Charles Kenny

What Drives Broadband Traffic?

A paper written with Zack Gehan and Robert Kenny, forthcoming in Telecommunications Policy. Worldwide there is an ongoing policy and regulatory push to make very high speed broadband available as widely as possible. Underlying the policy interventions to support higher speeds is an implicit assumption that higher speeds will enable different (and socially valuable) use. In this paper we empirically test whether higher speed lines are associated with greater household data usage in the UK. We find that after allowing for demographic factors, higher speed in fact has a very limited relationship to traffic. This suggests that mid-speed broadband is not in fact a constraint on household usage (as measured by traffic), and thus the benefits of policy interventions to support higher speeds remain somewhat speculative.

Automation and AI: Implications for African Development Prospects?

A CGD note.  I'm comparatively optimistic about automation: Africa needs more of it, the rate of automation does not appear to be rapid enough to suggest short-term dislocation, manufacturing jobs have moved rather than gone away and services offers another technology-enhanced route to development.

What Robopocalypse?

Suggesting there is no end of work.  For SAIS Perspectives.

The Internet Debates Most Important to the Poor

In most of the world, net neutrality and ICANN are less important than infrastructure and free speech. For Slate.

Donors Funding Technology: 10 Recommendations

Donors should take the importance of context on board when designing their technology interventions.  Well, duh. For CGD.

When Television Is More Than an “Idiot Box”

Piece for Medium on what the TV might teach the Internet about education --entertainment is probably the way to go.

Why Apple's New Phones Won't Change the World but Nokia's Will

Cheap cellphones are the revolutionary force for change.  In @BW.

The False Promise of Classroom Technology

@BW column on IT in schools.

Can Silicon Valley Save the World

With Justin Sandefur.  Tech & Dev need careful mixing.  In @FP.

Think the Internet Leads to Growth? Think Again

Internet revolution.  Pah.  In @BW.

The Case for Big Brother

Biometrics as a tool for development for FP.  Upset libertarians are fun in the comments.

Overselling Broadband

This essay for CGD critiques the UN Broadband Commision's reports which suggest broadband is vital to meet the Millennium Development Goals.  It isn't.

Technology and USAID: Three Cheers and a Thousand Cautions

Technology and USAID is a CGD essay discussing Raj Shah's efforts to promote technology in development.  It is a great idea, but it carries risks well illustrated by his example of a tablet computer changing farming practices and education in rural West Africa.

No Need for Speed

An FP column with a somewhat critical take on the UN Broadband Commission.

Fiber Cons

Co-authored with my brother Robert, the latest FP column is the short version of our paper arguing that governments shouldn't subsidize fiber rollout.  I'd wanted the title to be 'insoluble fiber,' but there you go.

Superfast: Is It Really Worth a Subsidy?

Suerpfast: Is It Worth A Subsidy? is a working paper written with my brother, Robert Kenny, at Communications Chambers.  Governments around the world are investing multiple billions to support the roll-out of fiber. These subsidies are based on the premise that fiber to the home brings substantial externalities.  However, the evidence that basic broadband has contributed significantly to economic growth is decidedly mixed, and points to low returns for (expensive) superfast upgrades.  This is especially the case given that many of the applications used to emphasize the supposed benefits of fiber to the home can be delivered by basic broadband or by superfast to business and government rather than to homes.  In addition, other high speed broadband infrastructures are often simply ignored when making the case for fiber, and fiber rollout is credited with bringing benefits that would in fact require major systems and social change in other parts of the economy.  Given the benefits of fiber have been considerably overstated, governments should think very hard indeed before supporting fiber rollout to the home.  The paper casued a bit of excitement in Australia, and attracted some critics.  Here is our response.  The paper was published in info  (vol 13, No. 11).  We published a short version in The Journal of the Institute of Telecommunications Professionals (gated, here).

TV Will Save the World

More on TV, this time in Time (with bonus video for those who can stomach it).  The editing process was an exercise in humility --here's the original draft, which is about five times longer.

Revolution in A Box

Revolution in a Box was published in the November issue of Foreign Policy. The article notes the continuing global spread of television sets and an explosion of viewer choice driven by cable, satellite and digital technologies.  It suggests this is a good thing, pointing to evidence that access to competitive television can improve womens' standing in the home, increase girls schooling, reduce fertility rates, lower drug use, improve governance and (possibly) help foster global peace.  I spoke about the piece on NPR, Australia's ABC and on blip TV.  It was picked up by Fast Company and the London Times.  I didn't speak about the article to the UK's Daily Star --but this didn't stop them making up an inteview.   British journalism at its best!

