border Projects
International Border
(and border length)
Bangladesh / India
(4,053 kilometers)
Low Priority
Bangladesh /
Myanmar
(193 kilometers)
High Priority
Bhutan / India
(605 kilometers)
High Priority
India / China
(3,880 kilometers)
Medium Priority
India / Nepal
(1,690 kilometers)
Medium Priority
Analysis
The border between
Bangladesh and India is served
by one existing terrestrial fiber
link, as well as an additional
terrestrial fiber link currently
under implementation. The
two countries are also linked
by the Sea-Me-We-4 submarine
cable and will be linked by the
proposed Sea-Me-We-5
submarine cable.
Myanmar Posts and
Telecommunications (MPT)
and the Bangladesh Submarine
Cable Company Ltd. (BSCCL)
are in the process of
implementing a terrestrial
fiber link between the two
countries.
Although Bhutan has two
terrestrial links to India, with
the first completed in 2007 and
the second in 2011, both fiber
paths converge in Siliguri,
raising concerns about the
vulnerability of Bhutan’s
international connectivity.
There are three fiber links
between China and India,
linking China to the Indian
networks of Bharti, Reliance,
and Tata.
Nepal Telecom is linked to the
Indian networks of Reliance,
BSNL, and Bharti Airtel via
multiple border crossings.
Recommendation
Given that Indian operators
BSNL and Bharti Airtel have
activated terrestrial fiber
connectivity between the two
countries (with additional
terrestrial link under
implementation by Tata), and
given existing and planned
submarine connectivity between
the two countries, there is no
strong requirement for
additional terrestrial fiber
between Bangladesh and India.
Additional fiber links are needed
in order to ensure that
Bangladesh has redundant
bilateral connectivity with more
than one country.
Diversification of Bhutan’s fiber
links to India is urgently needed
in order to ensure the
robustness of the country’s
international connectivity.
The ability of the Chinese
terrestrial route to provide an
outlet for Indian international
demand, coupled with the
relative fragility of existing fiber
links, indicates a need for more
robust fiber links between the
two countries.
Despite multiple fiber links, the
importance of India’s
connections with Nepal requires
mesh-like connectivity across
the countries’ border.
International Border
(and border length)
India / Myanmar
(1,463 kilometers)
India / Pakistan
(2,912 kilometers)
High Priority
Nepal / China
(1,236 kilometers)
High Priority
Islamic Republic of
Iran / Pakistan
(909 kilometers)
Medium Priority
Islamic Republic of
Iran / Turkey
(499 kilometers)
Low Priority
Analysis
A 640-kilometer terrestrial
fiber link was completed in
2010 at a cost of $7 million and
is operated by BSNL and
Myanmar Post and
Telecommunications (MPT).
A terrestrial fiber link has been
constructed between India and
Pakistan, but security agencies
on both sides of the border
have refused to allow its use
for non-voice traffic. The cable
remains dormant as of mid2014.
A link between China and
Nepal via Tatopani was
proposed in 2010 but as of
2014 the status of its
development could not be
confirmed.
Although Iran has strong fiber
connectivity with each of its
neighbors, the Iran-Pakistan
border has historically lacked
fiber and the implementation
of a trans-border link could not
be confirmed as of mid-2014.
There are multiple fiber links
between Iran and Turkey, and
Telecommunications
Infrastructure Company of Iran
has set a target of 1.1 Tbps of
bandwidth across the
countries’ border by 2017.
Pakistan / China
(523 kilometers)
A fiber link between Pakistan
and China is currently under
construction in the Khunjerab
Pass.
Turkey/ Armenia
(268 kilometers)
Terabit Consulting did not
identify any activated fiber
capacity between Turkey and
Armenia.
High Priority
High Priority
www.terabitconsulting.com
Recommendation
The India-Myanmar border is a
critical corridor for connectivity
between India and Southeast
Asia, requiring multiple fiber
links.
Deploying more robust
connectivity between India and
Pakistan could be an important
step to ensure regional stability,
although there is currently little
political momentum to do so.
Given Nepal’s almost exclusive
reliance upon terrestrial
connectivity with India, the
country is in urgent need of
diversified connectivity via
China.
