1. Property of TERA Consultants CONSULTANTS T E R A IDATE– Workshop Lessons from Tunis (22 November 2005) TERA Consultants 32 rue des Jeûneurs 75002 PARIS Tél. + 33 (0) 1 55 04 87 10 Fax. + 33 (0) 1 42 96 30 70 S.A.S. au capital de 200 000 € RCS Paris B 394 948 731 Broadband technologies and services in Sub Saharan Africa: The case of ADSL - Opportunities for operators & Challenges for regulators Michel ROGY Directeur associé

2. Property of TERA Consultants 2 CONTENT BACKHAUL DELIVERY END USER TERMINAL Internationally located content Nationally located content bandwidth VIDEO Internet Exchange Points Internet Servers Backbone + Access Network + local loop Rights holders (sports, movies…) Broadband network + Modem Internet VoIPDSL VoIP (PATS Interconnect) VOICE INTERNET VOICE VIDEO INTERNET Triple Play Services and Broadband Value Chain : main specificities of developing countries

3. Property of TERA Consultants 3 Single play “Broadband Internet”: DSL is an interesting solution for incumbent operators in SSA countries On the supply side :  Prices for DSL equipment (DSLAM in particular) have gone down tremendously over past years  Networks of the incumbents are geographically very concentrated. The number of Main Digital Frame to be equipped is relatively small, at least to cover the main areas of demand on the existing footprint, herewith making the relevant investment compatible with a typical 5 years business plan of an incumbent TO in SSA countries.

4. Property of TERA Consultants 4 Single play “Broadband Internet”: DSL is an interesting solution for incumbent operators in SSA countries On the demand side :  Narrowband usage of Internet out of fixed lines is fairly significant, so that an appropriate pricing policy would definitely encourage the migration to ADSL lines.  Flat rate of ADSL (as opposed to per minute pricing for narrowband Internet) enables a far better control of communications expenditure from the customer point of view and are therefore more appropriate for public programmes aiming at supporting the diffusion of ICT (e.g. in schools, universities, …).

5. Property of TERA Consultants 5 ADSL IN SENEGAL Year Bandwidth # DSL lines # Fixed lines % DSL lines over Fixed Lines 256 Kbits/s512 Kbits/s1024 Kbits/s March 03 21567111333000229 0001,3% December 04 550718163407663229 0003,3% Source www.art.sn ; OMSYC estimateswww.art.sn The number of African countries offering ADSL services has increased significantly since March 2003 Senegal since March 2003, Ghana since June 2003, Benin since April 2004, Ivory Coast since August 2005… ADSL penetration in typical SSA countries could reach 2,5% to 3% of fixed lines within 2 years, around 5% within 5 years and 10% within 10 years The demand is predominantly for lower bit rates (256k, 512k)

6. Property of TERA Consultants 6 Viability of business models for competitors is nevertheless highly dependent from the regulatory environment A review of the current situation in SSA countries having introduced DSL offers indicates potential regulatory concerns both in terms of operational issues (different levels of quality of service between incumbent and competitor’s clients, refusal to let competitors offer one stop shopping for ADSL accesses…) as well as in terms of pricing issues. Major challenges for regulators :  Introduce an appropriate set of roll out options for competitors, including resale, bit stream access and unbundled access  Have a clear stance against price squeeze by incumbents at retail and/or wholesale level

7. Property of TERA Consultants 7 ´ Main Distribution Frame DSLAM Access Network Backbone Network BAS + Modem Internet Servers (owned by ISPs) Full ULL Shared access Bit stream access (ATM mode) Bit stream access (IP mode) FilterCopper line Local loop FIXED costs VARIABLE costs HIGH functional dependence from dominant operator LOW dependence Level of investment Full ULL / Shared Access Bit stream access (IP mode) – national national regional Bit stream access (IP mode) – regional Bit stream access (ATM mode) - regional Circuit-voice possible RESALE Introduce an appropriate set of options for competitors, including resale, bit stream access and unbundled access

8. Property of TERA Consultants 8 Conclusions Even though SSA countries are considered the most underserved region in telecommunications infrastructure and network access, with the success of mobile telephony questioning further development of fixed telecommunications, successful launch of DSL shows a clear potential for this broadband technology for Internet access but also for Voice and TV services. Even if only limited to existing footprints of the fixed infrastructure, DSL offers bring to customers in SSA countries more quality for value in the usage of Internet, and herewith contribute to support an enduring ICT diffusion. Furthermore they are particular suitable for cyber cafés, whose successful development plays a vital role in increasing the demand for broadband access and bandwidth capacity. Failure to deploy ADSL technologies may therefore deny SSA countries an opportunity to participate fully in the knowledge economy of the 21st century