The Next Decade of ICT Development

The Next Decade of ICT Development: Access, Applications, and the Forces of Convergence was co-authored with Mohsen Khalil.  It was published in Information Technology for International Development 4,3. Developing countries are already driving global innovation in technologies and business models related to information and communications. Ongoing technological change may give new life to business and regulatory models adopted and then abandoned in the era of the dot-com boom in developed countries, and developing countries may take the lead in such changes. As networks and applications spread, catalyzing the impact of ICTs for development will become a challenge of the broader environment for their exploitation

ICT: Promises, Opportunities and Dangers for the Rural Future

ICT: Promises, Opportunities and Dangers for the Rural Future is for the Rural Futures conference in Plymouth, UK in March.  The paper briefly reviews the evidence regarding the rapid rollout of rural ICT access worldwide, and the powerful tools that access can unleash.  At the same time, it suggests the limits to the ICT revolution in rural areas especially in poor countries, and points to the limited evidence that ICT will reverse forces of agglomeration favouring the concentration of people and productivity in urban areas.  It concludes by suggesting the marginal role for ICT-based policymaking in regional development strategies.

Baywatch: Bigger than Aid?

Baywatch: Bigger than Aid? is an unpublished short paper.  It ponders the economic impact of the television program Baywatch --an everyday tale of lifesaving folk-- on people in the developing world.  It concludes that, without considerably greater academic attention to the subject, we may never know the coefficient of Baywatch episodes on per capita income growth.

Ending Global Poverty Through Tax Breaks to Bill Gates

Ending Global Poverty Through Tax Breaks to Bill Gates is an unpublished short paper. Many developing countries have enacted or are considering subsidies and tax breaks for the ICT industry.  This paper argues that the economic justification for such favoritism is very weak.  It is based in part on material from Overselling the Web.  A version was published in The Globalist.

ICTs Enterprise and Development

ICTs Enterprise and Development  is a draft chapter for ICT4D edited by Tim Unwin. It was written with Mike Best. There is no doubting that ICTs have had a significant development impact. Micro- and macroeconomic approaches alike suggest that the rollout of ICTs has improved livelihoods and increased the productivity of businesses. At the same time, the ICT industry itself has been a significant source of profitable investment and employment. This is not to suggest that ICTs are a silver bullet for underdevelopment, however. Successful utilization of communications technologies –and perhaps in particular the Internet—takes a broader economic environment that is conducive to their exploitation. Similarly, ICT industries and ICT-enabled businesses need an investment climate that includes an educated workforce with appropriate technical skills, access to entrepreneurial finance and business talent, reliable infrastructure, a robust but reasonable regulatory environment, and so on. Information and Communications Technologies have a role to play in the development process, but they are one player in a large ensemble cast.

I wrote an earlier collaborative paper on the impact of ICTs on development with Richard Heeks. The Economics of ICTs and Global Inequality: Convergence or Divergence for Developing Countries? was published as an IDPM Working Paper.  If debate on ICTs and development has drawn from any discipline, it has tended to be sociology. This paper attempts to broaden the debate by drawing on economic evidence to ask: will ICTs support economic convergence or divergence between developing and industrialised countries?  In an overall sense, technology is fundamental to development. However, ICTs – while having an uncertain impact on growth – are currently a force for global economic divergence rather than convergence. They diffuse more slowly in developing countries than industrialised countries, and they bring fewer benefits and greater costs to developing countries than industrialised countries.  This does not present an argument against adoption of ICTs by developing countries. Rather, it presents an argument for focus on particular applications and investment priorities.

Internet Governance on a Dollar a Day

Internet Governance on a Dollar a Day  is forthcoming in Information Polity.  Globally, around one billion people live on a dollar a day. About 44 percent –nearly half-- of the World’s population lives on less than two dollars a day. This paper examines the importance of "Internet governance" to such people. Arguments over generic top-level domain names might seem of somewhat esoteric interest to the subsistence farmer. Indeed, if Internet governance is defined in the narrow sense of the management of TLDs (Top Level Domains) and root zone files, it is surely of little importance to poor people. However, given the nature both of technology and of poor people’s demands for information and communication, a broader definition of Internet governance does spill over into issues of importance to all, including the world’s poorest. Furthermore, thinking in terms of "information governance" may make more sense in an increasingly converged sector, and issues of information governance are of undoubted importance to poor people. In turn, this suggests priorities for governments attempting to improve the lives of the poor through increasing information flows.

