Investing in Broadband Infrastructure for Economic Stimulus and Growth – notes

Notes from the World Bank workshop “Investing in Broadband Infrastructure for Economic Stimulus and Growth” in Washington.

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Welcome and Introductions

Melanie Marlette, Country Manager for Moldova, World Bank

Topic: What is the potential for broadband investment for economic stimulus and growth?

New initiative: Moldova – eDevelopment thematic group

  • Wants to partner with government, private sector, …

Oleg Rotaru, Deputy Minister, Ministry of Information Development, Moldova

Initiative is very efficient and useful for the government of Moldova

Moldovo is currently developing a national strategy for ICT for development

  • not only with private companies
  • also government structures
  • not only at broadband level
  • new generation of services – also implementing eScience, eSociety, … in Moldova
  • broadband is prerequisite

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Opening Remarks

Philippe Dongier, Manager, Global ICT, World Bank

Recent World Bank study – relation between access to broadband and economic growth

  • increasing access to broadband by 10% increases economic growth by 1.3%
  • for high income economies as well as low income economies

agressive broadband structures

Finland: aim = access of 100% of population to connections with 100 MB/sec

Recent trend – public-private partnerships

  • private sector makes investment
  • public sector creating incentives, providing legal framework and supporting private sector

Martin Raiser, Country Director for Belarus, Moldova, and Ukraine, World Bank

Melanie Marlette, Country Manager for Moldova, World Bank

Questions:

  • How can countries with significant budget deficits invest in broadband programs?
  • What is the rationale for continued investment?
  • What are you currently spending and what is required to catch up with Western Europe?
  • What role is there for the private sector?

Belarus:

  • Concerning the study linking economic growth and broadband access – how did you define the demand for these services? Sometimes people aren’t aware that they want the service. Furthermore: did you look at the relation between private and public services?

Russia:

  • The state offers the infrastructure backbone, the private sector offers the content – e.g. eBusiness. However, nothing can happen over night – rural areas are still in need for infrastructure, which can be accomplished by national public programs. Generally: what is the unit of measurement of broadband access – considering different structures in the countres?

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Overview

Juan Navas-Sabater, Senior ICT Policy Specialist, Global ICT, World Bank

Boadband investment in the context of economic stimulus

What are countries doing for the economic recovery?

  • e.g. Corea invested heavily in broadband infrastructure -> much bigger growth after the crisis
  • ICT industry can generate employment
  • ICT can raise productivity

What are countries doing in response to the crisis?

  • Many are spending in infrastructure
  • The amount of money spend is very different in different countries
  • Especially countries from the OECD invest in broadband – increase level of service for existing services, reach out to the ones not benefitting so far
  • Could be a good policy for developing countres

What is the World Bank doing?

  • INFRA initiative – Infrastructure Recovery and Assets
  • Fundraising activities

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The Role of Broadband Investments in Economic Recovery

Taylor Reynolds, Communications Analyst and Economist, OECD

Original presentation can be downloaded here

2 questions:

Can communication infrastructure investment be used as an effective economic stimulus?

If governments decide to invest, how can they structure projects for maximum benefit?

During crisis we are interested in quick demand stimulus

Why network investments?

  • core network investments (roads, airports, electricity) have significant impact on economic productivity
  • impact on demand (projects are labour intensive & can be started quick) and supply (foundation for commerce)

Goals

  • Stimulate the economy on demand side through construction projects for infrastructure rollout
  • Increase the productive capacity of the economy via spillovers from broadband networks
  • Bridge the digital divide and improve competition

How public funds are being used for broadband

  • broadband pretty similar to roads
  • high/middle/low capacity networks
  • all three different sectors should be considered

Fibre optics serve for all types of broadband internet access

1 fibre strand the thickness of human hair can hold 3 billion simultaneous phone calls

Policy and investment

  • regulatory frameworks are substantial when investing in broadband
  • couple with pro-competitive regulations
  • it’s vital to couple policy and investment

Case: Mexico

  • Goal: bringing broadband to all people, opening up national markets
  • Problem: lacking policy

