Benchmarking the ICT Sector World Bank 18 November 2004 Michael Minges Keith Bernard
Outline 1) Defining the ICT Sector……………...3 2) Overall Impacts of ICT………….......14 3) Design & Implementation of Benchmarks………………………… 26 4) Limits & Pitfalls to Benchmarking… 44 5) Regulatory Monitoring…………….. 71 6) Industry Benchmarking………….... 95 7) Conclusions………………………… 97
DEFINING THE ICT SECTOR • The scope of the information and communication technology sector • Implications of defining the sector in various ways • Is it meaningful to define the ICT sector? • Issues – Fast changing industry makes it a moving target in terms of definitions, relevancy – Is the data collectible and/or collected? – Administrative record or survey? – Supply or demand side?
Is it meaningful to define the ICT sector? • Definitions are critical for ensuring that data is comparable • Definitions are important to statistical offices so they know what to collect and how it fits into their frameworks and methodologies • Definitions are essential for doing your own data compilations • Definitions are useful for improving our understanding of ICT industry and relevant statistics
The “official� ICT Sector ISIC Rev. 3.1 The principles applied to the definition of the ICT sector are: For Manufacturing industries, the products of a candidate industry must be intended to fulfill the function of information processing and communication including transmission and display, or must use electronic processing to detect, measure and/or record physical phenomena or to control a physical process. For Services industries, the products of a candidate industry must be intended to enable the function of information processing and communication by electronic means Manufacturing
Services
Class
Description
Class
Description
3000
Office, accounting and computing machinery
5151
3130
Insulated wire & cable
3210
Electronic valves and tubes and other electronic components Television and radio transmitters and apparatus for line telephony and line telegraphy Television and radio receivers, sound or video recording or reproducing apparatus, and associated goods
Wholesale of computers, computer peripheral equipment and software Wholesale of electronic parts and equipment
3220 3230
5152 6420
Telecommunications
7123
Renting of office machinery and equipment (including computers) Hardware consultancy Software publishing Other software consultancy and supply Data processing Data base activities Maintenance and repair of office, accounting and computing machinery Other computer related activities
3312
Instruments and appliances for measuring, checking, testing, navigating and other purposes, except industrial process control equipment
7210 7221 7229 7230 7240 7250
3313
Industrial process control equipment
7290
Source: UN. http://unstats.un.org/unsd/cr/registry/docs/i31_ict.pdf
Ireland
Composition of the ICT sectors, 2001
NACE Sector Division
30 32 3320
3330 2233, 3130 72 5143, 5164, 5165, 6420, 7133
ICT Total - Manufacturing and Services ICT Manufacturing Office machinery & computers Radio, television and communication equipment and apparatus Instruments and appliances for measuring, checking, testing navigating and other purposes, except industrial process control equipment Industrial process control equipment Reproduction of computer media, manufacture of insulated wire & cable ICT Services Computer and related activities Wholesale of electrical household appliances, radio and television goods, office machinery and equipment, other machinery for use in industry, trade and navigation. Post and telecommunications. Renting of office machinery and equipment (including computers).
Enterprises
Persons engaged
Turnover
Gross value added
Number 4,173 248 74 63
Number 90,700 41,980 19,208 12,766
€million 51,317 34,098 18,426 6,651
€million 11,191 6,822 1,625 2,599
41
1,977
565
196
14 56
369 7,660
47 8,409
-1 2,403
3,925 3,184 741
48,720 22,259 26,461
17,219 6,138 11,081
4,369 2,377 1,992
Source: Central Statistics Office. Information Society Statistics – Ireland 2003. http://www.cso.ie/publications/ict/ictirelandjune2003.pdf
Infocomm sector in Singapore National definition Content Activities 8%
Telecom services 20%
Content Hardware Retail 46%
6%
Telecom IT services Services 3% 4%
IT Services 10% Software 16%
Total Industry revenue (2003): S$ 32,8 Billion
Software 24% Hardware Retail 63%
Total exports (2003): S$ 17,8 Billion
Source: Adapted from Infocomm Development Agency (IDA) of Singapore. Annual Survey on Infocomm Industry for 2003. http://www.ida.gov.sg/idaweb/factfigure/infopage.jsp?infopagecategory=&infopageid=I3073&versionid=2
STRENGTH OF THE ICT INDUSTRY $m
period
ICT industry total income
89,979.2
200203
Production of ICT goods and services income from domestic production
48,778.5
200203
15,135.9 4,646.3
200203
1497
200203
Trade in ICT goods and services Imports Exports R&D performed by the ICT industry
no. ICT industry employment
264,423
Jun 2003
• Innovation and Entrepreneurship Indicators • 4 categories, 10 indicators • Human Capital Indicators • 3 categories, 10 indicators • Information and Communications Technology Indicators • 5 categories, 24 indicators
ICT manufacturing
4,392.3
ICT wholesale trade
36,798.6
Telecommunication services
31,795.8
Computer services
16,992.5
Total
89,979.2
http://www.abs.gov.au/ausstats/abs@.nsf/94713ad445ff1425ca25682000192af2/4f377c75
Classifying the telecom sector
TYPICAL CLASSIFICATION • Fixed-line • Mobile • Data “As development advances, applications developed for fixed networks will also be offered via mobile networks and vice versa. It is increasingly difficult to differentiate between areas of use for fixed and mobile networks and a convergence of the two is becoming increasingly apparent. The Internet is an example wherein the same information can be transferred via fixed or mobile networks.” –Statistics Sweden
Telecommunications Telecommunications Telecommunications Other revenue 16%
Telecom servicesfixed Data network comm. 33% 16% Mobile Infratelephone & structure public paging 3% systems 32%
Source: NTIA.
