1.3.1 Positive Impacts of Broadband
With the appropriate policies in place, broadband is a transformative
platform that impacts the ICT sector as well as other sectors of the economy. While
some may disagree on the precise economic and social benefits that can be attributed
specifically to broadband, and may challenge the studies that have suggested a large
impact, few argue against the fact that broadband has dramatically changed our personal
lives, our businesses and our economies. Moreover, as an enabling ICT platform and
potential GPT, broadband can facilitate growth and innovation in the ICT sector
and throughout the economy, serving as a vital input for each sector that strengthens
the economy as a whole. Broadband has the capacity to “contribute to virtually every
sector in the economy through productivity gains.”*
Even beyond productivity increases, broadband affects the economy
in multiple ways, for instance, through job growth and improved quality of life.
It is capable of facilitating micro- and macroeconomic growth by “accelerat[ing]
the distribution of ideas and information and foster[ing] competition for and development
of new products, processes, and business models.”*
Broadband impacts a country’s economic output and GDP in multiple ways by: 1) enhancing
the role of human capital through easier acquisition of knowledge and technical
skills; 2) improving the efficiency and productivity of enterprises; 3) increasing
community competitiveness by attracting knowledge-based businesses; and 4) sparking
new and innovative technologies, services, applications and business models.*
The multiplier effect of broadband can drive GDP, productivity, and employment growth.
However, policies that support the supply and demand elements of the ecosystem,
as well as the absorptive capacity to develop broadband capabilities in other sectors,
must all be in place in order to fully realize such benefits.
1.3.2 Impact of Broadband on Gross Domestic Product
Due to the potentially wide-ranging impacts of broadband, and its
ability to provide easier access to information that increases efficiencies and
productivity in the economy, it is unsurprising that increased use of broadband
networks and services has been found to produce positive outcomes that reverberate
throughout a country, particularly involving GDP. A frequently cited World Bank
study found that low-income and middle-income countries experienced “about a 1.38
percentage point increase in GDP for each 10 percent increase in [broadband] penetration”
between 2000 and 2006.*
The World Bank further found that the development impact of broadband on emerging
economies is greater than for high-income countries, which “enjoyed a 1.21 percentage
point increase in per capita GDP growth” per 10 percent increase in broadband penetration.*
The study also demonstrates that broadband has a potentially higher growth effect
than other ICTs, including wireline telephony, mobile telephony and the Internet,
as shown in Figure 1.2. The predominance of broadband may be unexpected considering
that, over the last decade, mobile telephony has been the fastest growing ICT worldwide,
with a 2010 global penetration rate of 76.2 out of 100 persons.*
Figure
1.2. Growth Effects of Various ICTs on GDP
Source: Adapted from Qiang and Rossotto, Extending Reach and Increasing
Impact, Chapter 3: Economic Impacts of Broadband, p. 45.
The World Bank’s findings of broadband’s growth effects are supported
by other independent studies. In a study noting the extensive benefits of broadband
for emerging markets, management consulting firm McKinsey & Company estimated
that “a 10 percent increase in broadband household penetration delivers a boost
to a country’s GDP that ranges from 0.1 percent to 1.4 percent.”*
Additionally, a study of OECD countries by global consulting firm Booz & Company
found that among high-income countries, there is a strong correlation between average
annual GDP growth and broadband penetration wherein “[c]ountries in the top tier
of broadband penetration have also exhibited 2 percent higher GDP growth than countries
in the bottom tier of broadband penetration.”*
Although numerous studies have found a positive impact on economic
growth, the estimate of its actual magnitude varies. For example, a ten percent
increase in broadband penetration has been found to increase economic growth from
a low of range of 0.24 percent to a high of 1.50 percent (Figure 1.3).
Figure
1.3. Impact on GDP of an Increase of 10 Percent in Broadband Penetration
Sources: Katz 2010;* Analysys
Mason 2010;* McKinsey
2010;*Qiang&Rossotto
2009;* and
Czernich et al. 2009.*
Notes: * Only includes Germany; ** Average of five country
studies, including United Kingdom, Australia, New Zealand, Malaysia and a Middle
Eastern country, from various sources 2003 and 2004, and Qiang and Rossotto 2009
study; *** Limited to mobile broadband impact in India; + Various countries, upper
range applies to developing countries and lower range to developed countries; ++
Sample of 20 OECD countries.
