1.4

Market Trends

What Market Trends are Fostering Broadband Deployment and Adoption
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FIGURE 1.4.
Global Fixed and Mobile Broadband Penetration Rate per 100 People (2000-2010)

Source: ITU, World Telecommunications/ICT Indicators Database, Global ICT Trends, www.itu.int/ITU-D/ict/statistics/material/excel/2011/Global_ICT_Dev_01-11.xls (2011).

Broadband connectivity is expanding globally. Between 2005 and 2010, the average wireline broadband penetration rate grew over 60 percent—from 3.3 to 8.8 subscribers per 100 people.As a result of such growth, the estimated number of wireline broadband subscriptions surpassed 550 million by mid-2011, up from 471 million in 2009.* A sizable number of these new subscriptions come from Brazil, Russia, India, and China (known as the BRIC countries), which have collectively doubled their subscriber base in the last several years.* The number of active mobile broadband subscriptions reached nearly 1.2 billion by mid-2011, representing a 45 percent increase annually since 2007, with total mobile subscriptions topping five billion.* By the end of 2010, there were over twice as many mobile broadband as wireline broadband subscriptions (see Figure 1.4).*

Despite these advances, a “digital divide” remains between developed and developing countries. Technology fitting the needs of users is critical, but broadband deployment also depends on structural market characteristics, such as competitiveness and purchasing power, as well as the evolution of relevant (localized) content, international connectivity, geography, and several other factors. As shown in Figure 1.5, there are nearly six times more wireline broadband subscribers in developed countries than in developing countries and nearly four times more mobile broadband subscribers.In effect, wireline broadband deployments in many developing countries are a decade behind those in developed countries. Given the cost and resources required for the deployment of wireline broadband, wireless broadband is more likely to be the broadband solution for users in developing countries, particularly in rural and remote areas.

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FIGURE 1.5.
Digital Divide for Wireline and Wireless Broadband, 2010

Source: ITU, World Telecommunication/ICT Indicators Database (2011).

  • 1.4.1 Trends in Supply

    Developments in the types of technologies and business models used to deploy broadband network infrastructure are allowing operators to supply more people at lower costs. In developed countries, network operators are installing fiber optic cables closer to end users, reaching directly into their neighborhoods, offices and homes. In developing countries, the spread of high-speed wireless networks promises to gain momentum over the next few years. Wireless broadband is already more prevalent than wireline broadband in many developed and developing countries. As noted in Figure 1.6, the number of wireless broadband subscriptions in Africa, for example, is more than four times that of wireline.In comparison, Europe’s wireless broadband penetration is nearly double the wireline penetration rate at 26 percent and 54 percent, respectively.* This suggests the potential for wireless broadband in areas where traditional wireline infrastructure may be absent, as well as in areas with substantial wireline build-out.

    With the number of wireless broadband subscriptions worldwide surpassing the one billion mark in 2011, developing countries, particularly India and China, are often leading the way.* Together, India and China have the top five mobile operators in terms of total number of subscriptions, which is expected to continue as mobile broadband grows.*

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    FIGURE 1.6.
    Wireline and Wireless Broadband Subscriptions by Region, 2011*

    Another important trend affecting broadband networks is their ever-increasing speed. In 2011, Akamai, a major Internet traffic manager, noted a global shift away from narrowband to broadband connectivity.As shown in the figure below, the global average Internet connection speeds (for users who pass through the company’s servers) rose 43 percent year-over-year to 2.6 Mbit/s, and all of the top ten countries achieved average connection speeds well above the “high broadband” threshold of 5 Mbit/s.

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    FIGURE 1.7.
    Average Broadband Speed: Top 10 Countries, Q2 2011

    A result of greater supply of broadband and improved technologies is the steady decrease in broadband prices, generally for equal or faster broadband speed. In its report, Measuring the Information Society 2011, the ITU reported that among 165 countries studied, the retail price of “entry level” (i.e., 256 kbit/s) wireline broadband access halved between 2008 and 2010.In developed countries, these monthly broadband subscriptions represented just 1.5 percent of income—for 31 developed countries, a basic broadband subscription costs on average the equivalent of 1 percent or less of average monthly gross national income (GNI) per capita. Comparatively, in 19 countries, most of which are least developed countries, a broadband subscription costs on average more than 100 percent of monthly GNI per capita. For example, the monthly price for a wireline broadband connection in Ethiopia, Guinea, Malawi and Zimbabwe is over ten times the average monthly income. As such, the price of wireline broadband Internet access in developing countries is substantially more expensive relative to developed countries, which demonstrates that despite falling prices, broadband Internet access remains too expensive for many around the world. While wireline broadband prices may be prohibitively high, they are declining most rapidly in developing countries. The ITU found that the steepest reduction in retail broadband prices has taken place in developing countries with wireline broadband prices dropping by over 50 percent between 2008 and 2010, as compared to a drop of 35.4 percent in developed countries (Figure 1.8).

