Thirty years ago a UN commission published the Maitland Report, proposing that by the early 21st century, every individual on the planet should “be within easy reach of a telephone” given the economic benefits. That was interpreted as being within a one day walk of a phone. Anyone suggesting back then that over 90% of the global population would be covered by mobile cellular signals, and over half of the world’s population would have a phone in their pocket, would have been labeled a crazy optimist. Yet, today it’s all about high-speed broadband connections, which total over 3.4 billion as of 2014 – nearly half of the world’s population.
This year’s Global Information Technology Report, and chapter 1.2 in particular, details this history of ICTs as a powerful driver of economic growth, and discusses the remaining barriers to more inclusive prosperity. While ICTs have a multiplying effect on income and growth, unconnected countries and people are being left behind. To address a widening income gap, particularly within countries, more needs to be done to increase broadband adoption, particularly through policies that focus on universal access, affordability, digital skills and the gender gap.
Evidence from the last two decades demonstrates that ICTs, particularly broadband Internet, are an income multipliers. At the country level, macroeconomic data links fixed telephony, mobile telephony, Internet use, and broadband use to gross domestic product (GDP) growth in a causal relationship across developed and developing countries. , And increasing the intensity of data use also drives per capita income growth. This growing body of evidence highlights the fact that we are long past the days of the “Solow paradox,” when, in 1987, Nobel Prize–winning economist Robert Solow noted, “you can see the computer age everywhere but in the productivity statistics.”
At the microeconomic level, emerging analysis highlights the impact that ICTs can have on driving income growth at the bottom of the economic pyramid. Mobile phones in particular, have spread across the developing world and this ‘mobile miracle’ is contributing to income growth as handsets act not only as a communications device for sharing public and private information, but also as educational tools delivering learning content, and as a financial transfer and savings device.
A direct result of ICT adoption is the steady decline in absolute poverty across developing regions. The global extreme poverty rate (those individuals surviving on less than US$1.25 per day) dropped from 1.9 billion people in 1981 to 1.3 billion in 2010 according to the World Bank: extreme poverty rates in developing countries dropped from more than 50 percent to 21 percent. This decline in extreme poverty has been driven by long-run economic growth in China and India, recent growth across Africa, and the impact of social programs in Latin America.
The picture is more mixed, however, when looking at ICTs’ impact on income inequality. At the global level, the latest available data from the World Bank show income inequality (the distribution of income across all people in the world) to be on the decline. The most recent analysis finds that global income inequality has fallen steadily from a Gini coefficient of 72.2 in 1988 to 70.5 in 2008 with the decrease attributed to the large overall income gains of the global median (around the 50th percentile) of the population.
However, the decrease in global income inequality masks the income inequality increases observed within individual countries. With-in country income inequality appears to be rising in many countries (developed and developing) and one analysis by the International Monetary Fund suggests that technological progress, measured as the share of ICT capital stock, has a statistically significant impact on inequality. The available evidence presents a paradox where ICTs are driving economic growth and decreasing global inequality while at the same time contributing to rising within-country income inequality.
While this paradox appears, the full benefit of ICTs has yet to accrue to lower income groups. For example, network effects and externalities that multiply the impacts of ICTs require minimum adoption thresholds before those impacts begin to materialize. One analysis finds a positive impact of a 2.8% increase on GDP resulting from a 10% increase in telecommunications infrastructure, but only once a minimum threshold density is reached. In this case, the threshold was at 24% of the population. In other words, countries will only experience the full growth impacts of ICTs once penetration passes that point. Similarly, a 2009 analysis determined that increasing returns to broadband investment occurs when a critical mass of penetration—above 20% (20 subscriptions per 100 people)—is reached. Greater access and adoption of ICTs in lower-income groups will further accelerate income gains at the base of the economic pyramid.
