Report warns of widening broadband divide but sees strong mobile phone growth despite economic crisis

Geneva, 22 October 2009 - Greater efforts are needed to narrow the broadband divide, UNCTAD says in its Information Economy Report 2009: Trends and Outlook in Turbulent Times (1). The rapid spread of information and communication technologies (ICTs) around the world, especially mobile phones, is beating the expectations of most experts. Mobile telecommunications also appear to be weathering the crisis relatively well. But there is a widening gap between the developed and developing worlds in the availability of broadband Internet. A person in a developed country is 8 times more likely to be a broadband user than someone in a developing country.

Digital inequality is shrinking, but gap varies by type of ICT

While fixed telephone subscriptions are now in slight decline, mobile and Internet use continues to expand rapidly in most countries and regions.

Comparing the diffusion of the different ICTs with the distribution of income in the world shows that mobile telephony has become the most equitably distributed ICT. At the end of 2008, there were about 4 billion mobile subscriptions worldwide. In many developed, developing and transition economies, mobile penetration now exceeds 100 subscriptions per 100 inhabitants. The penetration level in developing countries is now eight times higher than what it was at the turn of the century. The least developed countries raised their mobile penetration from 2 per 100 inhabitants in 2003 to 20 in 2008. According to the new UNCTAD report, between 2003 and 2008, the most dynamic economies in terms of increased mobile penetration were Montenegro, Qatar, Bahrain, and the Maldives, a least developed country (LDC) (chart 1).

In the case of Internet use, more than half of the developed world population is now online, compared to only 15% in developing countries. The greatest improvements in Internet penetration since 2003 were achieved in Andorra, Argentina, Latvia, and Colombia (chart 2).

The digital divide is particularly pronounced in the case of broadband. For example, Australia, a country with 21 million inhabitants, has more broadband subscribers than the whole of Africa. Average penetration in developed countries was more than eight times higher than in developing countries. Moreover, a person in a developed country is on average 200 times more likely than someone in a least developed country to enjoy high-speed access to the Internet.

"There is still a long way to go before we can claim to have significantly narrowed the "digital divide" to achieve an information society for all. Wide gaps in ICT infrastructure remain, not least in the case of broadband networks," UN Secretary-General, Ban Ki-moon says in the preface to the report.

The broadband divide is aggravated by smaller bandwidths and higher costs in developing than in developed economies. However, the fastest growing broadband markets are found in large emerging economies. China has already emerged as the world´s single largest broadband market, followed by the United States. During the period 2003-2008, the Nordic countries achieved the highest growth in fixed broadband penetration. The fact that no developing or transition economy reached the top 20 list is a vivid illustration of the widening gap in this area.

How to narrow the broadband divide?

Improved broadband connectivity can help to achieve various economic and social development objectives, and governments play a critical role by setting the terms for broadband roll-out. The UNCTAD report suggests, for example, that operators should be encouraged to share backbone infrastructure to avoid duplicative and fragmented low bandwidth networks. To ensure sufficient supply at reasonable prices, governments also need to ensure that operators are exposed to competition. To achieve more widespread deployment of broadband backbones and access networks in remote and sparsely populated areas, governments can make use of universal access service funds and can promote the establishment of public Internet access points or telecentres.

For international broadband access, countries have to connect with undersea cable projects and, for landlocked countries, build out fibre links to submarine cable landing stations in other countries. One region that has been largely excluded from the mesh of undersea fibre optic cables is sub-Saharan Africa, which has the world´s lowest level of international Internet bandwidth per capita. As of mid 2009, there were only two intra-continental undersea cables to this region: SAT-3 (running up the African west coast) and SEACOM (since July 2009 linking East African countries with Europe and India). Several other initiatives are under way, however.

Mixed impacts of economic crisis

Mobile telecommunications in developing countries stand a good chance of weathering the current economic turbulence. For example, well into 2009, subscriber growth remained strong in the two largest developing-country mobile markets. During the first seven months of 2009, India registered almost 100 million new wireless subscriptions. Mobile devices are increasingly replacing fixed lines for voice communications in developing nations. They are also used for new purposes - such as by small entrepreneurs - making them even more desirable. The demand for mobile telephony in many developing countries is thus likely to undergo further expansion, despite the crisis. The production of IT and ICT-enabled services also appears to have been relatively resilient (see UNCTAD/PRESS/PR/2009/056).

By contrast, the production of various ICT goods and services has been seriously affected by the global recession. The volatile semiconductor industry has been among the worst hit. Revenue growth also turned negative for the largest makers of such IT equipment as computers and consumer electronic devices. The same is true of the top manufacturers of communication equipment. Over the medium to long term, however, companies will continue to upgrade their ICT systems, as this is essential for their competitiveness. If anything, the crisis has made effective corporate use of ICTs, which improve efficiency, even more important.