International: ISIC 6420 Regional: NACE 64.2 National: NAICS 5133
Denmark-Telecom revenue 2003 “Because of the interconnect traffic exchanged between the companies there will be payments counting as revenue for one provider and expenditure and revenue for the other provider invoicing the customer. This means that some revenue will appear twice and that aggregate revenue is overestimated.”—NTIA Denmark
Philippines Source: Philippines Long Distance Telephone Company. Years Ended December 31, (in millions Php) 2003
%
2002
Fixed line
45,831
47
45,519
Wireless
50,383
52
33,703
1,509
1
948
97,723
100
80,170
Operating Revenues
Information and communications technology TOTAL
Wireless services:
50,383
100
45
Cellular
49,876
99
12,543
27
Voice
26,201
National long distance
6,429
14
Data
18,201
Data and other network
7,669
17
Other
5,474
347
1
Fixed line services:
45,831
100
Local exchange
20,710
International long distance
Miscellaneous
Satellite, VSAT and others
507
1
Use of ICT Internet usage by individuals, age 16+, 2003 (%)
See ITU World Telecommunication Development Report 2003, Chapter 2.
16
37 26 29 31
41
50 53 54
61
EL PT IT IE ES AT EU LU DE UK FI DK NO SE IS
Households & individuals Business Education Government
81
Use of broadband connection in enterprises, 10+ employees, 2003 (%) 64 6975 49 5151 54 4646 39 41 33 27 30 22 20
IE IS PT UK IT NL EU DE LU N BE AT ES SE FI DK
• • • •
75 77 66 71
Source: EUROSTAT. 2004. Internet usage by individuals and enterprises. http://europa.eu.int/information_society/activities/statistics
Indicator lists
• OECD. Science, Technology and Industry Scoreboard. http://www1.oecd.org/publications/e-book/92-2003-04-1-7294 A proposal for a core list of indicators for ICT measurement. http://www.oecd.org/dataoecd/3/3/22453185.pdf • EU. List of eEurope Benchmarking indicators. http://europa.eu.int/information_society/eeurope/2002/benchm • ITU. Key indicators of the telecommunication/ICT sector. http://www.itu.int/ITU-D/ict/material/Top50_e-Oct2004.doc
• Australian Bureau of Statistics. Measures of a knowledge-based economy and society. http://www.abs.gov.au/ausstats/abs@.nsf/94713ad445ff1425c
Highly recommended THE ICT SECTOR THE ICT MARKET ICT PENETRATION ICT AND EDUCATION ICT LABOUR FORCE ICT USE BY HOUSEHOLDS AND INDIVIDUALS ICT USE BY ENTERPRISES http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KSDP-03-001/EN/KS-DP-03-001-EN.PDF
IMPACTS OF ICT • Economic impact • How ICT fits into global initiatives (e.g., MDG, WSIS)
Jipp’s curve revisited 100
Telephone lines per 100 persons
R2 = 0.782
10
1
0.1 $100
$1'000
$10'000
GNI per capita US$
1965
2003
Has not really been any groundbreaking work in last decade. Classic work: Telecommunications & Economic Development. 1994.
Economic impact in Japan
Source: http://www.soumu.go.jp/joho_tsusin/eng/whitepaper.html
Impact of mobile on French economy Rest of the Economy 22 For each 1 Euro spent by operators Value added created in the economy
Operators 8.3 Multiplier 0.66 € in 2002
Value added by operators
Manufacturers / Distributors / Partners 31
Accumulated value added 1991-2002 of the mobile industry (billions of Euros) Rest of the Economy 84 000
Operators 21 000 Source: AFOM. La décennie du mobile. 1992 2002, l'émergence de la filière mobile :quel impact sur l'économie française ? July 2003. www.afom.fr
Manufacturers / Distributors / Partners 100 000
Employment at the end of 2002 for the mobile industry in France
Mobile communications employment chain • MTN Africa: 6 063 employees • “Businesses in related industries have also created several times this amount of jobs as part of the wider economic impact of MTN’s investment activities” —MTN South Africa
MTN Uganda Job creation
MTN 378
Formal distribution points 1’300
Village Phone 315 5 year target: 5’000
Street phone service vendors 6-7’000
Informal prepaid card vendors “thousands” Source: MTN, Econ One.
Micro-economic impact of ICT: Bangladesh Number of months in which poor phone-using families eat well (months per year)
Cost of village phone and alternatives, US$ 12
$1.4
$1.0
10
Time & Transport
8
$0.8 Savings
6
$0.6 4
$0.4 $0.2 $0.0
Village Pay Phone
2 0
Before phones became available 5 years earlier
Source: ZEF (Germany). June 1999
$1.2
After phones became available
ICT & the Millennium Development Goals (MDG) •
ICT is part of the MDG – Goal 8, Target 18, Indicators 47-48
•
ICT has an impact on achieving other MDG • MDG has an impact on use of ICT • ICT can also be bad for MDG
• •
Goal 8: Develop a global partnership for development Target 18: “In cooperation with the private sector make available the benefits of new technologies, specifically information and communications.” – Total number of telephone subscribers per 100 inhabitants – Personal computers per 100 inhabitants – Internet users per 100 inhabitants
Millennium Indicators Database: http://unstats.un.org/unsd/mi/mi_goals.asp
Pollution and Teleworking in Ireland More teleworkers = more people working at home = less car pollution (MDG #7) Source: Central Statistics Office (Ireland).
Work at home 9.7%
Public transport, walk, bicycle 36.2%
Car 54.1%
Home 8.9% (Telework: 2.3%)
Away from home 91.1%
Getting to work Location of work
Telework: “persons who work from home & could not do so without PC with a telecom link.”
