The second issue of Focus concentrates on key issues and findings that emerged from the 2011 Telcom World event. We will analyze some of these debates, critical recommendations and core findings from ITU Telecom World 2011. This was held in Geneva on October 2011 and centered on one key premise: that broadband deployment is the greatest single driver of global economic growth and recovery.

 

The issue of expanding the reach of broadband, and the many benefits this technology offers was an overarching theme at our event, and was debated both in the Broadband Leadership Summit and subsequently through roundtables, shared case studies, best practices and showcasing of innovative solutions. We were delighted to convene a unique mix of representatives from the government, leaders of industry technology visionaries and many more to share their insights and experiences on this vital topic.

 

Blaise Judja-Sato, Executive Manager, ITU Telecom

Key Findings

• ICT today is superior to all infrastructures. It directly boosts productivity and economic growth and adds value across all vertical sectors across the globe. It’s also a rapidly expanding sector; the global market value of the ICT sector is forecast to grow from US$1.67 trillion today to US$2.4 trillion by 2020, according to India’s Minister of Communications and Information Technology.
• Increasing broadband connectivity in both developed and emerging markets is of paramount importance to stimulating economic recovery and growth. It is crucial that private sector investors, governments, policy planners and decision makers are fully aware of the importance of increasing connectivity, and factors this in to investment plans and national policy.
• A range of broadband solutions in terms of infrastructure, connectivity, financing, content provision and regulations need to be considered. Doing so will provide flexibility and ensure that the specific needs at local levels are fully met.
• The collaboration and sharing of successful practices, case studies and innovative business models is crucial at all levels. This includes building understanding and cooperation between public and private sector investors, telecoms operators, infrastructure providers, content and service suppliers between governments and private sector shareholders
• Stimulating the growth of SMEs and entrepreneurs is critical to economic recovery and should be underpinned by broadband internet connectivity.
• Mobile broadband usage is on the rise, with likely dramatic global economic impact. Following the lessons of success of the mobile model could prove valuable.
• Broadband is uniquely positioned to drive massive economic and social transformation. The technological applications and future shape will be innovative, youth-driven and unpredictable; ICTs must be prepared to adapt to meet fast-changing market demands.

Broadband: A key economic driver for the future

 

• Broadband deployment is the key to socio-economic development, global economic recovery and supporting growth in both developed and developing markets. This was the key message of the ITU/UNESCO Broadband Commission for Digital Development and the focus for the Broadband Leadership Summit which was held immediately prior to and in conjunction with the ITU Telecom World 2011 event. This formed the backbone of the wider range of debates, discussions, case-sharing and workshops throughout the four day event.

 

• ICTs, with the internet and broadband as the main disseminator and driver, are evolving more rapidly than ever before. They bring opportunities, benefits, jobs and productivity. The ICT sector itself is both a major job-creator and productivity driver, with an estimated global market value forecasted to rise from USD 1.67 trillion to USD 2.4 trillion by 2020, according to Kapil Sibal,
• B more with Broadband session
• The Minister of Communications and Information Technology, India, spoke at the B More with Broadband session. But technology alone does not and will not make the difference. It is what is done with that technology, the “clever use of clever technology”, as described by Dr. Bruno Lanvin, Executive director of e-lab, INSEAD. The session unleashed an explosion of economic activity in the mobile sector. The effects of this ‘explosion’ are continuing despite the current general economic downfall and can be enhanced by broadband through the provision of universal and affordable access, digital skills and education programs to tap into human capital on a global scale.

 

• All enterprises, industry sectors and businesses in the world have generally adopted ICT in some form. Using broadband offers enhanced possibilities for those business platforms, according to WIPO Director-General Francis Gurry, who spoke at the event. Broadband connectivity is an “urgent imperative – failure is not an option” in the words of Reza Jafari, contributing to the Closing Conversation of the Broadband Leadership Summit at the event.

