Role of Telecom in Socioeconomic Development

1. Role of Telecom in Socioeconomic Development ISOM 591 Global Connections, Chapter 8 March 13, 2000

2. Need for Information: GII • Global Information Infrastructure to link all users to a worldwide network • NII in US • problem: developing world still does not have adequate access to communication systems • wide variance in teledensity (Table 8.2) • information gap between industrialized and developing countries

3. Technology Context • Digital switching technologies • services provided by satellite • increasing use of cellular radio telephone • cellular networks • wireless local loop • VSAT (very small aperture terminals) for direct broadcasting, voice, and data

4. Applications for Developing Regions • Data broadcasting • news service feeds • electronic transactions • banking • travel • business to business transactions • electronic messaging • fax and e-mail to exchange information

5. Applications for Developing Regions • Electronic meetings • audioconferencing, videoconferencing • virtual telephone service • voice mail and messaging services in the switch • distance learning • Web-based courses, televised classes, audio and video conferencing • access to databases over the Internet • virtual library

6. The Role of Information • Social and economic activities • free exchange of information is essential for a democratic society • need knowledgeable voters • research and education • application areas like health care, weather • access to information and knowledge

7. Benefits of Telecommunications • Transport of information overcoming the limitations of distance and time • role in global marketplace • economic development is highly dependent on access to information • groups like OECD and ITU are very active in promoting access to communication in developing countries

8. Benefits of Telecommunications • Economic: investment in telecom contributes to economic growth • efficiency or productivity (ratio of output to inputs) • effectiveness or quality of outputs • equity or distribution of benefits throughout the society

9. Benefits of Telecommunications • quality of life • quality and accessibility of education, health care and other social services • increasing sense of community • training and education, information, and knowledge • create informed citizens

10. Economic Benefits of Telecom and E-commerce • Provide price information • reduce inventory • reduce travel costs • reduce equipment downtime • timely delivery of product to market • decentralization • energy savings

11. Examples from the Developing World • Emergency calls in India, Costa Rica, Egypt, and New Guinea • remote diagnosis for health care workers in developing counties and rural areas • African medical faculty and students now have access to resources like The New England Journal of Medicine

12. Examples from the Developing World • distance education • University of the South Pacific broadcasts to nine Pacific Island nations • University of South Africa • travel savings • no longer need to be physically present to sell goods and services • support of rural industries

13. India in the 90’s: A Case Study • Diverse groups debate liberalization • coalition of international and domestic businesses, supported by foreign governments and international organizations support liberalization and privatization • urban dwellers try to exert pressure via the media • trade unions and politicians lead the opposition • 1991-8 is a period of social and political unrest • restructuring in areas such as banking • attempt to reduce many existing restrictions in areas such as foreign trade

14. India in the 90’s: A Case Study • GNP was between 3.5% and 5% from ‘92 to ‘94, average of 7% between ‘95 and ‘97 • foreign investment was growing • Infrastructure Investment Promotion Board created in July ‘97 to streamline projects in roads, power, telecommunications and industrial development • Subsectors such as the Cellular Operators of India, E-mail and Internet Service Providers began to lobby the government • Waiting lists: 2.2 million in ‘95, 3 million in ‘98, 14.5 million telephone lines in March 1998, teledensity of 1.53, among the lowest in the developing world

15. India in the 90’s: A Case Study • ‘91-92 liberalization of paging, cellular, and equipment manufacturing • ‘94 National Telecommunications Policy allows privatization of telephone service • ‘97 Telecommunications Regulatory Authority of India, an independent regulatory agency created • Rules and high interconnection rates create problems for private companies such as US West and Motorola • Cost of access to Indian telephone network is high and the cost of a dedicated line is as much as $33,000 per year • ISDN was available in 12 cities by 1998

16. India in the 90’s: A Case Study • Liberalization of the value-added market • e-mail and Internet providers complain about high cost of leased lines • major hurdle is inability of providers to develop own networks • government wants to block Internet telephony • Emerging as one of the biggest markets for VSAT for delivering data and voice services to remote areas • way to bypass leased circuits

17. Telecom Planning • Coordination of national economic efforts and telecom agencies • National planners must be informed about the value of telecom to their economy • Resources are needed! • in many cases, foreign investment is required • Educate users (business and residential) about the benefits

18. Conclusions • Telecom is recognized as a vital infrastructure and development priority • PTTs typically were unprepared to meet the demand for telecommunications services from domestic and international users • natural resistance to change • state-led initiatives for restructuring are relatively rare in the history of telecom • influence of coalitions on reform can be substantial