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    FIGURE 1.8.
    Wireline Broadband Prices in Developed and Developing Countries between 2008 and 2010

    Source: ITU, The World in 2011: ICT Facts and Figures.

    In addition to overall increased availability, faster speeds and declining prices in broadband network access, the release of new broadband-enabled devices may also be viewed as a supply-side input. The overall trend for broadband devices is improved capabilities, mobility and portability. According to research firm IDC, in the second quarter of 2011, global smartphone shipments grew 11.3 percent year-on-year while the feature phone market shrank 4 percent over the same period.In Western Europe, the number of smartphone shipments surpassed feature phone shipments for the first time.* By the end of 2011, over 450 million smartphones will be shipped, leading to the worldwide smartphone market growing nearly 50 percent since 2010 as users upgrade to smartphones with more advanced features.* These devices are designed to take advantage of broadband connectivity, whether provided by a mobile network or by Wi-Fi distribution of the wired broadband connection in a home, workplace, or Wi-Fi “hotspot.”

    Mobile Broadband for Developing Countries

    While developing economies often do not have the type of infrastructure that is usually associated with broadband deployment (that is, wireline access), the significant deployment and availability of mobile services is proving to be an easier way for the developing world to shrink the digital divide. Access to 2G mobile networks is now available to 90 percent of the world population and 80 percent of the population living in rural areas. By mid-2011, 3G networks reached 45 percent of people worldwide.* According to the ITU, people are moving rapidly from 2G to 3G platforms, in both developed and developing countries, with 159 countries offering 3G services commercially by mid-2011, compared to 95 countries in 2007.*

    Globally, there has been steady growth in the number of advanced mobile wireless broadband networks. As of October 2011, 424 HSPA systems had been launched commercially in 165 countries, including 152 commercial HSPA+ networks launched in 79 countries.* By mid-2011, nearly 600 WiMAX networks had been planned or launched commercially worldwide.* Most of these WiMAX networks are being deployed in developing countries and Africa regions. For example, there have been 120 commercial or planned WiMAX deployments in 33 Latin American and Caribbean countries and 117 deployments in 43 African countries.*

    As mobile broadband subscriptions have overtaken fixed broadband subscribers, the continued accessibility to mobile services has spurred the growth and deployment of broadband in the developing world. Indeed, because of high penetration of mobile in the developing world, as the broadband market matures, the majority of growth is likely to occur there.*

    The immense commercial success of mobile telephone service attests to the attractiveness of untethered access to users around the world. In the developing world, it is important to note that mobile services are in many cases the first widely available two-way telecommunications technologies. As such, while the appeal of mobility is certainly a factor, the choice for many users is not between mobile and fixed service, but rather between mobile broadband and no broadband. In addition, in many countries, particularly developing countries, the deployment of new access lines is time consuming, costly, and yields unattractive returns. As noted in the case of India (see Table 1.4), there are substantial cost differentials when comparing the costs of deploying broadband technologies.

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    TABLE 1.4.
    Comparative Evaluation of Deploying Broadband Technologies in India

    Source: Analysys Mason, Assessment of Economic Impact of Wireless Broadband in India, December 2010, available at http://www.gsmamobilebroadband.com/upload/resources/files/AM_India_Exec_Summary_Final.pdf.

    Deployment of mobile broadband technologies is beginning to advance beyond 3G in both developed and developing countries. In particular, LTE systems are capable of providing broadband speeds faster than DSL and comparable to fiber optic networks. Regulators are assisting these developments by increasingly permitting mobile operators to upgrade existing network infrastructure, as well as releasing new spectrum bands for mobile services.

    As of January 2012, 285 network operators in 93 countries were investing in LTE systems, including 49 commercial LTE networks launched in 29 countries (Figure 1.9).* Although current commercial deployments of LTE are focused in developed countries, there have been a few commercial LTE launches in emerging economies, including Saudi Arabia, the Philippines and the United Arab Emirates.* LTE is in the trial stages in many other developing countries throughout Latin America (e.g., Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Mexico, Peru and Uruguay); the Asia-Pacific region (e.g., China, India, Indonesia, Malaysia, Sri Lanka, Thailand and Vietnam); and the Middle East and Africa region (e.g., Angola, Bahrain, Egypt, Kenya, Namibia, Oman and South Africa).

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    FIGURE 1.9.
    Worldwide LTE Network Commitments, Launches and Trials as of January 2012

    Global mobile Suppliers Association, Map: Worldwide LTE Network Commitments, Launches and Trials, January 5, 2012.

