1. © GSM Association 2009 UNIVERSAL ACCESS: MOBILE VOICE, DATA, BROADBAND FOR ALL Robindhra Mangtani, Senior Director, Government & Regulatory Affairs, GSMA

2. © GSM Association 2009 Agenda 1. Access today 2. Rural economics 3. Do USFs work? 4. Conclusion

3. © GSM Association 2009 Population V Geography The old question: – How do we get communications across developing countries and Africa? The fact is: – 60% population coverage today, around 90% by 2010 The new question: – How can government and industry partner to get even further? 0% 20% 40% 60% 80% 100% Population Coverage 0%20%40%60%80%100% Geographic Coverage 0% 20% 40% 60% 80% 100% 0%20%40%60%80%100% Population Coverage

4. © GSM Association 2009 Agenda 1. Access today 2. Rural economics 3. Do USFs work? 4. Conclusion

5. © GSM Association 2009 e.g. Access in Rural Areas  Once the problem was connecting Africa BUT – Mobile operators cover more than 70% of Africa – 10 countries have > 90% coverage  Then the problem will be connecting Rural areas – A problem of a different type – Release unused analogue TV spectrum - The Digital Dividend allocated for Mobile Broadband - LTE  The problems will not be generic but specific – Areas with specific problems – Distance – Accessibility – Regulatory regime

6. © GSM Association 2009 Access & Services Investment decisions balanced between: ACCESS  Increasing coverage  Network sharing SERVICES  Increasing penetration in existing areas  Payphones  Affordability –Lower scratch card values –E-refill –Per second billing –Tariffs  M – Banking &

7. © GSM Association 2009 Base Station Economics Each Base Station is a “factory” producing minutes – It costs money to build (CapEx) – It costs money to run (Opex: Fuel, backhaul transmission) – It gets revenue from traffic Operators will evaluate each project separately All viable investments will be made

8. © GSM Association 2009 Base Station Capital Costs The majority of capital costs are not technology related Import duty is a significant proportion of our costs The cost of building a base station is similar in Abuja or Abeche 0% 20% 40% 60% 80% 100%

9. © GSM Association 2009 But Operators Build 4 Networks Radio network – Towers, Base Stations Transmission network – Microwave, Satellite or Fibre Power network – Generators, green base stations and the means to supply them Distribution network – Distribute Pre Paid Cards, collect revenue 2 1 3 4

10. © GSM Association 2009 Infrastructure Costs  ICT penetration drives economic development and raises GDP  Infrastructure costs –Power, backhaul transmission, site acquisition  Government as ‘pump primer’ –When building infrastructure – Roads –Consider laying fibre transmission –Give long-term contract for use of transmission –Encourage provision of competitive transmission and international connectivity –Reduce taxation on ICT infrastructure and devices

11. © GSM Association 2009 Rural V Urban Economics URBAN SITE  Costs –Power Grid? –Local Transmission to switch –Easy to reach for site engineers  Revenue –Mostly outgoing calls –Uneconomic if interconnect is high –High site utilisation –Distribution relatively easy RURAL SITE  Costs –High Fuel Cost –High Transmission Cost –Especially on satellite –Costly to maintain  Revenue –Mostly incoming calls –Uneconomic if interconnect is low –Low site utilisation –Distribution is difficult

12. © GSM Association 2009 Agenda 1. Access today 2. Rural economics 3. Do USFs work? 4. Conclusion

13. © GSM Association 2009 Best Practice USFs Targeting – Network expansion with public /shared access models, – Internet POPs, telecentres in rural district centres – Internet to leading schools & “vanguard” users – Support for commercially run telecentres / cyber cafés (PCO, STD) – ICT Training – E-government, e-health and telemedicine Low levies, small staff, managed under the regulator Independent and transparent financial reporting Seed finance from Government & donors Competitive Tender for subsidies Regular review of fund status and achievement Review targets and objectives; voice, SMS, internet access and bridging digital divide

14. © GSM Association 2009 USF Take Aways  Competitive markets work  Consider USFs only if the market is failing  Spend or return unallocated funds  Commit to market growth Help customers connect

15. © GSM Association 2009 Agenda 1. Access today 2. Rural economics 3. Do USFs work? 4. Conclusion

16. © GSM Association 2009 Government As Partner  Lower rollout costs  Lower running costs  Help customers to connect  Don’t divert revenue

17. © GSM Association 2009 Development Circle Regulatory & Fiscal Policy Mobile Affordability Employment Mobile Industry Growth GDP Boost Good Governance

18. Restricted - Confidential Information © GSM Association 2009 All GSMA meetings are conducted in full compliance with the GSMA’s anti-trust compliance policy THANK YOU!