Out of the Labs and Into the Developing World



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Appropriate Internet Technologies for the Developing World



Out of the Labs and Into the Developing World


Using Appropriate Technologies to Promote Truly Global Internet Diffusion*

Geoffrey S. Kirkman**

Center for International Development at

Harvard University ***


March 2001
Abstract: One of the primary barriers to the diffusion of the Internet to the developing world is economic in nature. Mainstream Internet technologies remain too highly priced to make them accessible to the majority of people in developing countries. This paper presents and explores a range of possibly appropriate technologies which can aid local Internet diffusion. These technologies are either being developed in specialized research labs and universities, already used on a small scale within the developing world, or available in retail markets in developed countries where their applicability to the developing world is overlooked. The paper also explores technologies that in the future should aid in Internet diffusion, particularly mobile wireless Internet solutions. The paper concludes that the primary stumbling block to the provision of these technologies to developing countries stems from market failure. Private companies do not perceive the latent demand for the Internet in the developing world, thus technology is not produced with the cost and design constraints of developing nations in mind. There is an important need to create incentives for information technology development geared toward the developing world, as well as increased dialogue and awareness raising to channel market forces toward developing country needs.

Introduction and Some Caveats

This paper attempts to broadly outline some technologies and trends in technological development that may be more appropriate for the developing world than those found in the mainstream. This appropriateness is primarily dealt with in terms of cost, as well as the more taxing physical conditions that can exist in developing countries. There are many important issues that this paper does not cover adequately. In particular, the question of designing technologies around communities, rather than individuals, is one of the most essential cutting edge trends in the development of information and communication technologies for the developing world. Of equal importance also are explorations of technologies that deal with issues of literacy (and illiteracy) and culture that can affect the usability of certain technologies. This paper only touches upon these important issues.

In terms of the specific technologies discussed in this paper, they are by no means meant to be exhaustive. Each of the Internet-enabling technologies presented is meant to indicate the potential for low cost, appropriate technologies in several different areas. Each of the technologies chosen is one that focuses on Internet diffusion at the local level. Long distance networks including national and international backbones, satellite systems, microwave relay networks and other elements which are essential for the delivery of Internet to one’s home or business are mentioned but not treated in depth. Instead, this paper tries to focus on some information and communication technologies (ICTs) that are found closest to the end-user, and on how they can help alleviate the cost constraint that limits Internet use by most individuals in developing countries.
More specifically, this paper contemplates developments in three areas of Internet technologies: local communications networks, software (applications and protocols), and the hardware that make up the interface between the user and the network.
The Diffusion of the Internet

Perhaps the most talked about phenomenon during the past decade has been the Internet. There are few places in the world where the local inhabitants have not heard of the Internet, even if they do not know what it exactly is. By now, there is some Internet connectivity in every country in the world, except in the one or two nations where the last ISP routinely has either gone out of business or been banned by the national government.

The global map of Internet connectivity shows that while there may be Internet points of presence in every nation in the world, when the subnational patterns of Internet diffusion are examined, a very different picture emerges. Particularly in the developing world, the Internet has not penetrated most rural areas, and indeed, within urban areas, can be found primarily among the wealthy and privileged. The patterns of Internet diffusion are following many of the same patterns that have been etched into the global landscape of social and economic development. Internet use can very much be seen to follow lines delineated by income, gender, social standing, political power and race within most communities.

Internet diffusion can also be seen as determined by other factors. The expansion of the Internet into a particular community is directly related to its information infrastructure, skill levels relating to ICTs, telecommunications and ICT policy framework (including taxes, tariffs and cyberlaws), business and political climate, and incorporation of ICTs by business, government and the community-at-large. Each of these determinants by itself may not be enough to ease Internet adoption, but together, they create the necessary conditions for technological diffusion.1
Many of these factors and determinants of Internet penetration can be seen more as barriers to diffusion than facilitators in the context of developing nations. The lack of economic resources, low levels of technical education, poor infrastructure, political instability, stagnant business community and poorly formulated policies that plague much of the developing world not only hinder economic development itself, but also retard the arrival of the Internet.
The value of the Internet
Why does this matter, and why is the Internet so important? Enough would seemingly have been written already about the Internet to obviate the need for one more attempt at describing its virtues. But it seems important, especially in light of the past decade’s hype surrounding all things relating to the Internet (and the current backlash against the dot com phenomenon), to point out that when all the exaggeration and overblown fanfare associated with the Internet are stripped away, we are still left with an extremely powerful, even revolutionary, tool for economic and social development.

Never before has such a flexible, rapid and useful platform for disseminating communication and information on a global basis been so widely available. The Internet has the ability to move large (and small) pieces of information through the global communications networks in ways that have in a very period short time transformed the way that businesses, governments and individual citizens conduct their affairs, see the world, make their money, learn, teach, heal and work.

