ICTs and economic inequality

ICTs and poverty alleviation

While the entire ICT4D sector would claim to focus on development in favour of the poor, it remains challenging to find simple solutions or agreement on priorities for ICT4D and poverty. The various technology parks invested in by governments as a key part of ICT strategic plans underscore the difference within countries between those able to make use of ICTs (largely in urban centres) and the rural poor. The question of how to foster social mobility among the rural poor is complex and will not be easily resolved.

McNamara (2003, p. 4) points out that this development issue is not confined to ICTs and that 'the enthusiasm for ICTs has also mirrored earlier fads in development thinking in overemphasizing one factor and failing to focus adequately on the complexity and difficulty of fostering pro-poor change, and on the political and structural constraints on that change in a given country'.

This is not to say that ICTs do not have a role to play, but it is one that needs to be integrated into a larger analysis of structures (for example, trade, education) that may not be largely driven by ICTs. For example, a recent UNDP report on telecentres aimed at empowering the poor found that user satisfaction with the centres is 'closely associated with the capability of the staff at the centres and this in turn affects the degree of community acceptance that the centres enjoy' (Harris and Rajora 2006, p. 13). Such findings show how technology by itself is far from sufficient to achieve clear results in the ICT field and that a range of human skills are required.

ICTs can, however, make a difference to many specific factors that exacerbate poverty. In the area of disaster alleviation, as outlined by Krishnamurthy Sriramesh, Chanuka Wattegama and Frederick John Abo in this edition, ICTs have a critical role to play in preparation, warning and response. This comes from the ability of ICTs to duplicate and deliver instantaneous data in many different formats. Krishnamurthy et al. note, however, that ICTs alone will not save lives and that they need to be integrated into a larger, holistic management system.

Another issue in pro-poor development is that transferring critical services to ICTs needs to take place without dismantling services that are relied upon by those who are not online. In this edition, Lelia Green and Axel Bruns discuss the further marginalization experienced by those unable to access online services after cutbacks to face-to-face bank transactions in Australia.

ICT-related economic development

At the regional and nation-state level, ICTs and technological convergence pose significant challenges for economic development. Many countries throughout the region are beginning to focus their economic development policies on ICT industries. These industries can be difficult to develop without an existing base as they often require integration with dominant platforms and standard-setting bodies which are based outside the region (for example, operating systems such as Microsoft or Apple). A common strategy is to undertake clustering of ICT industries to enable learning from each other and develop regional linkages. The Multimedia Super Corridor (MSC) in Malaysia is a prime example. The informal exchanges and learning that take place in technology parks lead to overall skill development. This is why countries such as Iran are providing large subsidies for such initiatives in their five-year development plan. As Masoud Davarinejad and Massood Saffari point out in their country chapter, there are now nine such parks in Iran alone.

Another significant and sometimes controversial strategy is the use of tariffs to protect local ICT manufacturers. Without such tariffs it is very difficult to develop a local hardware industry and without such an industry technological skills that are necessary for future competitiveness may remain undeveloped. On the other hand, the tariffs may also result in ICT hardware remaining unnecessarily expensive and out of reach of many users and thus prevent the development of new markets. For countries with a limited local industry, like Lao PDR, this debate is ongoing as the chapter on this economy by Phonpasit Phissamay makes clear. It is difficult for policymakers to view these issues objectively due to the tremendous pressure applied by industries with economic interests in the outcome of policy decisions.

Business Process Outsourcing (sometimes termed BPO or, more commonly, simply 'outsourcing') continues to be a growing phenomenon that is having a transformational impact on the economies of the region. On one level, outsourcing has become a significant source of income for many Asia Pacific countries as European and US firms make use of ICT to have labour-intensive service tasks such as call centres, animation work and data processing performed in lower wage countries. However, these industries are challenging to forecast, as they are subject to task migration: if one's own city can host a call centre for a firm, there is a strong chance that the firm could shift to outsourcing to somewhere else if it gets a better deal, as the required skills are relatively transferable (May 2000).

The Internet as private infrastructure

One of the newest pressures affecting ICT-enabled trade is the concept of 'Network Neutrality' (Butt 2006a). The theoretical model for the Internet suggests that Internet Service Providers (ISPs) carry any and all Internet traffic equally, rather than being able to prioritize or block certain traffic or charge differential rates for different kinds of data. User groups advocate for legislative measures to maintain this openness, arguing that it is necessary because users do not have true competition in the telecommunications area due to high switching costs and limited choice. These groups are concerned that the increasing attempts to link content with network service provision will result in users being required to sign up to a particular ISP in order to receive certain kinds of content. Competing businesses might bundle exclusive access to particular content packages along with network access in order to extract the maximum revenue per user, because provision of basic network access alone has low-profit margins. This will result in a fragmentation of the network, as users will not generally purchase more than one access technology in order to access all possible content.

Many people assume that the Internet is a public facility because the technical protocol for transferring information (TCP/IP) is public. But the actual physical networks are owned primarily by private entities who interconnect via market transactions. This raises significant new challenges for governments in particular who are dealing not only with a global facility that is relatively impervious to national interests, but also with a private governance structure that has little incentive to consider the needs of poorer potential users not already connected. In the early days of the Internet, the bulk of the bandwidth was owned by academic or research networks and the profit motive was not usually present, even though the networks only served a small elite. As the Internet becomes important infrastructure for communities around the world, serious challenges are developing for those seeking to expand Internet use in the public interest, when the infrastructure is privately owned.

Peering and exchanges

Related to the issues arising from the ISP business model, there are also policy challenges emerging due to interconnection agreements between networks. Because the Internet is not a single network but a network of networks, the market transactions between these networks can have effects that seem unintuitive from a policy perspective. If two networks within a country do not have a 'peering' arrangement, for cost reasons, traffic may end up travelling to quite remote physical destinations before returning to the very same city. This is akin to how smaller economies are served by airlines—for example, travel between small islands in the Pacific can be more expensive than around-the-world tickets with stops at major cities. While many believe that a market economy will naturally lead to the establishment of Internet Exchange Points due to the economic efficiencies involved, there are indications in some highly developed countries that this is not the case. In New Zealand, for example, major ISPs are choosing to de-peer from exchange points (Bertram 2006). In Lao PDR, as Phissamay describes in this volume, the Lao National Internet Committee (a government agency) is investing in an exchange point to link traffic between the five ISPs and academic networks internally to help alleviate the current situation where national data will often be routed via Thailand or Singapore.