The Impact of Telecommunications Services on Doing ...

1 The Impact of Telecommunications Services on Doing business in EthiopiaDecember 2010 Dominique Baron Chief Executive, Horus Telecom & Utilities team of local consultantsProduced and distributed by Addis Ababa Chamber of Commerce and Sectoral Associations with financial support from the Swedish Agency for International Development Cooperation, Sida Private Sector Development Hub/Addis Ababa Chamber of Commerce and Sectoral Associations, 2010P. O. Box 2458, Mexico Square, Addis Ababa, ethiopia Tel: +251 (0)11 550 4570, Fax: +251 (0)11 554 2404 Email: Rights ReservedNo part of this publication may be produced or transmitted in any form or by any means without the prior permission of the copyright holder.

2 The only exception is for a reviewer, who may quote short excerpts in a : The views expressed in the study do not necessarily reflect the views of the PSD Hub or the Addis Ababa Chamber of Commerce and Sectoral Associations or Sida. They are solely the responsibilities of the of ContentsList of Tables ..iiList of Figures ..iiiAbbreviations and Acronyms ..iv1 Introduction ..12 Methodology of the Study ..33 Telecommunications Sector Review .. ethiopia Key Statistics .. Market Overview .. Regulatory Environment .. telecommunication Infrastructures and Capacity.

3 Services and Customer Bases .. International Benchmark ..244 The business Sector and Telecommunications in ethiopia .. Summary of the Ethiopian business Sector .. Telecom Equipment, Opinions and Needs of the business Sector ..365 Conclusions: Telecommunications Services and business Activity in ethiopia ..456 Opportunity Costs of Telecommunications Service Weaknesses .. Identifying the Direct and Indirect Benefits of ICT .. Evaluating the Direct and Indirect Benefits ..507 Proposed Short- and Medium-term Targets for Telecommunications Services .. Bringing ethiopia to the African Median.

4 Responding to the Needs Expressed by the business Sector .. Summarized Target for the Telecommunications Sector ..598 Required Investment ..619 business and Social Benefits from Improvement of Telecommunications Services ..6310 Main Constraints to the Improvement of Telecommunications Services .. Internal Constraints of the Sector/Operator .. Market Constraints ..6611 Conclusions and Recommendations .. Conclusions .. Recommendations ..7112 Glossary of Terms ..7713 References ..81 Appendix. Company Survey Results ..83 IIList of TablesTable 1. Country Statistics.

5 5 Table 2. Telecommunications Statistics ..5 Table 3. Fixed regional capacities ..11 Table 4. Fixed line evolution ..16 Table 5. ETC fixed to fixed/fixed to CDMA WLL and vice versa calling charges ..17 Table 6. Mobile subscriber evolution ..17 Table 7. Mobile GSM tariffs post-paid access charge ..18 Table 8. Mobile GSM tariffs pre-paid access charge ..18 Table 9. Mobile GSM tariffs mobile to mobile normal call rate (ETB/min) ..19 Table 10. Mobile to fixed/fixed to mobile normal call rate (ETB/min) ..19 Table 11. Development of Internet users and subscribers.

6 19 Table 12. Estimated Internet subscriber distribution per access technology ..20 Table 13. Internet data summarized tariffs. Dial-up Internet ..21 Table 14. Internet data summarized tariffs. Fixed broadband Internet service ..21 Table 15. Subscription and usage charge for EVDO with full mobility ..22 Table 16. Digital Data Network (DDN) ..22 Table 17. International benchmark. Geographic & economic 18. International benchmark. Telecommunications data: fixed and mobile ..26 Table 19. International benchmark. Telecommunications data: Internet data and tariffs.

7 27 Table 20. Urban employment ..34 Table 21. Summary of number of companies and employees 2010 in urban areas ..35 Table 22. Size distribution of companies ..35 Table 23. Distribution of employment by size of company ..35 Table 24. Distribution of businesses by region ..36 Table 25. Estimated Impact of additional GDP linked to the mobile penetration rate ..52 Table 26. Estimated Impact of the mobile penetration rate on tax revenue ..52 Table 27. Expected mobile market 28. Ethiopian Internet penetration vs. average African Internet penetration ..56 Table 29.

8 Sectoral distribution of companies in Addis Ababa ..83 Table 30. Sectoral distribution of companies in regions ..83 Table 31. Company activity, status, structure and size Addis Ababa ..84 IIIT able 32. Company activity, status, structure and size regions ..84 Table 33. Regional distribution of company 34. Organization and commercial relationships Addis Ababa ..85 Table 35. Organization and commercial relationships regions ..85 Table 36. Telecommunications equipment ..86 Table 37. Personal access to IT and Telecommunications facilities ..87 Table 38.

9 Preferred means of communication Addis Ababa ..87 Table 39. Preferred means of communication regions ..87 Table 40. Internet use Addis Ababa ..88 Table 41. Internet use regions ..88 Table 42. Focus on e-mailing Addis Ababa ..89 Table 43. Focus on e-mailing regions ..89 Table 44. Web site Addis Ababa ..89 Table 45. Web site regions ..89 Table 46. Availability of the Services Addis Ababa ..90 Table 47. Availability of the Services regions ..90 Table 48. Quality of service ..91 Table 49. Tariffs ..91 Table 50. Global opinion about the Telecommunications Services Addis Ababa.

10 92 Table 51. Global opinion about the Telecommunications Services regions ..92 Table 52. Impact on Doing business ..93 Table 53. Frequency of key words in comments on expected developments ..93 List of FiguresFigure 1. Planned GSM coverage ..13 Figure 2. Existing transmission network ..14 Figure 3. International connectivity schematic ..16 Figure 4. Ethiopian mobile penetration rate vs. African mobile penetration rate ..51 Figure 5. Mobile telephony penetration before and after the introduction of competition .. 74 IVAbbreviations and AcronymsADSL: Asymmetric Digital Subscriber LineARPU: Average Revenue Per UserBSC: Base Station ControllerBSS: Base Station SubsystemBTS: Base Transceiver StationCDMA: Code Division Multiple AccessCPE: Customer Premise EquipmentCSA: Central Statistical Agency (of ethiopia )DSLAM: Digital Subscriber Line Access MultiplexerETB: Ethiopian BirrEVDO: Evolution Data OptimizedFDM: Frequency Division MultiplexFTTx: Fibre To ( FTTH: Fibre To The Home, FTTO: Fibre To The Office)FO: Fibre OpticGbps: Gigabit per secondGDP.