    Towards Ubiquitous/Seamless Broadband Access

    Perhaps the ultimate trend in advanced wireline and wireless broadband technologies is the ability for users to access networks seamlessly, whether at work or at home, in shops or restaurants, on planes, trains, at sea and in the most remote areas. Beyond the current and emerging terrestrial wireless and wireline technologies being used for provision of broadband services addressed above, satellites are also capable of providing Internet access, reaching the most remote locations. A new generation of satellites was launched in the beginning of 2010 that are capable of providing true broadband speeds to end users.The advantage of satellite broadband access is that it can extend broadband to those areas that neither wireline nor terrestrial wireless providers can go. Collectively, terrestrial and satellite broadband deployments will help to provide ubiquitous access and ensure that anyone has the option to subscribe to a broadband service, as well as maintain connectivity regardless of where they travel. In addition to ubiquitous broadband access, cloud computing services, which help to drive demand for broadband, will enable a seamless broadband experience from any device, as addressed below.

  • 1.4.2 Trends in Demand

    The development of novel or enhanced applications, services and devices enabled with broadband connectivity has served as a key driver of demand for broadband access over the past several years. The availability of broadband networks has allowed at least a partial migration of existing services away from more traditional models requiring consumers to conduct in-person transactions and/or abide by pre-scheduled services (such as banking, education, healthcare, shopping and entertainment) towards broadband digital networks that allow consumers to conduct a wide variety of activities online and on their own time, regardless of standard business hours or scheduled programming. While many of these same services saw an initial online presence with dial-up and other narrowband services, the rise of broadband connectivity has facilitated the development of more robust applications and services. Today, broadband networks allow consumers near-instantaneous access to on-demand entertainment content; permit professionals to better communicate and collaborate with far-flung colleagues; and create opportunities for students to access richer, more interactive educational materials. From the perspective of organizations leveraging broadband-enabled services to better reach consumers, clients, members and citizens, the efficiency of electronic communications has led to an increasing interest in bringing traditionally offline or non-electronic services to the Internet, or at least augmenting traditional means with online alternatives.

    Innovative Applications and Services

    Demand for more and higher-quality video and other rich content will be a major factor in driving the demand for higher-capacity broadband access. In addition, applications are also increasingly driving broadband use and development. Applications consist of function-specific software that delivers content to users or allows them to perform certain tasks.Social media applications, which connect users and allow for creative, collaborative, user-centered and interoperable environments in real time, are also helping to drive demand for broadband.* These applications include social networking, a wide variety of Web 2.0 applications and cloud computing services, as addressed below.

    Social Media and Web 2.0

    Social media, which include YouTube and Facebook, are applications that facilitate social interaction, using web and mobile technology. For example, YouTube, which allows users to generate video content, upload it and share it with others, is one of the most widely used social media applications and requires broadband capabilities to be effective. In 2011, some 48 hours of video was uploaded to YouTube every minute, resulting in nearly eight years of content uploaded each day—equivalent to 240,000 feature films every week.Web 2.0 is closely related to social media and is a term generally associated with applications that feature user-generated content and facilitate collaboration among users.* Web 2.0 applications—including web-based communities, hosted services, web applications, social networking sites, photo and video sharing sites, wikis, blogs, mashups and folksonomies—are interoperable, user-centered, and collaborative. Unlike the “traditional web,” they allow users to generate, distribute and share content in real time and typically require broadband connectivity. The availability of social media and Web 2.0 applications is stimulating demand and is an important factor to bear in mind in developing demand creation or facilitation strategies.

    Social Networking

    Social networking applications allow people to initiate and maintain connections, communicate with one another via various media, including text, voice and video, interact through social games and share user-generated and traditional media content. The highly personalized, easy, and flexible nature of social networking applications makes them some of the most-used online tools and one of the main drivers of broadband demand. Since these websites tend to offer only limited functionality with low bandwidth Internet connections, they help to drive broadband demand among users seeking to take full advantage of them. Non-adopters who may not have found broadband to be relevant in the past may seek out broadband services in order to interact with family and friends, as well as discover and create other engaging user-generated content.

