|Latin America 2006
|Everything over IP in the developing world
|Jaime Chico Pardo
|Vice Chairman and CEO
|Telmex, Teléfonos de México, S.A. de C.V.
Jaime Chico Pardo is Vice Chairman & CEO of Teléfonos de México, S.A. de C.V., the largest private sector company in Mexico. Prior to joining TELMEX in 1995, he was President and CEO of Grupo Condumex. He was also President and CEO of Euzkadi/General Tire de México and Fimbursa, an investment bank. Mr. Chico is Chairman of Carso Global Telecom and serves on the boards of América Móvil, Grupo Carso, Honeywell International, Inc, Hemispheric Advisory Board (HAB) of the Institute for Connectivity in the Americas (ICA), Mexico City’s Children’s Museum, and Chairs the Americas’ Council of the University of Chicago GSB. Mr Pardo holds a BA in Industrial Engineering from Universidad Iberoamericana and an MBA from the University of Chicago, Graduate School of Business.
In the 20th century, mass media was a driving force in society; this century, the driving force will be the Internet distributing information to people according to their needs. Last century, transportation was the cure; today, relations among people are no longer a matter of transportation, but of communications. Increasing urbanisation has had worrying consequences; people come to cities looking for services that overload the cities’ often marginal infrastructures. Cities now have an ally – communications technologies that can bring services wherever needed.
Globalization, urbanization and communication technologies At the beginning of the 21st century, the speed and range at which societies and economies from all over the world converge has no precedent. This accelerated convergence has come to be known as ‘globalization’ and is made possible by the technological innovation and change during the past century. The big thing in the 20th century was the emergence of ‘mass media’ – newspapers, cinema, radio and television – that created vast and broad audiences all over the world and transformed the way in which people communicated and created a global culture. In this century, we are living the Internet Era, one in which interactive and participatory mass communication is an everyday reality in large parts of the world but mostly, as was the case with mass media, in big, mega cities. The United Nations defines a mega city as a massive urban centre of more than ten million people. In 1950, only New York qualified as a mega city; by the year 2010, there will be 25 mega cities, 19 of them in developing countries including, Latin America and Asia. In addition to these mega cities there will be 19 cities with populations greater than five million, and the percentage of our world’s population living in cities of a million of more has risen from 37 percent in 1970 to 50 percent in the year 2000. Nowadays, the majority of the world’s population lives in cities and by the year 2020 more than two thirds of the world population will be in large cities. Cities are not only the cradle of modern, massive, interactive communication but also the place where communication has been constantly reinvented. Since, for the most part, high-speed broadband networks exist mostly in these cities, when we speak of a globally networked world, it is essentially a global economy made up of very large, interconnected metropolitan regions. It is almost self evident that the future of globalization and the future of development reside in these emerging urban centres around the world. It is also obvious that, in this new world, relations among people are no longer a matter of transportation, as it was in the past century, but a matter of communications. So far, in human history the high value generating services, high paying jobs, and the possibilities for human development have acted as magnets for migration to these increasingly dense urban centres. They are focal points for markets, industry clusters, complex societies and interpersonal networks for resource exchange, collaboration and learning. Today, in these cities, from New York to Mexico City, from Geneva to Lima, and from Paris to Buenos Aires, success and affluence are not related to land holdings, but to the level of knowledge, the capacity to take advantage of new opportunities that provide the greatest possibilities for a nation to develop or remain underdeveloped. Cities are a rich source of innovation. They are also flagrant examples of inequality and pollution, both in the developed and the underdeveloped worlds. While they remain a robust habitat for social entrepreneurs, inventors and service providers, the local needs for balance between economic and sustainable social benefits cannot be ignored if the city is to continue as a pivotal player in a globally networked world. They face the difficult challenges of being the main engines of growth, of balancing economic competitiveness and social equality, of keeping a clean environment and of integrating large numbers of rural and foreign migrants. One of the greatest paradoxes of modern life is that policy makers will not always have to take public services to rural areas, more often than not people will come to the cities looking for those services. It is noteworthy that, in spite of the size of the challenges they face, cities have now a powerful ally – communication technologies. EoIP and development In the 21st century, a debate has emerged around a series of development, urbanization and globalization questions: how far have they progressed? If there has been progress, who has benefited? Are globalization, urbanization and development zero-sum games that will result in millions of prospering winners and billions of impoverished losers, or are they really the key to an overall improvement of the human condition? The popular view is that developed countries and rich cities innovate with ever-increasing speed and, as a result, the five billion people who live in developing countries are left behind. It is true that countries and cities vary hugely in their ability to produce patents and new technology, but it is also true that technology, particularly information technology, is being deployed everywhere. With the costs of information technology falling rapidly, the natural barriers that separate the first from the third world have been falling, too. It is a truism to say that technology makes the rich richer. What is not so obvious is that it can also make the poor richer, not to mention healthier, better fed, longer lived, and better educated – in other words, with everything over IP. There are three fields where technology holds particular promise for the poor. The first is agriculture, where despite the controversies surrounding the science of genetic modification, it is a fact that improved crop yields could feed the entire world in one generation. The second is medicine, where advances in medical