 I think everybody's kind of already unexpected, so I don't, okay, I'm going to stop. All right, ladies and gentlemen, good afternoon, ladies and gentlemen. My name is Ellie Noam. I'm a professor of economics and finance at Columbia University and Civilian Life and director of the Columbia Institute for Tele-Information. I'm pleased to be here to welcome you as your moderate moderator and, if necessary, your arbitrary arbitrage. And we're going to have a conversation, a conversation that is really important because this is a precursor to the December meeting of the ITU in which the rules of the telecommunications will be reviewed for the first time in several decades. Important decisions might be taken relating to the governance of the Internet too. There's another meeting, Internet visit IGF in Baku in a few weeks to take place. So this is all part of a preparation. And therefore this meeting here dealing with the financial aspects of the future is particularly important because telecommunications in a way is way too important to leave to the telecommunications engineers and even more so to the telecommunication lawyers, right? So there is, there's money, there's finance and there's investment and all these things will be discussed here. To make this discussion possible, of course we thank the ITU. The organizer of this event. But we also thank McKinsey that has been sponsoring this particular panel and is represented here also by Luis Enriquez who will also be speaking. Now, when we talk about funding the future, okay, let's kind of keep firmly in mind that we're talking about the future because it's been said that generals always fight the last war and maybe regulators also regulate the last crisis and financiers look back also and then kind of duplicate themselves. That's usually when they get in trouble. And so we want to think about the next, next. And we also want to think about how investments in this field can perhaps be separated into three different segments and it's important to distinguish them otherwise. We're talking about everything and therefore nothing. There is the leading edge, there's the trailing edge and then there is the main street. The trailing edge in some ways is the easiest to understand and we kind of know how to deal with it and we certainly have spoken about this in certain ITU events. These are the countries that are less developed, the within countries, the regions that are less developed, social groups that are poor, less educated and how to raise them and bring them into the mainstream is something that needs to be discussed. Usually the commercial sector in those situations is not the right sector to deal with that fully because there's not enough money to be made. Therefore some subsidy mechanism has to be devised. External, internal, we can discuss exactly how it should be funded but we kind of understand some of the dimensions here. Then there is the leading edge and that's the new technology and that is a risk factor where companies when they invest are taking high risks but because of the social importance of new technology and new networks and new things, governments at times will be a co-sponsor, will reduce the risk, will take some of the risk itself. Examples to that might be the early internet where the US government took some of the funding and end the risk in making it possible and then kind of the benefits accrued too many. Now in between... And here kind of also the mechanism is already hogger. There might be tax advantages, tax benefits in a variety of other ways or direct government investments in the early stages. In between is the mainstream and that usually follows the leading edge and usually it is self-sustaining and self-funding and a good example might be mobile wireless in metropolitan areas where the money, the consumer demand, consumer usage is enough to attract investment and then the role of the government might actually be not to be in the way. Those are my last comments here. Here too there are challenges. One of the challenges is that government likes to treat that particular part as a cash cow for taxation and for other ways of extracting money in order to put them into other sectors of the economy or for other purposes. And that might also be the case when it's over the international settlement rates on the issue of whether incoming traffic should be charged a certain amount something that is being discussed right now. And there are various other ways such as the discussion over unbundled local loops in which competition policy enters in other societal goals of competition of protection of development of taxation where that big mainstream is being used for other purposes too. So there's a lot to talk about and we have wonderful speakers to deal with our subjects and I will introduce them in sequentially. The first speaker here gives me great pleasure to introduce her is right here to my left, Omombola Johnson who is the Minister of Communications Technology in Nigeria. She comes here with a very kind of wonderful background not only is she the Minister but before that she was in kind of the managing country managing director of the consulting firm Accenture in Nigeria. Sorry, Louise. So she had over 25 years of consulting experience and worked with a cross-section of companies of a variety of industries. She's also the founding chairperson and member of Board of Trustees of Women in Management and Business and she has a technology degree in electrical engineering from the University of Manchester and a master's degree in digital electronics from King's College so she comes here and she's finishing a doctoral dissertation while being a cabinet minister. Very impressive things and now directed. Thank you. Thank you very much, Eli. I think I have to first thank Mackenzie for sponsoring this forum but I think just to make some opening comments if you look at the future that we're trying to fund right now is this future that we're talking about, this future where everybody is connected to everybody and it's the internet of things. I'm really going to talk about this from the perspective of Africa. When you look at the latest figures 2011 figures from the Africa Development Bank what they say was that out of all the funds that went into infrastructure communications just got 0.5% of that infrastructure so clearly there's a lot of work to do in terms of funding this infrastructure this broadband infrastructure we're talking about that connects us all to each other. Over the last 10 years or so Nigeria has attracted about 25 billion dollars of investment so clearly we're doing something right and so what I wanted to just talk about is what we have done to get to this 25 billion dollars but having said that the context has changed and we need to be looking at different ways of how we fund this future of connectivity that we're talking about there are two perspectives that we need to look at when you're trying to attract funding and that's the supply side and the demand side on the supply side what has been done, what we've done is really around a very liberal investment policy that attracts investments in foreign ownership it's a full repatriation of profits it's a price and autonomy of competition of course the regulator stability, consistency and the competence of the regulator has been something that has really helped us to attract those kind of investments and just like you mentioned earlier Eli was the notion of subsidies we plow about annual operating levy for the network operators is 2.5% of their revenue we take 40% of that into our USP fund and it's then devoted to putting infrastructure in the rural and underserved areas and this becomes important again to go back to your point where in most countries in Africa where the majority of our population lives in the rural