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Global Internet Connectivity:A critical success factor in the
information economy
Dr Tim Kelly,International
Telecommunication Union,Telenor Carrier Venue,
2001
The views expressed in this paper are those of the author and may not necessarily reflect the opinions of the ITU or its membership. Tim Kelly can be contacted at [email protected].
AgendaAgendaConnectivity and reach
Internet and the digital divide Some international comparisons Some common myths “The Internet latecomer” problem
Connectivity and richness Broadband deployment Barriers to broadband deployment
Connectivity and economic opportunity
Source: ITU, adapted from Internet Software Consortium <www.isc.org>.
0.1 0.2 0.4 0.7 1.3 2.7 5.814.4
21.829.7
43.2
72.4
104.0
44%
67%
46%36%
70%
95%
79%
107%
81%93%
100%
135%
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Number of Internet host computers, Number of Internet host computers,
in millions, and annual growth in %in millions, and annual growth in %
0%10%
20%30%
40%50%60%
70%80%
90%100%
Internetusers
Mobile users
Telephone lines
Popul-ation
High income
Upper-mid income
Lower-mid income
Low income
300 million
490 million
912 million 6 billion
82 %69 %
58 %
15 %
Digital divide = Infrastructure divideDigital divide = Infrastructure divideUser distribution, by income group, Jan 2000User distribution, by income group, Jan 2000
Source: ITU World Telecommunication Indicators Database.
Barriers to connectivityBarriers to connectivity
Regulatory barriers 46 countries permit only one ISP A significant minority of countries restrict access to
international IP bandwidth to a single IAP A majority of countries place limitations on use of
international IP bandwidth for voice over IPEconomic barriers
High costs for int’l leased lines in some markets, esp. those without infrastructure competition
For countries with only low levels of IP demand, unit bandwidth costs are higher than for countries with higher levels of demand (economies of scale)
Many countries are not served by international cables (e.g., landlocked countries, small islands)
More connectivity = more ISPs = More connectivity = more ISPs = more connectivitymore connectivity
ISPs and Leased Line Internet connections in countries with more than 1 million inhabitants
R2 = 0.7851
0.01
0.10
1.00
10.00
100.00
0.01 0.10 1.00 10.00 100.00 1000.00
Leased lined connections to the Internet per 1 million inhabitants
ISP
s pe
r 1
mili
on in
habi
tant
s .
Source: OECD, adapted from Netcraft.
Market liberalisation and Market liberalisation and investment brings down pricesinvestment brings down prices
Band-X: Bandwidth Price Index (2Mbit/s). Oct ’98 =100
0
20
40
60
80
100
120
Oct-98 Dec-98 Dec-99 Dec-00
London Sydney
London Hong Kong
Composite World .
Los Angeles Tokyo
New York London
Los Angeles Hong Kong
London Amsterdam
London Frankfurt
London Milan
London Madrid
London Brussels
Composite European
New York Frankfurt
London Paris
Source: Band-X.
Connectivity: Myths and missesConnectivity: Myths and misses
The total bandwidth available in the United States is increasing three-fold every year. Therefore there will soon be universal connectivity.
Some 264 economies have Internet access. Therefore the whole world is connected.
Bandwidth across the Atlantic will soon amount to more than 1 Mbit/s for every person in North America and Europe. Therefore usage will soon be too cheap to meter
Connectivity: Myths and missesConnectivity: Myths and misses
The total bandwidth available in the United States is increasing three-fold every year. Therefore there will soon be universal connectivity.
Some 264 economies have Internet access. Therefore the whole world is connected.
Bandwidth across the Atlantic will soon amount to more than 1 Mbit/s for every person in North America and Europe. Therefore usage will soon be too cheap to meter
WRONG!WRONG!Connectivity is about distribution, not about total quantity
WRONG!WRONG!The vast majority of fibre optic cable is left dark and is made available only when price is right
WRONG!WRONG!The majority of countries have less connectivity than a single ADSL link
Inter-regional Internet backboneInter-regional Internet backbone
357 Mbit/s
19’716 Mbit/s
Asia-Pacific
LatinAmerica &Caribbean
2’638 Mbit/s
127 Mbit/s
Arab States, Africa
468 Mbit/s 171
Mbit/s
Europe
56’241 Mbit/sUSA &Canada
Source: TeleGeography Inc., Global Backbone Database. Data valid for Sept. 2000.
