Miscellaneous Ramblings

Broadband Access for All Not a Luxury

New technologies key to economic growth, reducing world poverty

Charles Moore - 2001.07.24 - Tip Jar

There have been other things going on in the world besides the Macworld Expo - another sorry display of anarchist mob violence at the G8 summit in Genoa for instance. Can nothing be done about this portable mob of criminal yahoos? As my Prime Minister, Jean Chretien (who will be hosting next year's G8 at an isolated retreat in the Canadian Rockies, protected by mountains, about 20 miles of near-impenetrable forest, and a few, easily checkpoint controllable access roads) remarked yesterday, "burning cars is not democracy."

At last year's G8 summit, protesters mocked international efforts to channel technology towards the needs of the poor. "We can't eat computers," complained the Luddite leader of a group campaigning for debt relief. "People are dying." To underscore the point, members of the group set fire to a laptop computer on an Okinawa beach. And within international development circles, some have worried that the technology "fad" might distract donors and draw resources from more traditional development goals.

But this year's Human Development Report, commissioned by the United Nations Development Programme (UNDP) and released this month, argues that information and communications technology and biotechnology can make major contributions to reducing world poverty. UNDP Administrator Mark Malloch Brown warns, "Ignoring technological breakthroughs in medicine, agriculture, and information will mean missing opportunities to transform the lives of poor people."

The report concludes that information and communications technology (ICT) can make an important development impact, because it can overcome barriers of social, economic, and geographical isolation; increase access to information and education; and enable poor people to participate in more of the decisions that affect their lives.

However, it's not only between the first and third worlds that a disparity of access to Internet technology exists. In a commentary entitled Don't ignore the global digital divide, published by ZDNet, Klaus Schwab, founder and President of the World Economic Forum, a not-for-profit Foundation in Geneva, Switzerland, notes, "It's clear that a divide exists between those who have access to electricity and those who do not. A similar divide exists between those who have access to a telephone and those who do not. And a divide exists between those who have access to a broadband connection to the Internet and those who do not."

He cites Michael Powell, Chairman of the US Federal Communications Commission, who thinks the whole issue of the digital divide has been overplayed. "I think the term [digital divide] sometimes is dangerous in the sense that it suggests that the minute a new and innovative technology is introduced in the market, there is a divide unless it is equitably distributed among every part of the society, and that is just an unreal understanding of an American capitalist systemÖ" he quotes Powell saying. "I think there's a Mercedes divide, I'd like one, but I can't afford it . . . I'm not meaning to be completely flip about this - I think it is an important social issue - but it shouldn't be used to justify the notion of, essentially, the socialization of deployment of the infrastructure."

Schwab thinks Mr. Powell's comments miss the point. So do I, and so does Canada's Industry minister Brian Tobin, whose National Broadband Task Force has recommended that the government of Canada make high-speed broadband Internet services available to all Canadian communities by 2004.

In Canada, as in the US, some critics echo Mr. Powell's protest and have suggested the Can$1.85-4.5 billion necessary to provide universal broadband access could be better spent elsewhere and argue that rural residents aren't likely to make use of fast Internet connections.

"I think that kind of pompous, arrogant, misguided, shortsighted thinking has no place in a modern and contemporary Canada," Brian Tobin responded last month.

I often disagree with Mr. Tobin, but I give him full credit for standing tough in the face of urban elitists who oppose full advantages of citizenship for all Canadians. As a rural resident, I am sick and tired of the supercilious attitude of some urban dwellers that anyone who lives outside a metropolitan area is an ignorant simpleton who couldn't possibly have any interest in high-tech communications or what is going on in the world beyond the horizon. Internet access is more important to many rural Canadians than it is to city-dwellers.

As Klaus Schwab observes, digital technology is not a luxury item like a Mercedes Benz. It is, instead, the key that opens the door to the knowledge economy. And if we fail to provide access to digital technology to countries in the developing world [and rural areas of the developed world] we are essentially denying them an opportunity to participate in the new economy of the 21st century.

In its report, "The New National Dream: Networking the Nation for Broadband Access," the Canadian National Broadband Task Force notes that broadband infrastructure is essential to "Canada's economic well-being and continued international leadership, and is an important element of the Government of Canada's innovation agenda. It is a nation-building challenge that will require creative partnerships and collaboration between governments, the private sector and communities nationwide."

