Handbook of Research on Global Diffusion of Broadband Data Transmission Yogesh K. Dwivedi Swansea University, UK Anastasia Papazafeiropoulou Brunel University, UK Jyoti Choudrie University of Hertfordshire, UK
Volume I
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[email protected] Web site: http://www.igi-global.com and in the United Kingdom by Information Science Reference (an imprint of IGI Global) 3 Henrietta Street Covent Garden London WC2E 8LU Tel: 44 20 7240 0856 Fax: 44 20 7379 0609 Web site: http://www.eurospanonline.com Copyright © 2008 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. 3URGXFWRUFRPSDQ\QDPHVXVHGLQWKLVVHWDUHIRULGHQWL¿FDWLRQSXUSRVHVRQO\,QFOXVLRQRIWKHQDPHVRIWKHSURGXFWVRUFRPSDQLHVGRHV not indicate a claim of ownership by IGI Global of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Handbook of research on global diffusion of broadband data transmission / Yogesh K. Dwivedi, Anastasia Papazafeiropoulou, and Jyoti Choudrie, editors. p. cm. Summary: “This book explores broadband adoption and the digital divide through a global perspective, it provides research on constructs such as relative advantage, utilitarian outcomes, hedonic outcomes, and service quality. From over 100 noted experts in nearly 30 countries, WKLVZRUNDOORZVSROLF\PDNHUV,QWHUQHWVHUYLFHSURYLGHUVDQGRWKHUVWRJDLQPXOWLFXOWXUDOLQVLJKWLQWRZKDWIDFWRUVLQÀXHQFHFRQVXPHUV¶ decisions to adopt broadband”--Provided by publisher. ISBN 978-1-59904-851-2 (hardcover) -- ISBN 978-1-59904-852-9 (e-book) 1. Internet users--Attitudes. 2. Digital divide. 3. Internet service providers. 4. Consumer behavior. 5. Broadband communication systems. 6. Globalization--Social aspects. I. Dwivedi, Yogesh Kumar. II. Papazafeiropoulou, Anastasia. III. Choudrie, Jyoti.
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To my Mother and Father for their love and blessings…And to my lovingly and much awaited ‘Shagun’
To Athina
To my dearest, wonderful, encouraging and supportive Mum, Dad and Bobby
Editorial Advisory Board
Nikhilesh Dholakia University of Rhode Island, USA Guy Fitzgerald Brunel University, UK Sergio Godoy Universidad Catolica de Chile, Chile Heejin Lee University of Melbourne, Australia Catherine Middleton Ryerson University, Canada Challa Radhakumari Sri Sathya Sai University, India Aradhana Srivastava PRIA (Participatory Research in Asia), India Viswanath Venkatesh University of Arkansas, USA Michael D. Williams Swansea University, UK Vishanth Weerakkody Brunel University, UK
Table of Contents
Foreword .......................................................................................................................................... xxxi Preface ............................................................................................................................................ xxxiv Acknowledgment............................................................................................................................... xlvi
Volume I Chapter I Broadband Adoption and Diffusion (BAD): A Framework / Yogesh K. Dwivedi and Anastasia Papazafeiropoulou ......................................................................................................... 1
Section I National Policies Division I Africa Chapter II South Africa: The Long Walk to Broadband Freedom / Justin Henley Beneke.................................... 13 Division II Asia Chapter III Bridging the Digital Divide Through Broadband Deployment / Challa Radhakumari........................ 30 Chapter IV Broadband Policy, Market Competition, and User Adoption in Taiwan / Yu-li Liu.............................. 47 Chapter V ICT Competency of Bangladesh to Face Broadband Diffusion / Anwarul Islam and K.C. Panda..................................................................................................................................... 60
Chapter VI Socio-Cultural Interpretations to the Diffusion and Use of Broadband Services in a Korean Digital Society / Dal Yong Jin............................................................................................................... 78 Chapter VII Structural Changes and Regulatory Challenges in the Japanese Telecommunications Industry / Hidenori Fuke ....................................................................................................................................... 90 Division III Australia and New Zealand Chapter VIII $QDO\VLVRIWKH,QÀXHQFHRI$XVWUDOLD¶V*RYHUQPHQW3ROLF\RQ%URDGEDQG,QWHUQHW$FFHVV Qiuyan Fan ......................................................................................................................................... 109 Chapter IX Broadband for the Mass Market / Roger Saunders............................................................................. 126 Chapter X Competition, Regulation, and Broadband Diffusion: The Case of New Zealand / Bronwyn Howell.................................................................................................................................. 139 Division IV Europe Chapter XI Digital Divide and Broadband Access: The Case of an Italian Region / Enrico Ferro, J. Ramon Gil-Garcia and Natalie Helbig ........................................................................................... 160 Chapter XII Improving Broadband Access in Rural Areas / Ingjerd Skogseid....................................................... 177 Chapter XIII Metropolitan Broadband Networks: Design and Implementation Aspects, and Business Models / Antonios Alexiou, Christos Bouras, John Papagiannopoulos and Dimitris Primpas ........................ 196 Chapter XIV Small World: The Irish Broadband Experience / Diana Wilson, Kevin O’Reilly, and Dave Murray................................................................................................................................ 211 Chapter XV Social, Political, and Ethical Responsibility in Broadband Adoption and Diffusion: $*HUPDQ&DVH6WXG\Axel Schulz, Bernd Carsten Stahl, and Simon Rogerson ............................. 227
Division V North America Chapter XVI Competition in Broadband Provision and the Digital Divide / Wei-Min Hu and James E. Prieger ..................................................................................................... 241 Chapter XVII *RYHUQPHQWDODQG&XOWXUDO)DFWRUVLQ%URDGEDQG$GRSWLRQ Elizabeth Fife, Laura Hosman,and Francis Pereira .......................................................................... 260 Chapter XVIII Regulation and the Deployment of Broadband / James E. Prieger and Sunhwa Lee ........................ 278
Section II Consumer-User Behaviors Division I Australia Chapter XIX Factors Affecting Broadband Adoption for Mainstream Consumers / Peter Adams.......................... 306 Division II Europe Chapter XX Developing a Dynamic View of Broadband Adoption / Herbert Daly, Adrina Ortiz, Yogesh K. Dwivedi, Ray J. Paul, J. Santos, and J.M. Sarriegi ........................................................... 322 Chapter XXI Employing the Content Validity Approach for Improving the Content of the Broadband Adoption Survey Instrument / Yogesh K. Dwivedi, Banita Lal, and Khalil Khoumbati..................... 337 Chapter XXII Inside the Microcosm: A Case Study of a Wireless Internet Hotspot / Pierre Vialle, Olivier Epinette, and Olivier Segard .............................................................................................................................. 349 Chapter XXIII 7KH8VHVDQG*UDWL¿FDWLRQVRI%URDGEDQG,QWHUQHW Karianne Vermaas and Lidwien van de Wijngaert ............................................................................. 366
Division III Middle East Chapter XXIV Factors Affecting Attitudes towards Broadband Adoption in the Kingdom of Saudi Arabia / Vishanth Weerakkody .......................................................................................................................... 380 Division IV North America Chapter XXV Characteristics of Farm and Rural Internet Use in the United States / Peter L. Stenberg and Mitchell Morehart ........................................................................................... 395 Division V South America Chapter XXVI Broadband User Behavior Characterization / Humberto T. Marques Neto, Leonardo C.D. Rocha, Pedro H.C. Guerra, Jussara M. Almeida, Wagner Meira Jr., and Virgilio A.F. Almeida ................... 408
Volume II Chapter XXVII Precisions about the Broadband Divide in Chile / Sergio Godoy and M. Soledad Herrera............... 427
Section III Small and Medium-Sized Enterprises (SMEs) Division I Asia Chapter XXVIII A Survey on the Adoption and Usage of Broadband Internet / Roya Gholami, John Lim, and Sang-Yong Tom Lee...................................................................................................................... 448 Division II Europe Chapter XXIX Broadband Access and Broadband-Based Applications: An Empirical Study of the Determinants of Adoption Among Italian SMEs / Massimo G. Colombo, Luca Grilli, and Cinzia Verga ................... 466
Chapter XXX Broadband Diffusion to SMEs in the UK / Oluwasola Oni and Anastasia Papazafeiropoulou ........ 481 Chapter XXXI Environmental Drivers of E-Business Strategies Among SMEs / Alessandro Arbore and Andrea Ordanini ........................................................................................... 493 Chapter XXXII ([SORULQJ60(V¶$GRSWLRQRI%URDGEDQGLQWKH1RUWKZHVWRI(QJODQGBoumediene Ramdani and Peter Kawalek.............................................................................................................................. 504 Chapter XXXIII External Pressures for Adoption of ICT Services among SMEs / Andrea Ordanini and Alessandro Arbore ........................................................................................... 524
Section IV Impact on Emerging Applications Division I Entertainment Industry Chapter XXXIV IPTV Business Model Analysis / Kate Carney Landow, Michelle Fandre, Raghu Nambiath, Ninad Shringarpure, Harvey Gates, Artur Lugmayr, and Scott Barker.............................................. 538 Chapter XXXV The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry / Stanford L. Levin, John B. Meisel, and Timothy S. Sullivan .................................. 563 Division II Health Industry Chapter XXXVI Broadband for Health in Developing Countries / Aradhana Srivastava ............................................ 581 Chapter XXXVII Improving Health Services via Advanced ICT Networks / Peter Farr, Isabelle Ellis, and John Royle.................................................................................................................................... 593 Chapter XXXVIII Remote Patient Monitoring in Residential Care Homes: Using Wireless and Broadband Networks / Tanja Bratan, Malcolm Clarke, Joanna Fursse, and Russell Jones ................................................... 604
Division III Social Impact Chapter XXXIX Social Consequences of Broadband Access in Japan / Kenichi Ishii.................................................. 619 Division IV Communication Chapter XL Internet-Based Changes in Organizational Communication / Erik Lundmark and Alf Westelius........................................................................................................ 637 Chapter XLI 8ELTXLWRXV&RPPXQLFDWLRQYLD5HVLGHQWLDO*DWHZD\VAlex De Smedt............................................ 655
Section V Cross-Country Analysis Chapter XLII Adoption of Broadband Services: The Role of National Policies / Morten Falch ............................. 671 Chapter XLIII Broadband Diffusion and its Driving Forces / Banani Nandi and Chandana Chakraborty............... 689 Chapter XLIV Diffusion of Broadband Access in Latin America / Arturo Robles Rovalo, Claudio Feijóo González, and José Luis Gómez-Barroso ............................. 711 Chapter XLV Diffusion Forecasting and Price Evolution of Broadband Telecommunication Services in Europe / Dimitris Varoutas, Christos Michalakelis, Alexander Vavoulas, and Konstantina Deligiorgi ................................................................................................................ 729 Chapter XLVI Explaining Patterns of Broadband Deployment and Adoption in OECD Countries / Inmaculada Cava Ferreruela.............................................................................................................. 756 Chapter XLVII ICT Statistics for Broadband Promoting Regulatory Policy / Diana Korsakaite and Tomas Lamanauskas....................................................................................... 776
Chapter XLVIII Impact of Broadband VoIP on Telecoms: A Cross-Country Analysis / Bardo Fraunholz and Chandana Unnithan ........................................................................................ 796 Chapter XLIX The Adoption of Broadband Internet in Australia and Canada / Catherine Middleton and Shanton Chang .......................................................................................... 818 Chapter L The Evolution of Broadband Industry in the Developing World: A Comparison of China and India / Nir Kshetri, and Nikhilesh Dholakia ......................................... 841
Detailed Table of Contents
Preface ............................................................................................................................................ xxxiv Acknowledgment............................................................................................................................... xlvi
Volume I Chapter I Broadband Adoption and Diffusion (BAD): A Framework / Yogesh K. Dwivedi and Anastasia Papazafeiropoulou ......................................................................................................... 1 The aim of this chapter is to outline various factors reported in the 49 chapters of this handbook of research. 7KHDLPLVDOVRWRRUJDQL]HLGHQWL¿HGIDFWRUVLQDPHDQLQJIXOPDQQHULQRUGHUWRSURSRVHDIUDPHZRUNRI broadband adoption and diffusion. This chapter illustrates the fact that research on the adoption, diffusion, usage, and impact of broadband is clearly a global issue which requires a multidisciplinary approach. The proposed framework includes three levels of factors—macro factors, individual micro factors, and SME-level micro factors. These three levels of factors are relevant at different levels of development, deployment, and diffusion of broadband which persist in various developed and developing countries. The chapter concludes by suggesting that the proposed framework is based on a comprehensive set of factors observed in various countries, and future studies may use this framework to identify gaps and then bridge those gaps by conducting new studies.
Section I National Policies This section examines the macro or supply-side factors affecting broadband deployment and diffusion in various countries including Australia, Bangladesh, Germany, Greece, India, Ireland, Italy, Japan, New Zealand, Norway, South Africa, South Korea, Taiwan, and the United States of America. A number of pertinent factors and issues including national policy, market competition, ICT competency, structural changes, regulatory challenges, rural access, socio-political and ethical responsibility, and digital divide DUHGLVFXVVHGLQWKLVVHFWLRQ7KHVHFWLRQLVIXUWKHURUJDQL]HGLQWR¿YHGLYLVLRQVDFFRUGLQJWRWKHJHRgraphical areas where the studies included in this section were conducted.
Division I Africa Chapter II South Africa: The Long Walk to Broadband Freedom / Justin Henley Beneke .................................... 13 South Africa has fallen behind its international peersboth developing and developed marketsin the race to rollout broadband services. In fact, even within the African continent, it is neither the broadband leader nor progressive in comparison to its Northern African counterparts. This chapter explores the development of broadband services in South Africa, as well as touching on the challenges faced in bringing this phenomenon into the mainstream. Reasons for the lack of diffusion and adoption of such VHUYLFHVSRLQWWRKLJKHQGXVHUFRVWVRIWKHVHUYLFHDYHU\OLPLWHGJHRJUDSKLFDOIRRWSULQWRIERWK¿[HG line and mobile broadband infrastructure, as well as a lack of computer literacy and an understanding of what broadband is able to offer. The chapter looks at possible solutions, including introducing a greater degree of competition into the market to facilitate downward pressure on prices, as well as providing FRVWEDVHGDFFHVVWRLQWHUQDWLRQDOVXEPDULQH¿EHUFDEOHVDQGWKHXQEXQGOLQJRIWKHORFDOORRSWRIXUWKHU this objective. Division II Asia Chapter III Bridging the Digital Divide through Broadband Deployment / Challa Radhakumari ......................... 30 This chapter provides a summary relating to the functioning of two projects in the two Southern States of India, Andhra Pradesh and Kerala, to show how through broadband deployment in rural areas the digital divide can be bridged. By focusing on the implementation of the two projects, the chapter illustrates their contribution in practically using the broadband technologies in overcoming the hurdles to bridging WKHGLJLWDOGLYLGHDQGKLJKOLJKWVWKHFULWLFDOVXFFHVVIDFWRUVDVLGHQWL¿HGGXULQJWKHIXQFWLRQLQJRIWKH projects which helped the states in achieving their goals. The chapter also reveals through its analysis that the accessibility of services through broadband technology has brought an opportunity to the citizens to become a part of the current knowledge revolution, besides bringing about a great technological transformation to the areas where it is implemented and thus contributed to bridging the digital divide. The chapter is concluded by proving that moving from a manual to electronic process with broadband technology as an enabler; the two Southern States of India set an example, which will serve as a set of guidelines for application of similar projects in other geographical settings. Chapter IV Broadband Policy, Market Competition, and User Adoption in Taiwan / Yu-li Liu.............................. 47 7DLZDQKDVEHHQPDNLQJJUHDWHIIRUWVWRSURPRWHWKHIXO¿OOPHQWRILWV1DWLRQDO,QIRUPDWLRQ,QIUDVWUXFWXUH (NII), with broadband network technology and its application having rapidly developed in recent years. This chapter analyzes the broadband adoption, the competition among providers of broadband, and relevant policies in Taiwan. The research methods adopted include a literature review, in-depth interviews,
DQGVHFRQGDU\DQDO\VLVRISUHYLRXVVXUYH\VFRQGXFWHGE\7:1,&6LQFH7DLZDQ¶VEURDGEDQGSHQHWUDWLRQ LVWKH¿IWKKLJKHVWLQWKHZRUOGWKHGLVFXVVLRQVRIWKHPDMRUIDFWRUVFRQWULEXWLQJWREURDGEDQGGHSOR\ment in this chapter might provide some experiences from which other countries can learn. Chapter V ICT Competency of Bangladesh to Face Broadband Diffusion / Anwarul Islam and K.C. Panda ............................................................................................................ 60 As a developing country, Bangladesh has taken keen initiatives to develop its sustainable information infrastructure. Teledensity and overall IT infrastructure is now in a growing stage. Recently, Bangladesh KDVEHHQFRQQHFWHGZLWK6($0(:(VXEPDULQHFDEOHHVWDEOLVKLQJDQRSWLFDO¿EHUEDFNERQH LWV teledensity is changing in rapid pace. But, the broadband diffusion in Bangladesh is not on par with other Asian countries, since it is in an embryonic stage in broadband diffusion. This chapter tries to show the initiatives taken and the existing condition of Bangladesh to fetch the countrywide broadband diffusion. Efforts have been made to unmask the overall development of ICT infrastructure in Bangladesh to judge the environment of broadband diffusion in the country. Chapter VI Socio-Cultural Interpretations to the Diffusion and Use of Broadband Services in a Korean Digital Society / Dal Yong Jin............................................................................................................... 78 This chapter attempts to ascertain the causes of the rapid growth of broadband services in the context of the broader socio-cultural elements. It recognizes technology as a socio-cultural product which has historically been constituted by certain forms of knowledge and social practice, so this chapter explores cultural elements contributing to the diffusion of broadband services in the context of the cultural enYLURQPHQWLQ.RUHD)XUWKHUWKLVFKDSWHUGLVFXVVHVWKHVLJQL¿FDQWUROHRIWKHSHRSOHDVXVHUVLQWKH process of the rapid diffusion and growth of broadband services. In particular, it emphasizes the way in ZKLFKWKH HFRQRPLFFULVLVDVRQHRIWKHPRVWVLJQL¿FDQWVRFLRFXOWXUDOWXUQLQJSRLQWVLQPRGHUQ .RUHDQKLVWRU\KDVLQÀXHQFHGWKHGHSOR\PHQWRIEURDGEDQGVHUYLFHVDVKLJKVSHHG,QWHUQHWFRQQHFWLRQV have developed since 1997. Chapter VII Structural Changes and Regulatory Challenges in the Japanese Telecommunications Industry / Hidenori Fuke ....................................................................................................................................... 90 The structure of the telecommunications industry in Japan has been changing revolutionarily. The FKDQJHVDUHREVHUYHGLQ¿YHSKDVHV GHYHORSPHQWRIFRPSHWLWLRQLQWRWKHORFDOFDOOPDUNHWGLIIXVLRQ of broadband Internet and development of inter-platform competition, rapid growth of cellular services and Internet access via cellular, decline of POTS (plain old telephone service), and structural changes from vertical integration to layered structure and development of media convergence. These changes require total review of the regulatory framework that was formed in the POTS era. This chapter reviews: D HVVHQWLDOIDFLOLWLHVUHJXODWLRQ E DXQLYHUVDOVHUYLFHV\VWHPDQG F DÀDWUDWHSULFLQJV\VWHPRI the Internet to solve problems that are likely to distort the new industry structure and would stress the importance of a regulatory system that is competition, technology, and content neutral.
Division III Australia and New Zealand Chapter VIII $QDO\VLVRIWKH,QÀXHQFHRI$XVWUDOLD¶V*RYHUQPHQW3ROLF\RQ%URDGEDQG,QWHUQHW$FFHVV Qiuyan Fan ......................................................................................................................................... 109 Like many other governments in the world, the Australian government has taken a multi-faceted approach to promoting broadband Internet access. This chapter provides an in-depth analysis of the impact of policy issues on broadband Internet access in Australia. The primary goal of this chapter is to develop a holistic XQGHUVWDQGLQJRI$XVWUDOLD¶VQDWLRQDODSSURDFKHVSHUWDLQLQJWREURDGEDQG,QWHUQHWDFFHVV7KLVUHVHDUFK KDVFOHDUO\LQGLFDWHGWKDWWKHVWDWHRIEURDGEDQG,QWHUQHWDFFHVVLVFORVHO\UHODWHGWRWKHJRYHUQPHQW¶V policy and regulatory framework. The government has been basing its actions on market forces as a principal driver for broadband Internet connectivity. However, market forces only play roles in improving broadband Internet access in the major cities and have little effect in regional and rural Australia. The research has indicated that the regulatory competition regime, by and large, has failed to address concerns of market dominance and market power in the telecommunications sector as is evidenced by a relatively lower price-performance ratio of broadband services in Australia. Chapter IX Broadband for the Mass Market / Roger Saunders ............................................................................. 126 This chapter suggests that there is no new application to stimulate adoption of broadband by the mass market. Many new applications have been introduced but have not created the desired growth. One application that could have mass market attraction is voice over Internet protocol (VoIP), and it is the most likely killer application. But failure by major communications carriers to develop VoIP is slowing broadband penetration to this larger market segment. It is postulated that this resistance results from the risk to current carrier call revenue from VoIP and that infrastructure to support high-speed broadband PD\QRWJHQHUDWHDGHTXDWHUHYHQXHLQWKHVKRUWWHUPWRVDWLVI\VKDUHKROGHUVRU¿QDQFLDOPDUNHWV1R international standards have yet been set, and VoIP between the Internet platforms is not fully integrated. Also the multitude of broadband packages offered by the various competing carriers creates confusion in the mass market which, as a result, defers purchase decisions. Chapter X Competition, Regulation, and Broadband Diffusion: The Case of New Zealand / Bronwyn Howell .................................................................................................................................. 139 New Zealand offers a thought-provoking case study of the effects of different competition and regulatory policies on broadband diffusion rates. Despite having one of the highest rates of Internet connection and usage in the OECD, widely available broadband infrastructure, and low broadband prices, broadband uptake per capita languishes in the bottom third of the OECD. While low uptake has typically been atWULEXWHGWRFRPSHWLWLRQDQGUHJXODWRU\IDFWRUVDVVRFLDWHGZLWK1HZ=HDODQG¶VµOLJKWKDQGHG¶UHJXODWRU\ UHJLPHWKLVFKDSWHUSURSRVHVWKDWDPRUHFUHGLEOHH[SODQDWLRQOLHVLQDFRPELQDWLRQRI1HZ=HDODQG¶V legacy of demand-side regulations, in particular the retail tariff options for voice telephony, and the
limited value being derived by New Zealand residential consumers from the small range and narrow adoption of applications currently used that necessitate broadband connections. The New Zealand case illustrates the effect that legacy regulations can have on both the diffusion of new technologies per se and the choices made by consumers between different generational variants within that technology. The case indicates a need for more research on the effect of telecommunications industry regulations on demand-side uptake factors. Division IV Europe Chapter XI Digital Divide and Broadband Access: The Case of an Italian Region / Enrico Ferro, J. Ramon Gil-Garcia and Natalie Helbig ................................................................... 160 Reducing digital divide in order to build an information society for all is one of the top priorities for European policymakers. A better understanding of the determinants of broadband access at the individual level represent a key starting point for any e-inclusion policy. Based on a review of the literature on digital divide and broadband access, the authors document different approaches to understanding the digital divide and argue that these perspectives can also help to understand broadband access. Combining the digital divide and broadband literature provides a systematic and theory-based approach to the selection and inclusion of variables in different models. This chapter presents a case study conducted LQDQ,WDOLDQUHJLRQ7KHDXWKRUVSURYLGHVRPHLPSOLFDWLRQVRIWKH¿QGLQJVDQGDUJXHWKDWSROLF\PDNHUV should explore the relationship between IT skills acquisition, broadband access, and Internet use in order to develop more effective policies and programs. Chapter XII Improving Broadband Access in Rural Areas / Ingjerd Skogseid ....................................................... 177 The chapter explores the characteristics of rural broadband infrastructure development. Taking the existing installed base into consideration, small rural communities can initiate bottom-up cultivation of broadband infrastructure. Such initiatives are important contributions to overcoming the disparity in broadband access. In effect, they aggregate demand by creating a larger total market for suppliers than the individual needs of the actors. The proposal is to use descriptive clusters as a way to reveal the LQVWDOOHGEDVH$VHWRITXHVWLRQVDQGDQVZHUVZLOOEHGH¿QHGWRUHYHDOWKHLQVWDOOHGEDVH7KHUHVXOWLQJ data can be used to acquire an overview of the types of resources available and the choices that need to be made. The use of descriptive clusters places emphasis on the local context and culture. With a bottom-up strategy, questions must be answered in relation to the local context. The responses and lessons learned may vary from one location to the next, making blueprint implementations impossible. Chapter XIII Metropolitan Broadband Networks: Design and Implementation Aspects, and Business Models / Antonios Alexiou, Christos Bouras, Dimitris Primpas, and John Papagiannopoulos ...................................... 196 This chapter presents the design principles that cover the implementation of broadband infrastructure in the region of Western Greece, by examining all the necessary parameters that arise while implementing
such a critical developmental project. The broadband infrastructure that is deployed is either based on RSWLFDO¿EHU RQELJPXQLFLSDOLWLHV RURQZLUHOHVVV\VWHPV 2)'0EDVHGDQG:L)LFHOOV )XUWKHUPRUH the authors present as two case studies all issues of the designing of the Metropolitan Area Network of Patras, the third largest city of Greece and the Wireless Access Network of Messatida. The major target of the broadband networks is to interconnect the buildings of the public sector in the city and also deploy LQIUDVWUXFWXUH ¿EHURUZLUHOHVVV\VWHPV WKDWZLOOFUHDWHFRQGLWLRQVRIFRPSHWLWLRQLQSURYLGLQJERWKDFcess and content services to the advantage of the end consumer. The usage of the broadband infrastructure by service providers will be based on the open availability of the infrastructure in a cost-effective way. 7KLVFKDSWHUDOVRSUHVHQWVWKHPDLQFKDUDFWHULVWLFVRIDSURSRVHGEXVLQHVVSODQWKDWHQVXUHV¿QDQFLDO viability of the broadband infrastructure and guarantees the administration, growth, and exploitation of infrastructure. Chapter XIV Small World: The Irish Broadband Experience / Diana Wilson, Kevin O’Reilly, and Dave Murray ................................................................................................................................ 211 In this chapter the authors consider from a marketing perspective the political, cultural/social, and economic factors, both micro and macro, affecting the supply/demand nexus of broadband services for the Irish consumer. This chapter charts the development of broadband and its current situation of rollout and uptake, examines the reasons for its continuing poor performance, and offers recommendations on how Ireland may close the gap and perhaps even move ahead. Utilized data was collated from a variety of resources, journals and press and trade publications. The authors attended a ministerial conference on the state of broadband to which many representatives of the telecommunications industry had been LQYLWHG7KH\VXUYH\HGSHRSOHZLWKDQGZLWKRXWWKHIDFLOLW\DQGLQWHUYLHZHGNH\SOD\HUVLQWKH¿HOG7KH chapter concludes that, although the market is beginning to grow strongly, it is from a low base, and as a result Ireland still lags behind many of its European counterparts. There is still a lack of competition which is having an adverse effect on both supply and demand of broadband for the Irish domestic conVXPHU,UHODQGLVDVPDOOFRXQWU\DQGWKHLQFXPEHQWVWLOOKROGVFRQWURORIWKHPRVWSUR¿WDEOHDUHDVRIWKH technology, particularly wholesale and selling to other operators. Also, the Irish are still not convinced WKDWEURDGEDQGLVWKHµNLOOHUDSS¶WKH\QHHG7KLVPD\FKDQJHLQWKHIXWXUHDVWKHWHFKQRORJ\GHOLYHUV more of the content-rich multimedia fare that the Irish already enjoy in other formats. Chapter XV Social, Political, and Ethical Responsibility in Broadband Adoption and Diffusion: A German Case Study / Axel Schulz, Bernd Carsten Stahl, and Simon Rogerson ............................. 227 There is considerable interest worldwide in broadband diffusion, with research focusing on aspects such as the provision of broadband in remote areas and the socio-economic factors that determine the OLNHOLKRRGRIDGRSWLRQ7KLVFKDSWHULGHQWL¿HVWKHSROLFLHVDQGLQLWLDWLYHVXVHGWRHQFRXUDJHEURDGEDQG awareness, availability, and adoption. Using the case study of a local broadband initiative in remote and rural Germany, the chapter asks the question of who can and should be responsible for broadband provision, and how such responsibility ascriptions are realized.
Division V North America Chapter XVI Competition in Broadband Provision and the Digital Divide / Wei-Min Hu and James E. Prieger .......................................................................................................................... 241 This chapter examines the supply of DSL broadband by the incumbent local exchange company (LEC) LQ¿YH86VWDWHVLQWKHHDUOLHU\HDUVRIGHSOR\PHQW(PSLULFDODQDO\VLVVKRZVWKDWLQFRPHRWKHUGHmographics, and cost factors are important determinants of entry and availability. After controlling for other factors, the racial characteristics of the area do not affect DSL provision. Active competition in broadband from competitive LECs reduces deployment of DSL by the incumbent, but potential competition from competitive LECs has the opposite effect. Competition from cable companies also negatively LQÀXHQFHVWKHLQFXPEHQW¶VGHFLVLRQWRVXSSO\'6/7KHDXWKRUV¶REMHFWLYHLQJDXJLQJWKHLPSRUWDQFHRI the various factors is to highlight the important drivers of broadband provision for policymakers. Chapter XVII Governmental and Cultural Factors in Broadband Adoption / Elizabeth Fife, Laura Hosman, and Francis Pereira ............................................................................................................................ 260 7KRXJKWKHSRWHQWLDOEHQH¿WVRIEURDGEDQG,QWHUQHWDGRSWLRQDUHJUHDWWKHOHYHOVRIWDNHXSYDU\JUHDWO\ around the world. Some governments have adopted aggressive policies to deploy broadband networks and to encourage the use of these applications, while others have not. In the former cases, governments DUHPRWLYDWHGWRSURPRWHEURDGEDQGDGRSWLRQLQRUGHUWRUHDOL]HERWKHFRQRPLFDQGVRFLDOEHQH¿WV7KLV chapter argues that the high level of broadband adoption rates witnessed in certain Asian economies is attributable in part to the aggressive policies pursued by these governments. Independent of these policies however, social factors can also have an impact on whether broadband-related technology will be DGRSWHG(YHQLIHFRQRPLFDQGVRFLDOEHQH¿WVH[LVWWKHUHIRUHDVLQWKHFDVHRIWHOHPHGLFLQHLQWKH8QLWHG States, cultural and social factors may in fact hinder the deployment of such applications and retard the growth rate of broadband access. Chapter XVIII Regulation and the Deployment of Broadband / James E. Prieger and Sunhwa Lee ........................ 278 This study examines the impact of telecommunications regulatory policy on broadband service deployPHQW8VLQJ86GDWDFRYHULQJDOOIRUPVRIDFFHVVWHFKQRORJ\ FKLHÀ\'6/DQGFDEOHPRGHP DQGDOO areas served by major carriers, authors investigate the impact of state and federal regulation on broadband availability. Alternative regulation increases the probability of broadband availability, particularly for price caps. Unbundled network element (UNE) rates, the prices incumbent carriers charge to competitors for access to the local exchange network, also matter. Areas with lower UNE rates have a slightly higher probability of broadband availability. The effects of UNE rates on broadband deployment are ODUJHVWZKHUHLQFHQWLYHUHJXODWLRQLVLQSODFH7KHDXWKRUV¶REMHFWLYHLQH[DPLQLQJUHJXODWRU\IDFWRUVLV to highlight the role of incentive regulation and local telecommunications competition policypolicies used or available around the worldin stimulating broadband service deployment.
Section II Consumer-User Behaviors This section examines the micro or demand-side factors affecting broadband adoption and usage in various countries including Australia, Brazil, Chile, France, The Kingdom of Saudi Arabia, The Netherlands, the United Kingdom, and the United States of America. Chapters included in this section provides in-depth discussion on socio-behavioral, attitudinal, and demographic factors affecting the adoption of broadband and the digital divide at the consumer level. This section also focuses on broadband user behavior and characterization. Similar to Section I, according to geographical area where studies (included within WKLVVHFWLRQ ZHUHFRQGXFWHGWKLVVHFWLRQLVIXUWKHURUJDQL]HGLQWR¿YHGLYLVLRQV Division I Australia Chapter XIX Factors Affecting Broadband Adoption for Mainstream Consumers / Peter Adams .......................... 306 7KLVFKDSWHUH[SORUHVZKHWKHUSDVWH[SHULHQFHVZLWKWHOHFRPPXQLFDWLRQVSURYLGHUVDQGFXUUHQWµSODQV¶ RQRIIHUVHUYHDVEDUULHUVEHWZHHQDQLQGLYLGXDOFRQVXPHU¶VSHUVXDVLRQSKDVHRIWKHLQQRYDWLRQGHFLsion process and the decision phase. With broadband in approximately one-third of Australian homes, it is important that telecommunications providers understand why the future mainstream segment of consumers will want to adopt broadband, and any barriers to this. This analysis suggests studies are needed to investigate whether the telecommunications providers are collectively confusing potential broadband consumers in their attempts to differentiate a generic product in the market. It argues that future technology adoption studies need to consider including the complexity of the actual purchase decision when developing constructs for quantitative models. The author argues that if we are to build a picture of why mainstream consumers adopt broadband, more than just the perceptions of using the technology itself need to be investigated. Division II Europe Chapter XX Developing a Dynamic View of Broadband Adoption / Herbert Daly, Adrina Ortiz, Yogesh K. Dwivedi, Ray J. Paul, J. Santos, and J.M. Sarriegi ........................................................... 322 The widespread domestic use of broadband Internet technology has been recognized to have a positive LQÀXHQFHRQQDWLRQDOHFRQRPLHVDQGLPSURYHWKHOLIHRIFLWL]HQV'HVSLWHVXEVWDQWLDOLQYHVWPHQWWRGHvelop the infrastructure, many of the countries have experienced slow adoption rates for broadband. This chapter develops a view of UK broadband adoption using dynamic modeling techniques based on an existing statistical study. The contrasting approaches to modeling are compared. Principles of a dynamic modeling system are introduced, and an appropriate form for broadband adoption chosen. The process of building a dynamic model based on an existing static model of broadband adoption is presented. Finally, the new perspective of the dynamic model is explored using the causal loop analysis technique.
Chapter XXI Employing the Content Validity Approach for Improving the Content of the Broadband Adoption Survey Instrument / Yogesh K. Dwivedi, Banita Lal, and Khalil Khoumbati ..................... 337 The overall aim of this chapter is to validate the content of the broadband adoption survey instrument IURPWKHKRXVHKROGFRQVXPHU¶VSHUVSHFWLYH7KHREMHFWLYHVRIWKLVFKDSWHUDUH ¿UVWWRHQVXUHWKDWWKH LGHQWL¿HGFRQVWUXFWVDQGWKHLUUHVSHFWLYHLWHPVDGHTXDWHO\FRYHUUHOHYDQWGLPHQVLRQVRIIDFWRUVWKDWDIIHFW FRQVXPHUVLQWKHGRPDLQRIEURDGEDQGDGRSWLRQ VHFRQGWRGHWHUPLQHZKHWKHUWKHLGHQWL¿HGFRQVWUXFWV and their respective items adequately cover relevant dimensions; and third, to conduct a pre-test and pilot WHVWRQWKHUHVXOWLQJVXUYH\LQVWUXPHQWVLQRUGHUWRREWDLQIHHGEDFNOHDGLQJWRLPSURYHPHQWVLQWKH¿QDO TXHVWLRQQDLUH7KHLQLWLDOLWHPVIRUHDFKFRQVWUXFWZHUHLGHQWL¿HGIURPERWKWKHWHFKQRORJ\DGRSWLRQ OLWHUDWXUHDQGH[SORUDWRU\VWXGLHVRQEURDGEDQGDGRSWLRQ9DOLGDWLRQRIWKHLGHQWL¿HGLWHPVZDVWKHQ SHUIRUPHGHPSOR\LQJDYDULDWLRQRIDTXDQWLWDWLYHDSSURDFKWRFRQWHQWYDOLGLW\7KH¿QGLQJVREWDLQHG from the content validation are then presented and subsequently discussed. Chapter XXII Inside the Microcosm: A Case Study of a Wireless Internet Hotspot / Pierre Vialle, Olivier Epinette, and Olivier Segard .................................................................................................. 349 The objective of this chapter is to highlight critical elements affecting the diffusion of broadband wireless Internet at a hotspot location, through a case study. The research deals with a wireless Internet services project in the main Paris airport, and comprises two components. First, this chapter analyzes WKHHPHUJHQFHRIDYDOXHFKDLQIRUDQHZVHUYLFHEDVHGRQWKHFRRSHUDWLRQRIVHYHUDO¿UPV,QSDUticular, the authors show how different actors can or cannot position themselves on this value chain, according to their resources and capabilities. Second, the authors explore the perceptions and attitudes of business passengers in order to better understand the potential adoption and use of hotspot services, and provide a preliminary framework of analysis. The research is drawn from a qualitative survey via in-depth interviews of potential suppliers (airline companies, service providers, airport managers) and business passengers. Chapter XXIII 7KH8VHVDQG*UDWL¿FDWLRQVRI%URDGEDQG,QWHUQHWKarianne Vermaas and Lidwien van de Wijngaert ............................................................................................................ 366 7KLVFKDSWHULGHQWL¿HVDVPDOOQXPEHURIUHODWLYHO\KRPRJHQHRXVJURXSVRI'XWFK,QWHUQHWXVHUV ERWK broadband and narrowband), based on their usage pattern. Using individual and behavioral characterLVWLFVWKHDXWKRUVIXUWKHULQYHVWLJDWHWKHQDWXUHRIWKHGLIIHUHQWJURXSV7KH8VHVDQG*UDWL¿FDWLRQV approach is employed as a starting point for an online survey. Cluster analysis and logistic regression ZHUHXVHGIRUGDWDDQDO\VLV7KLVFKDSWHULGHQWL¿HVDQGSUHVHQWV¿YHFOXVWHUVRIGLIIHUHQW,QWHUQHWXVHUV based on patterns of behavior. Results show that the Internet users in the sample consist of a large group that more or less conducts the same online activities. Results also show that narrowband and broadband users differ in their Internet behavior.
Division III Middle East Chapter XXIV Factors Affecting Attitudes towards Broadband Adoption in the Kingdom of Saudi Arabia / Vishanth Weerakkody .......................................................................................................................... 380 Utilizing a survey approach, this research set out to explore the reasons for the slow progress in broadband adoption and investigates the factors that may be affecting the adoption of broadband by KSA consumers. 3DUWLFXODUHPSKDVLVZDVSODFHGRQLQGLYLGXDOOHYHOIDFWRUVVXFKDVVRFLDODQGFXOWXUDOLQÀXHQFHV7KH NH\¿QGLQJVZHUHWKDWWKHIDFWRUVZLWKWKHPDLQLQÀXHQFHRQDWWLWXGHWRZDUGVDGRSWLRQRIEURDGEDQG were usefulness, service quality, age, usage, type of connection, and type of accommodation. Contrary WRSUHGLFWLRQDOWKRXJKVRFLRFXOWXUDOIDFWRUVVXFKDVUHJXODWLRQWKURXJK¿OWUDWLRQRIEURDGEDQGZHUH IRXQGWRKDYHQRVLJQL¿FDQWLQÀXHQFHRQWKHDGRSWLRQRIEURDGEDQGFRQVXPHUVZHUHDZDUHDQGODUJHO\ did not like the regulation. The chapter also provides a discussion on research implications, limitations, and future directions. Division IV North America Chapter XXV Characteristics of Farm and Rural Internet Use in the United States / Peter L. Stenberg and Mitchell Morehart ........................................................................................................................ 395 The Internet became enmeshed in U.S. businesses management practices over the last decade. During this period access and use of the Internet increased for all regions of the United States, most types of work places, and all income groups. In this study, the authors examine Internet use by farm and rural workers, and proprietors using descriptive statistics and market demand analysis. In their market demand analysis approach, the primary methodology the authors used is categorical dependent variable analysis. The results indicate income is a critical element, though other factors such as age of proprietor DQGUXUDOXUEDQORFDWLRQDUHDOVRVLJQL¿FDQWLQPDUNHWGHPDQGGHWHUPLQDWLRQ Division V South America Chapter XXVI Broadband User Behavior Characterization / Humberto T. Marques Neto, Leonardo C.D. Rocha, Pedro H.C. Guerra, Jussara M. Almeida, Wagner Meira Jr., and Virgilio A.F. Almeida ................... 408 This chapter presents a broadband user behavior characterization from an Internet service provider standpoint. Understanding these user behavior patterns is important to the development of more ef¿FLHQW DSSOLFDWLRQV IRU EURDGEDQG XVHUV 7KH FKDUDFWHUL]DWLRQ GLYLGHV WKH XVHUV LQWR WZR FDWHJRULHV UHVLGHQWLDODQGVPDOORI¿FHKRPHRI¿FH 62+2 DQGHPSOR\VIRXUFKDUDFWHUL]DWLRQFULWHULD VHVVLRQ arrival process, session duration, number of bytes transferred within a session, and user request patterns.
The results show that both residential and SOHO session inter-arrival times are exponentially distributed, and point out that a typical SOHO user session is longer and transfers a larger volume of data. Analysis also uncovers two main groups of session request patterns within each user category: (1) sessions that comprise traditional Internet services, such as WWW services, e-mail, and instant messenger; and (2) VHVVLRQVWKDWFRPSULVHSHHUWRSHHU¿OHVKDULQJDSSOLFDWLRQVEDVLFDOO\7KLVFKDSWHUDOVRDQDO\]HVDQG FODVVL¿HVWKHHEXVLQHVVVHUYLFHVPRVWFRPPRQO\DFFHVVHGE\XVHUVZKLFKGLGQRWYDU\VLJQL¿FDQWO\ across the user categories.
Volume II Chapter XXVII Precisions about the Broadband Divide in Chile / Sergio Godoy and M. Soledad Herrera ............... 427 This chapter aims to quantify more exactly the adoption of broadband at the household level in Chile, by assessing its impact on three types of digital divide: between users and non-users of the Internet, between usage at home and elsewhere, and between home broadband users and modem home users. This was done by a statistical analysis of WIP-Chile surveys of 2003 and 2006. At least in Chile, the main digital gap is still between users and non-users of the Internet, both in terms of age and education level. Income mainly affects the probability of having broadband access at home. Since broadband has rapidly expanded among all socioeconomic segments, it is becoming less relevant as a predictor of access and Web usage. Other factors are also weak predictors of both residential use of the Internet and broadband connections at home.