38’700 teleworkers in Ireland 2.3% of total employment Reduced C02 emissions: -1.2% % all Irish workers who want to telework: 28% Potential reduced C02 emissions: -15.1%
Impact of ICTs on Millennium Development Goals http://www.itu.int/ITU-D/ict/publications/wtdr_03/material/Chap4_WTDR2003_E.pdf
1. Eradicate extreme poverty
24
2. Achieve universal primary education
5.7
3.Promot e gender equality
5.Improv e maternal health
7. Ensure environmental sustainability
143
0.8
% change
Increase in income of Bangladesh village phone owners
4. Reduce child mortality
6. Combat HIV/AIDS , malaria and other diseases
-10
-50
-1
Increase in Increase in Decrease in Decrease in Increase in Decrease in CO2 primary school female tertiary infant health maternal condom imports car emissions enrolment in school problems among mortality in St. Lucia after from telework in Nepal from enrolment in families using following ICT- HIV radio show Ireland teachers trained Australia from telemedicine in based program using ICTs online education US in Uganda
UN ICT Task Force: Working Party on ICT Indicators & MDG Mapping Eradicate extreme poverty and hunger
Correlation of average income with ICT as % of GDP PRSPs (poverty reduction strategy papers) that include ICTs (IMF)
Achieve universal primary education
The total and % of schools with Internet connectivity; % of schools with computers; Student/computer ratios; Number of teachers trained on the usage of ICTs…
Promote gender equality and empower women
ICT literacy among girls; Women as % of all Internet users; Number of female IT workers/No. female technical workers (as % of total) ; Percentage distribution of thirdlevel enrollment by field of study…
Reduce child mortality
Train the practitioners on the use of ICTs; General statistics on access and usability; Proportion of one-year-old children immunized against measles…
Improve maternal health
% of local content on the subject of maternal mortality vs. foreign content; General statistics on access and usability; Number of programs/hours of information sessions…
Combat HIV/AIDS, malaria, and other diseases
% of local content on the subject of HIV/AIDS vs. foreign content; General statistics on access and usability; Number of programs/hours of information sessions…
Ensure environmental sustainability
Number of hectares of forest protected; Number of ICT equipment sent to remote areas.
"Tools for Development: Using Information and Communications Technology to Achieve the Millennium Development Goals". http://www.ceprc.ca/docs/ICT_e.pdf
http://www.unicttaskforce.org/perl/showdoc.pl?area=mdgm
World Summit on the Information Society (WSIS) Targets
6. Based on internationally agreed development goals, including those in the Millennium Declaration, which are premised on international cooperation, indicative targets may serve as global references for improving connectivity and access in the use of ICTs in promoting the objectives of the Plan of Action, to be achieved by 2015. These targets may be taken into account in the establishment of the national targets, considering the different national circumstances: a) to connect villages with ICTs and establish community access points; b) to connect universities, colleges, secondary schools and primary schools with ICTs; c) to connect scientific and research centres with ICTs; d) to connect public libraries, cultural centres, museums, post offices and archives with ICTs; e) to connect health centres and hospitals with ICTs; f) to connect all local and central government departments and establish websites and email addresses; g) to adapt all primary and secondary school curricula to meet the challenges of the Information Society, taking into account national circumstances; h) to ensure that all of the world's population have access to television and radio services; i) to encourage the development of content and to put in place technical conditions in order to facilitate the presence and use of all world languages on the Internet; j) to ensure that more than half the world’s inhabitants have access to ICTs within their reach. WSIS. 12 December 2003. Plan of Action. http://www.itu.int/wsis/docs/geneva/official/poa.html
Tracking the WSIS targets: Jamaica Schools, 2002, % 96
99
64
96
Libraries & Post Offices, 2002, %
58 22
6 With electricity
With telephone
With Internet
b) to connect universities, colleges, secondary schools and primary schools with ICTs
Broadcasting, 2001, % Households with
Population coverage
Libraries Post offices
97
With electricity
With telephone
33
9
With Internet
d) to connect public libraries, cultural centres, museums, post offices and archives with ICTs
Mobile, 2003, %
90
85
Population coverage 95
65
69
Penetration 62
Radio
TV
h) to ensure that all of the world's population have access to television and radio services
j) to ensure that more than half the world’s inhabitants have access to ICTs within their reach
Source: Office of Utility Regulation, STATIN, Digicel.
Primary Secondary 37
STRUCTURE, DESIGN & IMPLEMENTATION OF BENCHMARKS • What are the most cost-effective ways to collect data • Incorporate the ICT benchmarking process within the scope of statistical agencies • Conduct international comparison so that benchmarking adds value to policy dialog with governments
Most cost effective way to collect data • Depends on what is to be benchmarked (Tariffs? ICT access? ICT sector? E-readiness?) – Nobody collects everything for everybody
• Trade-offs between reliability, credibility, timeliness, quality and cost • Just as in other sectors, data tends to be “easily” available for most high income economies and not so easily “obtainable” for developing nations
Inter-governmental sources
• OECD. Measuring the Information Economy. http://www.oecd.org/statisticsdata/0,2643,en_2649_3 • EUROSTAT. Statistics on the information society in Europe. http://europa.eu.int/information_society/activities/stat • ITU. World Telecommunication Indicators database. www.itu.int/ti • COMTRADE. Trade data. http://unstats.un.org/unsd/comtrade
National sources • Regulators – Generally compilations of national level data from operator reports – http://www.itu.int/ITU-D/treg/profiles/RegPolicyAddress.asp?lang=en
• National Statistical Offices – Household data and sometimes wider coverage of ICT sector – http://unstats.un.org/unsd/methods/inter-natlinks/sd_natstat.htm
• Other government agencies – Ministries, ICT-related agencies, planning agencies
• Operators – Operating reports – No comprehensive directory
• Industry associations
Market research • Tarifica.Tariffs. http://www.tarifica.com/tariffs/tariffs.asp • TeleGeography (PriMetrica). International traffic, Internet bandwidth. www.telegeography.com • IDC/EITO/WITSA. ICT spending, hardware shipments. www.idc.com www.eito.com www.witsa.org • Point Topic. ADSL. http://www.point-topic.com • TMG/D-TWO. Mobile & mobile multimedia, other information society statistics. http://reports.tmgtelecom.com www.d-two.info
Can find almost anything if you look hard enough FDI - Bangladesh Source: OECD. 2004. GrameenPhone Revisited: Investors Reaching Out to the Poor. http://www.oecd.org/dataoecd/36/6/33702522.pdf
Trade in IT services – India
http://www.nasscom.org/artdisplay.asp?cat_id=314
e-commerce - Thailand
http://www.nectec.or.th/pub/book/thailandictindicators.pdf
Incorporate ICT benchmarking within scope of statistical agencies • Some developed nations statistical agencies collect and produce documents on ICT sector • Not clear if they have expertise to benchmark but rather to compile data • Global initiative for developing countries to improve ICT data collection
Partnership on Measuring ICT for Development • UNCTAD-led interagency initiative to improve ICT statistics in developing nations • Stock taking exercise underway led by UN regional commissions • February 2005 meeting to discuss results & next steps
http://measuring-ict.unctad.org
http://www.unctadxi.org/templates/Press___
Conducting international comparison to add value to policy dialogue with governments
• What to benchmark? • ICT sector has grown more diverse (before only teledensity but now what? Mobile, Internet access, broadband, etc.) • Sometimes conflicting policy issues
What is the policy dialogue here? 2000
14
Is Ireland to be praised or criticized? Significant ICT industry but relatively poor access for citizens.
