What are Cisco up to?

Wednesday, 01 August 2007 00:00  |  Michael Schwartz

Developing regions offer huge potential for the telecom sector. Their populations and economies are growing faster than those in the developed regions, and they have relatively low penetration rates with respect to telecom connections. Many countries in emerging regions see that improved communications are likely to stimulate economic growth and productivity. As a result, many are attempting to introduce competition and liberalisation in order to attract infrastructure investment and deployment.  

There is, of course, huge pressure to innovate in the emerging markets, where current communications costs will need to fall dramatically. Cisco is involved in the business realities of connecting developing countries and communities in a way that is also replicable across multiple regions, and thereby beneficial to both the population and the economy.  

Many individual factors influence the opportunities in individual emerging markets. Basic areas for differentiation are population, GDP and penetration of fixed-line and mobile phone connections. Other factors include political stability and government interest in communications: how willing a government is to invest in and foster communications. The regulatory environment and the extent of competition play an important role in shaping the real-world communications opportunity and growth in these markets and this will of course differ per country.  

Turning to one particular region, many countries in Central and Eastern Europe have sought a new dispensation for their telecom industries since the break-up of the Soviet Union 15 years ago. The collapse of various communist regimes exposed how badly the telecom infrastructure had suffered from years of stagnation and under-investment. Subsequently, some governments have increased investment levels, allowed new entrants to offer mobile and other telecom services, privatised state operations, introduced regulatory regimes and exposed monopolies to competition. Governments in the region see that better communications can increase economic prosperity. They are working toward greater liberalisation, increased competition and more transparency as a way to attract the investment needed to fund infrastructure expansion. However, they still have a very long way to go before all their markets are fully open to private capital and fair competition. 

The accession of Hungary and the Czech  Republic (together with Poland, Estonia, Latvia, Lithuania, the Slovak  Republic and Slovenia) to the EU will help to drive competitiveness and loosen the monopolistic grip of the old incumbents as EU requirements “bleed” into national legislation. In addition, increased international presence in these countries will drive the growth of the embryonic markets for data and Internet services, and for managed, rather than native, services such as virtual private networks. 

As witnessed in Hungary, opening up telecoms in this region proceeds in a series of ponderous stages. Apart from allowing competition in the mobile telephony and business services markets, the process began by allowing (in 1994) alternative operators to bid against local incumbents for concessions to provide local telephony services and ended with the release of domestic long-distance and international voice services. However, it is important to realise that ten years later Hungary’s ex-incumbent still retains the lion’s share of the market. 

Corporate entities face challenges such as regulation, more often than not coupled with those that are more politically orientated. That said, Cisco believes that network technology is the key to global advancement socially and economically for emerging markets. And it is these corporate organisations that have to develop specific partnerships, schemes such as Cisco’s Networking  Academy and the Cisco Entrepreneurship Institute. Underpinned by awareness and innate understanding of the country, such companies must “buy in” from government and its citizens to make the partnerships work. This is a different level playing field which must be continually revisited if success is to be achieved. 

  One Cisco-sponsored IDC research project is measuring the adoption of broadband in selected countries across emerging markets. The adoption of broadband is tracked on a regular basis per country, and the results are shared with appropriate government offices/officials and the public at large. The research allows both in-country and cross-country comparisons and analysis. 

One country where this has occurred within is Argentina, in order to encourage the development of high-speed Internet in the country. Through this initiative, Cisco believes Argentina should set itself the goal of reaching 4 million high-speed connections by 2010 in order to drive the country’s economic development, competitiveness and productivity - a goal that has been endorsed by the Argentine government. 

More info: 

• www.cisco.com 

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