While these studies provide important insight into the growth effects
of broadband, data collection and further systematic research and analysis in this
area are needed, particularly for developing countries. Currently, there is ample
anecdotal evidence of the effects of broadband on economic growth, with some cases
highlighted below. However, these cases provide only limited evidence of the impact
that broadband has on the economy as a whole. It is also important to note that
investment in broadband or policies fostering its deployment or adoption are unlikely
to produce significant GDP gains without complementary investments or policies in
other sectors, notably education, innovation, civic participation and health care.
However, even with the implementation of appropriate policies, the impacts of broadband
on growth in certain areas may be limited. For example, developing countries may
be in less need of telemedicine to improve health outcomes and more in need of low-tech
and inexpensive solutions, such as mosquito nets and de-worming pills.*
Additionally, despite providing a new educational resource, broadband can also create
a new distraction if careful controls are not in place that limit Internet access
to non-academic sites such as Facebook, YouTube and file-sharing websites.*
Examples of the impact of broadband on economic growth around the world
Australia
The Australian Government is in the process of deploying the country’s
largest-ever infrastructure project, the National Broadband Network (NBN). At a
cost of up to AUD 43 billion (USD 41 billion) over eight years, the NBN is set to
rollout a fiber network delivering broadband speeds of up to 100 Mbit/s to at least
93 percent of the population and wireless networks delivering speeds of 12 Mbit/s
or more to those living in remote areas.*
As the NBN is implemented, both the public and private sectors are researching the
impact that the NBN is expected to have on economic growth.
One such study, completed in November 2010, reviewed the anticipated
effects of the NBN up to the year 2020 based on the NBN’s rollout plan.*
The results revealed that for 18 industries, the NBN’s impact would improve economic
outcomes between 0.17 percent and 0.54 percent with an average of 0.43 percent across
all industries.* As Table
1.1 below shows, four industries—transportation, electricity, water and government
services—will have more than 0.5 percent growth due to broadband. Interestingly,
the communications industry is expected to gain 0.46 percent in output from broadband,
which is less than the expected gain in the top six sectors. Despite these estimated
gains, the authors of the study believed “they most likely underestimate the full
impacts of applications, processes and business models that are only available with
a high speed and quality service.”*
Overall, the benefits across all sectors help to demonstrate the significant network
effects of broadband.
Table
1.1. Expected Impacts of the NBN on Output of Major Industries at 2020
Source: Simes, et al., Australian Business Expectations for the National Broadband
Network, p. 6.
|
Industry
|
% Change (most to least)
|
|
Transport
|
0.54
|
|
Water
|
0.54
|
|
Electricity
|
0.53
|
|
Government services
|
0.51
|
|
Finance and insurance
|
0.49
|
|
Construction
|
0.49
|
|
Gas
|
0.48
|
|
Communications
|
0.46
|
|
Trade
|
0.44
|
|
Other business services
|
0.43
|
|
Oil
|
0.42
|
|
Recreation and other services
|
0.38
|
|
Coal
|
0.34
|
|
Manufacturing
|
0.33
|
|
Forestry and fishing
|
0.27
|
|
Other minerals
|
0.25
|
|
Processed foods
|
0.23
|
|
Primary agriculture
|
0.17
|
The study also surveyed 540 businesses across the 17 industry groups
with annual revenues ranging from less than AUD 5 million to over AUD 1 billion,
finding that 57 percent expected that the NBN will change the way they communicate
with suppliers and customers while 55 percent believed that their online capabilities
will definitely or likely be enhanced by the NBN.*
Canada
Over the last several years, broadband access studies in Canada
