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2015 11 11 WS 207 Economics of Global Internet Deployment Workshop Room 8 FINISHED
 Welcome to the United Nations | Department of Economic and Social Affairs

The following are the outputs of the real-time captioning taken during the Tenth Annual Meeting of the Internet Governance Forum (IGF) in João Pessoa, Brazil, from 10 to 13 November 2015. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid to understanding the proceedings at the event, but should not be treated as an authoritative record. 




>> MODERATOR:  So let's get started.  Thanks everyone for coming to this panel.  It used to be a panel on drug policy, I think.  It's like even an airplane, if here for that you are going to the wrong place.  Go somewhere else.  We are going to talk about the economics of international broadband deployment, and we have an ever growing panel of experts to talk about this, which means we each get 35 seconds to speak.  So what I'd like to do is ask the panelists to quickly introduce themselves so I don't mangle their names.  They will tell you their names and affiliation.  If you would like to find out more about them, I highly encourage you to talk to them afterward and then we will get started.  I'm Geoffrey Manne from the international Center for law and economics.

>> HELANI GALPAYA: I’m Helani Galpaya from LIRNEasia, a think tank working on ICT policy and regulation questions.

>> CHRISTOPHER WOO:  University of Pennsylvania, Philadelphia, United States.

>> PATRICK RYAN:  Patrick Ryan, strategy and operations principle with Google.   

>> MICHAEL KENDE:  Michael Kende, chief economist with the Internet Society.

>> SILVIA ELALUF-CALDERWOOD:  Silvia Elaluf-Calderwood.  I'm with Alliance for Affordable Internet.

>> ROGER MATTHEWS:  Roger Matthews, I represent the Civil Operators Association of India which represents all of the mobile operators in India.

>> VICKI WARKER:  Vicki Warker, commercial operator O3B networks.

>> MODERATOR: Great, thanks everyone, and thanks for agreeing to join us in this.  Also we have two hashtags for this panel, one is just not enough.  We have, we encourage you to use both the IGF 2015 and the broadband hashtag, and if you use both of them, you only get 105 characters, but you also will insure that everyone is participating in the same conversation.

Okay.  So as the set up for the panel suggested, everyone agrees that universal broadband deployment is a good thing, and as is so common in so many aspects of the debates and the conversations that we are having here at IGF and in this industry generally they are definitional questions.  What does universal mean?  I guess we could say what does broadband mean?

We could even say what does deployment mean?  And too frequently they think there is a tendency to going sloganized a bit.  We believe universal agreement is great, but what do we mean by that?  What we wanted to do with this panel is focus in particular on the economics and business of broadband deployment in the service of trying to define better in particular to my mind what universal means.

So for an economist universal never means 100%.  There is no such thing as 100% in economics.  There is always diminishing marginal cost, diminishing marginal returns and increasing marginal cost which means at some point it simply doesn't make sense to continue, say, for example, deploying broadband.  That doesn't mean we shouldn't try, and that doesn't mean we shouldn't identify what is sort of optimal amount of broadband which also implicates questions about what is the optimal type of broadband.  What are the optimal or what are the acceptable limitations on access or limitations on quality or speed or other things that would justify an increase in the amount of deployment even if it comes with some constraint on it.  Alternatively, in what situations are we willing to sacrifice some amount of infrastructure because it may be more expensive but we think it's supremely important that we have a certain quality of access?

We may not be able to offer that 100% of the world, but that's okay because we think we need to have at least that minimum quality level.  The important thing to point out is that there are exactly these tradeoffs.  Too often we talk about fundamental rights.  We talk about ubiquity.  We talk 100%.  We talk in these strong terms that are often emotional, we feel strongly about them, but in the real world there are always tradeoffs.  So what we want to explore in this panel is what those tradeoffs are, what the sources of those tradeoffs are and to some extent assuming we have some time what sorts of policies we should be pursuing given our understanding of where the tradeoffs are and how we think we should make those tradeoffs, what sorts of policies we should be pursuing in order to achieve this optimal level of broadband deployment.

So we are going to start talking about some fairly basic issues here just to get on the table let's call it the economic way of thinking about broadband deployment, and as we go along I will ask various panelists based on their expertise to delve in more detail into some of the topics we will be discussing.  So the first thing that I want to throw out to the panel is what I offered as a statement a little while ago is a question that I think will engender interesting discussion, which is what does universal deployment mean?

I'm not suggesting everyone has to pick a number, 97%, that, of course, isn't the answer, but when you think of universal deployment, when you think of achieving the optimal level of broadband deployment around the world, how do you think about that?  How should we think about that and let's start talking a little bit about the kinds of limitations that prevent that number from ever being 100%.  Christopher.

>> CHRISTOPHER WOO:  There is a standard of the International Telecommunications Union.  It is not 100%.  We understand that there are areas that are just going to be the hyper-rural areas are going to be impossible to seven in an effective way.  So that's the practical part of it is that there are certain realities and if you look at even the most ambitious broadband plans they can see that usually the last 1% will be reached by satellite.  It's not because we think that satellite has the same latency or the same bandwidth issues as provided it's the reality that they are the best means for serving them because it would be so expensive on a per line basis.

The question is service of what quality.  And what's interesting to me is how little empirical basis is put into defining that.  It's often used for various purposes, you know, Europe is famously identified 30 megabits and 100 megabits as target thresholds.  There is very little analysis about what usage is and what people will often say you have to have a certain threshold of speed.  In this day and age I think Netflix recommends 8 mega bit and multi-party Conference calling on VOIP is 12 megabits.  People are making claims for a need for a gig.  It's not entirely clear that the man as caught up with that.

It's not a theoretical question, it's an empirical one which is to look at how people are using the Internet to figure out what speeds they need and studies I have seen that speeds on the area of 50 even in a multi‑screen world are sufficient.  But the thing that bugs me as well is the things you need speeds well over 10 meg for are primarily entertainment, video.

If we want to talk about taking limited resources and using them and the policy levels that are available to us, we are talking about fully participating in society which means applying to jobs, getting services, access to Government, eHealth services, generally those are not high bandwidth items and we need to disaggregate what people need, but have a question of what people real need as members of society.  Germany used to have a system like this.  If usage dropped below 50% they would drop it from the universal service bundle.  In a cell phone world no one uses pay phones.  It dropped below 50% and Germany defined it in different terms so there is a temptation to keep them along. A more rigid approach that looks at what people actually need would be a stronger one.

