|Issue:||North America 2006|
|Topic:||Public/private partnership to beat the digital divide|
Jean-Hervé Jenn is President International for Convergys Corporation. He is responsible for the execution of Convergys’ strategic billing and customer care initiatives throughout Europe, the Middle East, Africa (EMEA), Asia Pacific and South America. Before the expansion of his role, Mr Jenn served as President, EMEA, for Convergys’ Information Management Group (IMG). Prior to joining Convergys, Mr Jenn was at Goldman-Sachs, where he led a team responsible for all strategic dialogues with large corporate, institutional and government clients of Goldman-Sachs. Previously, Mr Jenn served as head of the European Information, Telecommunication and Entertainment practice for KPMG and was co-founder of KPMG Ventures. Jean-Hervé Jenn earned his master’s degrees in science from Ecole Spéciale des Travaux Publics in Paris and in management from the University of California in Los Angeles. He also completed the Executive Management Program at INSEAD, France. He is a member of the Institute of Chartered Accountants in England and trade representative to the Financial Services Authority.
The Internet offers great promise to the people of the world – developed and developing, rich and poor. What was once a service for the few has become a tool for the many, increasingly helped by the ubiquity of communications networks. If the dream of universal Internet access is to be fulfilled, there are a number of hurdles yet to be overcome. A stronger partnership between government and the private sector is the way to advance the cause of universal access.
Internet access is growing at a phenomenal rate – globally by nearly 150 per cent since 2001 to more than one billion users today. The great promise of the Internet as an economic equaliser has gained new credibility. However, certain conditions need to be realised to achieve the benefits of universal access and to fulfil the real destiny of the Internet. The main obstacles to universal Internet adoption lie in areas of technology, infrastructure and cost. The US was the first country to take advantage of the economies of scale and, although the pace of growth is slowing, broadband home penetration was expected to pass 70 per cent by the end of March 2006. In addition, according to the ITU, more than 86 per cent of US users have access to high-speed Internet connections at their places of work. Interestingly, despite these impressive statistics, the US is only 15th in overall broadband penetration in the world. Although it is still the country with the most broadband connections, with more than 42 million subscribers in late 2005, it will almost certainly lose its crown, per ITU projections, to China before the end of 2006. Breaking down barriers While, until recently, network operators, ISPs, and other participants have sought to attract users by stressing the advantages of their particular systems and services, it is clear that today’s Internet users are looking for something more. Whether businesses or consumers, Internet users want the walls that still restrict them demolished. The limitations that restrict people to a particular network or range of services, which differentiate between fixed and mobile connections are, to the increasingly sophisticated user, pointless. The pressure is on to provide a different kind of service, one where the user has no idea, or interest, in the network he is using at any particular point – a service that operates faultlessly at all times, anywhere, and provides a full range of available services and functions. The time for network ubiquity and network neutrality has come. Network access should be available to all. As far as the users are concerned, when they connect, all services should be available wherever they may be. This can be done by uniting political and corporate will, easy access can bring even greater benefits to everyone. Different countries, different starting positions Some countries have promoted the rapid liberalisation of the telecommunications industries to enjoy the benefits of competition, yet others have kept state-owned monopolies that are often slow to react to public need and demand. Still, a country’s ability to reap the economic benefits of universal Internet availability, and not get left behind on the technology curve, depends on its national infrastructure, the regulatory environment, and the speed at which it is connecting its populace. Raising rates of connectivity, particularly to high-speed connections, appears to have a dramatic effect on online spending and e-consumption. According to research by the Pew Internet & American Life Project, broadband users in the US read more news and blogs, download more music, and buy more products online than those with a dial-up connection to the Internet. Governments, either as ‘owners’ of the telecommunications industry in their countries or as regulators of a privatised market, can make access to communications services far easier by either supporting the build-out of the network infrastructure or by stimulating competition. National and regional regulatory bodies have a significant role to play levelling the playing field between traditional incumbents and new market entrants. While liberalised policies can act as a catalyst for growth in emerging markets, regulation actually impedes progress in some mature markets – as in many western European countries where there is inadequate regulatory support for broadband access. Changing the pace of broadband access take-up Another important requirement for increasing Internet availability is development of the ‘last mile’ connection – wired, wireless, or even satellite – to connect homes and offices to the network. India’s Telecom Regulatory Authority, for example, has clearly identified lack of wired access as an obstacle to national connectivity and recommended that the existing 42 million subscriber (2004) telephone network’s last mile be opened up to let other service providers use the connections for Internet access, voice, digital TV and other services. In the US, Google recently proposed providing