Two interesting speakers on the real opportunity in telecom, emerging markets, a.k.a. places you want to visit on vacation but not live in.
Intro: Lane has been wiring Africa. Rahul is public policy researcher at CMU.
Lane Smith
Mickey Leland, congressman from Houston when it was very racist. Fought against hunder. Plane crashed in Sudan and died. Asked for $25m from Whitehouse, so USAid stepped in.
Connectivity map of Africa in 1995. Very little. By 2000, all capitals and many major cities connected.
Two great privileges in life. Started with Peace Corps, now with USAid. Funded by tax dollars. A privilege to be a steward of those dollars.
I didn’t do any of the roll-out. All done by Africans. I just sat in Washington. ISP from Morocco installed gateways into 10 countries.
Knew old telecom model of monopoly wouldn’t work. 40 countries at a kick-off conference. All countries wanted internet. Only 10 wanted retail competition at Internet. How many willing to offer cost-based tariffs to make it work. Same 10. Worked with those countries. Last country to sign up is Eritrea.
To give idea of bandwidth scarcity, USAid bought “gigantic” circuit of 128kbps for 1st year. Soon had ISPs wanting more bandwidth. Go to telcos. Either couldn’t work out how to do it, or refused (competition with own ISPs).
Issues: Policy reform, infrastructure access, network of users.
All countries had regulatory countries, not independent, staffed by current or former telcos people. Needed 4-5000 people trained in regulation. Have formed industry regulation associations.
Nigeria: 450k phone lines, 20k cell phones at start, deregulated, 18 months later, 2m cell phones. Still growing that fast. Catalytic infrastructure. Incremental.
Rahul Tongia
Carnegie Mellon University. Engineering and public policy. Faculty of school of CompSci.
Background academic, lots of real-world experience. CMU involved with India number of years ago. Presentation to prime minister officer. Don’t treat voice and data the same. Build all-optical network, leapfrog. 1998. Spent three years building Internet++ for India. Walked out because of politics. Need to be ready to play dirty. Can’t just win on merit. For example, CMU project funded by DARPA, think it’s a back-door to take over India.
Lessons: International is very important. UN meeting recently. 90% of brazil tax returns done online. Internet important. UN important. Therefore UN = Internet. Hmmm… Scares engineers.
Compare voice versus Internet. Developing countries have call completion charges. Raises forex. In Internet would they have to pay to send and receive data.
2.8bn live in poverty (<$2 day). Internet far from the minds of people with lack of food and electricity. Developing countries don’t know how to react to change. US has incumbents. Developing countries the incumbent is the government. Restrict VoIP, unlicensed wireless spectrum.
World telecom development indicators. Didn’t ask govts for stats. Went direct to source. Asked for costs of basic Internet dial-up connectivity. As of GNP, Hong Kong cheapest at 0.2 of personal income, 968% of income in Congo.
No technology bottleneck. Can provide services to 10x people a fifth cost with regulatory changes.
Push to privatization for PTTs, competition believed to solve all problems. Doesn’t necessarily deliver what you want. Bad outcomes from the market. Role of govt needs to be understood.
Foreign Policy article on “Broadband Marxism”. Like Utah OTOPIA model.
Developing countries where the action is.
China has more DSL than USA. $5/month. In terms of absolue numbers US voice is saturated. All about re-arranging the pie. Elsewhere it’s about growing the pie.
Q: Outsourcing of US jobs. Why should we help?
L: Have seen bad things coming out of developing world (AIDS, SARS, Al Qaeda). Down the road see this being a healthier, saner world.
R: No longer $10 Nikes made in US. In grand scheme, jobs to India is small. India imports more than it exports, and imports growing faster. Just will be different winners and losers. Bottom line is all benefits have not gone to consumers, just CEOs and shareholders.
Q [Gordon Cook]: Fiber economic model utterly broken, can’t survive without government subsidy.
L: In India for $2.75/day can get Internet to a location. Doesn’t include labor to run retail outlet. Just capital. Plenty of purchase capacity. Can get BB internet out there. Africa has your equals in entrepreneurial skills.
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