PARTNERING TOWARD UNIVERSAL CONNECTIVITY MOBILE WORLD CONGRESS 2016

Transcription

1 PARTNERING TOWARD UNIVERSAL CONNECTIVITY MOBILE WORLD CONGRESS 2016

2 Contents Introduction p.3 Helping the next 4 billion people get online requires a better understanding of the barriers to connectivity p.4 Broadband in the Asia Pacific: How partnerships and policy are driving a global success story p.6 Policy options for promoting high-speed broadband p.8 E-band spectrum offers strong prospects for new wireless services, and effective regulation can unlock innovative uses p.10 About Analysys Mason p.12

3 In this issue Mobile World Congress 2016 Mobile World Congress (MWC) took place last week in Barcelona, and provided the backdrop for many interesting discussions and keynotes focused on what is now a global UN Sustainable Development Goal: expanding affordable connectivity to the Internet to many more people, as a vector for development. This goal is also a central theme of the World Bank s recent World Development Reports 2016: Digital Dividends. Over the last year Analysys Mason has been extremely busy working with many of our clients on many different aspects of the connectivity issue. We are continuing to work closely with operators and investors to plan, finance and roll out ever better, more extensive networks. In addition, we have had the opportunity to work with many of the people at the heart of international efforts to bring connectivity to the billions of people who do not currently use the Internet. In this special newsletter, Richard Morgan provides an overview of the state of connectivity, as described in a new report we collaborated with Facebook on, which was launched on 22 February and which Mark Zuckerberg referenced in his keynote at MWC. Andrew Kloeden sheds light on the situation in Asia Pacific, where operators and Internet content and application providers are driving a dynamic broadband ecosystem, despite economic, geographical and policy-related challenges. Samer Mourad explains how policy makers can affect connectivity outcomes, based on an Analysys Mason paper published by the Broadband Commission last summer. Finally, Janette Stewart highlights how modern spectrum management approaches could unlock the potential of very high frequency radio spectrum to enable innovative connectivity solutions, including the muchanticipated drone and balloon initiatives by Alphabet and the Facebook Connectivity Labs. DAVID ABECASSIS Partner We are both honoured and excited to participate in this new stage of development for global broadband connectivity. The challenges remain huge, but the pace of innovation and the clear sense of purpose in the international community bring new opportunities for overcoming them. We are looking forward to the rest of 2016 and hope to bring you an update this time next year! 3

4 Helping the next 4 billion people get online requires a better understanding of the barriers to connectivity The State of Connectivity 2015 report highlights new data from Facebook, as well as analysis of third-party data carried out by Analysys Mason to provide new insights into the barriers to connectivity. RICHARD MORGAN Manager 4 In September 2015, the United Nations Member States unanimously adopted the new 2030 Agenda for Sustainable Development, outlining a plan of action to end poverty, reduce inequalities and protect the environment. As part of this agenda, Sustainable Development Goal 9c (SDG 9c) recognises the important role of Internet connectivity through the commitment to strive to provide universal and affordable access to the Internet in least developed countries (LDCs) by This is a challenging ambition: at the end of 2015 only about 10% of the 900 million people living in LDCs had access to the Internet, compared to a developed market average of 82%. Globally only 43% of individuals are online, leaving 4.1 billion people unconnected. 1 Progress to increase connectivity has been steady over the past decade, with 200 to 300 million more Internet users each year. On current trends however, over 3 billion people will remain unconnected by Analysys Mason recently contributed to the State of Connectivity 2015 report published by Facebook as part of its Internet.org initiative. The report, launched by Mark Zuckerberg at Mobile World Congress in February 2016, discusses new insights into the four key barriers to connectivity, which relate to: Availability the absence of infrastructure to provide services where people live Affordability high costs of services and personal devices relative to people s incomes Relevance shortage of relevant local content online in the languages people speak Readiness lack of literacy, digital skills, awareness and understanding of the Internet, or cultural acceptance. These barriers are interconnected in nature and many people are affected by all of them, especially in developing countries. To effectively address the barriers to connectivity will require a solid understanding of their scale and drivers, and this relies on robust and accurate data. The State of Connectivity 2015 report highlights new data from Facebook, as well as analysis of third-party data carried out by Analysys Mason to provide new insights into the barriers. Some summary statistics are shown on p.5, and the full report is available for free at: Research/Content/Reports/state-ofconnectivity-2015/ Questions? Please feel free to contact Richard Morgan, Manager, at richard.morgan@analysysmason.com 1 Proportion of individuals who have used the Internet in the past three months, ITU Measuring the Information Society Report 2015

