White Paper The Economic Impact of
Broadband in Developing Nations
Intel World Ahead
Best practices enable developing nations to
reap economic benefits of broadband.
Introduction
Since the emergence of the Internet, governments around the world have increasingly
recognized broadband’s powerful influence on the economics of businesses, communities
and nations. Already, broadband networks are widely considered essential infrastructure for
the global information economy, providing businesses, students and consumers with fast,
always-on access to Internet-based services, content and applications.
For at least the past decade, a variety of case studies, anecdotes and qualitative studies have
detailed the wide-ranging benefits of broadband networks. These benefits include the ability
to expand economic opportunities and innovation, increase trade and productivity, reduce
business costs, create jobs and encourage foreign investment. More recently, quantitative
research and empirical analyses have emerged that go further — firmly establishing the fact
that broadband networks support GDP growth in developed nations and have the potential
to offer similar benefits in developing or emerging markets.
Although economic benefits have been seen in both developed and developing nations,
the existing infrastructure, regulatory environment, urban-rural divide and other factors that
affect broadband diffusion are often different in developing nations. These differences
should not preclude the expansion of broadband in emerging markets, but they reinforce
the need to adopt best practices that facilitate the rapid and cost-effective deployment of
broadband technologies, along with other information and communication technologies (ICT)
and services.
Moving Beyond Dialup For years, the Intel World Ahead program has worked with governments,
Broadband networks provide dramatic improvements over development organizations, community groups and other technology leaders to
narrowband, or dial-up, connections. The benefits for develop sustainable, comprehensive approaches to ICT and broadband deployment
businesses and citizens that are unique to broadband in emerging markets. Through these efforts, Intel has identified five essential best
networks include: practices that can help countries successfully expand broadband penetration:
• Ubiquitous access. Broadband networks are always on
1. Adopt supportive regulations that embrace innovation and competition
and always available for usage. 2. Form mutually beneficial public/private partnerships
• Enhanced multimedia applications. Broadband speeds 3. Invest in infrastructure and the latest innovative technology
4. Encourage competitive ecosystems
enable ready access to online video content and other 5. Release spectrum suitable for sustained broadband deployment
multimedia resources.
• Cost reductions. Web browsing, e-mail and other online When these best practices are combined with a firm governmental and national
activities enabled through broadband can increase labor commitment and with private and public partnerships, developing nations can
productivity while lowering the cost of gathering market achieve the many benefits of broadband networks, including both extensive GDP
intelligence. growth and increased global competitiveness, for decades to come.
• Improved communication. Broadband networks enable
real-time communication through e-mail, instant messaging, The Economic Effects of Broadband
Voice-over-Internet Protocol (VoIP) and other means. These
tools enable businesses to expand networks internationally Developed Nations
and communicate more frequently and at a lower cost with Studies in developed nations have repeatedly established that broadband networks
suppliers, customers and business partners. drive economic growth and development, and provide a platform for addressing
social issues such as health care and education.
“The ... realization of economic growth
benefits in communities in rural areas On the national level, one study found that ubiquitous broadband deployment
(the ‘death of distance’) depend[s] on across the U.S. would produce as much as $460 billion in economic growth per year.
the widespread deployment of Estimates made by Accenture in 2003 suggest broadband could contribute $500
broadband services.” billion to GDP in the United States and as much as $400 billion in Europe.1
Robert Crandall, William Lehr and Robert Litan, The nationwide impact of broadband begins in communities and individual
“The Effects of Broadband Deployment on Output and businesses, where research has repeatedly identified positive effects including
Employment: A Cross-sectional Analysis of U.S. Data,” Issues in greater productivity and rapid employment growth. One study estimated that
Economic Policy, The Brookings Institution, Number 6, July 2007. for every percentage point increase in broadband penetration in a particular area,
employment would increase 0.2 to 0.3 percentage points per year.2 Another study
found that from 1998 to 2002, U.S. communities that were among the early
adopters of mass-market broadband experienced more rapid growth in employment
and number of businesses in IT-intensive sectors.3
Internet business solutions have enabled private companies in the U.S. to save
$155 billion and have helped companies in France, Germany and the UK increase
revenues $79 billion.4 A survey of more than 2,000 businesses across the U.S.