Young People and ICTs in Developing Countries

Young People and ICTs in Developing Countries  is forthcoming in Information Technology for Development.  The paper is co-authored with Naomi Halewood.  Young people are often ‘first adopters’ of new technologies, and this appears to be the case with ICTs.  Evidence from the developing world suggests that young people have widespread access to broadcast technologies and the telephone, but more limited access to the Internet.  And even amongst young people, Internet use lags considerably behind Internet access.  ICTs, and in particular the Internet, provide opportunities for employment, but it should be noted that there are limits to the economic impact of the Internet in developing countries.  Broadcast technologies can be particularly useful tool in both formal and continuing education, the Internet may have a significant role in vocational and further education.  There are potential social costs of ICT use amongst young people, but these can be mitigated.  Youth-specific policy recommendations focus on the greater use of ICTs in education and content control.

Toward Universal Telephone Access

Toward Universal Telephone Access Market progress and progress beyond the market was published in Telecommunications Policy vol. 31. It was written with Rym Keremane.  The last 10 years have seen an explosion in access to telephone services worldwide based on rapid technology advance in increasingly competitive markets. The mobile phone has driven expansion in subscribers and access, especially in the developing world. This paper estimates global mobile footprint coverage based on 2002 data and calculates that as much as 77 percent of the world’s population may live in an area covered by a mobile signal. Nonetheless, many people remain without access to telephony. The paper estimates the maximum likely cost in terms of cross subsidy within the industry and outside financing for achieving universal access using competitively awarded subsidies to private providers in a reformed market. This upper-end cost is estimated at $5.7 billion, with costs that could not be supplied by a reasonable tax on existing providers (and so required from outside the sector) estimated at $1.8 billion.

Caribbean Telecommunications Reform

The OECS and Regional Telecommunications Reform, co-authered with Donnie DeFreitas and Robert Schware, was published in info, Vol. 3, No.3. The Impact of Reform on Telecommunications Prices and Services in the Countries of the OECS, co-authored with Robert Schware and Eliud Williams, is forthcoming in the Journal of Information Technology for Development. Five member countries of the Organization of East Caribbean States (OECS) — St Lucia, Dominica, Grenada, St Vincent and the Grenadines, and St Kitts and Nevis — are undergoing a unique experiment in telecommunications liberalization. The reform has two interesting features. First, the reform effort was dramatically enhanced because of a legal ruling in one of the member countries that monopoly telecommunications provision is unconstitutional; and, second, the islands hope that a large part of the functions of a telecommunications regulator will be carried out at the regional rather than the national level. Reforms began to show results when the current monopoly service provider slashing the prices of international calls.  Prices have fallen considerably further after the introduction of a regulated price cap.

Overselling the Web: Development and the Internet

Overselling the Web? Development and the Internet is being published in September 2006.  The book discusses the role of the Internet in development, and policies designed to increase its impact.  The widespread and rapid adoption of the Internet in the developing world suggests that there are real opportunities presented by the new technology.  At the same time, Overselling the Web suggests that the overall impact may be smaller than commonly thought and that policymakers should be wary of large-scale subsidies, tax breaks and rollout programs.

Here are the preface and Chapter One.  Here's the publisher's blurb, a couple of reviews and a link to the Library Journal's 50 best business books of 2006, where it appears.  And here is a short summary article in ITID based on the book.  Chapter summaries are available in the Overselling the Web category page (look to your left).

Overselling the Web Chapter One: Will the Internet Change the World?

Chapter One of Overselling the Web? looks at some predictions regarding the impact of the Internet on development.  George Gilder chose December 31st, 1999 most suitably to suggest the change might be millenarian:

With any technology that will change the world so radically as the Internet… religious wars are important and inescapable….The twentieth century has been an era when an atheistic belief in the ultimacy of matter and the triviality of man led to the horrors of Nazism, Communism, and an epoch of total war. Now sweeping through the global economy, the overthrow of matter will unleash an undertow of religious belief that will make the new millennium a time of awakening to the oceanic grandeur and goodness of the universe...

Thomas Friedman hasn't gone quite as far, but he, too, has been pretty optimistic:   “We are now in a period of radical change, possibly more sweeping and complex than any period since 1776-1789.”  Technology, he argues, “is shrinking the world from a size medium to a size small.”  At the same time, it “turns out that the real secret of success in the information age is what it always was: fundamentals -- reading, writing and arithmetic, church, synagogue and mosque, the rule of law and good governance.”  Indeed, these basics have got even more important.  “Just when the developing world is coming to really grasp that it has no choice but to get itself ready to climb aboard this train… the train is going to get faster -- not slower -- as the developing world moves toward Internet-based commerce, communication and learning systems. What's worse, no one can slow the train down, because the world economy today is just like that Internet: everybody is connected but nobody is in charge.”