    Mobility is an important part of social networking. In December 2011, of the over 845 million active Facebook users, more than 425 million accessed Facebook through their mobile devices and use Facebook twice as much as their non-mobile device counterparts.* Indeed, evidence already exists that social networking applications are driving mobile broadband use in many countries. In the United Kingdom, mobile operator Hutchison 3G released traffic statistics showing the amount of data customers use when browsing social networking sites.* The operator found that social networking accounts for most mobile broadband usage in the country, with Facebook being the most popular application. With the number of mobile broadband users surpassing the one billion mark in 2011, the value of social networking driving demand for ever-increasing amounts `of data is substantial.*

    Particularly in developing countries where mobile broadband is likely to be more accessible than wireline broadband, social networking applications accessed through mobile devices are likely to be a major driver of demand for broadband access. Facebook is actively reaching out to users without advanced phones or networks, in the expectation that it will entice more advanced usage in time.* India is now number two (after the United States) in terms of active Facebook users with nearly 43.5 million users as of February 2012, with Indonesia a close third with over 43 million users.*  One of the reasons for Facebook’s popularity in Indonesia is that it is “a way to establish social status, success and a platform for self-promotion.”This resonates with many people in developing countries where Facebook has emerged as the leading application.* Indonesia’s interest in social networking extends to Twitter: around one-fifth of Indonesian Internet users access the microblogging application, equaling the world’s highest penetration.* All of this has spurred a demand for faster connectivity, with available mobile broadband speeds rising to 40 Mbit/s.*

    • Facebook has more than 845 million active users around the world.
    • About 80 percent of Facebook users are located outside of the United States and Canada.
    • Over 70 languages are available on the site.
    • Over 700 billion minutes a month are spent on Facebook.
    • Over 425 million people access Facebook via their mobile phone per month.
    • 48 percent of young people said they now get their news through Facebook.
    • The average user is connected to 80 community pages, groups and events.
    • On average, more than 250 million photos are uploaded per day.
    • In just 20 minutes on Facebook over 1 million links are shared, 2 million friend requests are accepted and almost 3 million messages are sent.
    BOX 1.4.
    Impact of Facebook—Some Key Statistics

    In general, the exchange of user-generated content, particularly through video-sharing sites, also helps to drive broadband. Since social media focus on user-generated content, they are often quite localized, meaning they are available in local languages and character sets and deal with topics that are locally relevant. As noted in a 2011 survey by Pew Research Center, 71 percent of online adults in the United States use video-sharing sites, which is a 38-point increase from 2006.For example, with more than three billion videos viewed every day, YouTube has become the most popular online video sharing site in the world.* As Forbes magazine noted, the site is likely the “biggest television station on the planet.”* Not only does broadband access facilitate use of these social networking applications, but the applications are major drivers of broadband demand.

    Perhaps most indicative of future trends is that younger users report more frequent usage of video-sharing sites, implying that, as younger users get older, the popularity of video-sharing sites among all age groups will continue to rise. As shown in Figure 1.10, although there has been a significant increase in the use of video-sharing sites among all age demographics between 2006 and 2011, those between 18 and 29 years of age are the most likely to use video-sharing sites with over 90 percent visiting such sites in 2011. In each of these cases, broadband connectivity enables access to the media, information, conversations or services that users are sharing. While some of these services may function over a narrowband connection, most are intended for the always-on, high-speed connectivity of broadband.

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    FIGURE 1.10.
    Percentage of Internet Users Watching Videos on Video-Sharing Sites by Age, 2006-2011*

    Source: Pew Internet & American Life Project, The Audience for Online Video-Sharing Sites Shoots Up

    *2010 data broken down by age range are not available.

    As another important social networking application, Twitter, an application that allows users to broadcast short text messages, had over 100 million registered users worldwide in 2011.* Formed in 2006, it is already a powerful tool for the organization of social and political activities across the world.* In particular, Twitter and other social media helped play a pivotal role in the 2011 so-called “Arab Spring” uprisings. Protest organizers used Twitter, Facebook and YouTube, in addition to texting and similar narrowband technologies, to coordinate protest activities. Social media facilitated the spread of information about citizens’ grievances through YouTube videos and conversations on social networking websites when official or traditional media sources may not have given those grievances much or any coverage. These online tools are now firmly embedded within a more expansive media ecology that includes traditional sources such as radio, as well as popular satellite television stations.

    Indeed, there is much interest in user-created content created outside of professional routines and practices. The OECD predicts that the popularity of user-created content will likely continue to grow, with new drivers furthering its creation and use. Specifically, consumers will increasingly use mobile devices to watch and create user-created content, with higher uplink data transmission speeds and other consumer devices allowing easier content upload.All this means that the demand for mobile broadband devices capable of video capture and sharing will only grow.

    Social Collaboration: Wikis, Mashups, and Crowdsourcing

    Web 2.0 applications allow for more than simply connecting with others—they also allow for people anywhere in the world to collaborate: they can create content through blogs and podcasts; co-create content, for example, through wikis; link different types of content from different sources together to create new media (e.g., mashups); or use social tags to identify folksonomies. Additionally, Web 2.0 applications often have strong network effects in which websites become more useful as more people participate (e.g., Wikipedia entries or reviews of products on Amazon).

