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As Two Digital Divides Close, A New One Threatens

Five years ago when it was created, the UN Commission for Digital Development stated that “the digital divide continues to be a development divide that must quickly be bridged.” Since then, huge progress has been made in closing the digital divides in the adoption of information and communication technologies (ICTs), particularly telephones and the Internet. A new potential digital divide may be emerging, however, in the adoption of machine-to-machine (M2M) deployment and services, a key element in the Internet of Things and the Internet of Everything.

The latest data from the Broadband Commission’s 2015 State of Broadband report launched this week, shows the gap in the adoption of telephones falling rapidly, particularly as mobile telephones spread across the world. In 2005, mobile penetration in the developed world was over three times higher than in developing countries (82% versus 23%). By 2015, this gap has closed significantly with mobile penetration at 121% in developed countries and 92% in developing countries. While larger gaps remain in broadband Internet (mobile and fixed) subscriptions, higher growth rates for both technologies in developing countries point to the same conclusion: overall, developing countries are catching up with developed countries in a range of ICTs.

According to Cisco’s 2015 Visual Networking Index (VNI), we now stand at a clear digital tipping point – by 2019, the number of people connecting to Internet will be 3.9 billion, reaching over 51% of the global population. As over one billion additional people connect to the Internet over the next five years, over 10.2 billion new devices (smartphones, tablets, sensors, etc.) will come online at the same time, growing from 14.2 billion in 2014 to 24.4 billion in 2019; and 10.5 billion of these will be M2M.

This ‘good news’ story, however, masks an emerging digital divide in this next phase of the Internet, which will be characterized by a growing number of connected devices of all kinds. In North America, there were 6.1 networked devices per capita in 2014 with a forecast of 11.6 devices per capita by 2019 (a CAGR of 14% in total devices). In Western Europe, the number will be 8.2 devices per capita by 2019, up from 4.4 devices per capita in 2014 (13% CAGR). However, in Latin America, there were only 2.0 connected devices per capita in 2014, with an expected rise to 2.9 by 2019 (9% CAGR), and in the Middle East/Africa region, growth is expected to be similarly slow growing from only 1.0 connected device per capita in 2014 to 1.4 by 2019 (9% CAGR as well).

The Emerging Digital Divide

The contrast across regions in M2M devices is even more stark. While globally, over 43% of all devices in 2019 will be M2M, advanced regions of the world are ahead of the curve. In the UK, M2M devices will account for 48% of all devices by 2019. In Australia the share will be 54%; the US it will be 58%; Japan 68% and in Korea, 72%. By comparison, in most developing countries the number of M2M devices are still at a nascent level: In India, only 13% of all devices by 2019 will be M2M, across Africa and Middle East, the share will be only 17%, in South Africa it will 22%; Brazil and Mexico will be 32%.

Why does this matter? While developing countries are catching up in basic ICT penetration, this growing gap in connected devices and M2M connections may point to big differences in how societies are utilizing, and benefitting from, the Internet and the next generation of the digital transition. For example, network effects and externalities that multiply the impacts of ICTs require minimum adoption thresholds before those impacts begin to materialize, and the greater the intensity of ICT use, the greater the impacts on economic growth (even beyond saturation levels of penetration).

It is important to recognize the global success in advancing the adoption of ICTs, particularly telephones and the Internet, around the world. Private sector telecom investment supported by smart government policies fostered infrastructure development to the extent that now over 90% of the world’s population is covered by mobile telephone signals.

We must continue the push for greater access and adoption of ICTs among lower-income groups to further accelerate income gains at the base of the economic pyramid. Policy action should focus on preventing and bridging this emerging digital divide in M2M and connected devices, achieved through partnership and private sector investment, enabled by conducive business environments and crafted by pro-innovation and pro-investment government policies. As the 2015 State of Broadband report highlights, more needs to be done to accelerate the adoption of ICTs and total connected devices and close the gaps between developed and developing countries, as well as high-income and low-income populations.

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Financing the Internet of Everything

You’ve heard us talk about the move from the Information Age to the digital age and how the rapid change associated with this movement will transform the way business is done at a global scale.

The primary driver for this revolution will be The Internet of Everything (IoE)—the next big phase of the Internet. Poised to generate over $19 trillion in value at stake for businesses and countries over the next decade, IoE encompasses shifts in computing such as big data, cloud, BYOD and mobility, and a new breed of software applications that will increasingly strain enterprise and service provider networks alike.