 

 

Hans Vestberg, CEO, Ericsson

• The broadband uptake stimulates job creation, GDP growth and social inclusion. Higher broadband penetration in Europe will lead to the creation of 2m jobs by 2015; in China, for example, a 10% rise in penetration has boosted GDP by 2.5%; employment rates in Brazil have risen by 1.4% in broadband penetration and usage. In his executive interview filmed at the event, Hans Vestberg, CEO of Ericsson, cited an average 1% sustainable rise in GDP for each 10% increase in broadband availability.  

 

• With this in mind, Stephen Conroy, Minister of Communications for Australia, chairing the B More with Broadband session, urged that broadband be accepted as a basic utility. “We all recognize that broadband is the critical infrastructure of the 21^st century; like water, roads, rail, gas and electricity before it, broadband is a fundamental importance to the economic growth of all nations”.

 

Cascading the economic benefits of broadband

 

• Broadband, defined as the simultaneous provision of voice, data and video services through high-speed access, can greatly increase productivity amongst existing businesses, streamline government services, and generates new economic activity on an unprecedented scale. The economic benefits of broadband arise from the basic deployment of infrastructure, as well as the tremendous range of services, products and applications working over the top of this infrastructure, opening up opportunities for new markets and new players.

 

 

Jay Naidoo, Director-General, GAIN

• These opportunities are fully scalable and allow individuals throughout the world to develop livelihoods from their own homes and for larger companies to grow through the development of innovative broadband-powered applications in sectors such as transport, banking, agriculture, education, health, and government services. As Jay Naidoo of GAIN points out in his Executive Interview, this is a very new way of doing business in that accompanies the expansion and stimulus of more traditional economic activity. In the words of Akinwale Goodluck of Nigeria’s mobile operator MTN, interviewed at the event, “investment in broadband will be the catapult to economic development”.

 

• “The exact nature of the applications, services, solutions and technologies that will bring the greatest disruptions and economic benefits is impossible to predict,” for Bob Kahn, President and CEO, CNRI, ICT. Economies in general must accept the challenge of “serendipity as the big driver of innovation going forward”

 

State of Play in Emerging markets

 

The current economic crisis is global in nature, but manifests itself in different ways in markets across the world. In contrast to the growing debt, unemployment and economic decrease in Europe, emerging markets have remained relatively buoyant – and may help re-energize the economies of the world as they boost their share of global markets. Emerging economies have accounted for three quarters of real growth in global GDP over the past decade, reaching 54% of total global GDP in 2011. This will offer a high potential for rapid growth, according to Dr Mona Farid Badran who spoke at the Dependability of Emerging Economies on ICTs session.

 

 

Emerging Opportunities in Emerging Markets

In emerging markets, broadband deployment can help leverage competition and attract considerable FDI in addition to the creation of jobs and boosting productivity. The three-year national cyber strategy for broadband infrastructure in Gabon, aims to connect all cities, encourage government and private investment, build a techno-specialist cyber city and  provide specialized offshore centers for IT and communication companies.

 

Given infrastructure availability, suitable low-cost devices and “content and applications to synchronize all variables”, - as outlined  by Oscar von Hauske, Telmex CEO, in Emerging Opportunities in Emerging markets, high-speed Internet has huge power as a transversal tool for global citizens. Turning emerging markets on to the full power of broadband will result in fresh solutions, models and applications that can be adopted throughout the world, boosting the economies of the West, and encouraging inter-market flows of capital, innovation, products and services on a new, global scale.

 

Innovative applications, such as m-banking, often have huge potential for boosting commerce. Indeed, new m-banking models originating in West Africa have been exported throughout the world in an example of reverse technological transfer, with local solutions to problems finding global resonance.

 

 

Data: Free and Priceless

Locally-relevant, affordable and compelling content will stimulate demand for and drive broadband uptake through applications and services in every imaginable field. This includes e-commerce, banking, education, health, climate change and entertainment, etc. But multimedia content must be specific to local markets and in local languages to reach the bottom of the pyramid and fulfill economic stimulus potential. Columbia’s Diego Molano, who spoke at the Global Villages High Level Round Table, gave the example of farmers seeing the value of the Internet through tailored content such as marketplace information, rather than social networking or entertainment applications. Content should also be sufficiently localized to take into account potentially high levels of illiteracy; particularly, in rural or underserved areas as Margaret Kunda Chalwe-Mudenda, Director General of Zambia Information & Communications Technology Authority pointed out at the Data Free and Priceless session.

