1. Reflections about the ongoing Transformation of the Telecommunications Market Open Access Conference Accra 2-3 Nov 2009 Anders Comstedt

2. The telecom business is about network scale effects: Size matters Relative size to your competitors High Density footprint for low cost per user

3. Intercontinental connectivity: From scarcity to abundance Q: Will all new African submarine cables really be built? A: Yes, these projects have such inertia that the only thing to watch out for is if they have passed the tipping point: Is the financing and the vendor supply contract in place?

4. High volume Low volume Profit Price reduction $$$

5. Business realities as scarcity change to abundance Will submarine cables be filled up or are we seeing a repetition of the overshoot of transatlantic capacity a decade ago? Scare tactics : Private, non-carrier controlled cables will go down the drain like Global Crossing, be sold for 5% of CAPEX First mover advantages: How much will the success of SEACOM depend on EASSy being a year late?

6. From scarcity to abundance How do sub-marine cable projects look upon themselves in the coming environment? Will they reinforce market dominance or increase competition in connected countries? Sell to who? Ultimately, will they partly be redundant as lots of cross boarder terrestrial fiber backbones will be rolled out? Why is SEACOM the only new cable with a clear communication of its strategy vs NRENs?

7. Others about African int. cable numbers: Western Seaboard MainOne Phase 1 US$ 200 m MainOne Phase 2 US$ 200 m WACs US$ 450m Around AfricaUhuruNetUS$ 1,200 m Investment Recovery: Total, Ongoing & Projected basic Investments: US$ 3.163 billion, excluding Cost of Funds & Return on Investments, estimated at an additional 30 –40 % Regional Population: c. 750 M Investment Recovery: Essentially, off 20% of the Regional Population A daunting Task: Capacity glut -Not all envisaged / planned initiatives will materialise Eastern Seaboard EASSyUS$ 263 m SeacomUS$ 650 m LionUS$ 200 m John Shira @ OECD meeting 2009 USD 25/user Ongoing, Estimated -Projected

8. Plans for New Sub-Saharan Undersea Cables to Europe and India by 2011 Seacom (7/09) EASSy (6/10) TEAMs (9/09) WACS (Q2/11) MaIN One (Q4/10) GLO1 (11/09) ACE (2011?) $ 650M$ 265M$ 82M$ 2B ?$ 865 M$ 150 M??? 13.7 kkm10 kkm4.5 kkm13 kkm14 kkm9.5 kkm12 kkm 1.28 Tbps1.4 Tbps0.12 – 1.2 Tbps3.84 Tbps2.5 Tbps?0.64 Tbps??? June 2009Q1/Q2 2010 Sept. 20092010Q4 2010Q2 20092011 Ambitious plans are once again underway to better-connect the African continent The potential increase in capacity compared to now is 1000X The issue is whether there is a sustainable market Before the recession hit, outlook was at least one of these new cable projects would succeed this time

9. General global trends and debated issues Shared infrastructure vs infrastructure competition, is the latter just a dream? State interventions to get expansion of broadband services: Australia, EU, US,... Network neutrality, more a US than EU issue right now From legal monopolies to dealing with abuse of dominant positions

10. From monopoly to competition Privatize Liberalize Abuse from the dominant operator Functional separation of services from the infrastructure inside the dominant operator Structural separation, split ownership of services from infrastructure

11. Layered networks Services Infrastructure

12. Relative size of US Tower Companies vs. carriers/mobile operators market capitalization in USD Tower Companies American Tower, 14.5 billion Crown Castle, 8.8 billion SBA Communications Corporation, 3.3 billion Carriers/Mobile Operators Qwest Communications International Inc 6.20 billion Sprint/Nexel, 8.33 billion Deutsche Telekom AG, 59.0 billion Verizon Communications Inc, 84.1 billion AT&T Inc. 151.5 billion

13. 07/02/201413 Number of operators on every level 4-12 5-20 2-42-5 3-83-10 1-2 6-30? Application Transmission Physical LocalNational International REACH LEVEL User FEW MANY

14. 07/02/201414 Relative costs in different parts of the total network 5 ? 5020 2 25 200 ?? Application Transmission Physical LocalNational International REACH LEVEL User

15. Network neutrality, getting to "greater transparency" "Greater transparency will give consumers the confidence of knowing that they're getting the service they've paid for, enable innovators to make their offerings work effectively over the Internet, and allow policymakers to ensure that broadband providers are preserving the Internet as a level playing field. Genachowski, FCC, Oct 2009

16. Economics and Technology, Inc. / June 2009 16 The deregulation experiment Lack of antitrust enforcement together with premature elimination of TA96 market-opening measures and competitive safeguards resulted in a perfect storm, assuring the demise of telecom competition –Mergers of incumbent carriers –Retail and wholesale price deregulation –Horizontal integration of intermodal competitors –Use of regulation to block and frustrate entry

17. Economics and Technology, Inc. / June 2009 17 Economics and Technology, Inc. / June 2009

18. 18 Economics and Technology, Inc. / June 2009

20. African NRENs in all of this? Make visible the need for orders of magnitude of more capacity Enabling a path for operators to selectively and reasonably grow the transformation. Discriminate by referring to the non-commercial nature of NRENs