found that Internet business solutions had already resulted in a net gain of almost
$600 billion by 2001 and would add .43 percentage points to future productivity
growth through 2011.5
Developing Nations
In developed nations, broadband penetration levels often rise above 30%, while
in many developing nations, high-speed Internet access is virtually unknown or
so expensive that it is out of reach of nearly all citizens and businesses. Globally,
all but about 1% of broadband users are located in developed nations.6 In 2007,
broadband penetration was 5% worldwide, but fixed broadband penetration was
just 1% in Africa, compared to 10% across the Americas and 16% in Europe.7
North America 73.6% Broadband Technology: Now More Accessible
Oceanic/Australia 59.5% and Affordable
48.1% In the past, the benefits of broadband were not available to
many developing countries. This was especially true in rural
Europe and remote areas, where broadband solutions such as digital
subscriber lines (DSL) and cable broadband access have often
24.1% proved too expensive or difficult to deploy.
Fortunately, in recent years, broadband technology has
Latin America/Carribean become more available, reliable and cost-effective, as well
as easier to deploy. Universal Service Funds have proved
21.9% particularly helpful in funding broadband access and adoption
in developing nations around the world.
World Average Today, broadband connectivity can be provided to remote
regions using a combination of backhaul networks and last-
21.3% mile networks. Affordable backhaul solutions include wired,
satellite and IP-based wireless point-to-point solutions.
Middle East Dependable last-mile, or access, networks suitable for non-
urban areas include WiMAX and Wi-Fi (in areas where power
15.3% restrictions don’t adversely affect coverage). These wireless
Asia broadband systems can reach remote regions and can often
be rolled out faster and more cost-effectively than wired
5.3% solutions, while offering greater portability and mobility. In
Africa addition, wireless technology can be deployed incrementally to
serve growing demand, without requiring expensive network-
0 wide upgrades.
10% 20% 30% 40% 50% 60% 70% 80% 90% WiMAX is a wireless broadband solution that provides
particularly attractive last-mile connectivity options through
Figure 1: World Internet Penetration Rates by Region technology designed to deliver ubiquitous, high-throughput
broadband wireless services at a low cost to remote and
Penetration rates are based on a world population of 6,676,120,288 for mid-year 2008 and 1,463,632,361 rural areas. WiMAX installation costs are lower for a wireless
estimated Internet users. infrastructure based on IEEE 802.16e than for today’s wired
solutions. WiMAX offers fixed, nomadic and mobile services,
Source: Internet World Stats—www.internetworldststs.com/stats.htm so it can be configured to cover wide metropolitan and rural
areas. WiMAX also enables integration of voice and data, re-
Because broadband penetration is more recent and less extensive in developing ducing the cost of connectivity and enabling more affordable
nations, fewer studies have been done to document its economic, social and other access to services.
benefits. Nonetheless, early research suggests that broadband diffusion creates Learn more about WiMAX broadband wireless technology
a wide range of benefits in developing nations including supporting economic access at www.intel.com/go/wimax
growth, in part by improving global competitiveness and attracting international
investors. Although such improvements are difficult to measure, one recent study
found that developing countries with better ICT infrastructure attract significantly
more business from offshoring, outsourcing and foreign investment.8
Developing nations share characteristics that make widespread broadband diffusion
particularly beneficial. For instance, the majority of the people in developing nations
— and many small and medium businesses — are located outside urban centers.
Expanding broadband networks to these non-metro areas can spread economic
efficiency and productivity, diversifying income by supporting both non-agricultural
employment and higher incomes from agricultural jobs. Greater exposure to
technology can better prepare rural citizens for an eventual urban transition while
at the same time reducing urban desire.
Broadband networks can also be used to bring more citizens and businesses
from rural and remote areas into the formal national economy. Transitioning more
people into the formal economy can enable governments to strengthen the basic
infrastructure (roads, schools, hospitals, etc.) in rural areas. Connecting the non-
metro population via broadband also enables access to e-government for citizens
and businesses, and better educational opportunities for students who can be
introduced to the technology necessary to compete and succeed in the 21st-
century global economy.
