ITU Telecom World

A Memorandum of Understanding was signed today between the Ministry of Communications and Informatization of the Republic of Belarus and ITU  to assist ITU in performing measurements related to cases of harmful interference for which an administration is seeking the assistance of ITU.

Speaking of this key government-ITU agreement, one of a number of key agreements signed during ITU Telecom World 2016, ITU Secretary-General, Houlin Zhou noted “This MoU will benefit the entire community of satellite users in Europe, Middle East, Africa and Asia to resolve cases of harmful interference between satellite systems.”

“It will also greatly contribute to ensure a more efficient, effective and equitable use of spectrum/orbit resources, which are managed by the ITU on the basis of the Procedures of the Radio Regulations” added Mr Rancy, Director, Radiocommunication Bureau, ITU

Republic of Korea’s point-of-sale technology business, Cobaltray announced a memo of understanding with Iranian technology business, Ariana Gostar Spadana to improve retail payment methods for Iran.  Cobaltray, a member of the Korea Pavilion, was also a participant at ITU Telecom World 2013.

Press conferences for SENEGAL and MADAGASCAR took place yesterday at ITU Telecom World 2016, revealing the exciting investment opportunities in each market and the important ICT projects that are taking place.

The next ITU Global Symposium for Regulators (GSR) will take place in the Bahamas at the Atlantic Paradise Island Resort between the 11^th and 14^th July 2017.  The decision, which was announced today at the signing of the Host Country Agreement at ITU Telecom World 2016 in Bangkok, will result in regulators, policymakers, industry leaders and other key ICT stakeholders gathering in the Bahamas next year for the annual global dialogue.

Underlining how ITU Telecom World 2016 is the place to make great partnerships happen, a contract was signed today between Korean Smart Cities innovator DSPONE and Thailand’s CAT BUZZ TV.

The agreement covers providing Smart city related equipment and solutions for infrastructure construction including M2M device and related network for IoT-based mutual control in the field of infrastructure construction in Smart City project.

ITU’s Brahima Sanou, Director, Telecommunication Development Bureau, welcomed delegates and a diverse panel line up, spanning cutting edge start-ups to key industry players including Intel and Mastercard as well as GSMA, to the B2B dialogue. This was ably moderated by Stephen Ibaraki, Founding Chair Global Industry Council & Vice-chair, IP3 Board, International Federation for Information Processing. Commending the nature of the panel, which brought MSMEs and industry together, he noted that we are seeing this kind of dialogue more and more frequently. ITU, he explained is the “broker to bring the whole ICT ecosystem together.” Noting the vital role of MSMEs in the ICT ecosystem, he explained that MSMEs can create “local solutions to help attain the SDGs.”

Biggest pain points for MSMEs

Time, speed, payment, navigating rules and protecting know-how were among the key pain points of corporate collaboration cited by the MSME panelists.

One key advantage, however, of working together with MSMEs is speed. Decision making within a corporate environment is slower, explained Natwut Amornvivat, Co-Founder, T2P, Thailand, and can diminish a competitive advantage, potentially slowing a product launch by several months. MSMEs, as both potential partners as well as disruptors, can reach markets first.  MSMEs and corporates have “different biorhythms” according to David Manset, CEO, Gnúbila, France. MSMEs, with their fast-paced development and decision making, need a corresponding fast rhythm for interaction.

MSMEs and corporates also operate with different mindsets, explained Manset. Within a corporate environment, individuals maybe focussed on building a career within that environment, whereas an entrepreneur can “lead 9 lives in 1,” and corporate employees need to realise this. Too many contact points within one organization can also make a contractual relationship difficult to set up.

Rules and regulations set up by corporates can also pose a problem for MSMEs to navigate their way through, according to Arada Fuangtong, Director of Digital Commerce Market & Manager of Thaitrade.com, The Department of International Trade Promotion (DTIP), Thailand, and they may need help and support with these.

Payment can pose a challenge, according to Oranuch Lerdsuwankij, CEO and founder of Thailand’s Techsauce, particularly for MSMEs used to operating within a b2c environment with online payment. Payments with corporate entities can involve contracts, purchase orders, and start-ups can have problems managing the cashflow. Protecting valuable know-how can also be a challenge, according to Yoonju Sung, VP, Sales, RippleBuds, Republic of Korea, as technology may often need to be shared and there is a concern it may be copied or disclosed.

Corporate perspective

Representatives from leading global players empathized with the MSMEs on the challenges they face, particularly navigating their way to the right decision maker within an organization.

MSMEs need to be prepared to talk to several people before you find the right person, according to Carlos Cornejo, Senior Vice President / Group Head New Consumers, Public Sector & Humanitarian Products, MasterCard. Nevertheless for those who do find the right contact and entry point in, it could be highly beneficial, providing a better chance of winning the next largest corporate – becoming a “lighthouse account.” According to John Galvin, Vice President, Government and Education, Intel, both sides should take advantage of sessions such as this B2B dialogue to make connections and build partnerships. “You need to look at opportunities such as this to really form your network.” Said Galvin.