areas in Nigeria it's about upwards of 60% live in rural areas that are really of no interest to the commercial operators so that means that targeting those subsidy funds to those areas becomes very very important and we use those funds as incentives to get our infrastructure providers to go to those areas because that's where you can begin to impact people with the connectivity that you have on the demand side so that's the supply side basically what we need to look at is not a case of building this infrastructure and just assuming that they will come it's a case of actually building the infrastructure and ensuring that people begin to use this infrastructure and that's really around making ICT relevant in the lives of people and ensuring that the investments the return on investment that's really where the return on investments begins to play out where you get people using that infrastructure so it's delivering government services over the internet it's delivering those targeted subsidies to over ICT infrastructure to make sure that the people that need those subsidies are the ones that get them it's the value-added services that are very important for developing countries, mobile money drug authentication getting commodity market prices to rural farmers entertainment and of course device ownership a lot of the population is poor so that's how we can subsidize the device ownership that they can actually access and begin to make use of this infrastructure that is there I think finally in terms of the future what we need to be looking at is defining ICT infrastructure as critical infrastructure as important as roads, as ports, as rails and all of that and what that means is that government needs to continue to support the investment in addition to attracting FDI the kind of things that we are doing in Nigeria we are investing in ICT infrastructure bonds where a certain percentage of those funds will be dedicated to ICT infrastructure it's the public-private sector partnerships that look at how we can begin to partner with the private sector particularly for some of those leading edge technologies and finally with our sovereign wealth funds again we are dedicating a portion of those funds to funding ICT infrastructure so yes we've been successful or there has been some success in using subsidies and attracting foreign direct investments but as we are looking at trying to connect people and getting more value on that infrastructure we have to begin to look at other means which are the local funding that we have to attract those investments thank you thank you very much the organizers gave the speakers three to four minutes and I promise they can have one extra minute if judging from your faces they are particularly interesting giving particularly interesting speech definitely there was one of them the next one is our next speaker is Ronnie Tay who is the CEO of Infocom Development Authority of Singapore IDA and the IDA in Singapore is in charge of developing the sector developing the use of the sector by other industries and what's the third one is of the use of the government of ICT he has been CEO of this operation of this agency since 2007 and before that he had been a real admiral in the Singapore Navy thank you Ali, Excellencies Ladies and Gentlemen first let me thank IDTU for giving me this opportunity to participate in this panel to share the perspective and our efforts moving towards broadband from both the access and consumption point of view we all understand that broadband excess is increasingly recognized as key to the economy and that will also lead to economic growth so in our context just a few words about Singapore we are a small country about 700 square kilometers population of 500 sorry, population of 5 million people so the numbers that I mentioned should be taken in that context for us our main infrastructure for broadband high-speed broadband was laid through our what we call the next-gen NBN next-gen nationwide broadband network we recognize that as being fundamental to Singapore being an Infocom hub and we envision that the way forward would be to open new doors to increase economic opportunities and transform the way we can live, learn, work and interact but while telecom operators may be well positioned to invest and deploy infrastructure they would need to justify the huge financial outlay needed for this network deployment even to a small country like Singapore until they have a proven customer demand for higher speeds so government intervention, financial support are essential to bring about this vision and we are mindful that the next-gen NBN would also impact telecom's competition for the next few decades so when we developed our approach we took into account the various benefits and challenges brought about by the commercial regulatory and technical factors and so this approach encompasses both the supply and demand side measures on the supply side included government funding support for our next-gen NBN of about 800 million US dollars and just as an aside we also have an approach towards the wireless broadband what we call the Wi-Fi, wireless and SG network where we have some 7600 hotspots in our country now back to the next-gen NBN now in the traditional integrated industry structure the infrastructure owners would tend to favor their own downstream operators so given the potential to bring about significant change and competitive benefits to Singapore to put in place and what we call effective open access next-gen NBN so in this structure we have three layers passive active and service layer at the top where the passive layer would be structurally separated from the above two layers and active layer operationally separated with this, with government funding support we were able to achieve a quicker rollout in fact by middle this year some two and a half years after we started the deployment the NBN has reached 95% of our country USO will begin first of January next year and wholesale prices have also dropped supply-side measures were also important to compliment the demands the demand-side initiatives were also important so toward that end the idea also worked with the industry organizations to tell them about the benefits of broadband to facilitate the creation and adoption of broadband services we do this through various means not forgetting that IDA also has a few roles including industry development so we regularly do calls for collaboration to introduce, to incentivize the operators, the service providers to develop new innovative services to meet the various end user needs calls for collaboration include things like home-based work or telehealth and so on in education sector we also supported the setup of broadband facilities in community centers so that the community at large can have access to high-speed broadband and of course as part of our other roles we also have run training courses to enable our senior citizens to adopt IT we also established an Infocom Experience Center as a permanent showcase of interactive engaging exhibits that are made possible by high-speed broadband and we did that in a busy part of town to reach out to visitors from public schools, community centers enterprises so that they can get a hands-on experience of what high-speed broadband can achieve I think the results are pretty good so far to date because of the effective open-extrait structure that we have we have a total of eight house hosts at the active layer and 22 RSPs in just two years the network has rolled out to our 1.1 million house hosts in terms of residents taking services we now have about 200,000 households taking services and that's about 20% of our population thank you so much and thank you for staying on time I'm going to proceed here in the order in which the ITU has given me the names and so there's no