Connectivity Scorecard Leonard Waverman. Kalyan Dasgupta. Haskayne School of Business University of Calgary. LECG, London

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1 Connectivity Scorecard 2010 Leonard Waverman Haskayne School of Business University of Calgary Kalyan Dasgupta LECG, London 1 Nokia Siemens Networks

2 Introducing Connectivity Scorecard 2010 results Data Implications for Policy 2 Nokia Siemens Networks

3 What did we do and why is it different focus on useful connectivity Account for infrastructure, usage and complementary services and skills Emphasis on the business sector on skills Different measures for economies at different levels of development Design based on economics Economic growth and productivity Connectivity as a productivity tool 3 Nokia Siemens Networks

4 Our methodology principles Studied 25 of World Economic Forum s resource and efficiencydriven economies and 25 innovation-driven economies Indicators grouped into government, business and consumer categories; weighted individually by country More detail and weighting on business, since it is a key contributor to productivity growth Relative benchmarked scoring Category/Dimension Sub-categories Basis for weighting Consumers Consumer infrastructure Contribution to consumer Consumer usage and skills utility Business Business infrastructure Contribution to business Business usage and skills productivity Government Government infrastructure Contribution to Government usage and government productivity skills 4 Nokia Siemens Networks

5 Introducing Connectivity Scorecard 2010 results Data Implications for Policy 5 Nokia Siemens Networks

6 What is new in Connectivity Scorecard 2010? Innovation-driven economies : First leadership change in United States lost no. 1 ranking to Sweden! Finland caught up with Sweden, Norway, Denmark to prove Nordic ICT leadership Resource & efficiency-driven economies : South Africa moved up, Chile, Argentina, Brazil retained/improved position New measures in 2010 version to reflect changes in technology and more precisely capture real-world user experience 6 Nokia Siemens Networks

7 Connectivity Scorecard 2010: Innovation-driven countries Sweden is the new leader Rank Country [1] Score 1 Sweden [2] United States [1] Norway [5] Denmark [3] Netherlands [4] Finland [11] Australia [8] United Kingdom [6] Canada [7] Japan [10] Singapore [9] Ireland [12] Korea [18] 6.33 Rank Country [1] 14 Hong Kong SAR [14] Score Belgium [17] New Zealand [16] Germany [13] France [15] Czech Republic [20] Spain [21] Portugal [22] Italy [19] Hungary [23] Poland [25] Greece [24] 3.44 Sweden passed the United States for #1 US strong performer, but behind the very best in consumer infrastructure ICT leadership of Nordic countries: Sweden (1), Norway (3), Denmark (4), Finland (6) Korea, Japan excel in consumer infrastructure Poor showing of southern and eastern European countries (19-25) Average score ranking in parentheses 7 Nokia Siemens Networks

8 Connectivity Scorecard 2010: Resource and efficiency-driven countries Malaysia tops yet again Rank Country [1] Score 1 Malaysia [1] South Africa [4] Chile [3] Argentina [7] Russia [6] Brazil [8] Turkey [2] Mexico [5] Colombia [9] Ukraine [13] Botswana [10] Thailand [11] Tunisia [14] 3.87 Rank Country [1] Score 14 Iran [12] Vietnam [19] Sri Lanka [18] China [15] Egypt [17] Philippines [16] Indonesia [21] India [20] Kenya [22] Nigeria [25] Bangladesh [23] Pakistan [24] 1.53 Malaysia top scorer for 3rd year in a row, very consistent performance Best Latin American performers Chile, Argentina and Brazil retain/improve position South Africa s ranks 2nd, helped by strong corporate spending on IT hardware, software and services China (17) and India (21) continue to be relatively weak performers Average score ranking in parentheses 8 Nokia Siemens Networks