Easing Urbanization Through Broadband The Keys to Success:
Best Practices to Speed
Urbanization is one of the most powerful forces affecting and Strengthen Broadband
developing nations, as the rural and non-metro population Deployment
rapidly moves into metro centers in search of employment
and other opportunities, as well as an overall better standard Intel has extensive global experience facilitating broadband deploy-
of living. ments in developing nations. The key to success in each case is
creation of an enabling environment, which can be accomplished
The expected impact of urbanization can be seen in a country using the five best practices outlined here. Through this enabling
such as China, where 55% of the population lives outside environment, communities and ultimately countries can achieve the
cities, compared to just 20% in the United States. By 2025, critical mass necessary to lower costs and achieve all the potential
mass urbanization is expected to more than double China’s benefits of broadband connectivity.
energy demand in urban areas, and increase demand for water
by 70% to 100%. Health care, education and other social Best Practice 1: Adopt Supportive Regulations
services are expected to be severely strained, while the loss
of arable land and demand on natural resources will have a In many developing countries, spreading broadband technology at a pace rapid
profound effect on the environment.9 enough to catch up and compete with the rest of the world requires simpler and
more supportive regulations and policies. As stated in a report from the World
Broadband can be used in several strategic ways to ease the Summit on the Information Society, a “trustworthy, transparent and non-discrimina-
damaging effects of urbanization: tory legal, regulatory and policy environment is necessary to maximize the social,
economic and environmental benefits of the information society.”
1. Reduce urban desire. Affordable broadband access can
improve the economies of rural areas, driving up incomes, A wide range of regulatory reforms can be made to create an enabling environment.
improving lifestyles, and reducing the need and desire to Hundreds of countries now have national regulatory bodies. Market liberalization
move to cities. and privatization can increase private sector investment and healthy competition,
and strengthening regulations and making them more transparent can build the
2. Improve skills and education. Broadband access trust necessary to spur greater investment and encourage infrastructure sharing.
increases educational opportunities in rural areas and sup-
ports development of ICT skills. This preparation enables Without encouragement and incentives, operators are unlikely to roll out broadband
rural citizens to find better employment in urban areas and networks in non-urban areas, where the majority of citizens live. To make such
reduces the strain placed on social services. rollouts cost-effective, governments can take a number of actions, such as offering
tax incentives, implementing initiatives that promote the sharing of infrastructure,
3. Improve urban life. In conjunction with other technolo- liberalizing licensing conditions and providing more efficient spectrum allocation.
gies, broadband can be used to encourage decentralized
work environments that improve productivity while also
reducing energy demands, noise pollution, vehicle emissions
and other forms of pollution.
Intel is working with Thailand and other developing nations to
identify ways to use broadband to reduce the harmful effects
of urbanization while encouraging economic development in
both urban and rural areas.
Changes in government policies can also have a far-reaching impact on ICT and broadband penetration. Brazil: Spreading Broadband
An increasing number of countries are altering their current Universal Service Fund (USF) policies to Quickly and Cost-effectively
allow the funds to be used to support not only telephone but also broadband services. The result — in
countries as diverse as Pakistan, Chile, India and Malaysia — is the extension of voice, data and Internet In Brazil, just 3.8% of the population has
service to citizens in even the nations’ most remote areas. access to broadband Internet access.10
Brazil’s government recognizes the
Best Practice 2: Form Public/Private Partnerships urgency: Broadband adoption must be
spread quickly across the vast country to
In nearly every country, successful broadband deployments begin with a strong commitment from keep pace with other emerging markets,
the government that is then carried out through extensive collaboration and partnerships among and at the same time, to catch up with
government, industry and private groups. developed nations.
Intel has worked with dozens of countries to bring together government departments and ministries, Intel is serving as a trusted advisor in
and help them work in concert with telecommunication companies and other industry groups. In a typical Brazil, helping to deploy broadband
deployment, the government provides guidance and startup funding, and a telecom provider develops a networks in remote areas and also iden-
“telco bundle” that makes ICT deployment profitable to the company, and at the same time, affordable to tifying ways to make the spread of broad-
consumers. “Telco bundles” are Internet connectivity services packaged with a PC at an attractive price. A band more sustainable and affordable.
bank or other financial group may also be involved to offer discounted financing that further encourages With the help of telecommunication com-
consumer purchases. panies, affordable technology bundles
that include broadband connectivity are
It is only by working together that ICT and broadband deployment succeeds on all levels — achieving now being developed. At the same time,
national goals while profiting local businesses and providing citizens, students and other consumers with Intel is working with the government to
the technology and connectivity they need to thrive in today’s information society. change existing policy and allow available
Universal Service Funds (USF) to be
used to expand broadband services into
remote and rural areas.