Section III Small and Medium-Sized Enterprises (SMEs) This section examines the factors affecting broadband deployment, diffusion, and use by SMEs in various countries including Italy, Singapore, and the United Kingdom. According to geographical area where the studies (included within this section) were conducted, this section is further organized in two divisions. Division I Asia Chapter XXVIII A Survey on the Adoption and Usage of Broadband Internet / Roya Gholami, John Lim, and Sang-Yong Tom Lee ...................................................................................................................... 448 7KLVFKDSWHUDUJXHVWKDWLQVSLWHRILQFUHDVLQJVLJQL¿FDQFHRIEURDGEDQG,QWHUQHWWKHUHDUHQRWPDQ\UHsearch papers explicitly addressing issues pertaining to its adoption and post-adoption. Previous research on broadband has mainly focused on the supply-side aspect at the national level, ignoring the importance of the demand side, which may involve looking more deeply into the use as well as the factors impacting
RUJDQL]DWLRQDODQGLQGLYLGXDOXSWDNH,QDQDWWHPSWWR¿OOWKLVJDSWKLVFKDSWHUHPSLULFDOO\YHUL¿HVDQ integrated theoretical model, comprising the theory of planned behavior and the IS continuance model, WRH[DPLQHIDFWRUVLQÀXHQFLQJEURDGEDQG,QWHUQHWDGRSWLRQDQGSRVWDGRSWLRQEHKDYLRURIVRPH organizations in Singapore. Overall, strong support for the integrated model has been manifested by the UHVXOWVREWDLQHGSURYLGLQJLQVLJKWLQWRLQÀXHQWLDOIDFWRUV$WWKHDGRSWLRQVWDJHSHUFHLYHGEHKDYLRUDO control has the greatest impact on behavioral intention. Findings also suggest that, as compared to attiWXGHVXEMHFWLYHQRUPVDQGSHUFHLYHGEHKDYLRUDOFRQWUROPRUHVLJQL¿FDQWO\DIIHFWWKHEURDGEDQG,QWHUQHW adoption decision. At the post-adoption stage, intention is no longer the only determinant of broadband ,QWHUQHWFRQWLQXDQFH UDWKHULQLWLDOXVDJHVLJQL¿FDQWO\DIIHFWHGEURDGEDQG,QWHUQHWFRQWLQXDQFH Division II Europe Chapter XXIX Broadband Access and Broadband-Based Applications: An Empirical Study of the Determinants of Adoption Among Italian SMEs / Massimo G. Colombo, Luca Grilli, and Cinzia Verga ........................................................................ 466 Why do some small and medium enterprises (SMEs) adopt Internet broadband technologies (high-speed connection and complementary applications), and others do not? This chapter aims at analyzing the issue through an econometric investigation. Relying on the (thin) previous empirical literature on the topic and focusing on a large and representative sample of Italian SMEs, we analyze the determinants of broadband connection and adoption of complementary applications. Results of the econometric analysis UHYHDOWKDW DPRQJ¿UPVSHFL¿FFKDUDFWHULVWLFVVL]HDQGWKH¿UP¶VQHHGWRFRPPXQLFDWHDUHPDMRU determinants both of broadband connection and use of complementary applications, while indicators of ¿UPHI¿FLHQF\DQGRIWKHFRPSHWLWLYHSUHVVXUHVXIIHUHGIURPWKH60(SRVLWLYHO\DIIHFWRQO\WKHQXPEHU of used applications, while not exerting any impact on the decision to connect; (2) among location-speFL¿FFKDUDFWHULVWLFVWKHOHYHORIWHOHFRPPXQLFDWLRQVLQIUDVWUXFWXUHSRVLWLYHO\LQÀXHQFHVERWKFRQQHFWLRQ and applications use, while the presence within the local labor market of a young and skilled workforce PDNHV60(VDGRSWPRUHDSSOLFDWLRQV DQG WLPHVSHFL¿FYDULDEOHVOLNHWKRVHUHODWHGWRWKHDFWXDODQG IXWXUHSULFHRIWKHKLJKVSHHG,QWHUQHWFRQQHFWLRQDIIHFW60(V¶GHFLVLRQVWRDGRSWEURDGEDQG7KHVH ¿QGLQJVKDYHLPSRUWDQWLPSOLFDWLRQVIRUVXSSOLHUVDQGSROLF\PDNHUV Chapter XXX Broadband Diffusion to SMEs in the UK / Oluwasola Oni and Anastasia Papazafeiropoulou ........ 481 Broadband is a relatively new technology, and its adoption in the United Kingdom has been an issue GXHWRLWVSHUFHLYHGEHQH¿WVIRUEXVLQHVVHVDQGPRUHVRIRU60(V,QWKLVFKDSWHUWKHDXWKRUVDUJXHWKDW previous research focuses on home uses of broadband, particularly for educational purposes with little attention to its adoption by SMEs. The authors argue that the existing diffusion of innovation theories are inadequate for the study of broadband diffusion, and they propose a more socio-technical approach for that purpose. This study can be useful for SMEs considering adoption of new technologies such as broadband, as well as policymakers that seek to apply effective technological adoption policies.
Chapter XXXI Environmental Drivers of E-Business Strategies among SMEs / Alessandro Arbore and Andrea Ordanini .......................................................................................................................... 493 ,QIURQWRIWUDGLWLRQDOLQWHUSUHWDWLRQVRIWKHGLJLWDOJDSEDVHGRQHQGRJHQRXVFRQGLWLRQVRIWKH¿UPVWKH authors emphasize the importance that some external pressures may have on the e-business strategy of small and medium enterprises (SMEs). The environmental factors analyzed in this chapter are market position, competitive intensity, and institutional pressures. SMEs have been grouped according to their level of e-business involvement, in relation to the number of e-business solutions adopted so far. Three layers are proposed: excluded, tentative, and integrated e-business SMEs. A general conclusion of this FKDSWHULVWKDWGLIIHUHQWPRGHOVVHHPWRH[SODLQH[FOXVLRQDQGLQYROYHPHQW6SHFL¿FDOO\WZRIDFWRUV among those analyzed are revealed to be more suitable in explaining e-business exclusion. They are the size of an SME and a lack of institutional pressures to adopt. On the opposite side, this chapter suggests that e-business involvement seems to be primarily prompted by a selective competitive environment and not by imitative behaviors, as for the previous case. Chapter XXXII ([SORULQJ60(V¶$GRSWLRQRI%URDGEDQGLQWKH1RUWKZHVWRI(QJODQG Boumediene Ramdani and Peter Kawalek .......................................................................................... 504 7KLVFKDSWHUH[SORUHVWKHIDFWRUVLPSDFWLQJ60(V¶ VPDOOWRPHGLXPVL]HGHQWHUSULVHV¶ DGRSWLRQRI broadband. It argues that ICTs are highly differentiated technologies for which there is not necessarily DVLQJOHDGRSWLRQPRGHO:KLOHPRVWODUJH(XURSHDQFRPSDQLHVDUHFRQQHFWHGWREURDGEDQG60(V¶ connectivity is lagging behind. The question of why one SME adopts broadband while another does QRWLVVWLOOXQGHUVWXGLHG7KHUHIRUHWKHSXUSRVHRIWKLVFKDSWHULVWR¿OOWKLVJDSE\LQYHVWLJDWLQJWKH WHFKQRORJLFDORUJDQL]DWLRQDODQGHQYLURQPHQWDOIDFWRUVLPSDFWLQJ60(V¶DGRSWLRQRIEURDGEDQG7KLV chapter starts by highlighting the importance of ICT innovations adoption in general and broadband in particular. Based on the ICT innovations adoption literature, an SMEs broadband adoption framework ZDVGHYHORSHGDQGHPSLULFDOO\YDOLGDWHGLQYROYLQJQLQH60(V¶NH\GHFLVLRQPDNHUVLQWKH1RUWKZHVW of England. Chapter XXXIII External Pressures for Adoption of ICT Services among SMEs / Andrea Ordanini and Alessandro Arbore ........................................................................................... 524 This chapter emphasizes the importance that external sources of pressure may have on the level of ICT involvement among small and medium enterprises (SMEs) in Italy. While past research tends to prioritize the role of endogenous conditions for the adoption of information and communication technologiesthat LV¿QDQFLDOUHVRXUFHVRUJDQL]DWLRQFRQGLWLRQVPDQDJHPHQWFXOWXUHthe high dependence of SMEs on their environment requires paying special attention to external pressures as well. Both competitive and institutional pressures are proposed and tested through an ordinal regression model on a sample of 285 SMEs. The results provides both policy and management implications.
Section IV Impact on Emerging Applications This section examines the impact of broadband on emerging ICT applications and business models. Chapters included in this section provide in-depth discussion on the impact of broadband on communication, society, and delivery of entertainment and health services to consumers and citizens. According to type of impact, this section is further organized in four divisions. Division I Entertainment Industry Chapter XXXIV IPTV Business Model Analysis / Kate Carney Landow, Michelle Fandre, Raghu Nambiath, Ninad Shringarpure, Harvey Gates, Artur Lugmayr, and Scott Barker.............................................. 538 This chapter focuses on evaluating Internet protocol television (IPTV) business models from different VHUYLFHSURYLGHUVWKURXJKWKHSULVPRIWKHVWDUPRGHO7KHWRROLVEDVHGRQ3RUWHU¶V¿YHIRUFHVDVGHveloped by M.E. Porter. The star model extends the Five Forces into a set of metrics to evaluate current and future business offerings. The star model is a simple tool used to identify the strengths and weaknesses of different business models in an appealing geometric shape. To highlight how to use this tool, sample partnership models are analyzed to evaluate the strength of a combined service. This tool will help IPTV service providers, and all potential investors, to build or identify a sound business model for their target market. The star model is explored through multiple case studies in this chapter including CBS, AOL, Google, Sling Media, and YouTube. Chapter XXXV The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry / Stanford L. Levin, John B. Meisel, and Timothy S. Sullivan .................................. 563 This chapter describes the far-reaching effects of broadband Internet access on the motion picture indusWU\,W¿UVWSURYLGHVDVXPPDU\RIWKHHIIHFWVRQWKHLQGXVWU\¶VEXVLQHVVPRGHO WKH,QWHUQHW SDUWLFXODUO\ when combined with broadband connections) provides a new window for the movie studios to utilize in releasing their products. It next examines the ways that legal, political, and cultural environments are DOUHDG\LQÀXHQFLQJWKHLQGXVWU\¶VVHDUFKIRUDQHZEXVLQHVVPRGHOWRUHSODFHWKHROG)LQDOO\LWGUDZV on lessons from the music industry to predict how the industry will ultimately incorporate broadband technology into a new business model. The authors believe that the motion picture industry provides an H[FHOOHQWFDVHVWXG\RIEURDGEDQG¶VHIIHFWVRQDPDWXUHLQGXVWU\ Division II Health Industry Chapter XXXVI Broadband for Health in Developing Countries / Aradhana Srivastava ............................................ 581 This chapter highlights the major issues in the use of broadband technologies in healthcare in developing countries. The use of Internet technologies in the health sector has immense potential in developing
countries, especially in the context of public health programs. Some of the main uses of ICT in health include remote consultations and diagnosis, information dissemination and networking between health SURYLGHUVXVHUJURXSVDQGIRUXPV,QWHUQHWEDVHGGLVHDVHVXUYHLOODQFHDQGLGHQWL¿FDWLRQRIWDUJHWJURXSV for health interventions, facilitation of health research, and support to healthcare delivery and administration. The technology has immense potential, but is also constrained by lack of policy direction, and problems with access to technology and lack of suitable infrastructure in developing nations. However, given its crucial role in public health, comprehensive efforts are required from all concerned stakeholders if universal e-health is to become a reality. Chapter XXXVII Improving Health Services via Advanced ICT Networks / Peter Farr, Isabelle Ellis, and John Royle .................................................................................................................................... 593 This chapter describes an innovative broadband initiative that connects a group of general practices, medical specialists, hospitals, and other health providers in rural areas of Australia through a managed virtual private network. It provides secure connectivity for a variety of mission-critical healthcare delivery applicationsfor example, transmission of pathology and radiology test results direct to clinicians. The medical practices involved are small to medium enterprises (SMEs), and the key aspects of ICTs for them are the impact on costs, productivity, and customer service. The formal evaluation process examined the GRPDLQVRIDSSURSULDWHQHVVHI¿FLHQF\DQGFRVWHIIHFWLYHQHVV%HLQJWKH¿UVWVXFKKHDOWKQHWZRUNRILWV kind in Australia, the project encountered challenges, and by overcoming these has been guiding government policy in respect to e-health. Initially funded from March 2005 via a Commonwealth Government grant, the GoldHealth network moved into a sustainable mode from mid-2006. The chapter provides insights into GoldHealth and should be a useful guide to any similar broadband network initiatives for the health sector elsewhere in the world. Chapter XXXVIII Remote Patient Monitoring in Residential Care Homes: Using Wireless and Broadband Networks / Tanja Bratan, Malcolm Clarke, Joanna Fursse, and Russell Jones ...................................................................................................... 604 7KH8.¶V1DWLRQDO+HDOWK6HUYLFH 1+6 LVXQGHUJRLQJJUHDWUHIRUP'ULYHQE\DGHPDQGIRUKLJKHU quality healthcare provision, ICTs are increasingly being used as tools to realize this change. The authors investigated the use of remote patient monitoring (RPM) using wireless and broadband networks in three community care homes between 2003 and 2006. The aim of the project was to determine for what conditions and in which setting the RPM was most useful, and to establish an organizational and FOLQLFDOLQIUDVWUXFWXUHWRVXSSRUWLW(YDOXDWLRQRIWKHSURMHFWGHPRQVWUDWHGFOLQLFDOEHQH¿WVVXFKDVWKH early detection of cardiac events, allowing prompt intervention, and routine monitoring of other conditions. A change in work practices resulted in a more collaborative approach to patient management and led to an increase in communication between healthcare professionals from different sectors, as well DVWKHHVWDEOLVKPHQWRISURWRFROVIRUVHHNLQJDGYLFH7HFKQLFDOO\WKHHTXLSPHQWODUJHO\PHWWKHXVHUV¶ needs. In conclusion, the monitoring proved a useful tool for the management of chronic diseases and has great potential to contribute to the reform of the NHS.
Division III Social Impact Chapter XXXIX Social Consequences of Broadband Access in Japan / Kenichi Ishii .................................................. 619 In Japan, both the cheapest wired broadband services and the most advanced 3G mobile phone services are widely available. Because of recent pro-competitive policy drives such as the “e-Japan policy,” the Japanese broadband market has become very competitive. While the digital divide has narrowed in recent years in terms of Internet access, a divide still exists with regard to Internet usage. Comparison between narrowband and broadband users demonstrates that broadband services currently are used mainly for entertainment. Unlike wired Internet use, mobile Internet is not used for information-gathering activities. Results do not support the media substitution effect of the Internet. Mobile Internet use VLJQL¿FDQWO\DQGSRVLWLYHO\FRUUHODWHVZLWKVRFLDOL]LQJZLWKIULHQGVZKHUHDVZLUHG,QWHUQHWXVHGRHVQRW correlate with socializing. Experience of past policies suggests that customer orientation will be a key factor in the success of the “U-Japan” policy. Division IV Communication Chapter XL Internet-Based Changes in Organizational Communication / Erik Lundmark and Alf Westelius....... 637 This chapter presents a descriptive study of the use of ICT and the change in communication patterns in Swedish sport associations over the period from 1994 to 2003. The change is discussed in light of Internet and broadband diffusion. Results show that new channels for communication have been adopted, primarily Web sites and e-mail, but few established channels have been dropped. While there are associations that save time, money, and increase the spirit of community using ICT, many organizations experience the increased number of communication channels as a burden, since maintaining them takes H[WUDUHVRXUFHVEXWWKHEHQH¿WVDUHQRWDOZD\VHDV\WRGHWHFWRUPHDVXUH&HUWDLQFKDUDFWHULVWLFVFRPPRQDPRQJQRQSUR¿WRUJDQL]DWLRQV 132V DVZHOODV,QWHUQHWDQGEURDGEDQGDFFHVVKDYHLQÀXHQFHG the development of ICT use. Chapter XLI Ubiquitous Communication via Residential Gateways / Alex De Smedt ............................................ 655 This chapter focuses on Residential Gateway, a type of home equipment providing broadband access to users in their homes. The chapter shows how such a device evolves from a simple modem to an advanced gateway system that contributes to the access inside the home of any data on any compatible device. The objective of this chapter is to give the reader technical insight into the enabling mechanisms and technologies dealing with such functionalities. The text indicates particular technical solutions, but explanations are kept high-level in order to allow non-technical readers to understand the basics and concepts of the solutions. A number of references show that the technical exposé is becoming a reality.
Section V Cross-Country Analysis This section examines both macro or supply-side factors and micro or demand-side factors affecting broadband deployment, diffusion, adoption, usage, and impact in various countries including Australia, Canada, China, Denmark, Germany, Greece, India, Latin America, Sweden, and the United States of America. This section is further organized into nine chapters. Chapter XLII Adoption of Broadband Services: The Role of National Policies / Morten Falch ............................. 671 Broadband is seen as a key infrastructure for developing the information society. For this reason many governments are actively engaged in stimulating investments in broadband infrastructures and use of broadband services. This chapter compares a wide range of broadband strategies in the most successful markets for broadband. This is done through analysis of national policies in three European countries (Denmark, Sweden, and Germany) and the United States, Japan, and South Korea. It is concluded that successful implementation of broadband depends on the kind of policy measures to be taken at the national level. Many countries have provided active support for stimulating diffusion of broadband, and national variants of this type of policy in different countries are important for an explanation of national differences in the adoption of broadband. Chapter XLIII Broadband Diffusion and its Driving Forces / Banani Nandi and Chandana Chakraborty............... 689 In light of the emerging consensus on potential impact of broadband technology on economic growth and development, this chapter analyzes the cross-country differences in growth of broadband technology by examining the key demand and supply factors driving diffusion in the observed countries. In addition, utilizing empirical evidence and country case analyses, the chapter offers tentative policy suggestions for accelerating broadband diffusion under alternative circumstances. Chapter XLIV Diffusion of Broadband Access in Latin America / Arturo Robles Rovalo, Claudio Feijóo González, and José Luis Gómez-Barroso .................................................................. 711 7KH³JHRJUDSKLF´GLJLWDOGLYLGHLVREYLRXVZKHQFRPSDULQJPRUHGHYHORSHGFRXQWULHVWRWKHUHVW,WV¿UVW and most obvious sign is the difference in the diffusion of broadband access. However, it is clear that there are also lines of separation in smaller geographic ranges: between countries in the same geographic DUHDLQVLGHHDFKFRXQWU\DQGVRPHWLPHVLQHDFKVSHFL¿FUHJLRQ7KLVFKDSWHUVKRZVWKLVVLWXDWLRQE\ studying the broadband access diffusion in Latin America on a three-level basis (regional, national, and local). At the national level, a few explanatory variables of the different situations presented by the countries chosen for the study are researched. Additionally, a description of the environment (market and public action) where this diffusion is occurring is also included.
Chapter XLV Diffusion Forecasting and Price Evolution of Broadband Telecommunication Services in Europe / Dimitris Varoutas, Christos Michalakelis, Alexander Vavoulas, and Konstantina Deligiorgi............................................................................... 729 This chapter is concerned with the methodologies for the study of the diffusion patterns and demand estimation, as well the pricing schemas for broadband telecommunication services in Europe. Along with the introduction of diffusion models and price indexes which can represent broadband convergence and diversity, a description of the theoretical models and methodologies are given, and application of these models in the European telecommunication market is performed. Evidence from Europe outlines telecom market behavior and contributes to better understanding of broadband diffusion worldwide. To this direction, a price index is constructed regarding the ADSL technology. Chapter XLVI Explaining Patterns of Broadband Deployment and Adoption in OECD Countries / Inmaculada Cava Ferreruela.............................................................................................................. 756 The aim of this chapter is to provide some insights about the explaining patterns of broadband deployment and adoption. This problem is addressed by examining these insights in light of the results of an exhaustive cross-national empirical analysis that uses a comprehensive panel data set from the 30 OEDC countries with more than 40 features. The results suggest that technological competition and the low cost of deploying infrastructures on one side, and the predisposition to use new technologies as well as some social indicators on the other, appear to be the key drivers for broadband deployment and adoption, respectively. Chapter XLVII ICT Statistics for Broadband Promoting Regulatory Policy / Diana Korsakaite and Tomas Lamanauskas ....................................................................................... 776 This chapter introduces the statistical analysis of a number of ICT market indicators as a means to develop sound regulatory policies aiming to promote broadband take-up. The chapter provides analysis of the concept of broadband, statistical analysis of ICT indicators time series and cross-country series DJDLQVW EURDGEDQG SHQHWUDWLRQ GHWHUPLQDWLRQ RI FRQWHUPLQRXV IDFWRUV ZLWK VWDWLVWLFDOO\ VLJQL¿FDQW LQÀXHQFHRYHUEURDGEDQGSHQHWUDWLRQLQ(XURSHDQVWDWHVDQGGHULYDWLRQRIFDOOVIRUUHJXODWRU\SROLF\ SDUWLFXODUDFWLRQVRXWRIVWDWLVWLFDOO\VLJQL¿FDQWUHODWLRQV7KHRYHUDOODLPRIWKHFKDSWHULVWRRIIHUD way as to how ICT statistical data could be employed to suggest preconditions for possible practical solutions in the domain of broadband promotion, and to use this to bring the rhetoric of statistics down to the operational level. Chapter XLVIII Impact of Broadband VoIP on Telecoms: A Cross-Country Analysis / Bardo Fraunholz and Chandana Unnithan ........................................................................................ 796 VoIP is a technology that has received much attention over the past few years. Speculations are rampant WKDWLWZLOOEHµWKH¶WHFKQRORJ\IRUWHOHFRPPXQLFDWLRQVRIWKHIXWXUHDVEURDGEDQGJDLQVPDVVPDUNHW
penetration in every nation. It holds the promise of ubiquity and eliminates the need for a separate infrastructure for telecommunications. In this chapter, the authors have undertaken a cross-country analysis of two economies, Germany and India, at varied levels of broadband VoIP diffusion, to examine the future potential of this technology in the respective nations and their telecommunications industries. A brief analysis presented in this chapter reveals some valuable insights regarding the impact of VoIP in both economies which may prove to be useful for other economies and telecommunication industries. Chapter XLIX The Adoption of Broadband Internet in Australia and Canada / Catherine Middleton and Shanton Chang ............................................................................................................................. 818 %URDGEDQG,QWHUQHWFRQQHFWLYLW\LVVHHQDVDPHDQVWRLQFUHDVHWKHHI¿FLHQF\DQGFRPSHWLWLYHQHVVRIDQ economy. But despite ongoing efforts to promote broadband in Australia, uptake has been much slower than expected. This chapter aims to identify areas that have been holding up broadband development in Australia. In examining multiple areas for attention (competition, user characteristics and behaviors, applications, network characteristics, and pricing), the authors refer to the experience of Canada, a leader in broadband deployment, to show the differences in each area. The chapter outlines objectives for the development of a more user-friendly broadband environment in Australia which would encourage broadband adoption. Although both countries discussed here have their own policy agendas and some unique circumstances related to broadband deployment, the chapter provides valuable insights for policymakers and industry leaders in Australia and in other countries which are struggling to develop widespread broadband deployment. Chapter L The Evolution of Broadband Industry in the Developing World: A Comparison of China and India / Nir Kshetri and Nikhilesh Dholakia .......................................... 841 7HOHFRPPXQLFDWLRQVQHWZRUNVRI,QGLDDQGWKH3HRSOH¶V5HSXEOLFRI&KLQDDUHDPRQJWKHODUJHVWLQWKH world. The two economies have a number of areas for broadband use ripe for exploration. Broadband networks in some regions in these two economies are even more developed than in some parts of the industrialized world. There are, however, a number of reasons to believe that these two countries may exhibit distinct and varied patterns of broadband diffusion. This chapter compares and contrasts the diffusion patterns of broadband technology in the two economies. The authors examine factors driving broadband diffusion in the two economies in three major categories: demand and cost conditions, industry structure, and export conditions.
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Foreword
I have been interested in the development and evolution of broadband for many years, and the one thing that has struck me in that time is the dynamic nature of the subject. Just when we think that we have it captured and perhaps have established a mental model for understanding it, at least in our own domain, broadband confounds us by reinventing itself and bringing up new issues and challenges in our own area and around the world. This handbook is testimony to the diverse nature of the subject, covering a wide range of issues and experiences in many sectors, industries, governments, regulatory frameworks, and areas of the world. The book is truly international and provides examples and experiences that will surprise and engage even the most knowledgeable. For example, its chapters range from the affects of broadband on the motion picture industry in the United States, and thus the world, through to actual and potential healthcare EHQH¿WVLQWKHGHYHORSLQJZRUOGIURPFDSLWDOLVWHFRQRPLFVWRVRFLDODQGFRPPXQLW\EHQH¿WVDQGEDFN As well as the experiences in a global context, the book also covers the critical role of governments and regulation and the economic development aspects of broadband. 7KHUHFDQEHIHZWHFKQRORJLHVWKDWKDYHEHHQPRUHLQÀXHQWLDODQGWKDWKDYHPRUHVHULRXVDQGSRWHQWLDOO\EHQH¿FLDOVRFLDOLPSOLFDWLRQVWKDQEURDGEDQGDQGLWVHHPVZHDUHRQO\DWWKHEHJLQQLQJRIWKHVH affects. This handbook provides an essential guide to that diversity and the issues to be addressed for successful broadband implementation.
Professor Guy Fitzgerald Brunel University, UK
Guy Fitzgerald is professor of information systems at Brunel University and is head of the Department of Information Systems and Computing. Prior to this he was the cable and wireless professor of business information systems at Birkbeck College, University of London, and before that he was at Templeton College, Oxford University. As well as being an academic, he has also worked in the computer industry with companies such as British Telecom, Mitsubishi, and CACI Inc., International. His research concerns the effective management and development of information systems and he has published widely in these areas. He is probably best known for his work in relation to development techniques and methodologies and is the author of a major text in this area entitled Information Systems Development: Methodologies, Techniques and Tools, now in its fourth edition. He is also well known for his research in the areas of strategy, outsourcing, and executive information systems. His PRVWUHFHQWUHVHDUFKLVFRQFHUQHGZLWKWKHGHYHORSPHQWRIÀH[LEOHLQIRUPDWLRQV\VWHPVWRHQKDQFHRUJDQL]DWLRQDODJLOLW\+H is founder and co-editor of the Information Systems Journal (ISJ), an international journal from Blackwell Publishing, and he has been a member of many international Program Committees, including the International Conference on Information Systems (ICIS) and the European Conference on Information Systems (ECIS).
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Foreword
The vital role played in modern society by information and communication technologies (ICTs) is nowadays recognized by both businesses and governments alike. The UN openly acknowledges the importance of the digital environment as a tool for economic and business development,1 and in Europe numerous EU initiatives2 actively promote and monitor the adoption of ICT-supported practices in order to raise productivity and growth. The changes brought about by the corresponding increasingly networked society have been many, with the last dozen years or so witnessing countless profound changes at societal, industry-sector, organizational, and individual levels. In this day and age, many of us now routinely make use of ICT for both work and leisure purposes, with speed and convenience of information exchange encouraging us to conduct transactions and communicate electronically with employers, work colleagues, friends, family members, businesses, and government agencies. As a result of the emergence and regular use of a wide variety of ICT-supported ways of doing things, we have witnessed terms such as e-business, e-government, e-health, e-learning, message boards, chat rooms, and blogging become part of our recognized vocabulary. However, the continued adoption and widespread use of ICT in daily life depends heavily upon the availability of reliable high-speed networks, and there is no doubt that broadband is a key enabling technology that allows such activity to occur reliably and at acceptable speeds. 7KLVREYLRXVVLJQL¿FDQFHRIEURDGEDQGKDVEHHQUHFRJQL]HGE\JRYHUQPHQWVDURXQGWKHZRUGDQG despite the massive investments required in terms of the provision of new network infrastructures, many have introduced policies to promote broadband availability and uptake. Indeed, the availability of affordable broadband was a key objective of the e-Europe action plan, and the current strategic framework for the European Information Society (i2010) places particular emphasis on broadband coverage and reducing the digital divide. The social and economic importance of broadband availability3 is such that broadband diffusion is often viewed as a means by which international competitiveness and economic development may be benchmarked. ,WLVZLWKLQWKLVFRQWH[WRIZLGHVSUHDGUHFRJQLWLRQRIWKHVLJQL¿FDQFHRIEURDGEDQGDQGLWVFRUUHVSRQGing promotion and take-up that this publication has been produced, and I am delighted to have been provided with the opportunity to write the Foreword to the Handbook of Research on Global Diffusion of Broadband Data Transmission. The handbook is clearly a valuable resource, providing a timely and relevant collection of chapters addressing a variety of issues pertaining to the adoption and use of broadband and the reduction of the GLJLWDOGLYLGHDWERWKPDFURDQGPLFUROHYHOV,WLVGLYLGHGLQWR¿YHVHFWLRQVHDFKFRPSULVLQJDQXPEHU of chapters and each addressing a different theme of broadband adoption. The international nature of WKHLVVXHDQGLWVWUHDWPHQWZLWKLQWKHKDQGERRNLVFOHDUO\LOOXVWUDWHGLQWKH¿UVWVHFWLRQZKLFKH[DPLQHV national policies affecting broadband deployment and diffusion in a range of countries including Aus-
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tralia, Bangladesh, Germany, Greece, India, Ireland, Italy, Japan, New Zealand, Norway, South Africa, South Korea, Taiwan, and the United States of America. The second section focuses upon demand-side LHFRQVXPHUUHODWHG IDFWRUVLQÀXHQFLQJEURDGEDQGDGRSWLRQDQGXVHLQFRXQWULHVVXFKDV$XVWUDOLD Brazil, Chile, France, the Kingdom of Saudi Arabia, The Netherlands, the United Kingdom, and the United States of America. The third section is dedicated to examining issues of broadband use in small and medium-sized enterprises (SMEs) in Italy, Singapore, and the United Kingdom, while the fourth DQG¿IWKVHFWLRQVDUHGHYRWHGWRH[DPLQLQJWKHLPSDFWRIEURDGEDQGRQHPHUJLQJ,&7DSSOLFDWLRQVDQG business models (including those in the entertainment and health industries) and macro and micro supply and demand factors in Australia, Canada, China, Denmark, Germany, Greece, India, Latin America, Sweden, and the United States of America respectively. I am pleased to be able to recommend the handbook. It will prove highly useful to readers who are looking for substantive material on broadband promotion and adoption, and I should particularly draw attention to the variety of international perspectives presented. Overall the handbook provides an appealing treatment of the area, and I am sure it will be viewed as a valuable information resource on what is a highly topical and relevant subject.
Professor Michael D. Williams Swansea University, UK September 2007 ENDNOTES 1
2
3
General Assembly Resolution 56/183 endorsed the need to develop the so-called information society. See for instance, the eEurope 2005 Action Plan, e-Business W@tch, and the e-Business Support Network. Broadband Access: The New Highways to Prosperity—speech delivered by Vivian Reding, the member of the European Commission responsible for information society and media, at the “Bridging the Broadband Gap Through EU Spectrum Policy” event, Brussels, March 2006.
Michael Williams is a professor in the School of Business and Economics at Swansea University in the UK. He holds a BSc IURPWKH&1$$DQ0(GIURPWKH8QLYHUVLW\RI&DPEULGJHDQGD3K'IURPWKH8QLYHUVLW\RI6KHI¿HOG+HKDVLPSOHPHQWHG DQG HYDOXDWHG LQIRUPDWLRQ V\VWHPV LQ GRPDLQV LQFOXGLQJ ¿QDQFH WHOHFRPPXQLFDWLRQV PDQXIDFWXULQJ DQG JRYHUQPHQW LV the author of numerous refereed and invited papers, and has obtained external research funding from sources including the (XURSHDQ8QLRQWKH1XI¿HOG)RXQGDWLRQDQGWKH:HOVK$VVHPEO\*RYHUQPHQW+HFXUUHQWO\VHUYHVDVDQLQYLWHGPHPEHURI the project expert group for a European Union funded project examining transformative use of ICT.
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Preface
As the Internet has become a part of everyday life, broadband has been considered as the necessary evolutionary step as a technology that offers fast, always-on Internet connections with access to services, DSSOLFDWLRQVDQGFRQWHQWZLWKUHDOOLIHVW\OHDQGSURGXFWLYLW\EHQH¿WV,QWHUQDWLRQDORUJDQL]DWLRQVVXFK as the International Telecommunication Union (ITU) and the Organization for Economic Cooperation and Development (OECD) forecast broadband to be a vital means of enhancing competitiveness in an economy and also of sustaining economic growth. Examples of delivering economic value include the potential of improving the productivity and competitiveness of small- and medium-size enterprises 60(V DQGODUJHUFRPSDQLHVDVEURDGEDQGSURYLGHVDQHI¿FLHQWFKDQQHOIRUVXSSO\FKDLQPDQDJHPHQWLPSOHPHQWDWLRQDQGVDYLQJFRVWVRIRI¿FHVSDFHE\VXSSRUWLQJHIIHFWLYHKRPHZRUNLQJ6LPLODU to commercial organizations, broadband also offers the potential to governments of creating electronic services and delivering them to citizens in a cost-effective and transparent manner. Electronic services in the public sector have the potential to reduce the cost of delivery and increase the quality of healthcare, WKHUHE\LQFUHDVLQJWKHFLWL]HQV¶WUXVWDQGFRQ¿GHQFHLQSXEOLFVHUYLFHV %URDGEDQGFDQDOVRLPSURYHFLWL]HQV¶OLYHVLQVHYHUDOZD\V,WFDQKHOSHTXLSFKLOGUHQZLWK,&7V skills for employment purposes and improve the way they obtain education. Similarly, since broadband facilitates working at home, it can help people to obtain a better work/life balance that is characterized E\PRUHHPSRZHUPHQWPRUHSURGXFWLYLW\DQGOHVVVWUHVV%URDGEDQGDOVRRIIHUVGLUHFWEHQH¿WVWRHOderly people, as it can be utilized to provide personalized care at homehence, removing the need to live in hospitals or care homes. Since broadband Internet has the potential to profoundly impact science, business, and societyand transform almost every aspect of everyday lifeit is appropriate and timely to understand the deployment and adoption of broadband technologies. Numerous researchers around the world have realized the importance of studying this research area and have focused upon accumulating knowledge in this area. %URDGEDQGUHVHDUFKKDVEHHQSUROL¿FIRUDSKHQRPHQRQWKDWLVTXLWH\RXQJ+RZHYHUDQDQDO\VLVRIWKH current literature on broadband suggests that the available body of knowledge is fragmented with some studies looking at adoption or usage patterns and some at the impact of broadband to existing or new Internet applications. This handbook is an effort to collect and group existing research results in order to offer an overall picture and comprehensive understanding of exploratory issues related to the deployment, diffusion, adoption, usage, and impact of broadband technology from a global perspective. 7RDFFHVVWKHODWHVWUHVHDUFKDQGSURYLGHDQRXWOHWWRUHVHDUFKHUVLQWKH¿HOGRIEURDGEDQGWKHHGLWRUV decided to launch this handbook where researchers from all over the world would assist in providing the necessary coverage of possible research issues within the area. The primary objective of this project was to assemble as much research coverage as possible related to the deployment, diffusion, adoption, use, and impact on emerging applications from studies conducted in various geographical settings. Our mission through this handbook is to provide an understanding of the global diffusion of broadband, examining
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factors affecting its deployment, diffusion adoption, usage, and impact on consumers and businesses from a global perspective. Additionally, the handbook helps to understand differences in the adoption of broadband in different countries and examine policy issues at national and international levels. In order to provide the most balanced coverage of concepts and issues related to the selected topics of this handbook, researchers from around the world were asked to submit proposals describing their proposed coverage and the contribution of such coverage to the handbook. All proposals were carefully UHYLHZHGE\WKHHGLWRUVLQOLJKWRIWKHLUVXLWDELOLW\UHVHDUFKHUV¶UHFRUGVRIVLPLODUZRUNLQWKHDUHDRIWKH proposed topics, and the best proposal for topics with multiple proposals. The goal was to assemble the preeminent research in broadband from all over the world to contribute entries to the handbook. Upon the receipt of full entry submissions, each submission was forwarded to at least two expert external reviewers on a double-blind, peer review basis. Only submissions with strong and favorable reviews were chosen as entries for this handbook. In many cases, submissions were sent back for several revisions prior WR¿QDODFFHSWDQFH$VDUHVXOWWKLVKDQGERRNLQFOXGHV HQWULHVKLJKOLJKWLQJDVSHFWVRIGHSOR\PHQW diffusion, adoption, and use of broadband in various geographical settings. All entries are written by knowledgeable, distinguished scholars from many prominent research institutions around the world. The extended and comprehensive coverage of broadband research in this distinctive book will contribute towards theory, practice, and policy. The theoretical contribution of this collection of studies is that it synthesizes the appropriate literature in order to enhance knowledge of broadband deployment, diffusion, adoption, usage, and impact from the global perspective. This handbook contributes to various theories and models from information systems, management, marketing, economics, and other social sciences disciplines. Some of the theories that this handbook contributes includes diffusion of innovations, technology acceptance model, theory of planned behavior, decomposed theory of planned behavior, model of adoption of technology in households, socio-technical approach, studies on developing countries, policymaking for telecommunications, and consumer behavior. Considering the relatively slow and heterogeneous adoption of broadband today, it can be learned that the policymakers and providers of the innovationin this case the telecommunications industryKROGDVSHFL¿FLQWHUHVWLQWKH¿QGLQJV of this handbook. Policymakers in various countries, particularly in the developing world, are currently investigating how to increase the diffusion of broadband within their own countries, and so information RQRWKHUFRXQWULHV¶H[SHULHQFHVFDQSURYHXVHIXO$GGLWLRQDOO\WKHWHOHFRPPXQLFDWLRQVLQGXVWU\LVLQterested in determining how to improve their current strategies. Therefore, for both policy and practice, this handbook will offer an understanding of the broadband diffusion strategies at both the macro and micro levels. This is particularly useful as there is little research published in the area of deployment, consumer adoption, usage, and impact of broadband. Understanding the usage and impact of broadband will be helpful for content developing organizations to integrate compelling content with new generation broadband, as well as to broadband service providers seeking to improve their services. In order to cater to the information needs of a diverse spectrum of readers and at the same time efIHFWLYHO\SUHVHQWWKLVJOREDOEXWFRPSOH[WRSLFWKLVKDQGERRNLVVWUXFWXUHGLQWR¿YHVHFWLRQVZLWKHDFK section including a number of divisions and consequent chapters. A brief description of each section, division, and chapter is provided below. Section I: National Policies examines macro and supply-side factors affecting broadband deployment DQGGLIIXVLRQLQYDULRXVJHRJUDSKLFDOUHJLRQVZKLFKDUHJURXSHGLQWR¿YHGLYLVLRQV $IULFD$VLD$XVtralia and New Zealand, Europe, and North America). A number of important factors including national policy, market competition, ICT competency, and digital divide are discussed within this section. 1LQHFKDSWHUVDUHLQFOXGHGLQWKLVVHFWLRQZKLFKDUHIXUWKHURUJDQL]HGLQWR¿YHGLYLVLRQVDVQRWHG above, according to their geographical orientation as follows: Division I. Africa (Chapter II: South Africa: The Long Walk to Broadband Freedom); Division II. Asia (Chapter III: Bridging the Digital
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Divide Through Broadband Deployment, Chapter IV: Broadband Policy, Market Competition, and User Adoption in Taiwan, Chapter V: ICT Competency of Bangladesh to Face Broadband Diffusion, Chapter VI: Socio-Cultural Interpretations to the Diffusion and Use of Broadband Services in a Korean Digital Society, Chapter VII: Structural Changes and Regulatory Challenges in Japanese Telecommunications Industry); Division III. Australia and New Zealand &KDSWHU9,,, $QDO\VLVRIWKH,QÀXHQFH RI$XVWUDOLD¶V*RYHUQPHQW3ROLF\RQ%URDGEDQG,QWHUQHW$FFHVV&KDSWHU,; %URDGEDQGIRUWKH0DVV 0DUNHW&KDSWHU; &RPSHWLWLRQ5HJXODWLRQDQG%URDGEDQG'LIIXVLRQ 7KH&DVHRI1HZ=HDODQG Division IV. Europe &KDSWHU;, 'LJLWDO'LYLGHDQG%URDGEDQG$FFHVV 7KH&DVHRIDQ,WDOLDQ5HJLRQ &KDSWHU;,, ,PSURYLQJ%URDGEDQG$FFHVVLQ5XUDO$UHDV&KDSWHU;,,, 0HWURSROLWDQ%URDGEDQG1HWZRUNV 'HVLJQDQG,PSOHPHQWDWLRQ$VSHFWVDQG%XVLQHVV0RGHOV&KDSWHU;,9 6PDOO:RUOG 7KH,ULVK %URDGEDQG([SHULHQFH&KDSWHU;9 6RFLDO3ROLWLFDODQG(WKLFDO5HVSRQVLELOLW\LQ%URDGEDQG$GRSWLRQ and Diffusion: A German Case Study); and Division V. North America &KDSWHU;9, &RPSHWLWLRQ LQ%URDGEDQG3URYLVLRQDQGWKH'LJLWDO'LYLGH&KDSWHU;9,, *RYHUQPHQWDODQG&XOWXUDO)DFWRUVLQ %URDGEDQG$GRSWLRQ&KDSWHU;9,,, 5HJXODWLRQDQGWKH'HSOR\PHQWRI%URDGEDQG $EULHIDFFRXQW of these chapters is provided below. Chapter II, “South Africa: The Long Walk to Broadband Freedom” by Justin Henley Beneke, aims to explore the development of broadband services in South Africa, as well as touching on the challenges faced in bringing this phenomenon into the mainstream. Reasons for the lack of diffusion and adoption of such services point to high end user costs of the service, a very limited geographical footprint RIERWK¿[HGOLQHDQGPRELOHEURDGEDQGLQIUDVWUXFWXUHDVZHOODVDODFNRIFRPSXWHUOLWHUDF\DQGDQ understanding of what broadband is able to offer. The author of the chapter concludes with possible solutions to these challenges. Chapter III, “Bridging the Digital Divide through Broadband Deployment” by Challa Radhakumari, provides a summary relating to the functioning of two projects in the two Southern States of India, Andhra Pradesh and Kerala, to show how through broadband deployment in rural areas the digital divide can be bridged. By focusing on the implementation of the two projects, the chapter illustrates their contribution in practically using broadband technologies in overcoming the hurdles to bridging the digital divide, and KLJKOLJKWVWKHFULWLFDOVXFFHVVIDFWRUVDVLGHQWL¿HGGXULQJWKHIXQFWLRQLQJRIWKHSURMHFWVZKLFKKHOSHG the two states in achieving their goals. The chapter concludes by providing recommendations for application of similar projects in other geographical settings. Chapter IV, “Broadband Policy, Market Competition, and User Adoption in Taiwan” by Yu-li Liu, analyzes broadband adoption, competition among providers of broadband, and relevant policies in Taiwan. The research methods adopted include a literature review, in-depth interviews, and secondary DQDO\VLVRISUHYLRXVVXUYH\VFRQGXFWHGE\7:1,&6LQFH7DLZDQ¶VEURDGEDQGSHQHWUDWLRQLVWKH¿IWK highest in the world, the discussions of the major factors contributing to broadband deployment in this chapter can provide some useful experiences from which other countries may learn. Chapter V, “ICT Competency of Bangladesh to Face Broadband Diffusion” by Anwarul Islam and K.C. Panda, examines the initiatives taken by Bangladesh to develop its sustainable information infrastructure, reporting that teledensity and overall IT infrastructure is now in the growing stage. Nevertheless, the broadband diffusion in Bangladesh is not on par with other Asian countries, as it is still in an embryonic stage in terms of broadband diffusion. This chapter, therefore, tries to show the initiatives taken and the existing condition of Bangladesh to achieve countrywide broadband diffusion. Chapter VI, “Socio-Cultural Interpretations to the Diffusion and Use of Broadband Services in a Korean Digital Society” by Dal Yong Jin, attempts to ascertain the causes of the rapid growth of broadband services in the context of the broader socio-cultural elements. It recognizes technology as a socio-cultural product which has historically been constituted by certain forms of knowledge and social
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practice, so this chapter explores cultural elements contributing to the diffusion of broadband services in WKHFRQWH[WRIWKHFXOWXUDOHQYLURQPHQWLQ.RUHD)XUWKHULWGLVFXVVHVWKHVLJQL¿FDQWUROHRIWKHSHRSOH as users, in the process of the rapid diffusion and growth of broadband services. Chapter VII, “Structural Changes and Regulatory Challenges in the Japanese Telecommunications Industry” by Hidenori Fuke, examines the structure of the telecommunications industry in Japan which KDVEHHQXQGHUJRLQJLPPHQVHFKDQJH7KHFKDQJHVDUHREVHUYHGLQ¿YHSKDVHV GHYHORSPHQWRIFRPpetition into the local call market, diffusion of broadband Internet and development of inter-platform competition, rapid growth of cellular services and Internet access via cellular, decline of POTS (Plain Old Telephone Service), and structural changes from vertical integration to layered structure and development of media convergence. These changes require total review of the regulatory framework that was formed in the POTS era. This chapter proposes a review of essential facilities regulation, a universal VHUYLFHV\VWHPDQGDÀDWUDWHSULFLQJV\VWHPRIWKH,QWHUQHWLQRUGHUWRVROYHSUREOHPVWKDWDUHOLNHO\WR distort the new industry structure. Chapter VIII,³$QDO\VLVRIWKH,QÀXHQFHRI$XVWUDOLD¶V*RYHUQPHQW3ROLF\RQ%URDGEDQG,QWHUQHW Access” by Qiuyan Fan, provides an in-depth analysis of the impact of policy issues on broadband Internet access in Australia. The primary goal of this chapter is to develop a holistic understanding RI$XVWUDOLD¶VQDWLRQDODSSURDFKHVSHUWDLQLQJWREURDGEDQG,QWHUQHWDFFHVV7KHJRYHUQPHQWKDVEHHQ basing its actions on market forces which help in improving broadband Internet access in the major cities, but which, however, have little effect in regional and rural Australia. The research has indicated that the regulatory competition regime has failed to address concerns of market dominance and market power in the telecommunications sector as is evidenced by a relatively lower price-performance ratio of broadband services in Australia. Chapter IX, “Broadband for the Mass Market” by Roger Saunders, suggests there is no new application to stimulate adoption of broadband by the mass market. Many new applications have been introduced but KDYHQRWFUHDWHGWKHGHVLUHGJURZWK2QHDSSOLFDWLRQWKDWLVLGHQWL¿HGDVSRWHQWLDOO\KDYLQJPDVVPDUNHW attraction is Voice over Internet Protocol (VoIP), and it is the most likely killer application. However, failure by major communications carriers to develop VoIP is slowing broadband penetration to this larger market segment. Finally, the multitude of broadband packages offered by the various competing carriers creates confusion in the mass market which, as a result, defers purchase decisions. Chapter X, “Competition, Regulation, and Broadband Diffusion: The Case of New Zealand” by Bronwyn Howell, offers a thought-provoking case study of the effects of different competition and regulatory policies on broadband diffusion rates. Despite New Zealand having one of the highest rates of Internet connection and usage in the OECD, widely available broadband infrastructure, and low broadband prices, broadband uptake per capita languishes in the bottom third of the OECD. The New Zealand case illustrates the effect that legacy regulations can have on both the diffusion of new technologies per se, and the choices made by consumers between different generational variants within that technology. Chapter XI, “Digital Divide and Broadband Access: The Case of an Italian Region” by Enrico Ferro, J. Ramon Gil-Garcia, and Natalie Helbig, looks at the issue of digital divide, and based on a review of the literature on digital divide and broadband access, the authors document different approaches to understanding the phenomenon and argue that these perspectives can also help to understand broadband access. This chapter presents a case study conducted in an Italian region. The authors provide some LPSOLFDWLRQVRIWKH¿QGLQJVDQGDUJXHWKDWSROLF\PDNHUVVKRXOGH[SORUHWKHUHODWLRQVKLSEHWZHHQ,7 skills acquisition, broadband access, and Internet use in order to develop more effective policies and programs. Chapter XII, “Improving Broadband Access in Rural Areas” by Ingjerd Skogseid, explores the characteristics of rural broadband infrastructure development. Taking the existing installed base into
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consideration, small rural communities can initiate bottom-up cultivation of broadband infrastructure. Such initiatives are important contributions to overcoming the disparity in broadband access. The proposal is to use descriptive clusters as a way to reveal the installed base. This can be used to acquire an overview of the types of resources available and the choices that need to be made. Chapter XIII, “Metropolitan Broadband Networks: Design and Implementation Aspects, and Business Models” by Antonios Alexiou, Christos Bouras, Dimitris Primpas, and John Papagiannopoulos, presents the design principles that cover the implementation of broadband infrastructure in the region of Western Greece, by examining all the necessary parameters that arise while implementing such a critical GHYHORSPHQWDOSURMHFW7KHEURDGEDQGLQIUDVWUXFWXUHWKDWLVGHSOR\HGLVHLWKHUEDVHGRQRSWLFDO¿EHURU on wireless systems. The usage of the broadband infrastructure by service providers will be based upon the open availability of the infrastructure in a cost-effective way. This chapter also presents the main FKDUDFWHULVWLFVRIDSURSRVHGEXVLQHVVSODQWKDWHQVXUHV¿QDQFLDOYLDELOLW\RIWKHEURDGEDQGLQIUDVWUXFWXUH and guarantees the administration, growth, and exploitation of the infrastructure. Chapter XIV,³6PDOO:RUOG 7KH,ULVK%URDGEDQG([SHULHQFH´E\'LDQD:LOVRQ.HYLQ2¶5HLOO\ and Dave Murray, considers the political, cultural/social, and economic factors, both micro and macro, affecting the supply/demand nexus of broadband services for the Irish consumer. This chapter suggests that although the market is beginning to grow strongly, it is from a low base, and as a result the country still lags behind many of its European counterparts. There is still a lack of competition which is having an adverse effect on both the supply and demand of broadband. Also, the Irish consumers are still not FRQYLQFHGWKDWEURDGEDQGLVWKHµNLOOHUDSS¶WKH\QHHG7KHDXWKRUVFRQFOXGHWKDWWKLVPD\FKDQJHLQWKH future as the technology delivers more of the content-rich multimedia fare that the Irish already enjoy in other formats. Chapter XV, “Social, Political, and Ethical Responsibility in Broadband Adoption and Diffusion: A German Case Study” by Axel Schulz, Bernd Carsten Stahl, and Simon Rogerson, suggests that there is considerable interest worldwide in broadband diffusion, with research focusing on aspects such as the provision of broadband in remote areas and the socio-economic factors that determine the likelihood RIDGRSWLRQ7KLVFKDSWHULGHQWL¿HVWKHSROLFLHVDQGLQLWLDWLYHVXVHGWRHQFRXUDJHEURDGEDQGDZDUHQHVV availability, and adoption. Using the case study of a local broadband initiative in remote and rural Germany, the chapter asks the question of who can and should be responsible for broadband provision and how such responsibility ascriptions are realized. Chapter XVI, “Competition in Broadband Provision and the Digital Divide” by Wei-Min Hu and James E. Prieger, examines the supply of DSL broadband by the incumbent local exchange company /(& LQ¿YH86VWDWHVLQWKHHDUOLHU\HDUVRIGHSOR\PHQW(PSLULFDODQDO\VLVVKRZVWKDWLQFRPHRWKHU demographics, and cost factors are important determinants of entry and availability. After controlling for other factors, the racial characteristics of the area do not affect DSL provision. Active competition in broadband from competitive LECs reduces deployment of DSL by the incumbent, but potential competition from competitive LECs has the opposite effect. Competition from cable companies also negatively LQÀXHQFHVWKHLQFXPEHQW¶VGHFLVLRQWRVXSSO\'6/7KHDXWKRUV¶REMHFWLYHLQJDXJLQJWKHLPSRUWDQFHRI the various factors is to highlight the important drivers of broadband provision for policymakers. Chapter XVII, “Governmental and Cultural Factors in Broadband Adoption” by Elizabeth Fife, /DXUD+RVPDQDQG)UDQFLV3HUHLUDVXJJHVWVWKDWDOWKRXJKWKHSRWHQWLDOEHQH¿WVRIEURDGEDQG,QWHUQHW adoption are great, the levels of take-up vary greatly around the world. This chapter argues that the high level of broadband adoption rates witnessed in certain Asian economies is attributable in part to the aggressive policies pursued by the respective governments. The chapter concludes by suggesting that HYHQLIHFRQRPLFDQGVRFLDOEHQH¿WVH[LVWDVLQWKHFDVHRIWHOHPHGLFLQHLQWKH8QLWHG6WDWHVFXOWXUDO and social factors may in fact hinder the deployment of such applications and retard the growth rate of broadband access.