A report to the Task Force submitted by The Rural Secretariat, Agriculture and Agri-Food Canada, notes that the 22% of Canadians who live in rural and remote communities must have access to modern information and telecommunications technology, which will be essential for their future economic sustainability and growth as well, and points out that:

Citizens of rural and remote areas have similar needs to those of urban areas yet are disadvantaged by a number of unique challenges, namely:

  1. distance from and access to markets and associated higher costs which can be a disincentive to new business growth;
  2. geographical remoteness, sometimes implying severe physical conditions and difficulties of access to transportation;
  3. low population density implying a lower taxation base to support essential services, difficulty in attracting private investment due to the market size, and lack of an adequate and skilled labour pool; and
  4. reliance on seasonal/cyclical industries vulnerable to the market shocks of commodity prices and trade restrictions in the global economy.

The report observes that "strategic investment in broadband technologies offers the potential to overcome many of the unique challenges and traditional barriers that characterize the rural economy, particularly associated with problems of distance and access," and affirms that "Canada's longer term economic prospects are increasingly tied to its capacity to harness the forces of technology, knowledge and innovation that drive the global, knowledge-based economy." Without broadband, rural areas will continue to fall farther and farther behind economically, and will be increasingly shut off from services and opportunities that urban Canadians take for granted. The Internet is the future of communications, and probably within a decade it will be the main conduit for everything from banking to television.

"Ensuring that all Canadians, regardless of where they live, have access to high-speed information technology is essential for future economic sustainability and growth. Rural and remote Canada is generally not well positioned to capitalize on opportunities and the benefits of Canada's transition to the knowledge-driven, technology intensive new economy," says the report. "Investment in telecommunications falls into the same class of infrastructure investments as do roads, water, electricity supply, access to public services - - all of which are indispensable for economic and social development. However, low population density continues to be a major barrier for rural and remote communities as a lack of an adequate population base and market can discourage private sector infrastructure investment." Consequently, this is one instance where government investment in a vital basic infrastructure, just as the government invested in the transcontinental railroad in the 19th Century, is necessary, and will ultimately pay handsome dividends, not least the survival of many rural communities.

As the report states, "The speed of change in the information age is continuing to accelerate, and many rural and remote areas are in danger of being marginalized. It is imperative that we do not inadvertently create barriers that would inhibit rural and remote communities from taking steps to manage their future. To date, rural and remote Canada are not benefiting at the same rate from new knowledge-based economy jobs and from the power of the Internet as a tool of social and economic development."

"So when we talk about information and communication technologies as tools to realize 'life, liberty and the pursuit of happiness,'" says Klaus Schwab, "I see a tremendous opportunity for entrepreneurs. The digital divide may be difficult to bridge, but opportunities to apply new technologies for economic development and social good continue to grow."

Thirty-one percent of US Internet users now have broadband access at home, work, or school, according to a report released by Arbitron in conjunction with Coleman, a media research firm, and reported by Nua Publishing. Fifty-eight percent of these users have broadband access only at work, 27% have it only at home and 15% have broadband at both locations.

With the proper infrastructure in place, there is no reason why world-class e-businesses can't operate virtually anywhere. The current slump in the dot-coms sector is a correction, not a meltdown. The future of communications, entertainment, and a large proportion of commerce is on the Internet. Government services will also be increasingly offered via cyberspace. As Scott Cook, chairman of Intuit Inc. has observed, "we're still in the first minutes of the first day of the Internet revolution."

A new study funded by Verizon Communications and released last week says that widespread use of high-speed Internet service by Americans could contribute as much as $500 billion annually to the U.S. economy.

A report on Yahoo notes:

Consumers would benefit from online home shopping, entertainment, traditional telephone and health care services, as well as reduced commuting, adding $200 billion to the economy if half the country has the high-speed service or $400 billion if almost all Americans have it, the study said.

Plus, the higher consumer demand will also provide a boost to manufacturers of computers, software and entertainment products, which would add another $50 billion to $100 billion to the economy, according to the study done by economist Robert Crandall and engineering consultant Charles Jackson.

"The impact of broadband by any measure - in terms of GDP, jobs, U.S. productivity and efficiency - will be profound,'' said Jackson. "We're looking at a transformative technology: one that doesn't just create change at the margins of an economic system, but at its core."

