The Global Perspective: Integrating Nigeria into the Digital Economy

1
The Global Perspective Integrating Nigeria
intothe Digital Economy

• Professor Raymond Akwule
• George Mason University
• Fairfax, Virginia, USA
• Nigerian Telecom Summit
• Accelerating Access to Telecoms
• Nigerian Communications Commission
• May 2002

2
Eras of Economic Development The World of
Telecommunications

• Pre-Industrial
• Hunting
• Agricultural
• Industrial
• Concerned mainly with production of Material
  goods mainly food and energy
• Post-industrial
• Information Society
• Networked or Digital Economy
• Concerned mainly with information productivity

3
The Nature of the Digital Economy

• Private Sector Dominated
• In 2002, more than half the countries in the
  world have fully or partially privatized their
  incumbent telecommunication operator.
• Even in countries that have not yet done so, the
  private sector accounts for an ever greater share
  of the market.
• Liberalized and Competitive
• A majority of countries still retain monopolies
  in fixed-line services, such as local and long
  distance calls.
• However, an overwhelming majority of countries
  now allows competition in the mobile and Internet
  market segments, which increasingly substitute
  for fixed-line voice
• In countries that do not legally allow multiple
  service operators for international calling, an
  indirect level of competition exists through
  call-back, calling cards, cellular roaming and
  voice over the Internet Protocol (VoIP).

4
The Nature of the Digital Economy

• Mobile
• Telecommunication services are increasingly
  mobile, that is, delivered by the medium of radio
  waves rather than over a fixed-line network.
• In the future, the majority of international
  calls may be made from, and delivered to,
  handheld devices. Those same devices will receive
  updates from websites and real-time video streams
  from multiple sources around the globe.
• Radio is now being increasingly used to provide
  access networks, while wired networks provide the
  long-distance component.
• By the end of 2001, twenty-eight African
  nationsor over half the regions countrieshad
  more mobile than fixed subscribers a higher
  percentage than any other continent.
• Nigeria is expected to soon join this growing
  number of African countries with more mobile than
  fixed subscribers

5
The Nature of the Digital Economy

• Global
• Globalization has affected the telecommunication
  sector in three ways.
• Global operations. Many major telecommunication
  operators have holdings in operators in other
  nations. It is increasingly rare to find a
  country that does not have a strategic foreign
  investor.
• Regional and multilateral agreements. Governments
  have increasingly chosen to enshrine their market
  liberalizing moves in treaty-level commitments,
  notably in the context of the WTOs basic
  telecommunications agreement.
• Global services. These include mobile cellular
  roaming, global satellite systems, calling cards
  and others that allow customers to continue to
  use a service while away from their home country.
  Future third-generation (3G) mobile services have
  been designed from the start to be global, rather
  than national, in scope.

6
Old economy and new economy networks Whats
the difference?

• Old economy network
• Hybrid analogue/digital
• Circuit-switched
• Highly regulated
• Priced per minute
• Distance-sensitive pricing
• Generally state-owned and operated
• Accounting rate system means cash flows from net
  traffic generating to net traffic receiving
  countries

• Digital economynetwork
• All digital
• IP (packet-switched)
• Largely unregulated
• Priced per megabyte
• Distance-insensitive pricing
• Generally privately-owned and operated
• Peering and transit system means cash flows from
  net traffic receiving to net traffic generating
  countries

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Characteristics of the Digital Economy

• In the new networked economy
• There is greater flexibility in the way
  information is produced, transported and
  consumed, as more information is transported over
  greater distances in shorter time and with more
  efficiency.
• The investment capital is knowledge and the means
  of production is the human intellect.
• Increasingly, people work with their brains
  instead of their hands
• Increasingly, innovation is more important than
  mass production
• investment buys new concepts or the means to
  create them, rather than new machines
• communications technology creates global
  competition
• rapid change is a constant.

8
Characteristics of the Digital Economy

• The Digital Economy also exacerbates already
  existing information gap the digital divide
• Though connectivity and access have generally
  improved worldwide, there is still a huge and
  growing digital divide between and within regions
  as well as within countries
• For instance, international Internet bandwidth
  (or IP connectivity) is a good measure of users
  experience with the Internet. The greater the
  bandwidth, the quicker the response times. The
  400000 citizens of Luxembourg between them share
  more international Internet bandwidth than
  Africas 760 million citizens. Thus, even though
  Africa has some five million Internet users, many
  of them may be restricted to using just e-mail
  and may not be able to browse the World Wide Web.
  The reality is that highspeed Internet access,
  which has become fashionable in many parts of the
  developed world, such as the Republic of Korea
  and North America, is still a long way off in
  most developing countries. The new digital divide
  is about quality, not just quantity.

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Characteristics of the Digital Economy

• The widening digital divide is caused by barriers
  to adoption of innovation such as lack of
  education, inadequate training, poverty, language
  barriers, etc

10
Some features of the new economy network

• gt95 per cent of global IP capacity passes through
  United States
• 96 out of top 100 websites in the United States
• Developing countries wanting to hook up to US IP
  backbone must pay both half-circuits of the
  leased line
• Smaller ISPs must pay bigger ones for transit
• Accelerating returns to scale
• high volume routes have lowest unit costs
• big hubs get bigger
• resources go to the strong

11
Integrating Nigeria into the New Digital Economy
A Way Forward

• Connectivity and Access
• Information Infrastructure the link to the global
  knowledge economy
• Policy Focus
• Continued Liberalization of the Nigerian ICT
  sector is an enabling force for sector growth
• Regulatory Reform
• Managing convergence supercedes
  telecommunications policy
• N.I.I.S. (National Information Infrastructure
  Society)
• A coordinated Economic growth requires efficient
  ICT sector and enabling environment

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Integrating Nigeria into the New Digital Economy
A Way Forward

• A coordinated Economic growth requires efficient
  ICT sector and enabling environment including the
  following
• ICT Education and Training
• Basic Skills - Basic education, vocational
  training, entrepreneurship
• Content - Local value, languages
• Applications (e-commerce, telemedicine,
  e-governance etc)

13
Integrating Nigeria into the New Digital Economy
A Way Forward

• THANK YOU
• Professor Raymond Akwule
• Professor of Telecommunications and
• Director, Center for Media Research and
  Telecommunications,
• George Mason University,
• Fairfax Virginia USA.
• Rakwule_at_gmu.edu