 

ITU Secretary-General, Dr Hamadoun Touré summed up the Broadband Leadership Summit Closing Conversation: “We all believe in the same cause: that ICT is key driver for the social and economic development of any nation. ITU and its constituents are used to offering infrastructure - now we need to move to content.”

 

 

 

 

 

 

 

 

 

 

 

Mirroring the “mobile miracle”

 

The dramatic success and explosive growth of the mobile sector over the past decade has often been referred to as the “mobile miracle” and is increasingly seen as a template or springboard for the broadband revolution.

 

 

Emerging Opportunities in Emerging Markets

In a world where there are 5bn mobile subscriptions in a total population of 7bn, life without mobile is practically unimaginable. It is mobile technology, rather than the Internet, which has driven the communications revolution to reshape the global economy. Extraordinary growth over the past ten years has seen mobile penetration in Latin America increase from 5% to over 100%, as cited by Carlos Slim. China Mobile has seen its total base rise from 100m to 630m with net additions of up to 5m subscribers per month, whilst the networks send SMS messages at a rate of 2bn per day. This example of the huge growth potential in emerging markets, cited by China Mobile’s Chairman Wang in Emerging Opportunities for Emerging Markets, is reinforced by the annual Visual Networking Index rolling forecast for data demand and consumption. This corporation projects an average compounded growth rate for mobile data between 2010 and 2015 of 92%, rising to 100 – 130% in emerging markets, as cited by Intel’s John Davies during his Executive Interview.

 

 

John Davies, Intel

Carrying the momentum of the mobile revolution through to broadband solutions and services is one way to maximize economic development globally. The mobile sector provides a direct model for broadband in terms of devices, connectivity, business models and compelling content.

 

Private investment has been a key enabler of the mobile miracle. In Tanzania, for example, as noted by Dr Mohamed Gharib Bilal, Vice President of Tanzania at The Global Village session, the private sector has taken the lead in promoting ground-breaking financial services such as long-distance transfers and payment of bills.

 

Private sector initiatives created the mobile prepaid model, arguably the single most important factor in driving mobile uptake, where the costs of subsidizing handsets were assumed by operators and recouped through widespread consumer use of prepaid cards. The prepaid model could be directly copied for broadband services; and serves at the same time as a reminder that the killer model, device or application behind mass adoption of a new technology is often unpredictable.

 

Mobile will also be the key technological platform for broadband deployment, in particular in rural and underserved regions where network rollout is often extremely complicated and prohibitively expensive. Boosting mobile broadband access involves reducing the cost of access, increasing network capacity, creating compelling content, raising consumer awareness and involving all stakeholders in ongoing dialogue to provide greater clarity on potential risks for private sector investors – who are then more likely to commit larger amounts of capital expenditure to broadband projects, multiplying the economic benefits for all concerned.

 

 

Connected on the Move - Mobile Broadband

Mobile broadband will be to a large extent financed by the private sector, as was the case with mobile telephone. Tom Phillips of GSMA, panelist at Connected on the Move, highlights the importance of private funding “in getting voice to 6bn subscribers; getting voice and data to 6bn will also involve private sector investment”. Providing attractive business models and environments through committed leadership at government level is therefore a priority, and may involve spectrum management, tax breaks, subsidies or other incentives to ensure broadband coverage in the most remote and rural areas. Excessive taxation should be reduced, universal service funds fully applied and spectrum licensing revenues reinvested in the industry.

 

At the same session, Phillips advocates standardization and harmonization of spectrum allocation across neighboring countries, regions or even globally to create sufficiently large markets for economies of scale to kick in, driving down the costs of devices and stimulating widespread adoption. For Chairman Wang, speaking at the Emerging Markets session, rapid evolution in smartphones and tablets should bring equipment prices down to affordable levels; Carlos Slim Helú at the B More with Broadband debate echoed the call for low-cost devices, including the recycling of handsets to provide basic broadband connectivity sufficient to meet local needs, in particular at the base of the pyramid.