ICT as % of GDP
12 10 8 6 4 2 0 0
10
20
30
40
Households with PC Source: Eurostat via Central Statistics Office Ireland.
50
60
70
Index • Index can help by synthesizing variety of indicators • Publicizing index can help to catch government’s attention • UNDP Human Development Index – Easy to understand – Wide coverage of countries – “Official” See ITU. World Telecommunication Development Report 2003, Chapter 5.
Digital Access Index Broadband Fixed Infrastructure subscribers telephone is not the subscribers QUALITY INFRAonly factor STRUCTURE that Mobile International impacts cellular Internet subscribers bandwidth USAGE the Internet users availInternet access Literacy ability price of ICT
KNOWLEDGE
http://www.itu.int/ITUD/ict/dai/index.html
School enrolment
AFFORDABILITY
Why an another ICT index? • • • • • •
Almost all existing ICT indices concentrate primarily on developed economies Some do not use internationally comparable indicators Some have methodological snags Some are susceptible to distortions due to the use of qualitative variables Most are not specifically targeted at measuring ICT access Wherever these indices use too many variables, transparency compromised
WEF NRI
178
IDC ISI EIU e-readiness DAI 120 100 82 53
15
Variables
60
8 Countries
How popular? Google hits on search terms below. 13 November 2004. 261'000 19'500
7'060 190
UNDP Human IDC ITU Digital Development Information Access Index Index Society Index
EIU ereadiness index
82
WEF Network readiness index
Countries take notice Bangladesh crawls in the ICT race Bahrain second highest ranked Arab nation in global ICT index Costa Rica: 58 en rånking de Internet Maurice deuxième en Afrique australe SA ranking plummets in Digital Access Index
Getting countries to use benchmarks “The International Telecommunications Union has just defined a Digital Access Index (DAI), to classify countries in function of access to ICT on a scale of 0 to 1, where 1 is the highest level. The countries are classified in four categories, according to their level of access: excellent, good, average and weak. Our country, Burundi, is classed in the weak category, with a DAI of 0.10. This signifies that it is very difficult to integrate into the cyberworld that the international community already lives in today.” Speech given by H.E. Mr. Séverin Ndikumugongo, Minister of Transport, Posts and Telecommunications of the Republic of Burundi on the occasion of the World Summit on the Information Society (Geneva, 10-12 December 2003) http://www.itu.int/wsis/geneva/coverage/statements/burundi/bi-fr.html
DAI at work
Country ICT sector health check-up list •
Overall network infrastructure – Teledensity, mobile density
•
ICT in households – Homes with fixed, mobile, PC, TV, radio, Internet access
•
Universal ICT access – Mobile coverage, telephone availability, public Internet facilities
•
ICT in other sectors – % of schools, % business, % government offices, e-government
•
ICT Sector – Employment, turnover, value-added, impacts
•
Pricing – Fixed versus mobile, international Internet bandwidth
•
Knowledge – Education levels, training, ICT skills
Indicators at work St. Lucia. Telephones in households, % 80% 60%
Internet gap:41'930 * 2 .6 times number of current users * 26% of population
Fixed
40%
Mobile
20% 0% May-01
Dec-02
Jun-03
Dec-03
Mauritius. Forecasting household PCs
80% 60%
Government target
Forecast
40% 20% 0%
St. Lucia. Gap between current & potential Internet users, 2002
Level at current growth
2000 2001 2002 2003 2004 2005
Population with secondary or tertiary education: 42'330
Internet users: Secondary + tertiary 16'000 students enrolled: 15'600
Fiji. International Internet bandwidth, US$ per 1 Mbps per month, 2003 Uganda Fiji Maldives Egypt Mauritius C. Verde Thailand Laos Mauritius Vietnam
All satellite except Fiji (fibre optic) Submarine fibre optic cable 0
5'000
Source: ITU Internet Case Studies. http://www.itu.int/ITU-D/ict/cs/
10'000 15'000 20'000
LIMITS / PITFALLS TO BENCHMARKING • Normal caution when using statistics (source of data, definition, etc.) – If the results seem weird, the data is probably wrong and chances are something is wrong
• Lack of data for many developing countries (can try to get around by using proxies) • What are the risks and how do you compensate for obvious differences between countries – Compare to similar group (geographic, economic) – Choose appropriate indicator – Change more important than stock value
Developing countries themselves often prefer to be compared to developed • “In spite of the intuitive appeal of selecting a sample of African countries, I consider that African comparisons are not an appropriate sample. Based on the analysis and discussion above, I hold that the 15 member countries of the EU provide the most appropriate efficient benchmarking sample to be used in the setting of efficient termination charges for BTC and Mascom.” —Botswana Telecommunication Authority (Regulator). http://www.bta.org.bw/pubs/Ruling%20no%203-%20Interconnection%20Disputes %20BTC-Mascom%20%2025%20FEB%202003.pdf
What countries compare themselves to
`Tech
power' India gets poor billing — Just four ranks away from ITU's `Low Access' category
Growth rates often more useful than penetration • It is often not useful to compare penetration rates across countries because of large socio-economic differences • Benchmarking growth rates rather than penetration levels is more useful for illustrating policy impacts
Liberalization “indicators”
4'000
60
3'000
40
2'000
20
1'000
0
N.Zealand
80
Korea
•
How do you factor in government support or industry/government consensus? Socio-cultural effects? What is the goal? Widespread ICT access or theoretical competitive market?
