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ITU Strategy and Policy Unit News Update  Policy and Strategy Trends

Issue 6: July - September 2003     English: PDF      Français:  PDF    Español: PDF  

Previous editions

In this edition: 
1.  Broadband - Opening up to the future
2.  Broadband case studies
3. The dark side of the information revolution
4. Call for ICT success stories

1. Broadband — Opening up to the future

At the start of 2003, there were some 62 million “broadband” subscribers worldwide (compared with 1.1 billion fixed-line users) enjoying a range of service speeds from 256 kbit/s to 100 Mbit/s. The term “broadband” is used here to describe high-speed, high-capacity communications for which digital subscriber lines (DSL) and cable modems are currently the most commonly deployed platforms, followed by metro Ethernet, fixed-wireless access, wireless local area networks (WLAN), satellite and other technologies. Current broadband applications include Internet Protocol (IP) telephony, video/audio via broadband, online gaming and telecommuting.

With a few exceptions, the take-up of broadband has been relatively slow. Even where infrastructure is available and the cost affordable, demand for broadband has tended to remain sluggish. It appears that uninitiated consumers do not always perceive the benefits that high-speed data delivery can bring. To help understand this and other pressing issues in the development of broadband and to look at possible solutions, “Promoting broadband” was selected as the topic of a recent ITU workshop.

The vast majority of today’s users are in the developed world but, even among OECD countries, there are large disparities, not only in service availability but also in terms of quality of access and price per Mbit/s. Figure 1 shows the penetration of broadband in the fifteen economies where adoption has been most successful.

Why promote broadband?

• For governments, broadband is seen as crucial infrastructure for achieving socio-economic development goals. For instance, in the Republic of Korea and
  Hong Kong, China, which are currently the leading broadband economies, telecommunication expenditure as a percentage of gross domestic product (GDP) grew up to three times faster in the last ten years than the global average, following the introduction of broadband networks. Broadband can also facilitate the provision of public services, such as e-learning, telemedicine and e-government.
• For telecommunication companies, broadband offers a route to offset the current slowdown in the industry. In the Republic of Korea, the average revenue per user (ARPU) for a broadband user is up to seven times higher than for a narrowband user. Worldwide, the broadband market was estimated to be worth some USD 22 billion in 2002.
• For consumers, broadband makes possible a much wider and richer range of applications, especially when higher-speed services are available. Faster access to richer information and the always-on nature of broadband are an attraction for users. In a user survey in Japan, 70 per cent of users reported that broadband had increased their usage of the Internet. In Iceland, some 40 foreign television channels are broadcast over the broadband network, greatly increasing the choice of services available. In Estonia, the typical connectivity requirement for providing broadband to each school has risen to 100 Mbit/s, and a further rise to 1 Gbit/s is projected, but it is generally difficult to estimate future bandwidth requirements (see Box: Estonia — Tiger, Tiger, Burning Bright).
• For businesses, in particular small and medium-sized enterprises, broadband brings advantages previously only available to larger companies in terms of access to high-speed communications, and the ability to reach a worldwide audience. Broadband also adds flexibility to the workplace through teleworking and remote network access at fast speeds.

Success factors for broadband uptake

Economies that have been successful in promoting broadband are generally those that have tackled both supply and demand issues. These economies are also characterized by a number of common factors, some of which are highlighted here.

Informing the public about broadband — The benefits of broadband may be hard to appreciate until they have been experienced. An element that is common among successful broadband economies is that potential users are well-informed about how broaband can be useful to them personally. Some lessons could be learned from video game console manufacturers, who are very aware of this power of exposure to their products and have invested heavily in demonstration consoles in shops for people to try, hoping a brief experience will convince potential buyers that they need a console at home.

Schools also provide an ideal environment to realize the educational benefits of information access. Many governments have launched initiatives to provide funding for the supply of broadband to schools. In the United Kingdom, for example, the Government announced in November 2002 that it would provide funding for broadband connections to all schools by 2006.

