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Regional Strategies > Articles > E-commerce, Digital divide are key concerns in Net's future >

E-commerce, Digital divide are key concerns in Net's future

Madanmohan Rao reports from the Global Internet Summit in Yokohama

From exploding multi-channel access and lucrative dotcom entrepreneurship to complex cyberlaws and a troubling digital divide, the Internet has grown so fast and so vast that fortunes and frustration seem to follow side by side in its wake.

Delegates from over 150 countries gathered recently in Yokohama, Japan, for INET 2000, the annual summit of the Internet Society (www.isoc.org), a global organisation geared towards the worldwide promotion of the Internet.

Future Trends, Governing Laws

"The Net is truly going where no net has ever gone before," said Vint Cerf, co-inventor of the TCP/IP protocol stack and senior VP at MCI/WorldCom, who is widely regarded as the "father of the Internet" (some even jokingly call him the "grandfather of the Internet").

"The number of Internet-connected devices is going up dramatically, thanks to the converging mobile telephony explosion. We will be forced to move quickly to IPv6 (Internet Protocol Version 6)," said Cerf. Separate address spaces will also have to be created for the upcoming "interplanetary Internet" which will include satellites, planets and other interplanetary traffic, he said.

The Japanese Automobile Association has even supported initiatives for Internet-connected cars -- and online connectivity to digital cameras, microwaves and refrigerators will create other challenges for seamless but secure middleware, said professor Jun Marai of Keio University in Japan.

Network address translation and domain naming systems have become very complex, and a key challenge for Internet architects will be balancing the tradeoff between flexibility and scalability, said Australian ISP Telstra's Geoff Huston, chairman of the ISOC Board of Trustees.

The Next Generation Internet will be faster, always on, and everywhere, according to  Michael Nelson, Internet strategy director at IBM. The Internet will eventually use all kinds of devices, the full range of services, and the entire spectrum of content - which brings about head-on collision between telecom, broadcast, cable, print and cellphone regulation, he said.

Numerous initiatives are being formed to address these challenges, such as the Global Business Dialogue on E-business (www.gbde.org), Computer Systems Policy Project (www.cspp.org), and Readiness Guide for Developing Countries (www.readinessguide.org).

In addition to Moore's Law and Metcalfe's Law (about the exponential increase in chip power and network value), the Internet economy is characterised by four new laws, said Bernard Lang, founder of AFUL (Association for French-speaking Users of Linux).

The Law of Self-Organisation holds that the success of a society or industry will depend on how well its constituent members can organise themselves and bring about co-regulation or self-regulation.

The Law of Unlimited Effects maintains that new content and software are available instantly to the global Internet population, with a scale and speed never seen before.

The Law of Large Numbers holds that sizable communities can be formed very quickly on the Net.

And the Law of Zero Marginal Cost maintains that once something has been created online, the extra cost to distribute it to user after user is zero.

Many of these laws have been effectively played out in the synergistic explosion of the Internet and of the Linux movement.

"The economics of the software industry are changing," said Ed Lynch, marketing head of Linux initiatives at IBM, which has participating in the open source movement in a big way through contributions of skills and technology in over 60 online community groups.

"The community-based open source way of developing software is a paradigm shift," Lynch said. It unleashes programming talent on a global scale, and dramatically increases the rate of innovation for features ranging from software patches to security plugs.

The acceptance of Linux is strong in the "fringes" and cutting-edge sectors of the Internet, but has begun moving swiftly into the enterprise as well.

"The Internet is a culture as much as it is a technology. We must all learn to share our expertise in it if we truly believe in its power," said George Sadowsky, computer science professor at New York University, who has been coordinating volunteer workshops for Internet training in emerging economies for almost a decade now.

The Digital Divide

Severe challenges arise, however, in achieving universal or near-universal access to the Internet in many developing nations. Overcoming the digital divide via "digital bridges" to bring people out from behind the "information curtain" or "knowledge curtain" is thus a key policy challenge for government and private sectors, and many innovative approaches are springing up in this regard.

Buses with satellite Internet hookup make tours of some Malaysian schools in rural areas, offering monthly or fortnightly Internet access. The first Internet café has opened recently in Baghdad. Internet community centres in Peru have brought Internet access costs via shared lines down to about 40 cents an hour, a model to be pursued by Sam Pitroda's WorldTel in six Indian states.

