Table of Contents
Chapter One PROBLEM FORMULATION AND INTRODUCTION
1.1 Project Objective
1.5 Research Questions
Chapter Two LITERATURE REVIEW
2.1 Public Policy 7
2.2 Internet Access
2.3 Definition of Broadband
2.4 Policy Issues
2.5 Broadband Policies in Developed and Developing
2.5.1 Broadband Strategies in Developed Countries (OECD)
2.5.2 European Union
2.5.4 Broadband Policies in Developing Countries
2.5.5 Broadband Penetration in Africa
2.5.6 Broadband Penetration in Ghana
2.5.7 Broadband Penetration in Rural areas in Ghana
Chapter Three STATISTICS AND SET TARGETS
3.2 Implication of internet users and populations statistics
3.3 Set targets
Chapter Four Government proposed strategies for broadband penetration
4.1 Summary of Government strategies
4.2 50% broadband penetration by 2015
4.3 Anticipated Increase in GDP Growth
4.4 Broadband penetration and Gov’t Requirements
4.5 Education and ICT Skills Improvement
Chapter Five “What strategies should be put in place to increase broadband penetration to rural areas in Ghana?”
5.1 Approaches to policy design
5.1.1 Benefits of Broadband to the rural populace
5.1.2 Potential Barriers to investors that must be overcome
5.1.3 How can regulator reduce risk for an investor
5.1.4 What are potential bottlenecks in the supply chain
5.1.5 How can spectrum be designed to encourage investments in the rural areas
5.1.6 How can policy makers decrease price of broadband in rural areas
5.1.7 How can Ghana learn from the experience of other countries?
5.1.8 How can the “broadband gap” between urban and rural areas be addressed?
5.1.9 How can Gov’t increase education and ICT Skills in the rural areas
5.2 Strategies to increase broadband penetration in rural areas in Ghana
Chapter Six Expected Benefits of broadband penetration in rural Ghana
Chapter Seven Conclusion
7.1 Project Expectations
7.2 Long term strategy
Chapter One PROBLEM FORMULATION AND INTRODUCTION
1.1 Project Objective
The objective of this project is to outline possible strategies (focusing on public policy) to increase broadband penetration in the rural areas in Ghana. Currently, broadband penetration in Africa is 0.3% and it is expected to grow to 1.3% in the next five years. More of that growth will be through mobile connections because the fixed infrastructure is just not there. It is therefore expected that more than 60% of broadband connections will be accounted for by High Speed Packet Download Access (HSPDA), Long Term Evolution (LTE) and WiMAX. [Source: Africa Review July 2009 edition Page 27].
The expected result of the proposed policy is to stimulate increased broadband penetration in the rural areas. This may be useful to government, telecom companies, ISPs, etc and the rural folks. This will help government to bridge the gap between the urban and rural areas. It will also be useful to sectors like agriculture, health, education, communication, finance, market information, commerce, and governance. The telecom companies, ISPs, etc, will benefit in terms of taking advantage to analyze, invest and make profit for the sale of broadband for internet connectivity in the rural areas. Some feasibility studies will need to justify its viability though. Concerning the rural folks, there will be improvement in their standard of living. This is because as will be seen later, broadband penetration brings about improvement in the per capita Gross Domestic Product (GDP) of the areas of implementation. Rural farmers may by the use of the internet have access to a broader market compared to the “limited market queens” who buy their products at very low prices and thus keeping them poor. Lots more other sectors of the economy will benefit from broadband penetration to the rural areas. For example, the financial sector and specifically the banks and insurance companies will now be in a better position to operate better in these areas. This is because of the increased means of communication.
The outcome is to propose some policies for government that may stimulate increased broadband penetration in the rural areas. This result, if implemented by government is expected to increase per capita Gross Domestic Product (GDP) in the rural areas which Ghana as a country will benefit from.