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Chapter XVIII, “Regulation and the Deployment of Broadband” by James E. Prieger and Sunhwa Lee, examines the impact of telecommunications regulatory policy on broadband service deployment. Using U.S. data covering all forms of access technology and all areas served by major carriers, the authors LQYHVWLJDWHWKHLPSDFWRIVWDWHDQGIHGHUDOUHJXODWLRQVRQEURDGEDQGDYDLODELOLW\7KHDXWKRUV¶REMHFWLYH in examining regulatory factors is to highlight the role of incentive regulation and local telecommunications competition policy in stimulating broadband service deployment. Section II: Consumer-User Behavior examines the micro and demand-side factors affecting broadband DGRSWLRQDQGXVDJHLQYDULRXVQDWLRQDOVHWWLQJVJURXSHGLQWR¿YHGLYLVLRQV $XVWUDOLD(XURSH0LGGOH East, North America, South America). Chapters included in this section provide in-depth discussion on socio-behavioral, attitudinal, and demographic factors affecting adoption of broadband and the digital divide at the consumer level. This section also focuses on broadband user behavior and characterizaWLRQ1LQHFKDSWHUVDUHLQFOXGHGLQWKLVVHFWLRQZKLFKDUHJURXSHGLQWR¿YHGLYLVLRQVDFFRUGLQJWRWKHLU geographical orientation as follows: Division I. Australia &KDSWHU;,; )DFWRUV$IIHFWLQJ%URDGEDQG Adoption for Mainstream Consumers); Division II. Europe &KDSWHU;; 'HYHORSLQJD'\QDPLF9LHZ RI%URDGEDQG$GRSWLRQ&KDSWHU;;, (PSOR\LQJWKH&RQWHQW9DOLGLW\$SSURDFKIRU,PSURYLQJWKH &RQWHQWRIWKH%URDGEDQG$GRSWLRQ6XUYH\,QVWUXPHQW&KDSWHU;;,, ,QVLGHWKH0LFURFRVP $&DVH 6WXG\RID:LUHOHVV,QWHUQHW+RWVSRW&KDSWHU;;,,, 7KH8VHVDQG*UDWL¿FDWLRQVRI%URDGEDQG,QWHUQHW Division III. Middle East &KDSWHU;;,9 )DFWRUV$IIHFWLQJ$WWLWXGHVWRZDUGV%URDGEDQG$GRSWLRQLQ the Kingdom of Saudi Arabia); Division IV. North America &KDSWHU;;9 &KDUDFWHULVWLFVRI)DUPDQG Rural Internet Use in the USA); Division V. South America &KDSWHU;;9, %URDGEDQG8VHU%HKDYLRU &KDUDFWHUL]DWLRQ&KDSWHU;;9,, 3UHFLVLRQVDERXWWKH%URDGEDQG'LYLGHLQ&KLOH Chapter XIX, “Factors Affecting Broadband Adoption for Mainstream Consumers” by Peter Adams, H[SORUHVZKHWKHUSDVWH[SHULHQFHVZLWKWHOHFRPPXQLFDWLRQVSURYLGHUVDQGFXUUHQWµSODQV¶RQRIIHUVHUYH DVEDUULHUVEHWZHHQDQLQGLYLGXDOFRQVXPHU¶VSHUVXDVLRQSKDVHRIWKHLQQRYDWLRQGHFLVLRQSURFHVVDQG the decision phase. The author argues that future technology adoption studies need to consider including the complexity of the actual purchase decision when developing constructs for quantitative models. The chapter concludes by supporting that if we are to build a picture of why mainstream consumers adopt broadband, more than just the perceptions of using the technology itself need to be investigated. Chapter XX, “Developing a Dynamic View of Broadband Adoption” by Herbert Daly, Adrina Ortiz, Yogesh K. Dwivedi, Ray J. Paul, J. Santos, and J.M. Sarriegi, develops a view of UK broadband adoption using dynamic modeling techniques based on an existing statistical study. The contrasting approaches to modeling are compared. Principles of a dynamic modeling system are introduced, and an appropriate form for broadband adoption chosen. The process of building a dynamic model based on an existing static model of broadband adoption is presented. Finally, the new perspective of the dynamic model is explored using the causal loop analysis technique. Chapter XXI, “Employing the Content Validity Approach for Improving the Content of the Broadband Adoption Survey Instrument” by Yogesh K. Dwivedi, Banita Lal, and Khalil Khoumbati, illustrates WKHYDOLGDWLRQRIFRQWHQWRIWKHEURDGEDQGDGRSWLRQVXUYH\LQVWUXPHQWIURPWKHKRXVHKROGFRQVXPHU¶V SHUVSHFWLYH7KLVFKDSWHU¿UVWO\LGHQWL¿HVFRQVWUXFWVDQGWKHLUUHVSHFWLYHLWHPVWKDWDGHTXDWHO\FRYHU relevant dimensions of factors that affect consumers in the domain of broadband adoption, and second, LWGHWHUPLQHVZKHWKHUWKHLGHQWL¿HGFRQVWUXFWVDQGWKHLUUHVSHFWLYHLWHPVDGHTXDWHO\FRYHUHGWKHUHOHYDQW GLPHQVLRQV9DOLGDWLRQRIWKHLGHQWL¿HGLWHPVZDVSHUIRUPHGHPSOR\LQJDYDULDWLRQRIDTXDQWLWDWLYH DSSURDFKWRFRQWHQWYDOLGLW\7KH¿QGLQJVREWDLQHGIURPWKHFRQWHQWYDOLGDWLRQDUHSUHVHQWHGDQGGLVcussed. Chapter XXII, “Inside the Microcosm: A Case Study of a Wireless Internet Hotspot” by Pierre Vialle, Olivier Epinette, and Olivier Segard, highlights critical elements affecting the diffusion of broadband
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wireless Internet at a hotspot location, through a case study. The research deals with a wireless Internet services project in the main Paris airport, and comprises two components. First, this chapter analyzes the HPHUJHQFHRIDYDOXHFKDLQIRUDQHZVHUYLFHEDVHGRQWKHFRRSHUDWLRQRIVHYHUDO¿UPV,QSDUWLFXODU the authors show how different actors can or cannot position themselves on this value chain, according to their resources and capabilities. Second, the authors explore the perceptions and attitudes of business passengers in order to better understand the potential adoption and use of hotspot services, and provide a preliminary framework of analysis. Chapter XXIII,³7KH8VHVDQG*UDWL¿FDWLRQVRI%URDGEDQG,QWHUQHW´E\.DULDQQH9HUPDDVDQG /LGZLHQYDQGH:LMQJDHUWLGHQWL¿HGDVPDOOQXPEHURIUHODWLYHO\KRPRJHQHRXVJURXSVRI'XWFK,QWHUQHW users (both broadband and narrowband), based on their usage patterns. Using individual and behavioral characteristics, the authors further investigated the nature of the different groups. This chapter presents ¿YHFOXVWHUVRIGLIIHUHQW,QWHUQHWXVHUVEDVHGRQSDWWHUQVRIEHKDYLRU7KHUHVXOWVVKRZWKDWWKH,QWHUQHW users in the sample consist of a large group that more or less conduct the same online activities. The results also show that narrowband and broadband users differ in their Internet behavior. Chapter XXIV, “Factors Affecting Attitudes towards Broadband Adoption in the Kingdom of Saudi Arabia” by Vishanth Weerakkody, sets out to explore the reasons for the slow progress in broadband adoption and investigates the factors that may be affecting the adoption of broadband by Kingdom of 6DXGL$UDELD .6$ FRQVXPHUV7KHNH\¿QGLQJV DUHWKDWWKHIDFWRUVZLWKWKHPDLQLQÀXHQFHXSRQ FRQVXPHUV¶DWWLWXGHVWRZDUGVDGRSWLRQRIEURDGEDQGDUH XVHIXOQHVV VHUYLFHTXDOLW\ DJH usage, (5) type of connection, and (6) type of accommodation. Contrary to prediction, socio-cultural IDFWRUVVXFKDVUHJXODWLRQWKURXJK¿OWUDWLRQRIEURDGEDQGZHUHIRXQGWRKDYHQRVLJQL¿FDQWLQÀXHQFH on the adoption of broadband. Chapter XXV, “Characteristics of Farm and Rural Internet Use in the United States” by Peter L. Stenberg and Mitchell Morehart, examines Internet use by farm and rural workers and proprietors using descriptive statistics and market demand analysis. The primary methodology used is categorical dependent variable analysis. The results indicate that income is a critical element, though other factors such as age RISURSULHWRUDQGUXUDOXUEDQORFDWLRQDUHDOVRVLJQL¿FDQWLQPDUNHWGHPDQGGHWHUPLQDWLRQ Chapter XXVI, “Broadband User Behavior Characterization” by Humberto T. Marques Neto, Leonardo C.D. Rocha, Pedro H.C. Guerra, Jussara M. Almeida, Wagner Meira Jr., and Virgilio A.F. Almeida, presents a broadband user behavior characterization from an Internet service provider standpoint. Analysis uncovers two main groups of session request patterns within each user category: (1) sessions that comprise traditional Internet services such as WWW services, e-mail, and instant messenger; and VHVVLRQVWKDWFRPSULVHSHHUWRSHHU¿OHVKDULQJDSSOLFDWLRQV7KLVFKDSWHUDOVRDQDO\]HGDQGFODVVL¿HGWKHHEXVLQHVVVHUYLFHVPRVWFRPPRQO\DFFHVVHGE\XVHUV Chapter XXVII, “Precisions about the Broadband Divide in Chile” by Sergio Godoy E. and M. 6ROHGDG+HUUHUD3TXDQWL¿HVWKHDGRSWLRQRIEURDGEDQGDWWKHKRXVHKROGOHYHOLQ&KLOHE\DVVHVVLQJ its impact on three types of digital divide: between users and non-users of the Internet, between usage at home and elsewhere, and between home broadband users and modem home users. In Chile, the main digital gap is still between users and non-users of the Internet, both in terms of age and education level. Income mainly affects the probability of having broadband access at home. Since broadband has rapidly expanded among all socio-economic segments, it is becoming less relevant as a predictor of access and Web usage. Section III: Small and Medium-Size Enterprises (SMEs) examines the factors affecting broadband deployment, diffusion, and use by SMEs in various countries. Six chapters are included in this section which are grouped into two divisions according to their geographical orientation as follows: Division I. Asia &KDSWHU;;9,,, $6XUYH\RQWKH$GRSWLRQDQG8VDJHRI%URDGEDQG,QWHUQHW DQGDivision II.
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Europe &KDSWHU;;,; %URDGEDQG$FFHVVDQG%URDGEDQG%DVHG$SSOLFDWLRQV $Q(PSLULFDO6WXG\ RIWKH'HWHUPLQDQWVRI$GRSWLRQ$PRQJ,WDOLDQ60(V&KDSWHU;;; Broadband Diffusion to SMEs in WKH8.&KDSWHU;;;, (QYLURQPHQWDO'ULYHUVRI(%XVLQHVV6WUDWHJLHVDPRQJ60(V&KDSWHU;;;,, ([SORULQJ60(V¶$GRSWLRQRI%URDGEDQGLQWKH1RUWKZHVWRI(QJODQG&KDSWHU;;;,,, ([WHUQDO3UHVsures for Adoption of ICT Services among SMEs). Chapter XXVIII, “A Survey on the Adoption and Usage of Broadband Internet” by Roya Gholami, -RKQ/LPDQG6DQJ 1 hr commute
% age 30-49 yrs
7.536
% age 25-29 yrs
4.587
# households (ln)
0.756
Mean
¿UPV OQ
Independent Variables
Broadband availability (1=yes)
Dependent Variable
Variable
Regulation and the Deployment of Broadband
Table 1. Summary statistics of the data
285
Regulation and the Deployment of Broadband
The publicly available broadband data from the FCC have some limitations. First, the data only contains ZIP Code areas with broadband providers reported. ZIP Codes without any reported broadband provider are not reported, and so the universe of ZIP Codes must be constructed outside the dataset. The universe of ZIP Codes in our study is the subset of the ZCTAs (ZIP Code tabulation areas) in the 2000 Census of Population that we ZHUHDEOHWRPDWFKWRWHOHSKRQHFRPSDQLHV¶FHQWUDO RI¿FHVXVLQJDZLUHFHQWHUGDWDEDVH26 A major limitation of the FCC data is that they do not indicate the type of company offering a service. The regulatory regime variable in this study applies only to local exchange companies, that is, providers of DSL service. The effects of telephone regulation on cable modem companies are indirect: if regulation affects the decisions of local exchange companies to offer DSL, that may DIIHFW WKH SUR¿WDELOLW\ RI RIIHULQJ FDEOH PRGHP service, a close substitute. Since we cannot tell from which types of companies broadband is available, we are measuring the total impact of the telephone regulation on the market, including (with no ability to separate out) any indirect effects through rivals to DSL. The reporting threshold raises an interpretational issue for the rural location variables we include in the estimations below. Carriers serving fewer than 250 broadband lines do not have to submit information (though the FCC states that some did voluntarily). It is therefore possible that some areas are incorrectly recorded as lacking broadband access. The carriers not meeting the reporting threshold are the mostly likely to be in rural areas, and thus availability may be understated there. However, since rural carriers are generally not subject to the unbundling obligations and are not in our sample, we do not attempt to explore the rural/urban divide in any event.27
coupled with interim rate freezes, and deregulation grouped with a few miscellaneous other alternative regulatory schemes. The incumbent local exchange carrier in each ZIP Code is matched with the form of regulation it operates under within that state.29 The other regulatory variable is the UNE rate. 7KHVSHFL¿F81(UDWHVIRUHDFKORFDOH[FKDQJH carrier are set by the state public utility commissions. They may differ by company and by density ]RQH :H FDQQRW PDWFK VSHFL¿F 81( UDWHV WR each ZIP Code area, and so we instead use statewide average rates.307RUHÀHFWWKHGLIIHUHQWFRVW structure at each wire center, we also include the proxy cost of local telephone service at each wire center. See the appendix for information on the proxy cost data.
Demand and Cost Variables All demographic, socioeconomic, and business market variables are from the U.S. Bureau of the Census.31 The data from the Bureau of the Census are for ZIP Code tabulation areas (ZCTAs), which convert the collection of point addresses in a ZIP Code to a geographic area. Demand and cost variables are expected to DIIHFWD¿UP¶VHQWU\GHFLVLRQEHFDXVHWKH\SUR[\ IRUWKHH[SHFWHGSRVWHQWU\SULFHDQGSUR¿WLQWKH estimations (Bresnahan & Reiss, 1987). Demand variables include income, market size and composiWLRQUXUDODJHDQGHGXFDWLRQSUR¿OHJHQGHUUDWLR commute time, and telephone penetration. Relevant cost considerations for broadband GHSOR\PHQWDUH¿[HGFRVWVVXEVFULEHUGHQVLW\DQG the quality of the telecommunications infrastructure.32 Controls for these costs include population density and a proxy for the vintage of the local telecommunications and cable networks (median age of the housing structures) in the area. For a more complete explanation of broadband costs and these variables, refer to Prieger (2003).
State and Federal Regulation Local Telecommunications Competition Regulatory variables consist of the state regulatory regime and UNE rates. We divide regulatory UHJLPHV LQWR ¿YH FDWHJRULHV IROORZLQJ 155, (2000):28 RORR, price caps, rate freezes, price caps
286
Local telecommunications competition, enabled by the Telecommunications Act of 1996, grew steadily until the telecom bust around the time of the data.
0.205 -0.069 1.517 1.18 0.689 0.948 1.300 2.931
% aged younger than 19
% aged between 19 and 24
% aged between 25 and 34
% aged between 35 and 49
% aged between 50 and 64
% high school education
% college education
% graduate education
% rural farm households -0.465
-2.138
Median income (> median income)
-0.229
0.179
Median income (< median income)
% female
-0.082
ORJ QXPEHURI¿UPV
% rural non-farm households
0.210 0.368
log (number of households)
Demand and Cost Variables
36.38
16.14
11.77
8.56
14.64
18.83
-0.85
2.55
-2.84
-5.78
-26.54
2.23
-1.02
4.56
2.60
0.396***
0.188***
0.211***
0.411*
0.378***
0.430***
0.395
0.316
0.349
0.068***
0.286***
0.124
0.093
0.025***
0.024***
1.201
1.229
0.537
0.398
0.311
1.081
0.334
0.065
-0.313
-0.399
-0.169
0.330
-0.199
0.396
0.332
0.361
2.155
Verizon 0.031***
0.000
SBC-Ameritech-PacBell
CLEC Presence
0.107 0.968
-0.380
0.168
-0.088
0.141
Coef.
Qwest
5.87
0.087***
0.073***
0.049***
0.048
s.e.
BellSouth
0.420
-9.26
-0.522
Bell Operating Company
Deregulation
5.81
0.857
Rate Freeze
2.12
0.174
0.39
0.032
Price Caps
x 100
Marginal effect x 100
8.90
9.11
3.98
2.95
2.31
8.01
2.48
0.48
-2.32
-2.95
-1.25
2.45
-1.47
2.93
2.46
3.04
9.54
0.00
3.79
0.74
-3.89
1.08
-0.66
1.03
Marginal effect
and CLEC Presence
and CLEC Presence Coef.
Regulatory Variables, BOCs,
Regulatory Variables
Price Caps & Rate Freeze
State-Level Regulation
Variable
ESTIMATION 2
ESTIMATION 1
0.446***
0.210***
0.236**
0.467
0.420
0.483**
0.433
0.359
0.392
0.074***
0.308
0.139**
0.102*
0.027***
0.027***
0.034***
0.067***
0.043
0.063***
0.050**
0.095***
0.086*
0.059
0.056**
s.e.
2.870
1.444
0.839
0.656
1.274
1.559
-0.128
0.310
-0.355
-0.503
-2.257
0.243
-0.088
0.378
0.242
-0.609
0.788
0.237
0.094
Coef. x 100
35.93
18.07
10.51
8.22
15.95
19.44
-1.60
3.88
-4.44
-6.30
-28.25
3.04
-1.10
4.73
3.03
-11.46
5.65
2.90
1.17
Marginal effect
without CLEC Presence
Regulation Variables
ESTIMATION 3
0.391***
0.186***
0.209***
0.407
0.375***
0.426***
0.390
0.313
0.346
0.067***
0.286***
0.123**
0.092
0.024***
0.024***
0.086***
0.073***
0.049***
0.047**
s.e.
Regulation and the Deployment of Broadband
Table 2. Probit estimations for the availability of broadband service within a ZIP Code area (cont. next page)
287
288 -2.36
-0.580 0.157
),5(¿UPV
VHUYLFH¿UPV
median structure age
s.e.
0.437 -5281.70
Pseudo R-square
Log-likelihood
0.945***
0.001***
0.026**
0.017**
0.056*
0.022***
0.320
0.102
0.243**
0.188**
0.341***
0.199***
0.119***
0.399***
-2.859
0.006
-0.046
-0.006
0.172
-0.099
-0.356
0.225
0.200
0.582
0.726
1.117
0.710
0.492
Coef.
-4420.92
0.529
18,978
0.04
-0.34
-0.05
1.27
-0.73
-2.64
1.67
1.48
4.31
5.38
8.27
5.26
3.64
x 100
Marginal effect
1.033***
0.002***
0.030
0.019
0.060***
0.024***
0.367
0.116*
0.261
0.213***
0.350**
0.221***
0.133***
0.437
s.e.
-5.049
0.014
-0.059
0.042
0.110
-0.120
-0.213
0.183
-0.547
0.492
2.607
1.183
0.557
1.836
Coef.
-5374.01
0.427
18,978
0.17
-0.74
0.52
1.37
-1.51
-2.67
2.30
-6.84
6.16
25.87
14.81
6.97
22.98
x 100
Marginal effect
without CLEC Presence
Regulation Variables
ESTIMATION 3
0.933***
0.001***
0.026**
0.017**
0.055**
0.022***
0.315
0.102*
0.241**
0.186***
0.339***
0.198***
0.118***
0.398***
s.e.
VLJ Q LI L F D Q W D W WK H OH YH O
VLJ QLI L F D Q W D W WK H OH YH O
VLJ Q LI L F D Q W D W WK H OH YH O Notes: Dependent variable is 1 if there is at least one broadband customer in the ZIP Code area, 0 if not. The excluded regulation indicator is Rate of Return Regulation. The excluded BOC indicator is all non-Bell LECs. Marginal effects are expressed in percentage points. The sample includes only ZIP Codes matched to large ILECs (those subject to the UNE provisions of the Telecommunications Act of 1996); these include the BOCs and other LECs such as Sprint, Valor, Cincinnati Bell, Citizens, Concord, and so forth. Marginal effect is the marginal effect on the mean evaluated at the sample mean of x; for indicator variables these are discrete changes. S.e. is WKHVWDQGDUGHUURUIRUWKHFRHI¿FLHQWQRWWKHPDUJLQDOHIIHFW&/(&LV&RPSHWLQJ/RFDO([FKDQJH&RPSDQ\
18,978
0.15
-0.80
0.52
1.19
-1.45
-7.20
5.70
22.59
13.63
Observations
-4.774
-0.064 0.012
population density (> median)
Constant
0.096 0.042
DYHHPSOR\PHQW¿UP OQ!PHGLDQ
population density (< median)
-0.190
0.459
PDQXIDFWXULQJ¿UPV
-0.117
1.820
% households with phone
¿UPVZLWK HPSOR\HHV
1.098
% over 1 hr commuting time
DYHHPSOR\PHQW¿UP OQ PHGLDQ
1.95
0.559
6.94
1.906
% 30-60 min commuting time
23.66
x 100
Marginal effect
and CLEC Presence
and CLEC Presence Coef.
Regulatory Variables, BOCs,
Regulatory Variables
% workers with no commute
Demand and Cost Variables (continued)
Variable
ESTIMATION 2
ESTIMATION 1
Regulation and the Deployment of Broadband
Table 2. (cont.)
Regulation and the Deployment of Broadband
Competition in local telephony may spur incumbent carriers to offer broadband. Furthermore, some facilities-based competitors offer DSL themselves, although Faulhaber (2002) disparages the effectiveQHVVRIWKHGDWDRI&/(&V¶EXVLQHVVSODQV The FCC makes available a list of ZIP Codes in ZKLFKWKHUHLVORFDOFRPSHWLWLRQ,QVRPHVSHFL¿FDtions, we include an indicator for the presence of at least one competing local exchange company in the area.
Telecommunications Carriers’ Operating Areas To control for institutional differences among the major incumbent local exchange carriers, we include indicator variables for territory served by the Bell Operating Companies at the time: BellSouth, Qwest (formerly U.S. West), SBC (formerly 6RXWKZHVWHUQ%HOO7HOHSKRQH3DFL¿F%HOO1HYDGD Bell, and Ameritech), and Verizon (formerly Bell $WODQWLF DQG 1+%2@ DQG 6KRZWLPH DQG ¿QDOO\ standard cable and free broadcast television. Figure 1 summarizes the progression of a motion picture through various windows and indicates the new roles played by the Internet. Windowing allows the motion picture industry to price discriminate. By price discriminating, the industry forces those consumers who are most eager to see a new movie and those who want the best experience (in terms of video and sound quality) to pay the highest price. This results in KLJKHULQGXVWU\SUR¿WVWKDQUHOHDVLQJWKHPRYLH into all windows simultaneously. In particular, the consumers that are most eager to see a movie with the highest possible quality pay the highest price (at a theater). Consumers willing to wait some number of months (and settle for a smaller screen and, typically, lower-quality sound) pay lower prices (DVD and home PPV). Ultimately the most patient consumers pay essentially nothing (broadcast/basic cable). 7KH¿UVWZLQGRZWKHDWHUVRIIHUVWKHKLJKHVW quality experience in terms of video and sound quality. But, in part because it offers a superior experience (and an experience that is relatively expensive to provide), theater releases are priced the most expensively. North American sales of movie tickets totaled just under $9 billion in 2005, down about 5% from 2004 (McBride, Grant, & Marr, 2006). Worldwide sales were approximately $23 billion. The theater window accounts for less than a quarter of motion picture industry revenue (McBride et al., 2006). Decades ago, movie ticket sales accounted for the vast majority of motion picture industry revenue, but the opening of other windows has made ticket sales a less important window in terms of total revenue. By placing movies in the theater window, exclusively, for a number of months
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
Figure 1. Distribution windows
Motion Picture Studios
Windows Window #1 Movie Theaters ($9 billion in 2005)
Window #2 DVD Release ($23 billion in 2005)
Brick and Mortar DVD Sales
Internet DVD Sales
Window #3 Internet sales and rentals
Window #4 TV (including PPV, premium networks, standard cable, and over-the-air broadcasts)
Brick and Mortar DVD Rentals
Internet DVD Rentals
the industry is able to charge the highest prices to consumers who utilize this window. The second window, DVD sales and rentals, now represents the largest portion of motion picture industry revenue. Combined U.S. revenue from sales and rentals totals over $23 billion and accounts for about half of industry revenue (McBride et al., 2006). While home rentals are important, they have been passed, in terms of revenue, by home sales. U.S. DVD sales total about $16 billion per year (Marr, 2006) with Wal-Mart having the largest share of these sales with about 40% of the market (McBride & Marr, 2006). A new component in home rentals is the Internet rental company. These include Filmcaddy (owned by Blockbuster), Wal0DUWFRP RZQHGE\:DO0DUW DQG1HWÀL[FRP 7KHVHVHUYLFHVFKDUJHDÀDWPRQWKO\IHHW\SLFDOO\ about $20 per month. This entitles users to a set number of movies (higher fees allow a higher numbers of movies). Users request movies from the Internet site and they are sent as they become DYDLODEOH8VHUVFDQNHHSWKHPRYLHVLQGH¿QLWHO\
and subsequent movies are delivered when the previous movies are returned. Other revenue comes from much smaller sources. One relatively small window, in terms of revenue, but one that is expected to grow in coming years, is home PPV. Home PPV differs from standard cable movie channels in that customers must pay an extra fee per movie. At the present time this window represents only about 1% of U.S. revenue (McBride et al., 2006). The motion picture industry earns revenue in this window through revenue sharing agreements with the cable companies (roughly 50-50). This window should increase in importance as video on demand (VOD) capabilities improve. VOD allows users to watch the movie as desired, pausing and rewinding as with a DVD. However, the actual use of the service has stalled as customers must purchase or rent additional equipment to take full advantage of this ability. Most remaining revenue comes from selling broadcast rights to premium movie channels (such as HBO and Showtime) and networks that
565
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
are part of most basic cable packages (including the major over-the-air networks). The immediate effect of the Internet is to create a new means of distribution—a new window. The viability of this window, at least for the time being, has been limited by technology. But as access to broadband increases, the distribution of movies over the Internet will become more important. Where will this new window be placed in the life cycle of a motion picture? Owen and Wildman DQDO\]HWKHLQGXVWU\¶VWLPLQJRIWKHZLQGRZV (not including the Internet) and point to a number of considerations that determine the relative timing of each window. Three of these considerations are especially relevant for the Internet window—the amount viewers are willing to pay to utilize the window, the number of additional viewers who will use the window, and the ease of copying broadcasts that utilize the window. All else equal, a window will be timed earlier the more that viewers are willing to pay when YLHZLQJ LQ WKDW ZLQGRZ &RQVXPHUV¶ ZLOOLQJness to pay for Internet broadcasts is likely to be considerably less than a theater, slightly less than their willingness to pay for PPV broadcasts, but slightly more than they would be willing to pay for a rental. The main drawback of Internet broadcasts is that, while top-of-the-line computer systems can be quite impressive, standard computer setups have screens and sound that are far inferior to even a standard television set (let alone wide-screen home theater systems). One potential advantage RI WKH ,QWHUQHW EURDGFDVW LV ÀH[LELOLW\²WHOHYLsion broadcasts cannot be stored on a laptop and viewed, for example, on an airplane. However as on-demand video systems (such as Tivo) become more sophisticated, they may eventually match WKHÀH[LELOLW\RIWKH,QWHUQHWEURDGFDVWV,QWHUQHW broadcasts do have the advantage over DVD rentals in convenience (there is no need to make a return trip to the video store) and in the speed at which they can satisfy consumer demand compared to the rental services that rely on the mail. All else equal, a window will be timed earlier the more additional viewers are available in that window. The number of viewers gained with Internet broadcasts is smaller than DVD and cable. It is
566
true that the number of U.S. households with the capability for Internet access nears the 80% with cable or satellite service (Angwin & Pasztor, 2006). But of these Internet households, over half have slow, dial-up access. While most U.S. households have the option of signing up for broadband, about 50 million households currently do so (Reuters, 2006). This is a crucial consideration, as feature ¿OPVKDYH¿OHVL]HVWKDWFDQEHVHYHUDOKXQGUHG WLPHVODUJHUWKDQDW\SLFDOPXVLF¿OH :HUEDFK 2005). Of these just over half utilize a cable modem, with most of the rest using digital subscriber lines or DSL (Grant, 2006). This suggests that wherever the Internet window initially resides, it is likely to be moved forward in time as broadband access increases. This occurred during the past 15-20 years as the VCR/DVD window has been pushed earlier at the same time as the number of households with VCRs, and then DVDs, increased. All else equal, a window will be timed earlier the harder it is to copy the broadcast in that window. Copy protection technology (and the efforts to evade it) continue to evolve, but, currently, streaming video is about as hard to duplicate as DVDs but easier than PPV, which is to say that it is beyond the level of expertise (and patience) of the typical consumer but still a potential source of concern. Estimates are that more than half of peer-to-peer users are swapping video (not all of it illegally). %RRWOHJJHGFRSLHVRI¿UVWUXQPRYLHVIRUH[DPSOH typically arrive on the Internet 24 hours after their U.S. theatrical release (Mathews, 2002a). These are typically low-quality copies made from hand-held cameras (although the industry is concerned that, DVWKH\VZLWFKIURP¿OPUHHOVWRGLJLWDOGLVWULEXtion to theaters, illegal digital copies may appear). Of more immediate concern for the industry is the potential illegal distribution of digital video that is redistributed after being viewed by authorized users (as happened with music). The industry has responded with antipiracy encryption technology and legislative efforts to combat this unauthorized distribution. If motion pictures become easy to copy and distribute over the Internet, this will have a large impact, especially on home video revenue and home PPV and pay TV revenue and will encourage the industry to delay the Internet
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
ZLQGRZVLJQL¿FDQWO\ VHHWKHVHFWLRQVRQSLUDF\ and lessons from the music industry). Based on these considerations, the Internet window is likely to be late in the short run but is likely to move up in time as technology improves—eventually coinciding with the DVD release. There are a number of ventures that currently offer Internet movie downloads. Two of these, Movielink and CinemaNow, have offered online movies for several years but have failed to catch on. However, two recent entrants have better name recognition and may revolutionize this industry. $PD]RQFRP¶V 8QER[ UHFHQWO\ EHJDQ RIIHULQJ movies from most major studios. Users have the option of “purchasing” the movies, and watching them as many times as they wish, whenever they wish, or “renting” the movies, in which case they must be watched within 30 days of the download (Vascellaro, 2006). Another potentially major player, Apple, has recently added over 75 Disney movies to its iTunes site and plans to add more in WKHQHDUIXWXUH :LQJ¿HOG 0DUU 2WKHU companies considering entering this industry include Wal-Mart, Blockbuster, Comcast, Time Warner, and AT&T (Vascellaro). Currently, the studios seem to be delaying their Internet release until several months past the rental/purchase window. However, as more households gain access to broadband, the Internet broadcast window should move forward, perhaps until it is simultaneous with the rental/sales window. This prediction, however, is subject to one important caveat—the ability of the studios to create and enforce anti-piracy measures. The studios will not be foolish enough to release easily-copied digital versions of their movies only to see unauthorized versions competing with DVDs sitting on the shelf. Finally, as more homes obtain broadband Internet access through cable, the line between the home PPV, pay TV, and Internet windows will become blurred. The lines are already blurring as people use their computers to watch DVDs. As more households obtain their Internet access through the cable lines that run to their television, Webenabled televisions are likely to seem less exotic to typical households. With a browser-enhanced television, viewers could, in addition to visiting
standard Web sites for text and audio, visit sites such as iTunes and Unbox and view video on a ODUJHVFUHHQ$SSOH¶VQHZL79GHYLFHFDSDEOHRI television playback and having a storage capacity of up to 150 hours of video, may begin a general PRYHPHQWLQWKLVGLUHFWLRQ :LQJ¿HOG0F%ULGH 9DVFHOODUR :LQJ¿HOG 0DUU If this should happen, the cable companies may lose their status as middlemen between the viewer and the studios. Viewers will watch movies over the Internet accessed through the cable, but the cable companies will have no more of a role than an Internet service provider does today when a computer user visits a news or sports Web site. As a result, cable companies might attempt to partner with the studios to hold their position. In fact, cable companies are already becoming active providers of Internet service and telephone service. The distinction between these three is likely to disappear in the near future. Another outcome might occur if wireless Internet becomes more popular. In this case satellite companies (such as DirectTV) might enter the market as ISPs, and home PPV, pay TV and Internet access might migrate to a new wireless window.
EXTERNAL ENVIRONMENT Generally speaking, piracy of content involves WKH XQDXWKRUL]HG XVH RI DQRWKHU SDUW\¶V SULYDWH property and can take two forms: 1.
2.
Physical piracy of content contained on, for H[DPSOHPXVLFFRPSDFWGLVNV &'V RU¿OP DVDs or videocassettes. Digital piracy of content in cyberspace.
Technological advancement, such as audio tape recording and video tape recording, has threatened the music and movie industries before and will continue to do so in the future. There is no question that in a world with the Internet and digital compression techniques, much more copyrighted content is theoretically susceptible to digital piracy. While piracy of the physical manifestation of content, such as bootleg CDs of live performances and
567
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
FRXQWHUIHLW&'VRIRI¿FLDOO\UHOHDVHGPXVLFKDV been a continuing concern of the music industry and content industries in general for some time, digital piracy is a relatively recent (starting in 1999) and growing concern. A 2006 study commissioned by the movie industry estimated that piracy costs the movie industry $6.1 billion dollars annually (McBride & Fowler, 2006). In general, there are a host of activities that content companies have undertaken to confront the issue of digital piracy, or what they argue to be piracy, that involve two main objectives: 1. 2.
Limiting the unauthorized copying of content. Limiting the Internet redistribution of the unauthorized content.
In particular, the movie industry has made efforts in the legal, cultural, political, and economic environments to try to achieve these objectives. Table 1 provides a list of the key market stakeholders who facilitate digital piracy. Legal actions by the music and movie industries have been directed and continue to be directed at each stakeholder. In addition, technological efforts via digital rights management strategies to enhance copyright protection are being developed. These are directed at the machines and software that are used in the digital piracy process, including computers and computer networks at home, work, and school, DVD players, CD burners, and reproduction software (for example, the now shut-
GRZQ6WXGLRV¶'9';FRS\ FDPFRUGHUVDQG computers in peer-to-peer networks. Efforts to protect movie studios from digital piracy include protections by technology, protections by law, protections through market responses, and protections by culture. One concern is that copyrighted content, such as a movie, will be taken (“ripped”) off a purchased DVD and converted LQWRDGLJLWDO¿OHRQDFRPSXWHUKDUGGULYHDQGRU copied to a recordable DVD with a DVD burner or recorder. In either case, it is possible that the FRQWHQWFRXOGHQGXSE\,QWHUQHW¿OHVKDULQJLQ the hands of an unauthorized user, leading to a violation of the copyright laws, as has happened with music. Movies on DVDs are protected by an encryption code, using a standard called the content scrambling system (CSS). In turn, these encrypted DVDs will only play on devices licensed by Hollywood. Fortunately for the industry, this behavior has generally been accepted as appropriate by society since the advent of DVD distribution in 1994, in contrast to the negative reaction by consumers recently to similar efforts by music companies to start to protect music CDs by encryption. The means to circumvent this code and digitally pirate DVDs exist at this time but generally are regarded by the public as not worth the trouble and aggravation for the money saved. Nevertheless, the movie companies see these efforts at circumvention by FRS\LQJ DQG E\ ¿OH VKDULQJ IDFLOLWDWHG E\ SHHU to-peer networks as having a disturbing parallel WRWKHPXVLFLQGXVWU\¶VH[SHULHQFHDQGWKHUHIRUH
Table 1. Facilitators of digital piracy Key stakeholders
6RIWZDUHFRPSDQLHVWKDWFUHDWHDQGGLVWULEXWHVRIWZDUHWKDWFDQEHXVHGWRH[FKDQJH¿OHVRQSHHUWRSHHU networks on the Internet.