Inequalities in Inter-continental Inequalities in Inter-continental Internet bandwidthInternet bandwidth
Singapore Estimated 950’000 Internet users (Dec 1999) Around 800 Mbit/s international capacity (June 2000) Around 20 kbit/s per user (assuming 1 hour per day)
Egypt Estimated 200’000 users (Dec 1999) Around 26 Mbit/s international capacity (May 2000) Around 3 kbit/s per user (assuming 1 hour per day)
Uganda Estimated 25’000 users (Dec 1999) Around 2 Mbit/s international capacity (Feb 2000) Around 1.9 kbit/s per user (assuming 1 hour per day)
Telecom connectivity and Internet Telecom connectivity and Internet connectivity: connectivity: What’s the difference?What’s the difference?
Telecom world Platform is jointly-
provided circuits (cost-sharing)
Operators typically guarantee end-to-end connectivity
Financial arrangements based on negotiated settlement rates
Cash flows from core to periphery of network
Internet world Platform is leased circuits
(full-circuit paid by connecting operator)
Internet exchange points typically guarantee only efficient routing of traffic
Peering between Tier 1 IXPs; traffic exchange payments from Tier 2 IXPs
Cash flows from periphery to core of network
By 2005, the Internet may be: Available throughout the world A fully commercial undertaking Used primarily for multimedia streaming
The “Internet latecomer” problemThe “Internet latecomer” problem
In the beginning, the Internet was: North American Not-for-profit Used primarily for email & file transfer
Asia-Pacific
LatinAmerica &Caribbean
Arab States, Africa
Europe
USA &Canada
By the mid-1990s, the Internet had: Spread to the OECD countries Begun “privatisation” of the backbone Become primarily a channel for the Web
Two LDC “success stories”Two LDC “success stories”
Nepal 16-fold increase in IP connectivity in 8 months
following liberalisation of VSAT market in 1999 Lowest IP access prices in South Asia BUT, opening up VSAT market has lead to a drastic
fall in incoming telephone traffic and settlements
Uganda Rapid increase in network growth following
introduction of second national operator, MTN Uganda
First country in Africa where mobilephone outnumbered fixed-line telephones
BUT, entire national capacity is less than 2 Mbit/sSource: Internet Diffusion Case Studies at: http://www.itu.int/ti/casestudies
Broadband in Europe, installed Broadband in Europe, installed lines, per 100 inhabs, Dec. 2000lines, per 100 inhabs, Dec. 2000
Source: OECD, ITU.0 0.5 1 1.5 2
Austria
Netherlands
Belgium
Sweden
Denmark
Iceland
Finland
Switzerland
Norway
France
Portugal
Germany
Italy
Spain
UK
DSL
Cable modems
Fibre
Broadband outside Europe, installed Broadband outside Europe, installed lines, per 100 inhabs, Dec. 2000lines, per 100 inhabs, Dec. 2000
Source: OECD, ITU.
0 2 4 6 8 10
Korea (Rep.)
Canada
USA
Japan
Australia
New ZealandDSL
Cable modems
Barriers to broadband Barriers to broadband deploymentdeployment
Technical barriers Technical constraints on DSL technologies and cable
modems on older cable TV networks.
Regulatory barriers Where infrastructure competition is not permitted,
roll-out had been slower and prices higher. Where there is cross-ownership between cable TV
operators and incumbent telcos, roll-out is slower.
Economic barriers High costs for network roll-out = high prices Financial crisis is slowing down deployment Perceived lack of “killer applications”
Connectivity and economic Connectivity and economic opportunityopportunity
Connectivity in the 21st Century will play an equivalent role to trade routes in earlier eras
Trade in information goods will outweigh trade in goods
Connectivity differences between economies are much greater than would be predicted by differences in wealth or market structure:
There is an International IP connectivity divide between developed and developing nations
Disparities in broadband access between developed countries
International digital divide initiatives have focused on using ICTs to extend access to healthcare, education, governance etc
BUT, without connectivity, demand side initiatives are largely irrelevant
ITU Internet Diffusion ITU Internet Diffusion Case StudiesCase Studies
2000 6 studies covering Bolivia,
Egypt, Hungary, Nepal, Singapore, Uganda
2001 Regional focus on ASEAN
Purpose:“To understand the factors that may promote or retard the development of the Internet in different countries”
www.itu.int/ti/casestudies