It is access to information that lies at the heart of most human activity. Information about prices and goods makes markets work. Information about diseases, their prevention, and associated remedies is the key to health care. Information about the world in which we live enables learning to take place. Information allows good governance to occur, and information is at the heart of the things that entertain us. And it is precisely information that most of the developing world lacks. The tremendous distance of developing countries from the major corridors of trade and from the major markets of the world has been a primary driver of the inequality in economic development that exists globally.2 It is increasingly recognized that the impoverishment of information is still a serious handicap for the developing nations to overcome gaps in economic development, and educational and health levels.

There are many ways to distribute information. The written word, the telephone, the fax machine, even word of mouth all have their place in global communications. But none of these methods offers the global reach of the Internet. And none offers the multifunctionality of purpose of the Internet in terms of being able to deliver a wide range of rich content. And unlike some technologies such as radio and television, which “push” information to the user, the Internet is a two-way medium in which users can not only receive information, but also disseminate their own content to the rest of the world.

While the Internet is certainly a most versatile, powerful two-way global communications medium, it remains a tool that is mostly in the hands of people and businesses in the more developed nations. Only about five percent of the world’s population has been online, and of those, about 90 percent live in North America, Europe or Japan.3 While trillions of dollars of capital move around global markets on global communications networks each day, there are billions of people who still live on less than a dollar a day and have yet to make a telephone call, let alone send an email, bank online or surf the Web. It is the premise of this paper that by encouraging the diffusion of the Internet throughout the developing world, the people and organizations in those countries will gain a powerful tool that will allow them to both access and share information, and that this will aid in raising their incomes and in improving their health and education.

Cost as a Barrier to Diffusion
One of the most pressing concerns, and fundamental obstacles to the diffusion of the Internet to the developing world, is the cost of ICTs associated with access. Given the low wage levels that prevail in most developing countries, the prices of hardware, software and of connectivity remain prohibitively expensive for the majority of people and businesses. Infrastructure providers are leery of making the required investments in networks in most communities in the developing world, and most governments lack the financial resources on their own to make the diffusion of the Internet a major priority. The international development community, particularly the multilateral and bilateral donor organizations, have also done little to-date to address the issue of cost as a barrier to Internet diffusion in the developing world.
It is important to remember that in a vacuum, information and communication technologies like the Internet have no real intrinsic value. They are merely the newest wave of tools available to humankind that fit in the same trajectory as pen and paper, smoke signals, and the telegraph. The real excitement surrounding the newest ICTs lies in their power to break down time and space in a way that was not possible before. It is the use of ICTs that has the potential to change the world.

Nevertheless, too often in general discussions about the impact of the Internet upon the developing world, an analysis of “ICTs” never penetrates beyond the general level; the potential of information and communication technologies as powerful tools for development is elaborated as if all ICTs were the same. The truth is, they are not. There is a wide range of information and communication technologies being developed worldwide, with great differences in philosophies of design, and ultimately, in the usefulness and cost of what, if anything, is ultimately produced. In the interest of contrasting low cost technological development with the mainstream, this paper will highlight a number of specific research and development strands relating to the Internet.

Also within the growing debate about the appropriate role of the Internet there is a growing tendency to focus on moving the discussion of ICTs and development “beyond access.” Once again, it is often pointed out that access to the Internet and the global telecommunications network in itself is meaningless – it is how this access is used that is of real import. Does access lead to job creation, higher wages, social, political and economic empowerment? However correct this view is in terms of flagging the issues that lie at the core of the use of ICTs for economic development, it does not resolve the fact that access remains a main bottleneck. Without access, we cannot begin to speak of electronic commerce, telemedicine or e-government. And cost remains a major component of Internet access that has not been adequately addressed in mainstream R&D programs or in the big ICT companies’ production and sales agendas.
The cost of the Internet that a user pays reflects a number of other costs of goods and services that make Internet service provision possible: the correspondent amortized investment costs for the local, regional, national and international deployment of network infrastructure, a portion of the network’s recurring costs, the hardware and software interfaces used to interact with the network, etc. On each of these levels, there are specific technology costs that contribute to the overall cost of the Internet, influenced by the regulatory framework, the intrinsic cost of the technologies themselves, and a number of other factors. In the case of users in the developing world, this total cost is often prohibitive.
Does the Developing World Really Need the Internet?

Many dismiss the argument that it is important for the developing world to have the Internet by pointing out that poor people do not need or even want the Internet if they cannot feed and clothe themselves or take care of their health. Some critics of efforts to take the Internet to developing nations also point out that people there do not have the income to spend on a luxury like the Internet. There are at least two important reasons why these criticisms are missing the point.