The project study will focus on strategies in terms of public policy for increased broadband penetration in the rural areas in Ghana. Occasionally, references and comparisons may be made to broadband penetration in Europe, Asia, Africa or urban areas in Ghana. The project may examine some strategies in terms of policies that may have been put in place in some of the countries in Africa, particularly for their rural areas which policy makers in Ghana may find as useful.
It has been established that broadband penetration has a positive impact on a country’s per capita Gross Domestic Product (GDP).
The impact is bigger for the developing countries than in the developed economies. “A 2009 World Bank Information and Communications for Development report has analyzed the impact of broadband on growth in 120 countries from 1980 to 2006, showing that each 10 percentage points of broadband penetration results in 1.21% increase in per capita Gross Domestic Product (GDP) growth in developed countries, and 1.38% increase in developing countries thus Broadband has more impact in developing than developed countries.”
[Source: A National Broadband strategy for economic growth and development – Draft]
Broadband penetration in the developing countries is rather very low. Considering the above analysis of the World Bank, the impact will increase per capita GDP considerably assuming broadband is implemented in the rural areas of Ghana. This is because “least developed” areas benefit more from broadband penetration than “developed” areas.
Africa Review magazine edition of July 2009 puts broadband penetration in Africa at 0.3% which is negligible as far as penetration is concerned compared to the developed countries.
However, broadband penetration in the rural areas in Ghana is almost 0%.
In the light of the above, what are the barriers to broadband penetration in rural areas in Ghana? This is because for government to draw policies for increased broadband penetration, barriers to the current low penetration will have to be tackled in order to stimulate increase in penetration.
Also, what percentage of penetration do we consider appreciable, in other words what are the targets we will consider as increase in broadband penetration in rural Ghana?
Below are some reasons for low broadband penetration in the rural areas of Ghana.
a. Lack of infrastructure
b. Low level of computer literacy in the rural areas in Ghana
c. Public policy in favor of monopolistic stands
d. Pricing structure
e. Market size
f. Low Standard of living in the rural areas
The above barriers to broadband penetration may not apply to rural Ghana only, but also to urban Ghana and for that matter Africa as a whole.
The project will also focus on drivers of broadband penetration in the rural areas in Ghana.
1.5 Research Questions
This project is thus expected to answer the following questions
a. What is public policy?
b. What is broadband?
c. What is the level of penetration of broadband in the rural areas in Ghana?
d. What is meant by Strategy (in the context of public policy)?
e. What strategies (public policies) are to be put in place to increase broadband penetration in the rural areas in Ghana?
f. What are the benefits of broadband penetration to the rural populace in Ghana?
Considering the above, what strategies, in terms of public policy should be put in place to increase broadband penetration in the rural areas of Ghana?
Chapter Two LITERATURE REVIEW
2.1 PUBLIC POLICY
Simply put, Public Policy is a set of rules that the public must abide by. They could be documented and enacted through law, regulation, executive order, court order, or official letter that explains the policy decided by the country’s representatives or local authorities.
2.2 INTERNET ACCESS
The internet has grown to capture the entire world of information communications technology. This not withstanding, the speed to accessing information and services on the internet leaves much to be desired especially in developing countries like Ghana where bandwidth is a scarce resource. The duration of access to information and services on the internet is based on the capacity of bandwidth that is used to transmit information, the memory size and processor capacity of the transmitting and receiving devices. A bigger bandwidth means a faster data transfer rate that also means a faster performance of the internet, while a slower performance, which is a nightmare for the user, means a smaller bandwidth or lower data transfer rate Bandwidth is measured in kilobits or megabits per second (kbps/mbps) based on the data transfer rate.
2.3 DEFINITION OF BROADBAND
Broadband simply means a high data rate internet access. It enables high speed downloads and uploads of digital contents and services. There are however varying opinions in terms of the exact data rate to describe it. This is because there is no precise data rate to determine broadband. According to the Organization for Economic Cooperation and Development (OECD), data rate of 256kbps or faster in terms of download is Broadband. The US Federal Communications Commission (FCC) on the other hand describe broadband as data rate of 768kbps or faster. http://en.wikipedia.org/wiki/Broadband_Internet_access cited 10/10/2009 @ 14:00 The underlying factor is that broadband is a high data rate internet access.