    Although perhaps to a lesser extent than social networking applications, these social collaboration tools help to increase the demand for broadband services by engaging users and making the online experience more personalized and flexible. Often, they draw on the idea of the “wisdom of the crowd,” which refers to practices where opinions and information are collectively created rather than arrived at by the views of a single or small group of experts.

    • Wikipedia is a well-known example of such social collaboration. The popular collaborative encyclopedia is multilingual, web-based, free to access and written by Internet volunteers, most of whom are anonymous. Anyone with Internet access can write and make changes to Wikipedia articles, and there are currently more than 82,000 active contributors around the world who are creating and editing over 19 million articles in 270 languages.* Launched in 2001, Wikipedia is now available in over 280 languages—the English Wikipedia contains nearly 3.9 million distinct articles, followed by German with 1.36 million and French with 1.21 million*, though many languages native to developing countries remain under-represented.*
    • Users can also create mashups, which are interactive Web applications that integrate content (e.g., video, text, audio or images) retrieved from third party data sources in order to create new and innovative services and applications.* Mashup websites tend to rely on external websites that use open source application programming interfaces (APIs), which expose all of the instructions and operations in an application to facilitate the interaction between different software programs. Mashups may be as simple as a restaurant’s website embedded with a single API, such as a Google map to make it easier for customers to find it. Other mashups combine multiple APIs. For example, a web-based interactive restaurant guide could use APIs from sites with online reviews, photos, and maps to tell you the best places to eat in a given city and where to find them.
    • Crowdsourcing is a type of web collaboration referring to the outsourcing of tasks to a large, undefined group or community (the “crowd”) through an open call for assistance, such as via Twitter, Facebook or a dedicated webpage. Following the 2010 earthquake in Haiti, the Crisis Map of Haiti used crowdsourcing to coordinate relief efforts on the island. Those in need could submit incident reports via the organization's website, phone, SMS, email, Facebook, Twitter, etc., and thus request aid or even report missing persons. After being reviewed by volunteers, the reports were mapped with Global Positioning System (GPS) coordinates in near real-time on a map also showing shelter sites and hospitals. These tools helped speed search-and-rescue efforts and provide vital supplies to those most needing them. The events in Haiti provide a model for how to deal with future disasters, both natural and man-made, as well as demonstrating a practical application of Web 2.0 technologies.

    Collaborative Working Tools for Businesses and Institutions

    Businesses and institutions are taking advantage of Web 2.0 applications (often referred to as “Enterprise 2.0”) to improve productivity and efficiency, as well as lower costs. Generally, Web 2.0 applications are not only less expensive, faster to deploy and more flexible than commercial or customized software packages, but also offer built-in collaborative workspace tools that enable people to interact across differences in time and space.* These tools often center around “groupware” that allows multiple people to work together on projects and share documents, calendars and other data and to participate in video and audio conferences. Since Web 2.0 apps require large amounts of bandwidth to download and upload the various types of digital media, a broadband connection is essential.

    Education and Web 2.0

    Support for school broadband connectivity programs can be strengthened through the use of Web 2.0 applications in education. Even where virtual classrooms or other e-learning tools are in use, Web 2.0 tools can replace or complement expensive Virtual Learning Environment (VLE) software to provide a more flexible approach through the use of blogs, wikis, and other collaborative applications. For example, a classic VLE involves the teacher sharing slides and resources with students through an enabling software program. Web 2.0 applications, such as Slideshare for presentations, Google Docs for documents, Flickr for images, and YouTube for videos, however, are capable of replicating the core functions of the VLE software at no cost to educators or students.* Open source and cloud technologies also allow for more educational opportunities where fewer resources are available. For example, students without personal computers can complete assignments at a university computer lab or Internet café via Google Docs. Other services, such as Flat World Knowledge’s open source textbooks, allow professors to review, adopt, and even customize textbooks for their classes, which students can then purchase in print format or view online for free, further reducing the cost of education. Additionally, teachers can incorporate blogging and wikis to encourage student participation and interaction.

    A 2009 study by the Joint Research Centre of the European Commission on e-learning initiatives in Europe found that student and teacher participation in Web 2.0 applications supports technological innovation in education and training by providing new formats for knowledge dissemination, acquisition, and management.These tools increase the accessibility and availability of learning content through a range of platforms that offer a large variety of educational material. Further, Web 2.0 tools support new strategies for studying a subject matter by making available a host of dynamic tools for transforming content and displaying information in different formats, as well as contribute to diversifying and enhancing teaching methods. Students are able to have more personalized and flexible lessons targeting their specific needs and are able to learn valuable networking and community-building skills. Additionally, these tools allow collaboration among geographically dispersed groups and can facilitate intercultural, cross-border, and cross-institutional exchange, while reduced costs allow for institutions in developing countries to compete with those in other areas.

