Will the Internet fulfil the developing world’s dream and become the great economic leveller? There is a long way to go but there are encouraging signs that commercial as well as political factors are leading the way in bridging the great digital divide – the gap between those societies with access to communications technology and those without. Jean Hervé Jenn, President, International, Convergys Corporation reviews the evidence from around the world.

Connecting economies across the digital divide

The world’s leading nations rely heavily on broadband technologies to deliver an ever-increasing range of cheaper and faster services so that their economies will remain competitive in an increasingly globalised and fast-paced environment.

Demand for a new generation of converged services, combining media content and communications services, ensures the ubiquitous nature of Internet services delivered by broadband. It is profit potential that drives businesses to innovate, develop and improve the products and services available.

Those economies that fail to harness these commercial forces are in danger of being left on the wrong side of this digital divide.

Where has the progress taken place?

Today, even some of the world’s most remote regions enjoy a degree of connectivity even if it is via community access centres provided for medical or educational use. It is the extent to which telephone services, handsets, personal computers and Internet access are available to large parts of the population that indicates on which side of the digital divide a society falls.

Egypt, as an example, has seen Internet use rise from just 600,000 people in 2001 to more than five million in 2005, thanks to the country’s free Internet initiative. This makes it the largest Internet market in Africa but the penetration rate is still only 7% in a population of 71 million although, thanks to the Technology Access Community Centre programme (TACC), many more people do now have access to the Internet in their community. Broadband access remains low at only about 100,000 subscribers.

Another example is Brazil, where just 14.1% of her 186 million people are connected to the Internet (Internet World Stats), mainly as a result of sparse telecoms infrastructure, a low level of PC ownership, regulatory restrictions and outdated pricing models.

Contrast this with the prediction by Forrester Research that by 2010 41% of all Internet-connected households in Western Europe will be using broadband. The pace of broadband access is increasing among OECD countries, with Europe expected to have 71 million broadband users by 2010.

The digital divide in technological terms

One of the challenges is how best to compare communities with converged multi-play service offerings, e.g., broadband, IP telephony and interactive digital television, with those with nothing more than basic telephony and Internet services.

Taking a lead from the US and Europe, many emerging markets have been privatising mobile, Internet, satellite and wireline services in separate sell-offs and competitive bids. During the 1980s and 1990s this strategy promoted rapid growth in cellular and Internet subscribers both in Western markets and in regions such as the Middle East.

Times have changed. Today the lines dividing different services and technologies are becoming increasingly blurred. Many international communications service providers are creating new multi-play offerings by combining their broadband, cellular and fixed-line telephony services.

In Europe, this has triggered a spate of mergers, acquisitions and the formation of new business partnerships. For example, NTL has acquired Virgin Mobile in the UK, creating a large integrated communications company able to compete with both pay TV and telecom operators by offering quad play, i.e. TV, broadband, fixed line and mobile services. Meanwhile, British Telecom is upgrading its national network so that it can deliver triple-play services, including digital TV.

How have things rolled out?

The danger is that some less advanced countries may get trapped in the middle ground. Having systematically privatised mobile and Internet services before deregulating their wireline sectors, they have effectively created single-service “islands” of communications services. However, their regulatory environments now often prevent them from linking these individual services together to provide multi-play bundles. This too must change if the digital divide is to be narrowed.

The fruits of liberalisation can be seen in Jordan which has moved furthest along the road to deregulation in the Arab world. Having liberalised communications services incrementally, one of the most significant steps occurred in 2005 when the Kingdom’s fixed-line services were opened to competition. This move paved the way for the other 26 telecom operators to offer a rich variety of multi-play services.

Qatar, by contrast, maintains a monopoly in telecommunications, but its national operator, Qtel, has pressed forward with the development of sophisticated converged services. Although broadband penetration is still relatively low (about 30,000 lines or 3.7 per 100 people), Qtel has invested heavily in much of the underlying technology needed to provide new multi-play services. Qtel was also one of the world’s first operators to implement a converged billing system for mobile, telephone, Internet and digital TV services.

South Africa already boasts the African continent’s most advanced network services but it was only recently that the first major steps towards full liberalisation were taken, introducing new licence categories allowing fixed line competition and the use of VoIP for the first time. Competition has already boosted broadband subscriber numbers from 50,000 in February 2005 to about 200,000 currently. The country is now considering a regulatory framework that will permit the telecommunications, broadcast and IT markets to compete openly in a fully converged services market.

Liberalise or change your agenda!

In a world where broadband access, increasingly driven by multi-play services, is central to competitiveness, emerging markets must either put themselves on the fast-track to full liberalisation of their markets or significantly change the agendas of the incumbent operators.

Convergys believes that where regulatory environments foster and promote converged services, market forces will be a powerful driver of “e-competitiveness”.

more info: www.convergys.com