We are also trying to accelerate, added Cornejo, although must follow our own processes, and MSMEs need to understand this also. This sentiment was echoed by Cuvellier “Both parties need to try and adapt to the other.” Good collaboration works with a single point of contacts, ideally a small team empowered to work with start-ups.

As an operator, explained Taimur Rahman, Chief Corporate and Regulatory Affairs Officer, Banglalink Bangladesh, “We are scared.” With less young people using voice services, operators are concerned by prospects for the future. Partnership is now essential “We have to change ourselves, we can’t be what we were. We have to partner, we have no option.” MSMEs need to be mindful of this, and pitch how they can help. Entrepreneurs need a “value chain that should talk in 30 seconds” according to Birendra Sasmal, CEO, Subah Infosolutions.

A change of approach?

So who needs to adapt their strategy and approach? Manset asked if we would see a move to a new form of organizations, with fragmented value chains and a more entrepreneurship-focused mindset?

Galvin doesn’t envision the end of today’s corporate culture, and “corporates acting like MSMEs,” as such sweeping structural changes would be hard to instigate in multinational entities. MSMEs need to understand corporates and the challenges they face, added Cornejo, if they want to build a partnership.

Both sides must appreciate the other’s strengths and concerns. If you want a partnership with a multinational you must understand them, according to Cornejo. If you better understand your customer you will have a better approach. “You need to see the beauty of each other.” He explained.

MSMEs need to be ready to meet the needs of corporates, according to T2’s Amornvivat, by investing in time, prototyping to be able to demonstrate a working solution which can be circulated within the corporation to be seen at many levels.

According to Galvin, the best entry for MSMes into corporates is “through line of business.” Although they should bear in mind that if they grow with the company they “maybe growing out of what made them so attractive to begin with.”

Conclusions

Today has underlined the big gap that needs to be closed in order for tech MSMEs to enjoy healthy relationships with multinationals, and should be the first of many discussions, according to Galvin.

We are changing, we need to be open and rethink processes in order to integrate more the value SMEs can bring, concluded Cornejo.

Don’t give up, Cuvellier told the MSMEs, they are hearing you and there are great partnerships to be built.

As operators, we know we need to change, said Rahman, but change will take time. You need to understand us and work together.

We need to create a focus, we need a more platforms like this where we can discuss all issues, according to Sasmal. We are changing, moving in the right direction but it will take time.

Giving MSME perspectives on discussions, T2’s Amornvivat acknowledged his appreciation for the discussion, noting that corporates are receptive to the growing ecosystem. He urged MSMEs to navigate the relationship with corporates well “It is to your own advantage.”

Fuangtong urged participants to open their minds and hearts. Technology is unstoppable, she said, but keep opportunities open.

Techsauce’s Lerdsuwankij commended the initiatives from the corporate side, calling for more collaboration between the 2 sides

An ongoing cultural change is taking place in the industry, according to Manset but is still ongoing, and a cultural change is needed, so the value chain is better addressed.

We need to know what we really want from each other, according to Sung, we need to cooperate for synergy.

ITU Secretary-General Houlin Zhou concluded the session by outlining his vision for ITU Telecom World events as the unique international platform, connecting ICT SMEs, business and governments, a platform that we still need to work hard to promote. It is my dream, he told delegates that in future if anyone about supporting SMEs they think about ITU Telecom.  He encouraged delegates to continue the discussions and to promote the ITU Telecom platform.

Moderator

• Mr Stephen Ibaraki, Founding Chair, Global Industry Council & Vice-chair, IP3 Board, International Federation for Information Processing, Canada

Opening Remark

• Mr Brahima Sanou, Director of ITU’s Telecommunication Development Bureau, International Telecommunication Union, Switzerland

Panellists

• Mr Natwut Amornvivat, Co-Founder, T2P, Thailand
• Mr Carlos Cornejo, Senior Vice President / Group Head New Consumers, Public Sector & Humanitarian Products, MasterCard Worldwide, USA
• Mr Max Cuvellier, Head of Ecosystem Accelerator, GSMA, United Kingdom
• Ms Arada Fuangtong, Director of Digital Commerce Market & Manager of Thaitrade.com, The Department of International Trade Promotion (DTIP), Thailand
• Mr John Galvin, Vice President, Government and Education, Intel Corporation, USA
• Ms Oranuch (Mimee) Lerdsuwankij, CEO & Cofounder, Techsauce, Thailand
• Mr David Manset, CEO, Gnúbila, France
• Mr Taimur Rahman, Chief Corporate and Regulatory Affairs Officer, Banglalink Digital Communications Ltd., Bangladesh
• Birendra Sasmal, CEO, Subah Infosolutions Ghana Ltd, Ghana
• Ms Yoonju Sung, VP, Sales, RippleBuds INC., Korea, Republic of

Closing Remark

• Mr Houlin Zhao, Secretary General, International Telecommunication Union, Switzerland

How can we balance the needs of the ICT industry against the needs of the wider society? How should governments and industry work together so that the wealth created by ICTs is split between tax revenue and industry investment to the mutual satisfaction of both parties? This was the key question at the heart of the plenary session “Balancing Financial Incentives to Promote Investment in ICTs.”