An NGO called the M.S.Swaminathan Foundation (www.mssf.org) has been experimenting with rural "knowledge centres" in Tamil Nadu, where trained Net users help disseminate localised agricultural, medical, meteorological and educational content to villagers. UNDP (United Nations Development Fund) has helped set up online resource centres for farmers in Bhutan.

Other NGOs active in Asian Internet initiatives include Kuala Lumpur-based Asia Pacific Development Information Program (www.apdip.net), Singapore-based PAN (Pan-Asian Networking initiative), supported by Canada's International Development Research Centre (www.idrc.org.sg). PAN has launched e-commerce services for textile and handicraft manufacturers in Bangladesh and Nepal.

The Japanese government has announced plans to spend $15 billion during the next five years to help developing countries narrow the digital divide. There is also talk of creating a Peace Corps-style volunteer group, the Global Digital Opportunity Corps.


Issues pertaining to the digital divide also featured in another key meeting held in Japan -- the G8 Summit -- where the Okinawa Charter on the Global Information Society was passed, calling for a Digital Opportunity Task Force ("dot force") which would formulate action plans for developing countries to harness the Internet via appropriate policies, technologies and participation.


Many emerging economies also have a well-connected diaspora, who are beginning to plough money, advice and energy back into Internet initiatives in their home country - such as SchoolNet Africa.

Emerging economies also need more home-grown success stories, champions of the Internet, role models of Netrepreneurship, and even celebrity endorsements of e-commerce to accelerate the Internet economy.

Africa, despite low overall Internet penetration, has some pockets of excellence, as in countries like South Africa and Ghana.

"We offer local Internet data centre facilities for e-commerce players, offer unlimited access for US$20 per month, and are also involved in regional initiatives like SaharaNet," said Nii Quaynor, chairman of National Computer Systems in Ghana.

Though there was a need in some cases for external development aid, Quaynor was critical of Western organisations who did not tap local talent in Africa for their IT needs, but preferred to hire outside help. "We are also not a social test-bed for the First World, who throw out some funding here and there to observe social experiments," he said.

E-Commerce Challenges

Companies in many emerging economies are discovering that e-commerce is much more than neat design and online catalogues; real-world logistics and online payment gateways are as important, said Michael Mingus of the Telecommunication Development Bureau at the International Telecommunications Union (www.itu.int).

Hence some e-commerce models in countries like Indonesia are targeted more at the diaspora, who can avail of U.S.-based payment gateways and use gifting services for their relatives back home. In countries like Mexico and Cuba, overseas residents use the Net for sending remittances to relatives back home, which can be much cheaper via a well-designed Internet business model than the expensive moneywire services like Western Union.

Governments can also lend a helping hand to domestic e-commerce, as in the case of Tunisia's upcoming smart card project called e-Dinar. These cards will be made available at most post offices, and can be used for e-commerce, said Lamia Chaffai, e-commerce manager at the Tunisian Internet Agency (www.ati.tn).

Developing countries should also track and participate in international fora framing e-commerce policy, said Magda Ismail of Egypt's Ministry of Communication and IT. Such fora include the World Trade Organization (WTO), U.N. Commission on International Trade Law (UNCITRAL), World Intellectual Property Organisation (WIPO), Organization for Economic Cooperation and Development (OECD), and U.N. Conference on Trade and Development (UNCTAD).

Another key organisation for all countries to participate in is the International Corporation for Assigned Names and Numbers (www.icann.com) which oversees domain name and address allocation. Countries like India unfortunately have zero participation on the boards of many of these organisations, and need to get their act together or be left out of critical decisions affecting their Internet space.

Emerging economies like Mongolia have unique needs, such as a small population sparsely distributed over vast tracts of land -- or archipelago nations like the Philippines and Indonesia, made up of over 10,000 islands. Satellite and wireless access will play a key role here.

"In 2010, we aim to have all nomadic families with laptops and cellphones, doing e-commerce online," predicted Suren Badral, foreign policy advisor to the Mongolian government.

An increasingly popular way to keep Internet costs down is by leveraging open source and free software, such as the Linux kernel and Apache server.

While much analysis about the Internet in emerging economies focuses on B2C space, even greater benefits of the Net may lie for them in B2B space. Emerging economies have been much slower to catch up in innovations like third-party marketspaces (such as ChemConnect or FruitExchange) founded in OECD countries.