particular sequencing here because the next person is David Lewin who is the director of Plum Consulting David Lewin is an expert in economics and regulation of fixed and mobile telecommunications he has advised on virtually all aspects of telecommunications regulation in most countries of the world by my calculation 200 countries, 200 issues that's what is 4 million type of I don't think I've ever said that you're a pretty busy guy but that includes consulting for Oman where David has prepared a plan and the European Commission where he's been involved in input to the access and interconnective in 2000 and to advising on regulation of the NGA next generation access in 2009 right and more recently and more recently well thank you very much let me first of all thank ITU for inviting me to speak let me thank Louise for funding this session and let me thank Eli for moderating for about the last 5 years now I've been very much involved in this issue of investment in broadband and here I think what I'd like to talk about in my time is where and how should governments invest in broadband if they're going to maximize economic and social measures for their citizens and I've got 5 I hope I make it in the time maybe you'll allow me that extra minute the first one I'd say is and this probably doesn't apply to every single country but in general I'd say invest to complement what market players are doing don't crowd out in private investment and don't or distort to the minimum extent possible the competition because they're both very significant the second and again I think this has been echoed by the two previous speakers is the importance of investing in demand side measures you can have an absolutely wonderful broadband infrastructure but if everybody in the country isn't regularly using the broadband internet then you do not have any social or economic benefits from it at all so those demand side measures are important equally important is to evaluate those demand side measures so much government money gets thrown into that pot but how effective is it some of the studies we've done suggests not very my third proposition is invest first of all in affordable basic broadband for all before focusing on the stimulation and providing funds for investment in high speed broadband all of the studies that we've looked at say there's very strong evidence that you'll get big economic gains and a good bang for your buck if you do the former the evidence that the incremental costs can be justified by the incremental benefits of moving from basic to high speed broadband is much, much weaker so there's a priority there invest to support a mix of technologies yes it's going to be fiber in urban areas perhaps it's certainly going to be LTE in most places but there are also going to be remote areas where satellite might be the appropriate technology most of that for the market players but clearly there is a role for government in subsidizing satellite because it's not going to be affordable there isn't going to be the willingness to pay in perhaps subsidizing LTE backhaul to rural areas that's going to be important and one which actually costs the government any money is releasing all the spectrum that is required particularly sub one gigahertz for rural areas in order that mobile broadband can be provided as cheaply as possible and that then means low prices and affordability and then finally I would urge governments not to set unrealistic high minimum speeds for broadband if we contrast here what happened in the U.S. where they set this minimum speed at 4 megabits per second for 2020 with Europe where they've set the speed at 30 megabits per second by the same date which one would I vote for? Well I think I'll go for the American model it seems to me that the European model runs a very distinct danger that if everybody is working to that target you're raising the unit costs of supplying universal broadband which means higher prices which means no affordability or alternatively it means much much bigger subsidies which many governments around the world and particularly in Europe at the moment cannot afford I know that they've received a massive injection of funds from the Nobel Committee today but I don't think it's going to cover it thank you even the EU exactly one days of honeymoon before engaging in criticism alright and our next speaker is Luis Enriquez who is the senior partner at McKinsey, Belgium he comes with a kind of very interesting international background which includes his native from Chile in South America and got a doctorate in Berkeley in the United States and worked at the Federal Communications Commission in Washington at the Office of Plans and Policy with the Chief Economist and then he was worked with telecommunications and energy firms in the United States and moved to McKinsey and to Belgium and he of course we are grateful to him for sponsoring this session thank you thank you for coming yeah I bounced around the world a little bit I guess and I've tried to unlearn everything that I learned in the FCC since then this was a long time ago we were putting in the 1996 Telecom Act in place and I think we came up with perhaps some things that were a bit too complicated I've learned to do better now at least make it simpler I'm going to talk a little bit less around what government should do and more a little bit about what what I would say more what we see a holistic view on why we're in this room and why these things are a challenge we think that these NGN networks are actually different they represent a completely different challenge from the way regulation has had to deal with the sector since we started opening the markets in the early 80s in Japan and the US and the key here is infrastructure the these represent a significant amount of infrastructure whether it be mobile or whether it be fixed in the fixed we did some rough estimates that we set the fiber in Europe to have a 50 to 60% penetration would cost between 200 to 300 billion euros clearly beyond the ability of the industry to pay by itself industry performance levels and to put an LTE network for one operator would cost about 45 to 50 billion euros by the way by contrast the United States already has an LTE network and they only need another 3 to 4 billion dollars to complete coverage in 95% of the country so the financial challenges the scale the step function is substantial and the first point to this is this industry lives and dies by CAPEX by infrastructure investment if you actually measure it as a percent of sales there is no industry in the world that is as CAPEX intensive the average of the industry is between 10 and 15 to 20% of revenues spent on CAPEX every year the next industry that comes close to it is German automobiles which spend about 10% of the revenues then steel is about 5% cement is about 4% nobody invests as much as and so if you do not create incentives for investment you don't get the investment the problem is that our entire regulatory apparatus has actually been about slicing and dicing existing networks to encourage prices to go down and encourage more traffic to go up and it's been hugely successful on existing networks the one area we did not do that was immobile and immobile it exploded and we also by the way it was combined with a once in a lifetime sort of technological leap to mobility which we probably will not see again we will see additional benefits in there but we will not see the leap so what happens is if you don't get this right you don't get investment and if you don't get investment you don't get NGNs so our we think that in general we have someone we call the US based model which basically means operators go do what you want invest in it it's yours you can monetize it whichever way you can the investments you get more or less significant