•
,QWHUQHW:HEVLWHVWKDWSURYLGHGLUHFWRULHVRIXQDXWKRUL]HGFRQWHQWDYDLODEOHIRU¿OHVKDULQJ Internet service providers, universities and colleges, and businesses that provide access, especially high-speed access, to the Internet.
6WXGHQWVRQFDPSXVHPSOR\HHVDWZRUNDQGLQGLYLGXDOVDWKRPHZKRWUDGHVKDUHXQDXWKRUL]HG¿OHV
•
Individuals that make an original unauthorized copy of copyrighted content or that distribute pre-released copyrighted content.
568
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
seek additional legal, political, and technological protection for their intellectual property.
Legal Environment Efforts to protect movies from piracy are proceeding along several legal fronts. The biggest self-perceived threat to the industry is the availability of movies for free from use of decentralized peer-to-peer networks. Customers are able to GRZQORDGPRYLH¿OHVIURPPHPEHUVRIWKHSHHUWR peer community. In 1999, Napster introduced the PXVLFZRUOGWRWKHSRZHURI¿OHVKDULQJWKURXJKD version of a centralized peer-to-peer network that utilized central servers to facilitate the trading RI ¿OHV DPRQJ WKH PHPEHUV RI WKH FRPPXQLW\ Under a more decentralized architecture, content is stored on peer machines located on the edges of the Internet that communicate with each other directly without relying upon company-provided, FHQWUDOO\ORFDWHG:HEVHUYHUV6SHFL¿FDOO\SHHU to-peer networks today have evolved to enable users to share content among members directly without the use of a central server directory that was required with Napster. For a description of the differences in the architecture of centralized peer-to-peer systems and decentralized peerto-peer systems, see Alexander (2002). Besides trading copyrighted and public domain content, SHHUWRSHHUWHFKQRORJLHVKROGVLJQL¿FDQWSURPLVH for improving search capabilities on the Internet DQG LQFUHDVLQJ HI¿FLHQF\ IRU GDWD VWRUDJH DQG distribution. Popular decentralized peer-to-peer software ¿UPVDQGWKHLUORFDWLRQVKDYHLQFOXGHGWKHIROORZing: Kazaa Media Desktop, owned by Sharman 1HWZRUNV /LPLWHG LQFRUSRUDWHG LQ WKH 3DFL¿F Island nation of Vanuatu but headquartered in Australia; eDonkey, owned by Metamachine, Inc., based in New York; BearShare, owned by Free Peers, Inc., based in Miami; Blubster, owned by Optisoft, SL, based in Madrid, Spain; Imesh, RZQHGE\L0HVK/WGEDVHGLQ,VUDHO DQG;ROR[ RZQHG E\ ;ROR[ %9 EDVHG LQ WKH 1HWKHUODQGV (Grow, 2002). Additional peer-to-peer networks of note are StreamCast Networks, based in Tennessee that distributes Morpheus, and Grokster,
incorporated in the West Indies but owned by $PHULFDQV6KDUPDQ¶V.D]DD0HGLD'HVNWRSZDV once the largest of these systems with an estimated 2.48 million simultaneous users each day but now eDonkey has reportedly over 2.5 million users daily (Borland, 2004b). Now that the original Napster, as well as former peer-to-peer systems Madster (originally known as Aimster) and Audiogalaxy, all of which are or were American based companies, have been legally vanquished, the motion picture industry and other content providers are attempting legal action to halt the newer decentralized peer-to-peer software companies that, in their view, contribute indirectly to copyright infringement by individuals DQGEHQH¿WIURPLW¿QDQFLDOO\WKURXJKIRUH[DPSOH advertisements included with the software. The SRVW1DSVWHU YHUVLRQV WKDW IDFLOLWDWH ¿OH VKDULQJ HQDEOH D XVHU WR XVH D VHDUFK FRPPDQG WR ¿QG content he desires from the hard drives of other peer users in the community. In fall 2001, the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) sued StreamCast and Grokster, alleging indirect copyright infringement, in federal court in Los Angeles. The plaintiffs added Sharman to the suit, which challenged but lost its attempt to protect itself from U.S. law on jurisdictional grounds. A distinguishing aspect of the suit is that none of these companies used FHQWUDOVHUYHUVWRFRQWUROWKHWUDQVIHURI¿OHVDV did Napster. In April 2003, a federal judge ruled that StreamCast and Grokster were not liable for copyright infringement since the software had substantial, legal uses and the software companies were unable to reasonably control the uses to which the software is applied. In August 2004, an DSSHDOVFRXUWXSKHOGWKHIHGHUDOMXGJH¶VGHFLVLRQ In December 2004, the Supreme Court agreed to hear an appeal of this case and a decision favorably to the movie industry was made in summer 2005 (Metro-Goldwyn-Mayer Studios Inc. et al. vs. Grokster, Ltd., et al.). There were interesting legal issues in the Grokster case for the Supreme Court to consider, including jurisdictional issues, since two of the companies are not headquartered in the United
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The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
States; the “potential for substantial noninfringing use” for these peer-to-peer networks, a rule established by the Supreme Court in 1984 in the famous Sony v. Universal City Studios case that made use of videocassette recorders legal since they could be used for a substantial noninfringing use, time-shifting a television program; and the distinction between direct and secondary (indirect) infringement. The last issue was perhaps the most fundamental question in the case for it would determine the liability of companies that produce and distribute software that enables (actively induces?) others to violate copyright protections. Unfortunately, the decision did not clarify the boundaries of the Sony safe harbor but rather imported from patent law the standard of active inducement. A producer of a new technology with both infringing and noninfringing uses who behaves, according to the Supreme Court, with a ³FOHDUH[SUHVVLRQRURWKHUDI¿UPDWLYHVWHSVWDNHQ to foster infringement” is liable for infringement engaged in by direct infringers. This is somewhat at odds with a March 2002 case involving Kazaa in which a Netherlands appeals court concluded (and this decision was upheld by the Dutch Supreme Court) that the liability for copyright infringement lies with the users of the software and not with the software distributor (Grow, 2002). Legal examples and precedents abound illustrating the global nature of digital piracy and the potentially contradictory messages they send to U.S. courts, users, and content companies. For instance, in March 2004 in Canada, a federal judge UXOHG WKDW XSORDGLQJ DQG GRZQORDGLQJ ¿OHV LV legal (Borland, 2004a). On the other hand, digital content companies won an international victory in a trial that commenced in November 2004 that pitted the major record companies in Australia against Sharman Networks alleging indirect copyright infringement. In December 2005, Sharman closed down access to its Web site in Australia (Ferguson, 2005). A second legal front is aimed at individual infringers in an effort to discourage or eliminate the use of these sharing services by individuals. One result of this effort is a legal battle between movie and music companies and Internet service
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providers (ISPs). Content companies attempted to halt piracy by customers who use an ISP for access to the Internet by utilizing the ISP as an enforcement agent and/or a collection agent for the content provider. The ISPs rebelled against being used for these functions. Under the Digital Millennium Copyright Act of 1998, ISPs are responsible for UHPRYLQJ D VXEVFULEHU¶V DFFHVV WR XQDXWKRUL]HG content utilizing equipment operated by the ISP by taking that content off their network. But peerto-peer networks rely on users at the edge of the network to store the content and not on servers within the network. 7KLVGLIIHUHQFHOHGWRFRQÀLFWEHWZHHQFRQWHQW companies and ISPs. A controversial case involved a request in July 2002 by the RIAA to Verizon for VSHFL¿FVXEVFULEHULQIRUPDWLRQIRUDQLQGLYLGXDO DOOHJHGO\HQJDJHGLQPDVVLYHPXVLF¿OHVKDULQJ XVLQJ .D]DD¶V SHHUWRSHHU VRIWZDUH 9HUL]RQ¶V Internet unit balked at the request, arguing that the legal process that the music companies were LPSRVLQJ ZRXOG YLRODWH DQ ,QWHUQHW VXEVFULEHU¶V privacy and due process rights. The case centered on the legal procedures that a content company must follow when requesting the identity of an ,63¶VFXVWRPHU$86'LVWULFW&RXUWMXGJHUXOHG in favor of the content companies in January 2003, requiring Verizon to turn over the name of the ¿OHVKDUHU,QHIIHFWWKLVGHFLVLRQPDGHLWOHJDOO\ easier, using provisions in the Digital Millennium Copyright Act, for content companies to proceed ZLWKOHJDODFWLRQDJDLQVWLQGLYLGXDO¿OHVKDUHUV However, in December 2003, an appeals court RYHUWXUQHGWKHORZHUFRXUW¶VGHFLVLRQDQGLQ2Ftober 2004 the Supreme Court rejected hearing an appeal of the case. This means that the content companies must follow a more cumbersome and FRVWO\OHJDOSDWKWRJHWDFFHVVWRWKHQDPHVRI¿OH sharers from ISPs, thus slowing down the pace of litigation. Not to be detoured, music companies KDYHVWLOO¿OHGWKRXVDQGVRIODZVXLWVDJDLQVWLQdividuals, a strategy that movie companies have since followed. For example, in November 2004 the 03$$¿OHGDQLQLWLDOEDWFKRIRYHUODZVXLWV against individuals. The problem for the movie industry from this aggressive step is the potentially VLJQL¿FDQWSXEOLFUHODWLRQVEDFNODVKWRVXFKOHJDO
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
HIIRUWV GLUHFWHG DW LQGLYLGXDOV 6XLQJ RQH¶V RZQ customers is a risky endeavor and, perhaps, unfair given the disparity in access to legal resources and the somewhat random nature in selection of the prosecuted infringers. Working in the opposite direction, it is possible that peer-to-peer companies will instead sue content providers and argue that content companies are engaging in anticompetitive behavior by denying them access to copyrighted content concertedly in situations in which the peer-to-peer companies would willingly develop digital stores that compensate copyright holders. Sharman Networks made this counter argument in the Grokster case but its allegations were dismissed on legal standing grounds and thus were not analyzed from an economic perspective. In September 2006, the ¿OHVKDULQJGLVWULEXWRU/LPH:LUHVXHGWKHUHFRUG industry for antitrust violations in an attempt to drive it out of business (McBride, 2006). Even though music and movie distributors relentlessly sue peer-to-peer networks for indirect copyright infringement, new versions of peer-topeer technology continue to evolve. The peer-toSHHUFRPSDQ\%LW7RUUHQWLVDGHFHQWUDOL]HG¿OH VKDULQJ WHFKQRORJ\ WKDW PD\ SURYH GLI¿FXOW WR legally challenge. BitTorrent has decentralized the search functionality of the process of peer-to-peer exchanges and only acts as a delivery protocol. Choi (2006) predicts that as peer-to-peer networks decentralize the control and discovery functions, the effectiveness of pursuing secondary liability is approaching a dead-end.
Cultural Environment Content companies have turned to moral suasion and warnings to discourage what they view as digital piracy. Content providers do not understand why people, and in particular young people, view the unauthorized, anonymous, and widespread VKDULQJ RI GLJLWDO ¿OHV DFURVV WKH ,QWHUQHW DV DQ acceptable form of behavior in society when, in contrast, taking a DVD or CD from a retail store without paying would almost universally be FRQVLGHUHG LOOHJDO DQG LPPRUDO 2I FRXUVH ¿OH sharing does not involve entering a store to take
property that you do not own, but rather involves JLYLQJ D ¿OH ZKLOH UHWDLQLQJ SRVVHVVLRQ RI WKH ¿OH\RXUVHOIWRDQRWKHUSHUVRQWKDW\RXPD\KDYH purchased yourself or downloaded from someone else. It has generally been viewed as acceptable in society to share property that you own with IDPLO\PHPEHUVDQGFORVHIULHQGV6KDULQJD¿OH ZLWKRWKHUVGRHVQRWVHHPOLNHVWHDOLQJWRWKH¿OH sharing community. $SSDUHQWO\WKH,QWHUQHWKDVDOWHUHGWKHGH¿QLtion in practice, although not in law, of what is acceptable behavior. A form of moral outrage was directed toward music companies for bundling inferior songs with desirable songs onto a CD and then selling the package but not the individual VRQJV7KLVEXQGOLQJSUDFWLFHMXVWL¿HGLQWKHH\HV RIPDQ\PXVLFORYHUVXVLQJD¿OHVKDULQJQHWZRUN to get access to only the song(s) desired. However, a similar rationale does not exist for a movie, but PRYLH¿OHVKDULQJLVRQWKHULVHHVSHFLDOO\ZLWK the growth of high-speed Internet connections, so there is something more fundamental at work that has changed cultural norms. A user who downloads DQLOOLFLW¿OHJHWVLWIRUIUHHEXWDWWKHVDPHWLPH participation in a peer-to-peer network generally requires a user to play both a host and client relationship. The former role causes the user to incur costs by the use of bandwidth and computing resources ZKHQKHVKDUHV¿OHV WKXVSDUWLFLSDWLRQLQVXFKD community is not free. Compared to the original, widely used dial-up connections to the Internet, high-speed networks DUHPRUHFRQGXFLYHWR¿OHVKDULQJHVSHFLDOO\ODUJH YLGHR ¿OHV *LYHQ WKLV IDFW FRQWHQW FRPSDQLHV sent letters to university presidents with a plea to VWRSXQDXWKRUL]HG¿OHVKDULQJRQWKHLUKLJKVSHHG university networks by their users, in particular students, of these networks. A similar request has been made to large corporations, addressing HPSOR\HH LOOHJDO ¿OH VKDULQJ RQ FRUSRUDWH QHWworks. Eventually, these warning letters provide the grounds for copyright infringement lawsuits directed toward the universities and corporations themselves if they do not take meaningful steps to VWRSWKH¿OHVKDULQJ 0DWKHZVF 8QLYHUVLWLHV have tried to respond, apparently ineffectively, to the letters and have “closed off the portals used
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The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
E\ ¿OHWUDGLQJ VHUYLFHV LQVWDOOHG VRIWZDUH WR limit how much bandwidth each student can use, DQG GLVFLSOLQHG VWXGHQWV ZKR VKDUH PHGLD ¿OHV But nothing, so far, has proved entirely effective” (Harmon, 2002). Some universities, such as George Washington University and the University of Southern California, pioneered the practice of including a subscription to an online music service as a part of the bundled services (e.g., cable TV) they provide to residential students and by fall 2006 there were more than 90 universities involved in this practice (Ali, 2006; McBride, 2004). Public service announcements, identifying the economic impact of digital piracy on the industry, especially on the lower-wage employees in the movie industry, directed at movie theater audiences is another attempt to change public opinion about digital piracy (Film industry to try, 2002).
Political Environment For Hollywood, a more comfortable and timetested approach to protecting content by reducing piracy is working for change in the political arena. Recent legislative efforts have included limiting the publication and distribution of software code, forcing a more secure design of consumer electronics equipment, potentially disrupting the operation of peer-to-peer networks, increasing the possibility of bringing federal civil cases against individuals for copyright infringement, making it a federal crime to make a video recording in a movie theater, and making it illegal to create technology that has the effect of intentionally inducing individuals to break copyright laws. The 1998 Digital Millennium Copyright Act extended copyright protections into the digital and Internet eras and can be viewed as a major legislative victory for content companies. This legislation attempted to balance the concerns of content companies and users of that content with respect to digital copyright issues. 7KHDFW¶VDQWLFLUFXPYHQWLRQSURYLVLRQPDNHVLWLOlegal under most circumstances to create software that can undo (“crack”) the encryption code that protects copyrighted work. This act has led to controversial legal suits, alleging the illegality of UHYHUVHHQJLQHHULQJDQGWKHLGHQWL¿FDWLRQRIÀDZV
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in encryption codes, by content companies in order to enforce the new anti-circumvention provision of the law. Their goal is to stop the copying and subsequent distribution of unauthorized DVDs for whatever reason. Since 1998, with the innovation and widespread adoption of peer-to-peer software, content companies have tried unsuccessfully to address with legislation new issues that have arisen. For example, a proposed bill in 2002 was aimed at requiring consumer electronics equipment providers to add anti-copying features to their machines (“digital media devices”) to provide a second line of defense WKH¿UVWOLQHEHLQJWKHHQFU\SWLRQRIWKHFRQWHQW on a DVD) against copyright infringement. This effort has led to a bitter dispute between technology and electronics interests and content companies. It also has led to a continuing countervailing effort by consumer groups to push for legislation to codify consumer personal use rights, such as time-shifting, space-shifting, and back-up copies that, according to groups such as DigitalConsumer. org, this failed legislation threatened. In 2004, in direct response to the trial and appeals courts unsettling Grokster legal decisions, the content companies unsuccessfully backed legislation, called the Inducing Infringement of Copyrights Act, which made it illegal for anyone to intentionally induce individuals to engage in a copyright violation, such as trading unauthorized PRYLH¿OHV7KLVOHJLVODWLRQZDVDLPHGDWKROGLQJ peer-to-peer software companies responsible for XQDXWKRUL]HG¿OHVKDULQJ A bill introduced in 2002 aimed to grant legal protections from criminal and civil liability for copyright holders to disrupt publicly accessible peer-to-peer networks where they suspect unauthorized distribution is taking place. This was another failed attempt to stop or discourage individuals from downloading unauthorized content from the Internet. Individual users of such a QHWZRUN FRXOG ¿QG WKHLU FRPSXWHUV KDFNHG LQWR and they could be stopped from utilizing such a network. This type of legislation illustrates the EDWWOHRIFRQÀLFWLQJULJKWVWKHULJKWWRSULYDF\E\ computer users, and the right to protect their content from infringement by the content companies
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
Table 2. Key dates
•
Mid-2001:6HYHQPDMRUPRYLHFRPSDQLHVDQQRXQFHGSODQVIRUWZRVHSDUDWHRQOLQHMRLQWYHQWXUHV0RYLHÀ\DQG0RYLHV com, to provide video-on-demand movies over an Internet platform.
•
December 2001: The Department of Justice launched a preliminary antitrust investigation into the competitive effects of
•
April 2002: Fox Studios quits its venture with Disney, thus ending Movies.com. For details, see Mathews and Orwell
WKHVHMRLQWYHQWXUHVSDUDOOHOLQJDVLPLODULQYHVWLJDWLRQRIWKHPDMRUPXVLFFRPSDQLHV¶,QWHUQHWMRLQWYHQWXUHV (2002). •
September 2002:,QWHUWDLQHUDQLQGHSHQGHQWRQOLQHGLVWULEXWRURIIHDWXUH¿OPV¿OHGDQDQWLWUXVWVXLWDJDLQVWWKUHHPRYLH
•
November 2002: Movielink commenced operations.
•
April 2003: )R[ 6WXGLRV OLFHQVHG LWV FRQWHQW WR &LQHPD1RZ D ULYDO RQOLQH GLVWULEXWLRQ VRXUFH LQ )R[¶V ¿UVW ,QWHUQHW
FRPSDQLHVDQG0RYLHOLQNIRUPHUO\NQRZQDV0RYLHÀ\
distribution deal. •
July 2003: Walt Disney licensed its content to Movielink.
•
June 2004: The Department of Justice ended its investigation of Movielink by concluding that the joint venture does not have anticompetitive effects or harm consumers.
•
June 2004: Starz Encore, a cable network, and RealNetworks introduced a rival online movie rental service.
•
August 2004:1HWÀL[WKHPDLOUHQWDOPDUNHWOHDGHUDQQRXQFHGWKDWLWZLOOHQWHUWKHRQOLQHPRYLHUHQWDOPDUNHWLQ
•
April 2006: Movielink begins to sell movies online.
•
Summer 2006: Peer-to-peer software providers, Wurld Media and BitTorrent, negotiate deals with various movie studios
•
Summer 2006: Apple Computer, Amazon, and AOL enter the online movie download business.
•
Summer 2006: CinemaNow announces a burn-to-DVD service enabling a purchased online movie to be viewed on a
WRGLVWULEXWHDXWKRUL]HGPRYLHVXVLQJ¿OHVKDULQJWHFKQRORJ\
television set.
that will be surely played out in the future in the legislative arena. It is highly likely that legislation will continue to be introduced at the request of content companies that increases opportunities for prosecution and penalties for the participants in digital piracy. This includes individuals that make original unauthorized copies of movies, companies that produce and distribute peer-to-peer software regardless if it has non-infringing uses, and individuals that engage LQXQDXWKRUL]HG¿OHVKDULQJ2QWKHRWKHUKDQG consumer groups are likely to push for legislation that will make it legal to circumvent a technology that blocks copying if it is done to accomplish a lawful, fair use purpose such as to make a backup copy of a movie for personal use.
Economic Environment Video-on-demand is a distribution innovation in the economic environment that promises to alter the existing set of vertical relationships that exist in the industry. Digital cable and the Internet are emerging distribution vehicles that transmit movLHVGLUHFWO\WRFRQVXPHUVIURPWKH¿OPGLVWULEXWRU bypassing middlemen such as pay television movie channels and video rental stores, in a form that ofIHUVDXQLTXHFRPELQDWLRQRIEHQH¿WV1RPDUJLQDO WUDQVSRUWDWLRQ FRVWV YLHZLQJ RQ WKH FXVWRPHU¶V own schedule, no late charges, and the ability to SDXVHUHZLQGDQGUHSOD\DYLGHRGXULQJD¿[HG SHULRGRIIHUVDVHWRIEHQH¿WVIRUPRYLHYLHZHUV that should cause video-on-demand to have a huge SRWHQWLDOIRUJURZWK7KH¿YHPRYLHFRPSDQLHV that formed the joint venture Movielink that began operations in fall 2002, responded to this techno-
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The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
logical innovation by offering their own online movie service in competition with several small LQGHSHQGHQWRQOLQHGLVWULEXWRUVRIWKHLQGXVWU\¶V movies. Initially, Movielink offered to rent, for a ¿[HGSHULRGGRZQORDGHG¿OPVIURPWKHVWXGLRV¶ OLEUDULHVIRUDUHQWDOFKDUJHSHU¿OPRIEHWZHHQ $1.99 and $4.99. In addition, the joint venture FDQ EH YLHZHG DV WKH LQGXVWU\¶V OHJDO HFRQRPLF response to their biggest threat, the availability of IUHHXQDXWKRUL]HG¿OPVRYHU¿OHVKDULQJSHHUWR peer networks on the Internet. 7DEOHLGHQWL¿HVNH\GDWHVLQWKHHYROXWLRQRI the video-on-demand joint venture and its emerging online competitors. Movielink is the most recent attempt by the movie production companies to integrate forward LQWRWKHGLVWULEXWLRQQHWZRUNIRU¿OPV3DVWDWWHPSWV to alter the vertical relationship by the production companies attempting to integrate forward and to bypass distribution middlemen had not been well received by the antitrust authorities. In the ODWH VLQWKH3DUDPRXQWFDVHWKH¿YHOHDGing movie companies were required to divest over ¿UVWUXQPRYLHWKHDWHUVORFDWHGLQFLWLHVZLWK populations over 100,000, at a time when movie theaters were essentially the only distribution winGRZDYDLODEOH$FFRUGLQJWRWKHFRXUW¶VDQDO\VLV collective horizontal market power in the movie business was facilitated by the vertical ownership of the theaters (Litman, 1998). A structural solution was deemed by the U.S. Supreme Court to be necessary in order to restore competition in the market IRU¿UVWUXQPRYLHV7RGD\EHFDXVHWKHDWHUVDUH only one of several important distribution windows IRU¿OPVWKDWOHVVHQVFRQFHUQRYHUDQ\H[HUFLVHRI market power by the movie production companies from such vertical integration (Movielink) into only one of the several distribution windows. In 1980, the Department of Justice blocked the plans of four leading motion picture distributors to integrate forward into the cable pay television window by creating their own movie-programming network, called Premiere, to compete with HBO. The movie companies felt that this was a legitimate business response for, in their view, HBO was exerting buying market power over them. From an antitrust perspective, two troubling aspects of the
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Premiere joint venture were the exclusive window WKDW LW ZRXOG UHFHLYH EHIRUH WKH ¿OPV ZRXOG EH available to competitive pay television channels such as HBO and the collective determination by the four companies of the prices of licenses for the VKRZLQJRIWKH¿OPV7KHYHQWXUHFROODSVHGWKH same year, once the government issued a preliminary injunction against Premiere. Not surprisingly, independent online movie distributors are unhappy with the movie comSDQLHV¶HQWUDQFHLQWRWKHLUOLQHRIEXVLQHVV2QH VXFK LQGHSHQGHQW ,QWHUWDLQHU ¿OHG DQ DQWLWUXVW VXLWLQ6HSWHPEHUDJDLQVWWKH¿OPXQLWVRI AOL Time Warner, Sony, and Vivendi Universal, and Movielink, charging that these companies had attempted to monopolize the online video-onGHPDQG PDUNHW 0DWKHZV E 6SHFL¿FDOO\ Intertainer charged, in part, that these companies had reneged on existing licensing agreements and had delayed negotiating new agreements while they formed their own competitive venture. This suit KLQJHVLQSDUWRQWKHDFFHSWHGPDUNHWGH¿QLWLRQIRU the rental service that Movielink provides, for only then can one assess the state of competition. $QDUURZPDUNHWGH¿QLWLRQZRXOGDUJXHIRUDQ Internet video-on-demand market that includes companies such as CinemaNow, Alwaysi, SightSound, RealNetworks, Movielink, and, formerly, Intertainer. These companies rent authorized ¿OPVGLUHFWO\WRFRQVXPHUVRYHUWKH,QWHUQHW,W LV ,QWHUWDLQHU¶V VWUDWHJ\ WR GH¿QH WKH PDUNHW LQ this narrow fashion to increase the market share RI0RYLHOLQN7KLVGH¿QLWLRQKRZHYHULVFOHDUO\ too narrow, for consumers can gain instant access to videos on their own schedule and in their own home through the services of digital cable television providers such as Charter, Comcast, Cox, Cablevision, and Time Warner Cable. Thus, at least two competing delivery platforms can be used to provide video-on-demand and each is a close VXEVWLWXWHIRUWKHRWKHU$¿UVWOHVVRQLQPDUNHW GH¿QLWLRQLVWKDWLWLVJHQHUDOO\DPLVWDNHWRGH¿QH DPDUNHWDURXQGVSHFL¿FGLVWULEXWLRQPHWKRGWHFKnologies. For example, two different distribution PHWKRGVDWHOHSKRQHFRPSDQ\¶VZLUHRUDFDEOH WHOHYLVLRQFRPSDQ\¶VFDEOHFDQSURYLGHDFFHVVWR
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
the Internet. Each competes with the other in the same market for Internet access. ,QWKHPRYLHLQGXVWU\¶VVHTXHQFHRIGLVWULEXWLRQ windows, video-on-demand is currently placed after the renting and sales of movies in retail outlets such as Blockbuster and before pay-per-view and pay television channels such as HBO. One can argue that both of these adjacent windows encompass VXI¿FLHQWO\ VLPLODU FKDUDFWHULVWLFV VR WKDW WKH\ are close substitutes for video-on-demand, further EURDGHQLQJWKHGH¿QLWLRQRIWKHPDUNHW2QHFKDUacteristic of video-on-demand is that it eliminates the trip to the video store, but so do pay-per-view and pay television channels. Services that use the mail to rent DVDs to the home also reduce transportation costs to the customer (Wayner, 2002). Another characteristic of video-on-demand is the ability of the customer to watch a movie on his own schedule. If one purchases or rents a movie, the VDPHÀH[LELOLW\LVDYDLODEOHWRWKHFRQVXPHU2Q the negative side, video-on-demand services have a limited selection compared to what is available in video stores. Fowler (2002), for instance, predicts WKDW WKH VHW RI YLGHRRQGHPDQG ¿OPV DYDLODEOH for viewing will be limited for at least the next ¿YH\HDUV$QRWKHUGUDZEDFNIRUWKH,QWHUQHWGLVtribution method is the time it takes to download D¿OP7KXVWKHWKUHHZLQGRZVWUDQVDFWLRQVDW retail outlets, video-on-demand, and pay-per-view and pay television channels, possess similar characteristics but in varying proportions. This leads to the conclusion that Movielink is a competitor in a market encompassing at least these three distribution alternatives. This means that there exist both intra-window competitors and inter-window competitors for Movielink. Consequently, any concern about monopolization or anticompetitive practices by Movielink is overstated. Moreover, in contrast to the Premiere case, the joint venture does not have an exclusive window for distribution RILWVPHPEHUV¶¿OPVDQGHDFKFRPSDQ\LVVHWWLQJ LQGHSHQGHQWO\LWVRZQSULFHWROLFHQVH¿OPVDQG UHOHDVHGDWHVIRU¿OPV 7KHPRYLHLQGXVWU\¶VJHQHUDOUHVSRQVHWRWKH growth of online distribution is to embrace it only to the extent that they can control the technology. As was detailed in the legal section, companies that
have utilized peer-to-peer online distribution technologies (such as Napster, Aimster, and Grokster) have been successfully sued for facilitating copyright infringement. As Currah (2006) notes, the industry prefers a centralized server-client online architecture in which they can closely control the ÀRZ RI FRQWHQW )XUWKHUPRUH &XUUDK SUHGLFWV that if a true peer-to-peer decentralized distribution system is to be implemented in the industry, ZKLFKKHWKLQNVZLOOEHXOWLPDWHO\EHQH¿FLDOWRWKH copyright owners; it will have to originate with companies on the creative and economic fringes of the movie industry. A trend that could signal an emerging threat to incumbent movie and music distributors is the creation and distribution of video through Web sites such as MySpace, Revver, Grouper, Bolt, and YouTube (recently purchased by Google). These sites initially offered home videos and clips recorded from television and viewed on a personal computer. For some uploaded content, there have EHHQFRS\ULJKWLQIULQJHPHQWQRWL¿FDWLRQVE\FRS\right owners resulting in a take-down by the Web sites of disputed video, following the procedures outlined in the Digital Millennium Copyright Act of 1998. In response to the concern about copyright infringement, YouTube has signed licensing deals with CBS Television, UMG, Warner Music Group, and SonyBMG. Also, an interesting development is that user-generated content appears to capture the interest of Web audiences. It should be noted that these increasing sources of digital content provide the consumer with an increasing variety of choices in selecting content to consume. Two other market developments may also aid WKH HIIRUW WR UHGXFH XQDXWKRUL]HG ¿OH VKDULQJ Some ISPs and universities are limiting the amount of bandwidth that is available to its subscribers/ VWXGHQWV 6LQFH ¿OP ¿OH VKDULQJ SODFHV D ODUJH demand on bandwidth, particularly compared to music, bandwidth supply reductions could reduce WKHQXPEHURIXQDXWKRUL]HG¿OHVWUDGHG$VHFond market response involves private companies WKDW LQWURGXFH IDNH ¿OHV WKDW LV VSRR¿QJ LQWR peer-to-peer networks. This is intended to lead to frustration on the part of users who are searching for a particular song or movie. Such efforts
575
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
are attempts to demonstrate the quality control problems associated with use of these networks. These market responses lead to increased costs to FRQVXPHUVRI¿OHVKDULQJ
THE FUTURE: LESSONS FROM THE MUSIC INDUSTRY The music industry has made strategic adjustments but continues to adjust to the shocks it faced from the combination of improvements in digital technology and the growth of broadband over the Internet (see, for example, Meisel & Sullivan, 2002). The music industry made a mistake initially by concentrating LWVHIIRUWVRQ¿JKWLQJWKHQHZGLJLWDORQOLQHWHFKQROogy and relying on legal and political victories to protect its old business model of relying for revenue extensively on selling physical copies of music. It is still recovering from this focus. Because of the GLI¿FXOW\RIGLJLWDOYLGHRGLVWULEXWLRQFRPSDUHG to digital music distribution, related primarily to WKHVL]HRIWKH¿OHVUHODWLYHWRWKHGRZQORDGVSHHG the movie industry has had more time than did the music industry to prepare for the new online distribution channels and to develop new business responses. But, as broadband connections accelerate within the United States and worldwide, the window of opportunity is closing. In late 2001, the major music companies commenced online provision of music over the Internet through two joint ventures, Pressplay and MusicNet. These online music stores and other recent entrants have over time become more responsive to consumer demand, including features such as a wider selection, the unbundling of albums to allow individual song purchase, and increased portability. Subscription services exist today, as well as opportunities to purchase downloaded music on D RQHWLPH EDVLV $SSOH¶V L7XQHV GLJLWDO PHGLD store is the market leader in an expanding market of competitors providing digital music downloads and streaming services. Online download prices are likely to continue to fall from the $.99 benchmark established by Apple, thus discouraging piracy. Another positive development is emerging cooperative alliances between the music companies and
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new technology companies such as Snocap and Mashboxx to utilize the Internet as a decentralized distribution platform in authorized ways. Peer-topeer online music stores promise to combine the GLVWULEXWLRQHI¿FLHQFLHVRIWKH,QWHUQHWZLWKOHJDOO\ sanctioned trading activity. 7KHPRYLHFRPSDQLHV¶VWDUWXSRI0RYLHOLQN in late 2002 was a similar initial rental strategy by movie companies to meet the expectations of consumers in the Internet age. Early indications suggest, however, that the motion picture companies KDYHH[SHQGHGPRVWRIWKHLUUHVRXUFHVRQ¿JKWLQJ the effects of the Internet in the political and legal environments instead of competing economically in the market with digital delivery, basically replicating the failed strategy followed by the music companies initially. However, there is preliminary evidence that the movie companies have reached DQLQÀH[LRQSRLQWDQGDUHUHYLVLQJWKHLUVWUDWHJ\ to try to tap the potential of the Internet. Another factor that gives the movie industry more leeway in its response to the threat of the Internet to its existing business models is portability. Part of the attraction of digital music is that it can be easily converted into formats that are portable (CD players and MP3 players). This is important because users want to have their music wherever they are, whether at home, at work, or in their automobiles. Users are less likely to watch a movie at work, in their automobile, or while jogging than they are to listen to music. A related difference involves the environment to experience the content. Consumers are willing to experience music utilizing a computer, while that LVOHVVOLNHO\WUXHIRUDPRYLH:DWFKLQJD¿OPRQ a computer screen or on a hand-held device will never be as attractive as in front of a big-screen television set. However, the wired or wireless conQHFWLRQRIWKHVHGHYLFHVWRKLJKGH¿QLWLRQODUJH screen televisions in the future is on the horizon. The threat of digital piracy will likely shift the focus of content companies to distribution channels where the threat is the smallest and where they have the greatest opportunity to add value for consumers. For music, this would mean more revenue derived from concert performances, the window least susceptible to piracy, and less revenue
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
from CDs, the window most susceptible to digital piracy. For movies, this would mean increasing emphasis on revenue generated in upgraded theDWHUV SRWHQWLDOO\ ,0$; WHFKQRORJ\ TXDOLW\ IRU ¿UVWUXQPRYLHV New online distribution platforms such as YouTube are complicating the adjustment process to a new equilibrium in the industry. Consumers are very excited with the opportunity to create their own content and to upload copyrighted content to Web sites for sharing with others in which they have a sense of community. The content companies need to balance the positive aspect of the promotional value their copyrighted content receives from this publicity with the potential negative effect of a reduction in copyright income. In the digital era, ownership of content will be altered. As digital rights management technology advances, licenses associated with digital content will change with respect to freedoms such as on what devices one can play the content, the number, if any, of copies one can make of the content, and the ability to distribute the content. Licenses will vary from unrestricted licenses, that is, unfettered freedom, to a rental system limiting the right to play the content one time, a much narrower concept of freedom. One can expect a continuing battle between companies that produce the hardware to play the content, companies that produce the software that instructs the hardware how to play the content, and the companies that produce the content. The only thing certain, based on the music LQGXVWU\¶VH[SHULHQFHLVWKDWFRQVXPHUVZLOOEHD minor stakeholder in crafting the decision-making UXOHVEXWWKH\ZLOOH[HUWDPDMRULQÀXHQFHRYHU the outcome.
Angwin, J., & Pasztor, A. (2006, August 5). Weaker reception: Satellite TV growth is losing altitude as cable takes off. The Wall Street Journal, A1. Borland, J. (2004a, March 31). Judge: File sharing legal in Canada. Retrieved July 17, 2007, from http://Cnetnews.com Borland, J. (2004b, October 12). Kazaa loses P2P crown. New York Times Online Edition. Choi, B.H. (2006). The Grokster dead-end. Harvard Journal of Law & Technology, 19(2), 393-411. Currah, A. (2006). Hollywood vs. the Internet: The media and entertainment industries in a digital and networked economy. Journal of Economic Geography, 6, 439-468. Digital Millennium Copyright Act of 1998. (October 28, 1998). Public Law No. 105-304, 112 Stat. 2680. Ferguson, I., (2005, December 6). Sharman cuts off Kazaa downloads in Australia. Retrieved July 17, 2007, from c/net news.com Film industry to try movie theater, video messages to combat piracy. (2002, August 21). The Wall Street Journal Online. Fowler, G.A. (2002, March 5). Video on demand is an idea whose time has come—almost. The Wall Street Journal, R10. Grant, P. (2006, August 17). Cable industry may need to spend heavily on broadband upgrades. The Wall Street Journal, A1. Grow, B. (2002, December 9). Dutch treat. The Wall Street Journal Online Edition.
REFERENCES
Harmon, A. (2002, November 27). Students learnLQJ WR HYDGH PRYHV WR SURWHFW PHGLD ¿OHV New York Times Online Edition.
$OH[DQGHU3- 3HHUWRSHHU¿OHVKDULQJ The case of the music recording industry. Review of Industrial Organization, 20(2), 151-161.
Litman, B.R. (1998). The motion picture megaindustry (pp. 64-69). Boston: Allyn and Bacon.
Ali, S. (2006, April 6). Becoming part of the solution. The Wall Street Journal, B5.
Marr, M. (2006, September 2). In Hollywood, the SLFWXUH EOXUV IRU VWXGLR SUR¿WV The Wall Street Journal, A1.
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The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
Mathews, A.W. (2002a, April 26). The studios strike back. The Wall Street Journal, B1. 0DWKHZV$: E6HSWHPEHU 2QOLQH¿OP outlet intertainer names studios in antitrust suit. The Wall Street Journal Online Edition. Mathews, A.W. (2002c, October 24). Movie, music ¿UPVWRZDUQFRPSDQLHVRQZRUNHUSLUDF\The Wall Street Journal Online Edition. Mathews, A.W., & Orwall, B. (2002, April 29). Fox studios quits venture plan with disney for movies. com. The Wall Street Journal Online Edition. McBride, S. (2004, August 23). Stop the music! The Wall Street Journal Online Edition. 0F%ULGH6 6HSWHPEHU /LPHZLUH¿OHV countersuit against music-industry group. The Wall Street Journal Online Edition. McBride, S., & Fowler, G. (2006, May 3). Studios see big rise in estimates of losses to movie piracy. The Wall Street Journal, B1. McBride, S., Grant, P., & Marr, M. (2006, January 4,). Movies may hit DVD, cable simultaneously. The Wall Street Journal, B1. McBride, S., & Marr, M. (2006, October 9). Target, a big DVD seller, warns studios over download pricing. The Wall Street Journal, A1. Meisel, J.B., & Sullivan, T.S. (2002). The impact of the Internet on the law and economics of the music industry. Info, 4(2), 16-22. Owen, B.M., & Wildman, S.S. (1992). Video Economics. Cambridge, MA: Harvard University Press. Reuters News Service. (2006, July 27). U.S. broadband subscriptions rise. The Wall Street Journal, D4. Vascellaro, J.E. (2006, September 8). Amazon GHEXWV GRZQORDG VHUYLFH IRU ¿OPV VKRZV The Wall Street Journal, B3. Wayner, P. (2002, September 23). The packaging of video on demand. New York Times Online Edition.
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Werbach, K.D. (2005). The implications of video P2P on network usage. New York: Video Peer to Peer, Columbia Institute for Telecommunication. :LQJ¿HOG1 0DUU0 6HSWHPEHU Apple computer aims to take over your living-room TV. The Wall Street Journal, B1. :LQJ¿HOG10F%ULGH6 9DVFHOODUR-( September 6). Apple, Amazon to unveil movie downloads. The Wall Street Journal, D1.
KEY TERMS Digital Millennium Copyright Act: A 1998 U.S. law that governs the copying of materials, LQFOXGLQJ ERRNV PXVLF DQG YLGHR ,W VSHFL¿HV circumstances under which online providers can seek a safe harbor from copyright infringement claims by copyright holders. Distribution window: The time period during which a movie is made available in particular form (i.e., movie theaters, DVD, PPV). Free broadcast television (Free TV): Television programs that are broadcast over the air and require no subscription fee. Motion Picture Association of America (MPAA): An industry trade group composed of the major motion picture companies operating in the U.S. (so-called “studios”). Pay-per-view (PPV): A system where home viewers pay an extra fee to a cable company to have a movie shown on their television. The times are pre-set by the cable companies (as opposed to video on demand). Peer-to-peer network: A group of users utilizing common software (and perhaps an Internet VLWH WRVKDUH¿OHVRYHUWKH,QWHUQHW Piracy: The unauthorized used of another SDUW\¶VSULYDWHSURSHUW\ Price discrimination:$V\VWHPZKHUHD¿UP charges a higher price to those consumers who most
The Impact of the Internet on the Law and Economics of the United States Motion Picture Industry
desire the good or service. Price discrimination is often accomplished by offering the good or service ¿UVWWRFXVWRPHUVZKRSD\WKHPRVW Recording Industry Association of America (RCIAA): An industry group composed of major recording companies operating in the US (so-called “labels”).
Video-on-demand (VOD): A system where home viewers pay an extra fee to a cable or Internet company to have a movie shown on their television or computer. The viewer selects the time (as opposed to pay-per-view).
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Division II
Health Industry
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Chapter XXXVI
Broadband for Health In Developing Countries Aradhana Srivastava Participatory Research in Asia (PRIA), India
ABSTRACT This chapter highlights the major issues in the use of broadband technologies in health care in developing countries. The use of Internet technologies in the health sector has immense potential in developing countries, especially in the context of public health programs. Some of the main uses of information and communication technologies (ICT) in health include remote consultations and diagnosis, information dissemination and networking between health providers, user groups, and forums, Internet-based disease VXUYHLOODQFHDQGLGHQWL¿FDWLRQRIWDUJHWJURXSVIRUKHDOWKLQWHUYHQWLRQVIDFLOLWDWLRQRIKHDOWKUHVHDUFK and support to health care delivery, and administration. The technology has immense potential, but is also constrained by lack of policy direction, problems with access to technology, and lack of suitable infrastructure in developing nations. However, given its crucial role in public health, comprehensive efforts are required from all concerned stakeholders if universal e-health is to become a reality.