5'000
Japan
•
Not very useful: Existence of a telecom regulator
6'000
100
Australia
–
120
Singapore
•
Per 100 persons Per 100 homes HHI
Taiwan
•
Attempts to quantify liberal ICT markets is subject to a high degree of subjectivity and often a considerable distance between theory and reality South Korea ranks low on most measures of telecom market liberalization yet ranks 1st in world in broadband, 2nd in mobile multimedia use and 5th in Internet penetration Measures should be transparent, based on current situation
H. Kong
•
Mobile subscribers, 2003
0
Note: HHI = Hirfindahl-Hirschman Index, closer to 10’000 more competitive market Source: TMG.
Teledensity is misleading
Bahrain has a low teledensity (fixed telephone lines per 100 persons) but higher household telephone penetration than Canada, US or UK.
The teledensity conundrum What to measure? Fixed, Mobile, Fixed + Mobile, Higher of fixed or mobile? South Africa. Subscribers per 100 inhabitants
South Africa. Households with phone, 2001, %
50 45
Fixed+Mobile
40
Fixed only 10%
35 30 25
None 58%
20 15 10
Fixed
5
2002
1999
1996
1993
1990
1984
1981
1978
1975
0
1987
Mobile
Source: Adapted from Statistics South Africa, D-Two.
Fixed + mobile 14%
Mobile only 18%
Mobile-only households Percentage of households with a telephone USA
Finland
2004
26
2003
6
32
2002
4
38
2001
43
0% Fixed only Both
6
2004 5
39
56
60
5
2003 7
36
57
56
5
2002
31
60
50
5
2001 11
27
62
63
2 1 50%
100%
Mobile only None
9
0% Fixed only
50% Mobile only
Source: FCC, Mediamark Research, Inc., Statistics Finland, TMG estimates. http://d-two-indicators.blogspot.com/2004/10/mobile-only-households_30.html
100% Both
Internet access from mobiles could help reduce digital divide
Source: TMG.
10
Mobile:Fixed
Mobile:PC
8 6 4 2 0
China Indo. India
M'sia
Phil.
Thai.
“…it is relatively small, you don't need a desk, you don't need to be in a particular place. And you don't have to be literate to use them or speak English. These are all constraints when it comes to operating a computer.” — Intel ethnographer Genevieve Bell
It really works! Vivo (Brazil) laptop Internet subscribers
31'138 13'927
2003
2004
Dhiraagu (Maldives) Mobile data subscribers
857 223 2001 Source: TMG.
429 2002
2003
Japan S. Korea France Singapore Germany Sweden UK Finland Norway Spain USA Netherlands Czech R. Hungary Belgium Italy Denmark Switzerland Taiwan Hong Kong Luxembourg Australia Israel Canada N.Zealand Brazil Austria Portugal Russia Malaysia Ireland Iceland Turkey Thailand Chile Philippines South Argentina Poland Venezuela Greece Indonesia Mexico China India 10.5% 7.2% 6.1% 5.6% 5.0% 4.8% 4.4% 3.4% 3.2% 3.1% 3.0% 2.9% 2.9% 2.6% 2.1% 2.1% 2.0% 2.0% 1.8% 1.6% 1.5% 1.3% 1.3% 1.0% 1.0% 0.9% 0.9% 0.8% 0.8% 0.7% 0.7% 0.5% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.1% 0.1% 0.1% 0.04% 0.01%
29.5% 24.8%
Mobile multimedia users % of population 2003
Source: TMG. 2004. ď‚ŤSuperstars of the Mobile Internetď‚Ť. http://reports.tmgtelecom.com/
Internet hosts is not a good proxy for Internet use! • Internet hosts are assigned to countries for statistical purposes by ISO domain—what to do about .com, .org, etc.? • Some countries may not be using their domain name (Bangladesh (.bd) just one host in January 2004) • Some countries have inflated host counts because they may commercialize their domain (Tuvalu (.tv) and Niue (.nu) have more hosts than people) More people use the Internet in S. Korea than Switzerland even though S. Korea has fewer hosts (registered under its domain name (.kr)) than Switzerland.
The shrinking digital divide? Internet users per 100 inhabitants Peru, 2000
3.9
Thailand, 2001 3.8
5.8
Survey
Estimate
Survey
2.0
Estimate Mexico, 2002
9.8
4.6
Estimate
Jamaica, 2003
25.7
5.0 Survey
Estimate
Survey
Telecom revenue versus communications value-added Top 10 countries by Telecom revenue as % of GDP, 2002 S. TomĂŠ