rollout and the logic there is our starting conditions are enough to have two competitors in place in Asia we fund it we subsidize it the Singaporeans did it the Koreans have done it the Hong Kong have done it and so on Europe hasn't Europe has a huge issue there it is not about Europe but actually it does highlight this problem an implication for this by the way is that if you don't get this right if you're not pragmatic about it you don't get the investment you can make you don't get it and so the implications for us for the operators particularly in places like Europe or in places that don't have this today is work pragmatically with your regulators on the government probably more often the government about how to figure a solution to this because we think if you don't address it you store political trouble 10 years down the line and for regulators do not ignore the underlying economics of the industry which are massive investments done by only two or three players it's not about free markets if you don't create incentives for those players you don't get the investment that's it recognize our last speaker on this panel Andrei Muhanov who is the of the Ministry of Telecom and Mass Communications of the Russian Federation he is the director of the department and chairman of the Commission for International Cooperation Coordination of the regional commonwealth in the field of communications RCC he is on top of it also an academician of the International Telecommunications Academy his experience goes back to communication satellites to defense to natural resources and climate change his studies at the university level included a really interesting combination of radio engineering and diplomacy so give us a little bit of both please so here we go thank you very much and first of all I'd like to thank the authorities of United Reven Emirates for hospitality for good organization of our event to thank ITU all the colleagues and I'd like to propose you the new and maybe little strange argument which we can use discussing the TMT I mean technology, media and telecommunication TMT grows and this argument is the middle class I'd like to thank the specialist from Cisco from Russian senior agency for investigation which are correlated with the initial point of use and which are base for my information now Russia has all ingredients for big TMT grows and these ingredients for the next 10 years are the first under penetrated and already deployed LTE network the lower handset prices to support affordability but most important and a fast growing middle class seeking and able to afford new services to support abnormal grows it seems to me that we tick all the boxes all these four boxes and the hour and we hope for the first to fall for the first for the middle class now my global data market 300 billion dollars American dollars and the Russia's under penetrated market should push the current 22% to above 30% before 2015 with Russian middle class who can afford smartphones and tablets with Russian middle class set to more than triple and the next 8 years the need for data usage should boom and the middle class seems happy to pick up the check for data some words regarding internet payment and e-commerce we expect internet penetration in our land to increase from 48% to 87% by 2020 regarding e-commerce 15% from now till the same till 2020 for example Russian main Russian browsers as Yandex and Mail.ru look well placed to benefit from growth in the segments and the need to retain their leading positions on the market and once again I see that the key investment case for Russia 2020 first of all should be based on the middle class increasing 3-fold by this year I mean from now till 2020. Thank you very much. We'll take now one round here in which people can relate to other things that have heard here on the panel so we don't just talk in tracks parallel to each other I'll start by saying by observing that government and nobody really touched this except for David a little bit I think that government has in addition to money or instead of money also to give out an important resource in the spectrum which is valuable but in fact if anything the auction mechanism has actually been used to take money out of the system rather than to put it in because the money typically is not being recirculated into the ICT sector but used for the general purpose and there's nothing wrong with that except it is in a way another cost of entering and creating networks in some cases significant the amount of monies that Luis mentioned a study that we did at Columbia said that for the United States alone the investment that was needed for broadband infrastructure in the past 10 years plus projected by the various companies into the next 10 years is about a quarter of a trillion dollars together if you add that to that also the private investment the Wi-Fi routers and the devices in people's homes and pockets if you add those on top of it it's about half a trillion dollars of investment that's an awful lot of money that's just one country United States so now projected to the entire world so that's a very fundamental issue here that Luis is identifying the huge need of investments now on top of it when you have a competitive environment the marginal costs are very low right and therefore in a competitive environment the prices are subject to deflation and low prices which is great for us as consumers but the problem to us as producers and therefore there is that disconnect of more and more being used but not more necessarily more revenues being gained or profits being gained in order to recirculate this investment and that is one of the dilemmas of the industry there are more minutes, more bits more of everything consumed at growth rates are just phenomenal but not revenue wise and not profit wise and that of course creates barriers to investment so I think I'd like kind of to go now in the comments in the reverse order and Andre maybe you want to start and then we go Luis and David and so on Thank you very much and you say about the rule of government of government investment of any projects and big and not so big projects in these fields I think that the main active role it is a role of business private sector and private sector has money government see this government can see the strategy and maybe for example business if business says I can then government says I can't and in Russia we have a partnership between government and business and between government and private sector for example you know maybe the big Russian company the such Russian companies as Rostelecom and which is responsible for many projects which use the two sources of investment and they own money and investment from the governmental side we have a partnership so thank you some quick comments for we don't take and we tend to work a lot with large companies but we also work with governments including Singapore and a few governments in the region the way we see this is there are multiple objectives for the sector we actually did some work for the mobile industry in which we sort of said there are three simple ways of measuring the industry at the time of the law price rollout and penetration and what we found was that there seemed to be a sweet spot in industry structure why because of the structure of the industry very very high up front capex very very low cost to deliver a minute of a call or a bite of traffic if you have ten players what actually happens is that the price collapses to that marginal cost and it cannot pay for investment obviously you don't have that because there was investment to begin with so what you actually see is you see a decline in rates of investment you see a decline in coverage out there we compare the Philippines with India and my apologies to anybody in India here I'm simply