>> MODERATOR:  So I will highlight a couple of things that Christopher said and just to make sure they are out there for the rest of the conversation.  So a couple of things that I heard, number one, the importance of different technologies for delivering broadband access.  Some of which entail inherently limitations if your baseline is FireWireline broadband access, satellite service looks different.  You can even say it looks deprecated in some facet, but, of course, that's the tradeoff we are talking about.  If the tradeoffs between the slightly slower service at all versus nothing, that's an important tradeoff and we should be, I believe we should be careful about impugning these other forms of service and establishing too high a baseline if the consequence of that is fewer people have service at all.

The second thing you mentioned that we will talk about more is the quality of the service, and, of course, that's extremely important as well, and we definitely want to make sure that we are talking about not just the quality of the service, the speed of the service, for example, but also certain, the sorts of business models, the kinds of technologies that are being used that make it economically worthwhile to provide service even though that service may look in some ways, again, as though it has some degraded quality.  The most obvious thing that comes to mind is zero rated services.

Some people would say this is a cabined version of the Internet, but if it is some part of the Internet, again, where the alternative is no part of the Internet for many people that's a perfectly valid tradeoff and we should be understanding exactly where those tradeoffs are.  The third thing you implied but I don't think quite discussed and that I will ask to talk about in a minute is question the affordability.

At what price are we offering service?  It's one thing to have service available.  It's another thing that that service be available at a price that people can actually use.  And that also is an important tradeoff to consider and implicates exactly both the technology being used to offer the service and the types of business models that may be facilitating making the economic calculation make sense.

So would that lead up, Patrick, do you want to jump in and talk about technology in particular.

>> PATRICK RYAN:  I do have comments.  I want to weigh in on a couple of things.  One of the first is to make a pitch for a paper that we are working on that proposes an idea that would hopefully lead to more measurement.  Christopher mentioned the lack of available information about the quality of services around the world and that's a real problem, we agree.  Who has that information?  Well, primarily the private sector, companies like ours and others and we don't contribute in an open way to the public to able to use either in a raw data format or boiled up format.

There are exceptions, Akamai and Cisco do a great job, but the operators don't.  We are proposing changing that as part of an initiative that should develop over the next year.  Would love comments on our thoughts.  There is a paper we posted.  G.C O/IGF 2015.

And we would love your comments.  The second point is on the question of what is universal coverage, and we have thought about this too, one of the things that has, constantly amazes me is we are dealing with a moving target, first of all.  Second of all, there is very little discussion around who we are trying to cover.  There are interesting statistics.  I need to look at a paper we wrote where we tried to break this down, so how many uncovered people are there?  How many people don't have access to the Internet?

If there are 7 billion today in the world, there is about 4 billion that don't approximately.  But if you are trying to figure out how to cover those next 4 billion and try to get to universal coverage, you have to project forward and take into account population growth because by the time, we did interesting analysis where you look at some of the markets like Asia which in 2010 had a population of, this is broadly defined.  4.2 billion.  And in 2030 it's anticipated based on current growth rates to have a population of 4.9 billion representing 47% of the world's growth.

In Africa, which had in 2010 population of 1 billion will have 1.6 billion in 2030.  When you are talking about universal coverage, you are talking about a system that's going to cover the people that aren't here yet but they are coming quickly.  Who are those people?  I won't belabor this too much, but there are a lot of people we just won't cover initially.  Some of the, I mean, when there is, when you think about these numbers a lot of babies, young people, so kids under 13, I think you can presume aren't going to be direct users of the Internet although they may be using the Internet of things and increasingly becoming participants themselves.  But you have a billion people in the world that are illiterate.  That requires significant investment in tools to make the Internet accessible and usable for that group of people.

While there are initiatives taking place that make that a lot better, I think by and large, I think, unfortunately for the most part it's not a focus area.  It's not something that the companies are generally focusing on primarily because it's expensive and its unfortunate, but it's something we need to address because it's certainly part of the group.

We have broken this down in a paper if you are interested in seeing what that is.  Our sense is that we have about, we are going to have about 4 billion people we need to cover out of the total 5 over the course of the next 20 years essentially.  But that there is going to be a significant percentage that we won't cover, nor will we even care about covering to some extent because they will count as statistics but we won't count subscriptions of babies, for example.

One other quick point, how do people use the Internet as the technologies deliver it?  I want to ask a question, is there anybody here whose first Internet experience ever was on a mobile phone?  Raise your hand.  I'm not going to pick on you, I would just like to know if there is.  No.  That's interesting.  So what we are seeing, the studies we are seeing is that in the Global South primarily, by and large the most, the first experience of people have on the Internet is through a mobile phone, not through the way that we all have done it, which is through a computer.  And it completely changes the dynamic.

And it certainly drives the kinds of technologies.  I would love to talk about some of the other forms that are out there but I want to leave microphone time for somebody else now.

>> MODERATOR:  Anyone else want to chime in on this.

>> Hi, everyone.  I think the question of how we define access is really important, universal access.  As well it ties into the issue of affordability which you hinted at, Geoffrey.  One of the ways in which affordability has been defined is looking at costs as a proportion of income.  The UN Broadband Commission set up a target several years ago where they defined affordability in terms of having a 5%, the cost should be 5% of average monthly income and they used per capita to define monthly income.  We in our own research through an affordability report, and last year's report pointed out that only 23 of 51 Developing Countries were able to achieve this target.

However, when we think about a target, target uses what is called entry level package.  It's a 500 mega bit package.  So we should consider now that we are talking what is usefulness of these different packages and how important they are.  Is 500 Megs useful, let's say, within a month?  Is that sufficient for one month's use of Internet?

This is the definition that's currently used and I would argue that we need to reconsider what the definition should be of what are we calling affordable?  Speed is another important question.  So we should think about the entry what we are calling entry level package, and we should also think about what this measure, this threshold should be.  Is 5% really a useful threshold, especially in light of increasing income inequality within countries?

>> Yes, just talking about some of the definitions, the Government of India has already tried to put definition around this.  So if you look at what is national telecom policy 2012, universal access means anybody who wants one, has it.  And now they have enshrined that in the license conditions for the operators, so already if you are rolling out 3G, 4G, you have to hit what we call the block headquarters which is pretty much at the rural.

So the Government policy is that by 2020 there ought to be 650 million of the population that has access to the Internet connectivity.  In terms of the qualities, 2 megabits per second.  Where are we today?  512 KBPS, and the issue becomes with regard to the quantum right of going from 650 onwards, the density of the population and the geography, the question is how do you get there from 512?  We are presently, if you look at the average spectrum allocated per operating, it's anywhere from 12 to 15 megahertz compared to a global average of anywhere from 45 to 50.  So here is the magnitude of the problem and increasingly what the Government has is schizophrenia that says we want all of this and we have defined it as this in terms of speeds and quality and continuously starve the industry from the resources to get that.