    Cloud Computing

    While applications have traditionally resided on the user’s computer or other device, there is increasing interest in hosting applications on remote servers, or in “the cloud.” Some cloud-based applications, such as web-based email (or webmail), have been in use for several years, even predating widespread broadband deployment. However, the rise of broadband has enabled more robust applications, including productivity applications, such as the office suites offered by companies including Google* and Microsoft.* Some of the benefits of cloud-based applications include access to information and documents from multiple locations, decreased processing power requirements for end-user devices, and decreased responsibility for users to update and maintain applications. In particular, cloud computing allows users to use any device from any network location to access uploaded files while keeping the costs of software and data distribution very low.

    Other cloud computing applications focus on file storage, independently of format. For example, Dropbox is a digital storage service with over 50 million subscribers who can upload, access and share documents, photos and videos from any location—up to 2 MB of storage is free while 50 MB is USD 10 and 100 MB is USD 20.* Online retailer Amazon also offers cloud services to consumers and businesses, allowing users to create a “personal hard drive in the cloud.”By January 2012, Amazon had hundreds of thousands of customers in 190 countries storing 762 billion objects, which was nearly triple the number of stored objects at the end of 2010.* The rising popularity of cloud computing services can help drive consumer demand for broadband since access to fast and reliable broadband is needed in order to maximize the value of the cloud.

    Compelling and Local Content

    Ultimately, what motivates people to buy broadband services and devices is that they believe broadband will enrich their lives, offer convenience, provide entertainment and improve their businesses. The network infrastructures or policies in place to expand broadband access are less important to end users on a day-to-day basis than the availability of relevant and useful online services and applications that allow users to access, create and share content. What Bill Gates said about the Internet in 1996 remains true today: “Content is King.”* Attractive and useful content, as well as context (with the development of location based services, which require broadband access), are perhaps the most important underlying elements of broadband adoption.

    The English language is currently used for the majority of websites around the world;an estimated 56.4 percent of all websites are in English followed by German at 6.6 percent and Japanese and Russian at 4.7 percent each.* Interestingly, when looking at the number of Internet users by first language, Chinese was a close second to English in May 2011 (Figure 1.11) and is likely to overtake in the near future. However, Chinese is ranked number six in terms of number of websites with about 4.5 percent of all websites in Chinese. This discrepancy helps highlight how there can be a significant obstacle to Internet and broadband use by non-English speakers due to the scarcity of content in their own languages.

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    FIGURE 1.11.
    Number of Internet Users by Language, May 2011

    Source: Internet World Stats, Top 10 Languages Worldwide in Millions of Users (May 2011), available at http://www.internetworldstats.com/stats7.htm.

    Efforts to create content that is relevant and interesting, using the local language and character sets, is expected to increase the demand for broadband services in local areas. For example, the Kenya ICT Board in 2010 launched a grant of KES 320 million (USD 3.7 million) to promote the development of relevant, local digital content and software by targeting entrepreneurs in the film, education, entertainment and advertising industries. The goal of the project is to increase Internet penetration and promote local content, which is viewed as a potential area for new revenues in the country.

    In addition to direct grants for the production of local content, governments can support the development of local content and applications in other ways, such as the development of standardized keyboards, character sets and character encoding. This type of indirect intervention would have an impact on the content available by enabling users to create content in their own languages.Additionally, translation and standardization of operating systems into local languages can help to facilitate the development of local applications that are relevant and comprehensible to local users.* Governments can also play an important role in developing local content and local applications by directly creating local content and local applications in the form of e-government applications as described above.

    Some forms of user-generated content, such as YouTube videos, face fewer barriers to expression as the speaker is recorded in his or her own language directly. YouTube is localized in 25 countries and is available in 43 languages.This helps to overcome some of the barriers in content reaching a possible community of interest, but not entirely, as content generated in languages other than those used in the 43 local versions or the worldwide version may encounter barriers in reaching an audience.

    It is likely that greater amounts of local content will continue to become available in the near term. For example, a website called d1g.com is a platform in Arabic for sharing videos, photos, audio, a forum, and a question and answer facility. Launched in 2007, d1g.com is one of the Arab world’s fastest-growing social-media and content-sharing websites, with more than 13 million users and 5.3 million unique monthly visitors in mid-2011.* It has 15 million videos, and streams an extensive amount of Arabic videos—600 terabytes of data per month. Notably, nearly 100 percent of d1g’s content is user-generated, with a small amount produced in-house. d1g.com became the most popular Arab social-media site (after Facebook and Twitter) when a user created the “Egyptstreet” diwan during the Egyptian revolution. During that time, unique visitors rose from three million to five million per month, and visits per month grew from six million to 13 million.