The potential of the Internet as a force for development was the focus of a G-8 meeting as well as a UN Summit (in two parts).  It has catalyzed aid programs and any number of "e-readiness assessments."  All of this activity is based on what might be termed the "Okinawa Consensus":

The Internet and related technologies present a significant opportunity for developing countries to improve their growth prospects.  Indeed, the Internet may be a ‘leapfrog’ technology –one that creates an opportunity for developing countries to catch up economically with the industrial world.  The technology is a powerful tool to improve government service delivery, education, and income-earning opportunities even for the world’s poorest people.  Given that, poor country governments (in partnership with the private sector and with the help of donors) need to dedicate significant resources to expanding the use of the Internet, especially in government and education and especially to reach the poor.  There is also a role to promote Internet industries through technology parks, and Internet use through public access programs such as putting computers in libraries and building stand-alone Internet access points. 

Overselling the Web? is about the policies suggested, the rationale behind them, and which ones might make sense.   

Overselling the Web Chapter Two: The Link Between Technology and Growth

Chapter Two of Overselling the Web? discusses the role of technology in growth.  It begins by defining technology in economic terms.  Technology is everything that isn't capital and labor.  As such, it covers new inventions such as the steam engine or the transistor, but also includes ‘business technology’ (management techniques and systems) ‘political technology’ (forms of government and institutions) and ‘social technology’ (modes of human interaction). 

Given such a broad definition, it is perhaps unsurprising that technology is the key to economic growth.  But that, in turn, means that rich countries must have more technology than poor countries and that technology is hard to move around.  One reason for this might be that the nature of institutions is key to determining technology adoption:

Jared Diamond, in Guns, Germs and Steel, points out that the history of invention suggests that the use, if any, to which a new technology is put does indeed depend very much on the nature of a society into which it emerges.  Ancient native Mexicans never used the wheel for anything but toys because they had no suitable animals to draw carts, the Japanese continue to use the (cumbersome) kanji in addition to the (far simpler) kana alphabet because of prestige, QWERTY dominates global keyboards because everyone (bar this author) has already learned how to type on them.  The ‘nature of a society’, in economic terms, is in fact a set of technologies itself.  How great an impact an impact a technology has, then, might depend crucially on what technology is already there.

This suggests that the broader environment is likely to be a key determinant of the impact of the Internet on economic growth in developing countries, a conclusion strongly supported by later chapters.

Overselling the Web Chapter Three: ICT in the Industrialized World

Chapter Three of Overselling the Web? looks at the impact of ICTs in wealthy countries, with a focus on the US.  It opens with a discussion of the evidence regarding the total factor productivity (TFP) impact of ICTs.  ICT using sectors have seen considerable investments in computing and communications --they accounted for as much as 25 percent of total investment by the end of the 1990s.  This investment produced solid returns.  At the same time, ICT investment did not produce especially high returns of the type that would show up in TFP statistics.  The only sector to see particularly dramatic TFP growth was the ICT producing sector.  And this was in large part connected to a new way of calculating output in the sector based on 'hedonic measures.'  These measures adjusted industry output statistics to account for the rapid increase in quality for price in the sector.  Such measures assume that if a computer had twice the power, it was worth twice as much even if it sells for the same price.  That is a questionable assumption, and the chapter demonstrates why with the example of word processing:

        In 1964, IBM brought out the MT/ST (Magnetic Tape/Selectric Typewriter) which allowed entered material to be edited without being typed onto paper, and provided electronic storage and replay, correction, and multiple re-printing… By the mid-1980s, the standard word processor already featured justification, alignment, insertion/overstrike, search and replace, copy/cutting, pagination, headers and footers, footnoting, table of contents and index generation, form letter merging and automatic spell check.  Progress did not stop there, however…   In 1995, Microsoft introduced what was already the eighth version of its world-processing software, Word 95. It had considerably higher requirements than its forebears.  A 386 processor, six megabytes of RAM, 8 megabytes of hard drive and a 3.5 inch disk drive.  But for this extra capacity, users were given a range of new features including an ‘answer wizard’ help system, auto-formatting and designer templates. 

        It should be noted that a study of 16 people using one version of this software found that of 642 commands available on the program, just 20 accounted for 90 percent of use.  The average person used just 57 commands in six months, and all of the users together used only 152 commands in eighteen months –or less than one quarter of all those available.

        Nonetheless, this did not stop Microsoft issuing new versions with more commands.  Within two years, the company had issued Word 97 –it required a faster processor (a 486, with nearly 1,000,000 transistors on the chip), more memory (eight megabytes), a larger hard drive (20 megabytes) and a CD-ROM.  In return, users now had access to a letter wizard with layouts and styles, 3-D effects and animated text, and the animated smiling paper-clip office assistant. 