So that's the challenge.

>> MODERATOR:  That's really interesting, and I want to ask, how much, so one of the important things here is the interplay between the policies and the reality.  So one thing, if you set the standards too high, if you set deployment standards at 100% and at very high speeds, for example, presumably at least on certain dimensions that costs a lot more to deploy, and if it's a market in which there isn't necessarily demand for that, it may be very difficult to recoup your costs.  So you said that it's, is that your carriers are having trouble accessing the spectrum required to achieve the Government standards, but how many of them are, feel like they wouldn't dare pay for it in the first place even if it were available because they couldn't possibly recoup at least within a reasonable time frame, recoup the investment if they have to deploy with the standards the Government is requiring.

>> So if you look at the experience to auctions you will notice that operators in India paid 1.3 times, 130% of the global asking price, auction price of spectrum.  So here is the metrics again try to sort of parameterize the question you are asking.  We pay global prices for our network equipment because just about 95% of it is imported.  We pay 130% of spectrum and we get $2.50 of average revenue per user.  You talk about trying to make economics work, but today a billion of our people are connected on voice telephony.  One of the critical impediments is in terms of penetration of the rural landscape is the price of the Smart Phone.  So that's going to be an additional factor because, yes, you can build out the network, but in terms of the affordability, not really the service, but the actual Smart Phone that is now there and today that's a significant hurdle in terms of universal adoption.

>> I think India and Southeast Asia got connected much earlier on are suffering from having legacy phones in the market still.  The difference is Myanmar which came on line eight months ago where nobody was connected pretty much and suddenly 67% of the phones that are being used are Smart Phones.  It's a quantum leap and it's not a surprise that give the experience of the phone that they have that these people are sort of 50% of them are accessing Internet on a daily basis.  It's a completely different thing.

Whereas we are struggling to get the feature phones passed down to the man of the household who gives to the female, then the child, this is third generation phones still in the market and that's a problem.  The problem with the definition of universality is countries set too high or too low and there really isn't mechanisms in policy processes to continuously keep calibrating this.  Am I keeping abreast with my peer group of countries?  That's -- nobody does that really.  OACD in their reports occasionally look at the high end and low end, but Developing Countries don't do that.

We set a bar and try to reach it.  Either we achieve it quickly, the case of MDGs which are set too low or set so high that nobody can achieve it and this is a problem because we don't calibrate.  And it has to change with available technology because if you get the regulation right, the per unit cost of deploying the next generation of technology, the per unit cost should be cheaper.

>> Listening to this discussion and looking at the material from the point of view of academia, what we see is when we discuss this initial of universal deployment, we need to understand the mandates that different countries have in their constitutions or parliamentary rules on how they should implement universal access.  At in countries this decision is made at governmental level.  Even if they lost money, they have the obligation to provide the network.

The question there comes, for example, in the case of America and in particular my country, Peru, for example, how do you get the returns?  That is when you see the conflict between what is the mandate give to the state to provide to every citizen access by Human Rights to Internet access versus the business practices that are local and global.  When you see that, the question comes is so we are giving universal access, what for?  And we have to differentiate between the services that are state based services versus commercial services, what the users want versus what the state is supposed to provide.

In the middle is the borders and these are the borders, and from there comes the definitions of what we should provide, which is speed, which is standard, and I think that when we look to all of that, what we see is that there are between three different perspectives of what universal deployment means.  One is issue of normative principles of companies that are going to provide the services, but also the telephony side of these, the additions to build infrastructure or use mobile infrastructure or satellite infrastructure when there are all of the dynamics in place.

>> MODERATOR:  So we are going to come back to those, all of these issues as well.  The next thing that I wanted to address and we have talked about it a little bit in what we have talked about so far, but in particular, I'm interested in getting out on the table some of your perspective on the type of technology that are being used to expand the deployment of Internet access.  Patrick, interesting hearing from you and Vicki as well, and to the extent you can tie this back to the point you made about anticipating the evolution as the population grows, I think that's really essential.

It's a very interesting point, and in particular, as we are evaluating the efficacy of both policies and private sector investment and business decisions, I think it's crucial to bear in mind that we shouldn't be ham strung by a snapshot that we really should consider that this is a very dynamic market, and but it's hard.  I mean it's particularly hard for policy makers to anticipate what the consequences of policy may be, whether the current trajectory of investment both in terms of amount and the types of technology will fulfill their Government's policy objectives.

It's difficult but I think necessary to think of it in dynamic terms and maybe you have thoughts about the relationship between the types of technology that we are seeing, the constraints on the technology today, and how nevertheless in the long run those constraints will seem less significant because of what the technology can offer.  And in particular, I would like Patrick and Vicki to talk about this, but everyone should.

>> PATRICK RYAN:  I start because I have comments about satellite that Vicki can jump in and keep me honest on because I'm not a specialist, but we did spend time thinking about this.  One of the reasons for this is that there is a lot of confusion, we find, among regulators.  When you speak to regulators who sometimes even come from the technology space but not necessarily from the various different kinds of politics, they just don't understand them.  And it gets worse when you get to the politicians and people that aren't in technology.  Everyone wants a single technological solution.  The technological solution is often wireless.  So everybody thinks wireless is going to solve it all so let's just have more wireless and more spectrum this is one thing or maybe satellite will solve it all.

There is no panacea.  There is no solution for the world's interconnection, so this is one of the things we try to do in our paper.  We tried to spend time thinking about this together with David Reed at the University of Colorado.  He presented some of the findings at the IGF last year and another colleague, Jennifer Harune.  And what we came up with was a proposal of the best fit technologies for different environments.

Essentially in the urban environments in dense city environments, fiber is the best you can get.  You are not going to find a large ‑‑ you will find some examples of point to point micro wave links.  You will find people that use their mobile phones for access, but you are not watching video, not having full experience on any of those things and the micro wave link still hasn't really, it doesn't scale well because you are using frequencies that are very high and don't penetrate walls so what it comes down to is fiber is the best solution for urban environments and as always going to be because it's cheap, you could scale it and once it's in, you really have a product that is timeless in ways that a lot of other network installations aren't.

When you move out of the urban environment into the suburban environment, the area that's don't have the tall buildings, and in that case, in the suburban area we see satellite as being increasingly possible as a really good substitute compliment or potentially substitute for fiber because it's cheaper and you have ‑‑ so with satellite you have a lot of scale because you don't have to install in the right‑of‑way and in an urban environment you don't have a lot of density, when you have density and clutter, wireless does not perform well because it needs to have in some way a line of sight.