It must also be noted that broadband can be deployed on any network infrastructure such as cable networks, DSL (Digital Subscriber Line), satellite and wireless technologies. The important issue is that the infrastructure should have a high data rate internet access which falls within the capacity described in the paragraph above. The cost depends on the architecture of the infrastructure and availability of existing infrastructure, density of the customers and other environmental considerations.
In most parts of Africa, internet access is very slow as a result of extremely low data rate internet access. It stands to reason that despite using the internet, users do not have access to broadband, based on the definitions given in the paragraph above. It is mostly dial up of 56 kbps which falls far short of the definitions given.
In broadband terms, large disparities exist between the “developed world” and “developing worlds” like Africa not only in terms of service availability, but also in terms of cost and access to technology. This therefore poses a serious challenge to policy makers and ICT engineers and professionals in Africa as to how best they can increase broadband penetration in Africa and especially in the rural areas where the bulk of the population live. This chapter will examine policies and how they influence penetration of broadband in the developed countries and that of the developing countries.
2.4 POLICY ISSUES
Governments are now aware of the importance of broadband penetration in terms of its role in improving per capita GDP. This calls for some strategies which depend on the country or group (of countries) in question and what strategies should be tailored to stimulate broadband penetration in their countries or block.
Strategy can be in several forms, examples are technology, policy, etc. As stated earlier, the project will take a look at public policy as a tool to stimulate broadband penetration in the rural areas in Ghana. The project will take a look at how policy stimulates broadband use in the Developed and Developing countries. It will also take a look at factors that influence broadband penetration in these cases.
Policies should be based on some set targets that have to be achieved. In other words, there should be some objectives or goal(s) that government should set out to do or achieve in order to increase broadband use. For example, what percentage of the population should have access to broadband within a certain period of time? What percentage of rural dwellers should have access to broadband in the next 2 years? These are issues that should be addressed by the state and with some public policy. Based on the set objectives, government can then tailor some policies to achieve the set objectives.
In the case of this project, the public policy issue is what policies should be put in place to increase broadband penetration in the rural areas of Ghana?
The subsequent writing will take a look at policies that stimulate broadband penetration in Developed and Developing countries.
2.5 BROADBAND POLICY IN DEVELOPED AND DEVELOPING COUNTRIES
Even though broadband penetration implementation in the developed and developing countries may be similar in terms of set objectives, certain factors however, influence the outcome of the set objectives resulting in different results. These factors include income levels, literacy levels, commitment to policy implementation and market behavior, etc. influence the achievement of set targets. These are what spell out the differences between Developed and Developing countries. The remaining part of this chapter will take a look and make some analysis in both cases. The project will then look at the case of Africa which is a typical case of the developing world, then settle on Ghana and its rural broadband penetration which is the focus of this project.
2.5.1 Broadband Strategies in Developed Countries (Using OECD)
Member countries of the Organization for Economic Cooperation and Development (OECD) are examples of developed countries. These are countries with high income levels, high rate of computer literacy, constant stimulation of broadband use with content and services, and no issues with cable connectivity throughout the country. These are some of the characteristics of developed countries. As a matter of fact, most of these countries have succeeded in developing policies, content and services that stimulate broadband usage. As a result, penetration of broadband is very high in percentage terms compared to those of the developing countries that have very low percentages in broadband penetration normally less than 1%. There are very few exceptions such as Morocco, Tunisia, Egypt and some others that have fairly reasonable “high percentages” of broadband penetration. The focus of these countries is to turn out to be information society based as compared to the Agriculture based economies of the developing countries.
In broadband bandwidth terms, developed countries normally have 1Mbps and above unlike developing countries 56 kbps dial up.