have focused on the importance of broadband for economic growth and development,
particularly in rural areas. In 2005, for example, Industry Canada commissioned
a survey to be conducted in the rural areas of British Columbia regarding subscribers’
views of the significance of broadband access. More than 80 percent of all business
respondents “reported that absence of broadband would affect their businesses negatively”
and over 18 percent stated “they could not operate their businesses without broadband.”* Additionally, according
to business owners’ self-reported figures, broadband increased productivity by 62
percent and there was “a majority indicating an increase in productivity of more
than 10 percent.”* Overall,
the study showed that, even prior to 2005, broadband had become a significant competitive
factor for businesses in rural British Columbia.*
An earlier study on broadband investment, conducted in the township
of Dundas, Ontario in 2003, showed that investment in fiber optic network infrastructure
of CAD 1.3 million resulted in CAD 25.22 million “increase in GDP for Dundas County
and CAD 7.87 million increase for the Province of Ontario,” as well as the creation
of 207 new jobs.* The researchers
also found that the new fiber lines directly contributed to an additional CAD 3.5
million in provincial tax revenues and CAD 4.5 million in federal tax revenues.*
China
Between 2010 and 2013, China’s network operators, China Unicom,
China Telecom and China Mobile, are expected to invest an estimated CNY 62.billion
(USD 9 billion) in the creation of a single fixed broadband access network providing
speeds of 1 Mbit/s or more.* These
investments seem justified given the fast growth of the number of fixed broadband
subscribers: it is expected to reach 182 million by 2013, which represents growth
of nearly 77 percent between 2010 and 2013.*
Set against these figures, the impact of broadband on China’s GDP
is anticipated to be substantial. As such, China’s “dial-up and broadband Internet
together may contribute a combined 2.5 percent to GDP growth for every 10 percent
increase in penetration.”*
Germany
Under Germany’s National Broadband
Strategy, 75 percent of households are expected
to have broadband access of at least 50 Mbit/s by 2014. By 2020, 50 percent of German households will have 100 Mbit/s access while another
30 percent will have 50 Mbit/s broadband access.
A 2009 study on the economic impact of the National Broadband Strategy found
that investments in the network are expected to result in a contribution of EUR
18.8 billion to Germany’s GDP between 2010 and 2014.*
By 2020, Germany’s ultra-fast broadband network will contribute an additional EUR
14.6 billion in GDP.
The study further found that from an “incremental economic growth
standpoint, network construction would yield additional value added of 33.4 billion
Euros, while network externalities will result in additional 137.5 billion Euros.”*
India
A study released by Analysys Mason in December 2010 on the deployment
of wireless broadband in India found that each percentage point increase in mobile
broadband penetration in India could increase India’s GDP by INR 162 billion (USD
3.8 billion), or 0.11 percent, by 2015.*
The study further indicated that if the Indian Government allocates an additional
5 MHz of 3G spectrum to each licensee, the broadband penetration rate would likely
increase 3.3 percent.*
This could result in an increase of INR 538 billion (USD 12.7 billion) of GDP, in
addition to the case that no additional allocation is made, translating into an
additional 3.3 percent growth in GDP by 2015.*
The study also estimated significant improvements to other sectors
within the wireless broadband ecosystem by 2015 regarding content, applications,
service models and device categories:*
- percent increase in the consumer/retail sector, including
mobile advertising, entertainment and commerce.
- percent increase in the financial services sector, including
mobile banking.
- percent increase in social services, including mobile
learning, health and government.