Telecom investment with limited funds

  • Search for most efficient way to invest in
  • Specific bottlenecks: Policies for competition in the market, backhaul networks to lay the foundation, providing schools and government buildings with networks, then sharing with the private sector – public private partnerships

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Country Case Study: Spain

Cristóbal Guzmán López, Vocal Asesor de la Unidad de Apoyo – Dirección General para el Desarrollo de la Sociedad de la Información, Spain

Avanza plan to develop the information society and ICT sector in Spain

  • started in 2005
  • Plan Avanza 2 started in 2009
  • legislative measures with a specific budget
  • also other stakeholders – private public partnership

Four lines

  • Digital public services – 70% public services available online
  • Digital citizenship – 24 mio citizens connected to internet, eId card
  • Digital economy – 2760 ICT R&D projects in companies
  • Digital context – 99% broadband coverage

Difficulties

  • Difficulties for complete availability
  • Geographic causes (mountains, dispersed population, high rural poulation)
  • -> one of the highest costs in Europe to reach all the population

Incentives for private sector and regions in Spain to invest in broadband

  • resulting in broadband access of 99%

Broadband in the EU

  • seen as key importance for economic growth
  • EU average: 23%, big differences between countries
  • there’s a big gap between rural and urban areas

New EU BB initiative

  • effective usage rather than coverage

Precondition for developing countries to benefit from broadband

  • regulatory framework
  • public-private partnerships
  • competitive environment

Overall Avanza Plan was a big success and perfectly in tune with the EU goals

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Commentary

Tim Kelly, Lead ICT Policy Specialist, infoDev/World Bank

World Bank will release ICT4D report next week

  • 10% increase in broadband results in 1.38% in GDP
  • better than other technologies

It’s important to understand the Korean case – what the key factors are that made their investment so succesful

Another project of World Bank currently: creating a broadband toolkit

Questions to Spain and the OECD

  • Is broadband a public or a private good?
  • Broadband can be seen as a platform for access to other public goods – which is one of the main arguments for investing in it; also offers a platform for green, low carbon growth
  • What is the most appropriate level of investment?
  • What percentage of sums should be investments in different sectors of broadband infrastructure?
  • Low gap in Spain between rural/urban areas – is that a natural phenomenon in Spain?

Q & A

Belarus

  • How do you calculate broadband coverage, what methodology is used?

Russia

  • It’s the same discussion as 10 years ago with the internet “just invest in internet and all your problems will be solved” – but this didn’t hold true.

USA

  • Is Open Access already practiced in OECD countries?
  • What is the incentive for open access in a monopolistic environent?

Moldova

  • Who should the infrastructure belong to? Private companies or the country? How to solve the monopoly problem?

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Tayler Reynolds

  • Divergence in stimulus package – what is the best practice? We don’t really know because most countries didn’t provide numbers how they structured their investment. There is no one-size-fits all.
  • Eastern Europe? Any infrastructure investment has synergies with other infrastructure investments. Broadband is just one piece in the puzzle.
  • What percentage to the backhaul & last mile access? Depends on the circumstances, push the fibre network as close to people as you can.
  • Investing in internet was supposed to solve all your problems? It will not solve all of your problems – broadband is an important infrastructure alongside electricity, roads, …
  • Open access? To us it means non-discriminatory access to a network – competitive access. In some cases that involves infrastructure sharing.

Spain

Spain is holding the next presidency of the EU – the issue of broadband investment is on the agenda

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Conclusion

Some thoughts

  • Consider bundling when creating the broadband infrastructure so companies don’t have to dig up the street again
  • Stimulus packages mostly on backbone and open access infrastructures if there are limited financial funds
  • Promote digital literacy and eGovernment with the government as an enabler to foster private investment
  • There’s growing interest in the topic, countries have to learn from each other
  • Russia: it’s vital to ensure the content which has to be put in the network, not just about extending the network capacity; this capacity will improve anyway – demand driven; more emphasis on the service side – not so much on broadband access

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Investing in Broadband Infrastructure for Economic Stimulus and Growth – notes
was published on 22.06.2009 by Florian Sturm. It files under global
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