Increasing Broadband Internet Penetration
In the OIC Member Countries
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Achieving rural deployment of mobile broadbandThe broadband supply gap tends to be focused in rural and isolated areas. In general terms, a
workable business case for broadband deployment is typically predicated on the possibility of
serving aggregate clusters of demand generally concentrated in population dense geographies.
While this is feasible in the case of urban and suburban settings, rural geographies do not
provide an attractive market, since they imply increasing the capital required for deployment
to yield a lower return. These factors act as a deterrent to broadband deployment from
privately owned carriers. In this context, four policy approaches are being followed to address
the rural supply gap.
The more conventional way is to allocate universal funds (collected as contributions provided
from private operators) to fund projects targeted to the unserved population. Responsibility
for deployment is typically assigned to private operators selected through public bids that
receive the public funds to support the deployment. The subsidy can be complemented with
additional incentives such as reduced taxes or elimination of permits.
In a different approach, if a publicly owned carrier is operating within the country, the
government might enforce an initiative to deploy broadband in rural geographies even if
conventional economic analysis renders this unattractive. This is conducted under the
assumption that government-owned broadband service providers need to operate under
“public service guidelines” rather than the profit imperative.
Another approach to promote network deployment in rural areas focuses on alleviating some
of the constraints of the rural broadband business case. For example, several governments
deploy publicly owned backbone networks with the objective of reaching remote locations.
Since traffic backhauling represents approximately 30% of the operating costs of running a
broadband network, a government-owned network represents an opportunity of cutting
transit costs to subsidize rural broadband network operations. However, while these networks
have reached geographies previously unserved by privately held transport facilities with the
ability to significantly reducing backhaul costs, the “last mile” access barrier remains. The
construction of fixed broadband networks, even after a national backbone network has
reached the rural area is not financially feasible. In this context, wireless broadband, due to its
more advantaged deployment economics could be a potential answer to this problem.
A fourth approach to tackling rural broadband deployment involves the introduction of
innovative ways of allocating radio spectrum to reduce the costs of constructing wireless
networks. Conventional spectrum management approaches, which imply high costs to acquire
spectrum licenses might raise a potential hurdle to deploying broadband in rural areas. In this
context, some governments have designated rural areas where a common band of spectrum is
assigned to a cooperative on a shared basis. This concept is an alternative to nationwide
spectrum rights in that small and medium size firms wishing to specialize in providing services
in particular geographical areas can do so without having to resort to paying large amounts of
money, typical of spectrum auctions. As expected, this approach requires some coordination