Rural Telecom Programs: Key Success Factors
- Paper number
IAC-07-E5.I.05
- Author
Mr. Benoit Denis, SES ASTRA, Luxemburg
- Year
2007
- Abstract
Most developing nations have issued Universal Service Obligations and specific rural telecom programs. However, countries with similar demographic or economic profiles do not have the same telecom services penetration rates. Frost and Sullivan has been tracking rural telecom projects for over a decade and has identified the main key success factors for those programs. 1. Market environment Stable regulatory, political, and economic conditions are a prerequisite to any long-term investments and competitive commercial offers. Indeed, the primary restraint for rural telecom projects is regulatory risk. Countries which liberalized VoIP and wireless technologies have mostly seen significant telecom services deployments. In the best cases, demand is driven by business factors that drive benefits of connectivity. Encouraging first regions with special economic activities that benefit from communications will assure an early uptake. Some industries where telecom can serve as a means of business development include tourism, or agriculture where crops are sold to other regions or exported. Too often, services developed within the scope of rural programs do not match factors influencing demand. An emphasis should be put on voice services in low-density rural areas while Internet services may find users in dense rural areas where voice services exist. Broadband is not a must have in most cases. It may be useful for government programs such as Telemedicine or Distance learning. In the private sector, areas where more users are computer literate or have strong business applications demand broadband. 2. Commercial viability The telecom industry tends to set business plans on 2-3 years return on investments timelines. For rural telephony projects, return on Investment should be calculated with long-term views, in the 10-year horizon. In order to make return on investment analyses attractive, telecommunication ministries may opt for a number of incentives: Universal Service Obligations for operators Regulatory requirements to cover rural areas tied to licenses to more financially attractive regions Government subsidies or pre-financing covering capital and installation costs In rural areas, infrastructure costs can be extremely high for rural installations due to transportation costs, power unit costs (solar cells + housing), and lack of qualified personnel to install equipment. Pre-financing schemes tend to be the most the attractive and successful incentives.
- Abstract document