Memo # 6: Foreign Investment in Telecommunications
The question asked was to address an issue with investment in telecommunications in a foreign country. For this memo, I wish to examine a related topic. In 2006, a paper was published for the Southern Association for Information Systems Conference, entitled Telecommunication Investment in Economically Developing Countries. The short paper addressed the annual budget expenditure of economically developing countries ("EDC") into the telecommunications structure of the country. The basis of the study is the Annual Telecommunications Investment ("ATI"), defined by the authors as "the annual expenditure associated with acquiring ownership of property and plant used for telecommunication services." Id. at 30. This expenditure was then compared to the nations' Gross Domestic Product to determine the percentage of GDP invested in telecommunications and whether this investment has spurred overall growth in the GDP. The results are interesting and provide the evidence that EDC's need greater foreign investment in their telecommunications industries. As many of these nations still have a nationalized, government funded telecommunications industry, the spending is often limited by government budgets and political will. There are a few major conclusions to draw from the research.
Many of the EDC's profiled by the study, nations in Africa, Eastern Europe, Central America and Asia, are spending no more then 2.5% of the annual GDP on ATI. That is in line with many of the industrialized nations. The United States is the amongst the lowest spenders, at .5% of the nation's GDP. However, the United States invested $34 billion in 2002 into the telecommunications industry. Industrialized nations have the resources to expend the billions needed to grow and maintain the telecommunications network. For a better comparison, look at the data from Gambia and the Czech Republic. In 2002, the Czech Republic, a relatively strong industrialized economy, spent 1.7% of the GDP on ATI. Gambia, a decidedly developing nation, invested 2% of the GDP on ATI. But here is the difference; the actual amount spent by the Czech Republic was $810 million while Gambia's actual expenditure was $8 million. The equality of percentage of GDP when viewed in terms of actual dollars is staggering.
The ramifications are huge. The authors state that the investment required to raise a nations telephone infrastructure (again, simply telephone infrastructure) from 1 phone for 300 inhabitants to 1 phone for every 100 inhabitants is $8 billion. Staggering; to take a EDC to the basic telephone infrastructure of 1 phone (AGAIN JUST PHONES) for every 100 inhabitants requires a 10,000 times increase in the investment a reasonably developed nation, like the Czech Republic, provides in a year. At current investment levels, that is a million times increase for Gambia. EDCs cannot make these telecommunications investments on their own, using the resources within the nation.
For the EDCs of the world to reach even a remedial level of telecommunications infrastructure, either foreign investment is required to enable the growth, or else the nation must be willing to take on huge amounts of debt to grow the network. Two nations, Azerbaijan and Gabon attempted the second route. In 2002, Gabon spend 229% of the GDP on ATI while in 2000, Azerbaijan invested 436% of its GDP on ATI. But it is unclear whether these debt-fueled investments will actually grow the national economy. A better route, a safer route for a country, would be to allow foreign investment in the telecommunications network, enabling a nation to provide necessary service without encumbering the economic hardship of debt.
Monday, February 26, 2007
Article
Role of Telecommunications Investment in an Economically Developing Country (EDC). Does the increase in telecommunications investment lead to a general advance in the economic standing of the country? See below and my next post.
http://sais.aisnet.org/2006/Negash-SAIS2006-papera.pdf
http://sais.aisnet.org/2006/Negash-SAIS2006-papera.pdf
Sunday, February 18, 2007
Memo #5-Public Service Announcement on Funding 9-1-1
FROM: THE NATIONAL EMERGENCY NUMBER ASSOCIATION: NEXT-GENERATION EMERGENCY 9-1-1 PARTNERSHIP
Change is good, but the process of change means tough choices as to deal with the effects of change.
