The document discusses key issues around broadband infrastructure including distributional issues, who has access, and who extracts value. It notes profound distributional issues around infrastructure investments and access. Main themes discussed are distributional issues, the broadband ecosystem, and securing infrastructure. The document also summarizes internet and technology usage statistics for Colombia, including time spent online, social media and photo sharing habits, and search behaviors.

1. Securing the infrastructure
-international reflections
Professor Howard Williams

2. Distributional Issues
• We need ask the fundamental question about the specific
values and returns we expect from BB infrastructures?
• Trade perspectives and call patterns
• This is not a straight forward question !
• There are profound distributional issues – Sprint and Apple
in the USA; $15bn transfer
• Colombia has reached a key point; over 4 million
connections, high growth rates in the recent past.
• Who are those without access?
• Who is extracting value from those who have access?
• Theoretical issues – greatest distortion flow from
distorted/subsidised input prices (Diamond/Mireless)

3. Main themes
• Distributional issues
• BB eco system
• Infrastructure

4. Overselling BB – Charles Kenny
Year Predicted Values at Given GDP/Capita Average Values Average Values
Income level 1,000 5,000 10,000 30,000 Poor Rich
Secure Internet servers (per 1 million people) 2001 neg 21 38 64 5 66
2008 neg 109 205 357 15 331
Fixed broadband subscribers (per 100 people) 2001 neg 0.6 1 1.7 0 1.8
2008 neg 5.7 10.1 16.9 1.3 16
Internet users (per 100 people) 2001 neg 9 15 24 2 25
2008 neg 24 36 54 12 50
Mobile cellular subscriptions (per 100 people) 2001 neg 21 32 51 6 53
2008 24 71 91 124 52 115
Fixed line subscriptions (per 100 people) 2001 neg 19 28 42 8.6 41.8
2008 neg 17 24 37 8.3 35.1
% of Firms Using Email 2009 49 69 77 91 59 81
% of Firms using Own Website 2009 16 39 49 66 27 55
Literacy rate, adult total (% ) 2008 66 83 91 103 75 95
School enrollment, tertiary (% gross) 2008 6 32 43 61 20 60
Value Lost Due to Power Outages (% of Sales) 2009 6 4 3 1 6 2
ICT Exenditure ($/capita) 2008 59 290 576 1714 206 1429
GDP Density ('000/km) 2008 neg 8518 17690 32229 417 26926
Rural population (% of total population) 2008 68 48 39 25 57 28
(Average GDP/Capita) 2001 3,526 25,278
2008 3,553 24,926

5. Social
Dating Networking Operating
Systems
High Gambling Gaming Games
Web Consoles
Ad Search
Networks
Smart
VoIP Digital Phones
Customer Switching Costs
Music/Video
Sales
Network Effects/
e-Commerce3
Medium
Portals
Ad
Agencies
Content Online
Rights Billing/
Payments
Internet Relative ROCE2
Web Access
Low Hosting/
Design High Med Low
PCs
30%+ 10-20% <10%
Low Medium High
Economies of Scale1

6. 45% 75%
VoD Digital
30% IPTV (1) Video Market
(5) VoIP sales
(1) (1) Concentration1
Media Rights <10%
(15) Digital
Music
Dating Sales 10-20%
(2) (4)
Adult 20-40%
Content
Mgt (11)
(1)
40-60%
e-Retail 60-80%
(72)
Market Social 80%+
Networks
CAGR 2008- (3) Billing/
2013 e-Brokerage Payments
(19) (21) Ad
Directories Networks
(5) (11)
Video
Gambling Gaming
Ad (6) (9)
Agencies Web
Internet (16)
Access Search
Consumer (30)
(164) Smart e-Travel
Publishing Software (49)
(7) (2) Phones
(27)
Web Games
Hosting Consoles
(10) (13)
PCs
(95) Operating
Systems
Global (6)
Portals
0% (4)
Average ROCE 40%

7. Two sided markets: Low spend customers
benefit most from receiving calls
Through CPP, revenue from received calls allows low spending users to be
connected, even though the scale of subsidy is small.
Contribution to total ARPU, by value
> Although high spending
customers receive a lot of
Making calls
calls, the revenue from
this is greatly exceeded by
what they pay for making
calls.
> The majority of revenue
for the lowest spending
Receiving calls
group comes from
receiving calls.
> Low spending users are
able to maintain a pre-pay
11% 17% 17% 13% 9% 7% 5% 4% 7% 10%
Percentage of the total mobile users in each ARPU band
account without an
Source: Vodafone customers in Delhi ongoing subscription.
> The lowest spending group
7 Making Broadband Accessible for All
represent 2012 of users but
04 July
11%
only 1% of revenue.