Some service providers have also expanded access to schools by connecting them either for free or at reduced rates. Swisscom, for example, is offering free Internet connections for all Switzerland’s public schools. Under its “Internet for Schools” initiative, the company plans to have all schools connected by 2005.

Competition — Both inter-modal and platform-based competition (cable modem, DSL, fibre and wireless in countries such as Canada and Iceland) and/or inter-operator competition help drive up broadband deployment and take-up.

Innovation — Promotion of innovation in relation to broadband technology and applications by both government and private industry has been a key factor in the success of countries such as Japan with its rapid fibre-to-the-home (FTTH) build-out and its Ubiquitous Network Initiative), Iceland (which offers broadband across power lines as well as via DSL and cable modem) and the Republic of Korea (through the provision of converged networks).

Applications — Development and rollout of pure-play broadband applications, such as online games in the Republic of Korea, has attracted a critical mass of users and demands a high-capacity connection offered by broadband. Broadband offers users the possibility of receiving voice, data and broadcast entertainment (“triple-play”) over the same service.

Pro-competitive regulation — A key regulatory strategy employed by a number of countries is an open access policy, which encourages shared access to networks. Canada is notable in this regard, having unbundled both its copper and cable networks. Low charges for local loop unbundling and collocation are also important.

Price — Affordable, innovative and transparent pricing schemes, such as flat-rate packages, are important to help promote user take-up. In Finland, for instance, a new entrant operator recently bundled a shared DSL connection to a number of subscribers in an apartment complex for USD 6 per month.

Marketing — Aggressive promotion of retail broadband services to consumers and user-friendly packages, which can be installed by the user (“plug and play”) help create awareness. In Hong Kong, China, potential customers are offered competing low-priced DSL services from hawkers at street stalls.

Benchmarking — Timely and reliable statistics in relation to a country’s broadband penetration, coverage and usage are a valuable policy tool to allow governments to measure their progress against other countries and address bottlenecks.

The other side of the picture shows a number of factors that can stifle broadband rollout. These include continued monopolies and low levels of competition, high or metered pricing, the imposition of caps on volume that could be downloaded within a flat rate, lack of competition in the middle mile and State subsidies that produce market distortion. Broadband deployment has also been significantly slower in those economies where there is cross-ownership between telephone and cable television networks as this reduces the potential for inter-modal competition.

Estonia: Tiger, Tiger, Burning Bright Broadband in education: Far-reaching benefits Estonia launched the Tiger Leap National Programme in 1996 in an effort to make a developmental leap by introducing ICTs, into secondary schools. The targets were to achieve the ratio of one personal computer per 20 students, an Internet connection to each school, and basic computer training for all teachers. Today, the programme has accomplished most of its goals. Through Tiger Leap, 75 per cent of all Estonian schools have broadband Internet connections and the remaining schools have a dial-up option. More than 63 per cent of teachers have received training courses, acquired basic computer skills, and have been given guidance in using contemporary ICTs in teaching. Investment in IT education and the promotion of broadband access in Estonian schools has been a significant factor in spreading the use of ICTs more broadly, beyond the boundaries of the education system. The programme has attracted considerable backing from local governments, the private sector and international investors, and has helped to shape Estonia’s progressive reputation. Today, 35 per cent of the Estonian population uses the Internet, 38 per cent uses personal computers, and 18 per cent have their own home computers. Furthermore, 90 per cent of government agencies’ computers are connected to the Internet. These figures place Estonia among the leaders in usage of IT in upper-middle income countries (see left chart). Estonia’s broadband penetration (at 1.70 per cent of the population in September 2002) ranks it among the world leaders. Some six years after the introduction of Tiger Leap, a new generation of Estonians, accustomed to fast information access and equipped with ICT skills, is reaching university level. As these students grow older and continue to demand fast access to information in different areas of their lives, the demand for ICT-related competence can be expected to continue its rapid growth. Note: 2002 Internet users data are estimated figures. Source: International Bureau of Education (www.ibe.unesco.org), 2002. NDP Estonia (www.undp.ee/tigerleap/2.html), 2002.