free, wireless, high-speed Internet access in the city of San Francisco. The service would allow users to bypass the fee-based connections provided by cable and local phone companies in favour of wireless links. Once available, low-cost offerings provide powerful encouragement to expand and add robust new services. Richer, more desirable, consumer services promote market expansion and create sustained consumer interest and demand. Consumer demand has helped drive the United Kingdom’s adoption of higher-speed broadband access from just two million in 2003 to ten million today, accounting for more than a third of all UK Internet connections and, according to Internet World Stats, growing faster than Internet dial-up subscription sales. In Europe, industry analysts expect broadband penetration to soar and the continent’s level of connectivity to continue to increase rapidly. According to Forrester Research, 41 per cent of all Internet-connected households in Western Europe will have broadband access by 2010, while in the Netherlands this will rise to 54 per cent. The Netherlands now has more than 22.5 broadband lines per 100 people (OECD Statistics, June 2005). The pace of broadband access is increasing. The OECD expects the Netherlands to match South Korea, the world leader in broadband access with 25 broadband lines per 100 people, by the end of 2005. Increasing competition among service providers to create more attractive triple-play – voice, video and data – services is a major growth driver. Another shining broadband star, Hong Kong, was a slow starter on the road to Internet access. Hong Kong’s broadband penetration, range of network services, and e-competitiveness has grown dramatically over the past few years. A variety of different service providers now offer multiple advanced services (multi-play) over wireless networks, fibre optic cabling, and even power lines. More than five million of Hong Kong’s seven million people had Internet access by the end of 2005 (Internet World Stats). Connected markets Hong Kong is now among the world’s most connected markets, sixth in the 2005 EIU (Economist Intelligence Unit) e-readiness rankings and with 69.9 per cent Internet penetration (Nielsen//NR Feb 05). Market forces demanding multi-play services drive the fast growth of this liberalised communications market. South America provides a stark contrast to Asia’s broadband access success. Sparse telecommunications infrastructure, low PC ownership, lingering regulatory restrictions, and outdated pricing models continue to restrain Internet connectivity on the continent. For example, just 14.1 per cent of Brazil’s 186 million people are connected to the Internet (Internet World Stats). While parts of Brazil experienced something like a 50 per cent growth in access during 2004, the rest of the country lagged behind in both access and rate of adoption, widening the divide that leaves millions of people digitally excluded. Encouraged by the success of multi-play service providers, Brazil’s Ministry of Communications wants national digital TV standards that are open and freely accessible to the 80 per cent of Brazilian homes that have regular TV. By achieving this ambitious goal, the national digital TV initiative might convert as many as 57 million television viewers to digital services that combine interactive television programming with Internet access. > Boosting e-competitiveness Many Middle Eastern countries have invested heavily in e-government and e-education systems to ensure future economic competitiveness, and are turning increasingly towards e-commerce. The success of these programs is restricted by the limited number of Middle Eastern citizens with access to the Internet. While Jordan appears in the top 40 countries of Brown University’s e-government rankings, which measures improvements in electronic government, it doesn’t appear in the EIU e-readiness rankings at all. However, the government has made steady and relatively fast progress with telecommunications deregulation and liberalisation during the past five years. Based upon firm economic principles, Jordan has liberalised step-by-step, but 2005 saw significant progress as the Kingdom opened competition in fixed-line services. This paved the way for the existing 26 telecom operators to offer a variety of rich multi-play services in Jordan and the opportunity to create what could be the most competitive communications market in the Middle East. Public investment The evidence is clear that governments’ aspirations for e-competitiveness, e-government and e-education are linked not only to the availability of the Internet to their peoples, but also to the private sector’s ability to excite consumers with new and useful services. Many countries have invested vast sums during the past five years to bring government services online, providing their citizens with access to e-government. According to Brown University’s (USA) annual global e-government study, by 2004, 21 per cent of governments surveyed worldwide were offering online services in 2004 compared with just 8 per cent in 2001. Yet, in many of these cases, only a small minority of residents are connected and able to access the government services available online. For example, even though China ranks fifth in Brown University’s 2004 e-government survey, its e-government services, the China Internet Network Information Centre, reaches only 7.3 per cent of the population, and it ranks only 54th in the Economist Intelligence Unit’s 2005 e-readiness evaluations. Where regulatory environments foster and promote universal Internet access, market forces will multiply and support national e-connectivity goals. The convergence of telecommunications, IP services and digital content has allowed service providers to create the most appealing and affordable communications services ever experienced by consumers. The next stage in the evolution of the Internet, possible only when universal connectivity comes closer to reality, has a real chance of eliminating the digital divide. Governments and the private sector both share the mission to bridge this divide as soon as possible.