Latin America and the Caribbean
A study of 24 countries in Latin America and the Caribbean found
that, controlling for educational and developmental starting levels, a “1 percentage
point in broadband penetration can generate 0.0178 percentage points in GDP growth”
(i.e., 10 percent increase in broadband penetration results in 1.78 percent increase
in GDP).* Based on this figure, it
was estimated that the contribution of broadband to GDP growth throughout Latin
America and the Caribbean was 3.4 percent between 2009 and 2010.*
The study also found that from 2007 to 2008, the growth of broadband access in Latin
America and the Caribbean contributed between USD 6.7 billion and USD 14.3 billion
to the economies, taking into account both direct and indirect effects.*
South Africa
In July 2010, the South African Government issued the Broadband
Policy for South Africa, which aims to provide 256 kbps download speed to 15 percent
of the country’s households with broadband being within 2 km of the remaining households
by 2019.* A 2010 study by Analysys
Mason reviewed the likely direct and indirect effects the broadband policy might
have on South Africa’s economy, finding that wireless broadband is expected to increase
the country’s GDP by 1.8 percent, or over ZAR 72 billion (USD 9.4 billion) by 2015.* In addition, wireless broadband
is expected to create about 28,000 new jobs directly, not including further jobs
outside the communications industry.*
Thailand
A 2010 study of broadband in Thailand noted that even without a
formal broadband plan or policy—the “business as usual” (BAU) path to broadband
access (considering fixed and wireless connections with speeds of at least 256 kbit/s)
would result in a broadband penetration rate of 17 out of 100 households.*
This is expected to add nearly 1 percent to the country’s GDP growth by 2015.*
The study notes that while “this increase will contribute marginally to Thailand’s
economy, it represents a 50 percent to 60 percent lower broadband penetration rate
than what we can expect from most other Asian peer nations by 2015,” which is likely
to leave Thailand at a competitive disadvantage vis-à-vis its neighbors.*
The study noted that if a broadband plan is implemented that provides
“meaningful broadband,” the penetration rate in Thailand may nearly double by 2015,
with 80 percent of this penetration based on wireless broadband technologies.*
Based on this broadband projection, mobile broadband “would drive new investments,
expand the domestic economy, and bring a rise to GDP of as much as 2.4 percent per
year, all other things being equal.”*
As such, broadband has the potential to be a “meta-driver” of “overall macroeconomic
growth, rather than merely a driver of ICT industries alone.”*
1.3.3 Broadband, Employment and Job Creation
Broadband enables job creation through three main channels: 1)
direct jobs created to deploy the broadband infrastructure; 2) indirect and induced
jobs created from this activity; and 3) additional jobs created as a result of broadband
network externalities and spillovers.* Each of these
channels includes the employment of unskilled, skilled and highly skilled workers.
Direct jobs relate primarily to civil works and construction of broadband infrastructure,
which involves more low-tech positions. Indirect and induced jobs require various
levels of skilled workers. However, network-effects (i.e., spillover) jobs are mainly
high-skill jobs requiring specific technical knowledge and education. Indeed, broadband
spillover employment effects are not uniform. Instead, they tend to concentrate
in service industries, such as financial services, health care, etc. It can also
produce some effects in middle-skills jobs, such as in manufacturing, but usually
related to the use of ICT, requiring ICT-skills.
Numerous studies have estimated the impact on broadband in each
of these job creation categories for specific countries by calculating employment
multipliers for each of the categories (Table 1.2). While these studies are country-specific
and cannot be applied directly to other nations, they provide an estimate of the
potential employment gains that could result from effective broadband development.
A simple average of these estimates indicates that potential broadband job creation
results in 2.78 indirect and induced jobs per direct broadband construction job
created and 1.17 spill-over additional jobs created per direct job. This means that
broadband can create between 2.5 and 3 additional jobs per direct broadband employment.
Some studies have estimated the impact of broadband on the employment creation rate.
For instance, Katz estimated that an increase of about 8 percentage points of broadband
penetration in 12 Latin American countries could result in almost 8 percent increase
on average over their employment rate.*
Table
1.2. Estimated Broadband Employment Creation Multipliers
Sources: Katz 2009, citing Crandall el al. (2003),* Katz et al. (2008),* Atkinson et al. (2009),* Katz et al. (2009a),* Libenau et al. (2009)* and Katz et al. (2009b).*
|
Study
|
Year
|
Scope
|
Type I
|
Type II
|
Network Effects
|
|
Crandall et al.
|
2003
|
US
|
…
|
2.17
|
…
|
|
Katz et al.
|
2008
|
Switzerland
|
1.4
|
…
|
…
|
|
Atkinson et al.
|
2009
|
US
|
…
|
3.60
|
1.17
|
|
Katz et al.
|
2009a
|
US
|
1.83
|
3.43
|
…
|
|
Libenau et al.
|
2009
|
UK
|
…
|
2.76
|
…
|
|
Katz et al.
|
2009b
|
Germany
|
1.45
|
1.93
|
…
|
|
Average
|
|
|
1.56
|
2.78
|
1.17
|
|
Note: Type I (Direct + Indirect)/Direct; Type II (Direct + Indirect
+ Induced)/Direct
|
It should be noted that although broadband is likely to have overall
positive effects on job growth, short-term job losses may result from broadband-enabled
improvements in productivity due to process optimization and capital-labor substitution.