For years, the Emergency 9-1-1 service has been funded by collecting subscriber fees for 9-1-1 service, assessed on all wireline and wireless phone bills and are collected by telecommunications providers. The telecommunications providers then remitted these fees to the local governments to ensure community-wide access to the Emergency 9-1-1 service. This blanket fee ensured that the Emergency 9-1-1 service was paid by, and available to, everyone in the community. The Emergency 9-1-1 service has saved countless lives by connecting the community to the emergency services they need. But the current technological and economic revolutions are threatening to erode the funding for this vital public service. Traditional telephone service is being challenged by the cellular phone and the Internet phone. These challenges to the traditional system are resulting in lower prices and better services for those who choose them; a choice that does nothing but benefit society.
However, a difficult choice must be made. The move away from the traditional sources of funding of Emergency 9-1-1 threatens to erode the very service that has saved and protected the society at large. The other issue is that the providers of Internet telephone service lack the ability to connect to the existing Emergency 9-1-1 service, the willingness to provide such connection, and no method to help provide the funding. As a result, Emergency 9-1-1 is threatened.
However, there are tough choices that can be made that would alleviate these concerns. First, write your congressman and senator and put pressure on them to actually appropriate the $25 Million dollars in Emergency 9-1-1 funding that was authorized in 2005, allowing these public funds to be released to the states and local governments. The release of this money will pay for necessary upgrades to the Emergency 9-1-1 system to ensure that the existing system will be work in conjunction with the new telecommunication technologies.
This release is a short term solution. For the long-term, the local consumers of Emergency 9-1-1 service need to provide direct, reliable sources of funding that applies to all members of the community. As such, please encourage your local city councils, county commissioners and public utility commissioners to encourage the adoption of the small surcharge on access infrastructure providers proposal advocated for by the NENA. This small surcharge, which is lower then the surcharge imposed on the telephone providers in the past, will apply to wireless, wireline, and Internet telephone providers by imposing the small surcharge on the access providers. Businesses, homes and other entities all need an access infrastructure provider to interconnect, and this fee proposal ensures that everyone in the community is providing for Emergency 9-1-1 services. By spreading the cost to all connections, the NENA proposal will keep the individual cost low, lower then what has traditionally been paid. Finally, this fee will ensure that Emergency 9-1-1 services will be paid for and responsive to the local developments.
The NENA knows that imposing a fee on every connection is a tough pill to swallow, but it is a decision that is necessary to ensure Emergency 9-1-1 service will be available to all who need it. Your life, the life of those you care about may depend on it.
FROM: THE NATIONAL EMERGENCY NUMBER ASSOCIATION: NEXT-GENERATION EMERGENCY 9-1-1 PARTNERSHIP
Change is good, but the process of change means tough choices as to deal with the effects of change.
For years, the Emergency 9-1-1 service has been funded by collecting subscriber fees for 9-1-1 service, assessed on all wireline and wireless phone bills and are collected by telecommunications providers. The telecommunications providers then remitted these fees to the local governments to ensure community-wide access to the Emergency 9-1-1 service. This blanket fee ensured that the Emergency 9-1-1 service was paid by, and available to, everyone in the community. The Emergency 9-1-1 service has saved countless lives by connecting the community to the emergency services they need. But the current technological and economic revolutions are threatening to erode the funding for this vital public service. Traditional telephone service is being challenged by the cellular phone and the Internet phone. These challenges to the traditional system are resulting in lower prices and better services for those who choose them; a choice that does nothing but benefit society.
However, a difficult choice must be made. The move away from the traditional sources of funding of Emergency 9-1-1 threatens to erode the very service that has saved and protected the society at large. The other issue is that the providers of Internet telephone service lack the ability to connect to the existing Emergency 9-1-1 service, the willingness to provide such connection, and no method to help provide the funding. As a result, Emergency 9-1-1 is threatened.
However, there are tough choices that can be made that would alleviate these concerns. First, write your congressman and senator and put pressure on them to actually appropriate the $25 Million dollars in Emergency 9-1-1 funding that was authorized in 2005, allowing these public funds to be released to the states and local governments. The release of this money will pay for necessary upgrades to the Emergency 9-1-1 system to ensure that the existing system will be work in conjunction with the new telecommunication technologies.
