Bread and broadband

The tenth edition of the Global Information Technology Report takes deeper looks at the development of broadband in several countries. Governments see the infrastructure investment as key to productivity gains and to better governance.

	Title:	The Global Information Technology Report 2010-2011
	Author:	Soumitra Dutta and Irene Mia
	Pages:	411pages
	Publisher:	INSEAD, World Economic Forum
	Price:	$0

(For the first part of the series, click here)

For professor Soumitra Dutta one of the key developments in the ten years of the GITR history is the ongoing explosion of broadband high-speed Internet access. This year’s edition of the Report provides two case studies from two of the leading actors: the United States and the European Union.

Chapter 2.3 of the GITR focuses on the priorities set by the American FCC (Federal Communications Commission). The comments by Jonathan Baker and Paul de Sa underline how the development of broadband to all US households is a key strategic priority.

A key justification? The Internet is viewed by the FCC as a general purpose technology that can spread through the economy and cause overall productivity boosts. Perhaps part of this emphasis derives from diminishing returns on investments in other areas, such as transport or energy infrastructure.

Another goal for the US government is to help the delivery of government or public sector services, such as those in healthcare, or education or e-government.

What is the role of government in aiding this broadband development? For the FCC in the United States, the impetus is less in terms of investment (in fact the FCC authors never mention a budgetary figure – quite strange for a key investment program…), but more in terms of facilitating the proper deployment of private resources.

More specifically, the four axes mentioned in the chart have to do with the proper management of competition and incentives so that private companies do their part. The one area where the government does play a key front-row role is in allocating spectrum for wireless communications. For the American National Broadband Plan, “… it is essential to make additional spectrum available for wireless broadband.” (Page 39)

And how does Europe fare compared to the United States? In Chapter 2.4 of the GITR, European Commissioner Lucilla Sioli explains some the public sector emphasis for broadband.

Europe is not starting from a position of weakness, since 60% of households and 90% of businesses have broadband access. The European average for households is however lower than the US level, at about 60% vs. 66% for households.

One of the differences in Europe is the reliance on LLU (local loop unbundling), which enables greater competition from suppliers on the “last mile” (i.e. from the last switch to the home or office building).

Even so, the European Union has earmarked over Euros 1.8 billion for about twenty prototype plans, namely in regions such as Bavaria, Catalonia and Finland. The objective is to have at least 50% of European households subscribing with access speeds of at least 100 MB/s. This is particularly important in the age of always-on households with younger users having heavy download appetites.

Another concern for both European and American broadband policymakers is the growing need for mobile broadband. In Europe, Finland leads the race, with a 21.5% penetration rate. Yet since the EU average is still only at 6.1%, there is much room for growth… and therefore requirement for government frameworks.

As countries race to provide ever-better and ever-faster digital services, the competitive advantage of such services will be tested, but no country can afford to fall by the digital wayside.

Published July 2011 by Chris Fodor.
The next instalment will appear on September 7.