"Let them eat megabits".

[Dave Farber <dave () farber net>]

[ This is from the New Economy Policy Forum of the Financial Times.  I have 
just been asked to join the group replacing Larry Lessig and have 
accepted  djf]


"Exclusively to FT.com, Lawrence Lessig, Richard Epstein, Eli Noam and 
Thomas Hazlett (debate the regulatory and legal issues generated by - and 
also shaping - the high-tech industries.

The forum runs on a fortnightly cycle, starting with a long article by one 
of the contributors, followed by responses from one or more of the others. "

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Wed, 10 Dec 2003 03:33:27 -0800
From: hudson () usfca edu
Subject: For IP list
To: dave () farber net


Hi Dave: I'm at WSIS in Geneva(are you?) { no not there unfortunately djf]


I had an article published in FT.com today that I thought would interest 
IP'ers. It's in response to Eli Noam's "Let them eat megabits".
 The URL is 
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&cid=1069493486004&p=1020498309075#hudson

Heather Hudson

Professor Heather E. Hudson
Director, Telecommunications Management and Policy Program
School of Business and Management
University of San Francisco
Phone: 415-422-6642; fax: 415-422-2502;
email: hudson () usfca edu

[]

Eli Noam: Let them eat megabits
By Eli Noam
Published: November 26 2003 15:32 | Last Updated: December 9 2003 16:21

In two weeks Geneva will host the World Summit on the Information Society 
(WSIS). Government and business leaders will converge from around the 
globe, and no doubt proclaim the importance of spreading the availability 
of high-speed internet access - "broadband" - to the populations of 
developing countries. Broadband is regarded as necessary to prevent poor 
people falling behind economically and socially. But is that true, and 
should broadband therefore be a priority for developing countries?

Politics and economics are about choices. Of course it is preferable to 
have an internet connection that runs at 1 megabit per second rather than a 
slow dial-up service that might be 100 times slower. But such an upgrade 
costs about $250 of new investment and labour per existing internet 
subscriber. Is this money well spent? At the same time, few people in poor 
countries have phone connectivity of any kind. Two-thirds of the world’s 
population live in countries with fewer than 10 phone connections per 100 
people. It costs about $1,000 to wire up a new user; wireless can bring 
down the cost somewhat. Thus, the money for about three broadband upgrades 
could instead support one basic connection of a new user to a network.

Telecommunications investments have been shown to have large multiplier 
effects. But should broadband or basic connectivity receive priority when 
investment money - whether public or private - is scarce, as it is now with 
the bursting of the telecoms and internet bubbles? Broadband benefits the 
urban professional classes; universal service benefits the rural areas and 
the poor. Faced with the unpalatable choice, and with the high-tech siren 
songs of equipment vendors and network companies, most policymakers will 
simply deny its existence, or defer to technology fixes as overcoming them. 
But avoiding a choice usually means making an imperfect one.

Even in rich countries, the migration to broadband has taken a definite 
historic path. First, basic telecom connectivity for everyone was achieved, 
a process that took a century, until the 1970s. Wireless mobile 
communications followed, and their universality is now in striking 
distance. Narrowband internet started in earnest with the web in the early 
1990s, and has now reached near saturation for those likely to use it. 
Broadband internet began a few years ago and has reached now 6.9 per cent 
of the population in America and 2.3 per cent in the UK. Several countries, 
most notably South Korea, have higher penetrations (21.4 per cent). In 
other words, rich countries first expanded their basic services across 
society, and only then embarked on bursts of upgrades.
[]


If residential broadband were to become a secondary telecom priority for 
poor countries, would they suffer for it? Not really. First, the expanding 
base of basic phone users would also increase the number of narrowband 
internet users. The extra speed of broadband is convenient but not 
essential. There are few things one could not do on narrowband outside its 
use for music and video. Yes, there are important applications, such as 
tele-medicine and distance education. For those, broadband may be justified 
in institutional settings, and they could grow into shared community 
high-speed access points. But that does not mean that broadband is 
essential as a residential service.

Second, the upgrade of the infrastructure to broadband, difficult as it is, 
is simple in comparison with the required improvements in the applications, 
content, and services that would operate on the faster network. Such 
applications are therefore likely to be dominated by providers in rich 
countries, which benefit from economies of scale and the huge drop in 
international communications prices, and which could therefore access the 
prosperous pockets of poor countries more easily. In contrast, domestic 
industries and content would develop better in the less demanding 
narrowband environment, in which they can access a larger number of small 
users whose needs are more familiar to them than to global companies.

