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Graham Vickery, OECD

Lessons from e-business and household use:Balancing broadband and applications

Internet use in the AmericasCIDE, Mexico City

16-17 June, 2005

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PresentationOECD Information Technology Outlook 2004

• ICT access and use by firms• ICT access and use by individuals and households

Policy overview

• ICT policies in OECD countries

• OECD Council Recommendation on Broadband Development, 2004

• OECD Work on digital broadband content

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Beyond the hype:From broadband access to efficient use

Lessons from the OECD Information Technology Outlook 2004

“Broadband as utility: Striking the balance between content and infrastructure”

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Firms: High ICT access, still working towards widespread efficient use

Wide diffusion of computers and Internet in government and enterprises of all sizes and all sectors in OECD countries.

Differences between large and small enterprises and sectors. Strong cyclical rise in 2004 ICT spending. E-commerce growth sustained – slower than initially expected. Integrated ICT-enabled business processes -- depending on

sectors, little implementation.– Mostly information search and supply and email.– Low integrated use along value chains and in R&D / production

E-business “divide” in applications between small and large firms.

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E-business development phases

Phase 1: Website for company Phase 2: Information on products

and/or price Phase 3: Orders received through the

Internet or electronic networks Phase 4: Delivery of goods /services

and/or customer services Phase 5: Couple electronic orders with

ICT system (financial, logistics, marketing)

Phase 6: Couple with customer ICT systems (stock administration)

CBS (2003), Dutch statistical office (percentage of firms).

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0

10

20

30

40

50

60

70

80

90

100

Canada2002

Belgium Denmark Spain Austria Finland Sweden Island Norway

Use of Internet

Having a web site ora homepage

% of employeesusing computer

Using Internet forBanking andfinancial Services

Purchasing productsonline

Receiving ordersonline

Having soldproducts overInternet marketplace

High business connectivity but low e-commerce adoption, 2003

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0%

20%

40%

60%

80%

10-49employees

50-249employees

250+employees

10-49employees

50-249employees

250+employees

Has IT systems for orders and purchasesw hich link to internal IT systems

Has IT systems for orders and purchasesw hich link to IT systems of suppliers or

customers

Finland

Belgium

Denmark

Austria

Spain

Norway

Iceland

Sweden

High business connectivity but low e-business adoption, 2003

OECD based on Eurostat.

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Impact of ICTs on businesses ICTs can increase business performance and productivity. Not automatic translation into effective use and positive impacts.

Innovation in organisational capabilities, improvement of human capital, are necessary conditions for maximising impacts.

Benefit-cost analyses rare. Few studies of broadband impacts, e.g. money saved, shorter cycle times, customer satisfaction, etc.

Obstacles:– Strategic clarity among top management to link e-business with

business strategies– Organisational and product innovations– Skills investments– Metrics to assess ICT impacts.

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b. Households: Increasing access and slowly moving to more complex applications

PCs diffused quite slowly in households. Broadband diffusion rapidly, building on the installed PC base, and

Internet diffusion Lack of need or interest and costs main reasons for not equipped. Internet use evolving, influenced by the supply of broadband and new

access devices, and by educational attainment. E-mail remains the principal activity. Focused information search,

obtaining news, and personal banking / and browsing for information on goods and services is becoming important for off-line shopping.

“Use” divide is appearing now ICT access is widely available (educated, IT-using occupations, not necessarily age-related).

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Some access divides persist

0

10

20

30

40

50

60

70

80

1997 1998 1999 2000 2001 2002

University degree

Less than high school

High school / college

% of households w ith Internet at home

Canada

Nordic countries: Individuals with tertiary education accessing the Internet from home a quarter to one third higher than for primary educated (Nordic Council of Ministers, 2002). Gap even higher in other countries

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Norway: catching up with broadbandBroadband subscribers per 100 Inhabitants. June 2004 provisional

0

5

10

15

20

25

30

Korea

Denm

ark

Canada

Netherlands

Iceland

Sw

itzerland

Belgium

Japan

Sw

eden

Norw

ay

United S

tates

Finland

Austria

France

United K

ingdom

Spain

Germ

any

Portugal

Italy

Luxembourg

Australia

New

Zealand

Hungary

Ireland

Poland

Czech R

epublic

Slovak R

epublic

Mexico

Turkey

Greece

Other June 2004

Cable June 2004

DSL June 2004

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Household usage Most common

activities: e-mail, information search.