5 State of connectivity People using the internet People connected in 2015 billion billion People not using the internet billion billion 43% Availability Share of population covered by mobile broadband networks % 78% People without mobile broadband coverage 1.9 billion 1.6 billion Remote mobile sites cost 2 to 3 times as much as urban sites, and can reach fewer people Affordability At the end of 2014 People who can afford 500MB per month 43% 500 million 500M more people could afford mobile data services than at the end of 2013 To get online, the 2.7 billion people who are not mobile phone users face costs three times higher than those who are Relevance Languages with high levels of relevant content online (at least 100,000 Wikipedia articles) 55 languages 58% 67% People speaking these as their primary language People speaking these as primary or secondary languages Readiness Skills Awareness and understanding 1 billion people lack basic literacy skills Over two thirds* of the unconnected in developing countries do not understand what the internet is Cultural and social acceptance Women in developing countries are 25% less likely to be online than men *based on surveys in 11 countries 5

6 Broadband in the Asia Pacific: How partnerships and policy are driving a global success story The Asia Pacific region is often regarded as one of the most dynamic broadband Internet ecosystems in the world. The Asia Pacific region is often regarded as one of the most dynamic broadband Internet ecosystems in the world. Internet markets in the Asia Pacific region have grown rapidly and consistently, with annual growth of 28% for take-up since 2005 and swift yearly growth of 28% in usage of apps and consumption of online content since Telecoms operators are benefiting from the progressive transformation of their businesses to become broadbandfocused and offer innovative services Data services and broadband in particular are rapidly replacing more traditional telecoms services such as telephony as a driver of revenue for telecoms operators who act as Internet access providers (IAPs). In markets including Australia, New Zealand, Japan, Hong Kong, Singapore, South Korea and Taiwan (referred to as connected markets), data now drives 60% of telco revenues. Markets including Malaysia, Thailand, the Philippines, Indonesia, Brunei, Vietnam, Cambodia and Sri Lanka (referred to as connecting markets) are catching up rapidly, as illustrated in Figure 1. This shift in revenue is accompanied by a shift in profits, which have remained steady despite rapidly maturing markets and competition. Building on their networks and existing customer relationships as a platform, IAPs are increasingly exploring ways to offer more services to their customers. In developed markets, this takes the form of partnerships between IAPs and content and application providers (CAPs), for example deep caching and content delivery network integration, to offer the best possible experience to end users. In emerging markets, IAPs are in a privileged position when it comes to marketing, billing and customer care, and are positioning themselves as CAPs. % of revenue from data 70% 60% 50% 40% 30% 20% 10% ANDREW KLOEDEN Principal CAPs are key drivers of value for telecoms operators and consumers alike Consumers are taking up broadband services, and upgrading to ever faster speeds, primarily because of the rich content and services offered by CAPs. For example, primary research commissioned as part of our report shows that the majority of broadband users make extensive use of online video services, including most of those who are upgrading to faster services (74% of upgraders compared to 63% of non-upgraders). 0% Years since launch of 3G Connected Connecting FIGURE 1: PROPORTION OF TOTAL SERVICE REVENUE FROM DATA AND INTERNET SERVICES [SOURCE: GSMA, COMPANY DATA, ITU, TELEGEOGRAPHY, ANALYSYS MASON, 2015] 6