Internet Diffusion: Benefits and Measurement

The Internet could also be used more pro-actively to coordinate relief efforts in the aftermath of natural disasters such as earthquakes or cyclones, or political crises like civil war. "Humanitarian agencies can use the Net to deliver assistance from around the world to a local target spot more effectively," said Paul Meyer, chairman of the Internet Project for Kosovo (www.ipko.org).

Other notable initiatives in this regard include PROMIS (Programme Management Information System, to improve donor access to project proposals in Afghanistan), interagency coordination via the Net by the transitional government of East Timor, and the Red Cross site (www.icrc.org).

The next step logical step for future crises could be a "plug-and-play" wireless ISP for humanitarian crises, said Meyer.

Other initiatives supported by ISOC for increasing awareness about the Net include a magazine called "On the Internet," the student-oriented ThinkQuest campaign (www.advanced.org/ThinkQuest) for learner initiatives, and the newly created Internet Societal Task Force (ISTF).

Areas still needing more internationally coordinated work include tracking the growth of the information society in countries around the world, via parameters ranging from connectivity costs and local content to IT skills and sectoral absorption. The Internet economies of countries like the U.S. are the focus of much market research, but few other countries have as much quantitative or qualitative data about their "infostructure."

Automated procedures (such as those used by Network Wizards) as well as community-driven collectively-standardised initiatives in member countries could jointly address some of these knowledge needs, according to Larry Press of California State University.

Some annual reports on global Internet indicators are already being published by organisations like TeleGeography, UNDP, UNESCO, World Bank, and ITU.

Concerns also arise in ensuring that Internet publishing includes the needs of people with disabilities, strongly advocated by organisations like the International Center for Disability Resources on the Internet (www.icdri.org).

In sum, strategies for bridging digital gaps must address all the "8 Cs" of the Internet economy: connectivity, content, community, commerce, capability, cooperation, culture and capital.

National Imperatives

Despite all these challenges, countries and companies must stay focused on the Net as a strategic platform, according to keynote speaker John Chambers, CEO of internetworking titan Cisco Systems.

"Years ago, we said that the world is entering the next industrial revolution thanks to the Internet economy. Critics said this was clever marketing, but look how the Net has swept across the world today," said Chambers.

The "virtual hand" or the network effect lies in increased competitive advantage and  productivity, and indeed, in basic survival in the online age.

"Speed, talent and branding are the key for success in the Internet era," said Chambers. The equivalent of 100 years of change in the Old Economy can now happen in less than a decade, he said.

"We will soon see the emergence of all-in-one data/voice/video networks, and a consolidation of voice and data communications companies," Chambers predicted.

"For countries and individuals to succeed today, they must realise that the two key equalisers in life now are education and the Internet," he said.

Internal use of the Net has played a big role in Cisco's success; 90 per cent of its transactions are now online, and Web-based customer service saves the company US$600 million per year.

Companies in today's world must compete simultaneously in several spaces: local, global, real-world, online, and in stock market valuations, said keynote speaker Ken-ichi  Ohmae, Japanese management guru and author of dozens of classic bestsellers like "The Borderless Economy" and the newly released "Invisible Continent."

"We are noticing an interesting phenomenon today: the growth of small nimble regions which can interface well with the global economy, such as Ireland, Singapore and Finland," said Ohmae.

These regions can also take off within a country - such as with Bangalore, Pune and Hyderabad in India, he said.

"These cyber-compatible global business units tend to have optimum sizes of between 3 to 10 million people, and are IQ-intensive," according to Ohmae.

"I am very happy with the success of Indian companies in the software space," he said.

Governments must allow such regions to interface independently with the rest of the world, and provide minimum safety nets, he advised. There should also be de-regulation of financial, transport and telecom sectors.

Countries like the U.S. are doing well thanks in part to their regional autonomy for economic development, and open access of Ph.D. programs for foreign students, whereas the Japanese government and corporates are not doing enough to harness the Internet, he said.

The New Economy's rate of growth is 10-fold compared to the Old Economy, he said, and is also leading to unprecedented cross-border mergers and acquisitions.

Information technologies can also have a disruptive effect, and societies must be prepared to handle this. They also lead to quick cross-border migration of information, capital, wealth, jobs and even crime, he cautioned.

With proper planning and attitude, countries have a rare chance today to "reboot" themselves up again, Ohmae concluded.


The writer can be reached at madan@techsparks.com

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