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Why connectivity means opportunity

Why connectivity means opportunity
November 9, 2011in Technology2011-11-092013-02-13technologyen
How broadband is driving growth in the developing...

The implementation of broadband is high on the agenda of most developing countries these days because of the astonishing boost to economic and business growth that the technology appears to give. Cath Everett, a regular contributor to the Guardian, ZDNet and Computing Weekly, reports.

Although figures vary depending on who you speak to, the World Bank indicates, for example, that for every 10 percent rise in high-speed network penetration in developing countries with low and middle incomes, gross domestic product rises by 1.38 percent - a jump higher than any other telecommunications service.

game changer
The reason for this, says Stefan Zehle, Chief Executive of telecoms specialist Coleago Consulting, is that broadband connectivity is the twenty first century equivalent of last century's telephone. "If I asked you 'could you work without a phone?,' the answer would probably be 'no,' but that is also becoming true for broadband. It's no longer a nice-to-have. It's now almost a hygiene factor and so, if you want to operate a business, you simply have to have it," Zehle explains.

At its most basic level, the technology helps to create a level playing field by providing efficient communication tools such as email as well as access to information that is often impossible to view with slower links.

"In Africa and to a lesser extent in Asia, you can suffer from lack of speed, which means that some services you simply can't access," says Zehle. "But once you have instant access to information, you're immediately on an equal footing with the rest of the world. So a business in a remote part of Uganda can obtain the same information as one in London or Tokyo, and it's a game changer."

continuing high costs
Another common challenge in many developing countries, however, is that a lack of adequate infrastructure and/or domestic competition means that the price of consistently available broadband can be prohibitive for any but the most well-heeled.

For example, Zehle says, while 1MBbof carrier-grade Internet connectivity would cost businesses in London about €10 per month, $35 per month in Bombay and between $50-60 in the Middle East, in Mauritius, for instance, the same service would be more like $1,000.

But having access to reasonably priced and reliable broadband immediately enables companies to move into the e-commerce arena and start expanding beyond a very local customer base to sell goods and services to both national and international customers.

knowledge-based industry
If the right skill base and international relationships are in place, broadband also enables the creation of knowledge-based industries such as business process or IT outsourcing targeted at offshore and/or nearshore markets.

One example of such activity is taking place in East Africa, which has benefited from the availability of cheap broadband connectivity after a fiber optic cable was laid to Kenya in 2009. U.S.-based non-profit organization Samasource was set up as a bridge between high tech companies in Silicon Valley and the slums and refugee camps in Africa, Asia and the Caribbean.

It trains workers to undertake basic computer tasks such as transcribing books from images into text, which are then printed into Braille. Samasource also operates in conjunction with local partners such as digital outsourcing firms Daproim and Adept in Kenya's capital Nairobi in order to help them create jobs for the disadvantaged.

"Kenya has always been an important commercial hub for east Africa, now it is becoming an important telecom hub," says Dennis Best, Network Engineer, Orange Business Services. "There was significant pent-up demand for broadband-enabled services in both Kenya and adjoining countries. Our customers have been deploying applications such as videoconferencing and voice-over-IP that would previously not have been possible."

boosting productivity
Interestingly, points out Susan Teltscher, Head of Statistics and Market Analyst at the United Nations' International Telecommunication Union (ITU), implementing broadband is useful not only in helping to create jobs, but also in boosting staff productivity.

She explains: "If you introduce these networks, you introduce changes to the way businesses are structured and organized, which tends to make them more efficient. So if you automate customer relationship processes or introduce e-commerce, you change the way that you deal with commercial relations and productivity increases." Another advantage of high-speed networks is their ability to open organizations up to new technology, such as cloud computing.

huge task
The actual implementation of broadband in many developing economies is still a work in progress. While the World Bank is sponsoring the development of 10 fiber optic cable-based digital backbones to span the African continent, for example, the task is huge and is likely to take decades.

But some progress has already been made, particularly in intra-continental routes, says Best. "In the past, nearly all traffic between African countries had to pass through Europe, and that is no longer the case," he explains. "Although much intercontinental traffic still transits through Europe, there are now direct routes between African countries with the establishment of hubs such as Kenya." Direct links between Kenya and Uganda are now possible, for example, and this guarantees better service levels for businesses.

A number of innovative start-ups are emerging to bid to share the large capital costs associated with building such networks, in order to encourage the spread and take-up of broadband services. Bangladeshi-based Fiber@Home, for example, was recently granted a license to build an operator-neutral fiber optic backbone across the country, which is being financed by local investors and is intended to be used by multiple service providers.

challenges remain
Despite these advances, according to the ITU, the availability and adoption of broadband in developing countries is still behind that of developed nations. While penetration based on the number of subscriptions per 100 inhabitants stands at 23.6 percent for fixed line services in the northern hemisphere, it is more like 4.2 percent in the south - and it is centered almost exclusively in urban areas.

There are alternatives for business, in both satellite broadband, particularly VSAT, and mobile broadband. The former was the primary choice for businesses in emerging markets for many years and remains an important network back-up. The latter was non-existent as little as five years ago but is on a steep growth curve in all regions.

As mobile devices continue to become more affordable, pre-paid packages more available and the creation of fiber backbones reliably and cost effectively connecting rural and urban centers to the rest of the world more widespread, the hope is that the opportunities offered by broadband will open up to those with even the lowest incomes.

For more information, please click on one of the links below:

World Bank

ITU Broadband



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