Government’s role in promoting broadband

Apart from creating the right policy environment, governments can also play an important role in stimulating demand and formulating national, regional and local programmes to support the deployment of broadband, especially in areas of market failure or through universal service policies. Broadband promotion campaigns that seek to highlight applications, content, and benefits of broadband through public service announcements have proved useful in some countries.

• In Singapore, for example, the “e-Celebrations” campaign, developed by the Government through mass media advertising to raise awareness of broadband and information and communication technologies (ICT) in general, has met with success. This campaign forms an integral part of the Singapore ONE initiative, a collaborative effort between the Government and industry to implement a nationwide broadband network and deliver interactive online applications and services to all Singaporeans.
• The “Try Before You Buy” programme in Wales (United Kingdom) is another innovative approach to increasing broadband awareness, where Government-funded ICT business support centres showcase and demonstrate broadband connections and applications to businesses so they can try the technology before they subscribe.
• In the Republic of Korea, the focus of government policy has shifted over time, from building up domestic manufacturing capability in the 1980s, to building broadband backbones in the 1990s, to developing e-government applications and training users in the current decade. Although it is the private sector which has created that country’s broadband success, the government has played an instrumental role in imparting the shared vision of the creative, knowledge-based society.
• In Malaysia, a National Broadband Steering Committee has been formed to develop a national plan. The target is to reach 12.5 million broadband subscribers (compared with just 25 000 in early 2003) by 2007. The action areas identified in the programme are demand development, public sector broadband deployment, supply-side intervention, regulatory change, institutional change and funding.
• In Canada, both federal and provincial governments, as well as local communities, have been active in policies to promote broadband. The federal policy on “Connecting Canadians”, launched in 1998, aims to make Canada the world’s most connected country. A national broadband taskforce reported in November 2001 and proposed a number of schemes designed specially to reach unserved communities and particular user groups that would not expect to be served under a normal free market operation. Canada also has a number of local-level projects and, more recently, a National Pilot Programme entitled “Broadband for Rural and Northern Development” was launched.

Effective regulation

Effective regulation plays a key role in achieving competition in broadband markets, by promoting facilities-based competition, for example. Some common approaches include the lowering of licensing barriers to facilities-based market entry and ensuring reasonable cost access to rights of way. Although a competitive multi-player market is desirable, effective competition can also be achieved where there is strong inter-modal competition between cable modem and DSL operators. In some cases, however, this may require the mandatory divestiture of cable television networks by incumbent telecommunication carriers.

Countries can also promote competition in broadband markets by encouraging the deployment of alternative networks, for example using wireless technologies. Hong Kong Broadband Networks has had considerable success in using fixed-wired access combined with metro Ethernet.

Beyond concentrating on last-mile access, regulators will also have to ensure that other bottlenecks in the supply of broadband services do not emerge. In particular, high leased-line prices may significantly increase the cost of providing broadband access.

Developing country experiences

Developing economies are beginning to provide and promote broadband. Experiences vary based on several factors, including geography and population. Many developing economies fall into a vicious cycle of high prices and low take-up. Users cannot afford the initial prices and thus providers cannot negotiate better rates for higher bandwidth.

Two viable methods for promoting broadband include connecting schools and using community telecentres to give users access to broadband without the vast fixed costs of wiring to homes.

The COMPARTEL programme in Colombia provides a good example of extending access through community telecentres.

Other countries, such as Jordan, have addressed broadband through government initiatives including e-government, e-health and e-learning. Projects include initiatives that focus on training teachers to interact and deliver material via computers and broadband connections.