This release is a short term solution. For the long-term, the local consumers of Emergency 9-1-1 service need to provide direct, reliable sources of funding that applies to all members of the community. As such, please encourage your local city councils, county commissioners and public utility commissioners to encourage the adoption of the small surcharge on access infrastructure providers proposal advocated for by the NENA. This small surcharge, which is lower then the surcharge imposed on the telephone providers in the past, will apply to wireless, wireline, and Internet telephone providers by imposing the small surcharge on the access providers. Businesses, homes and other entities all need an access infrastructure provider to interconnect, and this fee proposal ensures that everyone in the community is providing for Emergency 9-1-1 services. By spreading the cost to all connections, the NENA proposal will keep the individual cost low, lower then what has traditionally been paid. Finally, this fee will ensure that Emergency 9-1-1 services will be paid for and responsive to the local developments.
The NENA knows that imposing a fee on every connection is a tough pill to swallow, but it is a decision that is necessary to ensure Emergency 9-1-1 service will be available to all who need it. Your life, the life of those you care about may depend on it.
Sunday, February 11, 2007
Memo #4: Effect of the ITU-T on Mozambique
Based on an article Mozambique Event Examines Standardization Issues from an African Perspective, ITU-T's Newslog, available at http://www.itu.int/ITU-T/newslog/Mozambique+Event+Examines+Standardization+Issues+From+An+African+Perspective.aspx (October 2, 2006), the ITU-T and other multinational telecommunications unions are simply at the stage of informing the telecommunication regulators of Mozambique about the structure of the ITU-T and what can be provided at this point. The ITU-T, the African Advanced Level Telecommunications Institute (AFRALTI), and the ITU’s Center of Excellence conducted a three-day workshop in late October 2006 for the telecommunications regulators of the country to expose these regulators to the new standards available, in attempt to encourage the adoption of these standards to improve the telecommunications industry in the country, as well as increasing the interconnection of the county to the larger world community. Of the standards discussed at the event, the two that received particular focus were NGN (Next Generation Networking) and VoIP (Voice-over Internet Protocol).
For an initial matter, "The [ITU] Worldwide Centre of Excellence (CoE) Network consists of regional mechanisms aimed at strengthening the capacity within each region in order to develop high-level know-how and expertise in telecommunication policy, regulatory issues, corporate management and advanced telecommunication technology." See http://www.itu.int/ITU-D/hrd/coe/. The AFRALTI is one of two African Centers of Excellence focusing on increasing human resources training and other network training for the developing English speaking countries of Africa, with another Center of Excellence focusing on the French speaking nations. See http://www.afralti.org/coe.html.
The ITU-T defines NGN as follows: "A Next Generation Network (NGN) is a packet-based network able to provide services including Telecommunication Services and able to make use of multiple broadband, QoS [quality of service]-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. It offers unrestricted access by users to different service providers. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users." NGN Working Definition, ITU-T, available at http://www.itu.int/ITU-T/studygroups/com13/ngn2004/working_definition.html. The primary feature of the NGN is the fusing of older, separate and non-interconnected networks into one IP based network. Such a network would enable the expansion of VoIP services across this network, allowing developing countries to interconnect with the rest of the world.
Obviously, a concern of regulators in developing countries, and an issue that was raised at the Mozambique conference, is the security of the network. Interconnecting the the greater world on an international standard leads to the possibility that the national network will become targets of denial of service attacks or other hacking tools developed for these standards. Other security concerns would be the ability to use the network for governmental communications in cases of emergencies, or the nations individual standards on privacy. One feature of the NGN, again according to the ITU-T Working Definition, is that the NGN will be compliant with the Regulatory concerns of the nation, suggesting that the NGN is highly flexible.
Based on the information above, the ITU-T is seeking to open dialogues with the telecommunications regulators to expose these developing nations to the new standards and network developments in attempt to reconfigure these national networks so they will be interoperable with the larger world.