First, we are not speaking of a zero sum game. For some of the most rudimentary problems facing developing countries, the Internet could quite effectively ameliorate inefficiencies in markets and breakdowns in communication that contribute to poverty and stagnant development. In an environment with limited resources of course there is always a choice between one thing (food) and another (the Internet) when buying decisions are made. But the Internet is not an end in itself. The whole purpose of having the Internet is to aid in making the pursuit of food, health, income, education and entertainment more efficient and rewarding.
To illustrate this point, it is easy to talk in the abstract about the value of linking local producers to global markets, of connecting rural health clinics to better-equipped hospitals elsewhere, or of giving students greater access to the multitude of learning materials that exist on the World Wide Web. These are all potential impacts of the Internet upon a community in the developing world.

We can also consider a specific, practical example of the value of information and the potential role of the Internet. Inefficiencies in spot labor markets are one driver for high rates of employment and low productivity globally. Typically in many towns and cities around the world, each morning groups of (usually) men gather to look for day jobs. Employers who have a need for workers that day hire from this pool of available labor. The system seems fairly formalized but in reality, there is quite a bit of chance whether or not each prospective worker will get a job on any particular day. If there is a need for five workers in a particular town, yet eight men need employment, three people do not find jobs. Unbeknownst to these men, however, there may be opportunities just around the corner in another square several blocks away, on the other side of town, or in the next village over. Meanwhile, employers whose labor needs are unfulfilled are losing productivity.

How can information or communication technologies play a role in a situation like this?4 Obviously, some medium that can transmit the valuable employment information from one location to others would make this spot labor market work more efficiently, and allocate employment opportunities in a manner which would maximize all participants’ economic interest. It can allow a farmer to have his crops picked in a timely manner, and gives the worker an extra day’s pay.
An obvious criticism arises at this approach -- why does this medium have to be the Internet? It could reasonably be argued that these hypothetical towns do not need the Internet to achieve the goal of aligning their labor markets; a number of less expensive technologies could relay the essential information, including a bicycle or a burro. Perhaps all these villages need is a clever entrepreneur who can see a business opportunity and take advantage of it with whatever communication technologies exist.
But the value of a medium like the Internet is that not only could it provide a platform for making the labor markets in these towns more efficient, but it could also alleviate many or all of the other informational deficits that commonly exist in a community in the developing world. With the Internet, economic, health, education, and governance concerns can all be addressed, at least in part, all through the same information pipeline. So in answer to those who would question the relevance of the Internet in the developing world, this multifunctionality is part of the answer – the Internet can be used to alleviate a wide range of information deficits that currently impair the development process. And unlike more traditional ICTs such as the burro or the bicycle, the Internet can communicate a vast quantity of information in a much richer, more timely way.

Second, many of the people in the developing world do have the income to pay for information, and in fact, are already paying exorbitant prices to both transmit and receive information that is important to them. If the Internet were deployed in the developing world in a cost-effective manner, it could actually bring about cost savings in both time and money to its users. If we consider that there are certain information needs in every community in the world – needs to find out price and market information to carry out economic activities, needs for information about health care, needs to know information about the government, etc. – we can then envision how an isolated community obtains that information.

In much of the developing world, the lack of two-way communication technologies such as telephones means that people must rely upon one-way communication media such as radio, newspapers or television, or where these do not exist, upon physical travel to meet their information needs. Even when media such as the telephone or the radio do exist, in general the lack of information is a pervasive phenomenon across all levels of the economy and society in developing countries. The price that isolated people pay for information comprises the money and time they spend to obtain information, as well as the cost of not having effective and rapid means to obtain that information in a timely way (lost opportunities). This high price is further exacerbated by the low or variable quality of the information accessed.
While much more rigorous work needs to be done to evaluate this aspect of information poverty,5 there have been some efforts to quantify the cost and willingness-to-pay associated with information in developing nations. A 1999 study analyzing the impact of pay phones in Bangladesh showed that even poor Bangladeshis living in remote villages without telephones were already paying the equivalent of US$1.34 in time and money to obtain information that could be gotten through one telephone call.6 The key question in terms of the Internet, in light of this acknowledgement, is whether the Internet can be delivered to the developing world at a cost low enough to match up with the low income levels and willingness-to-pay.

The answer to this question is beyond the scope of this paper; however, in highlighting the technologies and technological trends in the discussion that follows, it is hoped that some insights can be gained into areas where further work could be done to provide appropriate and cost effective Internet solutions to the developing world. What is today the most common method to access the Internet, via a personal computer, is not an affordable option for most of the world. Even the lowest price of a Compaq 800 Mhz. Pentium III as of January 2001, US$699,7 is an unthinkable luxury representing two years of income for the 1 billion people who earn only US$365 a year. But what if an Internet device could be developed that cost only US$30? And what if each email message cost only around US$0.01 to send or receive?

