Use of ICT services grows despite global downturn

Riaz K Tayob

The International Telecommunication Union has found that despite the recent global economic downturn, the use of information and communication technology services has continued to grow worldwide.

Despite the recent global economic downturn, the use of information and communication technology (ICT) services continued to grow worldwide, the International Telecommunication Union (ITU) has said.

In its “Measuring the Information Society 2010” report, the ITU cited an estimated 4.6 billion mobile cellular subscriptions by the end of 2009, corresponding to 67 per 100 inhabitants globally. Also in 2009, mobile cellular penetration in developing countries passed the 50% mark, reaching an estimated 57 per 100 inhabitants at the end of that year.

However, the ITU found that average mobile penetration in developing countries remains well below the average in developed countries, where the penetration exceeds 100 percent.

It adds that prices for ICT services (mobile phones and Internet) are falling worldwide, yet broadband Internet remains outside the reach of many in poor countries.

The ITU expects the number of mobile cellular subscriptions in the world to top five billion in 2010. “The report confirms that despite the recent economic downturn, the use of ICT services has continued to grow worldwide,” said Sami Al Basheer Al Morshid, Director of ITU’s Telecommunication Development Bureau.

“At the same time, the report finds that the price of telecommunication services is falling - a most encouraging development,” he added.

According to the ITU report, Internet use continued to expand but at a slower pace. In 2009, an estimated 26 percent of the world’s people (1.7 billion) were using the Internet.

The Internet penetration percentage was much higher in developed countries (64 percent at the end of 2009) than in developing countries (18 percent), where four out of five people are still excluded from the benefits of being online.

Internet penetration rates have grown at an average of around 6 percent annually since 2007 in developed countries compared to 21 percent in developing countries for the same period.

This is much lower than the average annual growth experienced by developing countries between 1998 and 2009, which was 38 percent.

Fixed broadband access is primarily confined to Internet users in developed countries, with 23.3 percent penetration in the developed countries compared to only 3.5 percent in developing countries in 2009.

The report refers to this gap as a “large and persistent broadband divide”.

Mobile broadband (high speed Internet access) shows promising developments. The number of these subscriptions has grown steadily and in 2008 surpassed those for fixed broadband. At the end of 2009, there were an estimated 640 million mobile and 490 million fixed broadband subscriptions.

Pointing out that this indicator refers to subscriptions that have access to a high-speed mobile network, and not actual usage (which is currently still difficult to measure), the report says that the number must be used with caution.

The report uses two bench-marking tools to monitor information society developments worldwide - the ICT Development Index (IDI, which includes a total of 159 countries) and the ICT Price Basket (calculated for 161 countries).

(In the 2003 outcome document (Geneva Plan of Action) of the World Summit on the Information Society (WSIS), Members requested realistic international

performance evaluation and bench-marking through comparable statistical indicators, and the creation of a composite ICT development index. This was reiterated in the Tunis Agenda (paragraphs 113-119), which calls for periodic evaluation through indicators and bench-marking, and an assessment of the magnitude of the digital divide. The IDI and ICT Price Basket were also mandated in the ITU Plenipotentiary Conference and the World Telecommunication Development Conference, both held in 2006.)

The ICT Development Index (IDI) combines 11 indicators into a single measure that can be used as a bench-marking tool globally, regionally and at national level, as well as helping track progress over time.

It measures ICT access, use and skills, and includes such indicators as households with a computer, the number of fixed broadband Internet subscribers, and literacy rates. Using the IDI ranking, the top ten most advanced ICT economies include eight countries from Northern Europe (with Sweden in the lead for the second year running) and the Republic of Korea (ranked third) and Japan (ranked eighth).

In South America, St Vincent and the Grenadines, Argentina and Uruguay lead. In Africa, only three countries - Seychelles, Mauritius and South Africa - make it into the top 100. The United Arab Emirates and Bahrain top the list of Arab States, with Russia and Belarus leading ICT development in the Commonwealth of Independent States (CIS). The Asia and Pacific region is led by the Republic of Korea, Japan and Hong Kong-China.

The main objectives of the IDI are to measure the level and evolution over time of ICT developments in countries and relative to other countries; progress in ICT development in both developed and developing countries; the digital divide (the differences between countries with different levels of ICT development); and the development potential of ICTs.

The latest IDI results show that between 2007 and 2008, all 159 countries included in the index improved their scores, confirming ongoing diffusion of ICTs and overall transition to a global information society. The link between ICT development and income has been well established and most of the indicators in the IDI are strongly correlated with GDP per capita. Most poor countries rank at the low end of the IDI.

Another means used in the report to measure the digital divide is the time-distance methodology, which measures the number of years a country or region lags behind a benchmark country in terms of development indicators.

Using the time-distance methodology, the time lag between countries in the low category compared to the high category is given as 5.3 years.

The ICT Price Basket, which combines the price of fixed telephony, mobile cellular and fixed broadband Internet services into one measure, allows policy-makers to compare the cost of ICT services across countries.

The results for the 2009 and 2008 ICT Price Basket show a drop in prices for almost all countries. Overall prices dropped almost 15 percent in just one year, with the basket value decreasing from 15 in 2008 to fewer than 13 in 2009.

Fixed broadband services showed the largest price drop of 42 percent, with a 25 percent drop in mobile cellular services, and 20 percent drop in fixed telephony. The drop in prices was greatest in developed countries (23 percent) compared to developing countries (14 percent). People in developed countries spend relatively less of their income on ICT services than people in developing countries.

The ICT Price Basket value represents at most 10 percent of monthly per capita income in developed countries, which is the case for only 71 of the 117 developing countries included in the Price Basket. In ten developing countries, the ICT Price Basket value is even above 50. On the impact of ICTs on growth and development, the report states that countries go through different stages in becoming information societies. ICTs have both economic and socioeconomic impacts, which can both directly or indirectly enhance welfare and facilitate economic development.

It further states that, to date, the majority of empirical studies of the impact of ICTs have focused on economic impacts such as productivity growth, trade levels and employment patterns. Broader socioeconomic impacts have been explored less frequently, due in large part to challenges in measuring such effects and hence lack of data.

Productivity impacts are often singled out as the key economic effect of ICTs. However, analysis of the impact of ICTs is hampered by measurement and analytic challenges. Significant difficulties remain in spite of rapid progress in both statistical and econometric techniques, especially since the use of ICTs is particularly important in service activities, which in turn are difficult to measure, says the report.

On neo-classical growth accounting, the report states that productivity impacts from ICT-producing goods show up in measured total factor productivity (TFP) whereas investments in ICTs lead to capital deepening which boosts labour productivity.

However, there are a number of difficulties in using these techniques because of the limiting assumptions and hypotheses they sometimes require, in addition to data limitations (in particular for ICT investment), and the need for price deflators adjusted for quality change (hedonic deflators), the report adds.

-Third World Network Features

The writer is a researcher with the Third World Network