INTRODUCTION We live today in the age of information—the age of the global village when distance and physical barriers no longer pose hurdles to communication. The virtual world of the Internet has opened up avenues for unlimited information storage, transfer, and sharing, which is being utilized increasingly by each one of us to meet personal and professional needs. Information technology has also brought revolutionary changes in global trade, commerce, business, and professional service delivery. Increasing technological outreach and facilitation of information exchange has also laid bare before us the glaring disparity that exists in
the world today between nations in terms of economic and social development. Never before was the difference between the “developing” and the “developed” so visible. Grim pictures of poverty, famine, disease, and strife from all over the world reach our desktops in no time—and the truth is for us to see even as it unfolds. Globalization and a world culture seem but utopian ideals when we look at the deeply divided world—whether it is income, health, education, or infrastructure—the difference persists. Information and communication technologies (ICT) ranging from the humble radio to broadband Internet help bring clarity to the picture and are the most effective agents for reaching out and bridging the development divide.
Copyright © 2008, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Broadband for Health in Developing Countries
Information technology is in fact now visibly impacting the nature of development programs across the world. One of the most fundamental EHQH¿WVRIWHFKQRORJ\VXFKDVWKHFRPSXWHUVDQG Internet emerged in its ability to facilitate connectivity in remote and disparate regions, often impoverished and resource poor communities, where communication was a major hurdle to development efforts (Chandrasekhar & Ghosh, 2001). The achievements are indeed encouraging and ICT is beginning to emerge as an indispensable arm of global progress. Within this broader perspective of global develRSPHQWDQG,&7¶VSODFHLQLWWKLVFKDSWHUIRFXVHVRQ the health care sector in developing countries, more VSHFL¿FDOO\SXEOLFKHDOWKSURJUDPVDQGGHOLYHU\ of health care services to all. The chapter aims to highlight the various issues regarding the use of Internet, particularly broadband technologies in the public health sector, its potential, constraints, and possible future scenario in developing countries. The chapter is theoretical in nature, drawing upon current academic literature and news reports. Herein lies its limitation—lack of objective factual analysis to support the discussion. The suggested future course of direction in this context would be an objective analysis to validate the discussion presented here, possibly through a data-based intercountry comparison. The chapter has been divided into six subsections including the introduction—the second section outlines the context of health and development in developing countries, the third section discusses the role of broadband in health care, the fourth section lists out the various avenues for the use of Internet in health care in developing countries, WKH¿IWKVHFWLRQLVDGLVFXVVLRQRQWKHFRQVWUDLQWV to large-scale adoption of Internet technology in poorer nations, and the sixth is the concluding section with a discussion on the future scenario of Internet for health care in developing countries.
HEALTH IN DEVELOPMENT Health is universally recognized as a primary social goal and a prerogative of the welfare state.
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However, health remains a constantly neglected sector in developing nations where scarce resources compete with often more urgent alternate needs such as defense and industrialization. In the era of globalization, however, health is being viewed not as a compulsory social expenditure on part of welfare states but a constructive investment in human capital with implications on the future long-term economic productivity and health of nations (World Bank, 1993). In other words, it is no longer a purely consumption expenditure but a productive investment. Healthier populations are economically more productive, hence it makes economic sense to invest in health. This change in the global outlook on health has resulted in increased emphasis on health planning and expenditure on health programs by governments and aid agencies DOLNH :+2¶V FDOO IRU ³+HDOWK IRU $OO´ :+2 1978) has been the driving slogan behind all global development initiatives in the health sector. Health encompasses not just “absence of illness” but a feeling of wellbeing in the broader sense, which is ZK\:+2GH¿QHVKHDOWKDVDVWDWHRI³FRPSOHWH physical, mental, and social wellbeing.” Health in the developmental context relates to basic human survival and the need for a physically healthy life IRUDOOIUHHIURPGLVHDVHDQGLQ¿UPLW\ The distance that developing nations need to cover in terms of health status can be gauged by VRPHNH\¿JXUHV/LIHH[SHFWDQF\DWELUWKLVRQH of the most comprehensive indicators of health status of populations. According to UNDP (2006), high income nations have an average life expectancy of 79 years while low income nations have an average life expectancy of 59 years, which is a JDSRI\HDUV8QGHU¿YHPRUWDOLW\VWDWLVWLFVLV a good indicator of child health and also points to the poor health status of children in low income FRXQWULHV²WKHXQGHU¿YHPRUWDOLW\UDWHIRUKLJK income nations being just 7 per thousand while for low income countries it is as high as 120 per thousand. HIV prevalence is 1.8% in low income countries as compared to 0.4% in high income countries (UNDP, 2006). On the institutional side, public expenditures on health as a proportion of total GNP are much higher in countries with high human development, ranging between 6-9%, while
Broadband for Health in Developing Countries
in countries with low human development they normally range from 1-3%. Even within the developing world, disparities in health status are glaring. Sub-Saharan Africa, for example, is perhaps the ZRUOG¶VPRVWXQGHUGHYHORSHGUHJLRQLQWHUPVRI most health indicators (UNDP, 2006). Adoption of a time-bound approach to addressing the major global health concerns in the form RIWKH8QLWHG1DWLRQ¶V0LOOHQQLXP'HYHORSPHQW Goals has resulted in enhanced efforts on the parts of governments and global development agencies ZRUNLQJLQWKH¿HOGRISXEOLFKHDOWK,QWKLVVFHQDULR of earnestness towards reaching the health-related goals and being able to demonstrate the gains made through such efforts, Internet technology has emerged as a key instrument aiding public health programs in a number of ways. In the next sections, the focus is on how Internet technology has emerged as a powerful tool in public health programs, the enormous possibilities it offers, and the hurdles in its path towards universal acceptance and adoption as a key component of all development programs.
BROADBAND APPLICATIONS IN HEALTH There are a number of ways in which information WHFKQRORJ\VSHFL¿FDOO\WKH,QWHUQHWUHQGHUVLWVHOI invaluable to the health sector. Numerous popular Web sites on health have ensured that information on all aspects of health, such as diseases and risk factors, treatments, health care products, diets, and lifestyles, is just a click away for the lay person. Internet has increasingly become more and more specialized in information collection, storage, management, and dissemination, and it is this which lends it indispensable to all public health efforts (Srivastava, 2005). As the conduit IRULQIRUPDWLRQÀRZLWHQDEOHVWKHSROLF\PDNHUV and planners to make informed decisions on health policy and infrastructure in order to maximize equity in public health. It helps providers in orienting service provision towards the needs and demands of the population being served. It also enables remote consultation and diagnosis, which is very
useful in regions lacking specialized health care personnel. The networking function of Internet helps health care providers, health workers, scientists, students, patients, and high-risk groups to interact and exchange relevant information, and for knowledge-sharing on current research and clinical breakthroughs. It is also being used widely in targeting, disease surveillance, and monitoring of public health programs. Perhaps one of the most relevant areas in which information technology is extremely useful is generation of awareness—whether it is through simple radio and television programs, or specialized online information, education and communication (IEC) materials and courses, information technology enables people to improve their quality of life, minimize health risks through adequate preventive measures, and to reach the right source for help when in need (Accenture, Markle Foundation, and UNDP, 2001). ICT can also be used as an instrument to ensure transparency and accountability in delivery of public health VHUYLFHVWKURXJKHIIHFWLYHSHRSOH¶VSDUWLFLSDWLRQLQ governance (Chandrasekhar & Ghosh, 2001). The use of computers and narrowband Internet in health services is well established. However, VRPH VSHFL¿F UHTXLUHPHQWV LQ WKH KHDOWK VHFWRU make broadband or high-speed Internet data technologies the most appropriate for the purpose. This is especially appropriate for clinical applications. These include the ability to transmit large amount of data (such as video images of symptoms, data, or surgery) at high speeds with no corruption or data loss during transmission. Continuous network availability with no transmission breaks LVDOVRLPSHUDWLYHWRWKHVPRRWKDQGWLPHO\ÀRZ of information. Networks with high bandwidth ensure successful data transfer and low response time which is so crucial when the information WUDQVPLWWHGFRXOGPHDQVDYLQJVRPHERG\¶VOLIH Thus, the advantages of broadband in clinical applications include more timely health care, greater access to specialist opinion, and greatly reduced travel time and costs (NOIE, 2002). There are several studies available now on e-health applications in the developed countries, including broadband technologies. Telemedicine is one of the most widely discussed and debated
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among the many applications of broadband in health (for example, see Ferrante, 2005; Hisle, 2000; Wootton, 1996, 2001). There are studies RQH[LVWLQJSURJUDPVDVZHOODVSRWHQWLDOEHQH¿WV from proposed ones (such as Jennett et al., 2005). One of the main areas for evaluation and impact analysis has been home-based telemedicine and telecare (for example, Guillen, 2002). Research has also focused on evaluations of rural health care delivery using Internet protocol networks (Janes et al., 2005). $XVWUDOLD¶V1DWLRQDO2I¿FHIRUWKH,QIRUPDWLRQ (FRQRP\ 12,( LGHQWL¿HGWKHIROORZLQJ key clinical applications of broadband: a.
b.
c.
d.
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Remote consultation or telemedicine: This is a broad term referring to remote consultations directly between physicians and patients or referral of cases for opinion between physicians and specialists. A form of remote consultation is telepsychiatry, which facilitates psychiatric consultations of patients with remote specialists using videoconferencing. Remote surgery: This refers to surgery performed using robotics commanded by physicians in remote locations. Though initiDWHGLQLWLVVWLOO\HWWR¿QGZLGHVSUHDG application. Teleradiology and telepathology: TeleUDGLRORJ\ LV WKH WUDQVPLVVLRQ RI ;UD\ LPages across broadband using shared image software, which enables two physicians to view the image almost instantaneously and therefore greatly facilitates second or specialist opinion for remotely located practitioners. Similarly, telepathology enables transmission of microscope images from miles away. Remote monitoring: This is a breakthrough in home/hospice care of ageing persons. It enables chronically ill elderly persons to be monitored from their homes using small wireless devices which constantly transmit data on vital signs and symptoms. This has the multiple advantages of reducing costs of
e.
f.
hospital care, enabling timely response to change in symptoms, and improving quality of life of the older persons. Teaching, research, and training: Besides the use of video conferencing and transmission of surgical procedures online, other breakthroughs in the use of broadband technologies for training include simulated surgery environment for realistic surgery training (providing students with “virtual patients” for practice) using very high end broadband network. Online databases and patient records: Faster access to online databases has speeded up diagnosis and enabled effective treatment. Maintenance of patient records online has also been greatly speeded up and expanded using broadband technology.
The main hurdle in the spread of broadband data technology is its high infrastructure requirement which leads to high capital costs. However, this may not be the case in developed countries. Developed countries spend a large proportion of WKHLU *'3 RQ KHDOWK DQG IRU WKHP WKH EHQH¿WV RIUHGXFHGDFFHVVFRVWVFRXOGOHDGWRVLJQL¿FDQW HFRQRPLFEHQH¿WVDQGRXWZHLJKWKHFRVWVLQYROYHG in setting up broadband based health care infraVWUXFWXUH 12,( %HVLGHVPRQHWDU\EHQH¿WV WKHUHDUHDOVRWKHVRFLDOEHQH¿WVRIJUHDWHUDFFHVV to health for all and improved quality of life. Yet, governments have been slow in providing for broadband technologies on a large scale. Spending RQ³QHZ´WHFKQRORJ\LVGLI¿FXOWWRMXVWLI\ZKHQ there are pending “core” commitments, such as expenditure on more hospitals and beds. Therefore such initiatives have often invited criticism about expenditure priorities (NOIE, 2002). Some impediments to popular acceptance of broadband have included reservations about quality and reliability of broadband services, lack of standardization leading to incompatibility, and lack of interoperability between broadband networks (Committee on Enhancing the Internet, 2000).
Broadband for Health in Developing Countries
AVENUES FOR THE USE OF INTERNET-BASED TECHNOLOGIES IN HEALTH CARE IN DEVELOPING COUNTRIES In developing nations, broadband technologies are relatively nascent and less extensive as compared to developed countries. India is a typical example of a developing country just opening its doors to broadband technology. The scenario of broadband technology in India is only beginning to take shape. Since its launch in 2005 using ADSL technology, broadband covers about 300 cities with 1.5 million connections (Basu, 2006). India is one of the largest emerging global markets of broadband technology, but with a 700 million strong rural population base which the global players in Internet technology cannot ignore. Intensive research and development is going into developing technologies to suit Indian conditions at “Indian prices” with major global IT players like Intel, Nokia, and Motorola entering the fray. Wireless Internet technologies and WiMax are also being introduced into the Indian market (DQC News Bureau, 2005; Parthasarathy, 2006). Extending connectivity into rural areas is also a priority and companies like Intel and Motorola are working with the government for extending Internet connectivity to all rural areas of the country. At present, broadband penetration in India is quite low and the government is treading cautiously on higher spectrum allocations to major service providers; thus, it will be some time before broadband technologies establish themselves on the Indian scene ZHOOHQRXJKWRLQÀXHQFHGHYHORSPHQWVWUDWHJLHV (Basu, 2006). Research has highlighted several major initiatives through which broadband and other Internet-based applications are beginning to make an impact on health care delivery in developing FRXQWULHV6RPHRIWKHPDMRU¿HOGVLQZKLFK,&7 KDVLQÀXHQFHGSXEOLFKHDOWKDUHDVIROORZV
Information Dissemination and Networking In health, information often means life saved. Hence the importance of generating awareness on basic
preventive health care is obvious in regions with poor, illiterate, and largely ignorant populations, who suffer a high disease burden simply for want of basic health information. Information dissemination therefore features high on the agenda of public health programs in developing countries, whether run by governments or agencies like WHO and UNICEF. Hoardings, radio programs, television spots, and now the Internet—every means is being utilized to the maximum possible extent to take public health messages to the people. The ICT for Health Digital Opportunity Task (DOT) Force team study by UNDP in collaboration with Accenture and the Markle Foundation reports “communitylevel application of ICT to support informational initiatives” to be the most effective approach in educating the public on preventive health as well as recognition and treatment of symptoms of various commonly occurring ailments (Accenture, Markle Foundation, and UNDP, 2001). Networking through the Internet also enables people to enter into virtual communities where they can form user groups, support groups, or discussion forums. Such groups provide platforms for sharing experiences and local knowledge on issues of concern. A major advantage with using virtual portals for communication is that it can ensure anonymity, and thus help interaction and knowledge sharing even on sensitive subjects which may carry social stigma and which people may otherwise be hesitant to discuss—for example, those relating to sexually transmitted diseases including HIV/AIDS. This is a very important point with respect to health (Srivastava & Noznesky, 2005). 1HWZRUNLQJ EHQH¿WV QRW RQO\ HQGXVHUV EXW also health workers and activists, especially in developing countries, since most of them function in remote environments. They are able to keep tab of the current developments in health research and treatment breakthroughs which would be useful in their work. Interaction and sharing of experiences FDQKHOSWKHPOHDUQIURPHDFKRWKHU¶VH[SHULHQFHV and thus add to their knowledge base and also seek expert advice in emergencies or in special cases. For an example of a case study, see Wootton et al. (2004). Networks also help create pressure groups when it gives a common platform to health activists, 585
Broadband for Health in Developing Countries
patient groups, service providers, and concerned people who can then forge alliances and together bargain for a better deal in health policy and planning. Thus, in this respect, ICT emerges as an important tool for public policy advocacy and effective governance as well (Chandrasekhar & Ghosh, 2001).
Remote Consultation, Diagnosis, and Treatment Advances in telemedicine offer promising potential IRUVLJQL¿FDQWLPSURYHPHQWLQKHDOWKFDUHGHOLYery. In fact the technology has been no less than a boon for many poor families living in remote impoverished regions who cannot afford even a simple dispensary visit. Telemedicine also enables sharing knowledge among physicians themselves regarding new methods of treatments, and caseVSHFL¿FFRQVXOWDWLRQIRUH[SHUWRSLQLRQWKHUHE\ ensuring more effective treatment. Connectivity via the Internet and satellites has facilitated remote consultations and is increasingly being used in developing countries that may lack necessary medical facilities to transmit patient information to medical practitioners and specialists in other countries who then advise on treatments to be given. For example, nurses in Gambia are sending digital camera images of symptoms through the Internet to doctors in nearby towns for diagnosis and treatment (Zanker, 2001). Telemedicine has also been used effectively for post-tsunami trauma treatment and rehabilitation projects for affected coastal communities by leading medical institutes in India (Gogia & Surwade, 2005). The technology, however, remains underutilized in developing countries due to the many constraints in terms of access to high bandwidth for transmission of complex data and images and the high cost of setting up the necessary infrastructure for the same.
Support to Health Research Networking of libraries and other information agencies increases access to the latest information by students and researchers. This includes current publications in books and journals as well
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DV RQOLQH GDWDEDVHV 'DWD JHQHUDWHG LQ WKH ¿HOG by health workers through disease surveillance and treatment activities is being transmitted for further analysis to remote research institutes. Health research is also supported through online collaborations in research between researchers in different institutes. Several voluntary organizations and external aid agencies like the WHO, World Bank, and UNDP have set up discussion forums for greater exchange of information and experience in the development sector. The WHO supported Health Internetwork (HIN) program, while aiming at a broader level at strengthening policy making, also piloted networking of libraries and medical colleges in the Indian states of Orissa and Karnataka to facilitate exchange of health information for research purposes (Srivastava, 2005). ICT-enabled training mechanisms are being used increasingly to deliver training to health workers. This is another ¿HOG LQ ZKLFK ,QWHUQHW WHFKQRORJLHV DUH JDLQLQJ popularity rapidly.
Disease Surveillance and Targeting of Health Interventions Disease surveillance is vital to better prediction, preparedness, and management of all public health programs, especially epidemics with a geographical pattern surpassing regional boundaries. Such diseases often require regional and subregional cooperation in monitoring and surveillance. Research institutes and agencies across the world are coming together through technical collaborations to set up early warning systems for predicting the expansion of epidemics of a global severity, such as malaria and tuberculosis. Such a system is technology intensive and demands a high cost burden, which necessitates collaborative measures. 'DWD JHQHUDWHG IURP ¿HOGOHYHO KHDOWK LQIRUPDtion systems regarding transportation processes, pathogens, vectors, hosts and physical, and socioecological environment is integrated through bio-mathematical modeling to predict epidemic movements and likely periods of expansion. This system can also integrate remote sensing data on environmental and meteorological factors into the
Broadband for Health in Developing Countries
models. The Integrated Disease Surveillance and Response (IDSR) project in Africa and Eastern Mediterranean countries is one such collaborative disease surveillance structure involving several international agencies (WHO, 2003). Data from disease surveillance can be integrated with other relevant information using GIS tools to help identify high-risk groups and their geographical location in order to improve targeting of public health programs. Targeting is particularly useful in resource-crunch situations when the scale of the problem is too large and the resources available ZRHIXOO\LQVXI¿FLHQW7DUJHWLQJWKHQKHOSVIRFXV the resources where they are most in need. For example, an ADB-assisted project on prevention and education on HIV/AIDS in the Greater Mekong Subregion encompassing the borders of China, Vietnam, Laos, Cambodia, and Thailand has as one of its components a GIS-based network for monitoring interventions for vulnerable populations and direct targeted interventions for high risk groups and interstitial populations (Srivastava & Noznesky, 2005).
Health Care Delivery and Administration Internet tools have proven to be a boon to health workers operating in resource-poor settings with lack of transport and communication infrastructure as well as lack of trained medical personnel. Setting up centralized systems of data collection and management by medical institutes and agencies working in public health extension in remote resource-poor areas helps in logistics support for distribution of drugs, medical and drug supply chain management, and greater responsiveness to medical emergencies. Such systems are generally based on local area networking with a central server connecting computers in remote locations and a centralized database management system. The Electronic Medical Record (EMR) is a well documented example of such an application being used successfully in regions with poor connectivity, infrastructure, and very few doctors, where expansion of HIV treatment services, as well as follow-up of treatments and coordination of drug
supplies, is a major challenge. The EMRs help in logistics management, disease monitoring, and surveillance as well as remote consultation on case histories. Some successful EMR applications have been well documented, such as in Haiti and Kenya (Fraser et al., 2004; Siika et al., 2005). In India the use of hand-held computing devices called personal digital assistants (PDAs) to transmit data directly from source to higher levels for more prompt action and better follow-up of cases was experimented with in a government collaborative project in Rajasthan and later in a World Bank supported project in Nalgonda district in the state of Andhra Pradesh. PDAs were provided to auxiliary nurse midwives (ANMs) who visited each house in their jurisdiction monthly to track demographic data and check on maternal and child health through immunization and counseling services (Roy Sastry, 2003). Internet-based networks in remote rural areas can in fact greatly facilitate the delivery of centralized health services, especially during postemergency relief operations such as epidemic control in WKHDIWHUPDWKRIF\FORQHVÀRRGVDQGHDUWKTXDNHV Such systems are being set up in some states in India, such as Andhra Pradesh and Maharashtra. In a country where 70% of the people reside in villages, it is important to envision Internet as a tool for knowledge sharing among rural communities. There are several initiatives in India to provide village level Internet connectivity to ensure greater DFFHVVWRWKHEHQH¿WVRI,QWHUQHWE\WKHUXUDOIRON (Chandrasekhar & Ghosh, 2001). Internet technologies are thus opening up many frontiers and blazing new trends in health care delivery in developing countries. However, there are also some constraints which pose challenges to widespread adoption of broadband and Internet technologies in the health development sector.
CONSTRAINTS TO INTERNET TECHNOLOGIES IN THE HEALTH SECTOR IN DEVELOPING COUNTRIES At present the biggest constraint to global penetration of Internet technology is the digital divide in 587
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terms of technical capability for as well as access to Internet technologies (World Bank, 2006). This divide exists not only between the developed and developing countries but within developing countries as well. Access constraints within developing countries typically include unequal physical access to computers, Internet, and related facilities, poor literacy and inadequate technical skills to access WKHLQIRUPDWLRQDQGPDNHIXOOXVHRILWDQG¿QDOO\ lack of economic capability to keep up with the innovations in technology leading to the failure to PDNHIXOOXVHRIWKHEHQH¿WVRIQHZHUDQGPRUH HI¿FLHQWWHFKQRORJLHV,QFRXQWULHVOLNH,QGLDZKHUH DERXWKDOIWKHFRXQWU\¶VSRSXODWLRQGRHVQRWSRVsess even basic literacy, universal digital literacy seems but a dream, and ranks obviously low on the development priorities of the government. Language constraint is a problem affecting utilization of broadband technologies in largely non-English speaking populations (Chandrasekhar & Ghosh, 2001). Development of software in the vernaculars is progressing, albeit slowly with limited reach. A large part of this investment must be undertaken by the already overburdened state, since the market is unlikely to service these needs. This itself is a severe constraint on its development. Development of Internet-enabled health services is thus likely to impose a high cost burden on developing economies, the bulk of which is initially more likely to fall on governments, since the market may not be willing to support initial costs with longer gestation periods for recovery. Health remains an essentially social good and hence basically a state responsibility. While the potential EHQH¿WVRI,&7LQKHDOWKVHFWRUDUHWRRODUJHWREH completely ignored, the resource constraints are also very real and intimidating. Some possible options which can be suggested for adoption by governments include cost recovery through taxation of information technology-based commercial services and selective investment in the health sector in developing countries on connectivity to KHDOWKZRUNHUVZKRFDQWKHQFRQYH\WKHEHQH¿WVWR DODUJHQXPEHURI¿QDOEHQH¿FLDULHV,QWKLVZD\WKH outreach can be maximized with minimum input cost (Chandrasekhar & Ghosh, 2001).
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Some of the basic challenges before full-scale adoption and establishment of Internet technologies in the public health sector are discussed in detail below, with special reference to the Indian scenario: 1.
2.
Creating a favorable policy environment: (KHDOWKLVDQHPHUJLQJ¿HOGLQGHYHORSLQJ countries and there are many pressing policy matters and politico-legal issues remaining to EHGH¿QHG*UHDWHUFODULW\DQGSROLF\GLUHFtion is required on a number of aspects, especially with regard to the use of Internet-based health services. Public policy issues include setting up guidelines to ensure protection of patient identity in medical records, patient privacy, and anonymity in online discussion groups, and security of patient data being stored and transmitted online. Regulating access by different types of users to different resources on the network is also important, as the information may in many cases be private and sensitive in nature. Governments also need to set up requisite standards and guidelines to ensure authenticity of medical information provided on Web sites and circulated in online discussion forums. Greater clarity in the use of e-health technologies for clinical purposes requires determination of legal status of e-consultations in case of any eventuality leading to litigation, acceptance of e-consultations and e-payments as valid modes of health care delivery, and sorting out intellectual property issues in information being shared on the Internet for educational or research purposes. Access to technology: The major problem in universalization of Internet use in India, as in other developing countries, is lack of access to Internet itself. This means the use is restricted to the literate, largely urban and economically better off classes, who are not necessarily the population most in-need of Internet-based health services. While more than 700 million people live in the villages, the majority of them cannot afford computers and many villages simply do not have the
Broadband for Health in Developing Countries
3.
4.
infrastructure to put computers or Internet in place. Within a region different social groups may have differential access to Internet technologies due to gender bias and social exclusion factors as well. Hence e-health has a limited reach where it matters the most. Infrastructure support: Internet technology is heavily dependent on the availability of certain supporting infrastructure, such as regular power supply and communication lines. Broadband, especially for health, requires high-speed high capacity networks in order to support applications such as telemedicine and telepsychiatry. But what happens in regions with little or no power supply, lack of all-weather approach roads and poor telephone connectivity? Poor infrastructural support or the complete absence of it is a common problem in remote rural areas in developing countries, which also happen to be the regions with poorest health status, and hence most in need of enhanced health care interventions. This is one of the reasons why WKHEHQH¿WVRI,QWHUQHWKDYHQRWEHHQDEOHWR SHQHWUDWHVRPHRIWKHZRUOG¶VQHHGLHVWDUHDV in sub-Saharan Africa and South Asia. Skilled Personnel: Skilled personnel are required to set up Internet-based support V\VWHPVLQSURJUDPVDQGDOVRWRWUDLQ¿HOG level health functionaries to use their computer-based tools which feed information into the system. The sector, therefore, cannot do without a minimum level of literacy and skilled manpower. Though India is fortunate in the sense that technically trained personnel are available to administer information technology-enabled services, this is not the scene in many other developing countries. In many African nations, for example, there are very few technically skilled persons in WKH¿UVWSODFH7KRVHZKRGRH[LVWDOVRSUHIHU moving out for better opportunities abroad; hence, these nations suffer a high attrition rate RIVXFKSHUVRQVOHDYLQJDGH¿FLWRIWHFKQLFDO manpower at home.
CONCLUSION: THE WAY AHEAD Broadband data technologies are beginning to PDNHVLJQL¿FDQWIRUD\VLQWKHKHDOWKVHFWRULQGHveloping countries. But their advent is recent and they are yet to realize their full potential. In fact, JLYHQWKH:RUOG%DQN¶VODWHVW¿JXUHVRIEURDGEDQG penetration at 0.6 connections per thousand persons (World Bank, 2006), the path is long indeed. We have seen the many ways in which they can facilitate health care delivery right from program planning to targeting, implementation, and documentation of implementation outcomes. In spite of the encouraging results, IT-based initiatives remain sporadic and at the experimental stage for DQXPEHURIUHDVRQV/DFNRIWHFKQLFDOO\TXDOL¿HG personnel, poor supporting infrastructure, and high per unit costs are some of the most pertinent questions in this regard. Cost-effectiveness is perhaps the most imporWDQWIDFWRULQÀXHQFLQJZLGHUDGRSWLRQRIEURDGEDQG technologies in health care in low income countries. :LUHGEURDGEDQGQHWZRUNVDUHGHSHQGHQWRQ¿EHU optic cable networks and hence costly investments. Setting up a technology and infrastructure-intensive Internet network indeed can be a considerable H[SHQGLWXUHIRUVRPHRIWKHZRUOG¶VSRRUHFRQRPLHV ,QVXFKDVFHQDULRWKHEHQH¿WVRIWKHXVHRI,QWHUQHW technologies need to be demonstrably greater than the input cost, only then can they be sustainable in the long run. Expenditure on information technology in developing countries is growing rapidly and forms a high proportion of GDP, but, in absolute terms, the quantum of investment is very low (LBJ School of Public Affairs, 2006). In order to ¿UPO\HVWDEOLVKORQJWHUPFRVWJDLQVLQWKHXVHRI information technology, substantial research into WKHFRVWHIIHFWLYHQHVVRI,QWHUQHWDQGVSHFL¿FDOO\ broadband based interventions needs to be carried out in developing countries. The huge amount of initial investment required for setting up the basic infrastructure necessary for Internet-based services implies substantial public spending, especially in the initial stages. This calls for advocacy and opinion-building at the global level to sensitize nations towards the considerable gains in terms of health outcomes per unit cost of
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investment in information technology infrastructure. Of course, Internet technology needs to be part of the larger picture of development, especially in nations with a poor record of public spending on KHDOWK7KHEHQH¿WVKDYHEHHQGHPRQVWUDWHGDQG successful models of sustainable use of ICT in public health in developing nations are there for all to see. Yet without the initiative through a centralized SROLF\IUDPHZRUNDQGVXVWDLQHG¿QDQFLDOVXSSRUW from national governments, a universal e-enabled health sector is far from being a reality. Around the world, developing countries are committed to achieving the MDGs in time. For the purpose enhanced budgetary commitments towards public health have been pledged by them; thus the environment is favorable for the emergence of Internet and broadband technology as fully integrated component of public health programs. Last but not least, local communities need to be VHQVLWL]HGWRZDUGVWKHEHQH¿WVRI,QWHUQHWWHFKQRORgies so that they are in a position to demand and utilize such facilities to the maximum extent. This is extremely important for new technologies to be viable in the long run. New technologies always take some time to establish themselves, but nevertheless a committed leadership and community support ensures the sustainability of such efforts, which then in due course deliver the desired results. It is DSHRSOH¶VWHFKQRORJ\WDNLQJLQIRUPDWLRQOLWHUDOO\ WRDSHUVRQ¶VGHVNWRSFRQQHFWLQJSHRSOHDQGFRPmunities as never before, and opening an enormous world of possibilities for information generation and utilization. Avenues have been opened and in time broadband technologies are expected to HVWDEOLVKWKHPVHOYHV¿UPO\LQWKHKHDOWKVHFWRULQ developing countries.
REFERENCES Accenture, Markle Foundation, and UNDP. (2001). &UHDWLQJDGHYHORSPHQWG\QDPLF²¿QDOUHSRUWRI the digital opportunity initiative (section on ICT for health). Retrieved July 19, 2007, from http://www. opt-init.org/framework/pages/2.2.1.html
Basu, I. (2006). Indian broadband market could explode. Spacemart. Retrieved July 19, 2007, from http://www.spacemart.com/reports/Indian_Broadband_Market_Could_Explode_999.html Chandrasekhar, C.P., & Ghosh, J. (2001). Information and communication technologies and health in low income countries: The potential and the constraints. Bulletin of World Health Organization, 79(9), 850-855. Committee on Enhancing the Internet for Health Applications: Technical Requirements and Implementation Strategies, Computer Science, and Telecommunications Board, National Research Council. (2000). Networking health: Prescriptions for the Internet (Executive Summary). Retrieved July 19, 2007, from http://newton.nap.edu/execsumm_pdf/9750.pdf '4&1HZV%XUHDX :,0$; %URDGEDQG Internet for masses. Retrieved July 19, 2007, from http://www.dqchannels.com/content/mirror/105041901.asp Ferrante, F.E. (2005). Evolving telemedicine/ehealth technology. Telemedicine Journal and E-Health, 11(3), 370-83 Fraser, Hamish S.F. et al. (2004). An information system and medical record to support HIV treatment in rural Haiti. BMJ, 329, 1142-1146. Gogia, S.B., & Surwade, M.R. (2005). Health care technology aspects of disaster planning—based on the post-tsunami experiences. Retrieved July 19, 2007, from http://openmed.nic.in/1774/01/telmedtsunami.pdf Guillen, S. et al. (2002). User satisfaction with home telecare based on broadband communication. Journal of Telemedicine and Telecare, 8(2), 81-90. Hisle, M. (2000, Summer). Universal broadband communications creates new options for health care networks. Journal of Healthcare Information and Management, 14(2), 71-84. Janes, R. (2005). Few rural general practitioners use the Internet frequently in regard to patient
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care. New Zealand Medical Journal, 118(1212), U1380. Jennett, P. et al. (2005). Delivery of rural and remote health care via a broadband Internet protocol network—views of potential users. Journal of Telemedicine and Telecare, 11(8), 419-24. LBJ School of Public Affairs. (2006). Understanding the contexts for health information technology in developing countries (White Paper). Retrieved July 19, 2007, from http://www.wcit2006.org/ Healthcare/media/whitepaper/hit.pdf
WHO. (1978). Declaration of Alma Ata. Retrieved July 19, 2007, from www.who.int/hpr/NPH/docs/ declaration_almaata.pdf WHO, CDC, USAID, SARA, UNFIP. (2003). The implementation of integrated disease surveillance and response in the African and Eastern Mediterranean regions (a synthesis report). Retrieved July 19, 2007, from http://www.cdc.gov/idsr/focus/surv_ sys_strengthening/doc_idsr_implement.pdf World Bank. (1993). World development report. New York: Oxford University Press.
NOIE (National Office for the Information Economy). (2002). Broadband in health: Drivers, LPSHGLPHQWV DQG EHQH¿WV 5HSRUW SUHSDUHG IRU Broadband Advisory Group, Govt. of Australia). Retrieved July 19, 2007, from http://www.dcita. gov.au/communications_and_technology/publications_and_reports/2002/august/broadband_in_ KHDOWKBGULYHUVBLPSHGLPHQWVBDQGBEHQH¿WV
Wootton, R. (2001). Recent advances: Telemedicine. BMJ, 323, 557-560.
Parthasarathy, A. (2006, October 12). Twin tracks to broadband business. The Hindu. Retrieved July 19, 2007, from www.hindu.com/seta/2006/10/12/ stories/2006101200621500.htm
Wootton, R. et al. (2004). Prospective case review of a global e-health system for doctors in developing countries. Journal of Telemedicine and Telecare, 10(S1), 94-96.
Roy Sastry, C.L. (2003). India health care project: An application of IT in rural health care at grass root level. Information Technology in Developing Countries, 13(1). Retrieved July 19, 2007, from KWWS ZZZLLPDKGHUQHWLQHJRYL¿SMXQDUticle4.htm
Zanker, C. (2001). The global digital divide problems and solutions. Paper presented at UNI Seminar for Trade Union Representatives from Africa, Asia and Latin America. Retrieved July 19, 2007, from http://www.input-consulting.com/ download/berlin-dd-eng.pdf
Siika, A.M. et al. (2005). An electronic medical record system for ambulatory care of HIV-infected patients in Kenya. International Journal of Medical Informatics, 74(5), 345-355.
KEY TERMS
Srivastava, A. (2005, May). ICT in Indian health scenario: Accelerating delivery of health services, i4d, 12-15. Srivastava, A., & Noznesky, E. (2005, December). Better intervening HIV/AIDS with ICT. i4d, 1921. UNDP. (2006). Human development report 2006 (Tables). Retrieved July 19, 2007, from http://hdr. undp.org/hdr2006/pdfs/report/HDR_2006_Tables.pdf
World Bank. (2006). Information and communication for development—global trends and policies. Washington: World Bank. Wootton, R. (1996). Telemedicine: A cautious welcome. BMJ, 313, 1375-77.
ADSL Technology: The asymmetrical digital subscriber line (ADSL) technology is the technology which enables transmission of Internet data at faster rates than a regular modem using existing systems of ordinary telephone lines. Its range is limited to within about 5 km. Alma Ata Declaration, 1978: The Alma Ata Declaration was the outcome of the International Conference on Primary Health Care held in 1978 in Alma Ata, Kazakhstan. This declaration led to
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the adoption of the primary health care approach as the key public health strategy by all WHO member countries.
storing, and analyzing spatially referenced data which can also be used for resource planning and management purposes.
E-Health: The term “e-health” has been used in this chapter to denote all applications of Internet technology in health care, whether for commercial or for developmental purposes.
PDA: The personal digital assistant (PDA) is a hand-held computing device with a number of functions including palm-top Internet access. Though commercially used as a personal assistant, it is being used by development personnel working LQWKH¿HOGWRUHFRUGGDWDHOHFWURQLFDOO\DQGRIWHQ DOVRWRWUDQVPLW¿HOGLQIRUPDWLRQHOHFWURQLFDOO\WR a remote server.
EMR: The electronic medical record (EMR) is simply a medical record in electronic format, either captured directly on a computing device or created by entering patient data onto a computer. GIS: Geographic information system (GIS) is the application of computer programs for capturing,
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Telemedicine: Telemedicine refers to the exchange of information between patient and health care provider through electronic media for consultative, diagnostic, or treatment purposes.
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Chapter XXXVII
Improving Health Services via Advanced ICT Networks Peter Farr Peter Farr Consultants, Australasia Isabelle Ellis Charles Darwin University, Australia John Royle Reliance Consulting Pty Ltd, Australia
ABSTRACT This chapter describes an innovative broadband initiative that connects a group of general practices, medical specialists, hospitals, and other health providers in rural areas of Australia through a managed virtual private network. It provides secure connectivity for a variety of mission-critical healthcare delivery applications—for example, transmission of pathology and radiology test results direct to clinicians. The medical practices involved are small-medium enterprises (SMEs) and the key aspects of ICTs for them are the impact on costs, productivity, and customer service. The formal evaluation process examined WKHGRPDLQVRIDSSURSULDWHQHVVHI¿FLHQF\DQGFRVWHIIHFWLYHQHVV%HLQJWKH¿UVWVXFKKHDOWKQHWZRUN of its kind in Australia, the project encountered challenges and, by overcoming these, has been guiding JRYHUQPHQWSROLF\LQUHVSHFWWRHKHDOWK,QLWLDOO\IXQGHGIURP0DUFKYLDD&RPPRQZHDOWK*RYHUQment grant, the GoldHealth network moved into a sustainable mode in July 2006. This chapter provides insights into GoldHealth and should be a useful guide to any similar broadband network initiatives for the health sector elsewhere in the world.
INTRODUCTION The term e-health has become widely prevalent since originating in the year 2000. The stakeholders considered to be the users or targets of e-health YDU\ZLWKDUDQJHRIGH¿QLWLRQV6RPHGH¿QLWLRQV emphasize applications for providers and organiza-
tions—particularly those stressing electronic data exchange for clinical and administrative purposes. Others emphasize provision of information, education, and services to consumers, including patients and “citizens.” A small number clearly identify e-health with consumer health informatics. e-health is widely proposed to be a solution for the lack of medical and other healthcare specialists
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in rural, remote, and outer metropolitan regions of many countries, including Australia. However, WRUHDOL]HWKHSRWHQWLDOEHQH¿WVWKHLQIUDVWUXFWXUH needed to provide many of the services requires VXI¿FLHQW EDQGZLGWK WR DOORZ WUDQVIHU RI ODUJH GDWD¿OHV$IIRUGDEOHEURDGEDQGWUDQVPLVVLRQLV therefore seen as a key enabler and change agent for secure, functional, and equitable participation in e-health activities. Conversely, having broadband does not necessarily mean that health IT penetration will automatically follow (Farr, October 2006). Exchanging highly sensitive personal and health information requires an acceptable legal and privacy framework that ensures that such information can be transferred securely to authorized users for approved purposes (National Health Information Management Advisory Council, 2001). This requires a secure broadband connection. Increasingly, healthcare providers are implementing a secure broadband connection to not only help improve their daily business processes, but to enable better collaboration in patient care, continuing professional education, and so forth. Although these challenges have been recognized for a relatively long period of time in the literature, there has been a huge diseconomy of scale when individuals, institutions, and medical practices have considered establishing electronic health information management systems, as, for example, in the Australian healthcare system where each institution and general practice operates separately. Rural residents in Australia tend to have poorer health status and less access to health services (Simmons & Hsu-Hage, 2001). The cost of healthcare, the lack of choice, and the lack of access to health information is of concern to consumers (Bourke, ,WLVDOVRUHFRJQL]HGWKDWWKHUHLVDGLI¿FXOW\ in attracting and retaining medical, allied health, and nursing staff in rural hospitals, remote community health services, and so forth. Against this background, the potential to improve access to healthcare has been used by governments as a vehicle to encourage adoption of broadband in urban, rural, and remote Australia. For example, in 2004, the “Broadband for Health” initiative funded broadband Internet access to general practices and Aboriginal Community
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Controlled Health Services across Australia. DeVSLWHWKHORJLFDOEHQH¿WVRILPSOHPHQWLQJHKHDOWK systems for rural and remote areas, there have been GLI¿FXOWLHVLQGLIIXVLQJWKHVHVHUYLFHV A variety of change management models and methods have been proposed for implementing e-health, including: interaction design theory (Coiera, 2002); informatics, which has been the label put on sociotechnical systems design by a number of authors (Coeira, 2004; Hersch, 2002); and some more loosely put together frameworks such as that proposed by Kaur, Forducey, Smith, and Schneideman-Miller (2005) who propose that there are basic elements of organizational change, “strategy, structure, people and processes, all of which need to be addressed for a balanced approach to change.” Leonard (2004) points out that much of the research around implementing new technologies is “detailed and outline creative solutions and management theories, but have done little to facilitate the adoption of technology in healthcare.”
REFERENCE SITE OBJECTIVES The primary objective of the (DVWHUQ*ROG¿HOGV Regional Reference Site (EGRRS) was to test, PHDVXUHDQGGHPRQVWUDWHWKHEHQH¿WVRIKHDOWKFDUH providers working in rural and remote zones having access to high-speed, continuous, higher-quality broadband connectivity through which they may effectively and securely access a range of relevant information and communications applications, that is, e-health. Prior to the EGRRS rollout in early 2005, the majority of medical participants had either no Internet connection or only dial-up Internet from their practice or home, and this would have been typical for medical practices in other regions of Australia at that date.
DEMAND AGGREGATION CONCEPT The EGRRS broadband initiative provided a catalyst for organizations and individuals in the
Improving Health Services via Advanced ICT Networks
community to aggregate their demand for telecommunications services, potentially creating competition among providers and investment that will lead to greater sustainability and parity with metropolitan prices and conditions, hence VXSSRUWLQJWKH$XVWUDOLDQ*RYHUQPHQW¶V1DWLRQDO Broadband agenda. EGRRS had strong support in advance from key stakeholders across the region LQFOXGLQJWKH(DVWHUQ*ROG¿HOGV0HGLFDO'LYLVLRQ of General Practice (EGMDGP), a large number of individual health service providers, and other local bodies including the City of Kalgoorlie-Boulder, the local Chamber of Commerce, and a number of mining companies. The EGMDGP (http://www.egmdgp.com.au/) is one of 122 divisions of general practice in Australia. The EGMDGP was formed as a result of the &RPPRQZHDOWK *RYHUQPHQW¶V *HQHUDO 3UDFWLFH Strategy developed in 1992. This has resulted in greater involvement of GPs in health policy, planning, and delivery of health services at the local and regional levels, working in collaboration with other health agencies and managing a range of health service programs. Doctor members of the EGMDGP cover one RI$XVWUDOLD¶VODUJHVWUHJLRQV DURXQGWKHVL]HRI Texas), stretching from the town of Wiluna in the north to Esperance in the south, from the South Australian border in the east to Southern Cross in the west, with the city of Kalgoorlie-Boulder as the main center of administration. With a mix of metro-like, rural, as well as very remote geographies, the provision of quality health services is a challenging task. Prior to EGRRS, some key issues were: •
Distance. Due to the remoteness of healthcare practices in this region, communication of patient and medical information was infrequent and cumbersome between patients and health workers, as well as between healthcare practices themselves. Many patients in the region move regularly through communities and may see a number of different health practitioners for management of their healthFDUH7KLVFDXVHVDGLI¿FXOW\LQHVWDEOLVKLQJ normal support structures for patients.