To counter the disparity in the utilization of ICTs between lower- and higher-income groups, immediate actions should focus on closing the disparity in ICT adoption/penetration. To ensure that benefits of ICT accrue to lower income populations, more needs to be done to increase broadband availability and adoption, particularly through policies that achieve universal access, increase affordability, increases digital skills and close the gender gap. These include:
1) Focusing public resources and incentives for building broadband Internet access out to rural and underserved communities
2) Connecting schools and libraries to broadband Internet service and ensure widespread connectivity within schools
3) Removing excessive taxation on devices and access, and consider targeted subsidies for certain populations
4) Developing robust ICT training curricula and programs
5) Focusing on closing the gender gap in ICTs
The data in this year’s Global Information Technology Report leave no question that the adoption and use of ICTs has a positive effect on income and growth on lower-income countries and populations. However, the challenge to accelerate ICT adoption, particularly among lower-income groups, remains. Combining the positive economic growth impact of ICTs with targeted interventions focusing on alleviating poverty, will improve the well-being of citizens everywhere, especially those in absolute poverty at the bottom of the pyramid.
On Wednesday, April 15, at 10am US EDT, please join me and colleagues from the World Economic Forum to discuss the findings of the 2015 Global Information Technology Report.
Tags: broadband, GITR, growth, ICT, income, Inequality, WEF
The world we live in today is one where people, process, data and – increasingly – things are connected as never before. The Internet of EveryThing (IoE), is driving the most dynamic area of innovation, creating new business models, economic, social and environmental sustainability and also has fantastic potential to improve our quality of life.
Just imagine: a blind man gaining independence because his once ordinary walking stick is able to communicate with his other senses through sensors, vibrations and GPS technology that guide him through the city maze. Imagine a connected car informed of traffic jams by analyzing traffic patterns and adjusting traffic light operations. Or think of smart manufacturing facilities that cut costs by reducing waste and energy consumption. And these are just the possibilities being realised today. Imagine what the future will look like in 5, 10 or 25 years from now.
We have barely begun to scratch the surface of what’s possible. We don’t know what applications and services will shape the Internet’s future. To continue innovating, we need the Internet to remain open, giving the most creative among us the chance to experiment with daring new ideas.
We also must be sure not to stifle the very innovation that we seek to encourage. If we do so, it could inhibit growth and new ideas alike. This is why today we should focus on putting in place the right policy principles that will further develop this new Internet of Everything.
In policy debates, net neutrality is often understood to mean that all bits should be treated equally, regardless of whether it’s a text, email, picture or video. While at first sight this may sound reasonable, the truth is that such a strict net neutrality principle would become an innovation straight-jacket. It would require us to re-design the Internet as we know it, doing away with tools that have become essential to its success.
Different Internet services have different requirements. It doesn’t really matter if an email arrives now or a second or two later. But if you’re dealing with real-time applications – such as video communication, or buying stocks or monitoring vital signs, delays can have an incredible impact on user experience and effectiveness.
So the truth is that you have to manage internet traffic to make sure that the data that has to get there immediately – does. This short video explains what traffic management entails and why it is so important.
Reasonable traffic management is so deeply embedded in the Internet’s core structure that it could not operate smoothly without it. This is the case already with the traffic loads of today, let alone in the future. Because management and scheduling are a crucial part of the Internet, we are closely following European efforts to formulate new net neutrality legislation. Cisco believes such legislation has merit but it could also have sweeping implications for reasonable traffic management and new services that would ultimately stifle rather than encourage innovation on the Internet. These implications can and should be avoided.
Fortunately it seems there is an increasing realisation among some policy-makers that net neutrality legislation, necessary as it may be, shouldn’t eliminate reasonable traffic management altogether. That approach would undermine rather than improve the quality of users’ experience. One way to establish net neutrality rules that prevent bad behaviour while maintaining a role for traffic management is to pursue a two-thronged approach where a line is drawn between the types of bad behaviour we do not want to see in the Internet and the necessary and reasonable traffic management techniques that ensure the fast, reliable and scalable networks that we all rely on, and need as consumers.