 

 

The Digital City Way of Working and Living

Broadband can be a major driver in increasing the potential of major users such as e learning, e medicine and e government. Finding the balance between government and industry, public and private sectors is also essential. Speaking at Digital Cities Living and Working, Yan Zhu, Deputy Secretary General, the People’s Government of Beijing Municipality, drew on his own experiences with e-government in the Beijing Municipality, and highlighted e-government as a potential major driver of mobile broadband on both the supply and demand side.

 

Cisco’s Robert Pepper, underlines that “video is the fundamental driver of massive data uptake, on both fixed and mobile networks”, with the advantage that video overcomes many of the potential stumbling blocks of local content, local language and large scale illiteracy amongst the unconnected in emerging markets. The limitations of spectrum availability will lead to video over mixed platforms (fixed wireless, small cells, and fiber optic) in urban or other densely-populated areas of the world. But it is mobile that will bring the broadband revolution to the digitally disempowered in many parts of developing markets.

 

Summing up during the Broadband Leadership Summit closing conversation, ITU Secretary-General Dr Hamadoun Touré noted:  “We have the mobile miracle and we can transform this into the broadband miracle”, drawing on the experience of the past ten years, new services and applications, and the innovation of young people showing the lead.

 

 

Innovative investment models

 

Unleashing the broadband miracle and connecting the next billion nevertheless requires large-scale investment in infrastructure, devices and content development in the form of locally-relevant services and applications. Universal, affordable access calls for new investment models, new business models and new mindsets.

 

Carlos Slim Helú, during B More with Broadband, highlighted both the enormous capacity for investment implicit in redeploying the high levels of depreciation carried by many telcos, with particular emphasis on modernization of existing infrastructure as a lower-cost alternative. He also focused on the reworking of private public partnerships (PPPs) to avoid excessive taxation penalties within the sector.

 

Collaborative financing models such as PPPs are vital to large scale broadband deployment, and need to be flexible and varied in response to the variety of investment conditions, existing infrastructure and economic situations across developed and emerging markets.

 

 

Data: Free and Priceless

In Africa, for example, the pressing issue is infrastructure build-out, supported in most cases by universal service funds. Ensuring that all stakeholders, including content, software and applications providers “align risks” and make contributions to such funds would support investment and expedite universal access, according to Brian Herlihy, CEO, Seacom at the Data: Free and Priceless session.

 

 

Investment Revolution

Looking beyond PPPs, innovative investment models should reflect the different motivations driving different types of investors in a range of market conditions, bringing a whole spectrum of investment possibilities into play either in combination with one another or in the Investment Revolution session. The continuum from early entry social investors should impact investors, double bottom line investors and mainstream capital markets. For Doyle Gallegos of the World Bank at the Investment Revolution session, emulating the mobile model means enabling private sector investment through government encouragement of partial public funding, local competition and infrastructure sharing. Creating new PPP models for applications and content development, involving SMEs, entrepreneurs, government and private sector players is challenging but vital. Eschewing the perceived safety of operator monopolies in favor of competition at regional, national and local levels is a further important factor in the view of speakers at the Dependability of Emerging Economies on ICTs Technical Symposium session.

 

Broadband deployment is an economic win-win proposition: benefits accrue from the infrastructure projects themselves, from the vast numbers of new subscribers becoming connected, from the concomitant opening up of new, previously inaccessible markets and from the economic activity stimulated by new services, applications and content over this infrastructure.

 

Keeping revenues and economic benefits in-country as far as possible may not be matter of political imperative but of realigning national budgets to create business systems around investments locally, rather than allowing the majority of profits from consumption of goods to return overseas. Stimulating local investment within many emerging markets involves increased levels of transparency and investor protection, in the view of the African Development Bank’s Karim Mhirsi speaking at the Investment Revolution session.