pointing out the different objectives when we compare them actually the Philippines they were basically it's a two player market there are three players but it's effectively a two player market it's depending on which circle you go it's anywhere between a five to six to a twelve player market although some of the twelve have now lost their licenses and so on but the reality is they want a large number of players and what we saw was that prices in India were one tenth those of the Philippines but investment levels were one quarter those of the Philippines per capita so if you actually want investment then the price issues are trade off and you need to manage it so if you actually start moving more extensively towards rural areas you see much less coverage in India at the time I think coverage was about 60-65% I don't know where the latest number is the Philippines with the islands an archipelago of a thousand islands at 95% coverage now I will recognize these numbers are kind of fluid and depends on you to refine them but the reality was that the two player market was delivering on coverage and delivering on investment not delivering on prices prices were higher for us actually indeed to the point of Eli that many governments look at licenses without thinking of the impact of that license on the industry structure they view it as either a revenue source or they view it as a I'm going to bring prices down without understanding that there are other things you need to trade off so for us this NGN debate is about actually understanding what drives that investment and understanding what industry structure can make that investment supportable whether by a combination of a government and private funding or by a private only funding the US is basically a fixed war cable and fixed let's have a quick comment okay, well I think Eli has put his finger on the fundamental problem which is to get this massive amount of investment that's required in order to fund a broadband and I think across the whole panel my sense is that we're agreed that the vast majority of that investment has to come from the private sector and I would certainly agree with Louise that there's some things fundamentally wrong with regulation in Europe particularly in terms of fixed broadband and fixed broadband investment incentives I wouldn't deal with mobile I pretty much agree with everything you said in a few minutes giving you a sort of case study of maybe what has gone wrong in Europe something to be avoided rather than to be copied and that is that in Europe unbundled local loops for copper broadband were a great success and what the national regulators and the 27 member states have done is they have just transferred that set of rules where the investment was already made by the monopoly incumbents many years ago to fibre where the investment still has to be made and the rules meant that the investment case for investing in fibre was certainly fibre to the home was extremely weak and there's been very little of it by the main players the good news is that I think this problem has at last been recognised the financial institutions have hammered on the door of the person responsible of the commission, Nelly Crows and said look there isn't any investment and this is why there isn't any investment you have to do something about it and in July of this year she actually made an announcement which we had certainly worked on some of the details of some of the players which said look we can't go on as we are the regulatory model is broke we need to fix it we need to move from something which said you've got to as a major player you've got to unbundle your fibre and you've got to provide it to access seekers at a price which is cost oriented to one which is based essentially on you can have the pricing flexibility that you want but you must provide on an open access basis that's non-discriminatory and no margin squeeze those are kind of the new rules and the other important bit of the new rule is it's going to stay stable for 10 years so these are the kinds of things which we think will substantially strengthen the case for investment in Europe and there may be things that need to be thought about across the world as a whole when it comes to creating incentives for fibre well we had several market advocates here appropriately to my right now I will turn to the left here for perhaps people partly because they had responsible positions in government who stressed the role of government here and maybe we'll see from Singapore first which of course is the model for successful exercise of a governmental role just as Dubai is yes thank you so clearly government has a role to play in co-funding and I would say that in co-funding we tend to fund more the minor portion rather than the major portion and that I think helps to lower risk damages the industry to invest and provide services and we do that certainly in the end user services side and of course as I explained earlier something as large as the broadband network but I think when governments provides investments I think it's important to be clear what the objectives are so I think some of these objectives like we I shared earlier or now objectives in open access for example otherwise because that's an opportunity for the government to set out requirements that can better shape the structure going forward so in terms of open access so that you can have higher level completion at top and also recognizing that in this sort of a massive structure is largely a monopoly I mean not everyone can put in nationwide networks two and two or three in our case certainly so especially the residential area when it concerns bringing the fiber down into the individual homes you're not likely to get the home opening the door to different providers coming in price control and through the funding being able to ensure that prices are kept sufficiently low and that is a useful benefit because with competitive pricing it actually encourages widespread adoption by end users and consumers and that's important you know with high speed broadband I think is widely recognized as a way to go earlier in the other session you talked about how everything is video based now and when you talk about video it's certainly high speed whether for education, for business for gaming, for watching TV and so on so with lower prices through investments it encourages wider adoption and in return I think the end service providers from the telco industry would also benefit from that Thank you Ronnie and now Minister Johnson I think that we operate an industry that is completely liberalized and so I think that there's got to be a fine balance between policy and regulation the incentives that government will give to attract that investments and of course the private sector investments when you look at some of the numbers that you've spoken about these are fairly huge investments that need to be made and the numbers you talked about were in countries where some of that infrastructure is already in place in a country like Nigeria where a large part of that infrastructure is not in place we've got about 6% broadband penetration it's important that you look at these three factors first of all what does a regulator have to do so first of all at the policy level how do we in an in an industry that we have said at a policy level is completely liberalized a government will not make any more investments but that's what we said 10 years ago the regulator has to create that environment that ensures that that investment comes in but I think that as a years group by what we found is that because we've made it a very private sector driven market oriented industry we found that there are great pockets of the country that don't have this infrastructure, this investments and so therefore I think that we