Various studies have confirmed that broadband creates many more jobs than it displaces
in the longer term. For example, the OECD has found that increased broadband penetration
rates can significantly affect labor productivity; raising broadband penetration
five percentage points has yielded an estimated 0.07 percent increase in labor productivity.* Similarly, Booz & Company
found that “10 percent higher broadband penetration in a specific year is correlated
to 1.5 percent greater labor productivity growth over the following five years.”* By simultaneously lowering
the costs of doing business and increasing productivity, broadband can be instrumental
in promoting the growth of enterprises.*
As with broadband’s effects on GDP, further data collection and
analysis are needed to confirm the positive impact that broadband has on employment
growth. Yet, aside from the studies identified above, researchers focusing on various
regions and outcome measures have reported more evidence of how broadband development
has stimulated the job market.
A European Commission study found that broadband had a positive
impact on employment in 2006 with a net creation of 105,000 jobs throughout Europe
due to broadband deployment.* A nationwide
study in the United States examined how broadband deployment affects job creation,
determining that the availability of broadband at a community level increased employment
growth by more than 1 percent.* Another
study focusing just on the state of Kentucky in the southern United States found
that a 1 percentage point increase in broadband penetration increased employment
by 0.18 points, with the increase ranging from 0.14 percent to 5.32 percent depending
on the industry sector.*
In Malaysia, the Malaysian Communications and Multimedia Commission
(MCMC) estimated in 2008 that achieving 50 percent broadband penetration by 2010
could increase the country’s GDP by 1 percent, as well as create 135,000 new jobs.
The regulator further projected that by 2022, the number of jobs created would reach
329,000, again based on 50 percent broadband penetration rate.*
An evaluation of multiple studies showed that for “every 1000 additional broadband
users, roughly 80 new jobs are created.”*
1.3.4 Broadband as a General Purpose Technology
The importance of broadband might only be fully realized once it
is understood as a general purpose technology (GPT). While the notion of broadband
as a GPT has been addressed only in recent discussions of broadband and development,
as well as in government-funded stimulus plans, the concept of GPTs was introduced
on a more general basis already in the 1990s. It includes three key characteristics:
- Pervasive use in a wide range of sectors;
- Technological dynamism (inherent potential for technical improvements);
and
- As GPTs evolve and improve, they spread throughout the economy, bringing
about general productivity gains.*
In broad terms, GPTs are technologies that enable new and different
opportunities across an entire economy, rather than simply addressing one problem
or one sector. According to the OECD, GPTs “fundamentally change how and where economic
activity is organized.”*
Common examples of GPTs include electricity, the internal combustion engine and
railways.
Although the initial conception of GPTs did not include the ICT
sector, later research has considered ICTs (with broadband as the enabling platform)
through the lens of the GPT concept. This view of broadband as a potential GPT has
also been embraced in publications from, or on behalf of, the World Bank, infoDev
and the European Commission, as well as in academia.*
When taken holistically, broadband as a platform—coupled with services,
applications, content and devices—has the potential to satisfy the three criteria
mentioned above, so that it can be considered a GPT. First, broadband can be used
as a key input in nearly all industries. Second, broadband has the potential for
technological dynamism through the development of new technologies, as well as improvements
to the capacity and speed of broadband systems. For example, the average global
broadband (wireline and wireless) speed in mid-2011 was 2.6 Mbit/s, with the top
20 countries having average speeds of over 7.6 Mbit/s, which allows services and
applications requiring higher bandwidth, such as streaming video, to develop and
become accessible to users.*
Third, broadband has the potential to enable and engender new organizational methods
that result in more general increases in productivity. Global architecture firms,
for example, may have offices around the globe, but team members working on a new
building design no longer have to be in the same place or even the same time zone.