Reps. Billy Tauzin and John Dingell have proposed legislation that would eliminate requirements that dominant local telephone carriers open their networks before they can offer long-distance data services - but would require telcos to deploy high-speed Internet service in hard-to-reach and rural areas. It would be worthwhile for people who believe in the concept of universal information access and see the Internet as the engine of prosperity for everyone to contact their congressperson and support this bill.

The OECD's Communications Outlook 2001 report notes that the Internet, electronic commerce and demand for broadband communications access at prices supporting an "always-on" environment are major agents of change in recent telecommunications policy. But despite developments pushing for greater competition, progress in liberalising public telecommunications markets remains slow, especially in terms of local access. At the same time, the potential contribution to economic growth, including e-commerce development which could result from reform in the communications sector are much higher than before. Increased competition is also a major policy instrument for bridging the digital divide by ensuring wider access to information and communication technologies.

The sixth edition of the biennial OECD Communications Outlook provides a range of performance indicators for public communication services in OECD countries. In addition to a comprehensive review of the telecommunications sector it includes data and analysis of broadcasting, cable television and the Internet.

Communications revenues for companies headquartered in the OECD area totaled US$1.3 trillion in 1999, distributed between telecommunication services (63%), communication equipment (23%) and broadcasting services (14%). In the same year, telecommunication revenues for carriers based in the OECD countries represented more than US$ 800 billion and the telecommunication services market in the OECD area was estimated at more than US$ 756 billion.

The benefits of increasing liberalisation are clearly visible in the growing use of mobile communications and the Internet. Between 1995 and 1999, the average annual expansion for fixed networks was only 4%, whereas mobile networks grew at an annual rate of 49%. Prepaid cards driving up wireless penetration rates, the disappearance of long-distance charges and the possibility of making international calls at low rates bear witness to the rapid progress in services and decreasing prices. In New Zealand, fixed network subscribers can now have a mobile phone without paying a monthly rental for this service. In the United Kingdom, some cable companies offer a package of television channels or Internet access as part of their standard telephony service.

Although all OECD countries are committed to open competition in telecommunications, the process of deregulation needs to be taken further. Recent regulatory initiatives have focused on stimulating local access competition. In 2000, there was a significant increase in licensing of networks likely to enhance long-term competition, such as fixed wireless access and third-generation licenses (UMTS).

The OECD Human Development Report concludes that many of the most important technology opportunities for poor people have so far been missed because of lack of market demand and inadequate public funding. Technology creators in the private sector respond to the needs of high-income consumers, rather than the needs of those who have little purchasing power. Public sector funding and incentives for research and development could compensate for these market failures but, says the Report, governments in both developing and developed countries have so far failed to provide the support needed.

The diffusion of technology has been just as uneven. Developed (OECD) countries have 80 percent of the world's Internet users. The total international bandwidth for all of Africa is less than in the city of Sao Paulo, Brazil. The total bandwidth for all of Latin America is roughly equal to that of Seoul, Korea.

Much older technologies have yet to reach the world's poor. Electricity, in widespread use since the invention of the light bulb in the 1870s, is still not accessible for some two billion people, a third of the world's population. Two billion people also do not have access to low cost essential medicines such as penicillin that were mostly developed decades ago.

Every year since 1990, the United Nations Development Programme has commissioned the Human Development Report by an independent team of experts to explore major issues of global concern. The Report looks beyond per capita income as a measure of human progress by also assessing it against such factors as average life expectancy, literacy and overall well-being. It argues that human development is ultimately "a process of enlarging people's choices."

And those choices should include broadband Internet access. There is much work to do.

The Human Development Report is published in English by Oxford University Press, 2001 Evans Rd., Cary, NC 27513, USA. Telephone (919) 677-0977; toll free in the USA (800) 451-7556; fax (919) 677-1303.

OECD Communications Outlook 2001
288 pages, OECD, Paris 2001
Electronic version available (PDF)
€73; FF478.85; US$65; DM142.78

For more information, read: The OECD Communications Outlook 2001.

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Charles Moore has been a freelance journalist since 1987 and began writing for Mac websites in May 1998. His The Road Warrior column was a regular feature on MacOpinion, he is news editor at Applelinks.com and a columnist at MacPrices.net. If you find his articles helpful, please consider making a donation to his tip jar.

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