Connectivity equals opportunity: PPPs narrow the "broadband gap"

You don’t need to be a grandparent or even have a particularly long memory to recall a time when information and communications technology (ICT) devices were luxuries only a few could afford, if not something lifted entirely from the pages of science fiction. Reform of the ICT sector happened fast, both in broadband and mobile, and we all feel it in our personal and professional lives. The extraordinarily rapid uptake of mobile telephony in developing countries is the most compelling element of the
ICT story, but it’s only partly about the technology itself.

The real plot twist lies in why reform took off so quickly. Simply put, the incumbents did not see mobile services as threatening. Telecom companies thought of it as a fancy, add-on service that would be useful for rich people but unthreatening to the standard business model. However, the new technology was able to fill gaps in countries where there was no service at all, and it was able to make very rapid inroads. Elsewhere, people would have gone through a more traditional rollout of fixed network and then mobile; in developing countries, mobile became the main service because incumbent service was so poor. Mobile moved in because the incumbents had not done their job.

This shows that the most important element of progress in ICT is the creation of an environment where competition can flourish. Public-private partnerships (PPPs) are key players in this chapter of the ICT narrative. We see this in articles and interviews throughout Handshake, which examines PPPs in broadband and mobile/telecom (which together comprise our definition of ICT) and the services this infrastructure makes possible. In other words, we’re looking at PPPs whose infrastructure creates connections and whose services deliver connectivity.
 

PPPs Push Competition

With PPPs in ICT, the number one issue is competition: is there a pro-competitive environment for new technologies? Will innovative approaches be rolled out? Let’s look at the first two waves of the ICT revolution, which set the scene for PPPs.

Twenty-five years ago, when mobile rollout began, it was seen as a substitute for fixed service; no one expected that it would see such a quick uptake among poor people. (Today, the mobile global penetration rate hovers around 93 percent.) What we didn’t realize back then is that connectivity—in the form of mobile phones—would give poor people opportunities they didn’t have before. For example, if you are a craftsman in Africa before mobile services came your way, you’d have to go to a client’s home to ask if they had a job for you; potential clients didn’t have a way to find you when they needed your service. Cellphones provide this immediate contact and the ability to provide a service in real time. Since most labor in developing countries is informal, the way they get work is less structured and the potential for having access to employment opportunities, like contracts or jobs, is increasingly dependent on cellphones.

The overall growth story in many low-income countries can be attributed in part to the rapid expansion of cellular services. Success doesn’t follow simply because people use cellphones; they get opportunities, productive opportunities, through their access to telephones. That’s the first wave of ICT expansion.

The second wave of ICT expansion came with access to financial services. The best known case is M-Pesa in Kenya, but there are many others that use nontraditional platforms and mobile services as the distribution network. With this, the potential for services that reach poor people in slums or rural areas has increased dramatically. We’re not just talking about traditional communications service, but other value-added services that can be delivered over the air and bring a deepening of the market along with lower costs. Mobile health and education services, which are profiled in these pages, have impacted peoples’ lives in a number of positive ways.

Today, we’re in the midst of the third wave of ICT expansion: broadband. It’s a huge challenge because it’s a huge need, and PPP approaches can deliver solutions. The backstory has two parts: One, in many countries, the networks were started by public sector entities, but by and large these do not have the capital or expertise needed. Two, competition remains a key principle to get new entrants in. (This is a problem everywhere, not just developing countries. In fact, the U.S. FCC chairman has issued a significant statement that the U.S. is behind in broadband due to a lack of competition.)

Several articles tackle the best way to close the “Broadband Gap,” including a piece on how sharing infrastructure can boost private investment and enhance regional prosperity. We focus our attention specifically on PPPs for expansion of broadband in the Middle East and North Africa region, where demographics and current events underscore the need. Here and in other frontier, fragile, and high-risk markets, a PPP approach may be the only way to bridge the digital divide. Development agency support can facilitate cross border regional solutions and create an environment that allows investors to be comfortable. MIGA’s explanation of how mitigating the political risk of investments can contribute to ICT access delves into this in greater detail.

If reaching critical mass with broadband was easy, companies would have done it. The most successful PPP approaches to connect people provide a framework whereby the government can invite companies to develop these networks. Alternately, governments might provide some type of financial support where it might not be commercially viable, or some comfort or risk guarantees that would encourage people to invest. If broadband is to reach the UN Broadband Commission’s target of getting online 50 percent of the population in developing countries (this corresponds to 1 billion additional citizens), it will require major investments over a short time, significant innovation, and creative financing and operating models.

(Note: this article originally appeared in HANDSHAKE, the World Bank Group's quarterly journal on public-private partnerships.)