Based on an article Mozambique Event Examines Standardization Issues from an African Perspective, ITU-T's Newslog, available at http://www.itu.int/ITU-T/newslog/Mozambique+Event+Examines+Standardization+Issues+From+An+African+Perspective.aspx (October 2, 2006), the ITU-T and other multinational telecommunications unions are simply at the stage of informing the telecommunication regulators of Mozambique about the structure of the ITU-T and what can be provided at this point. The ITU-T, the African Advanced Level Telecommunications Institute (AFRALTI), and the ITU’s Center of Excellence conducted a three-day workshop in late October 2006 for the telecommunications regulators of the country to expose these regulators to the new standards available, in attempt to encourage the adoption of these standards to improve the telecommunications industry in the country, as well as increasing the interconnection of the county to the larger world community. Of the standards discussed at the event, the two that received particular focus were NGN (Next Generation Networking) and VoIP (Voice-over Internet Protocol).
For an initial matter, "The [ITU] Worldwide Centre of Excellence (CoE) Network consists of regional mechanisms aimed at strengthening the capacity within each region in order to develop high-level know-how and expertise in telecommunication policy, regulatory issues, corporate management and advanced telecommunication technology." See http://www.itu.int/ITU-D/hrd/coe/. The AFRALTI is one of two African Centers of Excellence focusing on increasing human resources training and other network training for the developing English speaking countries of Africa, with another Center of Excellence focusing on the French speaking nations. See http://www.afralti.org/coe.html.
The ITU-T defines NGN as follows: "A Next Generation Network (NGN) is a packet-based network able to provide services including Telecommunication Services and able to make use of multiple broadband, QoS [quality of service]-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. It offers unrestricted access by users to different service providers. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users." NGN Working Definition, ITU-T, available at http://www.itu.int/ITU-T/studygroups/com13/ngn2004/working_definition.html. The primary feature of the NGN is the fusing of older, separate and non-interconnected networks into one IP based network. Such a network would enable the expansion of VoIP services across this network, allowing developing countries to interconnect with the rest of the world.
Obviously, a concern of regulators in developing countries, and an issue that was raised at the Mozambique conference, is the security of the network. Interconnecting the the greater world on an international standard leads to the possibility that the national network will become targets of denial of service attacks or other hacking tools developed for these standards. Other security concerns would be the ability to use the network for governmental communications in cases of emergencies, or the nations individual standards on privacy. One feature of the NGN, again according to the ITU-T Working Definition, is that the NGN will be compliant with the Regulatory concerns of the nation, suggesting that the NGN is highly flexible.
Based on the information above, the ITU-T is seeking to open dialogues with the telecommunications regulators to expose these developing nations to the new standards and network developments in attempt to reconfigure these national networks so they will be interoperable with the larger world.
Monday, February 5, 2007
Memo #3: Video Game Wars
Ten years is a long time in the Video game industry. Ten years covers what is considered two potential product cycles, with a potential release of two new iterations of the Playstation, Wii and XBox. Or there could be a new player in the market with one of these three systems vanishing form thought. Ten years ago, one of the major players in the industry was Sega. The company had introduced in the late '80's and 90's such gaming consoles as the Genesis, the portable Game Gear and the Sega Dreamcast, but today the company is a shadow of its former self. Even ten years ago, the prospect of a company like Microsoft being a dominant player in the video game console world was not even considered. The only constant in the video game industry is the inclusion of Nintendo amongst the most important and influential leaders in the development of consoles and content. So what does this mean for the next ten years in the video game industry?
One could be tempted to say that the console, with its proprietary content, production and disks, will vanish in a move towards placing all games on the Internet. I am personally doubtful of this development. Today, two of the three major console systems have become the showcase for a new format war, HD-DVD versus Blu-Ray. The XBox 360 now has a new HD-DVD player that can be attached to the machine to add new functionality to the system a year after it was launched. On the other hand, the Playstation 3 has a Blu-Ray player built right in. Unsurprisingly, Microsoft is a supporter of the HD-DVD format while Sony is the pusher for the Blu-Ray system. Both companies have placed their bets in this new format war and the game consoles are the front line soldiers in the fight. Looking deeper, the two consoles are also advertisements for the cutting edge of the computing industry. The Playstation 3 contains an IBM cell-processor which could later become the basis for high end computing in other industries. The XBox 360 is designed around high-end components that the user could put in his own PC, powered by Windows of course. Both of the systems are pushing the other new standard that is emerging, high definition video. Both claim, with the XBox planning on releasing a HDMI connector in the XBox, that they will push 1080p content to the beautiful plasma television hanging on the wall.
