Oct 152013

The assertion that internet connectivity drives economic growth is largely taken for granted although getting the maximum benefit from a broadband network investment may require more than stringing fibre cables or building wireless base stations.

A key document that supports the link between economic growth and broadband penetration is the International Telecommunication Union’s 2012 Impact of Broadband on the Economy report.

While the reports authors aren’t wholly convinced of the direct links between economic growth and broadband penetration, they do see a clear correlation between the two factors.

ITU Impact of broadband on the economy report 2012

ITU Impact of broadband on the economy report 2012

One of the areas that disturbed the ITU report editors were the business, government and cultural attitudes towards innovation.

The economic impact of broadband is higher when promotion of the technology is combined with stimulus of innovative businesses that are tied to new applications. In other words, the impact of broadband is neither automatic nor homogeneous across the economic system.

For South Korea, internet innovation is a problem as the New York Times reports. Restrictions on mapping technologies, curfews on school age children and the requirement for all South Koreans to use their real names on the net are all cited as factors in stifling local innovation.

In reading the New York Times article, it’s hard not to suspect the South Korean government is engaging in some digital protectionism, which is ironic seeing the benefits the country has reaped from globalised manufacturing over the last thirty years.

The problem for South Korea is that rolling out high speed broadband networks are of little use if local laws, culture or business practices impede adoption of the services. It’s as if the US or Germany built their high speed roads but insisted that cars have a flag waver walking in front of them.

Indeed it may well be that South Korea’s broadband networks are as useful to economic growth as Pyongyang’s broad boulevards just over the border.

Similar problems face other countries with Google’s high speed broadband network in the US so far not attracting the expected business take up and innovation, although it is early days yet and there are some encouraging signs among the Kansas City startup community.

In Australia, the troubled National Broadband Network has struggled to articulate the business uses for the service beyond 1990s mantras about remote workplaces and telehealth – much of the reason for that has been the failure of Australian businesses to think about how broadband can change their industries.

Like Japan’s bridges to nowhere, big infrastructure projects look good but the poorly planned ones – particularly those no-one knows how to use – are a spectacular waste of money.

Hopefully the fibre networks being rolled out won’t be a waste of money, but unless industries start using the web properly then much of the investment will be wasted.

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