        Word 2000 came next.  Again, system requirements increased –a Pentium 75 processor, 20 megabytes of memory, 147 megabytes of hard drive.  But users now had access to WYSIWYG (‘what you see is what you get’) font menus and improved hyper-link functions.  This was also the version that replaced the animated paper clip office assistant with an animated Einstein office assistant.

        The next version –Word 2002 (or Word 11.0) required a Pentium 133, 32 megabytes of memory and 375 megabytes on the hard drive.  For which users were rewarded with content-sensitive smart keys, faster organization of mass-mailings (for which we can all be grateful), “a new auto-correct smart tag” that “lets you control how Word corrects text” –presumably allowing you to un-correct all of the mis-auto-corrected text from the Word 2000 version— and an auto save function that activates when the excessively baroque program crashes the computer.   

Since then, we have had Word 2003, and Word 2007 is just around the corner.  The latest version will use 42 times more RAM and 250 times more disk-space than Word 95.  Assuming that the retail price of the computer on which Word 2007 runs is similar to Word 95, it might be arguable that the 'real' value of the computer is 250 times larger because it can run software with auto-correct smart tags and other unused features.  Indeed, the excessively baroque nature of the programs that it runs might actually have reduced its value to the average user.

Worse, Word is in fact part of a 'baroque network.'  The value of the program is in large part attached to the fact that everyone uses it.  The utility of my word-processing software is considerably reduced if I cannot share files with collaborators.  And if they have Word 2010 while I have Word Jurassic, I will not be able to read their files.  Even if I am happy with the dancing paper clip mis-auto-correcting my text, if my collaborators will settle for nothing less than the dancing Einstein, I had better upgrade.  This might be a particularly significant drain on the productivity of ICT investments in the developing world, where use of advanced applications requiring significant computing power is rare.   But, along with the high failure rates associated with IT projects, the impact of baroque networks may help to account for no-more-than-normal returns to ICT investment in rich countries as well.

Looking at the impact of Internet use in particular, it appears that wholesale e-commerce enabled by the Internet is only a small improvement over the much older technology of Electronic Data Interchange, while retail e-commerce is not a significant improvement over off-line purchasing.  This might help to explain why it is difficult to pick up any impact of e-commerce on macroeconomic indicators.  Meanwhile, the Internet can be a powerful force for productivity at work, but it is also a powerful tool for wasting time.  Internet use at home and at work looks very similar (eBay is the fifth most popular site at home and sixth at work, for example), and this suggests a lot about the major uses of the web at work (at one point in 2005, the top three search terms were "sex", "porn" and "Paris Hilton").  Perhaps 172 million hours a week are wasted in recreational surfing at work in the US.

What does this mean for developing countries?  If the economic impact of the Internet and ICTs more broadly has been muted in the US, this is likely to be even more the case in countries with far lower usage rates.  It appears that wealthy areas with skilled workforces and strong institutions are garnering most of the benefits from new ICT technologies to date.  Overall, rich country evidence is not reassuring for those hoping for an ICT-enabled economic revolution in the developing World.

Overselling the Web Chapter Four: ICT in the Developing World

Chapter Four of Overselling the Web? reports on the rapidly shrinking digital divide.  Already, access in terms of Internet use per dollar of GDP is higher in the developing than the developed world.  Business use in particular is reaching global ubiquity --even in Kenya, 78 percent of firms use email. This is a strong sign of the significant utility of the new technology to business in the developing world. A gap remains, however, in the use of advanced applications --e-commerce, for example.  Some developing country firms are making good money through e-commerce applications.  Most, however, limit Internet use to email, seeing little benefit in a more aggressive Internet strategy.  The most significant problem isn't infrastructure but the broader climate for exploiting advanced applications, well illustrated by Mike Dertouzos' experience in Nepal:

...a few of us techies got together with a colleague from Nepal, fully expecting to boost his nation's economy by 20 percent through clever use of the information marketplace. Unfortunately, we quickly found out that even if we got the communications, hardware, software and training for free, we would still fall short of our goal: Only 27 percent of the Nepalese are literate. And of these, only a small fraction speak English. When we asked what services that smaller group could offer, we hit a brick wall. Many are not skilled, and those who are are already busy running their nation's businesses. Maybe we were too ambitious when we envisioned a future workforce in Nepal selling office services to New York and London via the Web. What if we focused instead on selling Nepal's famous crafts, like custom-made rugs, on the Web? That got us into all sorts of other concerns about establishing trust among distant buyers and distributing the goods. The potential of the modern information age seemed overshadowed at every turn by the ancient forces that separate the rich from the poor.

