Leveraging Broadband and ICTs as an Enabling Cross-Cutting ...itd.gov.la/ictexpo/Leveraging...
Transcript of Leveraging Broadband and ICTs as an Enabling Cross-Cutting ...itd.gov.la/ictexpo/Leveraging...
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Leveraging Broadband and ICTs as an Enabling Cross-Cutting Infrastructure for a Sustainable Connected Society and Economic Growth
Vientiane, 14th Dec 2016
Dmytro Ponomarenko
VimpelCom Lao Company Ltd
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VimpelCom: a global communications and technology company
Amsterdam
VimpelCom
236 million subscribers
59 thousand employees
$9.6 billion revenues
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New technologies bring significant economic benefits
Source: McKinsey Global Institute analysis
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ICTs – Key element in achieving SDGs
ICTs asan enabler
Areas ofcontribution
Key focus
• ICTs as key enabler and means of implementation
• 4.b: ICT higher education
• 5.b: ICTs as an enabling technology to promote the empowerment of women
• 9c: Increased access to ICTs / Universal and affordable access to the Internet
• 17.8: ICTs as enabling technology
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Digitalization and economic growth go together in our markets
Algeria
Bangladesh
Pakistan
Armenia
GeorgiaKazakhstan
Kyrgyzstan
Tajikistan
Ukraine
Uzbekistan
Russia
Italy
Laos
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0% 10% 20% 30% 40% 50% 60%
GD
P g
row
th (
5y
aver
age)
ICT Development Index growth (2010 – 2015)
“A 10% increase in broadband could raise economic growth by between
0.25% - 1.4%” ITU, 2016
GDP/Capita$12,500
Unemployment6.4%
Higher education35.8%
Market Averages
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Connectivity is increasing
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…and Mobile technologies are leading the way
Years to reach 1 billion users
Source: The State of Broadband 2015, Broadband Commission
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…with explosion of mobile data traffic
2 1.4 1.1 1
3.8
1.2
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6.9 6.3 6.9
22
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Western Europe Central andEastern Europe
Middle East andAfrica
Asia Pacific North America Latin America
Monthly mobile data traffic per region(in GB)
2015 2021
Source: Ericsson Mobility Report, 2016
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However, the majority of the world population remains unconnected
3.2 billion(43.3%)
4.1 billion(56.7%)
237.9 million(33.5%)
≈2.1million(30%)
472.1 million(66.5%)
≈4.8 million(70%)
Connected
World VimpelCom Laos
Unconnected
Source: ITU IDI Index, 2015
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Regional differences remain
7.4
42.3
0
10
20
30
40
50
60
70
80
90
2010 2011 2012 2013 2014 2015*
Mobile broadband subscription(per 100 inhabitants)
Africa Asia & Pacific Europe The Americas
9.4
36.9
0
10
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Individuals using the internet(per 100 inhabitants)
Africa Asia & Pacific Europe The Americas
Source: ITU, 2015
~57% ~60%
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Connectivity is important, but not sufficient though…
Connectivity
Digital Financial Services
Data Flows
Digital Platforms
ICT Empowered Communities and Individuals
e-c
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e-a
gric
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Data flows have become a crucial economic driver…
The economic model shows that global flows account for approximately 10 percent of global GDP output
Source: TeleGeography, Global Internet Geography; McKinsey Global Institute analysis, 2015
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The volume of data is exploding…
Used cross-border bandwidth
Lines represent interregional bandwidth (e.g. between Europe and North America) but excludeintraregional cross-border bandwidth (e.g. connecting European nations with one another).
90% of the world’s data has been generated in the last two years
40 Zettabytes (40 trillion GB) will have been created by 2020, compared to 4.4 in 2015
More than 1/3 of all data produced will live in or pass through the cloud by 2020
Sources: IBM, CSC, McKinsey
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…however Legal Frameworks are lagging behind
- “National and regional legal frameworks that protect data in the ever-expanding digital economy are often outdated, incompatible or missing”
- “Insufficient protection can create negative market effects by reducing consumer confidence, and overly stringent protection can unduly restrict businesses, with adverse economic effects as a result”
- - Data localization requirements can have a negative impact on GDP between 0.7% and 1.1%
- - Data localization requirements increase costs for local companies by 30-60 percent
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Countries with data protection laws
No legislation Draft legistlation Legislation
Source: UNCTAD, 2016
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Factors determining successful digitalization
ICT-Empowered Communities and Individuals
Access to Infrastructure
Access to Devices
Digital Literacy and Skills
Relevant Content
Sustainable Business Models
Enabling Policy Environment
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Enabling policy-environment is key for increasing connectivity
“Successful reforms must take into account the need for comprehensive changes that cut across traditional
technological and commercial boundaries”
(World Bank)
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Enabling policies: Cost savings through network sharing
Source: Network Sharing at Vodafone
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Mobile devices are the primary gateway to digital services
Our Smartphone Penetration GoalsSmartphone Penetration
World
VimpelCom
44%
31%
Source: GSMA, 2016
36%
Asia Pacific
2015 smartphone penetration
2020 smartphone penetration
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Our contribution to Digital LiteracyDigital Literacy
Digital skills are key to unlock digital opportunities for everyone
Together with UNESCO and the BuyadFoundation we developed an mLiteracyprogram to educate rural women, a groupmostly excluded from the conventionaleducational system in Pakistan.
