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ENCUENTRO en Mexico 2010Reflection Panel:

TOOLS, TECHNOLOGIES AND SOCIAL GAPS

SOCIAL GAPS AND LAGGING BROADBAND ACCESS

Dimitri Ypsilanti

OECDdimitri.ypsilanti [@] oecd.orgThe views expressed are those of the author and do not

necessarily reflect those of the OECD or its member countries.

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What we know about broadband? Business Social

Anecdotal evidence

• positive effects of broadband

Micro-level firm studies;access to broadband:

• improves productivity

• generates higher turnover

• raises profits

Improves access to

information

Strengthens social links

Lowers transaction costs

Can enhance local content

and culture

Education, health and

other social services

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Existing Evidence

Some existing evidence at the macro level:

– Qiang et. al (2009): Broadband contributes to economic growth

– Czernich et. al (2010): No linear relationship between broadband and growth; A 10% increase in broadband penetration rate raises growth rate by 0.9 – 1.5 percentage points

– Koutroumpis (2009): Critical mass at 30% broadband penetration rate; Impact of broadband on GDP growth stronger for countries above that threshold

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Economic development

Social well being

Information and communication

technologies

(ICTs)

The digital economy: ICTs and their role

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H1N1Pandemic: Schools closed

French Response 620 hours recorded

courses using non-interactive TV channels– 90 days material

Not available on web because of a lack of universal broadband

BUT with BB: Class subjects distributed via peer-to-peer by local teachers & interactive

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What if everyone had broadband? Mexico: 33% of adults (25-64)

have upper secondary or higher educational rates -compared to 70% OECD average

Broadband can have significant positive impacts on education (adult learning, in remote areas, vocational education and interactive material for students, etc.)

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Broadband and Health

Mexico: Infant mortality: 15.7per 1 000 live births - 4.9 OECD average.

Better diagnosis and treatment for 23% of Mexicans who are long distances from skilled specialists & needed for diagnosis & treatment of less common ailments.

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Broadband: the new electricity?Average US Residential Electricity Consumption by Category, kWh/customer

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Planet of the Apps & Social Networks

Total Active Apps -iphone (currently available for download): 276,904

Number of Active Publishers in the US App Store: 56,542

FACEBOOK (2004) 500,000,000

QZONE (2010) 200,000,000

HABBO (2010) 162,000,000

LIVE SPACES (2010) 120,000,000

ORKUT (2004) 100,000,000

VKONTAKTE (2006) 81,500,000

Hi5 ( 2003) 80,000,000

WEEWORLD (2010) 30,000,000

VIADEO (2010) 30,000,000

Source: Wikipedia

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Electricity Transportation Education Health

For OECD an average cost savings between 0.5% and 1.5% for the 4 sectors over10 years resulting directly from a new broadband network platform could justify cost of building a national point-to-point, fibre-to-the-home network.

0.5% – 1.5%

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The main barrier to increasing the adoption of broadband Internet …is cost, not the

availability of access (US GAO)

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Price influences

Lack of effective market competition (which is likely to reflect insufficient regulatory oversight);

Mexico only OECD country without a national Internet interexchange point (which increases cost for ISPs and therefore users)

Insufficient competition negatively impacts on build-out of network depriving high cost areas of broadband

Overall, high prices low rollout imposes cost on economy and society and reduces the propensity for innovative offers.