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Study: Governments fail to tap full potential of ICT

Posted: 04 Feb 2008 ?? ?Print Version ?Bookmark and Share

Keywords:communications technologies? Connectivity Scorecard report?

Businesses and governments must make better use of their communications and computing infrastructure if they are to benefit from the full economic and social benefits of information and communications technology (ICT). This is according to Leonard Waverman, a professor at the London Business School and consultant at LECG. The Connectivity Scorecard is an index to examine quality as well as quantity of ICT usage and infrastructure.

Sub-optimal connectivity
In his study, commissioned by Nokia Siemens Networks, Waverman noted that even the "best" connected countries are not exploiting communications technologies to their fullest potential and in many cases, policy and regulatory activity designed to promote connectivity is not having the impact intended.

The Connectivity Scorecard ranks the United States first in a group of 16 "innovation-driven economies" (as defined by the World Economic Forum), although it only scored 6.97 out of a maximum of 10. The differentiated nature of the Scorecard compared to other rankings is illustrated by the fact that Korea, typically a high scorer on other indexes, with 4.78 rating, is ranked tenth on the list.

The Connectivity Scorecard measures the extent to which governments, businesses and consumers make use of connectivity technologiesthe copper wires, fiber-optic lines, mobile phones and PCsto enhance social and economic progress. For each component of the Scorecard, countries are benchmarked against the best in class in their tier.

Study results indicate an opportunity for countries to add hundreds of billions of dollars by rethinking how they measure and enable connectivity, according to the study. The authors point to a well-known study that showed a $500-billion long-term economic benefit to the United States just from achieving near-universal broadband penetration. Given the room for improvement on multiple measures of connectivity, the global gain from improving connectivity would be much higher.

Tailor-fit scoring
The Scorecard has categorized indicators of connectivity by consumer, business and government, with weightings tailored to each country. Low scores reflect gaps in a country's infrastructure, usage or both. For example, the U.S. scores lower on consumer infrastructure because of its low broadband penetration, while Korea is noticeably low on business usage metrics.

"What this study demonstrates is that not even the world's richest countries can afford to become complacent about their current telecom and computing profile. Every nation has substantial work to do before achieving an ideal score in connectivity," says Leonard Waverman, professor of economics at London Business School and the creator of The Connectivity Scorecard. "To increase the societal and economic benefits made possible by connectivity, countries need to consider infrastructure and usage as a combined yardstick."

Russia placed first among the nine nations that are classified in the study as resource- or efficiency-driven economies. The country's high literacy rate, along with solid scores on several measures of usage and infrastructure, especially mobile usage, resulted in a rating of 6.11. Malaysia finished second, while India and Nigeria placed at the bottom of the rankings, with scores of 1.68 and 1.1, respectively. (The scores of the innovation-driven economies and the efficiency and resource driven economies are not comparable, as different sets of criteria, taking account of different circumstances in the two sets of countries, have been used to determine scores.)

"This study is a call to arms for government and businesses," said Ilkka Lakaniemi, head of global political dialogues and initiatives at Nokia Siemens Networks. "In a period of great economic uncertainty, there are great benefits to be gained from the effective use of communications infrastructure. And as we move toward the vision of 5 billion people connected by 2015, policy makers and business leaders must simultaneously encourage the deployment of infrastructure and invest in the complementary assetspeoplethat will enable this infrastructure to be used to its maximum potential."

Challenges, opportunities
The research also finds that different countries have different "to-do lists" to achieve maximized gains from connectivity. The United States must address the issue of raising broadband penetration and improving affordability. For its part, Korea needs to understand why its businesses spend apparently so little on enterprise telephony and IP applications. Meanwhile, India and Nigeria face challenges of improving performance on basic literacy and access measures, while not falling behind in the deployment of cutting-edge broadband and mobility technologies.

Within innovation-driven economies, economic growth will increasingly depend on new ways of using connectivity and adapting technology by workforce, whether by improving existing processes or inventing new, transformational ones. As populations in these countries grow older, optimizing connectivity usage is the best source of future economic growth.

For efficiency- and resource-driven economies, social development, such as education and gender relations, plays a key role in getting the most from connectivity investments. In these countries, connectivity technologies not only provide access, they can transform lives by giving people the means to connect to each other and to access useful services and information.

"The use of connectivity technologies might be compared to the way Internet usage has evolved in recent years," said Waverman and Lakaniemi. Even the most advanced countries today have achieved only a first generation of connectivity, unable or unwilling to exploit the full potential of the tools, just as a decade ago, people had only just begun to scratch the surface of the usefulness of the Web.

Both conclude: "And so, just as the Internet has moved on to Web 2.0, where the effective use of the available technology has brought about transformational improvements in business productivity and social gains, we believe that a similar move to Connectivity 2.0 will be worth the effort."

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