Transcript ICA Chicago, keynote

Broadband Economics
Dr Tim Kelly
Lead ICT Policy Specialist, infoDev/World Bank
infoDev/CSTD workshop
“Measuring the Broadband Economy”,
Hammamet, 23 November 2009
Broadband economics: Agenda
• The economic impact of broadband
– Relationship to economic growth (macroeconomic)
– Relationship to productivity (micro-economic)
• Government response
– Arguments for government intervention
– Broadband in economic stimulus packages
• Country case studies
– What made the different to broadband growth?
2
Broadband is correlated with Growth
• The relationship
between broadband
and economic growth
is similar to the Jipp
Curve between
telecoms and wealth
•Outliers doing well
include Republic of
Korea, Estonia, the
Netherlands
• Outliers doing badly
include Greece,
Ireland, USA
Broadband and wealth
2007
Source: World Bank Information and Communication
for Development Report 2009
3
Broadband can promote growth
Impact of a 10% increase in
the penetration of ICTs on
GDP per capita, 1980-2006
•Broadband
delivers a
bigger boost to
economic
growth than
other ICTs
•Impact of
Broadband
Internet is 57
per cent
greater than
for
narrowband
Internet
4
Broadband and economic growth:
Some evidence
•A teleworking trial
conducted by BT showed
annual savings of ₤60m and
20% higher productivity (BT)
Relationship between BB penetration and
future productivity
Source: Booz & Co
•Exports: A 1% increase in
Internet users is associated
with a 4.3% boost in exports
(Clarke & Wallsten, 2006)
•Location: Good broadband
can enhance the
attractiveness of a location
for the “creative class” of
knowledge workers (Dutta &
Mia, 2008)
•Productivity: LECG/Nokia
show that Broadband accounts
for more than 10 per cent of 5
US productivity growth
Role of government: Conceptual
Strategies
ICT4D
Approach
Infrastructure
Push
ICT Sector
1.0
(Digital) Literacy
Pull
Enabling Environment
2.0
Applications
(content and services)
Source: Adapted from Peña-López, Ismael (2009) “Measuring digital development for policy-making: Models, stages, characteristics and
causes”, unpublished PhD thesis, UOC, Barcelona
6
Rationale for efficiency goals
•Externalities
– Spillover effect: Marginal benefits to the economy and society exceed
those to the individual or firm
– Network effect: Value of the network increases as the number of
consumers goes up
•Information as a public good
– Excludability: impossibility (or very high cost) of excluding those who do
not pay
– Non-rivalry in consumption (my use does not impact yours)
•Imperfect competition
– High up-front investment costs required for market entry
– Competitive markets depend on absence of monopolies or monopolistic
behaviour
•Imperfect information
– Competitive markets depend on consumers being able to make informed
choices
7
Equity and environmental objectives
•Everyone should have access to public services and income
opportunities which allow them to fully participate in the life of
society
– Income equity
– Social inclusion
– Equal access to public services
•Implications for government policy
– Public support for the provision of services in remote and rural areas
– Regulations to ensure the provision of ICT services to the disabled
************
•Broadband as a clean, green technology
– Substituting for the physical displacement of goods and people (e.g.,
through telecommuting, telepresence and virtual collaboration, online
shopping etc)
– Assisting countries in meeting targets for reduced greenhouse gas
emissions
8
Broadband in national stimulus
Almost
US$50 bn has
been
committed to
broadband
investments
in stimulus
packages
• Korea is
targeting 1Gbit/s
by 2012
• BB is a legal
right in Finland,
Spain &
Switzerland 9
Source: Based on ITU, OECD, World Bank and Booz.
Case study #1: Republic of Korea
•Korea’s initial broadband
growth appeared to “defy
the S-Curve”
•Since 1985, six major policy
initiatives have helped to
promote public/private
partnership, including
government funding a
backbone network for public
institutions
•Korea has benefited in
terms of higher labour
productivity and educational
attainment as well as a
doubling of ICT services as a
% of GDP
Broadband penetration per
100 inhabitants: Korea,
Denmark
Source: OECD Data. and Netherlands
10
Case study #2: UK
•In 2005, following an Ofcom
review, the UK incumbent, BT,
proposed a functional separation
of Openreach, the network
management art, and the rest of
the company
•Openreach sells services to all
market players (unbundled local
loop) on the basis of “equivalence
of inputs”, subject to review by
the “Equality of Access Board”
•Subsequently, the number of
broadband accesses in the UK has
soared
•The UK government is now
proposing a £6 per year levy on
fixed lines to finance NGN
Broadband usage in the UK,
millions
Source: EU Data. Note, not a uniform data series.
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Case study #3: France
•France has benefited from a
strong competition to the
incumbent, France Telecom,
from new entrant Iliad
(free.fr)
•This has enabled it to build a
“ladder of investment”
strategy, beginning with
resale, and passing to
bitstream, shared access and
eventually fully unbundled
local loops (ULL)
•France was previously an
internet laggard but is now an
internet leader in Europe
Broadband usage in France,
Source: EU Data. Note, not a uniform data series.
millions
12
Case study #4: Singapore
6'000
•Singapore provides an
early example of a country
where mobile broadband is
overtaking fixed-line
broadband
• Worldwide, mobile
broadband users will
exceed fixed-line by end
2009
• However, there are
measurement issues:
– Is a mobile broadband
user someone with a
suitably equipped handset?
– Or with a USB modem?
– Or with a data
subscription?
Other
5'000
xDSL
Cable Modems
4'000
Wireless Broadband
3'000
2'000
1'000
0
Apr 07 Jun 07
Sept
07
Dec 07 Mar 08 Jun 08
Sept
08
Dec 08 Mar 09 Jun 09
Broadband evolution in Singapore
Source: IDA
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World Bank / infoDev research
•Research on the impact of broadband on economic growth
– Published in 2009 edition of Information and Communication for
Development Report: Extending Reach and Increasing Impact
– Joint work between infoDev and OECD
•Broadband infrastructure Investment in stimulus packages:
Relevance for developing countries
– Research paper, published May 2009
•Case study of broadband development in Republic of Korea
and other broadband pioneers
– Due to be published in late 2009
– Six mini case-studies
•Technical assistance programmes and benchmarking
– In Egypt, Armenia and elsewhere
•Broadband toolkit
– Broadband Handbook to be published in 2010
– Full toolkit to cover strategies and policies, regulation and implementation
– Core funding from Korea Trust Fund. Other partners welcome
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Thank You
www.worldbank.org/ict
www.infodev.org