•
•
•
•
Cost. Transport costs of medical equipment and patient visits in this region are high due to the great distances involved. Voice calls and fax alleviate some of the necessity of a direct visit, but when it comes to radiology images and other data that require large amounts of storage, direct communication is necessary, incurring a transmission cost. Service levels. There are less stable links between patients and GPs due to both the transient nature of the population and the turnover of doctors in the region. Digital patient records that are centrally stored in WKHGRFWRU¶VSUDFWLFHVDQGHDVLO\DFFHVVLEOH could greatly improve the continuity of patient care. However, due to the dispersed nature of healthcare workers in the region, coordination and advancement of the medical community as a whole is affected, with the participants in the healthcare supply chain (GPs, medical specialists, hospitals, pharmacies, etc.) operating independently of one another. Security. Healthcare practices need to be esSHFLDOO\GLOLJHQWDERXWSURWHFWLQJFRQ¿GHQWLDO patient data. Compromized medical data can expose a practice to error-prone diagnoses, OHJDOOLDELOLW\DQGORVVRIFRQ¿GHQFHIURP the patient. Consumer access to information. Rising expectations of up-to-date and comprehensible medical/health information.
In 2004, the Australian Government's Department of Health and Ageing (DoHA) invited telecommunications service providers to submit tenders for: •
•
The supply of EGRRS Broadband Services to participants in the EGRRS broadband initiative, to be paid for by DoHA for the Reference Site Period Provision of an EGRRS continuation plan under which participants may continue to acquire EGRRS broadband services for a further period of up to two years beyond the end of the reference site period at the same rates and on similar or better terms to
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those offered to DoHA for the reference site period. A network with managed Quality of Service was sought that could handle all potential applications as well as providing essential security and SULYDF\UHTXLUHGE\WKHVSHFL¿HGKHDOWKFRPPXnity. The successful tenderer for the network was IP Systems Pty Ltd http://www.ipsystems.com. au/industry_health_award.html.
Links Between the Reference Site and Other Australian Government Initiatives 7KHUHIHUHQFHVLWHIRUPHGDSDUWRIWKH'R+$¶V Broadband for Health program which draws together a number of government initiatives including the Access to Broadband Technology Initiative, to support whole-of-sector broadband connectivity. The Broadband for Health Program is a $60 million Australian Government program to provide broadband Internet access to GPs and aboriginal community controlled health services nationwide. The program is a key component of the $XVWUDOLDQ*RYHUQPHQW¶VUHYLVHG+HDOWKConnect LPSOHPHQWDWLRQVWUDWHJ\DQGUHSUHVHQWV'R+$¶V contribution to the national broadband strategy managed by the Department of Communications, Information Technology, and the Arts. HealthConnect aims to allow healthcare providers to securely transfer clinical information such as electronic referrals, hospital discharge summary reports, prescriptions, imaging and pathology requests, and results, and aims to create shared electronic health record repositories, guided by the iterations of National E-Health Transition Authority (NeHTA) ZLWK UHJDUGV WR VWDQGDUGV DQG VSHFL¿FDWLRQV IRU interoperability.
SCOPE OF THE PROJECT The physical locations of EGRRS participants were linked together by a Virtual Private Network, with GLIIHUHQWIRUPVRIWHFKQRORJ\ RSWLFDO¿EHU'6/
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and satellite) providing the link from each site into the core network. The participants in the project comprised approximately 81 sites made up of 22 medical practices (health points) and 39 home points in rural Western Australia. Also involved were the (*0'*3RI¿FHVDW.DOJRRUOLHDQG(VSHUDQFHWKH Kalgoorlie and Esperance Hospitals, a pathology laboratory, a radiology service, three KalgoorlieBoulder pharmacies, a University Rural Clinical School, and the Royal Flying Doctor Service. The scope of the project included these “Core” applications: Fast Internet access (at the surgery DQG DW GRFWRUV¶ KRPHV IRU PHGLFDO LQIRUPDWLRQ and other purposes, secure e-mail (at the surgery DQGDWGRFWRUV¶KRPHV DFFHVVWRMedicare Online Claiming; VOIP telephony (both entry level and full IP telephony), desktop videoconferencing and boardroom videoconferencing, remote after hours access from home or a hospital to the surgery practice management system, and other applications UHVLGLQJRQHDFKSUDFWLFH¶VVHUYHU Also included were additional medical applications which broadly fell into four categories: (1) online education and peer support, (2) clinical therapeutic guidelines, resources and information services, (3) clinical applications, and (4) new technologies and small business tools relevant to healthcare providers.
INDEPENDENT EVALUATION For the formal evaluation, DOHA appointed a multidisciplinary team led by Peter Farr Consultants Australasia. Their task was to thoroughly examine WKUHHGRPDLQV HI¿FLHQF\FRVWHIIHFWLYHQHVVDQG appropriateness, and the ability of the network to be replicated elsewhere. The methodology used was a pragmatic or “mixed methods” methodology, involving the collection and analysis of extensive quantitative and qualitative data. Relevant information for the evaluation was obtained from a very wide range of sources over a period of 16 months. The use of controlled test scenarios was an innovative method used in the evaluation. Volun-
Improving Health Services via Advanced ICT Networks
teer doctors participated in realistic exercises that provided contextual use of the various e-health technologies. This enabled the doctors to envision the future, and consider how various technologies could be adapted or appropriated (Carroll, 2002). Examples included desktop videoconferencing and e-mailing images and other attachments. (The scenarios used related to dermatology and obstetrics cases). The test scenarios also served to help technically test the technology infrastructure and its appropriateness. Recognizing that the gains or losses that might accrue from the reference site are likely to vary according to the intended target or user, the nature RIWKHDSSOLFDWLRQDQGWKHVSHFL¿FWHFKQRORJLFDO FRQ¿JXUDWLRQ WKDW LV XVHG D WKUHHGLPHQVLRQDO model linking health work, users and target groups, and technologies was developed and is depicted in Figure 1. The executive summary of the project evaluation is available—see Department of Health and
Ageing (2007a), together with a write up of the lessons learnt—see Department of Health and Ageing (2007b).
GOVERNANCE It was never considered feasible for a regional health information network of the scale of EGRRS to operate informally. Accordingly, the overall governance structure in place during the EGRRS project period comprised (Peel, 2006): DoHA (the sponsor and funder), working cooperatively with the EGMDGP, EGRRS advisory committee, and EGRRS stakeholder reference group The network contractor (IP Systems) The evaluator (Peter Farr Consultants Australasia).
•
• •
ch no lo gi es
Figure 1. Three-dimensional model for the reference site evaluation
Te m un ic at ion s
Specific medical applications
Video
Internet
E-mail etc
Public health education
Medical education / professional development
Voice comms
Administration, Practice Management System, etc.
Practice Principals & other Doctors
In fo rm at io n
Practice Admin. Staff
an d
Co m
Patients
Clinical
Evaluation Perspectives
Community (Society)
Focus of General Practice and Specialist Work
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NETWORK SOLUTION The technology foundation of the reference site was the Cisco Medical Grade Network which is designed to meet the rigorous security and performance requirements of healthcare organizations. The Cisco Medical Grade Network can be tailored to suit all types of healthcare organizations, from large scale hospitals to the smallest rural healthcare practice. Utilizing cutting edge network technology, a robust and scalable network infrastructure can be built to support various medical and applications (Cisco, 2005). For EGRRS, the network consisted of a mix of Cisco routers and switches deployed over more than 80 sites across the region. For IP telephony, a mixture of Cisco IP phones and Cisco analogue telephone adapters were deployed at medical practices and the EGMDGP (Cisco, 2005).
EDQGFRQQHFWLRQVXVLQJDPL[RIRSWLFDO¿EHUDQG DSL from a carrier (Telstra) and two-way satellite from PanAmSat. IP Systems installed its own Cisco routers in Kalgoorlie so that the group of VLWHVLQWKH(DVWHUQ*ROG¿HOGVFRXOGEHURXWHGWR its national backbone network. In this phase, onsite training was conducted in regard to Internet, e-mail, IP telephony, role of the help desk, and so forth. In Phase 2, IP Systems connected in further sites and revisited the Phase 1 sites for refresher WUDLQLQJ DQG DGGUHVVLQJ VSHFL¿F SUREOHPV DQG issues. The EGRRS project team considered that using the staged approach to rollout of network and applications would give time for users to develop skills for each type of technology or application prior to the next “new thing” being deployed. A network schematic is shown in Figure 2.
Network Rollout
ADDITIONAL MEDICAL APPLICATIONS
IP Systems installed the majority of the network points in March-April 2005, the endpoint broad-
The value of broadband is principally in two WKLQJV²WKH¿UVWWKDWLWLV³DOZD\VRQ´DQGVHFRQG
Figure 2. Diagrammatic representation of EGRRS
Source: IP Systems (2006).
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via the convenient/quick/cheap access it gives to relevant content and relevant applications. The suite of additional e-health applications that formed part of EGRRS addresses the latter consideration and was vital in increasing the “value proposition” for GoldHealth. Through an expression of interest process the EGMDGP invited software vendors, education institutions, and other interested parties to propose applications to be hosted on the network. A list of “additional” applications was selected and implemented. Training and support was provided by the suppliers of the additional applications and the EGMDGP project staff. The GoldHealth Additional Applications portal was launched at the end of October 2005, the rationale being that an applications portal would assist the participants in seamlessly accessing the whole range of applications (Farr, October 2006).
HEALTHCARE VALUE The DoHA is quoted (Cisco, 2005) as being very optimistic in advance of the rollout about the potenWLDOEHQH¿WVWKDWWKHUHIHUHQFHVLWHFRXOGSURYLGH "Broadband is a key enabler for e-health applications such as HealthConnect, a system of electronic health records with cross-jurisdictional support in Australia. This type of cutting edge technology has not been experienced by participants in the past. Participants are gradually increasing their knowledge of the technology and potential for associated applications. As people become more aware of the capacity of the infrastructure, there are many ideas coming forward from the participants themselves to innovate the way they currently communicate." At its core, the EGRRS aimed to bridge the geographical distances that separate healthcare practices within the large area. The ability to transmit digital data at high speeds across such distances vastly improves the ability of the healthcare practitioner to share information and receive peer support. Participants in the reference site were able to use e-mail, access the Internet at broadband speeds, and make voice calls via IP telephony. Sites had the ability to access clinical and educational
information directly from the source, thus keeping themselves up-to-date with best practices. Additionally, they were able to: • • • •
Receive radiology and pathology reports electronically Transmit clinical images electronically to specialists for review Transmit and receive specialist reports without the need for scanning Connect to the Medicare Online Claiming to DFFHVVVHUYLFHVVXFKDVLQVXUDQFHDQGEHQH¿WV information, claims, and processing, as well as immunization and organ donor registry lookups.
Through the various channels of communication available on the network, collaboration between sites was made easier, fostering a sense of community among the caregivers. As an addiWLRQDOEHQH¿WWKLVFDQDOVRFRQWULEXWHWRWKHDELOLW\ to retain and attract more healthcare workers to the region. The use of IP telephony allowed on-net voice calls to be made at a reduced cost compared with conventional telephony. Since IP calls travel as digital data along the high-speed network, quality DQG¿GHOLW\LVNHSWDWDKLJKOHYHOXVLQJ4R66WDII members from any of the sites are able to make voice calls without incurring any long distance charges. With the VPN, staff members who move between sites had a convenient way to stay connected. Routine technical maintenance and support could also be done remotely, thus saving the time and cost of physical travel. Video conferencing has also provided healthcare practitioners within the region the ability to conduct and receive training remotely. A government spokesperson is quoted in a publicly available case study (Cisco, 2005) as saying: "For the most part, many of the health professionals involved in the project are minimal users of IT. There are some advanced users, or 'champions,' which are important people in terms of creating acceptability and understanding of the technology. Desktop videoconferencing capability will enable a practitioner to conduct remote consultations,
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Improving Health Services via Advanced ICT Networks
undertake education, and attend professional meetings without the need to travel." One important aspect of EGRRS is its ability to scale incrementally to future growth. Additional hardware and software can be added without the QHHG IRU D GUDVWLF UHFRQ¿JXUDWLRQ +HQFH WKLV network becomes the seed from which further expansion and added services can be incorporated in the future. Additional applications which may be explored include backup services and disaster recovery—potentially important for small-medium enterprises (SMEs).
DISCUSSION 2YHUDOOWKHSURMHFW¶V¿QGLQJVFRQ¿UPWKHNQRZOedge gained from research into similar projects involving the integration of new technologies. Broadly, the research suggests that diffusion of new technologies generally follows an “S” shape over time, with low take-up in the early months/years, then an increase in the rate of take-up, when network HIIHFWVVWDUWWREHFRPHVLJQL¿FDQWDQGDSSDUHQWWR the group of people for whom the technology is intended. This is consistent with the innovation adoption curve of Rogers (1995). Leonard (2004) has reported that once the decision to adopt a technology has been made, regardless of the industry, the amount of work required by the business increases until the new system is working effectively. How much the workload increases, and how long this effect lasts, has been OLQNHGWR¿YHFULWLFDOVXFFHVVIDFWRUV 1. 2. 3. 4. 5.
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The amount of resistance to change and experience in using technology The amount of training before and during the transition The amount of buy in, or contribution from stakeholder groups The level of effective reporting on outcome measures during and after implementation The level of effectiveness in dealing with “breaks” (i.e., setbacks)
An aspect that was certainly to be considHUHGEHQH¿FLDOZDVWKHGHYHORSPHQWRIVWURQJHU relationships between participants (and with the EGMDGP) during the course of the project through project-related activities and events, including camaraderie-building social events. Members of the project visited participants many times which generally involved extensive travel. They also made a big effort to balance work priorities with social activities for the project. This balance is important in service delivery for health networks, and should not be underestimated. The major technical hurdles encountered were the technical problems affecting IP telephones and the satellite connected services. An aspect that did not reach initial expectations for practitioners in rural and remote areas was onnet videoconferencing. Along with the voice over IP, this technology required the implementation of quality of service, which comes at a cost. Training and support also were issues, compounded by staff turnover at medical practices. Limitations also arose from the relatively low OHYHO RI ,&7 FRQ¿GHQFH RI PDQ\ SDUWLFLSDQWV DW the commencement of the project. The executive summary of the project evaluation is available—see Department of Health and Ageing (2007a), together with a write up of the lessons learnt—see Department of Health and Ageing (2007b).
SUSTAINABILITY The initial set-up funding included both capital funding to establish the GoldHealth VPN and its associated services as well as the operational fundLQJDQGVXSSRUWIRUDVXI¿FLHQWSHULRGWRHQDEOH EGRRS to reach a viable level of operation and VHUYLFH)XQGLQJRIWKHSURMHFWE\'R+$¿QLVKHG as scheduled in June 2006. Farr and Papandrea (2006) have found that the various factors that contribute to sustainability for community ICT facilities can be grouped into these three key interdependent dimensions:
Improving Health Services via Advanced ICT Networks
Figure 3. Diagrammatic representation of the sustainability model for community ICT facilities Financial Resources
SUSTAINABILITY Community Empowerment & Socio-Economic Impact
• •
Financial resources Community empowerment and socioeconomic impact (I¿FLHQWRSHUDWLRQVDQGVXSSRUWV\VWHPV
The interrelationship between these three key dimensions is illustrated in Figure 3. Each of these three dimensions is critical to the viability of a managed health network. Also, because of the interrelationship between the GLPHQVLRQV LQVXI¿FLHQW DWWHQWLRQ WR DQ\ RQH RI them will be likely to have an adverse impact on the other two. It is the nature of ICT projects that there are economies of scale via aggregation and other means. If there are too few active participants over a very dispersed area, it will probably be uneconomic to offer or maintain a sophisticated service in the EGRRS style.
THE FUTURE With respect to “testing” and “demonstrating” the EHQH¿WVWKLVLVDQRQJRLQJDFWLYLW\IRU*ROG+HDOWK which is the name the EGRRS project was carried forward under from July 2006. The great majority of participants signed up from July 2006 to continue with a network connection (IP Systems, 2006; Siegmund, 2006). Continuity of governance arrangements has occurred as a result of putting in
Efficient Operations & Support Systems
place in July of 2006 a GoldHealth advisory committee and a stakeholders reference group. 6SHFL¿FLPSDFWVRI(*556RQFRQWHPSRUDQHous policy considerations or decisions include the aspect that the project has helped to inform the general development of change management around HKHDOWK7KHUHDUHDQXPEHURIVSHFL¿FRXWFRPHV that DoHA is believed to have taken forward from a policy perspective as a result of this project, including the Security Awareness and Conformance Report for the Broadband for Health program, the managed health network grants which have been VLJQL¿FDQWO\LQIRUPHGE\WKH(*556H[SHULHQFH especially considerations of change management and governance of such projects (Peel, 2006). Wider issues around broadband infrastructure and access for the health sector, especially in remote areas, have also been informed by this project and are being followed through at the national broadband policy level. The local division of general practice was well VDWLV¿HGZLWKWKH(*556SURMHFW³,WKDVEHHQVR well received by participants that it is now able to be sustained as a viable network under the name of GoldHealth,” said the CEO of the EGMDGP. “The GPs and practices throughout the region have embraced the concept and recognized that there DUHVLJQL¿FDQWEHQH¿WV-XVWDVLPSRUWDQWO\*3V throughout the region have realized that e-health is a part of the future of medicine and primary
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care and GoldHealth is at the forefront of it” (IP Systems, 2006). It is considered that health communities are needed from which lessons can be learned in terms of standards generally and in particular those needed for electronic pharmaceutical prescriptions, hospital discharge summaries, a standard e-health record, and interoperability issues. The Eastern *ROG¿HOGVKHDOWKSURYLGHUFRPPXQLW\LVLGHDOO\ placed to provide such a reference point. A central agency that can support network users is also a key success factor in projects of this nature and this involvement, when at a detailed level rather than just a bystander role, can help to inform policy.
CONCLUSION The establishment of managed health networks LQ UXUDO DQG UHPRWH FRPPXQLWLHV UHÀHFWV WKH pursuit of the social policy objective of providing healthcare providers and clients with access to ICT services that are indispensable to their well-being at reasonable and affordable prices. Evidence from EGRRS shows that such a managed health network can cut down a feeling of isolation and “falling on the wrong side of the digital divide.” It can lead to the development of many new skills along with long-term employment opportunities, economic development, and a greater ability to cope with change. The medical practices and pharmacies involved in EGRRS are SMEs and key aspects of ICTs for them from a project of this nature are the impact on costs, productivity, and customer service. EGRRS has proven that a VPN can be created to suit the majority of a wide range of healthcare service providers. The network has been leveraged to deliver DSSOLFDWLRQVLQDPHDQLQJIXOWDLORUHGDQGÀH[LEOH way that can continue to grow with the changing needs of the participants and the network. Partly from this evidence, GoldHealth was a joint winner of the “Best Regional Communications Solution” at the Australian Telecommunications Users Group 2006 awards. )XQGLQJ RI WKH SURMHFW E\ 'R+$ ¿QLVKHG LQ June 2006 and, on a self-standing basis, the great
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majority of health point sites continued as part of the GoldHealth network beginning in July of 2006. The managed VPN which is well bedded down enables the local division of general practice to have control, to decide who can be part of the network. It also controls the applications that are made available, and can broker the commercial conditions between the service providers and the participants.
REFERENCES Bourke, L. (2001). Rural health consumers of health issues. Australian Journal of Rural Health, 9(1), 1-6. Carroll, J., Howard, S., Vetere, F., Peck, J., & Murphy, J. (2002, January). Just what do the youth of today want? Technology appropriation by young people. In 3URFHHGLQJVRIWKHWK+DZDLL InternationalConference on System Sciences (HICSS-34), Maui, Hawaii. Institute of Electrical and Electronics Engineers, Inc. Cisco. (2005). Connected health in western Australia with Cisco medical grade network infrastructure. Retrieved July 19, 2007, from http://www. cisco.com/web/strategy/docs/healthcare/KalgoorlieCaseStudy.pdf Coiera, E. (2002). Interaction design theory. International Journal of Medical Informatics, (00), 1-18. Coiera, E. (2004). Four rules for the reinvention of healthcare. British Medical Journal, 328, 11971199. Department of Health and Ageing. (2007a). (DVWHUQ JROG¿HOGV UHJLRQDO UHIHUHQFH VLWH GHYHOopment phase report summary. Retrieved December 28, 2007, from http://www.healthconnect. gov.au/internet/wcms/publishing.nsf/Content/ B2D8D97206D4CCB4CA256F18004FBF7F/ $File/EGRRS%20Executive%20Summary%20F INAL.pdf Department of Health and Ageing. (2007b). (DVWHUQ JROG¿HOGV UHJLRQDO UHIHUHQFH VLWH GHYHO-
Improving Health Services via Advanced ICT Networks
opment phase lessons learnt. Retrieved December 28, 2007, from http://www.healthconnect. gov.au/internet/wcms/publishing.nsf/Content/ B2D8D97206D4CCB4CA256F18004FBF7F/ $File/EGR RS%20Lessons%20Lear nt%20%20FINAL.pdf (DVWHUQ*ROG¿HOGV0HGLFDO'LYLVLRQRI*HQHUDO 3UDFWLFH7KH(DVWHUQ*ROG¿HOGV5HJLRQDO5HIHUence Site (EGRRS). Retrieved Jul 19, 2007, from http://www.egmdgp.com.au/Eastern%20Goldf ields%20Regional%20Reference%20Site/eastHUQBJROG¿HOGVBUHJLRQDOBUHIHKWm Farr, P. (2006, October). Bandwidth connectivity and online content. Innovative strategies for the education and health sectors. Paper presented at ICT WA 2006 Conference, Perth, Australia. Retrieved July 19, 2007, from http://www.ictwa. org.au/program/Peter%20Farr%20ICTWA%202 7Oct06.pdf Farr, P., & Papandrea, F. (2006). Sustainability of community online access centers. In Priessl, B., & Muller, J. (eds.), Governance of communications networks—connecting societies and markets with IT (pp. 165-186). Heidelberg, Germany: PhysicaVerlag. Hersh, W.R. (2002). Medical informatics: Improving health care through information. Journal of the American Medical Association, 288, 1955-1958. IP Systems. (2006, July 17). As good as gold—rural GPs prepared to pay for technology which provides better healthcare connections than doctors have in Australian cities (Media Release). Retrieved July 19, 2007, from URL: http://www.ipsystems.com. au/industry_health_rural.html Kaur, K., Forducey, P.G., Smith, L., & Scheideman-Miller (2005). Organizational effectiveness of a telerehabilitation system in Oklahoma. Telemedicine Journal and E-Health, 10(Suppl. 1), S29. Leonard, K.J. (2004). Critical success factors relating to healthcares adoption of new technology: A guide to increasing the likelihood of success. Electronic Healthcare, 2(4).
National Health Information Management Advisory Council. (2001). Health online: A health information action plan for Australia (2nd ed). Canberra, Australia: Department of Health and Aged Care. Peel, N. (2006, April 5). GPs making a differHQFHLQWKHHDVWHUQJROG¿HOGV Paper presented at CHIK Health-E-Nation Conference, Melbourne, Australia. Rogers, E.M. (1995). Diffusion of innovations (4th ed.). New York: The Free Press. Siegmund, A. (2006, May). Connecting rural clinicians. Paper presented at ATUG 2006 Regional Conference. Retrieved July 19, 2007, from www. atug.com.au/ATUG2006RegionalConf/DrAndrewSiegmundPresATUG2006RegConf.pdf Simmons, D., & Hsu-Hage, B. (2001). Determinates of health, disease, and disability. In D. Wilkinson (Ed.), Rural health in Australia (pp.79-93). Melbourne: Oxford University Press.
KEY TERMS Virtual Private Network (VPN): A hybrid network that includes both public and private facilities. The user leases a bundle of circuits and FRQ¿JXUHVWKH931RQDQDVQHHGHGEDVLVVRWKDW VRPHWUDI¿FWUDYHOVRQWKHSULYDWHOHDVHGQHWZRUN DQGVRPHWUDYHOVRQWKHFRPPRQFDUULHU¶VSXEOLF network. E-Health: AQHPHUJLQJ¿HOGLQWKHLQWHUVHFWLRQ of medical informatics, public health, and business, referring to health services and information delivered or enhanced through the Internet and related technologies. Technology Diffusion Curve: The innovation DGRSWLRQFXUYHRI5RJHUVLVDPRGHOWKDWFODVVL¿HV adopters of innovations into various categories based on the idea that certain individuals are inevitably more open to adaptation than others. It is also called diffusion of innovations theory.
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Chapter XXXVIII
Remote Patient Monitoring in Residential Care Homes: Using Wireless and Broadband Networks Tanja Bratan Brunel University, UK Malcolm Clarke Brunel University, UK Joanna Fursse Brunel University, UK Russell Jones Chorleywood Health Center, UK
ABSTRACT The UK’s National Health Service (NHS) is undergoing great reform. Driven by a demand for higher quality health care provision, information and communication technologies (ICT) are increasingly being used as tools to realize this change. We have investigated the use of remote patient monitoring (RPM), using wireless and broadband networks, in three community care homes between July 2003 and January 2006. The aim of the project was to determine for what conditions and in which setting the RPM was most useful and to establish an organizational and clinical infrastructure to support it. Evaluation of WKHSURMHFWGHPRQVWUDWHGFOLQLFDOEHQH¿WVVXFKDVWKHHDUO\GHWHFWLRQRIFDUGLDFHYHQWVDOORZLQJSURPSW intervention and routine monitoring of other conditions. A change in work practices resulted in a more collaborative approach to patient management and led to an increase in communication between health care professionals from different sectors, as well as the establishment of protocols for seeking advice. Technically, the equipment largely met the users’ needs. In conclusion, the monitoring proved a useful tool for the management of chronic diseases and has great potential to contribute to the reform of the NHS.
Copyright © 2008, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Remote Patient Monitoring in Residential Care Homes
INTRODUCTION 7KH8.¶V1DWLRQDO+HDOWK6HUYLFH 1+6 KDVEHHQ and continues to be subject to major change. Driven by an increase in expectations, together with an aging population and the availability of new medical technologies (Department of Health, 2006), the government presented its vision for reform of the NHS in the NHS Plan in 2000. The main themes of this plan were to: (1) develop a service that would offer prompt and convenient care; (2) enable rapid access to diagnosis and treatment in modern facilities; and (3) give patients the choice over the time, place, and personnel involved in their treatment (Department of Health, 2001). Central to the plan was the creation of the National Program for IT (NPfIT), the largest IT program in the world. A national data spine and a national broadband network (N3) were designed to connect health care providers to a central secure system (Calkin et al., 1999) and support many e-health initiatives. These initiatives include the electronic patient record, repeat prescription, choose and book, as well as KHOSZLWKSUR¿OLQJFOLQLFDOJRYHUQDQFHDQGUHXVH of data (Department of Health, 2002). HKHDOWKLVDQXPEUHOODWHUPDQGFDQEHGH¿QHG as “the application of information and communications technologies (ICT) across the whole range of functions which, one way or another, affect the health of citizens and patients” (Maheu et al., 2001). This ranges from medical applications such as telemedicine, remote patient monitoring, and electronic patient records to telecare and beyond to tools that empower patients such as health Web sites. The objectives of this chapter are to: • • •
Inform the reader about the potential of ICTs to reform health care Demonstrate the application of ICTs in form RIDVSHFL¿FHKHDOWKFDVHVWXG\ Discuss future trends in the area
The case study, e-Vital, was a feasibility and market validation project providing remote patient monitoring (RPM). The UK element of the project investigated the use of RPM in two residential
care homes and one nursing home. The work was novel in that it exploited new forms of technology, wireless and broadband networks, to provide the communication infrastructure to small health care organizations.
BACKGROUND As the number of elderly people in society continues to grow, so do the health care costs associated with this section of the population and the need to ¿QGDPHDQVIRUHI¿FLHQWDQGHIIHFWLYHSURYLVLRQ of health care. Continued aging of the population LVLQHYLWDEOHGXULQJWKH¿UVWKDOIRIWKLVFHQWXU\DV the relatively large number of people born after the Second World War and during the 1960s baby boom become older (British National Statistics: Ageing, 2005). Chronic disease is more prevalent among the elderly, with almost 75% of the over 65 year-olds suffering from at least one chronic disease, while nearly 50% have two or more (Calkins, Boult, & Wagner, 1999). Many require frequent medical attention, both in a clinical environment and at home. As a result of cost-issues, over-crowded hospitals, and the preference of elderly people to remain in their normal environment, there has been a trend to move away from hospital-based health care to home-based health care (Maheu, Whitten, & Allen, 2001). The UK government has been actively promoting home-based health care as part of its program to move services into the community (Wistow, 2000). It has recently made available 80 million pounds for preventative technologies over a 2 year period (TeHIP, 2005). It is speculated that with the provision of home care services, patients can live in their usual environment for longer, thus DYRLGLQJWKHKRWHOFRVWVRIKRVSLWDO WKHSDWLHQWV¶ own care-givers can provide no-cost nursing; and the actual costs of primary care are often lower than the equivalent service provided from hospital (Hersh et al., 2002).
Remote Patient Monitoring 530FDQEHGH¿QHGDVWKHPRQLWRULQJRISK\VLological measurements in a setting other than a 605
Remote Patient Monitoring in Residential Care Homes
hospital, using ICTs to transfer data over geographical distances. It has the potential to offer a convenient and cost-effective solution for the problems described. Information such as blood pressure, respiration, temperature, weight, blood oxygen saturation (SpO2), glucose monitoring, SHDNH[SLUDWRU\ÀRZDQGUHPRWH(&*PRQLWRUing can be collected and transmitted (Bratten & Cody, 2000). Currently, most RPM takes place in WKHSDWLHQW¶VRZQKRPH There are three main reasons for remote patient monitoring: (1) the prevention of hospital admissions through early detection of deterioration, (2) prompt hospital admission where indicated, and (3) the provision of hospital-like services in the home, which might facilitate keeping patients at home and out of hospital or early discharge from hospital and the follow-up care in the home. The aim of each is to triage cases so that resources can be allocated according to need and that patients receive the most appropriate form of care for their condition at the time they need it. %HQH¿WVLQFOXGH •
•
•
Early discharge of patients from hospital, as it can provide an alternative to hospital monitoring Help in identifying deterioration early and thus either expedition of hospitalization or prompt treatment resulting in a reduced number of unnecessary admissions, and enabling of prompt emergency response (Bratan et al., 2005) Allowing for health care professionals to look after a greater number of patients as they FDQGRVRIURPWKHLURI¿FHV HJ'HPHULV 2004)
There are three distinct types of RPM: (1) chronic disease management which might also include other regular monitoring for example during pregnancy, (2) acute monitoring, and (3) ambulatory monitoring. Diagnostics, which have a different purpose, for example, Holter ECG monitoring, will not be covered in this chapter.
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1.
2.
3.
Chronic and other disease management: This is currently the most common form of RPM. Measurements are taken on a periodic or regular basis, for example, daily, and data is forwarded to the data store usually without processing. The purpose is to GHWHFW D VLJQL¿FDQW FKDQJH LQ D SDUDPHWHU over a period of time, which may be an early indicator of deterioration and would indicate that intervention in therapy may be required. The most important aspect of designing such D VHUYLFH LV WR GH¿QH WKH FOLQLFDO UHVSRQVH and the intervention in the pathway of care, DQGLPSRUWDQWO\KRZLWPD\¿WZLWKLQWKH existing organizational structures. The most commonly measured data includes blood pressure, weight, and oxygen saturation of the blood (SpO2). Data are frequently measured by the patients themselves. Chronic heart failure (CHF) and chronic obstructive pulmonary disease (COPD) are the most commonly monitored diseases. Acute: The purpose is to monitor a patient in situations where there might be a sudden or rapid deterioration in condition which must receive prompt medical intervention. This can include acute exacerbation of a chronic disease, cardiac conditions, stroke, or post operative care. Data from vital signs will have to be sent on a near continuous basis and would include ECG, SpO2, temperature, and blood pressure. The requirement in design is to ensure that the clinical response is capable of rapid intervention and would include provision of professional medical personnel close to hand. Ambulatory: In this form of monitoring, the goal is to identify a critical and sudden change in the vital sign in an otherwise reasonably healthy person, for example a prolonged ST segment change (a part of the ECG wave) in an ischemic patient that might be the early indicator of imminent myocardial infarction. This requires that the signal be monitored continuously and algorithms be used to detect an event. The system must be capable of sending an alarm, and, ideally, data representative of
Remote Patient Monitoring in Residential Care Homes
Figure 1. Patient being monitored with the telemonitor
the event. The system should allow the patient mobility and be designed to operate within a range of environments, such as within the home or the community, and so is likely to be based on wireless communication.
E-VITAL CASE STUDY The e-Vital project established a monitoring service in three community care homes (two residential homes and one nursing home) and investigated its use in this environment. Community care homes are characterised by having a large proportion of dependent and semidependent residents who often suffer from multiple chronic diseases and frequently require medical attention. They also have residential staff members who are either mediFDOO\TXDOL¿HG LQWKHFDVHRIWKHQXUVLQJKRPH or have some medical training (in the case of the residential care home). RPM was seen as supporting the staff members in the management of their residents. They are responsible for their care and well-being. With training, they are able to apply and use the monitoring system to gather data for
onward transmission to a health care professional to provide support and advice. 7KH ¿UVW SKDVH RI WKH H9LWDO SURMHFW ZDV WR evaluate the practical feasibility and acceptability of the monitoring. The second phase determined the impact of the monitoring on clinical outcomes, organizational and human factors, and technical issues. This chapter discusses the outcomes of both phases, although it focuses on the second phase.
Set-Up The three community care homes within Watford and Three Rivers Primary Care Trust (PCT) to the northwest of London were equipped with a telemonitor from RGB Medical Devices, S.A/Spain. The telemonitors were able to measure several parameters including 7-lead ECG, blood pressure, oxygen saturation (SpO2), heart rate, temperature, and respiration, and were designed to support monitoring of conditions that commonly occur in a community care home setting, including cardiac and pulmonary diseases. As such, they were to be operated in a nonclinical environment by nonmedical personnel. If one of the residents gave cause for concern in their condition, physiological measure-
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Remote Patient Monitoring in Residential Care Homes
Figure 2. The network architecture in the pilot sites
ments would be recorded and securely transmitted over the Internet to the data server. Residential staff members would then contact the health care professional to inform them of the situation and that data was available to be viewed, which was via a secure Web site. Figure 1 shows a patient being monitored. The overall network architecture for the system is shown in Figure 2. Monitoring devices were connected to the network in each community care home using a wireless local area network (WLAN EJ WRJLYHIUHHGRPDQGÀH[LELOLW\RISODFLQJ the devices according to the needs of the resident or staff. Recordings were most often made in the seclusion of the bedroom, although some routine measurements such as blood pressure were made in communal areas when convenient for the resident. The wireless network connected through an access point to an asymmetric digital subscriber line (ADSL) broadband router to provide access to
608
the public Internet. Data was transferred through a virtual private network (VPN) connection to the data server. The data was viewed by medical staff at the associated health center or local hospital through their connection to NHSNet, the regional KHDOWKQHWZRUNRIWKH8.¶V1DWLRQDO+HDOWK6HUYLFH Being a private managed network, this allowed no external access, and it was necessary to place the server outside of NHSNet. The community care homes were privately run and therefore not allowed access to NHSNet. Although innovative in its use of technology and designed as a feasibility study, it was important not to concentrate solely on the technical aspects but to also consider the processes, interactions, and impacts on the various stakeholders of the system. Failure to consider this has often resulted in unsuccessful implementations of information systems in the past (see Lyytinen & Hirschheim, 1987; Sauer, 1993).
Remote Patient Monitoring in Residential Care Homes
Process of Care The community care homes normally have a contract for care with the local general practitioner (GP) and the residents of each home are registered with the local health center. Routine health care, such as reviewing medication, chronic care follow up, and dealing with acute illness, is provided by the GP visiting the home on a regular basis. The GP would also make unscheduled visits to the home to deal with urgent problems. We have used the term community care home to refer to all institutions providing residential and in some cases also nursing care. The homes having individual bedrooms but share communal and living facilities and all meals are provided. However, the type of resident in such homes may vary from the very well, but usually aged, through to high dependency, with the latter referred to as QXUVLQJKRPHVDQGKDYLQJVHYHUDOZHOOTXDOL¿HG and experienced nursing staff. This population of the homes are characterized by individuals who become ill relatively frequently and whose health, often during an illness, can deteriorate rapidly. As a result, they require a relatively high level of medical intervention. In the case of sudden deterioration, there will be great concern over the well-being of the resident, and it is normal practice to seek medical assistance from the local GP on an emergency basis. However, help may often be sought out of hours for the GP service or at busy periods, and is not immediately available. This often results in the person being sent to the hospital by ambulance, often with accompanying stress and ordeal. One of the main aims of the project was therefore to reduce these unnecessary admissions to the hospital. As part of this, we investigated for which conditions and in which setting the monitoring would be most useful.
carer, one nurse, and the technical director. We developed a theoretical model and framework for factors important for successful implementation of an ICT project in health care and in particular related to e-health. This was used to underpin the design of the project and to direct the interview questions.
Evaluation: Findings from the Literature It has been suggested that the evaluation of e-health projects is highly complex. Research teams tend to underestimate the technical and organizational complexity of the task, which leads to problems VHOHFWLQJ DQG LQVWDOOLQJ HTXLSPHQW DQG GLI¿FXOties in interpreting the data collected (May et al., 2002). Wootton and Hebert (2001) state that before evaluating a telehealth project, an understanding of what constitutes success is necessary. Listed below are evaluation criteria adapted from the authors. It is emphasized, however, that telehealth projects must be considered in relative, not absolute terms, that is, “success cannot be judged in isolation” (Wootton & Hebert, 2001, p.6). This means that success depends on the perspective and on the available alternatives. If no other health care is available for instance, telehealth will always be preferable, even if it is clinically inferior to conventional health care. Success can also depend on the perspective adopted, such as that of the clinician, the patient, the health care provider, or society as a whole, and so forth. Consequently, there is “no single criterion for success,” but the most relevant criteria should be applied (May et al., 2002). As an overall guideline, it is suggested that success in telehealth can be measured in the extent to which it has contributed to the provision and maintenance of a health service (Hailey, 2001). :RRWWRQDQG+HEHUW LGHQWL¿HGWKHIROORZing indicators for success in e-health projects:
Design of the Project A qualitative evaluation was used to assess the success of the monitoring in each home. This was based on semistructured interviews with key members of staff: two doctors, four managers, one
• • •
Routine operation High activity levels &OLQLFDOHI¿FDF\ Cost-effectiveness
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Remote Patient Monitoring in Residential Care Homes
• • • •
$GHTXDWH¿QDQFLQJ QRVSHFLDOIXQGLQJDUrangements required) Acceptance by clinicians Acceptance by patients Improved access to health care, particularly in rural and remote areas Reduction of travel
Although these apply to service programs rather than pilot services, many indicators are still useful for evaluating pilots and can give an indication of the “maturity” of the project. In the next section, e-Vital will be compared to the above indicators, DQG RWKHU ¿QGLQJV IURP WKH HYDOXDWLRQ ZLOO EH SUHVHQWHG7KH¿QGLQJVDUHGLYLGHGLQWRFOLQLFDO organizational, human, and technical issues.
Findings from the Case Study Clinical Outcomes Thirty residents were monitored for various condiWLRQVDQGLQGLYLGXDOVSHFL¿FFDVHVRIUHVSLUDWRU\ disorders, cardiac problems, high blood pressure, diabetes, and renal problems. Generally, the monitoring was used to investigate residents who were unwell, and in most cases the outcome was that no
Figure 3. Existing clinical pathway
Hospital
Resident Enters Home
Emergency
Clinical Organization
Residential Nursing Home
Clinical Services Given
Resident Registered
Local Surgery
610
immediate action was required. However, in these cases it did reassure the staff whether a resident needed to be seen by a doctor or not. ,QWKUHHFDVHV DVLJQL¿FDQWFDUGLDFHYHQW (two asymptomatic myocardial infarctions and one pericardial effusion) was found and permitted a prompt response, and, in one case, controlled admission to hospital. We are unable to comment on the outcome of such patients without RPM; however, response time can be critical for the outcome for the patient. We are also unable to quantify how many admissions may have been avoided, as the effect of RPM is not always direct. But use and experience of the technology, improved awareness, and closer professional relationships also impact on how patients are managed in an RPM environment. Staff members learn to be more proactive, take increased responsibility, and become more autonomous (Aas, 2000) and this will have an impact on admissions. E-Vital demonstrated that RPM in residential homes has value. We envisioned that it could reduce unnecessary admission to hospital, saving cost and discomfort for the resident. In the event, our system diagnosed several cases of silent myocardial infarction, which otherwise would have gone undiagnosed and untreated. Incidence of this type is to be expected in the environment of the comPXQLW\FDUHKRPHZLWKLWVVLJQL¿FDQWSRSXODWLRQ of elderly residents having existing disease, and with increased experience of use we would expect such systems to have greater value. Furthermore, we would also expect such a system in the future to include the capability to perform routine daily measurements on patients to manage residents with chronic disease.
Patient care pathways were used as a methodology to plan the introduction of the technology. The pathway before the introduction of the RPM system shows how residents giving concern were normally immediately sent to hospital (Figure 3). Many such admissions were unnecessary and resulted in residents spending long periods waiting in the accident and emergency department. This could cause distress to the resident and their
Remote Patient Monitoring in Residential Care Homes
Figure 4. E-vital pathway of care Resident Enters Home Possible Emergency Residential Nursing Home
Telemonitor Routine Monitor
Clinical Services Given
Resident Registered
Emergency
Hospital
Local Surgery
family, and might also lead to the unnecessary occupation of hospital beds. Introducing RPM into the pathway, as shown in Figure 4, allowed staff members to triage cases and so determine those needing admission to hospital or those who could safely remain in the home. In this system only the information moved, not the patient or the GP.
Organizational Factors The effects of introducing technology to an organization are well known (Aas, 2001) and must be well planned and considered. Staff members must adopt new working practices, be introduced to and trained on new equipment, learn new skills, and relate to new people or in new ways. In this project, staff members in the community care homes were expected to have more direct communication with staff at the health center regarding medical conditions and their management. They were to apply medical monitoring devices to take physiological measurements, which were, for many, new skills. Staff members in the health center had to access medical data from which decisions had to be taken without having direct access to the patients and on types of data to which they may not previously have been accustomed. New diagnostic and interpretive skills may have been required and access to expert skills and support found.
Other changes, such as daily routine could be affected. This might include learning how best to manage a situation such as when to review data in the busy schedule of a morning clinic, how to liaise with the staff of the community care home to elicit physical symptoms and condition, how to manage the patient, and learning the limits and capabilities of the system so that each health care professional felt safe and secure in later decisions. Users reported that they found their time expenditure “manageable,” but commented that they considered the support and encouragement from higher management to be critical and felt that the RPM system was more valuable when supported by their superiors. Meeting user requirements is one of the most important factors for a successful information system (Currie & Brown, 1997). The technical director therefore arranged two meetings with the staff before implementation and two during implementation in order to receive feedback and comments on the RPM system. This user involvement in setting up and conducting the trial proved WR EH YHU\ EHQH¿FLDO DQG FUHDWHG WKH QHFHVVDU\ trust and understanding between the medical and care staff as well as the research team. The system also built upon the existing relationship between each home and the GP.
611
Remote Patient Monitoring in Residential Care Homes
The time required to train the staff to use the equipment was relatively short and built upon existing skills. The staff members were quick to recognize the potential advantages of the system to improve patient care. Initially, key members RIWKHVWDIIZHUHLGHQWL¿HGDQGWUDLQHGXVLQJWKH concept of the champion (see the next section). Once established, training for other members of the staff was arranged. Although the staff members were shown how to access the data on the server in order to check the data was available, we had to stress that it was not their role to interpret the data; rather, that they should inform the GP that data was available and seek advice on management. Some confusion and concern about this role was found. We determined that ensuring each individual had a clear understanding of their role and how, when, and where to seek support was very important. Legal issues were encountered. During a routine inspection by the Commission for Social Care Inspection (CSCI) of one of the homes, it was decided that the staff did not possess the necessary skills to operate the RPM system. Use of such equipment was not considered normal. This decision was subsequently reversed after lengthy discussions.