The Competitive Framework as a Price Driver
A major determinant of the price of Internet within a country is the prevailing competitive environment for the provision of ICT products and services. In too many developing nations, neither the existence nor observance of regulatory frameworks promote a competitive telecommunications or ICT business environment, and therefore make access to both telephony and Internet services less affordable. This paper does not address the current condition and impact of competition and regulatory issues in great detail, as this is a subject that has been treated exhaustively elsewhere in the literature. However, because of its great impact on price the topic of regulation merits mention within a discussion of cost as an obstacle to Internet diffusion.
Any basic economics textbook argues that increased competition, when properly regulated, will drive down prices. There is compelling empirical evidence that this holds true in the telecommunications market; there is a strong correlation between the appropriate level of competition, brought about through an effective regulatory regime, and lower prices of both ICT goods and services. This has held true in a range of ICT markets, including leased telephone lines, Internet service provision, and local and long distance telephony. Historically, local telecommunication markets have been one of the most protected from competition and from the pressures to introduce new technology, which explains, in part, the increasing quality and lower prices of telephony services since the liberalization of those markets.8 One of the most studied liberalization processes is that of the United States. The breakup of AT&T in January 1984 led to an average percentage reduction in long distance telephony rates of 40.3 percent.9

The last few decades have seen an explosion in telecommunication privatization throughout the world. Today, there are more private telecommunications operators than ever before. Yet there are still great inroads that need to be made in terms of promoting competition, because privatization has not necessarily translated into liberalization of services. In many countries, state-owned monopolies have been replaced by private ones. And in other countries, collusion between competing companies is not an uncommon occurrence. This of course has an important effect on cost, in that it dampens the potential impact that a liberalization process can have on making telecommunications, and the Internet, more affordable and accessible to citizens.

As can be seen in Table 1, more traditional telecommunications services (local, national long distance and international distance telephony) are still uncompetitive in most countries. Since most Internet access is still delivered over dial-up telephone connections, intuition would suggest that monopolistic and duopolistic arrangements have an adverse impact upon the price of Internet access.
In any case, there is a greater tendency towards competition in important markets such as Internet Service Provision (ISP) and cable television than in the other markets which are major drivers of Internet diffusion (i.e. local telephony, international long distance and leased lines), and in which the majority of regulatory regimes remain monopolies globally. The link between the overall regulatory landscape and Internet pricing is certainly an area in which greater research should be carried out.
Table 1: Global Breakdown of ICT/Telecommunications Regulatory Situation




Countries

Percentages




Monopoly

Duopoly

Competition

Total

Monopoly

Duopoly

Competition

Local Telephony


121

19

44

184

65.76%

10.33%

23.91%

National long distance

134

12

36

182

73.63%

6.59%

19.78%

International long distance

129

16

38

183

70.49%

8.74%

20.77%

Analog cellular

69

11

62

142

48.59%

7.75%

43.66%


Digital Cellular

47

28

79

154

30.52%

18.18%

51.30%

Leased Lines

99

11

57

167

59.28%

6.59%

34.13%

Paging

33

9

105

147

22.45%

6.12%

71.43%

Mobile Satellite Market

32

12

65

109

29.36%

11.01%

59.63%

Fixed Satellite Market


61

14

59

134

45.52%

10.45%

44.03%

Cable TV Market

22

8

83

113

19.47%

7.08%

73.45%

GMPCS Market

10

5

47

62

16.13%

8.06%

75.81%

ISP

13

3

81

97

13.40%

3.09%

83.51%

Source: CID at Harvard University analysis of 2000 ITU data.

While the remainder of this paper focuses on specific technologies, it is important to consider all technologies against the appropriate regulatory backdrops. The affordability and usefulness of most ICTs are directly impacted by the competitive environment. As the process of digital convergence deepens, this is likely to increase competition even more when cable television, local and long-distance telephony, Internet access and even other unforeseen digital services become available using the same basic technological architecture.10 The challenge of how to regulate a rapidly converging environment will continue to be a major challenge globally, and essential in discussions of the affordability of the Internet.

The Cost of Technology
Competition, of course, can only go so far in promoting the provision of affordable technologies. The cost of the technologies themselves is obviously a major driver of Internet use and access.
What does one need to access the Internet? Connection to the Internet through a network, and some sort of hardware and software interface to interact with the Internet. The most common way to access the Internet in the developing world is through a personal computer and a dial-up telephone connection. As was pointed out previously, even the most inexpensive Pentium III computer cost US$699 in January 2001, and globally, the price of monthly Internet Service Provision rarely falls below US$20; obviously the current standard technologies associated with the typical way to access the Internet are out of reach of most people in the developing world.



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