The conclusion is therefore that the priority of poor countries should be 
to expand basic network connectivity, both wireline and wireless, through 
public investments and market structures that encourage private investment. 
It should also be to develop a base of narrowband applications and content 
providers that can later compete on the broadband platforms that follow.

It may be comforting to declare that one can do it all, widening service 
well as deepening it. This might be true one day. Until then, universal 
connectivity rather than broadband is the better but more boring strategy 
for development.

The writer is professor of economics and finance at Columbia University and 
director of its Columbia Institute for Tele-Information

...........................................................................................................................................

Heather E. Hudson: ‘Information is the key to all doors…’

My colleague Eli Noam made some seductive arguments under a catchy headline 
about the World Summit on the Information Society being held this week in 
Geneva, but many of his assumptions were wrong. The choices for the 
developing world are not between bits and butter, nor even between voice 
and data.

The headline above quotes a Malian woman who wrote in the logbook of a 
telecentre in Timbuktu: “L’information est la clé de toutes les portes”. 
She was exactly right. The underlying principle of the WSIS is the 
importance of information in development.

A doctor interviewed in Timbuktu before there was internet access noted: 
“Information is the fuel of medicine. Here we have none. Year by year we 
are falling behind.” He was one of the first to learn to send email and 
search the web once the telecentre opened.

Of course, not everyone in developing countries is likely to be able to use 
the internet. Some development pundits have argued that provision of 
text-based services should wait until literacy rates are much higher. Yet 
when this issue was raised by one funding agency, a Ugandan member of 
parliament responded: “My father sent many telegrams in his life. My father 
could not read or write.”

A scribe had written down his father’s messages and read him the replies. 
Similarly, facilitators can help illiterates to communicate and track down 
information using the internet. Unable to get any local help to attack a 
pest destroying their potato crop, farmers in Ecuador turned to just such 
an “infomediary.” She posted their problem on several internet newsgroups 
and within days had advice that saved their crop.

Although resources are always limited, expanding basic telephone service 
(often called POTS for plain old telephone service) and increasing access 
to broadband are not mutually exclusive options. The explosive growth of 
wireless, due to competition-fostered innovation (such as cheaper pricing 
and prepaid phone cards), is largely bridging the POTS gap. There are now 
more wireless than fixed lines in sub-Saharan Africa and most other 
developing regions. For many subscribers in the developing world, their 
cell phone is their first and only phone. Public payphones and wireless 
resale by entrepreneurs such as rural women in Bangladesh and the 
Philippines provide access to those who cannot afford their own phones.

No one is talking about broadband to every hut. But it is possible to 
provide broadband to every settlement, for use in schools or community 
centres such as telecentres, post offices, libraries or cybercafes. The 
emphasis is on community, institutional and organisational access 
(sometimes called “universal access” - which I would define as available, 
affordable and reliable service.) Pricing is, of course, critical. Some 
internet service providers in developing countries must charge very high 
rates because of the exorbitant prices they pay to monopoly operators for 
connectivity. And service quality is also important. Ask rural students 
what it is like to try surfing the Web on one single noisy dial-up line for 
the whole school.

In some areas, broadband may be added through upgrades to existing wireless 
networks (for so-called 2.5G and eventually 3G or third generation 
services). In other regions, broadband may be delivered via technologies 
such as VSATs (small satellite terminals) and WiFi (fixed wireless to cover 
villages or neighbourhoods).

Connectivity and content development are also not mutually exclusive. Many 
development agencies are in fact putting more support into content than 
into infrastructure by aiding preparation of relevant material in local 
languages. This internet content may also be disseminated through other 
media such as local radio stations. If we get the policy right so that the 
telecommunications sector has incentives to meet demand as it is now doing 
for wireless, governments and international organisations should not have 
to put their funds into connectivity.

Delegates at the WSIS come from the Arctic and sub-Arctic as well as from 
developing regions of Africa, the Asia-Pacific and Latin America. There is 
a connection between remote North and developing South. Thousands of rural 
communities in Russia do not yet have telephone service. On the positive 
side, innovative projects in northern Canada and Alaska are using the 
internet for distance education and practical telemedicine for native 
villages. In fact, almost all village schools in Alaska have high-speed 
internet access, thanks to a US Universal Service Fund known as the E-Rate 
that provides subsidised internet access to schools, libraries and rural 
health centres.

To eliminate the barriers of distance in remote and developing regions, 
many important problems remain to be solved. To my mind, some of the more 
interesting issues include:

• Are there lessons from the wireless explosion that show how to tap 
markets for other services, including broadband access in developing countries?

• Can substitutes for email such as SMS (short message service) extend the 
functionality of the wireless network without requiring more bandwidth?