need to go beyond the incentives that were given operators or infrastructure providers to invest in these particular areas because again like I said in my opening remarks 70% of our population lives in these rural areas they are mostly poor they can't afford the kind of prices we're talking about and they're also very sparsely populated so there are clusters of density all around the country so we need to begin to think of it's a kind of hybrid model there will be situations where government may need to enter into a public-private partnership and actually also put some money down put some money down for ruling out some of that fiber we also need to look at in the instance where government does invest it has to be purely open access so that everybody has access to that infrastructure I think I'd also like to make the point around not only attracting investment into the infrastructure but we need to also attract investment into the demand side I think that's very, very important and we shouldn't forget that because building this infrastructure yes it's going to take a lot of money to have a sector but two things are very important device affordability we need to begin to look at how we can get more devices into the hands of people whether it's smartphones, tablets, whatever it is that people can afford and they can begin to use to get on that to get on the infrastructure and the second thing is making investments into the value added services because that's where people begin to get the benefits that we're in right now it's making investments in software development particularly mobile applications we've seen the success of mobile money in East Africa in a country like Nigeria you've got 167 million people relatives are urban areas, rural areas having a means by which you can transfer money safely and securely is very, very important for economic development so looking at those kind of applications we're looking at health applications where one of the most important life-saving applications is a simple SMS you buy a drug, there's a code on it you type that code in, you get an SMS to tell you whether the drug is authentic or not this has saved millions of lives so investing into people that actually develop that software, the mobile application ecosystem is very, very important to ensure that once we build this infrastructure it becomes an important part of not just economic development but also social development as well well, thank you very much we are perhaps ready to take some questions from the audience and if you do so there's a microphone somewhere and please identify yourself and if you give a speech I will cut you off after 20 minutes the lights on, good Alan Horn Telecom Regulator in a small place called Vanuatu and I've moved from the very busy hectic large markets to the extremity where the challenges I think are probably the most significant in the world in how do we get communities connected in very remote areas where governments have very little money so how on earth do we fund that and I wonder, I've heard a little bit from Minister Johnson, some very good points there but I'd like to hear from the other panel members the challenges to these very remote communities with governments with little or no money to be able to put into those infrastructure the population of Vanuatu is what 250,000 people over 63 islands alright so they say if if you were not a country but a company you would go out of business we'll have two people here if they would like to respond to that at most my message is not a positive one I'm afraid I'm not quite sure how you square that circle somebody said foreign aid sounds quite good to me I guess there is the obvious technology is satellite technology for that kind of broadband with cellular to some extent and with cellular there's room for the government to really accelerate the liberalization of the allocation of sub-1 gigahertz I'm not quite sure what world region you're in but the maximum amount as quickly as possible will help with the more concentrated population centers and then for the rest as far as I can see it's satellite Ka-band satellite is getting better you might be able to get something to some people if you choke the speeds back a bit that closes that circle between willingness to pay on one hand and cost on the other but it's a tough one it's a really tough one I'll pass this on perhaps to Ronnie because Singapore maybe you're an extreme case but Singapore is a small country and they've done pretty well yes we are a small country population and in size we don't quite have so many islands I frankly don't have a solution for that unfortunately and for us I mean we have our digital inclusion issues that we try to address you know schools with households with school going children provide some subsidy and provide all sorts of incentives for adoption and so on but I think nothing near as the scale of Van Water just in chat so I'll take the next question yes please sir Bashir Patel from the Commonwealth Telecommunication Organization we've heard from the panelists talk about the public-private partnership models we have a quite a diverse view from the World Bank studies on public-private partnerships some of the findings I've heard in terms of public-private partnerships particularly in respect to UK that they haven't actually worked for infrastructure projects as effectively as they should have done just wanted to get an opinion how effective does the panelists think public-private partnership model can work in the ICT sector thank you I think you would be perfectly well positioned to respond to that yeah I actually think you can work quite well if I just make the point of before I talk about the ICT sector we've had some very successful public-private sector partnerships particularly in the transportation government has partnered with people to build roads they're told and clearly the road is maintainable so I think that in the ICT sector it really depends on what each party is bringing to the table and that's in the ICT I think what is important is for instance we're talking about fibre which means that right-of-way becomes very very important things like right-of-way becomes very very important and also the vulnerability of that infrastructure particularly again in developing countries and I think that in a PPP in the ICT infrastructure the funding will primarily come from the private sector that the private sector is looking for for government to give with some levels of assurances on things like the right-of-way potentially making that free because that's one of the biggest costs of fibre optic that's what government brings to the table again it's protecting that infrastructure making sure that once investment is made that infrastructure is protected and that protection comes from government so that's what government brings to the table so I think that they can work but government is really protecting that funding making sure the return on investments will be there we're talking about fairly long gestation periods for ICT infrastructure and that comes from stability of the regulation, stability of policy and also given the things the private sector invests that nobody else can give apart from government We'll take the next question in the back Hi This is Bala from IBM I'm a little speech talent right now so bear with me the question I have is what Lewis mentioned earlier about what is 40-50 billion dollars royalty I mean some of those figures are extremely challenging so I'm wondering in your model if you've looked at CAPEX sharing through the cloud or a revenue share model to develop some kind of rule of thumb for those investments Okay Well the question was kind of clearly directed at one of the panelists so Lewis take a go at it So the issue whether we're in Europe is a little bit