Now, when you get to the rural areas, this is in many ways what we are talking about in not all of Africa, but in a lot of places that are, that we deal with, it's a rural environment and the economics are very difficult to motivate a private sector investor.  And so there I think you have much more of a mix, satellite is the natural first choice in those markets because with the satellite system, you don't have to install the fiber.  You have power problems that you need to address that are very significant, extremely acute.  In the case of Africa, if you take South Africa out of the mix because South Africa has a fairly complex infrastructure, but Africa overall is powered by the same amount of power that powers the country of Spain.

An average citizen in Africa has enough electricity to power one 60 watt light bulb for a day.  That's it.  And the power is not increasing.  This is a real problem and something to take into consideration.  We look at places like Myanmar that is looking at Smart Phones they are not going to have the opportunity to keep Smart Phones charged all of the time.  We have seen that counterintuitively in the case of India, there is a power company that has been working closely with the telecom company as an anchor tenant to increase the grid and they created mini grids based on partnerships with the cellular provider so it's the Internet ironically in a lot of counterintuitively, it's the Internet bringing power to the communities, not the other way around.

>> Thank you.  Patrick's earlier comments first of all on this number of population moving also applies to technology because technology changes as well.  And you mentioned satellite is very often the best opportunity for connecting suburban or rural areas because it's cost effective and it covers a very large area very quickly, instantaneously almost.

The problem that has historically presented itself with satellite is the one that Geoffrey Manne talked about in the beginning which is what is sufficient because often it is slower, it's less throughput, so it is.  It is higher throughput and lower latency.  And so one of the things that we find when we talk to ‑‑ l.

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>> MODERATOR:  One question I have following up on that in particular, is how often you find that the policy makers are not technology agnostic, I guess, and in what context does that happen?  I mean, on the one hand, you could imagine that comes up in the context of various forms of subsidies that they are not available for satellite.  On the other hand, I'm more curious and concerned about when policies are dependent on the idea of a certain extent of broadband deployment, but it's not considered either not measured or not considered sufficient because of certain characteristics of it.

There could be any number of other context in which this happens.  I would love to hear some about your experiences with that.  And maybe if you have some thoughts about, I mean, other than technology agnosticism how to deal with those.

>> Yes, you are right, so the one then probably, perhaps the most obvious is in the satellite world you have both commercial satellites and Government satellites.  So if you are in a country where there are Government slights or there is plans for Government satellites but they aren't there, you may find that you have a barrier to entry even if there is only a plan for a national satellite.  So that can slow deployment.

We also find that usually a universal service obligation comes with a string attached of some sort to the use of spectrum, and we often will be talking both to the telecos because we don't serve the end user, we serve the telecos, the Internet service providers and we are talking to the Government administrations, and we will already have an existing story where the operators will be telling the Government they cannot afford a rural deployment because it's too expensive to put fiber there.

And we go in and say, well, actually it isn't all that expensive, and there is an option for affordability here.  We have had some success in partnering with that kind of education and then, of course, Governments that look to support shared infrastructure, shared tera structures, things like that.  It's rarely a silver bullet.  It's usually some willingness to accept a new technology and understand the cost structure and then understand what the Government needs to do in terms of fostering shared infrastructure and whatever subsidies.

>> MODERATOR:  Sure, please.

>> CHRISOPHER WOO:  There are policy makers that follow in love with technologies.  The media was getting behind ultra broadband.  They were fascinated with fiber.  What is interesting to me from a policy standpoint, heterogeneity.  The country that emphasize fiber have the worst rural build-outs in Europe.  It's no big surprise.  And it's pretty clear to me within a country you should see a mix of technologies leveraging the legacy.

What is also interesting is two countries, two of the largest countries in Europe, the U.K. and Germany are foregoing fiber.  And there was a quote from a U.K. regulator that said, look, I can get 50 meg to 80% of my country or I can get a gig to 20% of my country, and the 20% I would reach with the gig already have the best service.  And it's an interesting tough tradeoff that people make.  Everybody would love a gig.  I would love a gig, but it's a question of how you have to make that work.

The funny thing that struck me is the thing I love about the IGF is I have learned what happens in the developing world.  What I'm learning is that the developed world has problems too.  There are some people who are trying to wire Native American communities in the U.S., hyper-rural communities in the U.S. with unlicensed spectrum and wireless.  And they face a set of challenges they can do and they manage networks because they so little bandwidth available to them and there was a great experiment in the U.K. where they are trying to wish a city based on secondary access to Wi‑Fi.  You would get a discount in turn for making it open to other people.  We are seeing a huge amount of experimentation.

The thing I like is sometimes they say it's a problem of capital marks.  In these places is not the problem.  No matter where you are, no matter what country you are in, there is going to be part of your population that's hard to reach.  And we are finding all kinds of new ways to reach them.  And one of the great things I think the IGF, this IGF was designed to get submissions to collect those stories.  They got 80 of them, and in 2000 plus, I will tell you the Secretariat was hoping for more.

This is a great opportunity for the IGF to draw together the stories and leverage them in important ways.

>> When you look at the situation in India, first of all, let's make sure we are talking satellite last mile, no satellite, because that's precluded by regulation.  First question they ask you when you land is do you have a satellite phone.  You better mark no.  So now we are talking ‑‑ principally micro wave is used because it's next to impossible to dig up the streets in the urban areas and put fiber in there.  No matter how hard you try.  It's an impossibility.  The costs go through the roof.  So we are struggling with E band and other bands and 30 gig band and those are discussions held presently in terms of how do we go in there.

The Government says it is neutral in technology but we are in the process of spending $20 billion U.S. and counting to put fiber right down to the level.  So this is something that's going on.  And at the same time, we have quote, unquote, all of these trials going on.  Facebook is there with its planes up there and there are satellites that are being considered out there.  And the use of white space now jumping into the fray in terms of saying, well, let's try and use this in combination with Wi‑Fi as a mix and match type technology to see what we can do to start reaching the urban or rural areas at affordable rates.

One other caveat that I say we have got to be careful in India is that 65% of our population today is in our rural areas, but the demographic trend showed that that is moving into the urban areas.  So you are aren't going to ask us to build out infrastructure when the demographic trend is in the opposite direction.  So some of these anomalies need to be kept in mind in terms of where we start deploying and where we start investing.

>> MODERATOR:  Again, I think that that understanding and being mindful of the dynamics is crucially important and it gets to what I want to talk about next.  I think it follows on from this, somebody was hoping to talk about what we were just talking about I think we will be in the same vein, which is the sort of hidden cost of Government policies that may be perfectly well intentioned, usually they are well intentioned.  They may be intended to achieve the Government's policies with respect to broadband deployment and yet do it in such a way that it actually constrains broadband deployment.  I also want to talk about regulations that are intended to achieve some other purpose but nevertheless interrelated.  Let's not talk about healthcare or something like that, but related policies that may nevertheless curtail broadband deployment because of the, in particular ‑‑ I shouldn't say in particular, one of the things with will talk about is the interaction of supply and demand but there are any one of aspects of this.