Then there is the third player, the upstart. The Nintendo Wii is based around older, less powerful technology, without a concern for the pushing of 1080p video. The system is also basing its discs on the old DVD standard. This older technology is providing a price advantage for the Wii, allowing it to the market at several hundreds of dollars below the competitors. But the Wii is pushing a new way to play. Immersive gaming, which attempts to pull the player into the game and be a true part of the experience. Intuitive gaming, which allows novices to pick up the controller and join in. Further, Nintendo is continuing to push the hand-held game console which may end being the ultimate goal.
So what does this mean ten years form now. This is the cop-out answer, but I just don't know. Now that the Wii has become a modest success one can assume the larger players will bring immersive, intuitive gaming to the proprietary consoles, while boasting more powerful systems and graphics. And one cannot say whether there will be a new format war which will help drive new systems. One can at least assume that Nintendo will be around in some form, which I believe is the only constant. Ten years is a long time in the video game industry.
Ten years is a long time in the Video game industry. Ten years covers what is considered two potential product cycles, with a potential release of two new iterations of the Playstation, Wii and XBox. Or there could be a new player in the market with one of these three systems vanishing form thought. Ten years ago, one of the major players in the industry was Sega. The company had introduced in the late '80's and 90's such gaming consoles as the Genesis, the portable Game Gear and the Sega Dreamcast, but today the company is a shadow of its former self. Even ten years ago, the prospect of a company like Microsoft being a dominant player in the video game console world was not even considered. The only constant in the video game industry is the inclusion of Nintendo amongst the most important and influential leaders in the development of consoles and content. So what does this mean for the next ten years in the video game industry?
One could be tempted to say that the console, with its proprietary content, production and disks, will vanish in a move towards placing all games on the Internet. I am personally doubtful of this development. Today, two of the three major console systems have become the showcase for a new format war, HD-DVD versus Blu-Ray. The XBox 360 now has a new HD-DVD player that can be attached to the machine to add new functionality to the system a year after it was launched. On the other hand, the Playstation 3 has a Blu-Ray player built right in. Unsurprisingly, Microsoft is a supporter of the HD-DVD format while Sony is the pusher for the Blu-Ray system. Both companies have placed their bets in this new format war and the game consoles are the front line soldiers in the fight. Looking deeper, the two consoles are also advertisements for the cutting edge of the computing industry. The Playstation 3 contains an IBM cell-processor which could later become the basis for high end computing in other industries. The XBox 360 is designed around high-end components that the user could put in his own PC, powered by Windows of course. Both of the systems are pushing the other new standard that is emerging, high definition video. Both claim, with the XBox planning on releasing a HDMI connector in the XBox, that they will push 1080p content to the beautiful plasma television hanging on the wall.
Then there is the third player, the upstart. The Nintendo Wii is based around older, less powerful technology, without a concern for the pushing of 1080p video. The system is also basing its discs on the old DVD standard. This older technology is providing a price advantage for the Wii, allowing it to the market at several hundreds of dollars below the competitors. But the Wii is pushing a new way to play. Immersive gaming, which attempts to pull the player into the game and be a true part of the experience. Intuitive gaming, which allows novices to pick up the controller and join in. Further, Nintendo is continuing to push the hand-held game console which may end being the ultimate goal.
So what does this mean ten years form now. This is the cop-out answer, but I just don't know. Now that the Wii has become a modest success one can assume the larger players will bring immersive, intuitive gaming to the proprietary consoles, while boasting more powerful systems and graphics. And one cannot say whether there will be a new format war which will help drive new systems. One can at least assume that Nintendo will be around in some form, which I believe is the only constant. Ten years is a long time in the video game industry.
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