Improved connectivity between
Iran and Pakistan would provide
both countries with improved
interregional access, i.e. from
Iran to South Asia and from
Pakistan to northwestern
destinations.
There is no urgent requirement
for improved connectivity
between Iran and Turkey.
Both Pakistan and China would
benefit from improved fiber
connectivity, as the single fiber
link under implementation is not
considered to be a definitive,
long-term solution for linking the
two countries with robust
connectivity.
Given the gradual improvement
of relations between the two
countries, as well as increasing
opportunities for closer social
and economic cooperation,
Summary of Priority Projects
High Priority Trans-Border Projects
 Bangladesh / Myanmar
 Bhutan / India
 India / Myanmar
 India / Pakistan
 Nepal / China
 Pakistan / China
 Turkey / Armenia
Medium Priority Trans-Border Projects
 India / China
 India / Nepal
 Islamic Republic of Iran / Pakistan
www.terabitconsulting.com
Part 3: Why a Coherent,
Open-Access, Cost-Effective
Pan-Asian Fiber Infrastructure
Would Benefit the Region
www.terabitconsulting.com
Why a Coherent Pan-Asian Infrastructure Would Benefit the Region
Reason #1
Telecommunications
and
Internet
development in Bangladesh, Bhutan,
Nepal, and Pakistan, as well as each
country’s overall economy, has greatly
suffered as a result of weak international
infrastructure.
www.terabitconsulting.com
The Impact of Low International Bandwidth &
Weak International Infrastructure
• At the macro level: a major obstacle to economic and
human development
– Detachment from digital economy
– Continued economic inefficiencies and restrained growth
– Lack of access to critical social development tools including
telemedicine, distance learning, scientific/research networks
• More specifically within the telecom environment:
higher wholesale and consumer prices, and lower
broadband adoption rates
– Average IP transit price in secondary and tertiary markets in
the region is $60 per Mbps
• Compared to Mumbai: $12 per Mbps
• Compared to Turkey: $2.60 per Mbps
• Compared to USA: $1 per Mbps
www.terabitconsulting.com
Why a Coherent Pan-Asian Infrastructure Would Benefit the Region
Reason #2
Despite their developed international
connectivity, the markets in the study with
strong, low-cost bandwidth (e.g. India and
Turkey) would greatly benefit from
improved pan-regional terrestrial fiber.
www.terabitconsulting.com
Pan-Regional Fiber Benefits Markets with Strong Connectivity
• Mesh connectivity throughout the region would
increase all countries’ network reliability and
provide critical outlets of connectivity
– Allowing India to have a stronger alternative to the
Egyptian bottleneck, for instance
• Stimulating the region’s overall demand presents a
greater market opportunity for transit providers
and cable operators including Turk Telekom, Tata,
and Reliance
www.terabitconsulting.com
Why a Coherent Pan-Asian Infrastructure Would Benefit the Region
Reason #3
Coherent pan-Asian terrestrial fiber optic infrastructure would
benefit markets across the continent and beyond, and help
address one of the international bandwidth industry’s most
pressing concerns, namely the lack of reliable, cost-effective
Europe-to-Asia bandwidth.
In financial terms, the viability of constructing coherent panAsian terrestrial fiber optic connectivity can likely be
guaranteed by capturing even a small portion of bandwidth
demand between Asia and Western Europe.
www.terabitconsulting.com
Strong Europe-to-Asia Bandwidth Demand
Lit Capacity, Submarine Cables serving South Asia (incl. Europe-Asia), 2007-2013
Source: The Undersea Cable Report
by Terabit Consulting
www.terabitconsulting.com
Terrestrial as a Solution for Submarine
Source: The Undersea Cable Report 2014
by Terabit Consulting
The global telecommunications industry is desperate for a
cost-effective solution that would avoid undersea choke points.
