Building Broadband: Netflix is the Question, but Mobile is an Answer

“Where’s my Netflix?” is the euphemism for broadband access around the world, implying that all countries are eager for both the access and services to take advantage; but universal access is the more important question, and increasingly mobile broadband capacity and mobile services seem to be a possible answer.  Netflix streaming movie service now occupies an average of over 30% of net traffic into US homes during peak evening hours, and while Americans and others in developed countries are watching films online, many emerging countries are still struggling with broadband access.

Access Itself as a Universal Human Right
The United Nations has officially declared in June that internet access itself is a universal human right, yet it is a right many are still without.  The International Telecommunications Union, ITU, says that by the end of 2010, developing world Internet users accounted for 58% of the global total (1.2 billion), compared to 900 million in the developed world. Yet when compared to population, it means only one fifth of the developing world is online, compared to almost 75 percent in developed countries.

Broadband Availability is Subjective & Services Matter
There is a difference between technical availability and pervasive (i.e. affordable and widespread) availability of traditional fixed-line broadband.  Indeed, in my home town of Sao Paulo, people often point out that 10Mbps speed is available for purchase, at a relatively high price, but even if that type of availability was pervasive (which it certainly is not) such speed is of limited value since services (like Netflix) provide limited to non-existent availability outside US markets, and there are few local offerings to take advantage of fast broadband.  And, indeed, in countries like Brazil, access itself is still a core issue (despite previously-announced efforts under a “National Broadband Plan” to make 1Mbps affordable and more accessible).

Too often the rationale for lack of broadband infrastructure investments is that there are not services which exist to take advantage of the capacity.  Even in the European Union, Neelie Kroes, EU Digital Agenda Commissioner, commented recently: “Netflix is the largest single source of internet traffic in North America. But we have no pan-European equivalent.”

Changing the Dialogue: Mobile Broadband is the Economic & Social Leap Forward
While it might not lead to the ability to stream movies into selected homes around the world, digital access is the key growth driver for much more than entertainment, and mobile broadband is increasingly the greatest opportunity for many countries without traditional infrastructure. A recent study by Bell Labs and the World Economic Forum’s Global Agenda Council (GAC), argued the “right combination of actions and investment can accelerate the economic impact of broad access to mobility by as much as 36 percent, measured in GDP.” Focused on the mobile landscape in countries like Bangladesh, Kenya and Venezuela, the report concluded there is a correlation between mobile penetration and the prosperity of emerging economies.

Earlier research by the World Bank calculated that every 10 percent increase in mobile penetration leads to 1 percent increase in GDP in low-medium income economies. There is a “strong link between increased telecommunications penetration and faster economic and social development,” and mobile communications in particular opens up “groundbreaking opportunities to transform industries and improve living conditions in developing countries,” the organizations noted in their report.

Mobile operator Vodafone claims that many emerging economies are investing unnecessarily in fixed line broadband networks, when they should be focusing instead on extending the reach and capability of mobile networks.  In its 2011 Social Impact of Mobiles (SIM) report, Vodafone warns that the current level of investment in fiber optic networks in emerging markets is unsustainable, mainly due to the cost of deployment in rural areas.

Mobile Penetration is Not the Same as Mobile Broadband Penetration
Much of the world has a mobile phone, or is quickly getting one. Statistics from the ITU reveal that over one hundred countries in the world have passed 100 percent in mobile penetration, Eastern Europe is said to be counting about 126.6 percent mobile penetration at the end of 2010; Western Europe also is said to be trailing with 118 percent penetration; Asia Pacific region itself is at about 68.6 percent as of the last quarter of 2010; North and Southern Americas are also said to be fast approaching saturation; yet Africa is one of the few continents with vast untapped potential with mobile mobile cellular penetration closing at 41.4% in 2010.

Mobile broadband is growing, and nearly equal to fixed broadband reach today. The ITU says that there were as many fixed broadband subscriptions in the developing world in 2010 (253 million) as there were in the developed world in 2008 (251 million) – although around half of the developing market capacity is in China alone.  At the same time, there are now more mobile broadband subscriptions in the developing world in 2010 (309 million), than there were in the entire world in 2007 (307 million).

Barriers Exist Even for Mobile Broadband
Infrastructure and applications must be developed in tandem – just like the traditional broadband model. Infrastructure is key to accelerating the provision of universal and ubiquitous mobile access, and adoption of mobile services is hampered by a lack of applications, or a lack of apps which appealed to niche segments of underserved populations, thereby proving compelling or useful enough to appeal broadly across the urban and rural populations. One effective example is Mamakiba, a mobile app which aims to help Bangladeshi expectant mothers with irregular incomes, save and prepare the costs of prenatal care and childbirth. Affordability is also the obvious, and critical, element to enable widespread adoption across income levels.

Government Can Help Create Both Access & Services
Government in many countries have proven effective at creating the pervasive availability of fixed line broadband, and linked it with a plan for services and industry growth. Estonia is a fascinating case in the implementation of a comprehensive government strategy to do exactly this: grow broadband penetration, while simultaneously encouraging the growth of various e-commerce, e-government, e-education, e-health and other services to take advantage of the broadband capacity. High broadband usage in Estonia has helped to ensure a high potential online audience, which is in turn stimulating the development of broadband services from various sectors of the economy. Countries like Malaysia are also following similar approaches, building holistic plans with ICT at the center.

Should Governments Bet on Fixed or Mobile Broadband Infrastructure?
Any government who sees the Internet only as a “luxury” in the twenty-first century has failed to see the enormous potential of ICT as key lever of economic and social growth, as well as national competiveness; the governments who most recognize it are the ones building comprehensive plans to ensure both universal access and local services / local businesses to take advantage of the infrastructure – mobile is best for some, fixed line is best for others, and perhaps for many it is a combination of the both.

FastCompany: “Netflix Owns The Evening Web”
Research and Markets: “Estonia – Digital Economy and Broadband Market – Overview, Statistics and Forecasts”
IT Decisions: “Brazil internet plans dwarfed by South Korea”
Penn Olson: “Malaysia Announces Digital Masterplan For The Next Decade”
ZDNet Asia: Study: Mobile access lifts emerging markets
LA Times: United Nations report: Internet access is a human right
eWeek Europe: Vodafone Warns Against Excessive Fibre Investment
iAfrica: “Where’s our Netflix?”
Photo by Alicia Nijdam licensed under Creative Commons

This entry was posted on Sunday, July 3rd, 2011 at 2:16 pm. It is filed under Infrastructure, Mobile and tagged with Africa, Bangladesh, Brazil, Central and Eastern Europe, Estonia, ICT, Malaysia, Mamakiba, Netflix, Vodafone, World Bank. You can follow any responses to this entry through the RSS 2.0 feed.