So I had a list of primary sources of impediments to optimal deployment.  We can all contemplate what that the list looks like.  I think number one is construction costs and it's important, I don't mean to imply that that's somehow a problem to be overcome.  It is what it is.  Its reality.  You have to take costs as given sometimes they will change, but you have to, as we talked about before, you have to define optimal with respect to costs in many cases that you can't avoid.  But there are costs that in theory you can avoid and I stress in theory because we know how politics works.

But so there are regulatory costs, there are problems of interconnection, interoperability, particularly internationally, Mike is going to speak to that, there are also these demand side costs like lack of information, lack of demand, the lack of demand may be relative to what the Government wants.  It may be the Government wants to build gigabit fiber and there is no demand because there is just no demand for it.  On the other hand it may be that there is no demand because people don't know what they could get if they actually were on the Internet.

Which suggests a very different policy solution if you think that the problem is just that we don't have enough supply.  So I would like to talk about all of those.  In some ways I don't mean to imply, Michael, that because you are going to talk about the issue that you think this is the most important thing.  So I want ask what do you think is the most important impediment or hidden or regulatory cost here, but maybe in a way I will go down the line, pass if you would like to, but I would like to hear from each of you your thoughts about these kind of hidden or interesting underappreciated often regulatory but not always impediments to broadband build‑out.

And in the context of understanding where policies might most profitably be directed but in ways we are not always thinking about.  I think we will go down the line but feel free to pass.  I can't imagine anyone doesn't have anything to say on this.

>> I will start with that is a problem in a funny way.  Demand is a function of affordability to begin with, but not the only thing that affects it.  And affordability is a real, real issue even if we can't agree to affordability to what.  Affordability to something that gets people on line and that's a problem.  As I pointed out in other panels, South Asia, India, Sri Lanka, Pakistan, Bangladesh, we have met the broadband commission's affordability requirement.

We look good on paper.  5% of monthly income, we have broadband packages, entry level, and people are not online.  I mean, under 20% of the population is online.  So even after crossing that barrier there are other ones.  The availability of electricity, the fact that you can't charge your phone is a real problem in Africa in sample surveys, representative sample surveys that come through, and people are not getting a phone.

The availability of actual signal is still a problem in Africa.  You never see that now in Asian surveys but in African surveys in 18, 19 countries you see the same I don't get a good enough signal.  I don't see why I should get a cell phone, that's the way people are coming on line for the first time in Africa and Asia, this is really key, getting a device in their hands.

I don't see why I should.  I don't see the relevance, and that's a much bigger barrier, I think, to cross.  When you do hear Governments talking about, you know, we have built it, but they are not buying it.  That usually means that the Government has spent their own money, put in large amounts of fiber trying to reach everybody's household and people aren't paying the somewhat high prices that they expected them to pay.

>> CHRISTOPHER WOO:  I want to take your irreducible case which is construction costs.  We lower price, and Moore’s law does not apply to digging ditches and there are certain parts of that don't chairman.  What is interesting some countries have done a nice job coordinating across utilities that when someone is digging a ditch you let the other utilities know.  It's a funny thing, and they are going to squabble how they decide the cost I don't mean to make it easier, but some countries have done I have' nice effective job of being more up tensional and intelligent about how they do that.

The hidden cost, I worry that people who come to places like the IGF, we get an elitist mindset.  We are on the Internet, we all want Smart Phones and until globally it was 50% feature phones.  They do don't do much but are cheap.  Power consumption.  There are a lot of things beneficial.  People would say, oh, future proof it.  You are going to have to build fiber anyway.  Anyone else is being short sighted.  What I have learned is if you look at the economics of it matching your revenues with your expenditures becomes critical.

The story I will tell you is Verizon when they laid fiber their stock and bond rating cost it increased cost to capital on every project.  They are paying from day zero.  If the revenues come in fast, this is a good deal.  If the revenues come in slow, it's a disaster.  So future proving it if the revenues come in slow, I have never had this real conversation, they don't talk about fiber anymore.  All they talk about is LTE.

I have never heard them say this, if he had this to do it over again they wouldn't do it, certainly not then and they may not do it at all.  So understanding how to make sure that you meet, you right size the investment with the actual needs of the consumers is critical.

>> PATRICK RYAN:  One of the costs here that's rarely talked about but it's one that is interesting to me that I think is a relevant one is the legal costs of deploying, hiring lawyers.  How many lawyers are involved in rolling out networks?  I consider myself a recovering lawyer.  I was a lawyer in the telecom industry for 18 years before I joined Google and I'm critical of the needs for the kind of work I used to do.

And it's unbelievable how complicated these laws are and how many companies need lawyers to interpret them, and then what do lawyers do, they argue about them, require further clarification, they require memos and then you have to apply and the lawyer is going to have to represent you in the application process because it's all legal, you are all legally skating on the edge and trying to classify yourself and Internet provider or a telecom provider because in some places it's better than that.  It's unbelievable expensive, and it's an expenditure we need to focus on in order to eliminate and it's not being focused on now.

That is one thing, I don't know there is a solution other than just to observe that there are too many lawyers in the business.  The second is shared infrastructure.  This is a meta objective that I think we should all aspire towards and you had asked for examples of good policies and bad policies.  I will give one of each.  The advantage of shared infrastructure is important first of all because this is where you achieve economies of scale.  This is where Moore's law meets trenching not in a direct way, but by working in a way to take advantage of technology to share existing infrastructure in new and novel ways using the same piece of fiber made by a couple of different people, sharing conduit or just recognizing that the public right‑of‑way, the streets built by the Governments and the poles that the Government authorized to be put in even if they were put in by a private power company are funded by taxpayers.

And they have a responsible to open that infrastructure up to anybody that wants to serve the public service.  And understanding how to do that is a really important thing and yet Governments fail at it miserably.  I love to pick on my home state, Colorado which passed a law that says, called Senate bill 152 which prohibits municipality from entering into a partnership of any kind with the private sector to do Wi‑Fi or anything related to broadband service deployment as part of the package of bills promoted by the incumbents in many different states, not just Colorado.

So what happens in the case of Colorado is if you have a company wants to work with a municipality to share the infrastructure the municipality owns, the infrastructure lobby has effectively made it impossible unless the municipality goes and takes the whole thing to a public referendum.  That kind of overhead requires how many lawyers to draft the referendum, to encourage everybody to do that and most companies will walk away from it.

