Strategy&What we do Accelerating high-speed broadband in Turkey: Foundations, barriers, and policy considerations
Accelerating high-speed broadband in Turkey: Foundations, barriers, and policy considerations
Bahjat El-Darwiche, Alastair Macpherson, Mahmoud Makki, Mustafa Ucar, Jad El Mir
March 30, 2016
Now is the time to accelerate the reach of national broadband in Turkey. Turkey has laid the groundwork for this acceleration. Broadband reach, speed, and affordability have been established, all abetted by a competitive market, a regulatory framework conducive to broadband development, and significant investments.
The barriers that are holding back the Turkish broadband market are: low demand among entry-level users, lagging demand for higher speeds, high taxation on devices, patchy coverage in suburban and rural areas, a challenging wholesale market, and inefficiencies in distribution. Drawing on the examples of successful policy interventions in markets similar to Turkey’s, our research recommends six policy measures that could propel the expansion of Turkey’s broadband reach by overcoming these barriers.
Stimulate demand by increasing broadband awareness and digital literacy, emphasizing promotion of high-touch distribution channels, and accelerating the uptake of high-speed broadband.
Increase relevant local content and applications, particularly those related to education, government services, and economic productivity.
Revise the taxation regime on broadband-related devices and services to reduce the cost of ownership, making broadband more affordable.
Infrastructure-based competition can be encouraged through the extension/redefinition of the regulatory holiday and introduction of other regulatory incentives.
Extend current subsidies (Universal Service Fund) and bridge coverage gaps in low-density areas.
Cooperate with municipalities to aggregate demand and ease right-of-way fees.
At this stage of Turkey’s market development, these six interventions would be more effective, and less disruptive, than alternative supply-restructuring measures such as structural separation.
Turkey’s existing telecom outlook has the foundation on which to build a vibrant, truly national broadband network that reaches and benefits all people. To leverage that foundation and address current barriers, many measures have been identified that are impactful, affordable, and minimally disruptive. All of these measures have succeeded in other countries whose situations parallel Turkey’s — countries that had a good supply of broadband capacity but worked to build demand through wider distribution channels, reduced costs, and better local content.
International experience suggests that Turkey does not need supply restructuring. Instead, a coordinated effort by all stakeholders — policymakers, regulators, telecom companies, and content providers — can raise the supply of local online content, and increase demand among those who either lack broadband access or have previously seen no need for it. Stakeholders can follow proven policies and regulations to fill in the remaining gaps between supply of high-speed broadband and citizens’ demand, such as aggregating local demand, using mobile technologies as a supplement to fixed lines in remote areas, and doubling down on commercialization efforts to improve monetization of current infrastructure.
Connectivity-aided economic growth offers greater possibilities and prosperity for all sectors of society. If all stakeholders work together on evidence-based strategies to achieve it, while minimizing disruption, Turkey can hasten a highly connected future that benefits everyone.
International Telecommunication Union (ITU).
The impact of acceleration measures on the penetration curve is estimated as the difference between the status quo forecast (based on Turkey’s penetration CAGR) and the improvement forecast (based on the s-curve trend of comparable and advanced markets). The source of current numbers is WBIS.
Cumulative impact includes years from 2016 to 2023. Strategy& analysis.
The years 2005–2014.
Tübisad; Invest in Turkey; Strategy& analysis.
ICTA (BTK); Türk Telekom; World Cellular Information Service (WCIS). EU numbers are for the EU15 nations.
Türk Telekom estimates.
WCIS; BTK; Türk Telekom; Strategy& analysis.
Comparable markets are countries with population size between 25 million and 150 million, GDP per capita equal or higher than Turkey’s, and fixed broadband penetration higher than 30 percent. Selected countries are: Australia, Canada, France, Germany, Italy, Japan, Saudi Arabia, Malaysia, Poland, Russia, Spain, South Korea, and U.K.
World Economic Forum, Global Information Technology Report.
Refer to Strategy& Content Maturity Index in WEF GITR 201.
BTK; Türk Telekom.
EU Commission; European Digital Commission; BTK market reports; Turkish Statistical Institute (TÜIK in Turkish); Türk Telekom.
The affordability index is computed based on the share of households with a broadband package that is less than 5 percent of the average household income.
Analysys Mason; Strategy& analysis.
Infocomm Development Authority (IDA), Singapore.
Bronwyn E. Howell, “Separation Anxieties: Structural Separation and Technological Diffusion in Nascent Fibre Networks,” SSRN 2014.
David Bernal, “Providing broadband services through PPP (Public Private Partnership) models,” ITU 2013; James Allen, Ceri Tinine, Final report for Ofcom: International case studies, Analysys Mason, 2015.