Pandemic creates ‘more opportunity for rural coverage in Asia’
The pandemic has created a stronger business case for rural infrastructure in developing Asia and elsewhere, but the promise of government subsidies sometimes delays spending by telcos.
Those were the views expressed in a panel yesterday at the Capacity Asia conference, held virtually, on creating the framework for greenfield infrastructure builds in the Asia-Pacific region.
“Rural areas are not necessarily high ARPU [average revenue per user] consumers,” said Equinix’s Audrey Seow. “The small demand does not justify further investment.”
Adrian Martin of Superloop countered that, with the pandemic, more and more former urban dwellers are seeking to live in rural areas. “There could be a shift in the rural community that increases the demand profile.” This would back the case to improve rural infrastructure, he added.
“This will bring high ARPU customers back into the rural community,” said Facebook’s Ubaid Younus, who was chairing the panel.
“Is there enough capacity in the market for infrastructure projects?” he asked.
Digital Realty’s Robert Davidson said: “There is enough capital if the opportunity is right.”
Seow agreed: “There is definitely enough capital in the market. Investors are looking for the right opportunity.”
Davidson warned about what he said was the negative effect of the prospect of subsidy. Companies will negotiate with governments to seek funding. “We’re almost our own worst enemy,” he said.
Public funding is “the de facto model that everyone goes after. It gives the politicians a lever to pull.”
Davidson suggested a better model might be to create tax-free zones, already used to stimulate other types of infrastructure spending. “It drags companies into a region — it just means the government forgoing a revenue base.”
Martin pointed to the US, where public funds have backed 4G infrastructure in rural areas. “Businesses will wait for the handout. The knock-on effect is that those areas don’t get it quickly, but they get it eventually.”
Should governments and regulators allow open-access infrastructure, asked Younus. “It would definitely help,” said Seow.
Davidson noted that in rural communities, “it’s the last mile that’s most expensive” and said governments should take a holistic view of infrastructure investment. Over-the-top companies “are looking to deliver content, but not to be a telco. There needs to be a middle player doing that to connect the last billion.”
Half of Asia’s population is still not on the internet, Younus had earlier pointed out. Speakers urged countries in developing Asia to follow the examples of hyperconnected markets, listed by Davidson as Japan, South Korea, Hong Kong and Singapore.
Governments need to recognise that “an open framework, close to Singapore and Hong Kong” is most effective, he said.
Watch the panel in full here