These broader concerns raise the possibility that the Internet could be a force for economic divergence.  Developing countries are in a weaker position to garner returns from advanced Internet use than rich countries.  This problem is exacerbated by the spread of baroque networks discussed in Chapter Three.  The need to preserve their computers' capacities to network with developed country client and supplier IT systems requires developing country firms to update computer capital stocks even though they do not themselves need the additional computing power.  Developing country firms are forced into investment decisions which will garner lower returns in poor countries than in rich because of a broader economic environment.

On the plus side, the spread of the Internet may create forces for covergence through the online equivalents of the Spanish Prisoner scam (Mr. Oluwa's strictly confidential email regarding funds hidden by former president Abacha).  In 2004, such emails raised a third of a million or more from US victims alone.  And overall, it is likely that the scale of convergence or divergence produced by the technology of the Internet will be comparatively small either way, with a total economic impact of the Internet estimated at between one to ten percent of developing country GDP, or about 0.1 to 1 percent of the gap between Sudanese and US incomes, for example.

Overselling the Web Chapter Five: Experiments with E-Government

Countries can generate significant returns from incorporating ICTs into government reform programs.  Singapore's government estimates that every dollar it has spent on ICTs has generated $2.70 in returns.  But it isn't easy to do, and for every success there are examples of expensive disappointment.  Richard Heeks suggests that failure rates for IT projects in developing countries may be as high as 80 percent.  Introducing e-government without corresponding institutional reform seems to be a leading cause of breakdown.

E-government applications which involve direct interaction with citizens or widespread access may be particularly ill-suited to success given the broader environment in developing countries.  Take education programs.  Computer labs in developing countries carry annual costs of around $78-$104 per student at the level of one computer per twenty students.   Compare that to annual discretionary budgets (what is left over after paying for salaries, needed to cover items such as chalk, books and buildings) of $5 per student per year for primary schools in low income countries.  Beyond expense, returns don't appear to be dramatic enough to justify diverting resources from alternate, more suitable interventions. 

Indeed, public Internet access programs for kids in the developing World like the 'Hole in the Wall' in India get plenty of media attention, what is less clear is that such programs generate significant returns in terms of educational outcomes.  As one parent of a child using the hole in the wall kiosk complained:

My son used to be doing very well in school, he used to concentrate on his homework, but now he spends all of his free time playing computer games at the kiosk and his schoolwork is suffering... 

Adults, meanwhile, often don't see the need to use the Internet at all --in contrast to other ICTs.  There are a number of rural areas in poor developing countries that are under the mobile footprint or have a public phone box and are also near public Internet access points.  A survey of three such areas in Gujarat, Mozambique and Tanzania found that seventy percent of people had used the telephone at least five times a year.  In contrast, and in spite of the availability of Internet facilities in local towns, less that two percent of people had ever used them.  This suggests perhaps questionable returns to public subsidy or provision of Internet access points in such communities.  The big problem isn't access, it is finding useful things to do on line in the face of educational, language, financial and institutional barriers.

Overselling the Web Chapter Six: Sustainable Policies for E-Development

Chapter Six of Overselling the Web? opens with an analysis of the technological divide separating India from the US:

Already, there is more than a seventy-fold difference in access rates between US and Indian households. That gap is far larger than the income divide between the two countries.  Worse, the divide is linked to productivity, suggesting this differential access will promote ever-widening divergence in income.  The divide I am talking about is, of course, the air conditioner divide. 

Policies towards the Internet need to be designed with the recognition that it isn't the only technology where access is significantly lower in developing countries.  Furthermore, and unlike some other technologies vital to development, ICT provision is an area where private, competitive operators have sparked an ongoing revolution in access.  One of the best policies governments can follow if they wish to overcome the 'digital divide' is to get out of the way of the market.  There may remain a government role to extend telecoms infrastructure access to remote communities.  Sometimes, there may also be a role for support to pilot projects evaluating new approaches to Internet access, but such approaches need to incorporate innovation, sustainability and replicability as well as intensive monitoring and evaluation if they are not to be white elephants.

Policy makers also need to recognize that the enabling environment to attract ICT industries or the advanced ICT use extends far beyond sector-specific policies:

Malaysia’s multimedia supercorridor is a particularly powerful case study here.  The $10 billion-plus investment by the government was matched by just $475 million of private investment and 7,300 jobs (that works out at more than $1 million per job).  Reasons that companies cited for not moving to the corridor included concerns about government monitoring of Internet traffic, capital controls, red tape, slow visa approval, weak intellectual property rights and the absence of an appropriate skills base.

