1. Bridging the Gaps Industry Forum – Launch of ICT Access Gap Clusters Lagos, Nigeria. 19 th December 2014

2. Agenda Introduction Recap - relationship between USAID/GBI & USPF Access Gap Model Use of Cluster Modelling to propose projects addressing identified gaps Summary and Conclusion

3. My own Introduction Former CEO of USF Pakistan (first employee!) From 2007 to 20011, USF Pakistan ~ 5,000 of kms of optic fibers ~ 300 small towns – half mil. Broadband connections. ~ 1,100 high schools & colleges Broadband in those towns ~ 3,500 remote villages voice Telephony Tele-centers  Before USF – Country-head of Siemens Telecom  Now International ICT Consultant  Thailand, Indonesia, Samoa, Kiribati, Kenya, Bangladesh, …

4. USPF & USAID/GBI relationship Dec. 2012: Advice & assistance with Strategic Planning process Apr. 2013: Advise on Monitoring & Evaluation, incl. Training Apr. 2013: Advise on Data Collection Processes, incl. Training May 2013: Review of Gap Analysis Report of Fullplan Associates Sep. 2014: Conceiving Projects with Budgets in Clusters

5. Nigeria USPF project & GBI Study of M/s Fullplan Associates Ltd; identified “uncovered” areas USPF grouped together villages & towns in uncovered areas in an innovative manner, calling them “Clusters” Then together with GBI, analysed the Cluster Database, to determine: – what clusters need subsidies – what the subsidies should be, and – recommended projects, along with their budget estimates 5

6. First the Access Gap Modelling 6 Current Penetration Market Gap Access Gap Bridge thru: Policy, Legislation, Regulation, Taxation, etc. Bridge thru: Subsidies! Demand Supply On-time Smart Subsidies! Ongoing Subsidies! low cost high cost low income high income Sustainability frontier

7. Using Access Gap Modelling Assessments of Cluster Database were carried out to – Analyse market structure for telecom services, & – Identify the “Gaps” in access as Gaps due to the Market Gaps requiring one-time subsidies Gaps requiring continuing subsidies 7 There may still be other reasons to justify subsidy! – security, important activity in the area, etc., etc.

8. To subsidise or not? This ‘gap analysis’ followed determining: 1.The required Infrastructure to cover the identified gaps 2.Capex of the required infrastructure = A 3.Opex over a 5-year period = B 4.Revenue over a 5-year period = C Based on assumptions from international experiences & bench- marks

9. Answers needed to calculate Capex: What is the distance from Cluster to National Backbone Nearest fiber-node What should the Last-mile (access) cater for: Voice (2G)? or Data (3G)? or Both? If both, then how 3G would be deployed: All over or selected? If at selected locations, then how to select? Criteria? What coverage area per BTS to be assumed? Remember terrain! 9

10. Forward looking Technology: backhaul (from cluster to national backbone) only on: Optic Fiber! Challenge: calculate distance to nearest fiber-node without authentic fiber maps? And Superimpose on cluster map! Backhaul

11. The Last Mile - 1

12. The Last Mile - 2 “Selected locations” for 3G Towns above 3,000 pers Typically one 3G BTS / town In Town-centers Coverage Radius assumptions 2G BTS (flat terrain) : 12 km 2G BTS (hilly terrain): 5 km 3G BTS (in towns) : 3 km

13. Explaining further with an example

14. Taking one cluster as example Cluster 1-3

15. Adamawa Cluster: 1-3 15

16. Cross-checking … Using assumptions & calculations described earlier, infrastructure requirement is: 2G BTSs = 11 3G BTSs = 09 These results of 1 cluster were cross- checked using: Google Earth, & Software tool “Global Mapper”

17. 2G LoS Coverage - on Google Earth COVERAGE 09 2G BTSs Towns Villages 2G Coverage LEGEND.

18. 3G LoS Coverage - on Google Earth COVERAGE 08 3G BTSs Towns Villages 3G Coverage LEGEND.

19. 2G & 3G LoS Coverage - on Google Earth COVERAGE 09 2G BTSs 08 3G BTSs Towns Villages 2G Coverage 3G Coverage LEGEND.

20. Result of cross-check Such small differences are normal. The assumptions (used in “Calculation Based” method) improve as one goes up the learning curve. Difference of two methods of calculating Infrastructure: Calculation Based Mapping Tool Based Difference 2G BTSs110902 3G BTSs090801

21. Cost & Revenue Assumptions COSTS – Cost of a BTS Tower : US$ 125,000 – Cost of 2G BTS equipment : US$ 60,000 – Cost of 3G BTS equipment : US$ 100,000 – Cost per km of Fiber : US$ 7,000 – Cost of Microwave backhaul* : US$ 67,500 – Yearly Opex, as of Capex : 35% – Depreciation period : 05 years REVENUES – ARPU : US$ 4 – Uptake : 50% *Where fiber cannot be deployed Based on assumptions from international experiences & bench- marks

22. The Result! After knowing the following: 1.The required Infrastructure to cover the identified gaps 2.Capex of the required infrastructure = A 3.Opex over a 5-year period = B 4.Revenue over a 5-year period = C We just need to apply our “formula”:

23. 23 Some of the results

24. GBI proposed projects 24 Population3,524,892 Clusters35 Projects8 3G BTSs74 2G BTSs556 CAPEX + 5-yr OPEXUS$ 186.11 Mn Revenue over 5-yrsUS$ 97.29 Mn Estimated SubsidyUS$ 88.82 Mn

25. Collection of data to represent market structure Evaluation of service provision costs thru network assumptions & algorithms. Potential revenue assumptions based on international trends & benchmarks. Estimation of subsidy requirements Summarising 25

26. Concluding Looking at the methodology and the results, the Cluster Model for achieving Universal Access/Service targets comes out as an extremely useful tool to create Universal Access/Service projects and can become a preferred methodology for other countries too.

27. Lagos, Nigeria. 19th December 2014 Thanks parvez@piftikhar.com

28. A

29. Geopolitical Zones