Human Factors Communication between the staff of the community care homes and the health care professionals was key, as a greater level of communication than QRUPDOZDVUHTXLUHG:HWKHUHIRUHWRRNVSHFL¿F actions to develop the relationship between the SDUWLHV&RQ¿GHQFHLQWKHXVHRIWKHV\VWHPE\WKH home staff was important, and thus was affected by technical problems experienced early in the project. Staff members were sometimes reluctant to report problems, assuming that they were major and insurmountable. However, often, they were due to simple issues and quickly resolved. Having a clinical champion at each site was YLWDO:HWULHGWR¿QGDSHUVRQZKRZDVHQWKXVLDVWLF DERXWWKHPRQLWRULQJDQGKDGVXI¿FLHQWDXWKRULW\ WR LQÀXHQFH RWKHU PHPEHUV RI VWDII 7KH KRPH where the monitoring proved most successful was
612
the one with the most enthusiastic champion. The FKDPSLRQGHPRQVWUDWHGWKHEHQH¿WVRIWKHPRQLWRULQJWRWKHKRPH¶VPDQDJHPHQWDQGHQWKXVLDVP convinced others to use it. The response to using the system was generally very positive. Most members of staff embraced the system readily once they had been trained in its use. This can be explained by a shared interest in providing the highest level of care for the residents. However, resistance to the RPM system was also encountered. In this case, one of the GPs was uncooperative and this appeared to be as a result of DUHOXFWDQFHWRFKDQJHZRUNSUDFWLFHV6SHFL¿FDOO\ the GP refused to use a Web browser and insisted on the data being printed out and faxed. Good project management was essential. This LQFOXGHGKDYLQJFOHDUO\GH¿QHGSKDVHVRIIXQFWLRQDO XVHUUHTXLUHPHQWVDQGV\VWHPVSHFL¿FDWLRQSURcurement, implementation, training, and support %H\QRQ'DYLHV &RQÀLFWVZLWKWKHVXSSOLHUV were not encountered. This was attributed to the trust that had been formed between the technical director and supplier in the early stages of the project and had been built on an existing relationship.
Technical Issues The monitoring equipment chosen met most of the needs of the users. Overall, use was considered to be “easy” or “very easy” by all the community care home staff interviewed. This included setting up the monitor, attaching the sensors to the patient, taking a measurement, and transmitting the data. Data transmission was found to be unreliable on occasion, which was because of a number of wireless dead spots. This was resolved by extending the wireless network in the homes. Data access and presentation were considered acceptable, although suggestions for changes were made. Although the telemonitor was considered easy to use, some commented that it was cumbersome to move around due to its size and weight. We observed that the staff could quickly and easily become demoralized in use of the equipment folORZLQJWHFKQLFDOSUREOHPV,WFRXOGWDNHVLJQL¿FDQW effort to restore trust. We would advocate expend-
Remote Patient Monitoring in Residential Care Homes
ing effort early in a project to ensure reliability of equipment, training, and familiarizing users with the equipment and establishing good support mechanisms.
Comparison Against the Indicators for Success The project may be evaluated against the indicators for success of Wootton and Hebert (2001), as shown in Table 1. Five of the eight indicators for success were met. However, the project was designed as a pilot, and so was not integrated into routine health care or ¿QDQFLDOO\VXVWDLQDEOH,WVKRZHGJRRGDFFHSWDQFH and good clinical results, which were the objectives for the project.
Comparison of Sites The nursing home differed from the residential homes by having nursing staff. They were better able to recognize situations when monitoring could be of value. They were also often able to interpret the data and take responsibility for managing the condition with the support of the distant doctor. In contrast, the staff in the residential homes were
hesitant to make recordings and would delay contacting the doctor. In part, this could be explained by the cumbersome size of the equipment and reluctance to set it up in a resident room unless there was clear need. The role of the home would also affect usage. The nursing home, with its greater proportion of high dependency patients and nursing staff, had a greater need to use the system and opportunity for use was better recognized. This resulted in more than 70% of total use being carried out in the one nursing home.
BROADBAND AND RPM In any RPM application, there are several important aspects of the network characteristics that ZLOO LQÀXHQFH SHUIRUPDQFH DQG EHKDYLRU 0RVW important is bandwidth as this ultimately dictates which applications will be possible and the measure of their success. Furthermore, it is essential to consider the asymmetric bandwidth of most current implementations of broadband, as RPM applications generally will demand the greater bandwidth in the upstream direction, and where LW LV PRVW OLPLWHG RIWHQ E\ D VLJQL¿FDQW GHJUHH
Table 1. Indicators for success Indicator
Achieved
Routine operation
No
Comment The project was a pilot and did not become a routine part of health care delivery.
&OLQLFDOHI¿FDF\
Yes
Cost effectiveness
Not evaluated
$GHTXDWH¿QDQFLQJ QRVSHFLDOIXQGLQJ
No
arrangements required):
The project was funded by the European Union, and therefore relied on external funding.
Acceptance by clinicians
Yes
Acceptance by patients
Yes
Improved access to health care
Yes
Reduction of travel
Yes
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Remote Patient Monitoring in Residential Care Homes
(e.g., 512 kbps upstream, 8 Mbps downstream). The high bandwidth of broadband will support well a large variety of RPM applications including not only simple data transmission but also streaming of vital signs, video conferencing, and good access to Web resources for the user. RPM applications may also need to be permanently connected with their server, so that the remote server PD\FRQ¿JXUHWKH530RUFKHFNLWVVWDWXVDWDOO times. Most RPM applications will tolerate delay and jitter in delivery of packets, except for video conferencing. All RPM applications will demand low error rates. Broadband provides excellent support for RPM over other residential connection methods such as dial up and delivers qualities that match well to the desired level of quality—it has inherent high speed, low delay, is reliable, and is continuously DYDLODEOHZLWK¿[HGFRVW,WZLOOVXSSRUWDOOW\SLFDO RPM applications, which have modest bandwidth needs that are well within the upstream bandwidth limitations, except for high quality video conference applications. One aspect of normal residential broadband needs to be discussed. Usually broadband will be implemented by providing the user with a single dynamically allocated IP address each time they connect to the ADSL service, with the address being retained for the duration of the connection. A NAT router will be installed to provide connection for any computers located in the premises. Each of these computers is allocated a “private” address that may not be directly connected from the public Internet; the computers may only connect outwards to the public. This is done to “share” the single IP address. The NAT router maintains a mapping between the internal IP address of the computer and the external public IP address whenever a connection is made. This mapping is retained as long as data is transmitted or received, but is lost if there is no activity for some period (necessary in case a computer should be switched off). Although the connection can be easily restored by the internal computer, the route from the remote server will be lost and cannot be restored. Steps therefore must be taken to ensure that the TCP/IP connection between the RPM and the distant server
614
is maintained against loss of connection through the reset of the route mapping in any NAT routers, HDVLO\DFFRPSOLVKHGE\NHHSDOLYHWUDI¿F Using the NAT router has the advantage of allowing many computers to be connected using the same broadband connection, within the limits of sharing the bandwidth between applications. Furthermore the internal private network may WKHQLQFRUSRUDWHDZLUHOHVV/$1WRDGGÀH[LELOLW\ and convenience and can be well protected from outside intrusion from the public Internet by the NAT router.
FUTURE TRENDS While early detection and intervention should prevent unnecessary admissions, treatment, and expense, at present there is still some debate over WKHFRVWEHQH¿WVWKDWFRXOGEHDFKLHYHGIURPXVing remote patient monitoring technology. While VRPHSXUSRUWVLJQL¿FDQWVDYLQJVWKURXJKWKHXVH of RPM, it has been suggested that 15% of all home visits in the UK could be replaced by RPM WHFKQRORJ\VDYLQJ
PLOOLRQLQWKH¿UVW\HDU (Celler et al., 1999). Others argue that the scale of the projects implemented to date—most projects have not continued past the initial pilot stage and have not been integrated fully into the healthcare system (May et al., 2003)—has meant that it has EHHQLPSRVVLEOHWRWUXO\DVVHVVWKHFRVWEHQH¿WV that such a service would achieve. This has created somewhat of a paradox, with health professionals reluctant to invest in a technology that has so far failed to prove its cost effectiveness. Yet for the technology to effect the cost savings, there is a need to reach economies of scale and a critical mass of users. In order to combat this, the UK government has recently put out to tender for three demonstrator projects which will cover a population base of over one million each. It is hoped that this will provide the evidence-base required for the cost effectiveness for RPM. However, despite this uncertainty, the need for RPM looks promising. It is to be expected that as use and experience increase, so will the capabilities of the systems. At present, current solutions
Remote Patient Monitoring in Residential Care Homes
provide the basic functionality to support simple management of chronic disease. Systems are wired in the home to the telephone and take a limited range of measurements (blood pressure, oxygen VDWXUDWLRQEORRGJOXFRVHZHLJKWSHDNÀRZ RQD daily basis. However, the increasing availability of extra functionality such as ECG, temperature, and continuous oxygen saturation will allow systems to monitor the same patient in the home during an acute phase of an illness, provided that the clinical infrastructure to support this is available. Wireless transmission of alarms and data would allow monitoring of patients with conditions such as angina, who, although relatively well, may deteriorate very rapidly. Such systems would support well the work in community care homes. Systems are getting more powerful by enabling UHPRWHUHDOWLPHFRQ¿JXUDWLRQE\WKHFOLQLFLDQVR that reliable, sophisticated alarms can be set and PRGL¿HGEDVHGRQWKHFRQGLWLRQRIWKHSDWLHQW'DWD could be recorded and sent automatically based on SUHFRQ¿JXUHGVFKHGXOHV7KLVPLJKWPHDQWKDW a system monitoring a person with angina would send an alarm if ST depression for last 10 minutes and 10 seconds of the ECG. If there was cause for FRQFHUQWKHFOLQLFLDQFRXOGFRQ¿JXUHWKHGHYLFH to send the ECG every few minutes until recovery was seen or action taken. Such systems do exist in prototype and pilot form. An example is the Telecare project (Clarke, 2004), which produced a system having all the above capabilities that GPRS to provide wireless connectivity for ambulatory monitoring. The system would also manage blood pressure and weighing scales for chronic disease, and fall detectors, smoke alarms for simple in home monitoring, so WKDWDVLQJOHXQL¿HGDUFKLWHFWXUHFRXOGVXSSRUWWKH full range of monitoring modalities. Work also must be undertaken on how these systems become integrated into mainstream health care delivery. This would include how and where data are managed, how sectors of health care inWHUUHODWHZKLFKSDWLHQWVPLJKWPRVWEHQH¿WDQG best strategies for use of equipment and medical intervention.
CONCLUSION This chapter has discussed acceptability and feasibility issues of an RPM system piloted in three community care homes in the UK. This included detailed consideration of clinical, organizational, and human factors as well as technical issues. A number of factors were found to be critical for the success of the system. The project demonstrated feasibility and was well accepted by patients and VWDII&OLQLFDOEHQH¿WVLQFOXGHGHDUO\GHWHFWLRQRI cardiac events, allowing prompt intervention, and routine monitoring of other conditions, particularly cardiac and respiratory chronic diseases. The monitoring system allowed staff to triage cases and determine the most appropriate action. The evaluation showed that the monitoring proved very effective in the population of a high dependency QXUVLQJ KRPH EXW VKRZHG IHZHU EHQH¿WV LQ WKH relatively well residents of a residential care home. 7KHQXUVLQJKRPHDOVREHQH¿WHGIURPKDYLQJD clinical champion. The new approach required increased communication and collaboration between different sectors of the health care system involved in the care of the residents of the homes. Closer relationships between the staff at the residential care homes and the staff at the health centers fostered a team approach that was important for successful use of the technology. At the same time, staff gained a greater sense of autonomy. Rather than immediately requesting a visit or calling an ambulance in case of a problem, they were able to do more for the patients. This did require that the staff of the community care homes learn to seek support when reporting and requesting assistance for a problem and that the staff at the health centers respond appropriately. Patient pathways may be used to analyze how to best redesign the system to support the new method of working. In this case, the telemonitor enables the movement of information rather than of the patient or health care professional and allows cases to be triaged remotely. The continuous involvement of users prior to and during the implementation of the system, as well as the reliance on existing relationships between the homes and the health
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centers, created a positive atmosphere between the participants in the project. This allowed a relatively smooth introduction of the system. Both the support from management of the homes and local clinical champions played an essential role in establishing the project, and its continued use. Wireless networks were key to the success of the pilot, as they allowed use of the telemonitors everywhere in the large old buildings of the care homes without the need for rewiring. Broadband enabled speedy data transmission. The equipPHQWFKRVHQZDVIRXQGWRODUJHO\PHHWWKHXVHUV¶ needs. The overall conclusion is that the wireless and broadband based RPM system offers much potential for improving and providing excellent health care delivery, both in terms of reducing unnecessary hospital admissions and expediting admission where indicated. It is expected that such mobile health care applications will become an integral part of health care once the current challenges have been resolved.
REFERENCES Aas, I.H.M. (2001). A qualitative study of the organizational consequences of telemedicine. Journal of Telemedicine and Telecare, 7, 18-26. Beynon-Davies, P. (1999). Human error and information systems failure: The case of the London ambulance service computer-aided dispatch system project. Interacting with Computers, 11, 699-720. Bratan, T., Clarke, M., Paul, R., & Jones, R. (2005). Evaluation of practical feasibility and acceptability of home monitoring in a residential home setting. Journal of Telemedicine and Telecare, 11(S1), 29-31. Bratten, R.L., & Cody, C. (2000). Telemedicine applications in primary care: A geriatric patient pilot project. 0D\R &OLQLFDO 3URFHHGLQJV 365-368. Brennan, S. (2005). The NHS IT project, the biggest computer program in the world…ever! Oxon: Radcliffe Publishing. 616
British National Statistics: Ageing. (2005). Retrieved July 21, 2007, from http://www.statistics. gov.uk./cci/nugget.asp?ID=949 Calkins, E., Boult, C., & Wagner, E. (1999) New ways to care for older people. Building systems based on evidence. New York: Springer. Celler, B.G., Lovell, N.H., & Chan, D.K.Y. (1999). The potential impact of home tele-care on clinical practice. Medical Journal of Australia, 171, 518-521 Clarke, M. (2004). A reference architecture for RPM. In L. Bos, S. Laxminarayan & A. Marsh (Eds.), Medical and care compunetics: Volume 103 studies in health technology and informatics (pp. 374-380). Amsterdam: IOS Press. Currie, G., & Brown, A.D. (1997, October-December) Implementation of an IT system in a hospital trust. Public Money and Management, 69-75. Demeris, G. (2004). Electronic home healthcare: Concepts and challenges. International Journal of Electronic Healthcare, 1(1), 4-16. Department of Health. (2001). The NHS plan: A progress report. Retrieved October 14, 2006, from http://www.dh.gov.uk/en/PublicationsAndStatistics/Publications/AnnualReports/DH_4064826 Department of Health. (2002). Developing the information systems – national service frameworks: A practical implementation in primary care (Home Page). Retrieved July 21, 2007, from http://www. dh.gov.uk/assetRoot/04/06/06/42/04060642.pdf Department of Health. (2006). Health reform in England; update and commissioning framework. Policy & Strategy Directorate, Department of Health. Retrieved July 21, 2007, from www.dh.gov. uk/assistroot/04/13/72/27/04127227.pdf European Commission. (2006). What is e-health? Information Society. Retrieved July 21, 2007, from http://europa.eu.int/information_society/eeurope/ ehealth/whatisehealth/index_en.htm Hailey, D. (2001). Some successes and limitations with telehealth in Canada. Journal of Telemedicine and Telecare, 7(S2), 73-75.
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Hersh, W., Helfand, M., Wallace, J., Kraemer, D., Patterson, P., & Shapiro, S. et al. (2002). A systemDWLFUHYLHZRIWKHHI¿FDF\RIWHOHPHGLFLQHJournal of Telemedicine and Telecare, 8, 197-209. Lyytinen, K., & Hirschheim, R. (1987) Information V\VWHPVIDLOXUH $VXUYH\DQGFODVVL¿FDWLRQRIWKH empirical literature. Oxford Surveys in Information Technology, 4, 257-309. Maheu, M., Whitten, P., & Allen, A. (2001). Ehealth, telehealth and telemedicine-a guide to start-up and success. San Francisco: Josey-Bass. May, C.R., Harrison, R., MacFarlane, A., Williams, T., Mair, F., & Wallace, P. (2003) Why do telemedicine systems fail to normalize as stable models of service delivery? Journal of Telemedicine and Telecare, 9(S1), 52-26. May, C.R., Williams, T.L., Mair, F.S., Mort, M.M., 6KDZ17 *DVN/ )DFWRUVLQÀXHQFLQJ the evaluation of telehealth interventions: Preliminary results from a qualitative study of evaluation projects in the UK. Journal of Telemedicine and Telecare, 8(S2), 65-67. Sauer, C. (1993). Why information systems fail: A case study approach. Henley-on-Thames: Alfred Waller Ltd. TeHIP. (2005). The impact of e-health and assistive technologies in health care. The E-Health Innovation Professionals Group of IHM, ASSIST and BCS HIF. Retrieved July 21, 2007, from www. health-informatics.org/tehip/tehipstudy.pdf
Wootton, R., & Hebert, M.A. (2001). What constitutes success in telehealth? Journal of Telemedicine and Telecare, 7(S2) 3-7.
KEY TERMS Community Care Home: Facility in which residential and sometimes nursing care is provided to disabled or elderly people. Chronic Disease: A disease that lasts for a long time (at least three months) and cannot be prevented or cured. E-Health: The use of emerging information and communication technology, especially the Internet, to improve or enable health and health care, thereby enabling stronger and more effective connections among patients, doctors, hospitals, payers, laboratories, pharmacies, and suppliers. ICTs: Information and communications technology, a broad subject concerned with technology and other aspects of managing and processing information. NHS:7KH8.¶V1DWLRQDO+HDOWK6HUYLFH Remote Patient Monitoring: The monitoring of physiological measurements in a setting other than a hospital, using ICTs to transfer data over geographical distances. Wireless Network: A computer network that is not connected by wires but by radio frequencies.
Wistow, G. (2000). Home care and the reshaping of acute hospitals in England – an overview of problems and possibilities. Journal of Management in Medicine, 14(1), 7-24.
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Division III
Social Impact
619
Chapter XXXIX
Social Consequences of Broadband Access in Japan Kenichi Ishii University of Tsukuba, Japan
ABSTRACT In Japan, both the cheapest wired broadband services and the most advanced 3G mobile phone services are widely available. Because of recent procompetitive policy drives such as the “e-Japan policy,” the Japanese broadband market has become very competitive. While the digital divide has narrowed in recent years in terms of Internet access, a divide still exists with regard to Internet usage. Comparison between narrowband and broadband users demonstrates that broadband services currently are used mainly for entertainment. Unlike wired Internet use, mobile Internet is not used for information-gathering activities. Results do not support the media substitution effect of the Internet. Mobile Internet use VLJQL¿FDQWO\DQGSRVLWLYHO\FRUUHODWHVZLWKVRFLDOL]LQJZLWKIULHQGVZKHUHDVWKHZLUHG,QWHUQHWXVHGRHV not correlate with socializing. Experience of past policies suggests that customer orientation will be a key factor in the success of the “U-Japan” policy.
INTRODUCTION
BACKGROUND
Transition to broadband access has been rapid since 2000. As of February 2006, the household penetration rate of broadband access reached 41%, and approximately 70% of Internet users access the Internet via a broadband connection. The ,QWHUQDWLRQDO7HOHFRPPXQLFDWLRQV8QLRQGH¿QHV broadband as a technology providing transmission capacity that is faster than primary rate ISDN (1.5 or 2 Mbps) (Distaso, Lupi, & Manenti, 2006). AcFRUGLQJWRWKLVGH¿QLWLRQEURDGEDQGFRQQHFWLRQLV widely available via 3G (third-generation) mobile phones in Japan.
Wired (PC-Based) Internet ,QRI-DSDQ¶VZLUHGEURDGEDQG 3&EDVHG broadband) users, 62.3% had access via xDSL, 14.2% had cable Internet, 23.4% had FTTH ¿EHUWRWKHKRPH DQGKDG):$ )LJXUH Japanese people enjoy the highest-speed broadband services in the world. The International Telecommunications Union reports that, in 2004, Japanese consumers paid the smallest charge per 100 kilobits per second in the world (U.S. $0.06), compared to that paid by South Koreans (U.S. $0.77), Americans (U.S. $1.77), Germans (U.S. $2.77) and the Brit-
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Social Consequences of Broadband Access in Japan
Figure 1. Number of subscribers to wired broadband services in Japan (in millions) 0
10
20
30
2000
xDSL
2001 2002
Cable Internet
2003
FTTH
2004 2005 2006
Source: Ministry of Internal Affairs and Communications (2006)
ish (U.S. $6.18) (Ministry of Internal Affairs and Communications, 2005). For example, a 100 Mbps FTTH connection service with ISP, IP, phone, and VOD services for an apartment is provided for 7024 yen (U.S. $61; $1 = 115 yen) per month by Nippon Telegraph and Telephone Corporation (NTT). As a result of low charges, FTTH subscribers recently surpassed DSL subscribers. In March 2006, the number of FTTH subscribers reached 5.4 million. During the last three months of 2005, FTTH services saw a jump in subscriber numbers, which reached 658,000, almost three times as much as DSL (175,000).
Mobile Internet In addition to the cheapest wired broadband services, Japan also offers unique and advanced mobile Internet services. Figure 2 demonstrates that mobile phones outnumber PCs in the market for Internet-connected devices. Internet-enabled mobile phones accounted for 94% of all mobile phones, as of September 2004 (Ministry of Internal Affairs and Communications, 2005). Mobile Internet services, such as picture/video mail and picture characters in e-mail, are commonly used by the Japanese people (Ishii, 2004). In terms of business model, “i-mode”—the Web access proWRFRORQ177'R&R0R¶VWHUPLQDOV²LVRQHRIWKH
620
most successful mobile Internet business models in the worldwide telecom market. This service, launched in Japan in February 1999, attracted more than 33 million users three years after its launch (Ishii, 2004). In the mobile Internet market, mobile phone carriers play a dominant role because the carriers are the only ISPs in the mobile Internet. The carriers operate the major portal Web sites, FDOOHG³RI¿FLDOVLWHV´ZKLFKDUHOLQNHGGLUHFWO\WR WKH,63¶VPHQXSDJH&DUULHUVKDQGOHWKHELOOLQJ of those charges on behalf of the content provider (Ishii & Ogasahara, 2006). 3G mobile phones (cdma-one/W-CDMA/CDMA2000x) comprised 70% of all mobile phones in January 2007 (TCA, 2007). These mobile phone services enable connections that are as quick as the wired broadband services. Currently, NTT 'R&R0R -DSDQ¶V WRS PRELOH SKRQH RSHUDWRU provides a W-CDMA service with a maximum data transmission of 3.6 Mbps, while the second-largest operator, KDDI, provides cdma-one services with a maximum data transmission of 2.4 0ESV.'',¶V(=&KDQQHOVHUYLFHRIIHUVYLGHR content—including news, weather, movies, and music information—via push technology (Ishii & Ogasahara, 2006). In this chapter, the term “mobile Internet” will be used to refer to Internet access via mobile phones, and not to the wireless LAN access, because wireless LAN usually is connected to wired broadband only in a limited area.
Social Consequences of Broadband Access in Japan
Figure 2. Number of Internet-connected devices in Japan (in millions) 0 2001 2002
50 37
100
PC
24
49
150
25
2003
57
2004
62
2005
64
2006
66
Mobile phone
28 45 58 69
Others (game terminal, TV etc.)
Note: As of March, every year. Source: Ministry of Internal Affairs and Communications (2006).
Broadband Policy in Japan -DSDQ¶V LQIRUPDWLRQ FRPPXQLFDWLRQ WHFKQRORJ\ (ICT) policies underwent a fundamental change around the year 2000. Since the Japanese government declared in a white paper that the year 2002 was the “First Year of Broadband,” lower charges and faster access resulting from market-oriented ICT policies have caused the number of broadband users to grow rapidly. Following its e-Japan policy, the government proposed a new ICT plan called the U-Japan policy in 2004 (see Key Terms). In this new plan, “ubiquitous networks” are of particular importance. Ubiquitous networks enable easy person-to-person, person-to-goods, and goodsto-goods communication (Ministry of Internal Affairs and Communications, 2005). The e-Japan policy aims to develop a high-speed broadband infrastructure, while the U-Japan policy puts more emphasis on the usability of the system.
Local-Oriented Policy to Nation-Oriented Policy Previously, Japanese ICT policies aimed to create network infrastructure in local areas (Tsuda, 2005). These policies were expected to bridge the economic gap between urban and rural areas. For
example, in 1983, the Ministry of Post and Telecommunications (MPT) proposed the Teletopia Plan for the development of regional information and telecommunications infrastructure across the country using CATV and telecommunications PHGLD 037 )ROORZLQJWKH037¶VPRYH several government organizations proposed similar plans for local ICT projects. In the 1990s, these policies were implemented as economic stimulus measures, such as “public works spending,” which usually refer to the building of roads, dams, and railways. However, these projects were mostly unsuccessful. According to an MPT panel, many projects focused too much on hardware and too little on application software, and the projects were QRWVDWLVIDFWRU\LQVHUYLQJSHRSOH¶VQHHGVLQWKHLU respective regions. Tsuda (2005) pointed out that the local ICT projects did not necessarily lead to the revitalization of local communities. Another disadvantage of the locally-oriented projects was that they were not a part of a systematic nationwide strategy. Many regions worked separately on parallel versions of the local ICT projects, thus PDNLQJLWGLI¿FXOWWRDFKLHYHHFRQRPLHVRIVFDOH around the country (Ishii, 2003). For example, CATV operators were allowed to operate only in a ORFDOFRPPXQLW\EDVHGRQWKHJRYHUQPHQW¶VORFDO
621
Social Consequences of Broadband Access in Japan
community-oriented strategy; thus, most of the RSHUDWRUVZHUHVPDOODQG¿QDQFLDOO\ZHDN The government recently issued a critical advisory on local ICT projects, stating that they should WDUJHWPRUHVSHFL¿HGSXUSRVHVDQGWKDWGLIIHUHQW organizations should coordinate their projects. As a result of policy changes, the budget for local ,&7SROLFLHVGHFUHDVHGWRELOOLRQ\HQLQ¿VFDO year 2001 and to 15 billion yen in 2004, compared with 190 billion yen in 2000 (The Administrative Evaluation and Inspection Bureau, 2006).
Procompetitive Policy The introduction of local loop unbundling helped to enhance competition among telecommunications operators. The government ordered NTT, the dominant operator in Japan, to cut the price DWZKLFKLWRIIHUVLWVLQIUDVWUXFWXUHIRU¿EHURSWLFV to third parties in 2000. The unbundling policy prompted new operators to enter the market. For example, Yahoo BB entered the market with a vertical convergent business model that combines paid content with cheap connection. As of March 2005, the major operator, NTT, accounted for only 38% and 58% of the market for DSL and FTTH services, respectively (InfoCom Research, 2005). Despite its monopolistic status in the telecommunications market in the 1990s, NTT now holds a lower market share compared with telecommunications operators in other countries. The degree of intra and interplatform competiWLRQLVPHDVXUHGXVLQJWKH+HU¿QGKDO+LUVFKPDQ LQGH[ ++, ZKLFK LV GH¿QHG DV WKH VXP RI D ¿UP¶VVTXDUHGPDUNHWVL]H 'LVWDVRHWDO According to Distaso et al., the HHI index for the DSL market ranged from 0.51 to 0.82 (the median is 0.605) among 14 EU countries in 2004. In contrast, WKH++,LQGH[IRU-DSDQ¶VEURDGEDQGPDUNHWLVRQO\ 0.295 and 0.400 for DSL and FTTH, respectively.1 The HHI index for DSL service was as low as 0.272 in September of 2002. These low values indicate that the Japanese broadband market is much more competitive when compared with other countries, such as those in the EU.
622
LITERATURE REVIEW AND RESEARCH QUESTIONS Many studies examine the adoption of new media E\FRQVXPHUVSULPDULO\EDVHGRQ5RJHUV¶ diffusion of innovation paradigm (DiMaggio, Hargittai, Neuman, & Robinson, 2001; Hashimoto, Tsuji, Fukuda, Mori, & Yanagisawa, 1996; Jeffres & Atkin, 1996; Wei, 2006; Zhu & He, 2002). These VWXGLHVVHHNWR¿QGWKHFKDUDFWHULVWLFVRILQGLYLGXDOV that make them likely to adopt the Internet. Early adopters of the new information technologies are more likely to be male, wealthier, better educated, and younger than nonadopters (Ishii, 1996; Rogers, 2003; Wei, 2006; World Internet Project Japan, 2002). Differential access to and use of the Internet and new media in general, according to gender, income, race, and location has been cited as the digital divide (DiMaggio et al., 2001; Rice & Katz, 2003; van Dijk, 2006). Some argue that the digital divide remains substantial within some countries and is widening in some countries (Chen & Wellman, 2004; Hushing & Selhofer, 2004; Kubicek, 2003; Martin & Robinson, 2004; Parker, 2000), while others argue that the gap has been closing (U.S. Department of Commerce, 2002). It is widely believed that the broadband network will displace existing media content, such as Web casting over the Internet. The media substitution hypothesis has been tested in many previous studies. Many studies show that wired Internet use has something in common with the time-displacing technology of TV (Ishii, 2004; Robinson, Kestbaum, Neustadl, & Alvarez, 2000). Some studies reported a negative correlation between Internet use and television viewing (Pronovost, 2002; Robinson, Kestbaum, Neustadl, & Alvarez, 2002) while few reported a positive correlation (Rhee .LP 2WKHUVWXGLHVIRXQGQRVLJQL¿FDQW correlations between TV viewing and Internet use after demographic controls (DiMaggio et al., 2001; Gershuny, 2002; Haan & Huysmans, 2002). Many studies have examined the effects of the Internet on social capital. One concern is that the possibly solitary activity engendered by the Internet may displace time formerly spent on local social relations (Haythornthwaite & Wellman, 2002). A
Social Consequences of Broadband Access in Japan
study shows that greater use of the Internet was DVVRFLDWHGZLWKDGHFOLQHLQXVHUV¶FRPPXQLFDWLRQ with family members, and a decline in the size of their social circle (Kraut, Lundmark, Patterson, Kiesler, Mukopadhyay, & Scherlis, 1998). The more time that users spent on the Internet, the less time they shared at meals and watching TV with family members (Weng, 2000). However, the opposite ¿QGLQJV DOVR KDYH EHHQ UHSRUWHG +HDY\ HPDLO users have more social ties than do light e-mail users (Zhao, 2006). In Japan, many studies reported that mobile media users are more active in personal communications. Ishii (2004) documented that the PRELOH,QWHUQHWKDVDVLJQL¿FDQWO\SRVLWLYHHIIHFW on the amount of time spent with friends, whereas ZLUHG,QWHUQHWKDVDVLJQL¿FDQWO\SRVLWLYHHIIHFW on time spent with family. As compared with PCs, the mobile phone is considered to overcome the inequitable distribution of power that stems from differential access to ICT resources (Rice & Katz, 2003). However, only a few studies have examined the diffusion of mobile phones, especially Internet access over the mobile phone (Ishii, 2006; Katz & Aakhus, 2001). Based on the above brief review, the purpose of this chapter is to examine the social consequences of broadband access. Despite initial enthusiastic acceptance of the Internet, its social consequences KDYHQRWEHHQFODUL¿HG,QWKLVFKDSWHUZHLQWHQG to examine factors accounting for the adoption of broadband, and then to discuss the social consequences of the introduction of broadband services by comparing wired and mobile Internet. More VSHFL¿FDOO\WKLVFKDSWHUIRFXVHVRQWKHGLJLWDOGLvide, because many ICT policies (e.g., the e-Japan policy) aimed to close the digital divide. Additionally, this chapter discusses the future potential of the mobile Internet, in which Japan seeks to take a leading role. In sum, the research questions of this study are as follows:
METHOD
RQ1: To what extent are there gaps in wired and mobile Internet use in Japan? RQ2:What factors account for these gaps? RQ3: What are the social consequences of wired and mobile broadband services in Japan?
Digital Divides in Japan
This study uses data from the following questionnaire survey in its analyses. The World Internet Project Japan (JWIP) survey was conducted nationwide in Japan in 2000, 2001, 2002, 2003, and 2005, in cooperation with the World Internet Project (WIP), in which many countries are involved. Throughout this project, the author has participated in the research project (JWIP) headed by Prof. Shunji Mikami. This study will use two waves of this survey, years 2003 (World Internet Project Japan, 2003) and 2005 (World Internet Project Japan, 2005). The data collection method was a self-administered questionnaire. The survey was conducted under the auspices of the Communications Research Laboratory. The respondents were chosen from a national probability sample whose ages ranged from 12 to 74 for the JWIP2003 survey and 13 to 70 for the JWIP2005 survey. A questionnaire sheet was distributed by a research company and collected at a later date. The number of successful respondents was 1,520 (response rate: 69.1%) and 2,029 (response rate: 68.6%), respectively. The time diary method (time-budget survey) was adopted in 2003 and 2005 to measure the amount of time spent on a variety of information activities, such as viewing TV, reading newspapers, books, and magazines, and using the wired Internet and the mobile Internet. Respondents were requested to record basic activity codes, location, and information activities for every 15 minutes for 48 hours on two consecutive days. Details of the methods are documented in Suzuki, Hashimoto, and Ishii (1997) and World Internet Project Japan (2005).
MAIN FOCUS OF THE CHAPTER
Table 1 demonstrates that in the case of wired (PC) Internet, access gaps are found across various demographic factors, including gender, age, income, job, and region. Likewise, mobile Internet
623
Social Consequences of Broadband Access in Japan
Table 1. Internet penetration rates by demographic factors Variable
Gender
Values
N
Male
925
Female
1074
Chi-square statistic Age
47.8
37.4
34.1
49.1
38.7(***)
27.5(***)
50.5
69.7
20–29
226
55.3
72.6
30–39
399
53.9
64.9
40–49
362
50.6
40.3
50–59
436
28.9
24.1
60–74
368
14.7
14.7
200.3(***)
402.7(***)
Junior high school
230
20.4
20.0
High school
1028
30.5
42.2
College
321
48.0
60.4
University
414
70.8
47.3
245.5(***)
92.2(***)
Less than 2 million yen
154
21.4
29.2
annual
2-4 million
481
26.6
38.5
income
4-6 million
499
39.3
44.7
6-8 million
352
51.1
45.2
8-10 million
188
53.7
49.5
10-12 million
85
56.5
48.2
More than 12 million
80
62.5
53.8
117.6(***)
25.2(***)
Chi-square statistic Job
Full-time
925
50.2
40.9
Part-time
355
30.1
45.6
Housewife
321
24.9
41.7
Student
228
54.8
72.8
Unemployed
170
18.8
19.4
Chi-square statistic Region
136.6(***)
123.4(***)
1 million or more
474
45.5
44.7
100 thousand or more
784
40.3
46.7
Less than 100 thousand
376
38.8
39.6
County
365
35.9
40.0
8.3(*)
7.6(n.s)
Chi-square statistic
1RWH S
S
S QVS! 6RXUFH -:,3
624
rate (%)
208
Chi-square statistic Household
Mobile Internet
(%)
12–19
Chi-square statistic Education
PC Internet rate
Social Consequences of Broadband Access in Japan
7DEOH*LQLFRHI¿FLHQWVIRU,QWHUQHWSHQHWUDWLRQUDWHVE\\HDU Factor/year
2000
2001
2002
2003
2005
Age
0.308
0.266
0.242
0.241
0.204
Income
0.189
0.155
0.153
0.158
0.125
Education
0.291
0.255
0.284
0.198
0.172
Region*
0.090
0.030
0.072
0.064
0.038
* Region is categorized as (1) cities with over 1 million population, (2) cities with 100 thousand through PLOOLRQ RWKHUFLWLHVDQG WRZQVDQGYLOODJHV6RXUFH ,VKLL Table 3. Regression models predicting PC Internet use and amount of time spent on PC Internet PC Internet use
Time spent on PC Internet a
(logistic regression;
(regression; n = 707)
n = 1732) Standardized
Wald chi-
Standardized
parameter
square
parameter
t value
Gender (M = 1, F = 2)
-0.10
8.1**
-0.15
-3.5***
Age
-0.39
132.4***
-0.19
-4.7***
Education
0.37
116.1***
0.06
1.6
Job status
0.17
19.5***
-0.03
-0.7
0.20
40.2***
-0.01
-0.3
0.08
7.2**
0.04
1.0
(full-time = 1, else = 0) Income (10 thousand yen) Region b
Note: (a) Only PC Internet users are considered; (b) City with more than 1 million population = 1, others = 0.
S
S
S 6RXUFH -:,3
has similar access gaps across these demographic factors.
Closing Gaps in Internet Penetration The Gini index has been used widely to measure the extent of gaps across the social strata. The *LQLFRHI¿FLHQWUDQJHVIURPWKURXJKZKHUH 0 represents complete equality (no gap) regarding the target variable, while 1 represents complete inequality (the largest gap). To measure gaps in ,QWHUQHW SHQHWUDWLRQ ,QWHUQHW DFFHVV LV GH¿QHG as either wired or mobile Internet access. In Ja-
pan, gaps among age and education groups are UHODWLYHO\ODUJHDVUHÀHFWHGE\-DSDQ¶VFXOWXUDOO\ and economically homogeneous society. Table 2 demonstrates that almost all gaps in Internet access have narrowed over time. These results demonstrate that Internet access gaps based on age, income, region, and education have narrowed in the past 5 years. The regional gap is especially small as compared with other demographic factors. As discussed previously, the Japanese ICT policy in the 1990s targeted reduction of regional gaps. Although the present ICT policy still supports ICT development in rural areas, the mainstream policy
625
Social Consequences of Broadband Access in Japan
Table 4. Regression models predicting mobile Internet use and amount of time spent on mobile Internet Mobile Internet use
Time spent on mobile Internet a (regression;
(logistic regression;
n = 701)
n = 1732) Standardized
Wald chi-
Standardized
parameter
square
parameter
t value
Gender (M = 1, F = 2)
0.25
49.8***
-0.09
-2.1*
Age
-0.51
230.1***
-0.23
-5.8**
Education
0.21
38.7***
0.02
0.49
Job status
0.06
2.7
-0.06
-1.5
0.03
0.7
0.03
0.9
-0.02
0.4
0.05
1.4
(full-time = 1, else = 0) Income (10 thousand yen) Region b
Note: (a) Only PC Internet users are considered; (b) City with more than 1 million population = 1, others = 0.
S
S
S 6RXUFH -:,3
has shifted direction; where it was locally-oriented, it is now competition-induced (Ishii, 2003). These UHVXOWVVKRZWKDWWKH¿UVWW\SHRIJDS WKHDFFHVV gap) has tended to close in recent years, despite WKHLQWURGXFWLRQRIWKHJRYHUQPHQW¶VFRPSHWLWLYH ICT policies.
The Second-Level Digital Gap Many studies have looked at the digital divide only in terms of Internet access and have ignored Internet use (Peter & Valkenburg, 2006). Yet, the closing of access gaps does not mean that everyone EHQH¿WVHTXDOO\IURPWKHQHZWHFKQRORJLHV:H need to consider the second-level digital gap—the usage gap—apart from the access gap. In order to measure how these two gaps are associated with social status, the use of wired Internet and the amount of time spent on PC Internet are regressed on demographic factors. Table 3 demonstrates the estimated parameters of the regression models predicting access to the Internet, and the amount of time spent using the Internet; in the second
626
model, only users of the Internet are considered. The results of the logistic regression model show that all of the six variables—gender, age, education, ZRUNVWDWXVLQFRPHDQGUHJLRQ²DUHVLJQL¿FDQWO\ correlated with the Internet access, while the second regression model shows that second-level gaps H[LVWHYHQDPRQJXVHUV0RUHVSHFL¿FDOO\PDOHV and younger people are more likely to access the Internet and use it for longer durations. In other ZRUGV JHQGHU DQG DJH DIIHFW ERWK WKH ¿UVW DQG second levels of the digital divide in similar ways. The second digital divide suggests that new techQRORJLHVSURPRWHGE\WKHJRYHUQPHQW¶VSROLFLHV do not necessarily lead to effective use. Finance support from the government may boost adoption of the Internet, but it will not necessarily result in effective use of the Internet. The same regression models are applied to the mobile Internet (Table 4). Unlike the wired Internet, females are more likely to adopt the mobile Internet. Job status, income level, and region are QRWVLJQL¿FDQWO\FRUUHODWHGZLWKPRELOH,QWHUQHW use. In this sense, the digital divide is smaller in
Social Consequences of Broadband Access in Japan
7DEOH5HJUHVVLRQPRGHOVSUHGLFWLQJDPRXQWRIWLPHVSHQWRQYLHZLQJ79UHDGLQJQHZVSDSHUVDQG magazines TV
Newspapers
Magazines
Parameters
t value
Parameters
t value
Parameters
t value
Intercept
215.87
10.2
-28.38
-5.6
5.45
2.1
Time on Internet
-0.01
-0.2
0.03
2.0*
0.00
0.4
2.04
10.2***
0.99
20.6***
-0.05
-2.1*
-5.84
-3.9***
0.89
2.5*
0.21
1.2
PC a Age Education Income
b
Job status c
-0.03
-2.9**
0.00
1.5
0.00
-1.1
-67.55
-10.8***
-4.39
-2.9**
-2.38
-3.2**
Note: (a) minute; (b) yearly household income (million yen); (c) full time job= 1, else = 0.
S
S
S 6RXUFH -:,3
the mobile Internet than in the wired Internet. This difference between wired and mobile Internets suggests that the mobile Internet may bridge the digital divide in the wired Internet. The implications of these results will be discussed later in this chapter.
Social Consequences of Internet Access Closing the digital divide is not the ultimate goal RI WKH JRYHUQPHQW¶V ,&7 SROLF\ 7KH XOWLPDWH JRDOLVWRLQFUHDVHVRFLDOEHQH¿WVWKURXJKXVHRI WKH,QWHUQHW+HQFHWKHLQÀXHQFHRI,QWHUQHWXVH should be measured appropriately. To this end, this chapter will make two comparisons—between users and non-users and between broadband and narrowband users.
Users and Nonusers: Media Substitution Hypothesis Technological enthusiasts might simply expect that WKH,QWHUQHWPRUHVSHFL¿FDOO\WKHZLUHG,QWHUQHW will displace other media (media substitution hypothesis), such as TV. We test this hypothesis by comparing media usage patterns between wired
Internet users and nonusers, controlling for main demographic factors. During the two-day survey period, 30.5% of the respondents used the Internet at least once via PCs, with an average of 22.2 minutes of wired Internet usage per day. To assess the effects of wired Internet usage on the use of television, newspapers, and magazines, the regression model was employed. Table 5 demonstrates that ZLUHG,QWHUQHWXVHKDVQRVLJQL¿FDQWHIIHFWRQWKH amount of time spent on these media. Regression FRHI¿FLHQWVLQGLFDWHWKDWWKHDPRXQWRIWLPHVSHQW RQ ZLUHG ,QWHUQHW LV QRW VLJQL¿FDQWO\ FRUUHODWHG with the amount of time spent on other media, after controlling for age, education, income, and job. Contrary to the hypothesis, the wired Internet users spent more time reading newspapers than nonusers. The regression parameter suggests that WKH XVH RI ZLUHG ,QWHUQHW OHDGV WR VLJQL¿FDQWO\ increased newspaper reading. These results show that wired Internet use does not conform to the media substitution hypothesis.