7 People are keen to consume richer online services, a key driver of interest in upgraded broadband connections (at the right price), and of significant willingness to pay for broadband services, over and above current prices. This has been to the benefit of telecoms operators selling more advanced broadband packages, as well as helping CAPs and consumers. Barriers remain, however: over 75% of people who do not currently have broadband access are not aware of the benefits of broadband access and rich online services. Other people find it difficult to connect to broadband because of illiteracy, the lack of a connected device and the lack of availability of relevant content, as illustrated in Figure 2. Clearly, many of those who claim not to be aware of how broadband could benefit them will also face other constraints, and all these barriers need to be considered holistically. Finally, in addition to driving demand for broadband and sales of upgraded broadband packages for IAPs, CAPs are also increasingly investing in the very fabric of the broadband ecosystem, from data centres to submarine cables. In a 2014 paper, 1 we estimated that CAPs investments in network and infrastructure was USD33 billion per annum globally, of which USD7.7 billion was in the Asia Pacific region. 2 This benefits everyone in the value chain by improving the customer experience and creating demand for the services sold by IAPs. Partnerships and forward-looking policy environments are unlocking the benefits of the Internet CAPs and IAPs are lowering barriers, expanding supply and driving demand by forming innovative partnerships. For example, Google and Facebook are developing innovative solutions to cover remote areas through balloons (Project Loon), drones (Aquila, Titan) or low-earth orbit satellite (O3b, future highthroughput satellites with Eutelsat). Broadband take-up and usage are limited by awareness, skills and affordability constraints. Cheaper devices, manufactured throughout the region, many running Android, are enabling more people to use mobile broadband. Experiments are under way to reduce the costs of trying-out services (e.g. Free Basics and zero-rated applications) by bringing together IAPs and CAPs. Many other initiatives are constantly being evaluated or rolled out. In some cases, proactive policy makers are already implementing innovative policy initiatives to lower barriers to broadband connectivity, often in partnership with IAPs or CAPs. In most cases, policy and regulation plays an essential role in enabling partnerships to emerge and bear fruit. This includes best practices that have helped drive the broadband success story we now see in many Asia Pacific countries: sector liberalisation and the encouragement of sustainable development, effective competition regulation that stimulates investment, attractive business conditions, and carefully balanced data protection and localisation regulations. Questions? Please feel free to contact Andrew Kloeden, Principal, at andrew.kloeden@analysysmason.com Awareness Relevance of content Literacy I don't own a connected device Availability Someone close to me can use it when I need it It's too expensive Other 0% 20% 40% 60% 80% FIGURE 2: REASONS CITED FOR NON-ADOPTION OR NON-USAGE OF INTERNET SERVICES AS STATED BY THE INTERVIEWEES IN ALL COUNTRIES [SOURCE: ANALYSYS MASON, 2015] 1 See Content/Reports/Content-application-provider- Internet-infrastructure-Sept2014/ 2 This figure includes the entire Asia Pacific region. 7

8 Policy options for promoting high-speed broadband Governments and regulators have a broad range of supply- and demand-side policy options that they can use to support the development of broadband. It is now widely recognised that broadband is an essential pillar of a successful economy, and that the widespread availability and use of broadband has both economic and social benefits. As economies become increasingly reliant on digital networks, governments are now looking to promote next-generation broadband networks. Governments are implementing national broadband plans that define specific goals and the different policy instruments required to reach those goals. The objectives set out in these plans typically address two areas: supply (e.g. coverage of networks) and demand (e.g. take-up and usage of services). SAMER MOURAD Principal In most countries, reaching ubiquitous or near-ubiquitous high-speed broadband coverage is likely to require public funding, as the high costs of rolling out broadband infrastructure reduce the economic viability of high-speed broadband in low-density areas. Besides public funding, various policy options have been identified by governments, which can be classified as shown in Figure 1. Regulatory and policy framework Supply side Infrastructures and networks Broadband wholesale offers Awareness, trust and usage capabilities Demand side Content and services FIGURE 1: MAIN TYPES OF POLICY TO PROMOTE THE DEMAND FOR AND SUPPLY OF BROADBAND NETWORKS [SOURCE: ANALYSYS MASON, 2015] 8