St. Vincent, % of GDP 2002 8.4
Guyana
5.0
Kiribati Telecom revenue
Maldives St. Vinc't
Communications value-added
Communications value added 8%
C. Verde Jordan
7%
Seychelles
6%
Barbados
5%
Belize
4%
1997
0
5
10
1999
2001
15 Source: D-Two, ECCB, ITU.
2003
Price benchmarks Fiji mobile tariffs Prepaid prices, per minute, US$, August '03
•
Fiji New Zealand
•
UK Australia
Average Off-Peak Peak
Malta South Africa Kenya Egypt India $0.00
$0.50
$1.00
Source: ITU. 2004. Bula Internet: Fiji ICT Case Study. http://www.itu.int/ITU-D/ict/cs/fiji/index.html
“I wish to advise you that you have multiple errors in your report in regards to mobile.. it will undermine your integrity…as its not the full facts for example familyfone tariffs are the cheapest …”—Vodafone Fiji “We compare prepaid tariffs since this is the most popular mobile service today. … December 2003 figures show that close to 92 percent of your subscribers are using prepaid. The prepay familyfone service is indeed much cheaper (around US$ 0.08 per minute) IF customers call someone from their "family" group (a maximum 5 people). Since this group is limited and specific conditions apply, we cannot use this package for comparison. Also, I see that the peak tariff using the familyfone service to any other person (outside your "family" group) is still 0.99 cents Fiji per unit (so US$ 1.18) - exactly the same tariff we use for our peak comparison.”— ITU
Another way to compare mobile prices: UK 2nd Quarter 2003
Estimated retail revenues generated by mobile telephony (ÂŁm) Calls & fixed charges Text & picture messages
2,316 460
Call volumes All voice calls (millions minutes)
15,128
Text & picture messages (millions)
5,277
Price per minute/message (ÂŁ) Voice calls
0.15
Text & picture messages
0.09
Potential problems with this approach: Whether interconnection revenue is included or not (and whether it should be). Source: OFTEL.
Pricing broadband Number of dial up hours per month needed to match cost of ADSL, November 2002
120 100 80
73 Peak: hours vs. ADSL
60
20 0
11
15
103
7
75
6
45
18
25
26
27
46
51
4 3
33
2 1
1 AT
8
5
Broadband penetration
40
9
0 SE
BE
Source: Eurostat.
NL
IT
DK
LU
PT
FR
DE
ES
FI
IE
UK
Sizing potential mobile market Finland 2002 % of population with mobile phone, By age 100
98
95
100%
Maldives 2003
94 59%
76
Unmet demand: 102'581
Total population 285'066 16-29 30-49 50-59 60-74 Overall
Source: TMG. 2004. Maldives mobile market assessment.
Population aged 15 and older 169'047
23% Mobile subscribers 66'466
Projecting those 15 years and older in the 2000 Census to 2003 mid-year estimates.
Affordability in Mauritius
One month of phoning St. Lucia
Maldives
Description
Mobile
Fixed
Mobile
Fixed
Monthly subscription
15.00 (US$5.56)
22.00 (US$8.15)
100 (US$7.78
30 (US$2.33)
Call charge (Per minute)
0.75 (US ¢28)
0.08 (US¢2.96)
1.95 (US¢15)
0.25 (US¢1.95)
Usage charge
Included in voucher
1.60 (US$ (20 minutes)
Included in voucher
12.75 (US$ 1.00) (51 minutes)
Total
15.00 (US$5.56)
23.60 (US$8.74)
100 (US$7.78)
42.75 (US$3.33)
In St. Lucia, the minimum amount a user would spend is for mobile
In the Maldives, the minimum amount a user would spend is for fixed. However this is only true on islands with residential telephone service. On other islands, mobile would be far less.
The example is based on the least expensive mobile prepaid card) with a one-month validity. In St. Lucia, the cheapest pre-paid voucher results in 20 minutes of calls; in the Maldives it results in 51 minutes of calls. The example shows what the equivalent would cost for a month’s fixed line service. Calls for fixed-line are national fixed-fixed at peak time. Adapted from C&W, Digicel and Dhiraagu.
The “old” ICT argument • Developing countries often argue that newer ICT are not so relevant • Should track older ICT (radio, TV, fixed line) • However pretty close relationship between old ICT and new
TV
Percentage of households with, 2002 100 90 80 70 60 50 40 30 20 10 0
R2 = 0.7002
0
50 Telephone
100
Policy: Transition from universal access to universal service Doing better than expected. Could emphasize household penetration.
Doing very well. Can emphasize ICT household penetration.
Households with telephone, %, 2003
100 R2 = 0.79 75
50
25
0 100
GNI per capita, 2002 1'000
Low household access & income. Focus on public access.
US$2’343
10'000
Doing worse than expected. Should have higher levels of household telephones.
Mobile penetration & coverage in Uganda 70% of the population have access to mobile telephone service 5.0 4.5
100%
Coverage Penetration
90%
4.0
80% 70%
3.5 55%
3.0 2.5 2.0
30%
32%
1.9
1.5 1.0 0.5 0.0 1998
40%
20%
0.9
10%
0.4 1999
50% 30%
1.3
15% 0.1
60% 2.9
35%
70%
0% 2000
2001
Source: TMG adapted from UCC, MTN.
2002
2003
Measuring universal service and universal access in Chile ICTs in homes, %, 2002
Cable TV Internet
Urban Total
Phone TV Hi-Fi Electricity 0
25
50
75
Localities
Population
100 90 80 70 60 50 40 30 20 10 0
Rural
PC
Availability of public Internet facilities by locality size, %, 2002
100
Chile
10'00049'9999
1'0002'499
Source: INE (Chile). http://www.itu.int/ITU-D/ict/mexico04/doc/doc/39_chl_s.pdf
100-499
Public access facilities important in developing nations
35% of Venezuelan Internet users access Internet from cyber cafes
Source: Cavecom. October 2002. Indicadores de Penetraci贸n y Uso de Internet en Venezuela.
