The world connected: Society’s new highway roars up the agenda
By Paul Taylor
Published: May 28 2009 21:39 | Last updated: May 28 2009 21:39
Expanded access to fixed and wireless broadband connections is beginning to transform business communications and corporate processes while driving a new round of innovation that could have profound implications worldwide.
“Today, broadband is at the turning point with infrastructure widely available,” said Carl-Henric Svanberg, Ericsson’s chief executive, speaking at a recent event.
“However, we have not realised the full impact and potential for society.
“Over the next 20 to 30 years, it will stimulate innovation across society and will lead to the deployment of completely new solutions,” he said.
Mr Svanberg predicted that broadband would be the society's new highway, with telecommunications contributing to sustainability through innovations such as telepresence, video links which can reduce the need to travel to meetings, for example.
The potential of broadband to streamline business processes and cut costs has also ensured that investment and providing access for individuals and companies has remained top of the political and business agenda.
“The sector is receiving growing attention worldwide as governments recognise the crucial role it will play in economic recovery,” says Dianne Northfield, analyst at Yankee Group, a connectivity research firm. “The emerging ‘Anywhere Network’ – a powerful, pervasive digital network that can connect all people, at any time, in any place – presents an opportunity to create more jobs, increase productivity and develop solutions for healthcare, education, transportation and energy.”
Recent research, including a study commissioned by Nokia Siemens Networks and conducted by LECG, a consultancy, on the economic impact of broadband adoption in Europe and the US over the past 10 years, suggests this emphasis is fully justified.
The LECG Broadband Study directed by Professor Leonard Waverman of London Business School, found that in countries where diffusion and use of information and communications technologies (ICT) were at medium or high levels, the economic benefit from improved penetration was significant.
For example, the study predicts that adding 10 more broadband lines per 100 individuals across the US, or a total of 30m new lines, would raise US GDP by more than $110bn.
Significantly, the LECG study also found that in countries where ICT deployment had been relatively low, broadband has generally been adopted more slowly and has not had a noticeable positive effect on productivity.
It suggested that in these countries, while it may just be a matter of time before the benefits are evident, governments should be active in helping to speed up its adoption.
Another conclusion is that there is a significant role for “demand-side” policies which create incentives for, or lower the costs of, adopting broadband and computing technologies. “Governments and businesses could look at providing training in using ICT and raising awareness of the potential benefits,” it suggests.
But like other studies, the LECG report also suggests that even where broadband has had an impact, there are lessons and warning signs.
First, providing there are no diminishing returns, policies that promote it are policies that promote productivity, innovation and economic growth.
“Innovative ability” is an important source of comparative advantage for advanced economies – thus policies that promote innovation and encourage investment in advanced infrastructure are to the good.
However, it must not just be about infrastructure because the same infrastructure in different, more skilled hands can yield far higher returns.
Second, even within countries such as the US and the UK there is an internal digital divide. This has sometimes been portrayed in terms of access to infrastructure, but many argue there is also a divide in usage and skills.
“Many countries are looking at how to provide universal access to broadband as an assumed driver of economic productivity,” says Prof Waverman. “But far too little attention is given to other key factors. For instance, a US stimulus package that addresses affordable access would have a far greater impact when complemented by emphasising provision of computing devices, ICT training and education.”
The lesson for policy makers, he suggests, is that there needs to be a greater focus on the users of future infrastructure, enhancing the “demand side” of access.
Specifically, for broadband to become a more effective way of enhancing productivity, countries need to invest in improving skills and lowering the costs to businesses of adopting technology and restructuring business models around technology.
Ilkka Lakaniemi, head of global political dialogue and initiatives at Nokia Siemens Networks, says: “The models must take into account the digital divide between northern and southern Europe.” He adds, however, that even in advanced countries, policies that call for universal broadband access should also address issues of skills and awareness.
The LECG study agrees: “useful connectivity” depends not just on the number of people connected to a network or infrastructure, but on how those connected use the network or infrastructure.
Although it is convenient for governments and the telecoms industry to focus on the “supply side” (access), policy makers cannot ignore usage, skills and technological know-how among businesses and consumers.
Ovum, the technology consultancy, reaches similar conclusions in its recent report, “Bridging the broadband divide: challenges and solutions”. Divisions in developed economies are linked to lack of demand and complex interfaces more than limited availability, Ovum suggests.
Globally, overwhelming evidence that broadband is “good for the economy and good for the nation”, has made connecting society an important government goal. In many developed markets, penetration is well above 50 per cent; although growth is slowing. This, says Ovum, is due to a significant minority of people either not being interested in broadband or facing significant barriers.
The report outlines strategies that could help bridge such divides. It says many people are put off by complex devices and interfaces that cater to the technically literate. In addition, users with disabilities are largely under-served. Inclusive design needs to play a much greater role.
It argues that strategies to promote internet use need to work as part of wider inclusion efforts – embedding broadband in education, employment, care and other programmes designed to empower the socially excluded – and connectivity needs community relevance.
In most cases, operators will play a key role in inclusion activity, but this will be in partnership with other commercial companies, public agencies, non-government organisations and user groups.
For example, efforts to target elderly people can involve charities, targeted media coverage, local care agencies and companies specialising in products designed for elderly users.
The debate over the role of government in promoting access continues. For example, a report from the International Telecommunications Union noted that several of the top ICT countries have higher ICT levels than expected, given their income levels. For example, South Korea is outstanding.
“This illustrates how a strong and targeted ICT policy can drive the development of the information society in countries with relatively lower income levels,” the ITU concludes.
What LECG, Ovum and other commentators agree on is that the provision of access, either by private entity or government, will not, on its own, ensure that the full potential of broadband internet access to transform lives, companies and economies is realised. For that, a more holistic approach is needed that transcends all divisions.
ITU: ”Measuring the Information Society – The ICT Development Index, 2009 Edition”, http://www.itu.int/ITU-D/ict/publications/idi/2009/material/IDI2009_w5.pdf
NSN/LECG Connectivity Scorecard, http://www.connectivityscorecard.org/images/uploads/media/TheConnectivityReport2009.pdf
Ovum: Bridging the Digital Divide – less technology, more understanding, contact Maria Di Martino on +44 20 7675 7529 or maria.dimartino@ovum.com.
Copyright The Financial Times Limited 2009
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