That's an example, and these laws that prohibit or restrict public private partnerships are by and large problematic.  They are everywhere and there are opportunities to control that on the back end.

So that's an area of bad regulation.  An area of good regulation is quite simply the infrastructure sharing rules, those that don't mandate sharing in all cases, you need to have flexibility in it, but they create an environment that makes it very, makes it both encourages incumbents to share infrastructure, but then also disincentivizes bad behavior so you need to have a place to go.  If you have a complaint and you are I new entrant in the market and somebody is stopping you, you need to be able to go somewhere and resolve it and resolve it quickly.

And then finally, this is my last one I will be quick.  We talked about dig once.  I'm concerned that people are investing too much excitement in it because that is useful in new road construction and that's a big thing in places like Africa and Asia where you don't have any roads, but in mature marks there are very little road construction.  So the fanfare around passing those is good but I think we need to be realistic because it's not going to affect a lot of people.  I think you need to think about dig smart.  I have no experience, and I have no data to support this its anecdotal but it would be good if there were academics interested in looking at this, what I have experienced in the past is that as representing a competitive telecommunication provider trying to enter the market with these digs, what I'm calling dig smart policies what municipality will do is a there is a company that wants to dig and they alert everybody else and so the incumbents have used that as a way to delay.

And delay kills network deployment.  So the delay issue associated with some of these, hey, we are going to build, can really be a problem.  And it shouldn't be a problem theoretically, but it is in practice from my experience.  So I think it could be fixed by constraining those, by enabling those discussions, even requiring that there be notice to others when there is a new infrastructure project taking place but limiting the amount of time, making it a short window so it's not used as a tool to delay.

>> I will talk a bit about the cost of international transit, and I will start with a plug for Patrick's paper because it's very hard to figure out what is the cost of the international transit.  Telegeography.  And the big companies that gather data don't focus on Developing Countries, so it's very hard to get the data for starters.  So I highly recommend looking at that paper and the industry should start thinking about ways to gather this data so that the Governments and everyone else can see what the costs are, not just international transit.

So this morning I had to email a colleague in Kenya who had to email and got a current rate of maybe $100 per mega bit second, which is kind of hard to conceive of until you think of 4G connection can download 20 megabits per second.  It's not a great translation but it's easy to use one mega bit per second and $100 per mega bit per second per month that's quite expensive.

That's particularly an issue in countries where 80 or 90% of traffic can be international.  Almost all of the traffic is coming international and that adds significant cost, but there is a second issue that's also kind of a little more subtle, and that is in economics if something is expensive you try and get less of it, so you are going to under provision your international to the extent that you can, so you are adding a lot of latency.

So you have got high cost and things coming over during peak times especially are going to be quite slow because you don't want to provide enough to everyone can do Netflix on their mobile phones in these countries where costs are so high.  So the interesting thing I think is that there is a pretty established set of things that Governments can do to lower this cost.

First of all, don't just have one cable coming in that's owned by the incumbent in a consortium who has the only license.  I mean, these things are well understood, but I think the issue now is Kenya is one of the countries that gets it.  There are four cables coming in.  None of them are owned by a monopoly.  A lot of license to take the capacity.  There is open access to at least one of the cables and they still have high prices.

They have done everything that pretty much as far as I know that you are supposed to do to lower those prices and it still hasn't fully lowered them, so you have a high fixed cost thing.  You can't lay part of a cable until demand catches up.  You have to lay the whole thing and you lay a lot of fibers.  So it's just clearly, you know, not enough volume.

So that's a hard one to solve.  The Government can't just suddenly and nobody can just suddenly say get more volume and prices will come down.  So the things that we do at the Internet Society to help with this are to get countries to put in IXPs to localize traffic so it doesn't go over the international connections and it's also, of course, much faster to connect if you are not tromboning across international connections.

We are starting to look at local content hosting as a way to localize more traffic.  And these are great solutions because not only do they lower the cost and the need for the international, but they also lower the latency and allow you to watch You Tube videos and everything else especially when they start to be cached locally.

And we have seen that because the latency comes down, usage goes up, and we were doing a project on this in Rwanda on local hosting and at the time that we were doing it, Akamai put a cache of content in Rwanda and they shared the numbers and within two months just by putting the cache locally usage of their content doubled.  So in two months people responded just because it was faster, they used more of it, usage doubled within two months just by hosting it locally.

So those are great solutions, but ultimately, of course, that doesn't solve the volume problem.  In fact, it lowers the reliance on the international transit.  So I think everything else we have been discussing here will get to the long run solution of increasing broadband availability and usage, and starting to build up the volumes so even if more and more is coming from local solutions, the whole pie is growing and there is more coming over the international.  But here it's one of those areas that I think you start to run into where it's not just the Government that you can quickly point and say do this and do this, and you will solve your problems.  It's commercial and other issues that are going to take longer, but ultimately result in a much better ecosystem.

>> The issue of the costs and I point the case currently on the development in Peru.  In the north region the Peru there is a huge area covered by the Amazon and at this moment there is a plan to develop high speed network of mobile telephony.  The Government has taken initiative to get the cash for this network and they are finding that all of the associations with different services to reduce the cost, but one of the issues that has been difficult to estimate is the environmental cost of the installation of the antenna.  Because there is an area where there is no proper supply of electricity so this will run on petro and the petro will be transported to generators next to the stations and these are costs that are also seen in India.

This is something that is not discussed, you know, the actual carbon footprints and the offsets of installing this mobile in areas of extreme beauty that are national parks in many cases and environmental costs.  But more interesting than that is that in the case of Peru, for example, the Government has made a mandate and is making assumptions about the consumption of the services that potentially can be provided over these networks based on very low usage consumption.

What we all know from experience is that this is going to be very fast.  As soon as people start using the services if they can afford them or subsidize them as is the plan of the Peruvian Government people start using it more and more.  So in the next three or five years after the network is activated.  It will be necessary to expand it.  And the model is very difficult to understand because there is this huge investment made by loans for international organizations that Peruvian taxpayers would play.

The way they plan to cover the money to give management of the network to international companies that have the infrastructure to control the network.  It's not clear how the money will be returned and that makes huge questions about the future of how the network will be expanded.  So there is a discussion here open to understanding in Developing Countries implemented networks, how the regulators work and how this relates to the networks and I think this is an assumption that many people that live in Developed Countries and have access to Internet do not discuss even because these would be from the outset a discussion that will be run by the bright sector and not the Government or the regulators.