 

 

Wim Elfrink, Cisco

Tracking the hard economic benefits of broadband is vital if policy makers, governments and investors are to be convinced of the broadband imperative. Monitoring, evaluating and analyzing the macro impact of investments in broadband can enable a direct impact at sector level to be identified, providing demonstrable proof of the sustainable nature and good business sense of ICT projects for investors. Not all such benefits are as easily quantifiable, however, and here Jacqui Subban of eThekwini Municipality at the Investment Revolution session recommended the use of anecdotal evidence, sharing experiences of successful investment models. Investment decisions may be based on other factors than financial returns, with double-bottomed investors aware of the more “holistic type of productivity improvements” advocated by Cisco’s Wim Elfrink during his executive interview filmed at the event.

 

Stimulating SMEs and entrepreneurialism

 

 

B more with Broadband session

The majority of all companies throughout the world are SMEs with less than 10 employees, and throughout economic history it is SMEs that have played a crucial role in periods of transition and recovery as providers of jobs and innovation, as Dr Bruno Lanvin of INSEAD pointed out during the B More with Broadband session. Broadband has the potential to stimulate both growth in existing small companies and the creation of new SMEs, spurring entrepreneurialism at a local level in a variety of ways. Lanvin went on to give the example of large countries reaching out to lower density areas through the provision of broadband access to involve farmers and smaller producers; in the same session, Carlos Slim spoke of the profitability of big businesses selling links to SMEs, maximizing the use of infrastructure and large-scale data centre facilities by multiplying smaller-scale users. For John Davies of Intel, interviewed at the event, broadband enables SMEs to get their products and services out to market through websites, tools and relevant content.

 

The secondary and downstream impact of boosting SME activities is the creation of jobs and the increase in rates and tax bases, setting up a virtuous circle of more SMEs, more tax and more investment –unlocking “grey matter, creativity and knowledge” according to Jacqui Subban of eThekwini Municipality, speaking at the Investment Revolution session. Karim Mhirsi of the African Development Bank reinforced the importance of stimulating SMEs in the same session: the development priority and line of credit offered by his organization is focused clearly on SMEs as a central driver of growth and poverty reduction across the continent.

 

Developing the ICT skills to encourage entrepreneurship at local level is, in the words of INSEAD’s Bruno Lanvin, an “imperative on the road to recovery”.  Given the tremendous global dissemination of SMEs, local content in local languages is therefore crucial.

 

The OpenSpace debate on Mobile Apps Driving Entrepreneurialism proposed the establishment of interoperability across all platforms, educational conferences for local entrepreneurs and embracing social networking as tool for collaboration, sharing ideas, addressing unmet needs and interacting with other organizations and services.

 

Preaching to the non-converted

 

Policy-planners and leading government and industry decision-makers need to be convinced of the opportunities of the broadband revolution, if these opportunities are to be fulfilled.

 

Finance Ministers across the globe must be convinced of the value of broadband and the vast potential benefits it offers in terms of increased productivity, job creation and competitiveness. Mobile broadband in particular has the potential to rebuild and reenergize the economy on a global scale, with particularly dramatic impacts in emerging nations, as enormous new markets, new masses of human capital, new generations of entrepreneurs are brought into the picture.

 

Before the Broadband Leadership Summit, the Broadband Commission for Digital Development issued a call to all governments and private industries to recognize broadband as “a critical modern infrastructure contributing to economic growth” and to work together to develop innovative policy frameworks and business models to facilitate an expansion in access to broadband as “a top policy priority for countries around the globe, both the developed and developing”.

 

Stephen Conroy underlines the importance of “staying focused” on investment in broadband to boost economic growth; Wim Elfrink urges that broadband, the key enabler and the “fourth utility” be fully exploited for productivity improvements and value-added services. Dr Bruno Lanvin reminds us that the ICT sector has boomed even during the economic crisis. But he also points out that the challenge remains convincing ministers, decision makers and policy gurus outside the sector of how broadband can contribute to recovery and growth. This may be achieved through the collation, publication and repeated presentation of hard economic facts on the benefits of broadband, through sharing case studies, best practices and innovative investment models, through collaboration with private, research and non-governmental organizations. However it is done with those who hold the purse strings and pen the policies at local, national, regional and international levels and must be brought on board the broadband bandwagon as urgently as possible.