Increasing Broadband Internet Penetration
In the OIC Member Countries
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to prevent interference. Allocation of licences follows a ‘first-come, first-served’ procedure.
Licensees must pay license administration fees and annual charges; the latter include
management charges and a resource rental. This approach imposes a requirement to
implement services within two years of allocation. When more than one operator is interested
in being licensed for a particular area, an arbitration processes is put in place to decide who
gets to use the spectrum. Arbitration has been designed to encourage sharing26.
Achieving broadband affordabilityResearch indicates that limited affordability is a critical adoption obstacle when fixed
broadband penetration is low, which is the stage at which most emerging countries are. As a
general principle, telecommunications services have negative elasticities: higher prices imply
lower demand (see figure 17).
Figure 17: Correlation between fixed broadband penetration and price elasticity
Source: Estimates based on research literatureWhile the elasticity data in figure 17 is presented in absolute values, the price elasticity
coefficient is always negative indicating the indirect relationship between price and demand.
26 New Zealand has adopted this unique approach to managing the radio spectrum. The 1989 Radio Communications Act
created the Radio Spectrum Manager, a legal entity that allows private firms to manage portions of the spectrum. In New
Zealand, the Crown is the spectrum manager overseeing most of the spectrum, and in particular the Ministry of Business,
Innovation and Employment is the Manager of the frequency band 2575-2620 MHz (with 5 MHz required for a guard band at
the lower boundary reducing the effective bandwidth available for services to 40 MHz), which is operated as a Managed
Spectrum Park. In September 2009 80 licences were awarded. The park concept seeks to encourage “a flexible, cooperative,
low cost and self-managed approach to allocation and use” (MBIE, 2010) of the spectrum in the designated frequency band.
It intends to allow access to a number of users in a common band of spectrum on a shared basis; also, as the Crown is the
manager of the band it also seeks that the shared spectrum, if any, is also self-managed. Other objectives include
encouraging efficiency and innovation in the use of spectrum. The Managed Parks are According to the MBIE the MSP is
“intended for local and regional services” (MBIE, 2010) with licensees and services requiring”.Currently a number of
wireless broadband providers exploit the 2575-2620 MHz band after having successfully applied to be MSP licensees. Some
of the names include Gisborne Net, a telecommunications provider for the eastern areas of New Zealand’s North Island,
mainly around the city of Gisborne, TeamTalk and NetSmarts Ltd. These companies use the band to provide wireless
broadband to rural communities; each licensee incurs a cost of about NZD $300 annually per licence.