>> Yes, okay.  So we are talking about policy options, I would like to raise three quick points.  First, if we are looking at access we have to recognize that there is a huge access gap between men and women.  The Web foundation recently did a report using surveys across nine countries in South America, Africa and Asia and showed that women are 50% less likely to access the Internet, less likely than men for people with the same education, income and age.

So this is a huge problem, but we are talking policy options in terms of Governments.  The thing is we often see this as a operate issue.  For example, national broadband plans never typically address this kind of problem.  And this, we would argue, is a huge opportunity.  When we are thinking about national plans, national ICT policies, regulations, guidelines so on, what are our options here to address the access gap between men and women.

The second point on Government is issue of taxation.  In Developing Countries where we focus our work, taxation of ICTs is often seen as a luxury good, and they are often taxed at that level.  The problem is there is an interest in short‑term revenue from the Government side that overlooks the long term benefits of increased ICT diffuse, increased diffusion for mobile phones and Internet access.  And there are studies that have showed that there are a huge economic benefits for accessing these technologies.  So the issue is not to say that these types of ICTs and so on should not be taxed.  Taxation is required.  It's just that what's required is a more balanced informed kind of fiscal policy with regard to ICTs.

And the third point is on infrastructure sharing which Patrick mentioned.  Other area and very important way that this occurs is through sharing of tower infrastructure, and this is not a big opportunity for the operators themselves ‑‑ another big opportunity for the operators themselves.  One study done by the APC focused on Africa argued that two operators sharing the same tower infrastructure could represent 45% of the cost of a single operator deployment, and they argued that if all of the forecasted 15,000 towers throughout the continent were done on a tower sharing basis with at least two operators, the total cost sayings going in the range of $675 million U.S.

So the cost savings are huge because it can lower industry costs which ultimately can mean lower prices for consumers which is what we ultimately want.  So I think those are three key points we should keep in mind.

>> Thank you.  First of all, a data point as far as our operators are concerned probably globally, the issue is not one of demand.  It's one of being able to translate demand into monetized value.  We have more demand than we know what to do with, but we can't keep up with investments requires to keep up with demands on the network.  The second thing is you have a lot of sharing so we were one of the first ones to start infrastructure sharing.  Now we are going to active.  So we have a tendency ratio of close to 2, 500 towers throughout the country so that is something that the Government as a result of spectrum sharing and trading that has just been introduced allows for active infrastructure sharing on the towers as well.

The biggest challenge that we as operators have is the 30% that we pay for every dollar of revenue we get that goes back to the Government.  The Government sees us as a cow that can be milked at random.  It gives the Government a quick fix in terms of revenue.  Somebody noted, I don't know how accurate this is, but they said 100 basis point adjustment in the reserve bank of India primary does not get them as much as a 1% increase in terms of taxes on the mobile operators.  Why is that?  We have one billion connections so you can do the Math and see how quickly that translated into revenue for the Government.

Two, three days ago the Government decided they were going to fund the clean India campaign by a half a percent increase in terms of a tax on the telecom operators including air transportation and others.  So the point is that a large amount of money that goes back into the Government and is used for other than universal service obligation programs.  So this is, you know, Robinhood type of stuff here.  So that's clearly a challenge that we are facing.

Very quickly, I just want to show the sort of unintended consequence of regulation India.  In India, and as is the case in other parts of the world electromagnetic fields pose a significant scare in India.  Nobody wants a tower near their house or in their backyard because they are afraid that this causes cancer and all kinds of health hazards.  So the Government listening to the public outcry decided they were going to reduce these EMF levels from the global standards which is set by WHO by 90%.

Everybody thought they were going to feel safe.  This increased the concern among the citizens.  It increased the number of towers required because when you reduce the power consumption to reduce the EMF consumption is requires 10% to 12% more towers on average because of the dynamics involved.

So here is the unintended, no useful health benefit by the way that is documented, but yet posed a considerable cost on the industry and is still a cause for problems we have in terms of call dropped in India and getting the next work back on its feet.  Thank you.

>> So I'm pulling a few of these things together because being a commercial operator for us our willingness to put out services is driven by demand, it's a function of demand.  Often, and we talked about this a little bit, demand is a function of availability too, because if to your point, if you have never experienced something of value on a mobile phone, why do you need a mobile phone?

So it's a little bit cyclical, but picking up on the last point as well, one of the challenges is to get that ecosystem right.  To get all of the behaviors and drivers for the Government, for commercial industry, you know, for the citizenry aligned properly because we have also worked on a number of these places where there was a universal service obligation and seen that either, that the universal service funds get collected from the operators, but they don't get appropriately distributed to subsidize the build out of the infrastructure, or the flip side, which is also bad, they do get distributed, and they never get cut off.

So there needs to be an incentive to build out the infrastructure in places where otherwise it would not be economic for an operator to do, but not to forever subsidize it so that they build a robust business that makes them an acceptable, you know, profit, and that funds further build‑out, not a continual Government subsidy.

>> Two points, Roger.  You are being quite generous when you say you only have a problem with the USO funds being used for other purposes.  I have a fundamental problem with USO funds.  If connectivity is a meritorious good which is why we have decided to subsidize it should come out of general taxation.  And the contribution should go down made by the companies.  No countries have that, we have fixed amounts and that's partly because the general taxation regime is so weak that Governments, it's much easier to squeeze the 5, 6, 2, 1, telecompanies by six places to tax instead of the 700 million people we don't have tax files for.  But some other thing that we haven't talked about, and Michael really touched on this cost of international connectivity, and that we see this when we do quality of service testing for broadband across Asia and multiple cities, multiple times of the day when you are downloading, you get decent quality, not what's promised but the moment you are downloading international content your latency goes up, throughput comes down so under positioning is a real problem and last time a looked at telegeography numbers our cost was at least six times that of transatlantic prices.  Overall prices are coming down.

One of the things we haven't mentioned as one of the solutions which you gave many is IXPs, in country Internet change points which in some places have proven to keep the local ‑‑ I'm sorry.

>> MODERATOR:  We are coming up on the end here and I wanted to give an opportunity for members of the audience to ask questions.  I am told that for those watching remotely we can field questions through some mechanism remotely as well.  I guess the microphones on the side would be good for questions and while you are coming up I wanted to amplify one thing that you said, Vicki that to me is essential understanding the economics of deployment of networks in general is that, this, again, goes to the dynamic issue.

There is a very different set of incentives, very different set of optimal investment when you are building, at the beginning when you are trying to build your network or build your platform for those, for corn tent providers as well than there is at the end.  And it's a real problem if policies are locking the network into one or the other or neglecting to understand that whatever incentives they may have today in terms of getting initial uptake are very different than incentives they will have further down the line crucial to understand the appropriateness of policy.