The program combines technology with on-siteeducation and has received the prestigiousGlobal Mobile Award in 2013.
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5,000
10,000
15,000
2009 2011 2012 2013 2015
Program Outreach
Digital Illiteracy
Illiteracy
Low Income*
Age (65+)
15%43%
13%47%
8%3%
*low income: $1.90 per day
Developing
World
Source: World Bank, 2016
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Lack of content means less people will go online
Source: World Economic Forum, 2015
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ToFrom
We are moving beyond mere connectivity
Communication
Mobile Education
e-Commerce
Mobile Agriculture
Mobile Finance
Mobile Health
Calls
Texts
Data
Traditional Telecom
Customer-centric digital service provider
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30m MFS users
40m monthly transactions
465m underbanked within VimpelCom’sfootprint
Gender empowerment: 40% of our MFS operations are headed by women
Example: Mobile Financial Services
88% 87%
82% 82%
69%
60% 59%
50%47% 46%
33%
13%
Unbanked population (% of 15+)
Source: Global Findex 2014
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And also…
VimpelCom provides a portfolioof services for the farmers ofBangladesh. These include aspecialist call center, and a‘voice-based’ virtual agriculturalmarket place for buying andselling produce. In Armenia weaim to integrate digital andagricultural education at thegrass-roots level.
AgricultureHealthcare Education
In Bangladesh, we provideservices aimed at peoplesuffering from stress ormental issues, and inPakistan we provide apersonal safety app. InKazakhstan we give peopleaccess to information ondiagnosing and treatingcommon types of diseases.
We engage with a wide varietyof NGOs, typically thosefocused on developmentissues such as education andthose working withmarginalized communities. Weprovided access to ICTequipment to a number ofschools in our markets forexample.
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Some challenges for traditional telecoms operators
Data traffic is growing exponentially and significant network investments are needed to meet the future demand
The needed investments can not (yet) be recovered by data revenues and traditional voice revenues continue to shrink
In addition, OTT players re-shuffle the market balance by focusing on the content offering rather than traffic
Operator profit margins significantly decrease over time and require innovative solutions to address these challenges
Need for sustainable business models in a transforming market…
Profitability trap for traditional Telcos
2010 2012 2014 2016 2018 2020 2022 2024 2026
CAPEX + Depreciation
OPEX
Revenues
Shrinkingmargins
EBITnegative
EBITDAnegative
Source: Strategy Analytics (2014) - Wireless Operator Performance Benchmarking Q1 2014
Revenues are shifting towards OTT players
OTT services market revenues (bn US$)
Telco services market revenues (bn US$)
Forecasts2019
368
649
2018
257
624
2017
180
600
2016
158
580
2015
137
560
2014
117
540
2013
94
519
+699%
+35%
2021
753702
2020
526675
Drivers for fixed and mobile data growth
Source: IDATE World Internet Services Markets, 2013
25,000
30,000
20,000
15,000
10,000
5,000
0
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…and balanced “like-for-like” policies and regulation
Regulatory parameters Telecom operators OTTs
Licence costs High N/a
Spectrum costs High N/a
Telecom tax/royalty Sometimes high N/a
USO funding Sometimes high N/a
Corporate tax 20 – 35% Often avoided
Customer care Mandatory Not mandatory
Municipal permissions Required Not required
Emergency services Required Not required
QoS parameters Stringent N/a
Security Mandatory Not mandatory
Rollout obligations Often stringent N/a
Interoperability Interconnection required Not required
Network neutrality Often required N/a
Source: Rory Macmillan, 2016
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Operator Response: adapt operating model
ToFrom
Shared service centers
Managed servicesLean HQ and OpCos1
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3
4Regional hubs
Fragmented operating model
Global Operating Model
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Operator Response: Move from traditional- to digital services
ToFrom
Communication
Mobile Education
e-Commerce
Mobile Agriculture
Mobile Finance
Mobile Health
Calls
Texts
Data
Traditional Telecom
Customer-centric digital service provider
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Impact of macro-economic policies remains significant
The impact of tax rebalancing on the economy
Consumer taxes as a proportion ofTCMO* have increased over theyears, from 17% in 2007, to 18% in2011 to 20% in 2013* Total cost of mobile ownership
Source: GSMA & Deloitte, 2015
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The policy environment becomes increasingly complex
eID
Traffic management
Cybersecurity
Financial regulation
VoInternet | Internet messaging
Privacy | Data transfers | Data management
Content requirements
Piracy
Meeting Policy
Objectives
While enabling
digital development
Mobile Finance
Comms
Enter-tainment
Big Data
e-CommerceMobileHealth
New Policy Topics Digital Offerings
Stat
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f-th
e-A
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rati
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Mo
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IoT
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…and requires innovative approaches
Self-regulation
Co-regulation
Outcome-based regulation
Speed of technological change demands forward-looking, principles-based regulations with clear intent, rather than prescriptive regulations
Rules and codes developed by the industry, in consultation with the government, and with legislative backing should be considered as alternatives to direct regulation
Where appropriate, self-regulation may be adopted, for which industry itself is responsible for enforcement
www.vimpelcom.com
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“Our Vision is for our business to play a key role in the socio-economic success of the communities where we operate by
providing high quality services to our customers, behaving as a responsible corporate citizen, and leveraging our technology to
support development.”
Alexey M. ReznikovichChairman of the Supervisory Board