Subsidies and tax breaks for ICT industries are common the world over.  The justification for such incentives based on 'cluster economies' is weak.  This is particularly the case in developing countries, where it is likely that foreign consumers will be the biggest beneficiaries of any TFP gains from the ICT industry.  Competition based on the size of subsidy paid will only reduce economic returns.  And subsidies won't work at all if the broader environment is unattractive to firms.

Overselling the Web Chapter Seven: Confronting the Costs

Chapter Seven of Overselling the Web? notes the long tradition of linking technological advance to dramatic social change --stretching back to the Communist Manifesto which suggested that railways were catalysts to revolution.  And it is hard to argue with the fact there have been significant social changes as a result of the Internet.  But you only have to read Mike Daisey's description of working at Amazon.com to realize they aren't all good:

On weekends I loved Amazon and I would speak at great and windy length …’God, I love my company, I love working, it’s so great, we’re making history’… But when I came into work I flipped –while there I hated the place, hated the phone and the email and the endless tracking... 

Similarly, there are arguments on both sides regarding the impact of the Internet on political advance.  Perhaps the Internet will spawn a technological dystopia rather than universal liberalism. 

Regardless, these arguments largely apply to rich countries, where intensive Internet use is ubiquitous.  For good or ill, most people in poor countries are some distance from hours in front of the interactive telescreen.  For poor countries it is likely that the most significant impact of the Internet will be economic.  And we have seen that even this impact is likely to be comparatively muted.  There are important roles for the Internet in developing countries, both in the private and public sector, and some applications will have considerable rates of return, but the enabling environment is not such as to make it a revolutionary technology in either a social or economic sense.  The book concludes by quoting Bill Gates (wearing his philanthropy hat):

I am suggesting that if somebody is interested in equity that you wouldn't spend more than 20 percent of your time talking about access to computers, that you'd get back to literacy and health and things like that. So the balance that makes sense is that more money should be spent on malaria...   

Questioning the Monopoly-Supported Postal USO

Questioning the Monopoly-Supported Postal USO in Developing Countries was published in M.A. Crew and P.R. Kleindorfer (eds.), Progress toward Liberalization of the Postal and Delivery Sector (Springer, 2005).  The monopoly-supported universal service obligation (USO) is usually defended on the grounds that the monopoly allows for cross-subsidy in letter services that in turn allows universal access to a service of great importance to all. This paper argues that letter delivery (as opposed to other services that may be provided by post offices) is not in universal demand in poor countries, that the size of the market in developing countries is such that USOs could not be met under the monopoly model, and that the monopoly carries heavy costs for sector development and consumer welfare. It proposes in the place of the postal USO a competitive approach involving universal access to a range of services that poor people have a need to access.

The chapter is a revised version of papers in this volume, also issued as a World Bank/AEI-Brookings working paper.  The conclusions of the paper have been challenged by economists at the Universal Postal Union.

A Short Review of Information and Communication Technologies and Basic Education in LDCs

A Short Review of Information and Communication Technologies and Basic Education in LDCs: What is Useful, What is Sustainable? was co-authored with Jeremy Grace and published in the International Journal of Educational Development 23 (2003). Information and communication technologies such as radio and television have long been used in education. The advent of the technology of the Internet has created pressure for Internet access in primary and secondary schools across the world. This paper reviews some of the available evidence on the impact and cost of such technologies in developing countries. It concludes that while there is strong evidence for the efficacy and efficiency of interactive radio instruction, the evidence on the impact of computer-supported education remains mixed, and costs are prohibitive for many LDCs (less developed countries).

W(h)ither the Digital Divide?

W(h)ither the Digital Divide?, written with Carsten Fink, was published in info 5,6, in 2003. The "widening digital divide" has the status of fact in most discussions of the global distribution of information and communications technologies (ICTs), and that this divide is a problem is widely accepted. This paper challenges both assumptions. First, looking at various measures of the digital divide, there is a divide in per-capita access to ICTs but developing countries show faster rates of growth in network development than developed countries. Moreover, when employing a per-income measure of access, developing countries already "digitally leapfrog" the developed world. Second, the paper examines the prediction that disparities in absolute access to ICTs between countries will lead to reduced development prospects in poor countries. Past experience has shown that it is very difficult to make predictions of this type. The paper concludes that we may be posing the wrong policy questions when focusing on a "digital divide" as it is commonly understood.

The article was discussed in The Economist's Economics Focus.

