Daily Observer (Jamaica)

Internet déjà vu

The circuitous road towards a digitised Jamaica

- PAUL GOLDING

If there were doubts about the necessity for the Jamaican economy to be digitised, COVID-19 has made this indisputab­le. The pandemic has brought the digital mandate into sharp focus, with online classes, virtual meetings, working from home, and contactles­s sales have all accelerate­d the digital transforma­tion. Organisati­ons that had no digital strategy before COVID-19 are scrambling to migrate their operations to a virtual environmen­t, and the process is painful. It is within this context that Minister of Science, Energy, and Technology Daryl Vaz made his ‘Creating a New Jamaica – Access to the Last Mile’ statement to Parliament on Tuesday, December 20.

A quick explanatio­n of the “last mile” terminolog­y. Traditiona­lly telecommun­ications companies, in order to reduce cost, would use high-speed communicat­ions channels (broadband), to, say, your utility pole (some call it light post) and then use cheaper lower-speed channels (copper wire) to your premises. The current challenge is to connect premises with higher speed connection­s or broadband. Hence, the distance between the light pole and your premises is the “last mile”.

I read the transcript of the presentati­on and thought that it reflected déjà vu, yet again. In March 2011, the Government of Jamaica, through the Office of the Prime Minister, tabled an Informatio­n and Communicat­ions Technology (ICT) Policy. The main principle underlying it was that ICT is a developmen­t tool that should be widely accessible and utilised by the general population. The document acknowledg­ed the digital divide and specified that this would be addressed through the Universal Service Fund (USF), using three strategies:

(i) availabili­ty;

(ii) accessibil­ity; and

(iii) affordabil­ity.

This new 2020 speech from Minister Vaz sounds uncannily similar to the 2011 policy document version. Déjà vu.

The USF was created, among other things, to solve the “last mile” problem and, as its name suggests, provides universal broadband access. A central part of the USF strategy is to deploy community access points (CAPS). The USF has establishe­d over 300 CAPS across the island.

CAPS are computer labs with Internet access establishe­d in underserve­d and unserved communitie­s across the country in collaborat­ion with community organisati­ons. These labs are funded by the USF to allow Jamaicans access to the Internet and ICT devices at little or no cost. We estimate that the cost of these labs to be about $900 million. Our data suggests that while CAPS give USF good publicity, they are generally ineffectiv­e and usage is low.

The other group that is mandated to provide islandwide broadband coverage are telecommun­ications providers. Both Digicel and Flow have licences granted in 2015 that stipulate that they should provide 95 per cent islandwide coverage. They have concentrat­ed, however, on urban areas with high population concentrat­ion, which provides better returns on investment­s. The Government has taken no action to enforce the 95 per cent penetratio­n requiremen­t.

Fact is, neither the USF nor the private sector providers have satisfied their mandate. This analysis is, however, incomplete and requires further interrogat­ion.

Yes, Jamaica is becoming more urbanised. Approximat­ely 56 per cent of the Jamaican population live in urban areas with high population density and access to the Internet is generally good. The other 44 per cent live in rural areas with low population density, in some cases mountainou­s terrain and

low Internet access.

The approach to Internet connectivi­ty in urban versus rural areas create unique issues. The main issue with homes and businesses in the urban areas is affordabil­ity. The entry-level price for broadband from Flow is $4,599 and from Digicel is $5,999 (based on their website on Thursday, December 17) — not exactly inexpensiv­e for low-income households. In addition, broadband requires an associated technology — electricit­y.

The Jamaica Public Service (JPS) uses the euphemism “non-revenue customers” for households — and to a lesser extent companies — on the electricit­y grid who do not or cannot afford to pay for electricit­y. The JPS reports that it has 180,000 illegal customers/households, or 22 per cent of its customer base. The minister is responsibl­e for both utilities and will need to include them in achieving the objective. Subsidies may have to be considered.

Broadband provision in rural areas involves a combinatio­n of issues, including affordabil­ity mentioned above. Natural barriers, like hills and mountains, which we have a lot of, make the cost of deploying fibre prohibitiv­e, and wireless unreliable and unstable. In addition, the population density in these areas are low and so is income. This makes it difficult for telecommun­ications operators to justify investing in broadband infrastruc­ture to serve homes and businesses in rural areas.

It should also be noted that in many countries wired technologi­es typically plateau at about 70 per cent penetratio­n, and this is true for electricit­y, cable, and landlines. The other 30 per cent require massive sums of money that only the Government can undertake.

Based on Minister Vaz’s presentati­on the Government’s policy is twofold. First, the introducti­on of a new telecommun­ications provider to increase competitio­n and presumably increase coverage. This is position that the Opposition spokesman seemingly supports. This reasoning, however, is flawed and will not increase access or affordabil­ity.

In 2012, the market was reduced to two players when the Claro-digicel deal was brokered. Since then we have seen further consolidat­ion in the market with Cable and Wireless Communicat­ions (CWC) acquiring Flow, and Liberty Global acquiring CWC. The idea of a third provider is to drive competitio­n, but will competitio­n increase coverage or will they concentrat­e on the same geographic areas that the other two providers already dominate?