having to do with where they chose to put the spectrum so they've gone above the one gigahertz for LTE that makes it much more expensive There's a second problem is that the sector has ground to a halt on the mobile side and so revenues the incremental revenue case is rather difficult so these networks are a bit stuck there are all these pronouncements that we're going to build that we're going to build it but it doesn't get built There are a couple of things that are going to drive this CAPEX sharing is actually happening and it's moving ahead the trick there is actually how to manage the antitrust and the monopolistic issues also what level of the network do you share the chunk of the expense that you're going to share in general we see that there is less sort of active layer sharing but some of the passive or the intelligence part of the network basically ends up being the run operators but some parts of the active layer and a lot of the passive layer can be shared that works in markets where there is some amount of symmetry between the players so there's no two gigantic one and two and two really really small three and four or it's really really small three but then you're giving the three a competitive leg up relative to the other two and so you don't the level to which this will happen in Europe we think actually Europe has a problem and the level to which it will actually move on is to the extent that regulators are flexible about allowing this sharing and also the level to which there is alignment in the strategic and economic interests of each player so we actually don't see sharing in some countries or it would make sense to have you would say there is a move towards sharing not in the growth market I can differentiate through coverage much more so I rather not share if I'm the big guy why would I want to do that I will we've had here despite the Nobel Prize there's at least two critical voices and I'm not so hot myself about that either is there anybody here who would like to take a position that kind of explains defence are you rising in defence of the Brussels commission Hello, Guten Tag Christoph Le Gudko Intel I am not going to defence European Commission I was going to speak about the decision about the European Commission I was observing with interest the remarks of Mr. Enriquez and Mr. Levin about the challenge of Europe no fibre and about no investment in Europe in fibre the scenario was on the one hand American one the operator owns and operates the result the availability of fibre to the home in the US is 40% of households the scenario in Europe we have unbounding no investment 0.9% of fibre to the home the question I think Mr. Levin could answer that why European Commission in her announcement in June stopped in the half the way they encouraged in their announcement investment in fibre and immediately mentioned or announced the rules how to invest how to pay how to share how to finance that fibre after that announcement German telecom told beautiful we have new rules we have a plan how to invest 200,000 households a year 40 million households in Germany 200 years we are ready so why they are not going to abound what was the reason why the commission abound unbounding in Europe thank you alright this was although this was to some extent a comment rather than a question we'll take it anyway I saw it as a question at any rate which I'd like to answer and I think the answer is in two parts first as far as the European Commission is concerned I'm pretty sure that the nearly frozen cabinet are clear as to what needs to be done they're not going to go to the American model I think that would be considered politically unrealistic and perhaps unwise but they want something which gives the investor a much stronger business case for building with fibre I think the Deutsche Telecom position is one of not so much what Nelly Crow has announced was bad but we don't believe it will happen because there is an awful lot of regulators national regulators there's BEREC the Association of Regulators and there's an awful lot of small alternative network operators who are going to fight tooth and nail to change those rules to ones which leave us pretty much with the status quo and I think that is the challenge over the next 12 to 18 months is to convert Nelly Crow's statement into something which actually does make the investment start to flow just to give context to what's happening in Europe it's worth pointing out that the bulk money that is being spent in Europe and the bulk of the announcements are not about fibre to the home they are about fibre to the node rather than fibre to the home thank you very much some words regarding example or examples of PPPs and the level of Europe level of negotiations between Russia and Western Europe we have two examples when we try to task a very difficult very difficult problem with and we initially we I mean Russia has negotiations the meeting with Nelly Crow's and after that meeting we decided during this meeting we decided to go by the way of bilateral cooperation and we signed some memorandum between Russia and some countries of Western Europe the first memorandum was signed by Ex-Minister and her Excellency Suvilinden our Minister Igor Shogolev and this memorandum is example of PPPs some part of memorandum is the decision of regulators about their strategy and the second part of memorandum is the decision is the words of companies of operators who I agreed to elaborate the mutual rules of course degrees and the same situation we have in the field of frequency coordination between between Russia and the Western European countries there are several people here one I have already recognized right here and you're next and while this is taking place let me just kind of comment here that partly with the European policy which I'm not defending by the way is however is to make it cheaper not so much to perhaps to encourage the infrastructure relatively speaking but to encourage the users of the infrastructure the people and the companies that are heavy users of internet type services and they perhaps I have not heard much from them here but maybe there will be some who will speak up yes sir Sahla Iqta from Libyan Telecom just to have a comment more than a question which is building the infrastructure which is needed for mobile broadband and for fixed broadband is more of a challenge in the developing countries because it was a challenge in the UK and the US and still a challenge but more of a challenge in the developing countries so my comment is that governments and operators need to work to reduce this challenge in terms of governments effective regulation and the promotion of the ITC industry to help monetize the infrastructure from the operators side I think they have to invest more in the development of new solutions and new applications to help monetize the infrastructure to expedite the return on investment the other thing important in the operators side is the efficient utilization of the fiber or the infrastructure in their own countries which has to do with the regulation also but they have to work with the utilities with other operators because it's extremely expensive for developing countries to invest or duplicate any investment in the infrastructure so operators has to work harder to monetize and the government has to have effective regulations to help the utilization of the fiber thank you thank you very much sir we'll have here because we're running out of time we'll have here is the last comment perhaps yes my name is Sami Al Bashir I am with the Saudi Communication Commission from all the discussion there are two schools of thoughts one is heavy regulation is not good the example of Europe I'm just making things here simpler maybe to make sure that I understood government is not able to