These countries already have cable connectivity to almost all homes and industries. As a result, there is more broadband usage in the homes compared to those of the developing countries where basic access to telephone services is an issue. Most homes in the developing countries have no access to telephone services thus the term digital divide between the developed and developing worlds.
Another important characteristic of the developed countries is that as a result of the demand for content and services, broadband penetration is high. Most financial services, public services and other utility services are on-line and as a result, there is the demand for them. Others like games and social networking sites are easily accessible.
The developed countries normally have energy to power their systems in both the urban and rural setups. Energy is not an issue because it can be obtained anytime and anywhere without much difficulty. There are stores of backups to supply power should there be a possible blackout.
The developed countries in most cases belong to some regional or international bodies or blocks where an overall framework for broadband is drawn for member states. The individual member countries however have their own policies that fit into the overall policy framework of the organization.
2.5.2 European Union
It comprises of 27 sovereign states that have acceded to the European Union (EU).
EU members adhere to the same framework in terms of policies stimulating broadband development and penetration. There are however, some differences in how their national markets work.
The current regulatory framework aims at stimulating competition in the market for broadband services and telecom services among member states. In several member states, the incumbent operator owns telecoms and cable networks, and as a result limits facility based competition in those countries.
The EU commission has initiated a number of projects to stimulate broadband growth. These are included in the e-Europe plan 2000 – 2002 had set as its objectives as follows,
a. cheaper, faster and more secure internet
b. investment in people and skills
c. greater use of the internet
Their next e-Europe plan 2005 were as follows
a. modern online public services
b. dynamic e- Business environment
c. widespread broadband access
d. secure information infrastructure
Then finally in i2010 which is a follow up to e-Europe plan 2005, the objectives are
a. single European single space, innovation and investment in research
b. Better public service and quality of life.
It is obvious that each stage develops on the preceding stage in terms of value and services. The e-Europe 2000-2002 was the initial stage that targeted cheaper, faster and more secure internet. It also thought of the need to educate users and make them computer literate and thus invested in people and skills. Finally, the plan also tried to stimulate a greater use of the internet. The next plan was e-Europe plan 2005 that developed upon e-Europe 2000-2002, by providing online public service and the environment to do business. It further went on to provide widespread broadband access and secured information infrastructure.
The i2010 plan seeks a single European space and also to bring innovation and investment in research. It is also to ensure a better public service and quality of life. I2010 is Innovative in the sense of bringing online new services and applications where stakeholders can sit at home and transact their businesses. These businesses can be public or private. The websites of various state and private entities are expected to play very important roles.
The national policies fit very well into the EU programs as they are expected to move in the same line of implementation.
It is obvious that developed countries belonging to various groupings have several advantages. Some of these are benefits like sharing ideas and expertise at the regional groupings level. Also some advantages of economies of scale may be enjoyed by member countries.
illustration not visible in this excerpt
(source: http://www.websiteoptimization.com/bw/0609/european-broadband-penetration-b.gif cited 24/02/2010 @ 09:32am) Table is Broadband penetration for 2006
2.5.3 South Korea
It should also be noted that it is not only Developed countries that are associated with high broadband penetration rate. There are some exceptional cases like South Korea that have very high penetration of broadband. According to World Bank statistics, South Korea’s GDP is worth US$ 929 billion which is approximately 1.5% of the world economy. The per capita GDP is US$16,450 [source IMF Report for 2009]. Being an early mover into broadband, it has for a number of years been the leading country in terms of penetration of broadband rate. It may not be classified as a developed country and income levels may not be to the level of the developed countries. It must be noted that it is also not a developing country. In fact, it is a middle income country. Different circumstances have resulted in South Korea’s ability to achieve such high broadband penetration rate. As a matter of fact, South Korea is rated as one of the countries with the highest rate of broadband penetration globally. Their circumstances are different in so many ways. Their broadband bandwidth was 4Mbps in 2004 which is higher than in Europe’s 2Mbps. It has probably reached its saturation level in terms of penetration of broadband rate. Virtually every corner, homes, taxis and factories have broadband connectivity. Several factors have accounted for this interesting development. These are;
a. Geography and demographics
b. Facility based competition
d. Internet cafes (PC bang)
e. Available content
f. Government policy
It has been observed that more than 50% of households live in apartment complexes. Also, 93% of workers live 4km radius of central office. Connectivity cost is therefore low, in fact, as low as 14% the average cost of broadband connectivity globally. It is important to note that the block wirings of the apartments are owned by the landlords. The internet cafes (baangs) have stimulated the broadband services in especially the demand for on line games. Prices of broadband services measured in MB are one of the lowest one can come across in the world. Meanwhile, the Koreans are willing to pay more for higher bandwidth availability. It must be noted that the cafes provide a critical mass for the content providers. Though entertainment may be important in terms of services, educational services (complex education) are also areas that stimulate broadband use. Another admirable initiative of South Korea is that the amount paid for 3G licenses are put into research in the telecom sector and other network investments.