Pakistan: Combining Innovative
Funding with WiMAX Technology
For broadband networks to be spread
beyond a very limited group of citizens in
Pakistan, the technology had to be made
more affordable. To that end, Intel helped
facilitate partnerships that eventu-
ally resulted in an amazing offer: free
installation and free WiMAX broadband
connectivity for two months with every
PC purchase — an offer now available in
22 cities across four provinces.
Developing and implementing the unique
technology offer required collaboration
among numerous government and indus-
try groups. The Bank of Punjab provided
low-interest loans, Wateen Telecom
lowered its costs and offered technical
support, and the Commission for Higher
Education allowed the program to be
promoted at 16 universities.
“All levels of government
should follow policies that
encourage broadband
competition, which will lead
to lower prices and hence
greater use.”
Robert Crandall, William Lehr and
Robert Litan, “The Effects of Broadband
Deployment on Output and Employment:
A Cross-sectional Analysis of U.S. Data,”
Issues in Economic Policy, The Brookings
Institution, Number 6, July 2007.
Best Practice 3: Invest in can create impediments to the new opportuni- Vietnam: Working with Telecoms
Intermediate Infrastructure ties and increased productivity and income to Make Broadband Affordable
and Technology provided through broadband. More than 70 million households in
Vietnam have landline telephone sub-
As noted recently in The Economist, “Broadband Policies should be weighed carefully to ensure scriptions, but less than 2 million have
networks are not helpful without a reliable power consumers are protected while at the same broadband Internet connections delivered
supply and the widespread availability of personal time avoiding over-regulation and unneces- over those landlines.14 To improve the
computers.”11 Particularly in developing nations, sary protections of incumbents. When all levels country’s broadband penetration, Intel
where the infrastructure is not likely to be fully of government adopt and support policies worked with VNPT, a state-owned tele-
developed, investment is necessary to support the that encourage broadband competition, lower communications company.
intermediate infrastructure — including everything prices and the many benefits of expanded Initially, VNPT offered broadband services
from utilities to computers — that in turn enables usage are likely to follow. to its 10 million telephone customers, but
successful diffusion of broadband networks. the setup and monthly service charges
Best Practice 5: Release put broadband out of reach of ordinary
The World Bank found that in industrialized coun- Spectrum citizens. As late as 2002, less than
tries, if a technology reaches 5% of the market, it is 100,000 people had subscribed to the
highly likely to reach 50% of the market. However, Releasing spectrum offers a clear benefit: It service. Extensive promotions, low-cost
in emerging markets, only six of 67 technologies enables governments to place bandwidth in purchase programs and increased compe-
that reached 5% of the market went on to capture the hands of private businesses that can then tition from other service providers have
50%.12 The difference is due, to a great extent, to develop its use through emerging industries now driven down the monthly service
intermediate technology, which must be in place to and technologies, thus offering a significant charges, from about $60 per month to
ensure successful diffusion of any new technology. source of sustained revenue. The question is as little as $5 per month.
whether to release spectrum now or later, and As a result of the increased competition
For governments, the bottom line is that broad- based on basic economic realities, the clear and targeted purchase programs, nearly
band must be supported by a solid infrastructure answer is that the time is now. 2 million VNPT subscribers now have
that includes, for instance, reliable electricity and broadband Internet access, and many
dependable roads. Over time, investments in the Spectrum auctions may be delayed for several more are expected to sign up in the
general infrastructure, in combination with invest- reasons, including the fear of not maximizing years to come.
ments in ICT initiatives, will enable successful and government revenue and pressure from
sustainable broadband deployments. incumbents not to introduce competition.
Such delays hamper innovation, suppress
Best Practice 4: Encourage delivery of cost-effective broadband services
Competitive Ecosystems and negatively impact potential revenue from
spectrum utilization.