www.terabitconsulting.com
A Pan-Asian Terrestrial Network Would Be More
Competitive than Europe-Asia Submarine
Submarine
Terrestrial
Connectivity
Cable station to cable station,
with expensive backhaul
POP-to-POP
Repair
Faults take weeks to repair; ships
running costs $50,000+ per day
Networks accessible by highway
can be quickly repaired at low cost
Capacity and
Upgrades
Long-haul limited to 8 fiber pairs;
submerged electronics poses
limitation
Unlimited capacity with proper
duct installation and maintenance
Costs
Unrepeatered 3-fiber pair cable:
$12,500 per km, marine services
$20k-$40k / km
$1,250 per km with marginal fiber
costs of as low as $60 per km
Risk and
Reliability
No viable alternative to Egyptian
bottleneck
Mesh configuration could offer
“five nines” if properly designed
www.terabitconsulting.com
Part 4: The Case for Installing a Terrestrial
Pan-Asian Fiber Optic Network
Along Highway Rights-of-Way
www.terabitconsulting.com
International Highway Infrastructure
• In the near-term, many of the countries in the region will be
upgrading existing highway infrastructure and installing new
links
• Simultaneous installation of high-capacity fiber and ducts
would be a negligible marginal cost in most projects
www.terabitconsulting.com
Installing Fiber within a Road Project
• In the US (high labor-cost market), conduit+fiber
installation during open road construction costs
between USD$6,000 and USD$18,000 per kilometer
• Road installation costs at least USD$1.8 million per
lane, per kilometer
• Cost of fiber network installation during open road
construction: much less than 1% of project total
Photos: Terabit Consulting
www.terabitconsulting.com
Part 5: The Case for Intervention to
Ensure Network Development
www.terabitconsulting.com
Market Failure: Broadband Divide
• The analysis showed that the growing chasm
between the broadband “have” and “have-not”
markets results in vast differences in:
international fiber connectivity
domestic connectivity
the pricing of IP transit capacity
the competitiveness of telecommunications and Internet
market
– fixed and mobile broadband infrastructure
– the affordability of consumer broadband services
–
–
–
–
• This impacts overall economic growth and
development.
• Landlocked markets can’t compete using the existing
trans-border (bilateral) infrastructure.
www.terabitconsulting.com
The Need for Intervention
Intervention (by government or int’l. organizations)
is required to ensure the implementation of a panAsian terrestrial fiber optic network for 5 reasons:
1. To overcome the region’s vast broadband inequality and
assist landlocked nations.
2. To ensure that the region receives broadband services on
a par with more developed markets.
3. To finance or assist in financing a major capital project
that is unlikely to be fully financed by the private sector.
4. To pool and leverage private-sector resources which are
disparately insufficient.
5. To stimulate and facilitate future private investment
through market development and maturation.
www.terabitconsulting.com
Options for Government/UN Participation
Full Government / Int'l.
Organization
Ownership and Project
Management
Asian Terrestrial
Fiber Optic
Connectivity
Construction of
Coherent, PanAsian Terrestrial
Fiber Network
Continued Use of
Fractured, Bilateral
Terresrial Fiber
Infrastructure
Special Purpose Vehicle
(SPV) with Government
Shareholding
(Investment)
Intervention by
Government / Int'l.
Organization to Ensure
Implementation
Marketplace Left to
Implement Its Own
Coherent Solution
Choice of Project Design
and Engineering, Supplier,
Maintenance Authority,
Operational Plan
Public-Private
Partnership (PPP) /
Private Sector Project
Management
Special Purpose Vehicle
(SPV) with Government
Contribution (Subsidy)
Build-Operate-Transfer
(BOT)
Project Management
Contract
www.terabitconsulting.com
Available Public-Private Partnership Options
Special Purpose Vehicle (SPV) Model with Government/Organizational Shareholding
•
•
•
•
•
Network operators form a special purpose vehicle to assume full responsibility for the development, operation, and maintenance
of the pan-Asian terrestrial network.
Government, organizational, and/or developmental entities make capital contributions to the SPV and receive equity stakes
and/or capacity on the network.
The contributor(s) receive a seat on the board of the SPV, thereby ensuring that policy goals are achieved.
A regulatory framework is adapted to ensure that the SPV’s outcome fulfills policy goals and improves the overall welfare of the
region.
The contributor’s equity stake may be divested once certain milestones are achieved, or alternatively may be held until the
winding-down of the SPV.
Special Purpose Vehicle (SPV) Model with Government/Organizational Contribution
•
•
•
•
•
Network operators form a special purpose vehicle with full responsibility for the pan-Asian terrestrial fiber optic network.