9 Figure 2 presents examples of supply-side measures that can be taken to promote the supply of broadband networks and services, and high-speed broadband in particular. Type of policy Sharing of telecoms infrastructure Co-deployment and co-investment Access to non-telecoms infrastructure Spectrum assignment Spectrum trading Coverage obligations Imposition of technical standards Wholesale and retail markets Definition Adopt measures to promote the sharing of existing telecoms infrastructure among players that would benefit operators through a reduction in roll-out costs Introduce measures to enable co-ordination and joint investment in the roll-out of communications networks by telecoms operators, possibly in conjunction with utilities/promoters Introduce measures to allow operators to use non-telecoms civil infrastructure when deploying communications networks Take action to define a clear and efficient spectrum policy to encourage the development of mobile broadband Introduce the option to transfer spectrum rights, to improve flexibility in the use of frequencies Design new spectrum licences in a way which will increase the availability of broadband networks and services at a national level Eliminate uncertainty regarding the technical specifications for broadband roll-out projects Introduce measures to promote competition to allow potential new operators to successfully enter the market FIGURE 2: SUPPLY-SIDE MEASURES TO PROMOTE PROVISION OF BROADBAND NETWORKS AND SERVICES [SOURCE: ANALYSYS MASON, 2015] Governments and regulators clearly have a broad range of supply- and demandside policy options that they can use to support the development of broadband particularly high-speed broadband. It is important for governments to select the most relevant policies that reflect their own particular market situation and to assess each policy in terms of its potential impact and the difficulty of implementing it, as these factors vary considerably. This article is based on a Working Paper prepared by Analysys Mason for the Broadband Commission, available for free at: org/documents/publications/bb- Analysys-Mason-policy-briefingpaper-2015.pdf Questions? Please feel free to contact Samer Mourad, Principal, at samer.mourad@analysysmason.com Figure 3 outlines examples of measures that can be implemented on the demand side, to facilitate the use of broadband by the largest number of citizens possible and increase the amount and attractiveness of digital content and services in order to foster citizens interest in ICT. Type of policy Broadband mapping Transparency and control Communication Trust and security e Inclusion and ICT literacy e-education / e-administration / e-health / e-commerce / e-justice High-quality online content Support for industry Definition Develop a publicly accessible mapping tool to display the availability and speed of retail broadband connections, on a nationwide basis Set up transparency requirements for operators to enhance information, control and trust for end users in relation to broadband Design marketing campaigns to encourage the widespread use of digital services Introduce measures to improve security for users of digital services and increase their confidence in these technologies Implement measures to foster access to, and use of, ICT content and services by the vast majority of the population Devise measures to: connect schools and universities and develop the use of ICT in the education sector by all stakeholders make the most important administrative services available online to the whole population, to streamline and simplify administrative processes leverage the potential for providing online access to the health sector and encourage the use of new services develop the use of e-commerce enable the judicial system to benefit from the use of ICT services Involve the State in initiatives to develop high-quality and local online content, in order to attract a wide public audience Take steps to support ICT businesses, as a way of stimulating the development of new and innovative services or products FIGURE 3: DEMAND-SIDE MEASURES [SOURCE: ANALYSYS MASON, 2015] 9

10 E-band spectrum offers strong prospects for new wireless services, and effective regulation can unlock innovative uses Frequencies in the millimetre-wave portion of the radio spectrum above 60GHz offer favourable properties for providing high-capacity wireless links. Frequencies in the millimetre-wave portion of the radio spectrum above 60GHz offer favourable properties for providing high-capacity wireless links. This is primarily due to the large amounts of spectrum available in the millimetrewave portion, compared to lowerfrequency bands the large amounts of spectrum make wide channel widths a possibility, to achieve very-high-capacity links. This is emerging as a key driver for commercial use of millimetre-wave bands. In particular, the E-band, which is a millimetre-wave band including the frequencies 71 76GHz and 81 86GHz internationally, is emerging as a popular choice for point-to-point wireless links in markets where this spectrum is available. E-band is part of the extremely high frequency (EHF) portion of the radio spectrum (broadly 30GHz to 300GHz), corresponding to wavelengths between 1mm and 1cm, hence the term millimetre waves. However, despite being internationally allocated for fixed services use, the E-band is not yet available for licensing in all markets and, where it is available, a variety of licensing approaches have been used, risking divergence in terms of the regulatory conditions for use of this valuable resource. The properties of E-band frequencies, particularly the available bandwidth and the channel sizes (which, being in multiples of 250MHz, offer scope for considerably higher capacity to be delivered per link than is possible in other frequency bands allocated for fixed services use), make this band ideally suited to meeting growing demand for high-capacity point-to-point and point-to-multipoint wireless links. Demand for use of this spectrum comes both from within telecoms networks (e.g. for backhaul) and to provide high-capacity wireless connectivity to businesses and consumers, as well as in the context of new and innovative uses beyond conventional fixed point-to-point links. In particular, the short wavelength of frequencies in the E-band means that the potential for interference between neighbouring links is reduced compared with lower-frequency bands typically used to provide point-to-point links. Technological developments in use of millimetre-wave bands have also resulted in the availability of highly directional antennas for use in E-band. These pencil beam antennas not only make it possible to simplify co-ordination between links (due to reduced risk of interference) but they also potentially improve the performance of links in terms of their directionality and range. JANETTE STEWART Principal The properties of E-band frequencies and the use of pencil beam antennas mean that regulators have much more scope to implement simplified co-ordination mechanisms for the licensing of links in E-band, compared to other frequency bands used for point-to-point services where links are individually co-ordinated and frequency and location-specific licences are issued by the regulator. In view of this, a number of regulators have chosen to open up E-band for use on a self-co-ordinated (also referred to as a lightly licensed ) basis. The first lightly licensed approach to E-band was in the USA, and a number of other markets have subsequently adopted similar approaches. At least two regulators that we are aware of (in the Czech Republic and Mexico) have removed the need for frequency co-ordination for E-band altogether, and provide access to E-band on a licence-exempt (unlicensed) basis. 10