    Broadband-Enabled Devices

    In addition to services and applications, the continual development and evolution of devices and device use cases has been and will continue to be a key driver of broadband demand. The trends in device development are to make them smaller, faster, less expensive and more useful with a wider range of capabilities.

    Portable Internet access devices, including laptops, smartphones, netbooks and tablets, can leverage broadband connections to access services and applications in much the same ways as traditional desktop PCs. Further, there is a growing trend toward connecting devices not traditionally used for Internet access to online services and to connect devices to each other directly – an idea known as the “Internet of Things.” A wide spectrum of services and applications are used by a variety of devices, each enabled by broadband connectivity. As more devices are able to take advantage of broadband to provide information, services or functionality in a more effective or efficient manner, they drive demand for broadband service. Box 1.5 describes three trends in user devices that promise to alter the terrain of the computing and communications industries, bringing them closer to converging.

    Three trends in user devices have implications for broadband. First, traditional computers such as desktops and laptops are becoming cheaper. A computer capable of multimedia functions and Internet connectivity is much cheaper today, with prices dropping over 90 percent over the last decade. Indeed, producer price indices for the computer manufacturing industry have plummeted since 1992 (see figure below).

    Prices of computer hardware in the United States, log scale, 1992–2009

    Second, mobile telephones are becoming smarter. Popular smartphones include handsets powered by Windows or Linux derivatives. They both host applications and allow users to connect to applications over wireless connections. A survey of business technology professionals found that more than a third of smartphone users “occasionally or frequently leave their laptops at home in favor of their smartphones.” Over 700 million smartphones were shipped worldwide in the first half of 2011 with double-digit growth expected in 2012.

    A third development is the netbook—inexpensive portable computers that support simple applications and Internet connectivity. Netbooks are increasingly being bundled with mobile broadband connectivity. In the United States telecommunications service provider Sprint has bundled a netbook for USD 1 for subscribers who sign a two-year mobile broadband service contract.

    Pyramid Research predicts that netbooks will accelerate mobile broadband adoption among low-income customers, estimating that mobile broadband subscriptions will rise by 25 percent after services go below USD 20 a month and include ultralow-price netbooks. A growing demand for netbooks has led microprocessor maker Intel to see rapidly increasing sales of its Atom microprocessor, designed for the netbook market.

    BOX 1.5.
    Three Trends in User Devices Prices of computer hardware in the United States, log scale, 1992–2009

    Sources: U.S. Bureau of Labor Statistics; Information Week Oct 2008, Your next computer; Budde Global - Mobile - Handset Market 10/06/2009; http://news.cnet.com/8301-1035_3-10280886-94.html; Pyramid Research, Mobile broadband for the masses: The case for bundled netbooks, May 2009, p. 8; http://www.marketwatch.com/story/intel-margins-soar-as-manufacturing-might-kicks-in-2009-10-13; International Data Corporation, Worldwide Mobile Phone Market Grew More Than 11% in the Second Quarter; Feature Phones Decline for First Time in Almost 2 Years, According to IDC (July 28, 2011), available at http://www.idc.com/getdoc.jsp?containerId=prUS22962811.

    Portable Devices

    With respect to the expanding universe of Internet access devices, the rise of portable devices is generating significant new demand for broadband services, especially mobile broadband. While feature phones continue to outsell smartphones, the latter are enjoying significant growth. Research firm IDC has also found that the nascent tablet computing market is growing rapidly. For example, nearly 18.1 million tablets were shipped worldwide in Q3 2011 alone, representing a 265 percent increase over the previous year.In a separate forecast, IDC predicted that combined shipments of smartphones, tablets, and other application-enabled devices would overtake traditional PC shipments by mid-2011 as complementary devices to PCs.By October 2011, however, it appeared that tablets had not yet displaced PCs in terms of sales.*

    It is important to note that the majority of tablet shipments in 2010 and 2011 were Apple’s popular iPad and iPad2, which now have a 61.5 percent worldwide market share, while the first competing product from a major vendor did not enter the market until the last quarter of 2010.* The expected growth in 2011 tablet shipments reflects continued interest in the iPad, as well as further introductions of competing products, many based on the Android operating system. However, IDC believes that the non-PC devices are not necessarily replacing PCs, but rather are expanding the market for Internet access devices. All of these devices are designed to take advantage of broadband connectivity, whether provided by a mobile network or by Wi-Fi distribution of the wired broadband connection in a home or workplace.

    The explosive growth of wireless telephony services in the developing world has been one of the great ICT success stories in recent years, and has brought about significant change in the way the world’s population communicates and conducts business. With the low level of fixed telephony or broadband connections in the developing world, it is expected that advanced mobile devices will provide a primary means by which those in developing countries gain access to broadband. Thus, while broadband services in much of the developed world began with PCs and laptops and expanded to mobile devices, the pattern in the developing world is more likely to be the reverse, or may not even include a significant role for traditional PCs and laptops.