Equally, there is an emerging consensus that we must avoid overly prescriptive attempts to cast into law lists enumerating or narrowly defining the types of services other than internet access services that we deem “deserving” of specific levels of quality. Such attempts are bound to get it wrong in many cases. Moreover, any such neutrality law would quickly be outpaced and overtaken by reality. Building a Procrustean bed for the Internet is not the way towards a more vibrant digital economy in Europe. It is not necessary to have these prescriptive definitions and conditions on innovation as long as we maintain strong and clear safeguards to ensure an open and reliable Internet.
As the debate on neutrality in Europe enters its final phase, with trialogue negotiations starting this week, we hope the European Parliament will take a fresh look at the issue and we achieve a balanced final outcome.
In essence, the legislation we need should be sturdy enough to hold things together, but flexible enough for Internet entrepreneurs to continue adding new applications and services.
Just think about what the Internet looked like 15 years ago: a handful of wires, noisy connections that would bump you off from time to time, and streaming would be as quick as a snail. We have made huge strides, and we can continue towards an Internet of Everything – a smarter, more productive and efficient way at approaching life. But to get there, striking the right balance in Europe’s regulatory framework is more crucial than ever before.
Tags: Cisco, government, innovation, Internet of Everything (IOE), net neutrality
The world’s economy is increasingly interconnected. Continued economic growth stems from companies being able to move data freely across borders without being caught between conflicting legal requirements. Governments also face challenges in their efforts to protect public safety when data needed to conduct lawful investigations are stored in the cloud. Internet users, in turn, expect that their email will receive protections that are equivalent to those afforded paper documents. Therefore, the challenge we face is to develop a modern, efficient, transparent mechanism that protects reasonable expectations of user privacy when law enforcement demands access to the contents of electronic communications in the cloud.
Today, Representatives Tom Marino (R-PA) and Suzan DelBene (D-WA) introduced bipartisan legislation in the House to tackle this important problem.
Theirs is a companion to a bill introduced by Senators Orrin Hatch (R-UT), Dean Heller (R-NV), and Chris Coons (D-DE) earlier this month.
On behalf of Cisco, I’d like to thank these members for their leadership and to express support for the goals of their legislation.
The Law Enforcement Access to Data Stored Abroad (LEADS) Act offers a new framework for striking the balance between the government’s need to investigate crime and the Constitution’s protections against unreasonable search and seizure in the context of a globally connected world.
This proposal builds upon bipartisan efforts to amend the Electronic Communications Privacy Act (ECPA) in both the House and the Senate, which we also support.
Cisco urges Congress to take up these important issues quickly.
We continue to believe that the security threats facing nations are real and significant, and governments need to be able to take steps to address these threats and protect their citizens against crime and terrorism. At the same time, we must update our laws so that they respect innovation and enable new technologies to grow.
“When the FCC Chairman’s office originally unveiled open Internet rules last year, Cisco cheered the proposal, because we support an open Internet and believe that balanced rules that protect consumers and prevent anti-competitive behavior are necessary and appropriate.
Unfortunately, the rules adopted by the FCC today bear little resemblance to the original proposal. They impose far-reaching Title II regulation on Internet access and services. We believe this will inhibit investment in wired and wireless broadband and limit consumer choice in new and innovative services relating to telemedicine, distance learning, and the Internet of Everything.
Over the coming days and weeks, we will study the new rules to see how they impact broadband investment. But we view the decision to impose heavy-handed regulation, rather than a balanced approach, as a missed opportunity.
Ultimately, this issue will be decided by the Courts and Congress, which will have the final say on the matter.”
Tags: congress, FCC, Internet of Everything, net neutrality, title II
“Today’s decision by the IEEE Board of Directors is a significant victory for consumers and for those who want a reasonable and stable patent system that supports innovation.
In making this decision, the IEEE supported those companies who are willing to both grant and receive licenses for patents required for use in IEEE standards on reasonable terms. We congratulate the IEEE for resisting pressure from the few who wanted to use the patent system to force unreasonable costs on makers and users of everyday products like smartphones and wireless routers.
Today’s decision will help ensure that owners of patents required to implement standards won’t be able to use their leverage to obtain unreasonable royalties.
Cisco will work with the IEEE and other stakeholders to ensure that the new clarifications are implemented in a fair and equitable manner.”