The government, organizational, and/or developmental entities make capital contributions to the SPV.
The contributor(s) do not receive equity or capacity on the network.
However, the contributor(s) do participate in the creation of the SPV’s governance framework, and receive a seat on the board of
the SPV.
Mechanisms are instituted to ensure that policy goals are met.
Build-Operate-Transfer (BOT)
•
•
•
•
•
Following an open tender process, a concession is granted to one or more network operators for a fixed long-term duration
(typically 20 years).
The network operators are assigned full responsibility for financing, operating, and maintaining the cable.
Certain market privileges may be accorded to the network operators.
The operators are allowed to retain all revenues during the period of its concession.
Once the concession agreement expires, ownership of the network is assigned to the government(s) at no cost.
Awarding of Project Management Contract
•
•
•
A tender is issued to select one or more network operators responsible for the construction, operation, maintenance, and
commercialization of the pan-Asian terrestrial fiber optic network.
The contract recipient is paid to manage the cable and assume these responsibilities, including the sales of capacity to operators.
The contract recipient’s management fees may be fixed or based on a percentage of revenue.
The network remains the property of the Government(s), which collect all profits (less management fees).
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Part 6: Principles to Guide
Network Development
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Principles to Guide Future Network Development
1. Fully integrated and coherent
– Mesh configuration to allow for in-network healing in the event of
physical cable outages or political instability affecting connectivity in
specific countries.
2. Functioning and monitored as single, uniform network
– Existing multi-national terrestrial networks cannot offer uniform qualityof-service guarantees between endpoints (as good as “weakest link” or
“weakest operator”).
3. Leveraging existing infrastructure
– Right-of-way procurement and uniform construction techniques would be
enabled through the use of the Asian Highway network, Pan-Asian
Railway project, or power transmission networks.
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Principles to Guide Future Network Development
(Continued)
4. Cost-effective
– With suitable transmission capacity and fiber count, a pan-regional
terrestrial fiber network could compete effectively with submarine cable
on both a regional and intercontinental basis.
5. Open access and non-discriminatory pricing
– In order to achieve development and policy goals, as well as to serve the
region’s consumers, all purchasers of capacity must be able to access the
network on an equal, non-discriminatory basis.
6. Developed and managed by a Special Purpose Vehicle
(SPV)
– SPV shareholding would ensure the neutrality and efficiency of the
network
– Allows participation by all stakeholders while still maintaining arm’slength terms over all capacity sales and leases.
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Part 7:
Gaining Support for the Project
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Stakeholder Participation is Key
• Key stakeholders should be involved in the
project:
– National Regulatory Authorities
– Incumbent Operators and Major International Gateway
Operators
– Competitive Telecommunications Operators and ISPs
– Road and Railway Authorities/Operators
• Suppliers and contractors should also be consulted
in the development stage
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Convincing Governments of the Project’s Advantages
1. Benefits to consumers
– Better, more cost-effective connectivity in the region will greatly
reduce consumer prices in less developed markets and improve
broadband reliability throughout the region.
2. Economic growth
– Improvement in ICT infrastructure yields:
• Increased demand for the output of other industries (demand multiplier)
• New opportunities for production in other industries (supply multiplier)
• New goods and services for consumers (final demand)
– It also increases firms’ innovation capabilities and increases the
probability of new products, innovations, and organizations
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Convincing Governments of the Project’s Advantages
(Continued)
3. Increased government revenue
– Growth in economic output from ICT investment results in
greater tax revenue
– Increased employment in the telecommunications sector
– Greater collections from telecom licenses and excise
4. Regional stability through better international
and intercultural relations
– More efficient routing of trans-border traffic would encourage
trans-border initiatives in the education, healthcare, and research
sectors that would not otherwise be possible.
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Road Map / Next Steps
• Critical international connectivity weaknesses
throughout Asia are being identified by Terabit
Consulting
• As more market analyses are completed, the viability
of a coherent pan-Asian network is becoming clearer
• Detailed Feasibility Study (DFS) should be undertaken
• Rough Order of Magnitude (ROM) costing exploration
should be initiated
• Determination of support among stakeholders
• Identification of financing options
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Thank you!
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