The Internet and Economic Growth in Less-developed Countries

The Internet and Economic Growth in Less-developed Countries: A Case of Managing Expectations? was published in Oxford Development Studies 31, 1, 2003.  A discussion of the theory of technology and economic growth suggests potentially negative implications for the impact of the Internet on developing countries. Technology in general is undoubtedly central to the growth process, but economists define technology in very broad terms. The impact of any particular, invented, technology is likely to be small. This theoretical perspective is supported by the empirical evidence on the limited impact of past "information revolutions" on less-developed countries (LDCs) and the present impact of the Internet on advanced economies. Furthermore, LDCs appear ill-prepared to benefit from the opportunities that the Internet does present--they lack the physical and human capital, along with the institutions required, to exploit the e-economy. Finally, even optimistic forecasts of the Internet's global economic impact are small in scale compared with the challenge of development. This has significant implications for development policy.

The paper was previosuly issued as a WIDER discussion paper, it will be published as a chapter in A. D'Costa (ed) The New Economy in Development (London: Palgrave).

Can Information and Communication Technologies be Pro-Poor?

Can Information and Communication Technologies be Pro-Poor? co-authored with Emmanuel Forestier and Jeremy Grace, published in Telecommunications Policy, 26, 11, 2002. There is over 20 years of accumulated cross-country evidence on the link between telecommunications provision and economic growth. Looking at micro-studies from a range of countries including Bangladesh, Botswana and Zimbabwe, there is also some evidence that provision of telephony has a dramatic effect on the income and quality of life of the rural poor. This paper examines cross-country evidence to discover if teledensity (the number of telephones per capita) has a pro-poor growth impact—fostering increased average incomes while reducing inequality. It also examines the impact of telecommunications rollout on quality of life variables including infant mortality and literacy. It finds that, historically, telecommunications rollout has had a positive and significant impact on increasing inequality and little impact on quality of life variables. A reason for this is tested and preliminarily confirmed that rollout has (historically) only benefited the wealthy. The paper will then turn to emerging evidence on the role of the Internet in poverty relief and statistics on the access gap in provision between rich and poor, suggesting that this new ICT will also be a force for income divergence. Using the results of the cross-country analysis on telecommunications, the paper will conclude with a discussion of potential policy responses (such as sector reform and universal access programs) to turn telecommunications from a source of growth that also increases inequality to a source of growth that diminishes it.

Should we Try to Bridge the Global Digital Divide?

Should we Try to Bridge the Global Digital Divide was published in info 4,3, 2002. The standard set of statistics for measuring the "digital divide" involve per capita use of various information and communications technologies (ICTs). Underlying these statistics is an assumption that higher usage per capita would be a good thing, and ubiquitous usage would be a great thing. This article begins by examining poor people's information needs, and noting that poor countries have to provide information infrastructure both to meet those needs and the communications requirements of business and government. The article argues that there will be a role for the Internet as part of that information infrastructure. However, features both of poor countries, and particularly of the poor people who reside in those countries, suggest that the utility of widespread Internet access may be limited. Given that providing widespread Internet access will also be complex and expensive, this suggests the goal of "closing the digital divide" by attempting to reach ubiquitous Internet use in less developed countries (LDCs) might be a costly mistake.

I summarized the article in a piece for Foreign Policy.

Information and Communication Technologies for Direct Poverty Alleviation

Information and Communication Technologies for Direct Poverty Alleviation: Costs and Benefits was published in Development Policy Review, 20, May 2002. Information and communications technologies (ICTs) are powerful tools for empowerment and income generation in developing countries. The cost-effectiveness of different ICTs does vary between developed and less developed countries, however. This article reviews the potential efficacy of radio, telephony and the Internet as tools of direct poverty alleviation in the latter. While the requirements for their successful utilisation make radio and telephone far more suitable technologies for the poor, traditional ICTs can act as a sustainable intermediary for them to gain indirect access to the power of the Internet. Governments should concentrate on opening up private and community provision of broadcasting and widening access to telephone services, so that they can effectively play this intermediary role.

Prioritizing Countries for Assistance to Overcome the Digital Divide

Prioritizing Countries for Assistance to Overcome the Digital Divide was published in Communications and Strategies, No. 41, First Quarter, 2001.  In order to provide the right type of assistance to the right countries to overcome the digital divide, some method of prioritization is required. This paper attempts to take a first step in that direction. After a brief literature review, it develops two indicators of the present level and quality of ICT (Information and Communication Technologies) access in a country, as well as four indicators (beyond income) of the determinants of access and quality. After testing the determinant indicators to see if they are, indeed, related to the quality and quantity of access, it uses them to suggest priority countries for particular types of donor intervention to overcome to digital divide. The paper then turns to limitations of the proposed approach and conclusions.