By using broadband connections to share work products, the team can be completely
decentralized.
As broadband’s potential as a GPT is realized, it becomes an enabler
of technology-based innovation and growth throughout the economy by businesses and
individuals, as well as by academic, governmental and other institutions. Businesses
and individuals are able to use currently available broadband technologies and services
to create entirely new applications and services in areas such as advertising, e-commerce,
online video, social networking and financial services, including online banking
and loans.* Innovation in these areas
is important for the growth of new markets in developed economies and for the transfer
of technology to emerging economies, which can benefit from e-services, such as
mobile health and mobile banking.*
Broadband-enabled services also allow the public sector to access new communities
and regions, as well as deliver higher quality services more efficiently, including
online education, telemedicine and civic participation. In the following several
specific examples of how broadband can enable growth in and beyond the ICT sector
in both developed and developing countries are provided. Five common themes are
discussed: improved research and development efforts, reduction in business costs through
cloud computing, improved productivity in the retail, services and manufacturing
sectors, and improved outcomes in education and health care.
Research and Development throughout Economic Sectors
Broadband can have a particularly strong impact on research and
development (R&D) leading to innovative technologies, as well as enabling new
ICTs to lead to further innovations. Additionally, broadband may allow businesses
to move more rapidly in the product development cycle from the idea stage to final
product.* For example, a company
could have teams in various locations around the world working on related portions
of the same project, using broadband connectivity to provide seamless communication
and information sharing (see Box 1.2).
Box 1.2. Examples of the Potential Impacts of Broadband on Innovation in R&D
Source: OECD, Broadband and the Economy (2008).
- Enable instant sharing of knowledge and ideas
- Lower barriers to product and process innovation via faster and less expensive
communications
- Accelerate start-ups
- Improve business collaboration
- Enable small business to expand their R&D and collaborate in larger
R&D consortia
- Reduce time from idea to final product
- Foster greater networking
- Promote “user-led innovation”
Increasing broadband penetration may also enable more than just
large firms, governments and academic research institutions to develop innovative
products. For example, Apple’s iPhone App Store has over 100,000 registered application
developers, most of which are small companies.*
Since the App Store opened in 2008, Apple has paid app developers over USD 2.5 billion.*
Cloud Computing: Reducing Costs for Businesses
For enterprises of all sizes, the costs of IT infrastructure, including
hardware, software, and technical support, can be significantly reduced with the
adoption of cloud computing technologies. Cloud computing generally allows for instant
access to and storage of applications and data via broadband connectivity. Currently,
almost every traditional business application has an equivalent application in the
cloud, which means that cloud services can effectively replace the more conventional,
and typically more expensive, method of accessing and storing applications and data
through software installed locally on one’s own computer or in-house server.*
Additionally, cloud computing reduces or eliminates the need for on-site IT staff
since these data processes are handled remotely. Other potential benefits of cloud
computing for businesses include:*
- Reduced need for up-front investment since cloud-computing is typically
based on a pay-as-you-go pricing model;
- Lower operating costs since the service provider does not need to provision
capacities according to the peak load;
- Easy access through a variety of broadband-enabled devices; and
- Reduced business risks and maintenance expenses, as business risks (such
as hardware failures) and maintenance costs are shifted to infrastructure providers,
who often have better expertise and are better equipped for managing these costs
and risks.
In 2011, Harvard Business Review Analytic Services conducted a
global survey of nearly 1,500 businesses and other organizations on their current
and planned use of cloud computing, as well as the perceived benefits and risks
associated with cloud computing services.* About 85 percent
of respondents stated that their organizations will be using cloud computing tools
on a moderate or extensive basis over the next three years in order to take advantage
of the benefits of cloud computing, including improved speed and flexibility of
doing business, lower costs and new avenues for growth, innovation and collaboration.
Only seven percent of respondents stated that their businesses had been using cloud
computing for over five years; however, these early adopters reported that real
business value had already been created, including faster time to market, lower
operation costs and easier integration of new operations.