• Can sectoral policies also serve to extend broadband access? For example, 
a national policy that mandates internet access for schools may result in 
the schools becoming “anchor tenants” that can serve as bases to extend the 
internet to other local clients such as small businesses, public services 
and NGOs (nongovernmental organisations) via WiFi or other cost-effective 
wireless technologies.

• Are there lessons from industrialised countries, such as the targeted 
E-Rate subsidy, rural wireless internet service providers (WISPs) and 
public-private partnerships, that are relevant for developing countries?

The real danger is that the WSIS may not address these issues, but turn out 
to be only a talking shop full of lofty rhetoric without specifics, or 
“motherhood and muktuk”, as Arctic villagers might say.

The writer is director of the telecommunications management and policy 
programme at the University of San Francisco, and is currently a Sloan 
Industry Fellow at the Columbia Institute for Tele-Information

...........................................................................................................................................

Taylor Reynolds: Let us all eat megabytes

Professor Eli Noam correctly points out that politics and economics are 
indeed about choices. However, the simple traditional guns and butter 
trade-off, so popular in economics, neglects the complex nature of 
telecommunications, and broadband in particular. The beauty of broadband in 
the developing world is that the installation of traditional phone service 
and broadband is not an either/or decision. Rather, broadband serves as the 
backbone network that can transport voice, data, and video signals - often 
referred to as the "triple play". Broadband offers developing economies the 
chance to build one network that can be used for these three different and 
valuable services and makes efficient use of a country’s scarce resources. 
Contrary to the suggestions of Prof Noam, no economy (developing or 
developed) should be investing in a network that can only be used to 
transport voice. If new lines (or wireless networks) are under 
construction, they should always be capable of handling other high-speed 
traffic as well.

This new telecommunications era is an exciting time in developing economies 
because new technologies have allowed many economies to “leapfrog” over 
their more developed counterparts. This phenomenon was first shown by the 
strong take-up of mobile phones around the world, especially in areas that 
were not as well served by fixed-line telephony. Using mobile phone 
penetration as an example, Hungary (67.60), Estonia (65.02), the Slovak 
Republic (54.36), and Croatia (53.50) all had higher mobile phone 
penetration than the United States (48.81) in 2002. Mobile telephony was 
only the start; broadband could be next.

A new wave of wireless and fibre technologies may allow developing 
economies to inexpensively build new infrastructure that far surpasses the 
early-20th-century copper networks still heavily in use throughout the 
developed world. Just as Britain was slow to phase out gas street lamps, 
operators in many developed economies are unwilling to invest in newer 
technologies as long as there is still some life left in copper. Developing 
economies are not as tied down to an inefficient legacy network and for 
this very reason do not need to, and should not follow the path of 
developed economies. They should make every possible use of fibre and 
wireless technologies when planning their new networks.

One of the most promising technologies for the developing world will be the 
wireless standard WiMAX, which should be able to send huge amounts of data 
(70 Mbit/s - comparable to 1250 dial-up internet connections or 7292 voice 
calls) over a range of 50 kilometers. Projects in some developing 
economies, such as Bhutan, have already made use of slower and shorter 
Wi-Fi wireless connections to connect distant villages with simple 
telephone services. If Wi-Fi connections are already being used to form 
critical telecommunications infrastructure in the developing world, WiMAX’s 
much faster and longer-range connection will provide much better 
connectivity to many more people. Indeed, the combination of WiMAX to the 
village and then Wi-Fi to the users opens the possibility of voice, data, 
and video to regions that have never even had traditional phone services. 
There are few reasons to build a simple phone network when new networks can 
offer voice, data, and video for the same costs or less.

Prof Noam’s claim that broadband benefits the urban professional class and 
universal phone service benefits the poor is incorrect and propagates 
misinformation about the needs of the developing world. Mexico recognizes 
the needs of all its citizens to have access to broadband and is a world 
leader in working to build community access centers throughout the country. 
Mexico’s plan is visionary because in addition to supplying broadband to 
these centers in remote areas, the network becomes the backbone for a new 
local phone network as well.

The timing of the World Summit on the Information Society is opportune 
because the world may be on the brink of another digital divide. However, 
this digital divide can be avoided. Policy makers in the developing world 
have the opportunity to plan for one network that can provide a range of 
ICT access, not just voice, to their populations in one fell swoop. The 
summit will also serve as a forum where policymakers from around the world 
can converge and find innovative solutions to other real-world ICT 
problems. We would submit that constructing a world where everyone has 
access to the vast knowledge resources of the world is not an act of 
generosity but ultimately, a demonstration of common sense. Let us all eat 
megabytes.

The writer is a policy analyst for the International Telecommunication 
Union (United Nations Agency for Telecommunications)
[]

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