October 2012 - Teletimes

service exports from 2005 to2009. Even during the country’spolitical upheaval, the numberof ICT companies continued togrow, from about 4,000 in 2010to 4,600 in 2012.4. Enabling competition.Although telecommunicationswas a monopolistic business formost of the 20th century, theindustry has learned the valueof competition since the mid-1980s. Competitive provisionof broadband and softwareinfrastructure fosters innovationand drives adoption, two factorscritical to enabling countriesto progress in their digitizationefforts.In most emerging economies,market liberalization — throughICT license auctions, privatizationof state-owned telecomand media companies, andderegulation of barriers to entry— has been a key mechanismin driving competition. In SaudiArabia, for example, marketliberalization began in the early2000s, as state-owned SaudiTelecom prepared to competeopenly in its home market forthe first time, and to enter othermarkets. This liberalization ledto a 9 percent annual growthrate in digitization between2000 and 2004. The 2005 entryof another phone company, Etisalat,spurred heavy investmentin fixed and mobile broadband,which, in turn, fueled 17 percentannual growth in digitizationbetween 2005 and 2010.In some cases, competition canbackfire. In India, for example,excessive liberalization triggeredaggressive competitionand unsustainable returns forshareholders. To correct such asituation, policymakers shouldencourage consolidation thatwill restore balance to thesector. For example, in severalcountries, when competitioninhibited investment in Internetinfrastructure, policymakers creatednew “natural monopolies”to fill this role: regulated companieslike OpenNet in Singapore,QNBN in Qatar, and NationalBroadband Network in Australia.In cases like these, regulatorsneed to ensure that themonopolistic entity is well regulatedand that there is significantservice-level competition tospur innovation. Singapore, forexample, created a regulatoryframework that effectively gaveOpenNet a monopoly in buildingand operating the country’spassive networks. This frameworkallows regulated returnson investment in infrastructurewhile ensuring competition inservices. Similarly, in the UnitedKingdom, policymakers are encouragingconsolidation of theinfrastructure — as evidencedby the merger of Orange andT-Mobile — while maintaininga competitive environment inservices.5. Stimulating demand.Countries can progress rapidly indigitization by encouraging theadoption of new applicationsby individuals, businesses, andtheir own agencies. One way tostimulate demand is to ensurethat citizens can perform allgovernment-related tasks —such as paying taxes, renewingdrivers’ licenses, and enrollingin school — using broadbandnetworks.Beyond that, demand for ICTservices depends on technologicalliteracy and skilled humancapital. Policymakers can investin digitization by providing trainingprograms and incentivesfor education. They can alsoboost usage by promoting highspeedbroadband services andensuring that these networksare both widely available andaffordable.A number of countries in theadvanced stage of digitizationhave learned how to raise demand.For instance, France hasincreased ICT spending at a yearlyrate of 5 percent since 2003through a number of initiatives.Among these are the creationof the Villes Internet association,which works with localauthorities to develop Internetliteratecitizens; and the ComitéInterministériel pour la Sociétéde l’Information, which wascreated to encourage Internetusage, improve public servicesvia technological innovation,and strengthen the competitivenessof French companies.The Digitization ImperativeFor some policymakers, thestatistics on digitization will bea wake-up call. The metrics willreveal gaps in a country’s capabilities— and ways in whichit is not equipped to competewith other countries. Otherpolicymakers will be pleased tosee that they are relatively wellprepared — but for how long?The results also confirm a feelingthat many policymakersshare: that digitization can catalyzedramatic economic, social,and political improvements.Anecdotal evidence abounds:Water utilities have installedsensors that reduce leakage,saving water and money;healthcare organizations sendtext messages to pregnantwomen with advice on prenatalcare, creating a healthier newgeneration even before it isborn; fleets of delivery trucksuse GPS devices to find shorterroutes, cutting down on theirgreenhouse gas emissions. Butuntil the impact is quantified,nobody quite knows how muchto emphasize digitization, orhow its impact compares to thatof other factors. We hope thisanalysis can help demonstratethe high leverage that can accruefrom investment in digitizationbeyond simple broadbandaccess.In his book The Shield of Achilles:War, Peace and the Courseof History (Knopf, 2002), constitutionalhistorian Philip Bobbittargued that the world was goingthrough a fundamental shiftin the prevailing view of thepurpose of government, fromthe 20th-century nation-state,which derived its legitimacy byguaranteeing the welfare of thenation’s people, to the 21st-century“market state,” which willfocus on expanding opportunitiesfor its citizens.In several countries, when competition inhibitedinvestment in Internet infrastructure, policymakerscreated new “natural monopolies” to fill this role.The embrace of digitizationis, perhaps, an example ofthat shift. Indeed, nowhereare the benefits of the marketstate more evident than in ICT.National governments havelearned that there are limits totheir role as welfare guarantors.They cannot protect theircitizens indefinitely againstthe vicissitudes of the globaleconomy. But by advancingthe cause of digitization, theycan become market makers,building their own capabilities— and those of their citizensand businesses — to raise thelevel of opportunity for theirentire population.48 October 2012www.teletimesinternational.com