When policy and regulatory reforms are considered,
the encouragement of competition should be a When spectrum licenses are issued, costs go
priority, as competition is critical to the market down, new investments are made in wireless
growth seen in nearly 80% of countries world- technologies and new services are introduced
wide.13 Transparent national policies and regulatory into the market. While spectrum auctions can
frameworks can promote a competitive environment raise money for deficit reduction, taxpayer
that attracts investment, drives down prices and relief and other government causes, it is
makes large-scale rollouts more affordable. important to realize that the greatest benefit
is from sustained spectrum utilization and
Encouraging competition is not always easy, or not from the auction proceeds themselves.
popular. The innovations sparked by broadband and
the digital economy it supports can be disruptive Releasing spectrum now makes solid economic
to the status quo, sparking political demands to sense because it increases competitiveness, is
insulate particular segments of the economy. Even better for consumers, leads to innovation and
the most well-intentioned policymakers sometimes ultimately boosts GDP.
protect or introduce laws and regulations that in-
hibit competition and thereby slow the adoption of
broadband technology. However, such protections
Ghana: Delivering Broadband to Conclusion
Small and Medium Businesses
Broadband networks are an increasingly essential part of the global information society, enabling overall
In Ghana, as in most of Africa, business economic growth, creating new jobs, fostering innovation and enhancing national competitiveness.
is often limited by the lack of access To achieve these and other benefits of broadband, developing nations need to establish enabling
to affordable broadband connectivity. environments that support long-term, cost-effective broadband deployments.
An innovative program established by
Intel and USAID and supported by local After years of experience facilitating broadband deployments in developing nations, Intel has established
businesses is changing that reality for five best practices that form the key building blocks necessary to create a sustainable enabling
90 small and medium businesses. environment:
The businesses can purchase an 1. Adopt supportive regulations that embrace innovation and competition
eBizBox business bundle that includes a 2. Form mutually beneficial public/private partnerships
reduced-price Intel HP laptop computer, 3. Invest in infrastructure and the latest innovative technology
broadband connectivity, a package of 4. Encourage competitive ecosystems
accounting software and four training 5. Release spectrum suitable for sustained broadband deployment
classes. The broadband connections
are offered by two service providers, By adopting these best practices, developing nations can successfully deploy broadband networks and
so businesses can choose between become stronger, more competitive and more prepared for continued growth in the years and decades
a wireless, pay-as-you-go option and to come.
a fixed ADSL service that comes at a
fixed monthly price. Achieve Your Vision
New backhaul and broadband options Intel can help you achieve your vision of a growing national economy supported by
are expected in Africa in 2009 and widespread broadband deployments. To learn more, contact your local Intel
2010. In the meantime, the partner- representative, or visit us online at intel.com/worldahead
ships now being formed are laying
the groundwork for larger, nationwide 1 Robert Crandall and Charles Jackson, “The $500 Billion Opportunity: The Potential Economic Benefit of Widespread Diffusion of Broadband
efforts in the years ahead. Internet Access,” mimeo, Criterion Economics, Washington, D.C., July 2001.
2 Robert Crandall, William Lehr and Robert Litan, “The Effects of Broadband Deployment on Output and Employment,” June 2007.
3 Sharon E. Gillett, William H. Lehr, Carlos A. Osorio and Marin A. Sirbu, “Measuring the Impact of Broadband Deployment.” Prepared for the U.S.
Department of Commerce, Economic Development Administration, Washington, D.C., 2006.
4 Hal Varian and Robert E. Litan, “Net Impact of National Economic Benefits,” 2006.
5 Hal Varian, Robert E. Litan, Andrew Elder and Jay Shutter, “The Net Impact Study: The Projected Economic Benefits of the Internet in the United
States, United Kingdom and Germany,” January 2002.
6 ITU World Telecommunication Indicators Database, 2004.
7 ITU Report on the World Summit on the Information Society Stocktaking, World Summit on the Information Society, Geneva 2003, Tunis 2005.
8 Laura Abramovsky and Rachel Griffith, “Outsourcing and Offshoring of Business Services: How Important is ICT?” Journal of the European
Economic Association 4 (2–3): 594–601, 2006.
9 Janamitra Devan, Stefano Negri and Jonathan R. Woetzel, “Meeting the challenges of China’s growing cities,” The McKinsey Quarterly, 2008 (3).
10 Cisco Broadband Barometer, 2007.
11 “The Limits of Leapfrogging,” The Economist, February 7, 2008.
12 World Bank, Cross-Country Historical Adoption of Technology (CHAT) database.
13 “Report on the World Summit on the Information Society Stocktaking,” World Summit on the Information Society, Geneva 2003, Tunis 2005
14 http://english.vietnamnet.vn/tech/2008/09/806113
©Copyright 2009 Intel Corporation. All rights reserved. Intel and the Intel logo are trademarks or registered trademarks of
Intel Corporation or its subsidiaries in the United States and other countries.
0109/JT/PMS/PP/500 321293-001US