Measuring public ICT access •
ITU adopted indicators: – The number of localities with public Internet access centres (PIACs) by number of inhabitants (rural/urban) – Percentage of population with access to PIACs by type of PIAC (governmental/private) – Potential/target population using PIACs
•
Global indicators workshop on community access to ICTs, Mexico City, 16-19 November 2004
http://www.itu.int/ITU-D/ict/mexico04/doc/
Estimating demand for Internet access in rural localities: Mexico 2002
http://www.itu.int/ITU-D/ict/mexico03/doc/pdf/Doc07_Erev1.pdf
REGULATORY MONITORING • Competition – Significant market power (SMP) – Market concentration – Pricing • tariffs/competition issues • interconnection rates
• Technical aspects of provisioning – Quality of service
• Social objectives – Universal service and access
Competition • Asymmetric regulation of SMP operators – Determination of ‘relevant’ market • Hypothetical Monopolist Test/Cross-Elasticity
– Measurement of SMP • • • •
Subscribers Revenues Volume Traffic
• European Commission – 1997 approach [SMP vs. Dominance] – Revised approach – Additional factors • ‘churn’ • competitor capacity: ability to handle dominant operator customer base http://europa.eu.int/information_society/topics/ecomm/doc/useful_information/library/r ecomm_guidelines/significant_market_power/c_16520020711en00060031.pdf
Fixed->Mobile competition measurement
Source: European Commission. Technical Annexes of the Eighth Report on the Implementation of the Telecommunications Regulatory Package. http://europa.eu.int/information_society/topics/telecoms/implementation/annual_report/8threport/fina lreport/Annex%201%20-%20Corrigendum%20March%202003.pdf
Country and regional approaches to competition measurement • Bahrain – Revenue for retail services – Volume for ‘bulk’ services
• Hong Kong – Revenue
• European Commission – Revenue as ‘more realistic parameter’
• Ireland – Revenue – Interconnection • For international inbound traffic: average interconnection rate • For on-net traffic: average interconnection rate
Measuring Competition • Analyze the degree of competition • Hirfindahl-Hirschman Index of market concentration • Summation of the squares of market shares – ∑ (market share)2 = HHI
• If under 1,000: highly competitive • If between 1,000 and 1,800: workable competition • If between 1,800 and 10,000: concentration
• Useful for trend analysis and constructing liberalization indicators – Statistics Canada tracks HHIs by province
HHI in action Market share of mobile subscribers
Yemen
Hungary
100
10,000
9,000
90
9,000
80
8,000
80
8,000
70
7,000
70
7,000
60
6,000
60
6,000
50
5,000
50
5,000
40
4,000
40
4,000
3,000
30
2,000
20
1,000
10
100
10,000
90
30
Spacefon TeleYemen Spacetel HHI
20 10 0
0 '00
'01
'02
'03
2 new GSM operators launched in 2001; incumbent’s analog network rapidly lost market share. After introduction of new operators, the HHI has begun to increase. Source: TMG.
3,000
Vodafone Westel 900 Westel 450 Pannon HHI
0 '00
'01
'02
2,000 1,000 0 '03
Competition intensified after entry of 4th network in 1999. Incumbent’s analog network closed in 2002; most subscribers went to new entrants. HHI has been declining, reflecting greater competition.
HHI in action Canada
Source: http://www.itu.int/ITU-D/ict/WICT02/doc/pdf/Doc10_E.pdf
Data required for Competition Issues • Operator revenue for each relevant market • Subscriber base ‘churn’ • Operator capacity • Price/quantity times series data for each operator and market
ComReg (Ireland). Code for Tariff Presentation. http://www.comreg.ie/_fileupload/publications/ComReg0486.pdf
Policy Issues • Determination of SMP – Identification of the ‘relevant’ market • e.g. are fixed and mobile voice service in the same market?
– Which markets involve regulation • e.g. mobile call origination vs. termination
– Conduct rules imposed on SMP operators • Anti-competitive behavior • Number portability • Operator selection
• Examination of mergers/concentration – Licensing additional operators
OECD Methodology • •
Baskets [weighted averages] Business vs. residential – National PSTN • Connection charge (depreciated over 5 years) • Line rental (‘free’ allowance deducted from usage) • Distance bands • Time periods • Call duration • Calls to mobile
– – – – –
International PSTN National Leased Line International Leased Line Mobile Internet
Source: OECD. Telecommunications Basket Definitions. http://www.oecd.org/dataoecd/52/33/1914445.pdf
Irish Position
Interconnection • Focus on termination rates and inter-office trunks – Objective is cost-based rates • Requires reliable cost data • Cost modeling • Benchmarking as an interim approach ITU Report on Interconnection ITU – D SG I OECD Access Pricing in Telecommunications 2004 EC Recommendation Interconnection Pricing 20.03.2000
Cost Models •
Fully-distributed cost (FDC) – Short-run, accounting based, allocation of joint and common cost; historical asset values
•
Long run incremental cost (LRIC) – Future oriented, marginal cost of increase of output of an existing service
•
Total service LRIC (TSLRIC) – Future oriented, marginal cost of an entire service
•
Total element incremental cost (TELRIC) – Future-oriented, marginal cost of individual network elements But LRIC, TSLRIC and TELRIC all add an allocation of joint/common cost and a return on capital http://irgis.icp-pt/site/en/irg.asp www.accc.gov.au/context/index www.comreg.ie Accounting Separation & Cost Methodologies
Cost Models • World Bank – Bottom-up i.e. engineering-based costs, LRIC PPIAF ‘A Bottom-up Model to calculate Interconnection costs’
• Nigerian model – FDC, historical costs for assets
• Botswana approach – Benchmarking
Nigeria
http://ncc.gov.ng/interconnection/INTERCONNECTION %20RATE%20DETERMINATION.pdf
PARAMETERS
Fixed
Mobile
$812.50
$350.00
6’000
1’800
10
8
A
Amount of investment per subscriber
B
No. of minutes initiated on average by a subscribe (per year)
C
Average length of economic life of investment (years)
D
Required return on investment capital
