Increasing Broadband Internet Penetration
In the OIC Member Countries
111
As noted earlier, on the supply-side the government has been investing in deploying a national
fiber optic backbone network with the purpose of reducing long-haul connectivity costs and
improving the business case for deploying broadband distribution networks in remote areas.
Additionally, the auction of technology-agnostic universal spectrum licenses acted as a
stimulus for deployment of 3G and 4G technologies. Finally, for improving coverage in rural
areas, the government is promoting the sharing of broadband infrastructure, such as backhaul
and towers57 .
However, the operator view of this last incentive is that, even under the infrastructure sharing
agreement promoted by the government, the business case has not been proven to be positive.
The perceived barrier is the lack of “use cases”. Given that high illiteracy rate in rural areas, the
broadband consumption that could generate revenues is not high enough.
Furthermore, rural deployment is affected by a number of “hidden costs”. For example, due to
the lack of power, each base station has to be supplied with a generator. Additionally, at the
OPEX level, due to the lack of appropriate road access, maintenance and operations costs are
higher in rural areas than in urban settings. One way of addressing this problem would be for
the government to provide subsidies to cover some of the additional costs.
On the other hand, while enacting policies to promote investment, the government has also
implemented a policy that discourages investment. In 2015 the regulator raised the mobile
license renewal fees to be paid by the country’s operators in 2016 to CAF 100 billion (US$
162.5 million). The regulator also opted to cut the duration of the concessions, from 20 years
to 15 years. These measures are reported as having a negative impact on the operators’
willingness and ability to commit capital for the deployment of 4G. While acknowledging that
these measures are aimed at collecting additional revenues for the country’s treasury, their
impact should be evaluated also in terms of the extent that limit the country’s transition to
new technologies.
In addition to these investment impediments and increased costs reducing the amount of
capital for deployment of 4G networks, operators encounter local regulations that delay fixed
broadband deployment. For example, once an operator decides to construct fixed broadband
access in the last mile, it faces time delays for obtaining permits from municipalities and
negotiating construction terms of employment with labor unions.
In the context of the country’s development policies that affect the level of investment, there
are some macro variables that have a positive impact on the operators’ willingness to invest in
broadband infrastructure, affecting the strategies of operators such as Orange and MTN to
invest in fiber optics. Such companies consider fiber optic deployment as a bet on the future
economic development of the country. The government has presented its 2016-2020 National
Development Plan with a number of priority objectives that have strong implications for
requiring the deployment of fiber optics. Among those goals:
57 Source: Field trip interviews.