provide the investment and relying on the private sector to do that so we're in a dilemma here especially like my colleague from Libya the development countries are watching I think the message need to be stressed is in any strategy either you have a strategy or don't stop the operators or the private sector or whoever to start building the fiber to the home or any kind of broadband if we keep waiting and especially in the development countries to have the perfect strategy we will never get there so like our experience in the mobile I think the sooner you start the better no matter what strategy you have of course it's better to have a good strategy but if you don't have it please don't stop those people who have the money to invest and even probably cover the urban area which is more profitable to them but to have it there it's better not to have it at all thank you I think this is an excellent point I would in fact add to that that even if you have a good strategy to implement it using the governmental processes somebody here mentioned to me earlier the problems of procurement of public procurement and the problems that there are even if you have a great idea getting it through parliaments and appropriations may take years and in the meantime things have moved on speaking of moving on we have perhaps two or three minutes to conclude and so if everyone takes one minute of the speakers to just say what they take out of this session I think clearly there are different models I think different countries have really different situations whether geographically big the economic affordability of the end users citizens or the affordability of government are all clearly different even the technologies are different whether it's fixed whether it's mobile or even satellite in Singapore we recognise that even though it's mobile broadband it's so pervasive today and important and we are having LTE services but I think fixed broadband is also important and in fact it also provides the backhaul the mobile services and so on but I think clearly governments, the regulators the industry as well as the end users sectors all have a part to play in coming together to work out the relevant the models that are relevant and applicable for success in any particular country or situation I think for me there are four takeaways from the discussion I think first of all is the fact that there needs to be a balance between government funding and private sector funding of the build out of this infrastructure I think secondly is the importance of incentives particularly to incentivise the build out into the rural unserved and underserved area incentivised by government I think the third thing is also to really examine the impact of regulation and it's that fine balance again between heavy regulation and then leaving it completely to the market to decide what to do where of course there are dangers and risks in that as well so it's really having that balance between between regulation and the fourth and final thing is really that we need to simultaneously invest in both the supply side and also the demand side of the broadband equation thank you well after that I'm not sure I want to say anything but of course I will I can't resist I'd just like to sort of offer an idea a very simple idea that is prevalent in Scandinavia which is in some ways the third way and that is just stressing the importance of having fibre delivering high speeds to within shall we say two kilometres of every house not perhaps in the very remote areas but in a lot of the rural areas and then maybe people will come and they'll want to connect either as communities or it will be for the back call of a mobile phone company but an important role for government is to make sure whatever happens that that core backbone network is in place and if the market isn't providing it to think about how it can provide it because at least if you've got that you are giving people the opportunity to do things for themselves and it's quite clear from every survey you see that broadband is an experience good once you've got it you cannot do without it and you just want a higher speed so if you deliver that to somewhere close somebody will come along and fix it thank you very much my idea is that regarding the best investigation is that the best decision is a balance between investigation to new new gadgets new kind of transmission from one side and to broadband in general and from other side investigation to the social oriented field of life of social society and this case we as a result we will have more people who will be able to buy this gadget gadgets to use this frequency resources and to promote by this to promote the next investigation in this field and for I return to the beginning of my speech for example in Russia it's very positive idea to grow up the middle class at the base for economic investigation in the base of the economic base for the next development of ICT in general and for these days I don't know what will be in 10 or 20 years for these days investigation to broadband Thank you very much Luis so I think there was a lot of I think there were a lot of different points of view I came up with three things one is economic matter the understanding the underlying economic delivery model of the industry is critical and this is not about 10, 15, 20 players it's about two or three and if you don't fix those incentives you don't get problem either the government fixes them through a subsidy or you give the guys exclusivity or some other form of regulatory relief it doesn't get delivered and this is true in mobile, this is true in fixed it is starker in emerging markets we've explored in some places do a step function on them so we have different access models because access is expensive access costs a lot of money so the issue of fiber in Singapore or fiber in Sweden it's irrelevant to be honest to Mali or to Ethiopia for them it's a mobile access and the third regulation is critical if you take regulatory steps to reduce the price and reduce the returns to the industry you don't get investment it's not wishful thinking you don't the comment about mobile money in Kenya mobile money is 10% of Safari on revenues maybe 15 now 15% of Safari so 85% is traditional voice services 30% of Kenyan GDP goes through that mobile money service if I am the Kenyan regulator and I sell one more license to induce entry into that market and prices drop 20% I have blown away all the gains from mobile money in one swoop so it matters and it's 30% of Kenyan GDP that is going through that mobile money payment system so this is the levels and the sizes involved are huge and it matters thank you very much Louis we are now at the end of the panel and we are ran over time I will not summarize the summaries but I will just kind of state an observation which is a few years ago discussions at ITU events like this kind of essentially had the flavor of if we have competition all problems will be solved investments will flow competition will lower things now we are kind of observing things a bit more complicated the structure the high investment needs the low marginal cost lead essentially not to competitive environment but more to an oligopolistic environment and so there is a remaining role of government and we do have the problems of kind of the desiring an investment and therefore profitability of the underlying infrastructure but we also want to make sure that the users on the consumer end and the providers on the corporate level services of innovation are also not squeezed out by profit maximizing underlying carriers with market power so there is plenty of things for us to think about talk about but not on this panel because we are now out of time and I do thank the speakers very much and to you the audience for sitting and listening