25%
25%
E
Relation of Operation & Management (O&M) cost relative to amount of investment
20%
30%
F
Mark-up for common cost
10%
10%
G H I
Relation of cost of call termination to the average cost a call from anywhere to anywhere in the network --Single --Double
32%
71%
J
Amortization (Capital recovery [A] over [C] Years)
$227.56
$105.14
K
O&M ([E] * [A])
$162.50
$105.00
L
Average cost per subscriber ([J] + [K])
$390.06
$210.14
M
Average cost per minute before common cost ([L] / [B])
US¢ 6.50
US¢ 11.67
N
Average cost per minute after adding common cost ([M] * (1+[F]))
US¢ 7.15
US¢ 12.84
O
Cost per minute of termination incoming call ([G]*[N])
US¢ 2.29
US¢ 9.12
P
Cost per minute of terminating incoming call ([H]*[N])
US¢ 3.65
Q
Cost per minute of terminating incoming call ([I]*[N])
US¢ 6.87
R
Average cost per minute of terminating incoming call ([0]+[P]+[Q])/3
US¢ 4.27
51% 96%
US¢ 9.12
Botswana •
Benchmarking criteria – Calling party pays (mobile termination) – Use of LRIC – ‘a sample of countries that have reached or are in the process of reaching efficient cost-oriented termination charges…’
•
Selection of European Union – Fixed: EU average. double transit – Mobile: EU ‘best practice’ average
•
Transition period – Benchmarks may be below efficient forward-looking local costs – € cents From 2/03 From 3/04 Fixed: 2.55 1.87 Mobile: 14.45 12.75 th [4 quartile]
Source: http://www.itu.int/ITU-D/treg/Case_Studies/Disp-Resolution/Botswana.pdf
Mobile Termination
Provisioning Quality of Service • Ensure competitors & consumers are protected – For competitors: • Service Level Agreement (SLA) • Reference Interconnect Offer (RIO)
– For consumers: Performance Programs • Data published • Residential • Business
• Operator supplied data versus regulator compiling data
SLA / RIO • Parameters – European Independent Regulators’ Group posits use of Key Performance Indicators, but details ‘to be defined nationally’ – Provisioning • Delivery time (rolling average; 95%)
– Fault management • Repair time
– Standards • Ordering, validation, delivery confirmation
• Performance targets • Dispute resolution ComReg (Ireland): Service Level Agreements. http://www.comreg.ie/_fileupload/publications/pres040899.pdf IRG. Principles of Implementation and Best Practice Regarding LLU. http://irgis.anacom.pt/site/en/conteudos.asp? id_conteudo=21107&id_l=274&ln=en&id_area=277&ht=Documents
Performance Programs • Parameters by operator – Percentage of complaints processed in X days – Percent of orders completed as scheduled – Percentage of faults cleared as scheduled • variances from targets are published
– Technical considerations • Calls blocked • Calls dropped
Malaysian example
Source: http://www.mcmc.gov.my/consumer/pdf/EESAT2002.pdf
Consumer Survey
PCCW ‘G-Force’ • Consumer rebates for: – Delayed repair • One month free line rental for every day late
– Delayed installation • One month free line rental for every day late
– Response to: • Inquiry calls (within 7 rings) • Billing questions (within 3 days)
INDUSTRY BENCHMARKING Key performance indicators • Measure efficiency and market characteristics of operators • More precise than country level indicators • Operators often set direction for new indicators
Key mobile performance indicators 2003 Bharti (India)
China Mobile
Telesp (Brazil)
MTN (South Africa)
Vodacom (South Africa)
Telkomsel (Indonesia)
4'788
129'650
6'778
5'497
8'800
7'800
Prepaid %
79
64
80
81
85
90
Minutes/User/Month Minutes/User/Month
295 295
240 240
107 107
155 155
96 96
50 50
Average Revenue per User per Month (ARPU) US$
10.58
12.32
14.12
26.85
23.41
14.34
1.5/6.4
1.1
22
2'058
2'217
3'621
Subscribers (000s) Average
Churn Subscribers per employee
Calculatedrevenue revenue Calculated perper minute (¢)(¢) minuteUS UScents cents
3.6
3.6
5.1
5.1
13.2
13.2
Source: TMG adapted from mobile operators reports.
36.6 1'996
2'527
3'348
17.3
20.1
28.6
17.3
20.1
28.6
Key mobile data performance indicators SMS per subscriber per month SMS penetration MMS per subscriber per month MMS penetration Mobile multimedia subscribers as % of total subscribers % subscribers with multimedia handsets % subscribers on 3G networks % subscribers on 2.5G networks Mobile data as % of mobile revenue Text messaging % Multimedia %
CONCLUSIONS • • • • • •
Benchmarking far from perfect but better than nothing Art as much as science Ever-evolving industry Significant data and comparability problems Considerable data availability problem with developing nations Signs that things are improving – Privatization/public shareholding means more and transparent data – Inter-governmental initiatives to improve data collection in national statistical offices – Internet has greatly facilitated data collection – More policy attention on indicators
• • • • •
As infrastructure expands, more focus on affordability, quality & knowledge Network environment rapidly changing; within a few years, majority IP-based with major regulatory and policy (and measurement) implications Implications of mobile communications Data can be obtained, just takes resources! A lot of data out there, just not in a database!
An ICT database APPROACH 1: Each agency collects relevant data UN / Regional economic commissions ICT value added
UNCTAD ICT in business, e-commerce
ITU ICT use by individuals and households
UNESCO ICT in education
WHO-ICT in health WTO-ICT in trade etc.
1. Lack resources/expertise. 2. Will take years to coordinate and implement. 3. Who will assemble all data into one? APPROACH 2: National commitment (e.g., à la IMF DSBB/SDDS/NSDP)
National Summary Data Page (Australia good example)
Existing national data
ICT database (e.g., “ICT at a Glance”)
1. Practical; can begin implementing almost immediately. 2. Data collection can be alleviated by countries “subscribing” leaving resources to focus on hard to get data.
Telecommunications Management Group, Inc 1600 Wilson Blvd., Suite 710 Arlington, VA 22209 USA Telephone: +1.703.224.1501 Fax: +1.703.224.1511 Web: www.tmgtelecom.com