Speech from Dr Hamadoun I. Touré, ITU Secretary-General

WSIS Forum 2009 - High-Level Panel on Financial Mechanisms in the Economic Downturn
19 May 2009

We live in extraordinary times. Over the last nine months, we have witnessed the unravelling of the global financial system, a widespread collapse in credit markets and the disappearance of several multinational financial icons that stood as undisputed symbols of Western capitalism.

These difficulties in the financial markets which drive our systems of global trade, commerce and communication have had far-reaching effects - effects which we are only just beginning to understand, in terms of their economic, social and human costs.

Policy-makers and economists have been thrown into disarray, as they scramble to stabilize their economies and restore economic confidence and the flow of funds.

For the developing world, the current global financial and economic crisis is sufficiently grave that it could yet endanger progress on the MDGs and achieving the WSIS goals and targets.
But this financial crisis is not all bad news – far from it, we have seen innovative new approaches and unparalleled economic stimulus packages. On the policy front, new initiatives were taken at the G20 Summit in London last month, where global leaders reaffirmed the G20’s commitment to the developing world in meeting the MDGs. Governments have also pledged to do more for the developing world, including through institutions such as the IMF and the World Bank.

The UN has launched what is perhaps the biggest cross-agency effort in its history to respond to the financial crisis. The UN will host one of its most important Conferences ever in New York next month to coordinate its response to the unprecedented challenges that abound.

The UN Conference on the World Financial and Economic Crisis and its Impact on Development which will take stock of evolving developments, and will, I am convinced, continue to emphasize the importance of strengthened financial regulation and oversight.

At the Chief Executives’ Board meeting in Paris uniting the Heads of UN agencies, we agreed on nine joint initiatives to assist countries and the global community at large to confront the crisis, accelerate recovery and pave the way for a fairer and more sustainable globalization.

I am proud to say that ITU has played an active role in this process in emphasizing the contribution of ICTs to creating jobs, fuelling economic growth and boosting productivity.
But where does this leave the ICT industry, you may ask. We are seeing mixed effects, differentiated according to the sector and region.

Mobile devices have been adversely impacted (with the exception of smartphones), but there are indications that this market bottomed out in Q1 2009, and will see gradual recovery during 2009. However, demand for mobile telephony remains buoyant in large emerging markets, such as Brazil, China, India and Nigeria, which are continuing to see strong growth in mobile.

Fixed broadband Internet subscriber growth has been unaffected in many economies. According to Intel, after some difficulties, the PC/notebook market may have bottomed out, sending positive signals to the whole industry.

ITU has been actively tracking the evolution of the financial crisis and its impact on the ICT industry. We published the first edition of our report on confronting the crisis in February, at the World Mobile Congress in Barcelona.

At the World Telecommunication Policy Forum in Lisbon just three weeks ago, we brought together almost 800 participants from 116 Member States to debate the impact of the financial crisis on the ICT sector.

This strategic dialogue concluded that the financial crisis is certainly challenging many firms and even business models in the ICT sector. But it will also give birth to new technologies, new entrants and new business models, and could revitalize the communication industry as we know it.
The financial crisis has major consequences for the financial mechanisms by which the ICT industry funds the roll-out of infrastructure and new services to meet the needs of people around the world.

Historically, incumbent operators have been state-owned and traditionally funded by government, which engaged in cross-subsidization of less commercially attractive or profitable services, based on the revenues from more commercially viable areas, services or market segments.

Privatization, market liberalization and the rise of mobile have redefined this model of state funding, with private players playing an important role in the deployment of mobile networks around the world. The private sector has proven very effective in rolling out infrastructure and services to over 60% of the world’s population at the end of 2008, according to ITU’s latest statistics.

However, major issues persist for service to more remote, underserved areas. The commercial incentives of the profit-driven companies are not always aligned with social priorities – in fact, in many countries, ITU’s core mission of connecting the unconnected remains an elusive goal.

To this end, many countries have also set up Universal Service Funds to which operators are required to contribute. ITU statistics show that, to date, some sixty-two USFs have been established. These funds aim to invest in remote or poorer neighbourhoods, where commercial operators have fewer incentives to provide services.

More recently, in direct response to the crisis, a number of governments have announced major initiatives to kickstart their economies, with stimulus packages that amount to as much as 6% of GDP (in the case of the United States). And ICT spending can amount to as much as an eighth of the total stimulus plan (in Australia).

These investments represent the recognition by Governments that infrastructure is of vital strategic importance. Further, they reflect the fact that ICTs have a major role to play in generating economic recovery and kickstarting growth. And that ICT industries and infrastructure can be labour-intensive industries that can generate new jobs and help people weather the recession.

ITU is engaged in a number of activities to promote the roll-out of infrastructure in developing countries and Member States seeking assistance. From monitoring and research of the latest trends in infrastructure-sharing, to promoting an enabling environment with regulatory best practice guidelines, to the roll-out of Broadband Wireless Access in a number of African countries, ITU is constantly working to promote the development of affordable and accessible ICT services for all.

The roll-out of new networks will help bridge the digital divide, and will be crucial in delivering affordable, accessible access to broadband Internet services over the coming years. And the cooperation between the public and private sectors in financing these new investments is impressive – particularly in key areas such as infrastructure-sharing.

The financial crisis has made commercial funding more scarce and difficult to access. However, I believe it is also an opportunity – an opportunity to take stock of our priorities and the needs of developing countries, a time to reassess new forms of finance and a chance to introduce new and innovative forms of financing that work in favour of the poorer sections of society.

It has been done – it can be done. The Grameen Foundation has showed us all what life-changing transformations micro-credit and trust in our neighbours can achieve, using ICTs outside of the commercial market system. The work of the Grameen Foundation was honoured by the ITU World Telecommunication and Information Society Day Award to its founder, Professor Muhammad Yunud in 2006, in rightful recognition of his vision and pioneering work.

I hope that this High-Level Panel on Financial Mechanisms and the Economic Downturn here today represents the start of a new dialogue – a new dialogue building on what was achieved at the WSIS. A chance to reassess our priorities. A chance to take stock of what we have learned, but also to debate new ideas.

I look forward to hearing what you have to say, and your views on the changing relationship between the State and the private sector, particularly in relation to the funding and financing of the roll-out of new ICT infrastructure.

I am convinced that our industry will indeed be able to carry the torch forward and to contribute and to lead the world forward out of this crisis.

The world is changing. The ICT industry is changing. And I am here today in the sincere belief that, in a time of crisis, we need to reinforce our existing financial mechanisms and consider fresh approaches. I look forward to hearing your views on how this may best be achieved.

Thank you.