South Korea’s progress in broadband penetration did not start now. In the 1980s, the government had already provided the country with a nationwide backbone for broadband services. There were other infrastructure developed for the public, private and others like the educational institutions.
The case of South Korea is enough to show that high penetration of broadband results from proper planning and investment in the broadband infrastructure. Others include skills development, content development and stimulating growth in the use of broadband services and urban planning. Urban planning is organized in a way that flats which are residential accommodation for workers are based quite close to the central offices. It is therefore cheaper to implement broadband in their residences and offices than in other countries where residential areas are far apart from each other and their offices. Meanwhile, the landlords arrange to get cables to the residences which enables a one touch connection to the flats and cheaper to connect.
2.5.4 Broadband Policies in Developing Countries
These are countries where universal access to basic telephone services is still an issue. As a result of this, penetration of broadband is very slow. This is because cables penetration in these countries is limited to certain urban areas with virtually nothing in the rural settings. Copper cables for transmission which are being used are not the best high bandwidth transmission for Asynchronous Digital Subscriber Lines (ADSL). The result is very slow transmission speed on the internet. Other characteristics of these countries are low income levels, high illiteracy rates, lack of ICT skills and low rates for broadband use. Another important issue is energy to power systems. Most developing countries lack energy for their generators or dams for hydro power. Under such circumstances, penetration of broadband may not be relevant. Another observation is that these countries normally do belong to some regional groupings or blocks, however the commitment to these bodies in terms of their functions is just not there. In other words, they operate independently though on document, there is some kind of grouping. However, in recent times, lots of these countries are working to increase their penetration of broadband though it is still low. This is because they find it as a way to ensure internet access and increase the general standard of living. Also, some studies have shown that developing countries benefit more from broadband penetration than the developed countries in terms of GDP growth. This has been stated in the earlier chapter, based on a World Bank study. The current mobile and wireless technology has enabled internet access from the remotest of rural areas. However, considering the fact that there is a direct relationship between income and penetration of broadband (at least to some levels of income), then the developing world has much to do. This is the result of low incomes and expensive broadband usage, internet access to a large extent is a non-starter. It is partly because of these reasons that OECD members have made gains compared to the modest by the developing world.
Whereas the developed world has between 2001 and 2005 increased from 2.9 per 100 inhabitants to 13.6, the developing world has less than 1%. It is for this reason that some argue that broadband is not relevant in the developing world. This point, to some extent is relevant in the sense that limited infrastructure does not encourage broadband penetration. However, since 2006, rapidly falling prices for broadband brought about some limited improvement of broadband penetration in the developing countries. Secondly, mobile and wireless technologies have also increased the current situation because broadband can be implemented in these media. Some government commitments to infrastructure have also increased penetration of broadband in some of these countries.
As stated above, with falling prices of broadband worldwide, the situation will make it affordable to all eventually. Broadband prices have fallen in the last two years by about 40%.