research continue unabated. The third is information and communication technology. Information technology – from cellular phones to broadband networks – is spreading faster then anyone expected, and is disseminating knowledge and other useful technologies as well. A number of specialists, regulators and educators are concerned by the infamous ‘digital divide’. Usually thought of in terms of access to computers and the Internet, nowadays the digital divide often has access to broadband networks as the solution, yet Africa as a continent has less bandwidth than the city of Miami. How can the poor and the rural get connected? The fact of the matter is that they are increasingly connecting by themselves. The recent exponential growth of cellular telephony in the developing world is a clear example of this. More will come in the form of high-speed wireless Internet connections that can also, naturally, carry voice. Called WiMAX, this technology promises to provide Internet wirelessly over the kind of wide areas usually associated with mobile phone networks, complementing the broadband services provided by fixed lines both in the rural areas and in the cities. Establishing communication services in Latin America’s 50 biggest cities and thousands of small towns during the past decade was a step forward towards hemispheric coverage. But the next decade will require a lot of additional investment in infrastructure. Some argue that there is no point in giving people Internet connection when they are illiterate and have no drinkable water. They are probably wrong. The usefulness of information technology may have been sometimes exaggerated, but it has already made a mark in the world’s economic environment. It may be true that people in poor countries need food and medicine before they learn to ‘blog’ over the net. Still, information technologies could help them acquire both of these more easily and to transform modern Internet novelties – SMS, blogs, vlogs and podcasts – created mostly for entertainment purposes in the developed world, into useful tools for development and knowledge transfer in poor countries. Communication costs are going down. Any task that can be digitized – from medical diagnosis to job openings in the cities – can now be handled over IP at a distance, which creates all sorts of opportunities for developing countries. Timely information is useful in almost any field and any job. The Internet is the quickest and cheapest way yet devised for disseminating and discussing medical research or educational advances, or for creating virtual and viral markets for any product. On top of that, the Internet is spreading around the whole world faster than the telephone did a century ago. Developing countries, for the first time, are not missing out on this revolution. According to UNDP, the United Nations Development Programme, in 1998 only 12 per cent of Internet users were in non-OECD countries. By 2005, this proportion has almost tripled to 30 per cent. Countries with poor infrastructure can leapfrog to the next wave of technology. When setting up a network they can go straight to broadband and mobile telephones. Some developing countries, like Mexico and Chile, have built better communications infrastructure than many rich countries enjoy. In other words, some developing countries are moving through the same transitions that Europe, the USA and Japan made earlier, only faster. We can creatively use the abundant resources that the Internet puts in our hands. For example, the Internet offers virtually free access to a huge amount of information and expert advice on a wide variety of subjects: health, education, management, best practices, etc. A single Internet connection can be shared by many, connecting the new cities with the rural world, giving ethnic minorities and women access to information, or giving teachers and doctors access to each other and to the world’s top universities, hospitals, libraries, museums and databases. Internet-based counselling services, advice, education, tutoring, and other forms of interaction or discussions forums through email, SMS, or blogs, are yet to be systematically explored as tools for development. As current technologies lower their costs, they will spread. Also, as the Internet helps to keep scientists and practitioners in Latin America, Asia and Africa informed of current developments in their fields, they will start to produce more indigenous scientific and technological breakthroughs. For example, pre-paid telephone and Internet access cards were first created and introduced in Mexico to help low-income customers control their finances. Nowadays you can find them all over the world. Rising to the challenge Globalization, urbanization and development are processes directed by human preferences. The direction they take and the outcomes they generate are not immune to specific intervention if information and experience are used to guide them to ones that are more desirable. What we know so far about the impact of information technology and the Internet suggests there are several steps that can be taken to address many of the world’s problems, and improve the well-being of billions of people. To start with, we should stress that the current comparative advantage of poor countries and cities resides in their abilities to adapt and apply technologies from rich countries, not necessarily to research and develop them. An intelligent and well-managed process of technology transfer is all we need for the time being. However, we should note that neither cities nor communication technologies can drive development by themselves. In fact, many times they are just a consequence of economic growth or the lack of it. Without being naïve about the impact of the Internet in poor countries, we should remember that there is nothing simple or automatic about the process of reducing economic, political, and social gaps. The intelligent and creative use of communication technologies may increase the opportunities for developing countries to narrow the gaps – digital and otherwise – with rich countries. Yet that is only the beginning of an arduous process. Technology is not an instrument that allows countries to avoid all the hard work of investment, consolidating institutions, creating and respecting property laws, ensuring free and democratic forms of government, and improving education and culture. It is clear that to reap the full benefits from the transfer of technology, developing countries need a minimum of economic, institutional and social reforms as well. The challenge facing those of us in decision-making positions is to be forces for change. Eliminating poverty around the world is not just an ideal, but also an achievable goal through the implementation of policies by rich and poor countries that have the improvement of the human condition as their priority.