9 Sweden new top scorer in this year s index Sweden Connectivity Score 7.95 Outstanding performance on Connectivity Scorecard 2010 Scores consistently well across the board, although it does not finish 1st on any sub-category Narrowed gap with Asian countries (Japan, Korea) in terms of developing mass-market, next-generation, broadband infrastructure Best current mix of attributes to migrate up the ICT value chain 9 Nokia Siemens Networks

10 United States still going strong, but no longer at the top United States Connectivity Score 7.77 One of the strongest performers on Connectivity Scorecard, but less consistent than Sweden, Denmark and the Netherlands Leader in business infrastructure Strong in consumer usage, but slightly below Nordic countries Room for improvement in consumer infrastructure, where the US falls a long way behind leading Korea US predominance in higher education and skills is slipping 10 Nokia Siemens Networks

11 High-ranking Sweden, Norway, Denmark and Finland confirm Nordic ICT leadership Sweden Connectivity Score Norway Connectivity Score Sweden (1), Norway (3), Denmark (4) and Finland (6) all consistent performers Norway leads in both consumer and business usage and skills Denmark top scorer in government infrastructure, but less strong than Sweden in consumer infrastructure Finland climbs to 6 th place this year: Excels in workforce skills; strong investor in ICT and ICT-related R&D Denmark Connectivity Score 7.54 Finland Connectivity Score Nokia Siemens Networks

12 Korea mismatch between superior consumer infrastructure and weak business metrics Korea Connectivity Score th spot similar to last year Mixed bag of performance New benchmarks on consumer infrastructure Excels on government-related metrics Continued moderate performance on the two business sub-categories 12 Nokia Siemens Networks

13 IP traffic Comparisons Business 18 Lines 16 [GB] Business IP Traffic per capita [GB] Consumer IP Traffic per capita [GB] 0 UK USA Canada Korea 13 Nokia Siemens Networks

14 China and India still lackluster performers China Connectivity Score India Connectivity Score Both countries in roughly the same echelon of performance as last year China (17) well ahead of India (21), especially on measures of consumer infrastructure deployment (mobile penetration, broadband penetration) But China has long way to go before it reaches the levels of the top five group, especially in terms of overall business investment in ICT India lags behind in almost all aspects of Scorecard Improving infrastructure for consumers/businesses key priority! 14 Nokia Siemens Networks

15 Introducing Connectivity Scorecard Data 2010 results Implications for Policy 15 Nokia Siemens Networks

16 Data, Data, and more Data Ongoing effort to improve the robustness and representativeness of metrics Looked at actual speeds (from Akamai) rather than advertised speeds (OECD) Attempt to address significant inflation in mobile subscriber data (e.g., use 3G connections as % of total mobile connections, not per 100 inhabitants) More detailed data on usage e.g. frequent Internet users rather than Internet users Data on business adoption of broadband and websites that cover the SME picture as well as the large enterprise picture 16 Nokia Siemens Networks

17 Data, Data, and more Data Included data on investment in ICT capital assets and in ICT-related R&D Reformed some of the measures on workforce quality Capped penetration at 100 % of individuals for countries with reported mobile penetration rates of over 100 %. Likely still flatters European countries too much, but not as much as standard work does. 17 Nokia Siemens Networks

18 Example of problematic data: mobile ownership versus reported subscription rates Source: Ofcom 18 Nokia Siemens Networks

19 United States still going strong, but no longer at the top United States Connectivity Score Nokia Siemens Networks

20 Introducing Connectivity Scorecard 2010 results Data Implications for Policy 20 Nokia Siemens Networks

21 Supply Side Infrastructure does matter Important issue in USA may be overall IT investment, not communications investment But applications, services are crucial Skills in usage and production of ICT capacity to use ICT matter as well: demand side 21 Nokia Siemens Networks

22 ICT intensity of business investment OECD Factbook Nokia Siemens Networks

23 IT Investment Change in ICT share of manufacturing value add % USA Japan Korea Sweden Finland -2-3 Source : OECD Stat extracts Nokia Siemens Networks