Not a simple question, given the enormous impact of digital technologies on the economy, from creating new business to facilitating communication, production and the circulation of goods and services. Particularly given that excessive taxation on digital goods and services could limit adoption. “The taxation of digital goods and services should be approached with care, to prevent any erosion of their spillover contribution to the GDP growth,” cautioned Kemal Huseinovic, Chief of IEE at ITU’s Telecommunication Development Bureau, and moderator of the session.

Governments tend to see the ICT sector as a potential source of revenue to balance public sector budgets, rather than reinvesting in the promotion of infrastructure, deployment and development in the ICT sector. For Tomas Lamanauskas, Group Director Public Policy at Vimpelcom Group, representing the operators’ perspective, the clear contribution of ICTs to GDP and the burden of sector-specific taxation are a double injustice. But it is important to try to understand the situation from the other side – what is the government’s incentive?

Financial pressure on governments has increased as a result of the financial crisis, and is exacerbated in many countries by growing shadow economies – even in Europe, where the informal economy is relatively low, losses in taxation are around 450bn euros. Governments need “to collect enough fiscal resources, and we as an industry must be able to thrive and enable other industries, and big incomes.” Unpacking this tangle will only be possible through better dialogue, he believes.

Knowing the tax rate in advance helps to make it manageable, as will ensuring that all players in the market are treated equally, and transparency in national taxation instruments. There is a huge opportunity it work together to “assign the overall fiscal burden”, taking into account regulatory and fiscal factors, but also the impact on the affordability of services to the user.

As Abdoulkarim Soumaila, Secretary-General of the African Telecommunications Union, put it:”It’s a challenge for government. We think the telecom operator should develop ICTs, but we also need to develop other sectors, and need to collect money for that.” It is down to the national regulator to see how to incentivize investment.

Taxation policies are having a direct knock-on effect in regions such as sub-Saharan Arica and South-East Asia, where 3G coverage is slowing significantly as operators have been forced to reduce investment. Normal tax and sector-specific tax combined can be as high as 45%, removing any incentive to investment in the region. From the government perspective, as oil prices decline, the low-lying fruit of telecom tax revenue is seen as critical to balance budgets – representing up to 25% of the government’s income in some places.

It’s about balancing short-term and long-term perspectives, operators’ need for quicker return on investment as the technology cycle becomes faster against the government’s need to fill the public purse. For GSMA’s Director of Infrastructure Economics, Guillaume Touchard, the most beneficial solution is also the most difficult one for governments to undertake – decreasing taxes. Economic studies have shown, he said, that lowering taxes in the sector actually leads to increased tax revenue, with all the benefits of job creation, business development and, ultimately, new sources of fiscal revenue: “Governments have to be brave to think more mid- to long-term.”

There are actions that government could undertake beyond taxation. Providing free nation-wide rights of way to the industry, enabling operators to access public assets such as roads, public companies and even buildings, will accelerate network deployment. Policies enabling infrastructure sharing and site sharing would reduce the cost of network investment; as could rethinking the rules on universal service funds.

“When operators talk about tax, government talk about profits,” summarized Hichem Besbes, President, Instance Nationale des Télécommunications. Governments are fundamentally always in need of revenue, and the natural resource that is spectrum frequencies can be as rich a source of income as any minerals. On the other hand, ICTs are “a vector for development” in every sector, and “if we allow the penetration of ICT, we can promote and enhance the whole ecosystem”. It is about finding the right balance between short-term revenue and long-term investment, auction windfalls and universal service, operators’ right to make money against citizens’ right to services, the demands of the finance ministry against the requirements of the ICT sector.  “We have to have a common language between financial and telecom people,” he concluded.

Additionally, new market players, applications and services entering the ICT ecosystem and often subject to different regulatory and fiscal measures also have a tremendous impact. The global, borderless nature of internet players has often allowed them to slip between the cracks of existing national regulatory and tax regimes.

“ Taxation falls disproportionately on domestic players when other people use those networks, make a huge amount of revenue, and don’t necessarily follow all the rules,” Scott Minehane, Managing Director, Windsor Place Consulting, summed up. It is starting to change, including tax harmonization in regions such as the European Union, and moves to equalize the competitive market.

In addition, domestic taxation in areas such as spectrum costs and licence fees can be prohibitive; taxing people moving from 2G to 3G to 4G may not be realistic given operators’ need to upgrade to the most innovative technology. “Taxing these types of technology moves actually is a taxation on the future.”

“Creating the right financial incentives for the private sector to invest, but also for the right governmental take is a really difficult question,” said Minehane. Continuing open, multi-stakeholder dialogue is the only answer.