Next: reading /downloading news, playing/downloading games and music, banking, window shopping and buying goods and services.

Broadband Internet strongly affects type of use and intensity.

05

101520253035404550

1997 1998 1999 2000 2001 2002

email

Medical or healthinformationbroadband users

government information

e-banking

playing games

obtain and save music

purchase goods andservices

%

Broadband diffusion and use of Internet. Canada 1997-2002Percentage of all households

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P2P: The only “successful” broadband application so far?

0

2.000.000

4.000.000

6.000.000

8.000.000

10.000.000

Sim

ulta

neou

s P2

P U

sers

FastTrackAll Monitored Networks

2003 File Type Breakout for OECD Countries

Audio files 48,6%

Other files 24,3%

Video files 27%

OECD Information Technology Outlook 2004 based on BigChampagne.

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Broadband infrastructure, applications and content.

What role for policy ?

“Broadband as utility: Striking the balance between content and infrastructure”

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ICT policies in OECD countriesPrimary focus: General ICT policy environment (visions, policy co-ordination). ICT innovation (R&D support programmes and government

projects). Enhancing the infrastructure (broadband, electronic settlements,

authentication and digital signatures, standards).Broadband has been a new focus, with growing policy interest in digital content (especially public sector content) and digital delivery.

Diffusion and use (ICT skills, government on line, diffusion). Business environment (competition, IPRs). Promoting trust (security of information systems and networks).

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E-business and organisational capabilitiesChallenges and policy issues

Challenges: Integration of e-business into business strategies, integration with organisational, process and product innovations, investment in skills, develop metrics to assess impacts.

Policies: Widespread complex applications (e.g. SMEs), moving

beyond basic connectivity and ICT readiness.

Digital content development and electronic distribution. Regulatory and financial frameworks that enable online transactions

(e.g. authentication, payments), foster trust/security.

Interoperability, standards and new forms of competition are new policy issues with global networked production.

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Household access and useChallenges and policy issues

Supply-side measures to raise connectedness: – broadband private-sector rollout– e-government projects – digital signatures and trust measures– availability of government digital content.

Demand-side measures to enhance diffusion and encourage content provision, and education and social equity measures: – ICT literacy integrated into education– community access development or encouragement– disadvantaged socio-economic groups targeted– legal or financial measures to encourage ICT uptake.

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OECD Broadband Recommendation 2004 Competition / liberalisation in infrastructure, services

and applications. Technology neutral policy / reassessment of regulation. Investment policies (supply and demand). Private sector led - complementary government

initiatives. R&D encouragement. Security / trust (privacy, consumer, cross-border). Balanced regulatory frameworks - balance interests of

suppliers and users. IPRs / digital rights management, encourage innovative e-business models.

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OECD Work on Digital Broadband ContentBroadband content: What role for policy ?

High quality "always-on" broadband Internet services transforming industries and services that can provide digital content.

Stocktaking studies: – Business models for digital content and changing value chains– Drivers and barriers to growth, sector transformation and changing market

structures, impacts on growth and employment. – Barriers are not mainly technological ones.

1. Mobile content2. Scientific and technical publishing3. Music4. Online computer games5. Public sector information

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Issues for digital content development and delivery Innovation and technology R&D, innovation. Venture capital. Human resources. Value chain and business models Framework conditions. Convergence issues. Technology neutrality.

Competition / co-ordination along value chains. Revenue sharing models.

Infrastructure Broadband policies for coverage / access. Standards, interoperability

(including DRM). (Micro-)payments, electronic signatures, authentication.

Business and regulatory environment Adapting established regulatory frameworks IPRs, tax neutrality.

Public / government content (public sector information) Government content availability. Digitising content. Education, health.