24 Demand Side Demand-side barriers to broadband and ICT adoption lack of PC familiarity- So how does smart phone help? Is business resistance to disruptive change dampening ICT investment in some sectors and countries? What are the main barriers to increasing ICT usage and adoption in the SME sector? What is the trend in ICT skills? What is the trend in Capacity to Use 24 Nokia Siemens Networks

25 The American Competitiveness and Workforce Improvement ACT does Not help Year H-1B Cap , ,000* ,000* ,000* ,000 Source: United States Citizenship and Immigration Services Report on H-1B Petitions, Fiscal Year 2005, Annual Report, Issued April 2006 * subject to further exemptions 25 Nokia Siemens Networks

26 FCC - Broadband Adoption and Use in America Feb 23, 2010 Adults who do not have broadband at home fall into four categories: Digitally Distant: 10% of the general population. Median age is 63. Half say that the internet is not relevant to their lives or they lack the digital literacy to adopt broadband. Digital Hopefuls: 8% of the general population. Low-income, heavily Hispanic and African American. Likely to say they want to go online, but lack the resources. Digitally Uncomfortable: 7% of the general population. Likely to own a computer, but lack skills and interest in taking advantage of all the internet has to offer. Near Converts: 10% of the general population. Median age is 45. Cost is the biggest barrier to having broadband at home. And how does the National Broadband Availability target help? 26 Nokia Siemens Networks

27 More attention on government ICT use is warranted Source: National Broadband Plan 27 Nokia Siemens Networks

28 Census 2010 its BACK in Our Hands Brazil USA Country Brazil USA Pop 200m 308m Area 8.5 m km2 9.8 m km2 No of H holds ~ 58m HH ~ 145m HH GDP PPP $10k $46k Technology 220k GPS handhelds 150k GPS handhelds $600m computer system scrapped, paper forms for last 50m HH extra $3bn Workforce 230, m 3.8m POP/Workforce to 200 Budget $1.4bn $14bn Cost per POP $7 $45 28 Nokia Siemens Networks

29 Summary Call to action to better exploit ICT potential The Connectivity Scorecard - a unique global ICT index that ranks countries on useful connectivity, a bundle of infrastructure, complementary skills, software and informed usage that makes ICT the key driver of productivity and economic growth In the 2010 study, for the first time US lost #1 spot to Sweden All aspects of the ICT ecosystem must be addressed All leading nations see ICT as a catalyst for development and growth - therefore no country can assume that their leadership will continue Call to action to better exploit ICT potential, to innovate and invest in infrastructure, human skills and applications/services to stimulate economic growth to stay ahead - there is no finish line 29 Nokia Siemens Networks

30 Questions? For further information, link to Connectivity Scorecard web page: 30 Nokia Siemens Networks

31 APPENDIX 31 Nokia Siemens Networks

32 Connectivity Scorecard Cluster Analysis for Innovation economies Sweden, United States, Norway Average score for group Denmark, Netherlands Australia, United Kingdom, Canada Hong Kong SAR, Belgium, New Zealand Finland Japan, Singapore Czech Republic, Spain Ireland, Korea Germany, France Portugal, Italy, Hungary, Poland Greece Distance 32 Nokia Siemens Networks

33 Dissimilarity Index Rank Sweden United States Norway Denmark Netherlands Finland Australia United Kingdom Canada Japan Singapore Ireland Korea Hong Kong SAR Belgium New Zealand Germany France Czech Republic Spain Portugal Italy Hungary Poland Greece 1 Sweden United States Norway Denmark Netherlands Finland Australia United Kingdom Canada Japan Singapore Ireland Korea Hong Kong SAR Belgium New Zealand Germany France Czech Republic Spain Portugal Italy Hungary Poland Greece Sum Nokia Siemens Networks

34 Upgrades to US Broadband Networks - Fixed Networks 34 Nokia Siemens Networks

35 Upgrades to US Broadband Networks - Mobile Networks 35 Nokia Siemens Networks

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