    Internet of Things

    The Internet of Things can be characterized as the networked interconnection of objects, including those that are not traditionally considered as Internet access devices. It includes the idea of machine-to-machine (M2M) communications, in which machines or devices exchange information without the need for human intervention. Beyond connecting consumer devices, such as household appliances or cameras, the Internet of Things can also encompass connections to, for example, a wide range of sensors, utility networks (the “smart grid”) and healthcare devices. The connection of everyday devices and objects could enable a number of activities, including remote monitoring or activation of household devices; automated reporting from networks of weather, geologic, or other sensors; improved vehicle traffic management; and alerts to individuals or doctors regarding medical needs.

    The concept of an Internet of Things may be extended to encapsulate all of the major systems of a city. In such a “smart city,” transportation, public services, utilities, and other systems are interconnected and constantly updated to create a type of “living, breathing” organism. Businesses, residents, tourists, and government can all tap into this network to communicate with each other, glean information, identify trends, and even provide corrective action as needed.

    As advanced, Internet-connected devices become available and more ubiquitous, a number of smart city initiatives have appeared. In Barcelona, a municipal fiber-optic network complemented by a Wi-Fi mesh network facilitates smart city functions. Traffic lights, parking meters, surveillance and traffic cameras, and public lighting are all connected to the network. In addition, sensors throughout the city monitor traffic flow, parking availability, pollution, and noise and report to the network. Police officers, city planners, and even social workers can tap into this network for real-time information. Even trash containers are tracked using RFID tags; a pilot program measures the amount of trash produced per household to enable a “pay as you throw” program and optimize collection routes.

    In Venice, 10,000 kilometers of fiber optics and 120 Wi-Fi hotspots combine to enable a smart city platform that connects residents, businesses, schools, universities, museums, and city management. An RFID-enabled card allows citizens to access municipal buildings (including libraries, museums, and sports venues), use municipal transportation services, and even pay for items and services such as parking, tickets, and food. A similar service is available for tourists, allowing them to plan their visit and pre-pay for tours and services online. ARGOS, the Automatic & Remote Grand Canal Observation System, provides city managers real-time information of canal traffic and automatically detects and highlights illicit behavior.

    In India, a number of smart cities are being developed. For example, the Rajasthan government is collaborating with the Japanese government to develop Bhiwadi-Neemrana town in Alwar district as a smart city—part of a smart community development project. The aim is to integrate water supply, solid waste management, power production, and transportation systems to create an efficient city with a low carbon footprint. The project is being financed largely by Japan's Ministry of Economy, Trade and Industry (METI) would finance the ambitious project, with additional support from India’s Delhi-Mumbai Industrial Corridor project.

    BOX 1.6.
    Examples of Smart City Initiatives around the World

    As stated in the U.S. National Broadband Plan, “the Internet of Things will likely create whole new classes of devices that connect to broadband, and has the potential to generate fundamentally different requirements on the fixed and mobile networks: they will require more IP addresses, will create new traffic patterns possibly demanding changes in Internet routing algorithms, and potentially driving demand for more spectrum for wireless communications.”As shown in Box 1.6, a number of countries are deploying smart city initiatives around the world.

    Although the concept of the Internet of Things has been discussed for several years, and some devices are deployed, it is fair to say that a global Internet of Things is still in the early stages of development. A variety of stakeholders are taking steps to guide and advance development of multiple aspects of a world where most humans are surrounded by perhaps hundreds or thousands of networked objects at any given time. For example, the European Commission in 2009 adopted an Internet of Things Action Plan* intended to promote the evolution of the Internet of Things through technology standardization and research funding, as well as protection of privacy, data and security. In June 2010, the European Parliament followed with a resolution encouraging the development of the Internet of Things in Europe.In July 2010, China’s vice minister of industry and information technology announced that his ministry was developing a national Internet of Things plan. Further, the European Union and China in May 2010 inaugurated a joint Internet of Things expert group.*

    Beyond government plans to guide and promote the Internet of Things, private-sector companies are also moving forward with technologies and solutions to develop and expand the Internet of Things. For example, Hewlett-Packard’s CeNSE (“Central Nervous System for the Earth”)* and IBM’s Smarter Planet campaign* both work to create networks of Internet-connected sensors that enable a feedback loop for objects and people, and thus the monitoring and analysis of a wide range of environmental conditions and data. The volume of data transmitted to or from an individual device may be miniscule, but if billions or trillions of objects around the world are connected to the Internet, the result will be significant data flows best that can only be handled by broadband connectivity. One Hewlett-Packard estimate, for example, states that one million sensors, running continuously would generate 20 petabytes of data over a six-month period.*