11 The use of these self-co-ordinated management approaches has the benefit of facilitating a quicker turnaround on licence applications (useful, since one of the main benefits of fixed radio links is that they can be deployed more rapidly than wired connections). Self-coordinated licensing also has the potential to reduce access costs for using the spectrum (i.e. spectrum fees), if regulators do not need to recover the cost of administering detailed frequency assignment and interference assessment within the fee for the links. Rapid turnaround Reduced cost Rapid turnaround Benefits of light licensing Efficient frequency re-use At present, the main use of E-band is for terrestrial point-to-point wireless links. However, the self-co-ordinated management approaches that regulators are increasingly adopting could support the emergence of more innovative applications as evidenced in the USA, where experimental licences filed for E-band use by Google demonstrate possible new uses that may emerge in future 1. Overall this suggests a range of benefits emerging as further regulators choose to open up E-band for use on a lightly licensed basis, as indicated in Figure 1. Flexible bandwidth Ability to innovate Despite clear benefits from opening up E-band on a lightly licensed basis, use of E-band frequencies is still emerging in some markets (and the band is yet to be opened for use in other markets, despite an allocation for link use that applies internationally). In certain markets, E-band has been made available, but is licensed using traditional point-to-point licensing approaches, whereby individual links are co-ordinated and frequency and location-specific licences are issued by the regulator. While this approach might have merit in some cases (e.g. providing greater certainty of interference-free operation) it may potentially dampen ability to offer innovative services in E-band, since it introduces additional regulatory co-ordination overheads, resulting in increased time needed for licensing, and potentially higher costs. With the E-band being a relatively nascent market, it is too soon to conclude that increasing demand for use of the band is being influenced by the licensing approach. However, it is to be expected that the self-co-ordinated, light licensing approaches being implemented in a growing number of markets should reduce the cost and administrative barriers for new users to deploy systems in E-band, encouraging uptake. This increasing uptake in use is unlikely to compromise the integrity or usability of the E-band, thanks to its physical properties. Overall, the attractive properties of this frequency band including the simplified licensing approaches being used are likely to spur further innovative technology development for use of this band in future. FIGURE 1: BENEFITS OF SELF-CO-ORDINATED, LIGHT LICENSING IN E-BAND [SOURCE: ANALYSYS MASON, 2015] Questions? Please feel free to contact Janette Stewart, Principal, at janette.stewart@analysysmason.com 1 See google-tells-the-fcc-its-secret-airborne-network-isnothing-to-worry-about/ 11

12 About Analysys Mason Analysys Mason is the global specialist adviser on telecoms, media and technology (TMT). Since 1985, Analysys Mason has played an influential role in key industry milestones and helping clients through major shifts in the market. We continue to be at the forefront of developments in the digital economy and are advising clients on new business strategies to address disruptive technologies. See what clients have to say about working with us: ABOUT OUR SERVICES At Analysys Mason, we understand that clients in the TMT industry operate in dynamic markets where change is constant. Our consulting and research has helped shape clients understanding of the future so they can thrive in these demanding conditions. CONSULTING We deliver tangible benefits to clients across the TMT industry: operators, vendors, governments, regulators, service and content providers, financial institutions and private equities etc. Our sector specialists understand the distinct territorial challenges facing clients, in addition to the wider effects of global forces. We are future-focused and help clients understand the challenges and opportunities new technology brings. RESEARCH Our dedicated team of analysts track and forecast the different services accessed by consumers and enterprises. We also offer detailed insight into the software, infrastructure and technology delivering those services. Clients benefit from regular and timely intelligence, and direct access to analysts. Consumer and SME services Digital economy Regional markets Network technologies Telecoms software RESEARCH CUSTOM RESEARCH Strategy and planning CONSULTING Regulation and policy Performance Improvement Transaction support Analysys Mason is the global specialist adviser on telecoms, media and technology (TMT). Since 1985, Analysys Mason has played an influential role in key industry milestones and helping clients through major shifts in the market. We continue to be at the forefront of developments in the digital economy and are advising clients on new business strategies to address disruptive technologies. 12

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