To become industry disruptors and take full advantage of the Internet of Everything, organizations will need to rethink how they do business. They will need to reimagine the role technology plays in their business and make it a strategic asset.

In my role as President of Cisco Capital, the captive finance business within Cisco, I speak with customers and partners globally of all sizes, across different markets and that have different business needs. In almost every conversation, a common challenge arises – how do they to do more with less and keep pace with technology innovation? It’s a good question, and one that doesn’t have a one-size-fits all answer.

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Three Ways We Can Impact the Future of Society and the Planet

This blog is also featured on Huffington Post ImpactX.

As a member of the Clinton Global Initiative (CGI), Cisco is committed to creating and implementing innovative solutions to the world’s most pressing challenges. In partnership with other global leaders, we’re tackling new issues every year, from closing the IT skills gap to creating new economic opportunities for individuals worldwide.

This year, nonprofit leaders, influential CEOs, and diplomats will come together at the CGI Annual Meeting under the theme of “The Future of Impact,” where they’ll collaborate to turn inspiring ideas into real-world results.

Together, CGI members have made more than 3,200 Commitments to Action, which have improved the lives of over 430 million people in more than 180 countries. Through countless public-private partnerships, we are preparing people around the world with the skills, technologies, and resources they’ll need to thrive in a connected world.

Through both our CGI commitments and our own Corporate Social Responsibility (CSR) program, we’ve learned what works to speed the pace of social change in communities worldwide:

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The Internet of Food – Improving Lives

A sense of great pride came over me as I entered the Expo in Milan­ to attend the Cisco Internet of Food international press event. This event is where Cisco brings food and digital technologies together in a world of apps, services and technologies that are changing the way food is produced, distributed, consumed and depicted. My home town hosted this significant conference that focused on two of the most important factors that make our lives better: food and the Internet. What better place than Italy? This country is the world’s food voilà and has one of the highest number of mobile phones and Facebook users – to talk about building bridges between technology and food.

While there, I met with a group of international press and together with a few colleagues and industry luminaries, we discussed the Internet of Food, a natural offshoot of the Internet of Everything.

Cisco and THNK.ORG  have been working for the last 12 months to reimagine how the Internet of Everything changes the way we grow, manufacture, distribute and consume our food. Read More »

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Summary: Five Keys to Success Leading Digital Business Transformation

mriegelHere’s a summary of Mike Riegel’s latest blog on the IoE Blog site that reaches out to all those in the energy industry, both oil & gas and power utilities:

“As we explored in my previous blog, today’s rampant pace of innovation can be likened to a Digital Vortex, where ideas, technologies, and even entire industries are swept to the center of the Vortex — recombining and merging into disruptive new business models.”

In Mike’s blog he talks about how digital business transformation is critical for all industries. However, Cisco’s Digital Vortex research revealed, 45 percent of companies don’t consider digital disruption a board-level concern. That’s worrying. Mike goes on to talk about the level of complacency, and how organizations had better watch out – there’s a disrupter increasingly in your industry!

The blog elucidates of five key areas which, if adopted, can enable success for those wanting to thrive in the new digital business environment:

  • Lead from the top down
  • Create the Workforce of the future
  • Merge Business Processes and Technology
  • Ideate and innovate FAST (FAST IT)
  • Cultivate the Partner Ecosystem

So, the blog concludes, it is the incumbents that can thrive as the agile disrupters if they play their cards right in this business digitization arena. Singular point-digitization is not enough. Comprehensive digitization is the way forward, involving people, process, data, and things. Find out more about the Digital Vortex  by clicking on the link (the subject of Mike’s next blog).

Refinery factory at the Port of Los Angeles, California, USA

Refinery factory at the Port of Los Angeles, California, USA


What do you think – are you ready to be a disruptor in the Energy Industry, or be disrupted?

My take: The good news is that the utilities companies are at lower risk than others, and oil and gas companies even less, according to the report. Those organizations have embraced digitization and recognize the disruption will most likely come from within, probably owing to the large barrier to entry for outsiders (unlike Amazon taking on retail for example).

Still, don’t be complacent – your competitors are waiting to take further digital business steps, and take market share. You can find out more about cisco digital solutions for oil and gas and power utilities by clicking on the links.

Let me know what you think!


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