>> My name is Sharda.  I have two questions of the panel.  The first is in relation to policies that might be beneficial, and I wanted the thoughts on mechanism of cross subsidization of newer and more innovative models such as the one that 03B is using in relation to newer deployment.  What do you think of such a policy being implemented wherein you can increase access but you don't necessarily have to have as much cost as you would.  There is obviously a question of who would trust as what.  Who the incumbents would be but I'm interested in your thoughts on general principle.  The second question that I have and is will be short, what do you think see the role of community based networks in this debate about deployment.  Do you think they are not a thing?  I just want thoughts.  Thank you.

>> MODERATOR:  Just give an example.

>> AUDIENCE:  What I mean if I am a new and innovative technology that is going into a regime that does not have access to this technology at this point in time and I will have to spend a lot of money in like putting up that infrastructure in that space, should I be subsidized by who is a to be able to do that to be incentivized for me to be able to do it further.  Are there newer incentive mechanisms in terms of technology to exist in this situation?

The reason I'm asking this is because right now the programs that we have in terms of innovative technologies are more often than not already run by really large conglomerates like alphabet project, or 03B model they just complained and I wonder what that would look like if I am someone that does not have that kind of resources to invest of technology innovation of that scale.

>> MODERATOR:  Sounds like universal savings funds, you raise money from one thing and put it into something else which I'm sure he will with other opinions on otherwise where would the cross subsidy come from.

>> AUDIENCE:  The reason I am not using the universal service obligation fund is because the way universal service obligation fund is practically manifested in a lot of countries now or the problems that exist in interprets of things pointed out.  Either collection and no use or no understanding what of money is being used for or put into policies that are not helping Internet deployment.  So I actually think this might be an alternative to USO markets.

>> CHRISTOPHER WOO:  There are two answers the traditional telecom cross service is you allow overcharge for telecom service and finance the other one.  We have a primary example of this.  Japan did this with fiber.  When they announced the project, the private investors screamed saying it's never going to pay out.  The Japanese Government still owns 35% of NTT they are the controlling shareholders and so you have to do it.  It turns out the private shareholders are right.  It will never pan out.  The harm is they are overcharging traditional copper voice customers and making them pay for technology and Orthodox economics would say this is robbing Peter to pay Paul.  It created secondary distortions where people will curtail phone call and making the fiber look attractive and it won't survive competition.  Wherever you are overcharging that's where you will attract the competition.

What you are talking about can be something else which is do you arbitrarily go after a pot of money you can get at and to some extent this is what Rajan faced and we see this with taxes.  The Orthodox public finance response is you should tax people if they are creating harms or receiving benefits.  You should tax them in proportion of that to internalize that.  If you are spending money for general benefit, you should be financing that out of general tax revenues whether it's tax or, income tax, property tax, sales, whatever your general tax base is.  Going after a large company providing services in this space because they are large isn't a good idea.

The last question, mesh networks are a great dream.  We have been talking about them since I have been in this business.  The engineers have a say, three hops and you are dead.  We are we have never been able to work out ad hoc networking, we are hoping something will happen but until they find something, sprinkling mesh network is not going to solve the problem.  We all want it to work.  We love community that works to be part of the solution.  We just don't know how.

>> Yet.

>> CHRISTOPHER WOO:  It is tied to a technological issue.  It's a hard engineering program that people are working on.

>> MODERATOR:  We have 20 seconds in which to have one more question if there is one.  Yes.  Please.

>> AUDIENCE:  Okay.  Hi, it was a very interesting panel.  I am Chenia, South Africa from Research ICT Africa and I have only got one comment in terms of the demand side issues.  Maybe it's not everyone's main concern, but I think there has been a large broadband policy looking at infrastructure rollout when on the other side the demand users, we have done research where we found people just don't know what the Internet is and they have got basic education so maybe there is a need between private sector and Government to roll out the service and you do your job in educating people.

And then my second question is there a role for, one of the panelists talked about fiber being key for connecting urban areas, but in cases like South Africa where I come from, the high density areas do not connect with fiber because they are low income crime ridden areas.

Is there a need for Government to mandate service providers to go into those areas or is that a role between public/private enterprise to then come up with some solution to connect people in those less lucrative areas?  Thank you.

>> PATRICK RYAN:  I will try to weigh in on this.  I think it's always difficult to find the incentive to get the private sector to do something to do if it doesn't have the same pay back scale.  If I have $100 I want to invest and I can choose to invest in a poor area or in a place that's rich, it's obvious as a private sector I will go to the rich because I can make more money and potentially get me to the other areas quicker.  That's unsatisfying and appropriately unsatisfying for Governments because you see the red lining taking place where the companies carve out and serve the rich and it's a digital divide.  It's a problem.  And I have identified, but I don't have an easy solution.

I do believe that a lot of things Governments can do is regulation by raised eyebrow.  It is a mode of regulation that isn't actually regulation.  It's when you have regulators that are influential or politicians that are influential ask hard questions and threaten potential regulation.  So there is a number of regulation by raised eyebrow.  One that comes to mind when you think about the different kinds of connectors used to charge phones.  This frustrates everybody, and there has been a couple of regulators that say we are going to initial this and regulate the hell out of it and require a certain size adapter.  Private sector is like oh, my God, Government is going to tell me what size plug.  We got our act together and put a proposal to make it happen.

It's not a panacea, but it can work in these cases.

>> CHRISTOPHER WOO:    I have to give Patrick's company credit.  One of the things they have been able to do in areas that are perceived to be less available for fiber is they did something in business terms called gamification, which they said if you have passed a certain threshold we will wire the neighborhood.  And what they discovered is there are certain super heavy users who not only want it so bad that they will pay for it, they recruit people to do it and become the best advocates for doing it.  We thought it would be high income neighborhoods that would buy.  In fact, the dynamics work and they did a bunch of other things such as they minimize their truck rolls by saying we will wire you once.  This is the day.  If you don't go get on the bus now, it's not coming back for five years.

And it became an incredible thing where it became momentum building.  And it reduced their cost dramatically.  It's provisioning house by house.  So there are strategies where you can activate where they have been able to solve.  In response of the two orc things I'm not a fan of crazed eyebrow regulation because it be make regulators do things that they don't otherwise do.  It's a way to evade processes that all be dangerous and I want to thank you for focusing on demand side.  All surveys from Brazil, China, U.S. say you could build the networks you want.  Unless you solve the demand side at the same time, you will not get results you are looking for.

>> MODERATOR:  Good point to end on, thanks for coming.  I want to thank the panelists for their interesting comments, I appreciate your time. 

(Concluded at 15:34)