In addition, cloud computing itself can provide for new business
models and avenues for revenue. For example, Amazon, the largest U.S. online retailer,
began offering cloud computing services to businesses and individuals in 2002 because
the company had excess computing and storage capacity.*
In order to accommodate the busiest shopping week of the year in the United States,
Amazon had to purchase a much larger amount of capacity than was required for the
rest of the year. Rather than let the extra capacity go unutilized, Amazon began
renting out its system to others, thereby becoming a “utility” for computing services.
Despite the promise of cloud computing as a source of substantial
cost savings for enterprises, there are various issues that may limit its impact,
particularly lack of access to broadband services. Cloud computing requires access
to fast, reliable and affordable broadband in order to achieve its maximum functionality.
In addition, cloud computing raises several network and data security concerns.*
Other significant concerns include reliability of the technology, lack of interoperability
with existing IT systems and lack of control over the system.
Retail and Services Sectors
Particularly for the retail and services sectors (that is, customer
relations averages 50 percent or more of a company’s activities), broadband can
improve the ability to reach new customers and maintain contact with existing customers.* As such, the ability to
send multimedia email or use targeted online advertising to keep and attract customers
can increase a company’s sales while using less capital and labor inputs than would
be required for postal mailings or door-to-door sales calls. Broadband also enables
self-service websites, such as online airline reservations or e-government services,
as well as remote services such as online technical support and video conferencing.* For example, broadband
is essential for developing countries, particularly India, Mauritius, and China,
which are the main off-shoring destinations for IT technical support and business
process outsourcing.*
In addition, sophisticated services, enabled by broadband and the
development of ICTs, have become not just a traded input for goods, but a final
export for direct consumption.* Success stories
such as call centers in Kenya, business consulting and knowledge-processing offices
in Singapore, accountancy services in Sri Lanka, and human resources processing
firms in Abu Dhabi are different forms of this phenomenon. Recent research has found
that sophisticated service exports are becoming an economic driver of growing importance
in developing countries and may be an additional channel for sustained high growth.*
The deployment and adoption of broadband also has the potential to provide an additional
conduit for economic growth through service exports.
Manufacturing and Industrial Sectors: Supply-Chain Management
Broadband allows businesses to more efficiently manage their supply
chains by automatically transferring and managing purchase orders, invoices, financial
transactions and other activities.*
As with any information-based business activity, broadband can enable faster, more
secure and more reliable processing than previously possible. Broadband connectivity
saves processing and transfer time along the supply chain, and it can also substantially
increase competitiveness by helping businesses reduce stock levels, optimize the
flow of goods and improve the quality of final products.*
Since manufacturing and industrial sectors have been the main driver of overall
economic growth in developing countries for the last 15 years, broadband is expected
to play a vital role for them in improving productivity in these sectors and in
ensuring the ability for companies to effectively compete in a global market.*
Education: Building Human Capital
In order to fully realize broadband’s potential for economic growth,
it is necessary to have an educated workforce trained in the use of ICTs. Additionally,
there is a self-reinforcing effect between education (and technological literacy
in particular) and broadband adoption, since broadband can help improve fundamental
educational outcomes, including learning how to better use broadband. For example,
the services and applications available over broadband networks have been shown
to improve basic educational performance in a review of 17 impact studies and surveys
carried out at national, European and international levels by the European Commission.* These studies found that
broadband and ICTs positively impacted learning outcomes in math, science and language
skills.* In addition to facilitating
basic skills, broadband improves the opportunities for those with ICT training;
they generally have a higher chance of finding employment, as well as higher earning
potentials.*
Bridging the connectivity divide is critical to ensuring that today’s students—and
tomorrow’s high-tech workforce—can take advantage of these benefits.
One way to expand access to broadband and ICTs in rural and remote
areas is through the deployment of mobile education labs: vehicles fitted with broadband
connectivity, computer equipment and learning facilities.*
They allow educators to drive to various schools throughout the week. In addition,
these mobile labs can provide ICT training for adults to improve digital literacy.
