Home India 2009 Fuelling the modern economy

Fuelling the modern economy

by david.nunes
Author's PictureIssue:India 2009
Article no.:12
Topic:Fuelling the modern economy
Author:Ramamurthy Sivakumar
Title:Managing Director, Sales and Marketing, South Asia
PDF size:210KB

About author

Ramamurthy Sivakumar is Intel’s Managing Director for Sales and Marketing in South Asia (India, Sri Lanka, Nepal, Pakistan and Bangladesh). Prior to this, Mr Sivakumar was Worldwide Director, Business Development for the Mobility Group at Intel, which includes Intel’s laptop, cellular handset, WiFi and WiMAX businesses. Previously, Mr Sivakumar served as Assistant Treasurer and Director of Mergers and Acquisitions at Intel and as Director of Intel strategic programs in India. Mr Sivakumar started his career as a software engineer at Intel and later served as a technologist and engineering manager in the Intel Architecture Labs in the USA. He holds a US Patent in network-based audio/video processing using multicasting. Ramamurthy Sivakumar has a Bachelor’s degree in engineering from the Indian Institute of Technology (IIT), Kharagpur and a Master’s degree in Computer Science from New Mexico Tech, at New Mexico in the USA.

Article abstract

Broadband access is a determining factor in a nation’s economic prosperity as the Digital Revolution takes over from the Industrial Revolution. In the ‘knowledge society’ or ‘information economy’, knowledge, not machines and equipment, is both commodity and capital. Many studies have shown a direct correlation between broadband and economic growth. Yet India has less than 400 thousand broadband connections. To span India, to bring broadband to a billion people, wireless networks are needed; fixed networks are too costly and impractical.

Full Article

In the 21st century, the widespread availability of broadband access will be a determining factor in a nation’s economic prosperity as the Digital Revolution picks up where the Industrial Revolution left off. History has shown that the prosperity of nations is rarely the direct result of monetary and fiscal policy of the reigning government, but rather the outcome of strategic economic declarations to invest and innovate for the future made generations before. It was out of the Industrial Revolution, one of the most significant events in history, that the different economic powerhouses in Europe emerged in the late 18th and early 19th centuries. During this era, major changes and investments were made in agriculture, manufacturing, transportation and logistics infrastructure. Out of this emerged a period of economic growth in capitalist economies including the United States and Britain. The cornerstone of success was the ability for countries to gain access to information or ‘know-how’ during that period – whether it was in farming practices, textile manufacturing, or locomotive transportation. Prior to the explosive emergence of the Internet, or information superhighway, the common method for information exchange was getting involved in travelling study tours such as the Japanese Iwakura mission in 1871 that took two years to complete. The information exchanged, however, maintained the momentum of industrialisation and is responsible for making Japan the economic powerhouse it is today. Likewise, the digital revolution is rapidly moving into its next phase, creating the ‘knowledge society’ or ‘information economy’, where knowledge, as opposed to machines and equipment, is both commodity and capital. At a time where a single idea can spur an innovation worth billions of dollars, how quickly that idea is developed and monetised, before the competition beats them to it, broadband Internet access becomes the present-day determinant of today’s successful economies. Thus far, developed nations have forged ahead with heavy investments in this new sector, while many of the developing countries fall short in investing enough to keep them competitive as the 21st century gets underway. The Asia Pacific region contains some of the most diverse, and potentially powerful, emerging markets in the world, including China, India, Indonesia, Pakistan, Philippines, South Korea and Vietnam. Goldman Sachs reported that several of these markets might eclipse the current richest countries by 2050 to become the great economies of the world. These emerging markets have built much of their economic wealth on the agriculture and manufacturing sectors to date, but these industries, alone, may not be enough to sustain their growing populations ten, twenty or 100 years from now. Governments and private enterprises in Asia Pacific would be prudent to prioritise more investment in broadband infrastructure in order to fuel their information economy, and benefit from its significant influence on national productivity, economic growth, international competitiveness and social cohesion. This fundamental reality has not gone without notice amongst Asian leaders. In 1997 and 1998, a decade before our current financial woes, the Asian Economic Crisis forced the region’s leaders to rethink their strategies to steer their countries into the next millennium. This was certainly the context in Malaysia. In 2002, the Malaysian government – realising the importance of the information age -legislated for the further development of broadband by creating the National Broadband Plan with the vision to “enable Malaysia to be economically competitive overseas as broadband becomes an increasingly important tool for business”. Malaysia is not alone. The Australian government has allocated AUD$4.7 billion dollars towards the deployment of the country’s National Broadband Network, mandated to reach 98 per cent of the population. These actions indicate that the future of these economies will be heavily linked to their access to broadband infrastructure. In emerging markets, broadband can also address indirect factors of GDP such as health and education. Broadband access will enable significant advancements in both telemedicine and distance education that is simply not possible now. The Australian government’s research division, CSIRO, developed ECHONET, a mobile broadband telemedicine system built to bring a remote specialist ‘virtually’ to help intensive care units operate without a specialist on site. Technology like this is critical in developing nations where there is a severe shortage of medical specialists and the existing workforce is stretched beyond its means. The prevailing economic drivers of many larger Asia Pacific nations are sectors, such as agriculture, manufacturing and services, where business is geographically dispersed across rural and urban areas and is predominantly conducted in remote locations and inland regions. In such cases, it is not enough that broadband Internet be fast, it must also be mobile so critical information is available at sites where the work is and not just where a wire runs. Fixed broadband installations have limited reach and coverage in rural regions; because of this, there is growing demand for mobile broadband services. For emerging markets, fibre or ADSL broadband networks are impractical; it is too costly to fund wired networks that fully span a country like India to reach a billion people. Next-generation technology such as WiMAX is a more cost-effective solution; WiMAX back-haul offers a quicker, less expensive, way to build out the broadband infrastructure needed to drive an information economy in these countries. To date, WiMAX is the only 4G wireless technology that is commercially available in Asia Pacific with active deployments in both Malaysia (Packet One) and Singapore (QMAX). Broadband and knowledge-based advancements are a powerful catalyst for growth. In fact, there is a direct correlation between broadband and economic growth seen in the ITU’s ‘teledensity’ statistics. Comparison of GDP and broadband statistics support this. India has the second largest population in the world, with over 1.1 billion citizens. One could argue that India is a prime example of the rapid growth and importance of the Knowledge Economy. India’s fastest growing sector and now, by far, its strongest sector is the booming services industry, from which it derives some 52.8 per cent of its GDP. Yet there is a disparity, 60 per cent of the labour force works in agriculture and only 28 per cent in services. It is not unreasonable to surmise from this data that there is potentially a large opportunity cost. There are an estimated 80 million Internet users in India, but only 0.47 per cent of them have access to broadband. Business people, students and government organisations that have been limited in their access to richer information sources and to cost saving technologies such as telecommuting and IP telephony. The lack of broadband connectivity explains in part why India’s per capita GDP is only US$2,600. This is good news for the region as long as the momentum, the growth of broadband, continues. Most Asian leaders recognise the importance of the Knowledge Economy; to date, they have been diligently investing in it. The infrastructure now being built will provide businesses, schoolchildren and the government with access to a worldwide body of knowledge and will build the foundation for tomorrow’s wealth. It is probable that 100 years from now the hub of Internet innovation will come not from Silicon Valley but from the Klang Valley or the shores of the mighty Mekong.

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