8. Bringing broadband to the majority of citizens
Fibre offers the fastest speeds at the greatest cost (suitable for high demand users);
wireless is the cheapest and fastest way to reach universal broadband coverage.
Fibre Wireless
> Optical fibre offers broadband connections up > Wireless broadband can offer speeds from <1Mb/s
to 100Mb/s (3G and its developments HSPA+) to over 40Mb/s
> Fibre is very costly to install; as access network (LTE)
it is only commercially viable in densely- > Bringing wireless broadband to rural areas will
populated, affluent areas require significant investment but remains the
> 70% of the cost of a next generation fibre cheapest access technology
network is in the last 100m of the access > Advanced services, such as e-health, can be reliably
network provided using wireless broadband
Fibre
100
Streamed
Speed (Mbit/s) Cable LTE HD video
10 Advanced
ADSL HSPA+ e-health
3G YouTube
1 Internet,
Email
04 July 2012
8 Making Broadband Accessible for All

9. Relative viability of fibre and wireless broadband in India
Only the dense urban areas have sufficient aggregate monthly income per km2 to
support the cost of a fibre access network, but almost all districts support wireless.
Network cost as a % of district income Maharashtra illustrates the urban / rural split
Wireless > The equivalent monthly cost of fibre per km2 can be
determined by the revenue per customer that WIK
calculated as being necessary to support a viable
Rural geotype
network, for each geotype.
> Placing each district into its geotype, we can
compare the aggregate monthly income per district
to the calculated monthly income (Net District
Domestic Product/NDDP).
> ITU data shows the demand for telecom services is
commonly 2-5% of state GDP.
Dense rural geotype
> The cost of fibre would represent 1% of NDDP in
Mumbai and 4% in Thane. These are ‘dense urban’
Only in Mumbai and Thane and ‘less suburban geotypes’. In all other districts,
districts does the cost of fibre the equivalent cost of fibre would be a much greater
approach wireless, as a % of % of district income, rising to 61% of NDDP in
monthly NDDP Washim and 177% in Gadchiroli.
> The equivalent cost of wireless broadband is 3% or
less of district income.
Source: State Economic Census for Maharashtra, WIK study of fibre network cost, Vodafone
analysis
04 July 2012 9

10. Relative viability of fibre and wireless broadband in Jo’burg
Repeating exercise for suburbs of Johannesburg shows that fibre roll-out likely to be
challenging for the majority of the population
Joburg highlights economics of bbd investment
Fibre network cost as a % of income
> Repeat exercise for districts of Jo’burg.
> The richest parts of Jo’burg are in high cost
deployment areas; whereas low income areas are in
dense areas which are lower cost to deploy.
> The cost of fibre would represent over 10% of
income Diepkloof. Whereas, high income levels in
Parkview means it is profitable to deploy fibre.
> The equivalent cost of wireless broadband for
Diepkloof is 4% or less of income.
Wireless is less than half the cost of
fibre for low income areas of
Johannesburg
04 July 2012 10

11. Relative viability of fibre and wireless broadband in India
Charting the equivalent monthly cost of fibre and wireless networks as a % of
monthly district income demonstrates that fibre only affordable in dense urban
districts, but that wireless is less than 4% of monthly NDDP in all except the most
rural districts.
Maharashtra Karnataka Rajasthan
Gadchiroli wireless 8% / fibre 177% Churu wireless 3% / fibre 131%
Bikaner wireless 3% / fibre 127%
Osmanabad Barmer wireless 3% / fibre 170%
U.Kannada Jaisalmer wireless 12% / fibre 573%
Yavatmal
Jalna Chamarajanagar Nagaur
Dhule Chikmagalur Jodhpur
Sindhudurg Raichur Pali
Chandrapur Gadag Jhalawar
Rural
Parbhani Hassan Bundi
Ratnagiri Shimoga Sirohi
Solapur Bagalkot Udaipur
Latur Haveri Swaimadhopur
Bhandara Ramanagara Sikar
Sangli Davanagere Rajsamand
Dense rural
Raigad Udupi Ajmer
Kolhapur Dharwad Kota
Pune D.Kannada Jaipur
Banswara
Thane Less suburban
Mumbai Bangalore Dense urban
0% 20% 40% 60% 80% 0% 20% 40% 60% 80% 0% 20% 40% 60% 80%
04 July 2012 All 11

12. Professor Howard Williams
howard.williams@strath.ac.uk

13. Additional highlights from the presentation include:
- The average internet user in Colombia spent 20.4 hours online during
September, consuming 1,606 pages of content and averaging 42 online visits during
the month.
- 86% of Colombians visited a social networking destination in September, with
Facebook leading the category. Visitors averaged 4.6 hours on the site during the
month.
- Nearly 7 out of 10 Colombians visited a photo sharing site in September led by
Facebook.com Photos.
- An average searcher in Colombia conducted 184 searches in September, resulting
in a total of 2 billion queries conducted in Colombia during the month.
(comScore, December 2010)