Business

The internet and economic development

By DAWKINS BROWN

Wednesday, September 20, 2017

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The Internet has revolutionised the way we all work, socialise, create and share information. Despite its growing presence in society, many parts of the Caribbean are not able to make the full use of internet connectivity.

The Internet in the Caribbean is more than 20 years old, but there is still a sense that it is a novel phenomenon, where emphasis is still on facilitating access and not necessarily on using it productively by improving efficiencies, optimising systems and processes, and driving innovation.

It is strange that no Caribbean country has established Internet access as a basic right, though most policymakers readily acknowledge how critical it is to their country's economy and competitiveness.

Many countries in the region have been plagued with slow and expensive Internet connections. Under International Telecommunications Union standards, between 1.5 and 2 Mbps is considered the threshold speed for classifying an Internet service as broadband.

With few outlets offering broadband connections, the lack of competition has led to higher prices for consumers which are difficult for many low to middle-income families to afford.

A 2017 report by ICT-Pulse of fixed Internet broadband speeds and pricing across the Caribbean shows the various pricing structures in the Caribbean.

In seven of the 19 countries, the lowest download speeds offered is under two Mbps. ISPs in Aruba, Belize, Cayman Islands, Guyana and Saint Kitts and Nevis continue to offer Internet plans with advertised download speeds of under 1 Mbps (e.g. 256 kbps and 512 kbps). With the exception of Antigua and Barbuda and Suriname, all other countries offer plans with an advertised download speed of at least 10 Mbps.

There is a direct correlation between broadband access and economic development. The World Bank has found that in low- and middle-income countries every 10 percentage-point increase in broadband penetration accelerates economic growth by 1.38 percentage points-more than in high-income countries and more than for other telecommunications services (Figure 2).[i] In a similar study, McKinsey & Company estimates that a 10 per cent increase in broadband household penetration delivers a boost to a country's GDP that ranges from 0.1 per cent to 1.4 per cent.[ii]

 

Figure 2

Internet access is reaching near-saturation in the world's rich nations, but billions of people living in the developing world still don't have access. The use of the Internet permeates every aspect of living, working and doing business. For developing countries, it is the catalyst to closing the development gap.

The Internet also removes barriers between nations and supports the process of globalisation. It is therefore important that any barriers hindering the growth and development of the Internet be removed.

Affordable and effective broadband connectivity are vital for economic growth, social inclusion and environmental protection. Strengthening the Caribbean's telecommunications infrastructure is the first step to growing the region's digital economy through improving the regional connectivity. In the long-term aim, this will also drive technology-based innovation.

Notably, there has also been growing investment in technology infrastructure across the region. Last year, the European Investment Bank agreed to invest EUR 8 million to improve Internet access on the Caribbean island of St Maarten, enabling high-speed internet to be provided in schools, libraries and hospitals all across the island.

Once operational, the improved network will not only revolutionise Internet connections, but also allow smart meters to better manage scarce water and electricity resources in St Maarten.

Caribbean countries are connected to the Internet through submarine cables. Although most countries have two or three cables, Jamaica and Trinidad and Tobago each have five, and Curaçao has six. In the case of Jamaica and Trinidad and Tobago, their considerably larger populations relative to other countries in the region make them key anchor points, as it is expected that they will generate significantly more traffic, thereby improving the cost of recovery and profitability of the cables.

Telecommunication businesses are also keen to invest in the region. They are especially keen following restoration of diplomatic relations between Cuba and the USA which has increased interest in the Caribbean, and several global technology service providers are now turning fresh eyes towards the region.

Digicel has the largest market share for the largest mobile operations across the region and has been investing in its submarine cable system. In 2014, it bought the submarine cable assets of Global Caribbean Fibre and Global Caribbean Network to create a fibre-optic cable network of approximately 3,100 km providing capacity from Trinidad in the southern Caribbean to Puerto Rico in the north.

The firm has approval to build out networks connecting the Bahamas, Haiti and Jamaica, and connecting Guyana.

Digicel also launched Digicel Play, using digital and fibre technologies to offer voice telephony, subscriber television and broadband Internet. To date, Digicel Play has been rolled out in Anguilla, Barbados, Dominica, Jamaica, Trinidad and Tobago, and the Turks and Caicos Islands, with plans to add Saint Kitts and Nevis in short order.

But the vision for improving the Internet goes beyond giving government more efficient ways to deliver critical services. It is about growing the digital economy by giving more citizens access to essential online services and creating opportunities for digital entrepreneurs to enter the growing market.

Technology is shaping the future, and the changes it brings don't have to be a crushing force. For business, an understanding of the emerging challenges and opportunities can help prepare them for the possibilities.

Cyber security, big data, cloud storage, artificial intelligence and robotics are just some of the technology trends that are changing the ways we work, and how finance professionals operate in particular. Whilst they do not need to become experts in these developments, a broad understanding of where these technological advances are taking their profession will be crucial to their growth, whatever the sector they work in.

Today's modern finance professional is increasingly viewed as an influencer, with a major role to play in strategy development and overall business success.

Underpinning all of this is the effective application of technology. Technological advances provide businesses with new capabilities to enhance their competitiveness globally, offer opportunities to be more productive and lead to new ways of securing finance. SMEs, in particular, are now able to compete on an equal footing, even without lots of capital to invest.

The finance function is a part of the digital world. Technology helps them automate and de-skill time-consuming work, and thereby focus on higher-value work, consolidating their role as strategic business partners.

By keeping informed about technologies as they evolve, considering new ones as they emerge, and then assessing their implications for finance professionals and those they serve and support, finance professional can be prepared to minimise the burdens and maximise the benefits they bring.

Dawkins Brown is the Managing Partner of the firm Crowe Horwath Jamaica. He is a practising member and a fellow of the Institute of Chartered Accountants of Jamaica, a fellow of the Association of Chartered Certified Accountants UK (ACCA).

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