 2. Broadband case studies 

The ITU commissioned a number of case studies for the workshop on Promoting Broadband which took place from 9 to 11 April 2003 at the ITU headquarters in Geneva. The countries covered include Canada [PDF], Hong Kong, China  [PDF], Iceland [PDF], Japan [PDF] and Republic of Korea [PDF]

3. The dark side of the information revolution

While  the Republic of  Korea 's ICT developments have brought economic and social progress, it is not all a bed of roses : thorns of different shapes and sizes have surfaced. One example is online game addiction, which has become a major problem.  The excessive use of online games is particularly noticeable among teenagers and  young adults , who play at home or at one of the some 25 '000 PC  " bangs "  (online game rooms).  One user died in a PC bang, after three days of continuous games playing, so engrossed in the game that he forgot to eat, drink, or sleep. This illustrates  how  cyberlife can sometimes be  more gripping than real life, and that even when surrounded by other people isolation and vulnerability present real risks.  In recognition of this kind of problem, the Korean Education Research and Information Service (KERIS) has launched a research study into the problem of alienation among young people. In addition, the  Ministry of  Information and Communication (MIC )  has established  a   "Centre of Internet Addiction Prevention and Counselling"  to help combat the problem. The Centre is equipped with group and individual counselling rooms and provides free advice to addicts. It also has plans to focus its programme on the prevention of addiction. Parents and teenagers  alike  will be addressed and  will be able to attend lectures on the topic.

While this example may be an extreme one, the cybercafé and games culture has other less flagrant,  but  potentially  harmful consequences for children. Who knows how healthy it is for young people to spend several hours a day in front of a PC screen ?  The strain put on the eyes, the brain and ears have not yet been fully studied. And the growing propensity for young people to remain sedentary for long periods of time may entail long-term health risks, the repercussions of which may become more apparent in the future. Is cyberculture sowing the seeds of a society in which people may become detached from their psychological and physical well-being, or may become socially dysfunctional?

 The signs are that PC bangs and online games are  indeed  modifying social interaction. As one observer says "[PC bangs are ]...rabbit warrens of high-bandwidth connectivity ...where young adults gather to play games, video-chat, hang out and hook up" .  They allow people to pretend to be someone completely different. Avatars, personalized online personas, allow  internauts to assume new personalities. Although just a game,  how much will real life become a pale shadow of the exciting virtual world? In such cases, the temptation to escape into another world is not helping young people adapt to their real-life circumstances.

Content-related problems are not a uniquely Korean phenomenon. Stories about paedophile or racist sites have appeared in many countries. But a country like Korea, with ubiquitous access, is probably even more vulnerable to harmful sites. A Korean children's portal carried out a survey and found that more and more  youngsters were affected by adult content websites. The survey (which addressed children under 13 years of age) revealed that 28 per cent of the respondents had access to adult websites. Some 53 per cent accidentally came across these sites and 32 per cent accessed them through spam or unsolicited emails. Some 85 per cent of  those youngsters surveyed said that spam was a serious problem. New problems need new solutions,  and government intervention in this field includes the declaration on 'The Principle of Netizen  Ethics', issued in June 2000. The Korean Government has also organized several campaigns on ethical awareness.

The particular situation of the Republic of Korea as a leading and groundbreakingly Internet-connected population means that it has very few countries it can look to for advice.  Conversely, as it is already grappling with  the issue,  other countries that are starting to experiment with broadband access  will be able to learn from Korea's experience and, hopefully, to forestall many of the adverse social effects.

Excerpt from the case study on Republic of Korea 

4. Call for ICT success stories

The work of the International Telecommunication Union (ITU) includes bringing to the attention of policy-makers, governments, industry, academia and the general public issues relating to the broader telecommunication and information technology environment.

As part of the preparations for the World Summit on the Information Society (WSIS), to be held in Geneva in 2003 and in Tunis in 2005[1], ITU’s research and analysis unit, the Strategy and Policy Unit (SPU), has gathered and published “ICT Success Stories” from around the globe. These are illustrations of projects that have successfully deployed information and communication technologies (ICT) in various fields and in innovative ways. The projects form part of endeavours to promote the goals of the United Nations Millennium Declaration.

In order to extend and improve the website, we would like to add additional success stories. To that end,  all ITU Member States and Sector Members, as well as any other interested parties, are invited to submit project descriptions as candidates for inclusion in the website. The description should include:

• Project objectives
• Brief project description
• Project outcomes
• A web reference for more information.

Please send your contributions, or any comments, to: SPUmail@itu.int. We sincerely thank you in advance for your contributions.