As opposed to transporting children in rural areas to where broadband facilities
exist or waiting until the network is built out to them, mobile facilities offer
a more cost-effective way to reach rural populations.*
The United Nations has noted the success of mobile schools in Mongolia, where 100
mobile “tent” schools have been introduced in 21 provinces, as well as in Bolivia.* Bolivia has implemented
a bilingual education program for three of the most widely used indigenous languages,
which has been expanded to include indigenous children in remote areas.*
In Morocco, the government implemented a program called NAFID@ to help over 100,000
teachers afford wireline or mobile broadband connections, which has allowed the
teachers to receive training in the use of ICTs in the classroom, as well as to
use e-learning programs and online libraries to improve class lessons.*
Health Care Sector
Health-based broadband applications and services are significantly
improving health and medical outcomes around the world, particularly for patients
in remote areas and those with limited mobility through e-health and mobile health
(m-health) initiatives.* Considering
that there are fewer than 27 million doctors and nurses for the more than six billion
people in the world—and only 1.2 million doctors and nurses in the lowest income
countries—harnessing mobile technologies will be a valuable tool for healthcare
practitioners to reach patients. As mobile broadband develops and spreads in developing
countries, examples of the benefits are already becoming clear.*
Although basic voice and data connections can be useful in improving
health and medical care, broadband connectivity is necessary to capture the full
potential of e-health services, including telemedicine that enables real-time audio
and video communications between patients and doctors, as well as between healthcare
providers. Improvements in telemedicine and other e-health initiatives rely on increasing
bandwidth capacity, more storage and processing capabilities and higher levels of
security to protect patient information.*
As noted in Table 1.3, the U.S.-based California Broadband Task Force estimated
that telemedicine will require speeds between 10 and 100 Mbit/s and high definition
telemedicine will require broadband speeds of over 100 Mbit/s.*
The current wireline and wireless infrastructure in most countries is insufficient
to take advantage of the e-health opportunities in the digital economy. This is
particularly important for developing countries where ensuring access to and adoption
of wireline and wireless broadband networks would be particularly useful for including
those who have been left out of more traditional healthcare models.
Table
1.3. Necessary Upstream and Downstream Speeds for Various Services and Applications
Source: California Broadband Task Force, The State of Connectivity,
Building Innovation through Broadband, Final Report (2008).
This was the case in Rwanda where a three-phase e-health project
was delayed due to lack of high-speed broadband connectivity.*
The first phase of the initiative, which established an electronic data storage
system that permitted sharing of patient information among three hospitals, was
completed without delay. However, the final two phases involving video conferencing
and a real-time telemedicine system were put on hold for a year until a broadband
Internet connection could be established to connect the three hospitals with a fiber
optic cable network.*
Box 1.3. Mobile Health Services in Nigeria
Source: Intel, Realizing the Benefits of Broadband (2010).E-government
applications
In Nigeria, the government lacked sufficient public health information
to efficiently allocate health care services to over 800 villages that lacked primary
health care. A public-private partnership, Project Mailafia, was established to
alleviate this situation. Project Mailafia sends teams of mobile health care providers
to remote villages, where they treat patients and collect health data that support
better public health decision-making and resource allocation. The mobile health
workers collect the data on ruggedized netbooks, and transfer the data to area clinics.
The clinics then upload the data to a central database using Worldwide Interoperability
for Microwave Access (WiMAX) and Wi-Fi technologies.
E-government covers a broad range of applications that transform
government processes and ways that it connects and interacts with businesses and
citizens. This allows citizens to better participate in society and improves the
efficiency, accountability and effectiveness of government programs and processes.* Broadband is important
for e-government as it provides the foundation for public administration networks
that allow processes to flow more smoothly.*
E-government can also help to drive demand for broadband.
Countries around the world are providing increasing access to online
services, including the provision of basic services, the use of multimedia technology
to promote two-way exchanges and consultation with citizens on public policy issues.* Although the Republic of
Korea, the United States, and Canada take the top three places in terms of number
of online government services available, the UN found that several countries have
made significant progress over the last two years, including Bahrain, Chile, Colombia
and Singapore.* The UN
also found that the use of mobile phones for e-government services, such as alert
messages, applications or fee payments, are almost as popular in developing countries
as they are in developed countries.*