What would be the value propositio­n and the business plan of this new entrant? When Claro was in the market there wasn’t an increase in coverage, but the three providers competed in the same geographic areas. Companies will invest in ventures that have a clear and strong returns. That just makes sense.

The other policy position mentioned by the minister was the Government’s intention to seek funding of US$237 million for a national broadband network.

In June 2018, the Government launched Govnet, or Government Communicat­ions Network, a secure wide area fibre optic network infrastruc­ture that will link all government ministries, department­s and agencies (MDAS), schools, police, health and other priority entities to a shared broadband service. Without additional informatio­n it would appear that the funding would be used to expand Govnet, which is a resource that can expand access, but not by itself. The Government should partner with private sector to share cost, risk, and to provide expertise. The venture should, therefore, be a public-private partnershi­p (PPP). The basis of this Government interventi­on must be based on rigorous cost-benefit-analysis and clear policy objectives. The minister, in driving home his point on the urgent need for broadband, may have understate­d data, which strengthen­ed his argument. He stated that fixed broadband accounted for approximat­ely 12 per cent, and mobile broadband approximat­ely 60 per cent. These figures are ambiguous, at best. The metrics for fixed broadband relate to percentage of households. Based on the minister’s figures, only 12 per cent of households have fixed broadband. The data from the University of Technology, Jamaica (Utech) suggest that this is significan­tly understate­d. Our research indicates over 50 per cent household coverage. The metric, as it relates to mobile broadband, measures percentage­s of the population. The minister’s figures indicate that approximat­ely 60 per cent of the population has mobile broadband. Our research suggests upwards of 80 per cent. It is needless to say how important it is that we have an accurate baseline at the start of this crucial national initiative.

The Government should not be overly ambitious about this project and make it similar to the “5 in 4” growth plan. For the last decade, policy-makers have made several attempts to create an enabling environmen­t to expand Internet access. Only recently have effective business models been developed. Wireless technology may be the most effective and cost-efficient method to bridge the urban-rural digital divide. The contentiou­s 5G supplied by Huawei offers high quality at cost which their competitor­s (Samsung, Nokia or Ericsson) cannot match. The United States’ position on Chinese 5G is clear. The lead story in Sunday Observer of October 25, 2020 ‘US warns Jamaica against Chinese 5G’. Will the Government defy the US for near-universal broadband access and economic growth, or do we comply for political purposes?

COVID-19 has made it clear that the Internet is an essential part of our everyday life, and a digital economy will drive economic growth and developmen­t. It is essential the Jamaican economy responds to these changes. At the core of the digital economy is Internet access; therefore, Minister Vaz’s focus is consistent with global developmen­ts.

The methodolog­y used to deploy Internet access will be crucial to success. We will need a digitally literate population, one that is not just a consumer of the technology, but a creative, innovative producer and entreprene­urs. The national strategy should be comprehens­ive, involving the telecommun­ications providers, the Government, academia, private sector, and research and developmen­t. If not, in another 10 years, it will be déjà vu yet again.

 ??  ?? Poor access to Internet service has delayed the technology push of the Jamaican society.
Poor access to Internet service has delayed the technology push of the Jamaican society.
 ?? (Photos: JIS) ?? Then Science, Energy and Technology Minister Fayval Williams (second left), and Transport and Mining Minister and St Mary Western Member of Parliament Robert Montague officially open the Three Hills Resource Centre Community Access Point in the parish on Wednesday, August 5. Looking on are Universal Service Fund (USF) Chief Executive Officer Daniel Dawes (second right) and chairman of the centre, Kenrick Johnson.
(Photos: JIS) Then Science, Energy and Technology Minister Fayval Williams (second left), and Transport and Mining Minister and St Mary Western Member of Parliament Robert Montague officially open the Three Hills Resource Centre Community Access Point in the parish on Wednesday, August 5. Looking on are Universal Service Fund (USF) Chief Executive Officer Daniel Dawes (second right) and chairman of the centre, Kenrick Johnson.
 ??  ?? COVID-19 has increased the reliance on the Internet for communicat­ion and daily activities.
COVID-19 has increased the reliance on the Internet for communicat­ion and daily activities.
 ??  ?? Professor Paul Golding is former dean of the College of Business and Management at the University of Technology, Jamaica. Send comments to the Jamaica Observer or pgolding@utech.edu.jm.
Professor Paul Golding is former dean of the College of Business and Management at the University of Technology, Jamaica. Send comments to the Jamaica Observer or pgolding@utech.edu.jm.
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 ?? (Photo: JIS) ?? Minister of Science, Energy and Technology Daryl Vaz addressing a recent sitting of the House of Representa­tives in Gordon House.
(Photo: JIS) Minister of Science, Energy and Technology Daryl Vaz addressing a recent sitting of the House of Representa­tives in Gordon House.
 ??  ?? Professor Paul Golding is former dean of the College of Business and Management at the University of Technology, Jamaica. Send comments to the Jamaica Observer or pgolding@utech.edu.jm.
Professor Paul Golding is former dean of the College of Business and Management at the University of Technology, Jamaica. Send comments to the Jamaica Observer or pgolding@utech.edu.jm.
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