Effects of the Internet on Social Capital There are utopian and dystopian views on the impacts of the Internet on social capital. To estimate the effects of the Internet on social capital, the
627
Social Consequences of Broadband Access in Japan
Table 6. Regression models predicting amount of time with family and friends Amount of time
Amount of time
spent with family
spent with friends
Standardized
t value
parameter Gender (M = 1, F = 2)
Standardized
t value
parameter
0.04
1.18
-0.07
-2.1*
Age
0.07
1.98*
-0.05
-1.35
Education (years)
-0.01
-0.20
-0.07
-2.52*
Job status (full-time = 1, else = 0)
-0.20
-5.76***
-0.04
-1.08
Student (student=1, else=0)
-0.10
-2.82**
0.44
11.6***
Family income (one million yen)
-0.07
-2.38*
-0.45
-1.63
Wired Internet use
0.01
0.29
-0.03
-1.19
Mobile Internet use
-0.01
-0.39
0.12
4.39***
R-Square
0.074
0.08
N
1183
969
S
S 6RXUFH -:,3 Table 7. Logistic regression model predicting broadband subscription vs. narrowband subscription Standardized parameter
Wald chi-square
Gender (M = 1, F = 2)
-0.121
3.85*
Age
-0.045
0.65
Education
0.080
1.95
Work (full-time = 1, else = 0)
-0.140
4.87*
Income (10 thousand yen)
0.023
0.16
0.010
0.03
Region
a
1RWH 1 $SRVLWLYHSDUDPHWHUPHDQVDSRVLWLYHHIIHFWRQEURDGEDQGVXEVFULSWLRQ D &LW\ZLWK more than 1 million population = 1, others = 0.
S 6RXUFH -:,3
amounts of time spent with family and friends are regressed on wired Internet use and mobile Internet use, controlling for demographic factors. Table 6 LQGLFDWHVWKDWRQO\PRELOH,QWHUQHWLVVLJQL¿FDQWO\ associated with the amount of time spent with friends. This suggests that the mobile Internet use facilitates socializing with friends, although one cannot conclude a causal relationship.
628
Broadband Users vs. Narrowband Users Japanese ICT policies have aimed to shift users from narrowband to broadband access. Hence, we compare usage patterns of broadband and narrowband users based on survey results. In the following DQDO\VLVEURDGEDQGXVHUVDUHGH¿QHGDVXVHUVRI wired Internet through FTTH, DSL, or CATV at KRPHZKLOHQDUURZEDQGXVHUVDUHGH¿QHGDVXVHUV of wired Internet through dial-up or ISDN at home.
Social Consequences of Broadband Access in Japan
Table 8. Comparison of penetration rate (%) of Internet services between narrowband and broadband users Narrowband users
Broadband users
Chi-square
6LJQL¿FDQFHOHYHO
Viewing Web sites for entertainment
73.0
81.9
5.4
*
Getting information or making travel
65.2
69.1
0.8
Using health/medical information
56.5
60.2
0.7
Studying for school
28.3
33.3
1.4
Working at home
42.2
43.8
0.1
Getting news
54.8
68.7
9.8
Viewing Web sites about religion
1.7
2.0
0.0
Playing online game
18.7
25.3
3.0
Activities via the Internet
registrations
Using online banking
6.1
17.7
15.1
Searching job information
12.6
15.7
0.9
Chatting
6.1
13.7
7.6
**
***
**
Joining BBS/news group
11.3
26.1
17.0
***
Using online shopping
35.2
52.2
14.0
***
Using Internet auction
20.4
26.5
2.4
Downloading documents or data
53.5
66.3
8.2
**
Downloading music or ring-tone
21.7
29.7
4.0
*
Playing videos
24.8
44.6
20.6
***
Streaming video
7.8
26.1
27.9
***
Using matching Web sites
1.3
0.4
1.2
Using adult Web sites
3.9
11.2
9.0
N
230
249
**
1RWH S
S
S 6RXUFH -:,3
To assess the effects of factors that promote the shift from narrowband to broadband, the logistic regression model is employed. Table 7 denotes that males are more likely to shift services from narrowband to broadband. With regard to regional JDSVQRVWDWLVWLFDOO\VLJQL¿FDQWGLIIHUHQFHLVIRXQG between rural and urban residents. An unexpected ¿QGLQJLVWKDWRWKHUWKLQJVEHLQJHTXDOIXOOWLPH workers are less likely to change from narrowband service to broadband. This suggests that only few people access the Internet at home through broadband connection for business use. As expected, broadband users are more active online than narrowband users. Broadband users spend 29.8 minutes per day on wired Internet;
narrowband users spend only 11.9 minutes on wired Internet (t = 3.24, DF = 447, p < .01). In addition, broadband users employ the Internet rather differently than narrowband users. For example, 52% of broadband users engage in online shopping, compared with 36% of narrowband users (chi-square = 13.4, DF = 1, p < .001). Broadband users spend 23.8 thousand yen per year on online shopping, while narrowband users spend 12.1 thousand yen (t = -1.98, DF = 475, p < .1). 45% of broadband users view videos via the Internet, while only 25% of narrowband users view videos (chi-square = 20.6, DF = 1, p < .001). Table 7 also indicates that broadband users generally are more active online than narrowband users when it comes
629
Social Consequences of Broadband Access in Japan
Table 9. Regression models predicting the perceived importance of the Internet Perceived importance as an information
Perceived importance as an entertainment
source
medium
Standardized
t value
parameter
Standardized
t value
parameter
Connection type a
0.08
1.56
0.10
1.98*
Gender (M = 1, F = 2)
-0.00
-0.00
0.08
1.44
Age
-0.14
-2.97**
-0.16
-3.17**
Education
0.17
3.30**
0.01
0.23
Job status
-0.01
-0.1
0.02
0.29
-0.07
-1.4
-0.05
-0.96
(full-time = 1, else = 0) Income (10 thousand yen)
Note: (a) broadband = 1, narrowband = 0.
S
S 6RXUFH -:,3 Table 10. Access rates of information via PC/mobile internet (%) Via PC
Via mobile phone
Economic/business news
24.83
1.33
Weather forecast
35.68
16.30
Tour information
46.14
4.19
Shopping/products information
45.90
5.76
Health/hospital information
27.96
1.12
TV program information
20.31
1.77
Music information
35.41
7.80
Restaurant information
33.26
4.21
Note: Only users of both mobile and PC Internet are considered. 6RXUFH -:,3
to viewing Web sites for entertainment, getting news, using online banking, using BBS (bulletin board system), chatting, downloading documents and music, playing and streaming videos. These results suggest that the broadband access promotes some activities that require high connection speed (e.g., downloading and streaming). At the same time, we should note that broadband connection does not promote all online activities, especially those that are more practical (e.g., searching job information and working at home).
630
To compare the purposes of using the Internet, the perceived usefulness of the Internet2 is regressed RQWKH,QWHUQHWFRQQHFWLRQZKLFKLVGH¿QHGDVD dichotomous variable (narrowband = 0, broadband FRQWUROOLQJ IRU UHVSRQGHQW¶V GHPRJUDSKLF factors. Table 9 demonstrates the estimated parameters. Younger people perceive the Internet to be more useful, either as an information medium or as an entertainment medium. As compared to narrowband users, broadband users perceive the Internet to be more important as an entertainment
Social Consequences of Broadband Access in Japan
Table 11. Regression model predicting the information-handling competency index Standardized parameter
t value
Gender(M = 1, F = 2)
-0.030
-1.190
Age
0.009
0.340
Education (years)
0.088
3.540***
Job status
0.013
0.510
0.045
1.970*
(full-time = 1, else = 0) Income Region
a
Key-in ability PC Internet use b Mobile Internet use
b
R-square
-0.046
-2.060*
-0.314
-11.470***
0.069
2.890**
0.037
1.560 0.166
Note: (a) City with more than 1 million population = 1, others = 0. b. minute.
S
S
S 6RXUFH -:,3
medium (t = 1.98, DF = 1, p < .05), whereas no VWDWLVWLFDOO\VLJQL¿FDQWGLIIHUHQFHLVIRXQGLQWKH perceived importance of the Internet as a source of information. These results suggest that the purpose of broadband access is entertainment rather than information-gathering.
Mobile Phones as Potential Alternative to PCs Unlike the youth in other countries, Japanese youth are not very interested in using the Internet via PC (Ishii & Wu, 2006). Table 1 indicates that younger people (14-39 years) more often use mobile phones to access the Internet, while older people (40-59 years) more often use PCs. Despite its similarity to wireless LAN (WLAN), Japanese mobile Internet users differ greatly from WLAN users, who are younger, better educated, and more often male than non-users (Wei, 2006). Table 4 also shows that access gaps in mobile Internet are smaller than in wired Internet. Such a unique usage pattern suggests that Japanese ICT development may take a different route from that in other countries. Will the mobile phone displace PCs? To answer this question, we should bear in mind that the two technologies are used quite differently. Table 10
demonstrates that fewer users engage in information-gathering via mobile phones, compared with that through PCs. Despite a high usage rate (94%) of Internet-enabled mobile phones in Japan, few take advantage of the advanced Internet services, except for such personal communications as text messaging and photo e-mail. Mobile phones are used mostly for communication with close friends to maintain existing ties, rather than to create new ones (Ishii, 2006). The “information handling competency index”3 (IHC index) is a scale to measure the competency level of information-gathering activities in everyday life. To examine the effects of mobile Internet and wired Internet use on the competency level of information-gathering activities, the score of this index is regressed on the amount of time spent on wired and mobile Internets, controlling for demographic factors. Table 11 indicates that mobile ,QWHUQHWXVHLVQRWVLJQL¿FDQWO\DVVRFLDWHGZLWKD higher level of information handling competency. In FRQWUDVWZLUHG,QWHUQHWXVHLVVLJQL¿FDQWO\DVVRFLated with a higher level of information-gathering activities (t = 2.89, p < .01). These results demonstrate that, compared with wired Internet, mobile Internet use is not associated with a higher level of information-gathering competency.
631
Social Consequences of Broadband Access in Japan
FUTURE TRENDS ,WLVGLI¿FXOWWRSUHGLFWWKHIXWXUHEDVHGRQVXUYH\ results. Our survey suggests that wired Internet will become increasingly advanced, at least as an entertainment medium. For example, Web casting will become more popular for entertainment use services (Ha & Ganahl, 2006). In this sense, wired Internet will displace some of the functions RI H[LVWLQJ PHGLD HJ YLGHR YLHZLQJ -DSDQ¶V new ICT policy (U-Japan policy) and the present unique Internet usage patterns suggest that Japan will move toward the development of mobile Internet. Lessons from ICT policy history show that the key factor in making a successful system is how mobile Internet will be designed for users in the next generation.
CONCLUSION Findings indicate that gaps in wired Internet and mobile Internet are very different. The distinction between users and nonusers of wired Internet are associated with socioeconomic characteristics such as gender, age, education, job status, income, and region. This suggests that the traditional digital divide persists in wired Internet despite the narrowing trend of the divide. In contrast, the distinction between users and non-users of mobile Internet is associated only with gender, age, and educational levels. Gaps in the mobile Internet are smaller than adoption gaps in the wired Internet, except age gaps. Unlike early adopters of wired Internet and other new media, young women are the heaviest users of mobile Internet. This difference is attributable to the fact that mobile Internet is used for entertainment and communication rather than information-gathering, as mobile Internet supports a unique media culture among young people in Japan (Ishii & Wu, 2006). The results indicate that the social consequences of the Internet cannot be overstated. The impact of the Internet is more limited than either the utopian or dystopian visions suggest (DiMaggio et al., 2001). The media substitution is not the case and the Internet has not yet substituted for TVs. The
632
ZLUHG,QWHUQHWLVQRWVLJQL¿FDQWO\FRUUHODWHGZLWK either socializing with family or friends. In sum, despite the plethora of technological possibilities, the broadband Internet has not yet changed our everyday life. From a policy perspective, the adoption of EURDGEDQGDFFHVVFDQQRWEHWKH¿QDOVROXWLRQIRU bridging the second-level digital divide (the usage gap). Presently, in Japan, it is more important to provide a user-oriented system than to introduce broadband network infrastructure. The governPHQW¶VSURFRPSHWLWLYHSROLFLHV HJWKHH-DSDQ policy) have effectively promoted a fast and cheap broadband network, and should be continued for several years. However, the technology cannot be an end in itself. It is time to consider how the Internet should be promoted to make social activities more HI¿FLHQWDQGFRPIRUWDEOH,QRWKHUZRUGVVRFLDO EHQH¿WVRIWKH,QWHUQHWVKRXOGEHHPSKDVL]HGPRUH in future policies. One lesson from the history of -DSDQ¶V,&7SROLF\LVWKDWLWVKRXOGEHXVHURULHQWHG -DSDQ¶VORFDO,&7SURMHFWVLOOXVWUDWHWKHIDLOXUHRI a government-led ICT policy. In contrast, NTT 'R&R0R¶V³LPRGH´GHPRQVWUDWHVWKHVXFFHVVRI a customer-oriented technology; “i-mode” was designed as a user-friendly system based on relatively old technologies (Ishii, 2004). The history of the mobile Internet in Japan shows that it has been promoted by user needs, not by technology or policy (Ishii, 2004). Thus, if an ICT policy is guided only by the government or engineers, it cannot achieve the desired result. In this sense, there is a risk that, without appropriate customer-oriented systems, the U-Japan policy will end in failure. The future of the mobile Internet is still unknown, but the survey results indicate that, unlike the wired Internet, mobile Internet use is not associated with a higher level of information-gathering activities. Kimura (2004) even pointed out that mobile Internet use inhibits the information-gathering abilities of young people. Likewise, a survey of junior high school students showed that mobile phone users got worse grades than nonusers (Fukano, 2002). This evidence suggests that the mobile phone is a tool for the socially lower class, while previous studies suggest that the PC is a tool for the
Social Consequences of Broadband Access in Japan
socially higher class in Japan (Ishii, 2003, 2006). The present study did not support such negative effects of the mobile phone, but results demonstrate that, unlike wired Internet, mobile Internet is not positively associated with information-gathering activities. If the U-Japan policy overemphasizes the technological aspects and overlooks the social and psychological aspects, it may fail to enrich the everyday life of users.
Hashimoto,Y., Tsuji, D., Fukuda, M., Mori, Y., & .”) or data absent (“=.”).
762
Evaluating Variable Relevance An additional good characteristic of the MARS model is that the basis functions are easily interpreWDEOHDVWKH¿QDOPRGHOFDQEHYLHZHGDVDOLQHDU regression of the transformed variables through “max” functions. Therefore, the associated weight LVWKH¿QDOUHOHYDQFHIRUDJLYHQYDULDEOHRQO\ZKHQ it becomes activated, while the knot value indicates the threshold for which the variable becomes to be relevant in the model. This will allow us to extract useful conclusions from the built models, but also will allow us to generate rankings of variables through sensitivity (or saliency) analysis. In this context, the least important variable is the one with the smallest impact on the model quality (GCVR2); similarly, the most important variable is the RQHWKDWZKHQRPLWWHGGHJUDGHVWKHPRGHO¿WWKH most. The model variables are ranked from most to least important and displayed in the variable importance table. Data Analysis Limitations It is worth pointing out that, despite good experimental results, this analysis poses some problems concerning the adopted empirical methodology and assumptions. The main assumption is that the same process links the dependent with the independent variables for all the countries studied. Although the 30 countries included in the study belong to the OECD, different patterns are present and, thus, this assumption could be misleading. For instance, European countries and South Korea cannot be modeled under the same pattern. This problem could be reduced by including more observations from the same countries (time series modeling), or by clustering similar countries and applying dedicated models to each cluster. These approaches, though very promising, could not be followed because of the reduced number of available data. Another limitation of this approach is the use of data at a national level. The lack of available data at a regional or local scale limited the ability to develop more accurate models for these administrative levels. This is an important problem that has also been pointed out by other authors in the literature (Garcia-Murillo & Gabel, 2003).
Patterns of Broadband Development in OECD Countries
RESULTS In this section, the results obtained from the empirical analyzes aimed at identifying the key facWRUVLQÀXHQFLQJEURDGEDQGVXSSO\DQGEURDGEDQG DGRSWLRQDUHSUHVHQWHG2QO\WKHWDEOHVDQG¿JXUHV WKDWUHÀHFWWKHPRVWSHUWLQHQW¿QGLQJVKDYHEHHQ included in this section.2 MARS parameters have EHHQ¿[HGWRWKHIROORZLQJYDOXHV PD[LPXPLQteractions allowed as 1, maximum BFs as 30, speed factor as 2, and 10 V-fold cross-validation.
Analysis of Broadband Deployment In ordeUWRLGHQWLI\WKHPDLQIDFWRUVWKDWLQÀXHQFH broadband deployment, the effects of the following variables were studied: the supply-side variables (Groups 1-3), the economic level indicators (Group 7), and the population distribution indicators (Group 8), in DSL coverage (DSLCOV). The results of the empirical analysis suggest WKDW WKH PRVW LQÀXHQWLDO IDFWRUV IRU EURDGEDQG infrastructure supply are as follows: (a) the economic level of the country (Group 7); (b) the level of competition in the telecommunications market (Group 3); (c) the demographic distribution of the population (Group 8); and (d) the availability and investment in telecommunications infrastructure *URXS 7KHLQÀXHQFHRIWKHVHJURXSVRIIDFWRUV are the following.
Economic Level Indicators (Group 7) The results of the variable importance analysis of MARS show that DSL coverage in a country is mainly explained by its economic level, which is represented by the gross national income per capita variable (GNICAP). This variable is the PRVW LPSRUWDQW RQH IRU WKH EHVW ¿WWHG PRGHOV (Models 1-4) and also for any model that includes this variable. The statistical analysis of the data shows that the number of access lines that can be enabled to provide DSL technology (DSLCOV) is, on average, more than three times greater for countries with higher income levels than for countries with ORZHURQHV1HYHUWKHOHVVWKHFRUUHODWLRQFRHI¿FLHQW
GRHVQRWFRQ¿UPFOHDUO\WKLVSRVLWLYHUHODWLRQVKLS (0.555) which could indicate a non linear relationship between these two variables. 7KLVLVFRQ¿UPHGE\WKHDQDO\VLVRIWKHUHJUHVVLRQVORSHVIRU*1,&$3DVWKHLQÀXHQFHRQ'6/ coverage is not positive for all the variable range. $OOWKHPRGHOVFRLQFLGHLQWKDWWKLVLQÀXHQFHLV strongly positive for the region, that is from 5,250 USD and the knot around 14,300 USD which is approximately the GNICAP of Spain (2001, 2002) and New Zealand (2002) with relatively low economic level but high DSL coverage (more than 7KHQWKHLQÀXHQFHLVVOLJKWO\QHJDWLYHIRU higher values of GNICAP. These results indicate that an increase of the JURVVQDWLRQDOLQFRPHSURGXFHVDVLJQL¿FDQWLQcrease of DSL coverage for countries with income below 14,230 current USD. However, for countries with national income above this value, the results indicate that the relationship between GNICAP and DSL coverage is not so clear. Actually there are countries with more than 30,000 USD of national income per capita as Norway (2000) or Luxemburg (2001), with relatively low DSL coverage level (20% and 65% respectively), whereas others with national income around 20,000 USD, have almost complete DSL coverage such as Belgium (95%, 2002).
Level of Competition in the Telecommunications Market (Group 3) The empirical analysis suggests that the level of competition in the telecommunications market represented by Group 3 of variables is the second most important driver for broadband deployment. Nevertheless, it also reveals that the competition between different technologies (technological competition) has a greater impact on broadband availability than the competition between operators of the same technology (market competition). ,QWKHHPSLULFDODQDO\VLVWKHLQÀXHQFHRIWHFKnological competition is represented by: DSLVSCAB, which is a dummy variable that indicates the existence of competition between DSL and cable modem,3 the coverage of cable networks CTVHPAS, and the number of operators of other broadband technologies (OPUMTS, OPWLL,
763
Patterns of Broadband Development in OECD Countries
23),;36723&(/02% 2QWKHRWKHUKDQGWKH LQÀXHQFHRIPDUNHWFRPSHWLWLRQIRU'6/WHFKQRORJ\LVUHSUHVHQWHGE\WKHQHZHQWUDQW¶VVKDUHRI PSTN access lines (LINNEWEN) and by the numEHURI¿[HGVZLWFKHGWHOHFRPPXQLFDWLRQQHWZRUN 3671 RSHUDWRUV 23),;367 2WKHULQGLFDWRUV such as the number of operators offering broadband services over DSL and cable modem technologies, would have been useful for the analysis, but they were not available for all OECD countries. Technological and Market Competition Both the statistical and the correlation analysis RI WKH GDWD FRQ¿UPHG WKH VLJQL¿FDQW DQG SRVLWLYH LQÀXHQFH RI WHFKQRORJLFDO FRPSHWLWLRQ LQ the availability of DSL access networks. DSL coverage is dramatically higher for countries with competing cable infrastructures (an average of 10 times greater), and the existence of DSL and cable competition is the variable with the highest corUHODWLRQFRHI¿FLHQWZLWK'6/FRYHUDJH On the other hand, according to the variable importance analysis of MARS, the availability of competing infrastructures, either cable infrastructures (represented by DSLVSCAB) or PSTN access lines (represented by LINNEWEN), seems to have some relevance to explain DSL coverage. If these
two types of competition between infrastructures are compared (Model 2), the technological competition with cable networks appears as the most important factor after the gross national income per capita, whereas the market share in the local loop is in fourth position, after the percentage of urban population. The analysis also shows that the mere existence of market competition between ¿[HG3671RSHUDWRUV 23),;367 DVZHOODVWKH number of operators of other broadband technoloJLHVGRQRWVLJQL¿FDQWO\LQÀXHQFHWKHOHYHORI'6/ coverage (Models 1-4). The analysis of the regression slopes reveals WKDWWKHLQÀXHQFHRIWKHH[LVWHQFHRIWHFKQRORJLcal competition is always positive, whereas the LQÀXHQFHRI3671DFFHVVOLQHVFRPSHWLWLRQLVQRW positive for all the variable range. According to 0RGHOWKLVLQÀXHQFHLVRQO\VWURQJO\SRVLWLYH IRUWKH¿UVWDQGVHFRQGUHJLRQIRUPDUNHWVKDUH bellow 1.5%. This is the case of Korea where the new entrants share of access lines increased form 0.3% in 1999 to 1.5% in 2001, and the DSL coverage was relatively high (70%). )RUKLJKHUYDOXHVRIPDUNHWVKDUHWKHLQÀXHQFH of this variable is strongly negative for the third region limited by the knot value of 7.5%. This change of tendency is due to some cases such as the U.S. (2000) or the Netherlands (2000) with more
Table 1. Model 2, predicted variable: DSL coverage (DSLCOV) Variable
Importance
GNICAP
638.984
DSLVSCAB
519.491
DSLVSCAB_mis
482.029
73.013 ||||||||||||||||||||||||||||||||||||||||
URBPOP
349.498
37.260 ||||||||||||||||||||
URBPOP_mis
349.498
37.260 ||||||||||||||||||||
LINNEWEN
341.860
34.075 ||||||||||||||||||
LINNEWEN_mis
341.860
34.075 ||||||||||||||||||
POPDENS
324.321
25.285 |||||||||||||
Naive Adjusted: 0.742 GCV R-square: 0.717
764
Cost of Omission
100.000 ||||||||||||||||||||||||||||||||||||||||||||||||||||||| 80.283 ||||||||||||||||||||||||||||||||||||||||||||
Patterns of Broadband Development in OECD Countries
Figure 2. MARS regression slopes (a) for gross national income per capita (GNICAP) (DSL coverage, Model 1-3); (b) for number of ISDN channels per 100 inhabitants (ISDNCH100) (DSL coverage, Model 3); (c) for existence of competition between DSL and cable technologies (DSLVSCAB) (DSL coverage, Model 2); (d) for existence of competition between PSTN access lines (LINNEWEN) (DSL coverage, Model 2) Curve 1: Pure Ordinal
Curve 3: Pure Ordinal
60
25
50
20
40
15 30
10 20
5
10
0
0 0
10000
20000
30000
40000
0
50000
10
20
50
Curve 6: BF25--Categorical-Ordinal Interaction
LINNEWEN_mis, DSLVSCAB_mis
30
50
40
(b)
(a) Curve 3: BF5--Categorical-Ordinal DSLVSCAB_mis
30
ISDNCH100
GNICAP
40
20 30 20
10 10
0 -0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
DSLVSCAB
(c)
than 7% of market share but low DSL coverage, 36% and 40% respectively. Nevertheless, the cable network coverage is very high for these countries, with 94% and 97% of homes passed by a cable TV network respectively. Actually the success in the development of PSTN facilities-based competition in countries such as United States and the United Kingdom (19.8% and 10% of new entrants market share in UK and U.S. respectively, in 2001), both early starters in introducing telecommunications competition, can be partly explained by the development of telephony services provided by cable networks operators. This reason could also explain the increase of new entrants share of access lines
0
2
4
6
8
10
12 14 16 18 20 22 24
LINNEWEN
(d)
in other countries such as Spain (2.3% in 2000 to over 5.2% in 2001) (OECD, 2003c). )LQDOO\WKHLQÀXHQFHRIFRPSHWLWLRQLQWKHORFDO loop infrastructures is slightly positive for values higher than 7.5%, mainly due to some cases such as Denmark (2001) with 12% of market share and 90% of DSL coverage. Nevertheless, in Model 1 a QHJDWLYHLQÀXHQFHFDQEHREVHUYHGIRUWKLVUHJLRQ due to cases such as United Kingdom (2002) or Hungary (2001) with 19.8% and 21% of market share in the local loop, and low level of DSL coverage, 66% and 20% respectively. These results can be interpreted to mean that the mere existence of market competition does
765
Patterns of Broadband Development in OECD Countries
QRWKDYHDVLJQL¿FDQWLQÀXHQFHRQEURDGEDQGGHvelopment, either positive or negative. Moreover, only the existence of competing infrastructures is a key factor to explain broadband coverage. This LQÀXHQFH LV FOHDUO\ SRVLWLYH IRU WKH FRPSHWLWLRQ between infrastructures of different broadband technologies, in concrete DSL and cable. However WKHLQÀXHQFHRI3671IDFLOLWLHVEDVHGFRPSHWLWLRQ seems to be only strongly positive for countries that DUHVWDUWLQJWRLQWURGXFHFRPSHWLWLRQDQGWKHLQÀXence is even negative when there is a high market share of new entrants in the local loop.4 Local Loop Unbundling, Line Sharing Strategies to open the local loop are viewed as being fundamental in promoting a fast roll-out of broadband services (ITU, 2003b). Overall, a greater number of higher-income economies have embraced local loop unbundling (LLU) policies than have developing economies. Nevertheless, the effectiveness of LLU is under discussion and, to date, the major criticism of unbundling or line sharing is that such policies could discourage investment in new infrastructure. In order to shed light over this issue, the effects of local loop unbundling have been included in the empirical analysis by the following indicators: the existence of the regulation of LLU (ULLREG), and the percentage of unbundled local loops (ULLLIN). The statistical analysis shows that DSL coverage is higher for countries where LLU is mandatory5 (1.8 times greater on average) and where there is a higher percentage of unbundled local loops (2.8 times greater). It has also been observed that a high number of unbundled local loops is always associated to high levels of DSL coverage; whereas low number of unbundled local loops, this does not imply necessarily low coverage. Despite this apparent relationship, the correlaWLRQDQDO\VLVVKRZVWKDWWKHFRUUHODWLRQFRHI¿FLHQW LVSRVLWLYHEXWQRWVLJQL¿FDQWDQGDFFRUGLQJWRWKH MARS variable importance analysis, the implementation of LLU has no relevance to predict DSL coverage (Model 1-4). These results thus suggest that there is not a clear relationship between the
766
implementation of LLU and the deployment of broadband infrastructures, either positive or negative.
Demographic Cistribution of the Population (Group 8) The empirical analysis suggests that the demographic distribution is among the most important factors for broadband infrastructure availability. This issue is represented by the variables in Group 8, which include the household density (HOUSDENS), the population density (POPDENS), and the percentage of urban population (URBPOP). The statistical analysis shows that DSL coverage is, on average, 3.3 times greater for countries with higher levels of urbanization. The correlaWLRQDQDO\VLVFRQ¿UPVWKDWWKHUHLVDSRVLWLYHDQG VLJQL¿FDQWUHODWLRQVKLSEHWZHHQWKHSHUFHQWDJHRI urban population (URBPOP) and household density (HOUSEDENS) with DSL coverage. According to MARS models, an increase of population density implies an increase of DSL coverage for all the range of values of this variable (Models 1, 2). This is different for the percentage of urban population as this variable only has a SRVLWLYHLQÀXHQFHRQ'6/LQIUDVWUXFWXUHGHSOR\ment for values under 67% for cases (Models 1, 3, 4). This result suggests that the percentage of urban population is only a key factor to explain the deployment of broadband infrastructures, when this concentration is bellow this threshold value, or equivalently, when the percentage or rural population is high (i.e., Germany, Slovak Republic, Ireland, Finland, Greece, etc.). 7KH LQÀXHQFH RI GHPRJUDSKLF GLVWULEXWLRQ indicators can be explained by the direct relationship between the cost of broadband infrastructure deployment and the spatial density of users. Thus, in urban areas with high household and population density, the operators can take the maximum EHQH¿W IRU WKH LQIUDVWUXFWXUH GHSOR\PHQW FRVW as the number of possible customers covered is also high. Nevertheless, in rural or remote areas, which are characterized by low household or low SRSXODWLRQGHQVLW\WKHFRVWEHQH¿WUDWLRLVZRUVH than in urban areas for two reasons. First the cost
Patterns of Broadband Development in OECD Countries
Figure 3. MARS regression slopes (a) for population density (POPDENS) (DSL coverage, Model 1, 2); (b) for urban population (URBPOP) (DSL coverage, Model 1, 3, 4) Curve 2: Pure Ordinal
Curve 5: BF10--Categorical-Ordinal DSLVSCAB_mis, URBPOP_mis
25
60 20
50 40
15
30 10 20 5
10
0 0
100
200
300
400
500
POPDENS
(a)
of deploying broadband infrastructures is higher for areas of this type (long distances to cover with ¿EHUFDEOHRUUDGLROLQNVDQGQHZHTXLSPHQWLQWKH ORFDORI¿FH $QGVHFRQGWKHH[SHFWHGEHQH¿WVLQ rural areas are lower because there is usually less demand for broadband services. Thus, generally speaking, it can be assessed as an initial hypothesis that low levels of urbanization and low household and population density are constraints for broadband deployment.
The Availability and Investment in Telecommunications Infrastructure (Groups 1, 2) In the case of DSL technology, another constraint for infrastructure deployment has also been idenWL¿HGE\WKHHPSLULFDODQDO\VLV7KLVLVWKHOHYHO RIPRGHUQL]DWLRQRIWKH¿[HGWHOHSKRQHQHWZRUN represented by the number of access lines connected to digital exchanges, DIGACLIN, and the number of ISDN channels per inhabitant, ISDNCH100 (Group 1). At the end of 2001, the process of digitalizing WKH¿[HGWHOHSKRQHQHWZRUNZDVQHDULQJFRPSOHtion across the OECD area, with an average of 97%. Nevertheless, there are still some countries where the proportion of digital access lines is a little under 90%. These countries are Hungary, Korea, the Slovak Republic, Spain, and Turkey (OECD, 2003c).
0 40
50
60
70
80
90
100
URBPOP
(b)
According to the statistical analysis, DSL coverage is lower for countries whose PSTN networks have a lower digitalization level (2.3 times greater on average). Nevertheless, there are outliers such as Spain whose rate of digitalization is relatively low while its DSL coverage is relatively high (87% and 81% in 2001, respectively). In any case, the countries that lead the way for DSL coverage (90% or more) are fully digital, like Belgium and Denmark. The correlation analysis also shows a VLJQL¿FDQWSRVLWLYHFRHI¿FLHQWEHWZHHQGLJLWDOL]Dtion and DSL coverage. The analysis of the regression slopes of MARS models shows that an increase in the number of ISDN channels per 100 inhabitant, corresponds to an increase of DSL coverage for countries with less than 11.8 ISDN channels per100 inhabitants (Model 3). This result suggests that the deployment of DSL infrastructures is positively related to the modernization of the PSTN networks, especially for countries with low network digitalization level. In summary, the empirical analysis of broadband supply suggests that broadband coverage is mainly explained by the economic level of the country, although the relationship between these two variables is not always positive. Nevertheless, it is also clear that there are other key factors that FRXOG VLJQL¿FDQWO\ LQÀXHQFH EURDGEDQG GHSOR\ment. The existence of strong competition between
767
Patterns of Broadband Development in OECD Countries
telecommunications infrastructures, especially between broadband technologies seems to be the main driver for broadband deployment. However, low urbanization levels and consequently the high cost of network deployment per user appear to be the main constraints for building networks of this type. The empirical analysis also allows inferring DSRVLWLYHLQÀXHQFHRIWKHOHYHORIPRGHUQL]DWLRQ of the PSTN network. Finally, the presence of unbundled access to local loop seems to have not a clear relationship with the deployment of broadband infrastructures, either positive or negative.
Analysis of Broadband Adoption It has generally been accepted that both the supplyside and demand-side factors have a determining LQÀXHQFHRQEURDGEDQGSHQHWUDWLRQDQGWKHUHIRUH both should be taken into account to stimulate broadband adoption. Nevertheless, some have argued that government policies should be focused mainly on demand stimulation measures (i.e., UK). Others consider that more direct involvement by governments in broadband infrastructure availability and affordability would be more effective (i.e., Sweden and Japan). To shed light on this issue, the empirical analysis was carried out to study WKHMRLQWLQÀXHQFHRIVXSSO\DQGGHPDQGIDFWRUV on broadband adoption, both for DSL and cable modem technologies (DSLSB100 and CABSB100 variables). 5HJDUGLQJ WKH IDFWRUV WKDW FRXOG LQÀXHQFH broadband demand, evidence from many countries indicates that sociodemographic factors such as income, education level, gender, or age are major determinants (Savage, 2001). To explore this DVVXPSWLRQ DQ DQDO\VLV RI WKH LQÀXHQFH RI WKH group of demand-side variables (Groups 5-10) in broadband penetration (DSLSB100 and CABSB100 variables) was carried out (Models 1, 3). However, supply-side features such as the availability of EURDGEDQG LQIUDVWUXFWXUHV REYLRXVO\ LQÀXHQFH broadband adoption as well, so two supply-side variables were also included in the models which are DSL and cable coverage (LDSLCOV and LCTVHPAS variables, Group 1) (Models 2, 4). Finally, the DSL penetration has been included as a vari-
768
able in cable modem penetration and vice versa, LQRUGHUWRFDSWXUHWKHLQÀXHQFHRIWKHDGRSWLRQ of competing technologies. The results of the empirical analysis suggest WKDW WKH PRVW LQÀXHQWLDO IDFWRUV IRU EURDGEDQG adoption are: (a) the economic level of the country (Group 7); (b) the level of infrastructures availability (Group 1); (c) social indicators (Group 10); (d) the usage and adoption of Internet (Group 6); and (e) the education level (Group 9). Besides this, the adoption rates for both DSL and cable technologies are strongly and positively related (Group 11). Actually, the MARS models to predict DSL or FDEOHDGRSWLRQDUHSRRUO\¿WWHGLIDGRSWLRQUDWHRI the competing technology is not included in as a SUHGLFWRU7KHLQÀXHQFHRIWKHVHJURXSVRIIDFWRUV are the following.
Economic Level Indicators (Group 7) As for the broadband deployment, the results of the variable importance analysis of MARS show that broadband adoption are mainly explained by the economic level or the country, which is represented by the gross national income per capita variable (GNICAP). 7KLVUHVXOWLVKRZHYHUQRWFRQ¿UPHGE\WKH correlation analysis as none of the features considered as economic indicators in this study apparHQWO\KDYHDVLJQL¿FDQWFRUUHODWLRQZLWKEURDGEDQG penetration. Nonetheless, a more detailed statistical study revealed that the presence of outliers such as Korea in the upper part of broadband penetration (more than percentile 75) and a low income level (GNI less than percentile 25) could explain the ORZFRUUHODWLRQFRHI¿FLHQW7KLVSRLQWZDVWHVWHG E\FDOFXODWLQJWKHFRUUHODWLRQFRHI¿FLHQWEHWZHHQ national income and broadband penetration without taking into account the outliers. The results con¿UPHGWKDWLQFRPHOHYHOKDVDSRVLWLYHLQÀXHQFH on broadband penetration. The analysis of the regression slopes for *1,&$3DOVRUHYHDOVWKHLQÀXHQFHRIWKHFDVHRI .RUHD)RUWKHEHVW¿WWHGPRGHOVWKHLQÀXHQFHRI this variable is strongly positive before the knot of 9,010 USD, which is approximately the gross national income per capita of Korea, followed by
Patterns of Broadband Development in OECD Countries
Table 2. Model 2, predicted variable: DSL subscribers (DSLSB100) considering DSL coverage Variable
Cost of
Importance
Omission
GNICAP
0.753
LDSLCOV_mis
0.491
100.000 ||||||||||||||||||||||||||||||||||||||||||||||||||||||| 77.431 ||||||||||||||||||||||||||||||||||||||||||
EMPWOMR
0.366
63.950 |||||||||||||||||||||||||||||||||||
CABSBS10
0.331
59.688 ||||||||||||||||||||||||||||||||
LDSLCOV
0.228
44.637 ||||||||||||||||||||||||
PC100
0.160
30.926 |||||||||||||||||
PUNDSEC
0.148
27.802 |||||||||||||||
SITES
0.109
13.327 |||||||
Naive Adjusted: 0.971 GCV R-square: 0.979
a strongly negative slope until the knot of 11,430 USD. Finally, the last region presents a decreasing slope (Model 2). As for the models for DSL coverage, these results indicate that an increase of the gross national income produces an increase of DSL adoption for countries with low income level, whereas this relationship is not so clear of even negative for countries with higher incomes.
Infrastructures Availability (Group 1) The results of the variable importance analysis show that the availability of broadband infrastructures, represented by the percentage of DSL enabled local loops (LDSLCOV) and the percentage of homes passed by a cable TV network (LCTVHPAS) (both in the previous year), is a key factor to explain broadband penetration. 7KHDQDO\VLVDOVRLQGLFDWHVWKDWWKHLQÀXHQFH of infrastructure availability is positive both for DSL and cable modem penetration. Whereas for '6/WHFKQRORJ\WKHLQÀXHQFHLVSRVLWLYHIRUDOO the values range, it is only positive for values higher than 75% of homes passed in the case of cable technology. These results suggest that the availability of infrastructures is still a key factor to consider in understanding broadband adoption in OECD countries.
Social Indicators (Group 10) The analysis indicates that some social indicators, especially the employment rate of women (EMP:205 FRXOGKDYHVRPHLQÀXHQFHWRH[SODLQWKH tendency of the society to adopt broadband, both for DSL and cable modem technologies. This result could be interpreted to mean that open-minded societies, possibly characterized by a high level of women incorporated into the labor market, could have a tendency to adopt new technologies such as broadband.
Internet Usage (Group 6) The results of the empirical analysis show that the number of PCs per 100 inhabitants (PC100) and the number of local Web sites (SITES) are WKH YDULDEOHV RI WKLV JURXS WKDW PRVW LQÀXHQFH broadband demand for both DSL and cable modem technologies. The analysis of the regression slopes RI0$56UHYHDOVWKDWWKHLQÀXHQFHRIWKHQXPEHU of local Web sites is positive for all the range of values of this variable, and for values higher than 9.5 PCs per 100 inhabitants (Model 1). 7KHLQÀXHQFHRIWKHQXPEHURI3&VLVFRQ¿UPHG by the MARS variable importance analysis only for DSL penetration, whereas the number of local Web sites appears as a relevant predictor both for DSL
769
Patterns of Broadband Development in OECD Countries
Figure 4. MARS regression slopes (a) for lagged DSL coverage (LDSLCOV) (DSL subscribers, Model 2); (b) for lagged cable TV coverage (LCTVHPAS) (Cable modem subscribers, Model 4) Curve 6: BF14--Categorical-Ordinal Interaction
LDSLCOV_mis
Curve 4: Pure Ordinal 1.6
2.5
1.4 1.2
2.0
1.0 1.5
0.8 0.6
1.0
0.4 0.5 0.2 -10
0
10
20
30
40
50
60
70
80
90 100
LDSLCOV
(a)
DQGFDEOHPRGHP7KLVFRQFOXVLRQLVFRQ¿UPHG by the statistical analysis as DSL penetration is almost four times greater in countries where there are more local Web sites and this number increases WR¿YHIRUFDEOHPRGHPSHQHWUDWLRQ1HYHUWKHOHVV WKH LQÀXHQFH RI WKLV YDULDEOH LV QRW FRQVLVWHQWO\ FRQ¿UPHGE\WKHFRUUHODWLRQDQDO\VLV These results suggest that broadband demand is higher when people have some kind of predisposition to use Internet and new technologies as well as the skills to use them, especially for DSL technologies. It also reveals that the local content availability represented by the number of local content, could be a driver for broadband adoption.
Education (Group 9) ,Q WKH HPSLULFDO DQDO\VLV WKH LQÀXHQFH RI WKLV indicator is represented by PUNDSEC, that is the percentage of population that has not attained secondary level of education, PUPSEC, that is the percentage of population that has attained upper secondary and postsecondary level of education, and PTER, that is the percentage of population with a tertiary education level (PTER), all of them for people aged between 25 and 64. The statistical analysis reveals that the education level has a positive relationship on broadband
770
-10
0
10
20
30
40
50
60
70
80
90
100
LCTVHPAS
(b)
penetration. For countries with higher education levels, DSL and cable modem penetration is 5.6 DQGWLPHVJUHDWHUUHVSHFWLYHO\7KLVLQÀXHQFH is only weakly demonstrated by the correlation analysis but appears clearly demonstrated in the variable importance analysis of MARS especially for DSL penetration. The analysis of the regression VORSHVFRQ¿UPVWKHSRVLWLYHLQÀXHQFHRIWKHSHUcentage of population with education level higher than secondary (PTER and PUPSEC, Model 1), DQG WKH QHJDWLYH LQÀXHQFH RI WKH SHUFHQWDJH RI population with lower education level (PUNDSEC, Model 2). Nonetheless, some of the regression VORSHVDUHQRWORJLFDO VXFKDVWKHSRVLWLYHLQÀXence of PUNDSEC in DSL penetration in Model 1), which indicates that a further analysis should be done over this issue. In summary, the empirical analysis of broadband adoption suggests that it is mainly explained by the economic level of the country, although there is not a direct relationship between these two values. It also reveals that the availability of broadband infrastructures is still a key factor to explain the penetration of these technologies. Besides this, this results suggest that broadband demand is higher when local content is available and the people have some kind of predisposition to use new technologies such as the PC. Finally, the
Patterns of Broadband Development in OECD Countries
)LJXUH0$56UHJUHVVLRQVORSHV D IRUQXPEHURI3&VSHULQKDELWDQWV 3& '6/ subscribers, Model 1, 2); (b) for number of local Web sites (SITES) (DSL subscribers, Model 2); (c) for percentage of population with a tertiary education level (PTER) (DSL subscribers, Model 1); (d) for percentage of population that has not attained secondary level of education (PUNDSEC) (DSL subscribers, Model 2) Curve 5: Pure Ordinal
Curve 9: BF29--Categorical-Ordinal LDSLCOV_mis
3.0
0.8
0.6
2.0
0.4 1.0 0.2
0.0
0.0 0
10
20
30
40
50
60
0
70
10
20
30
40
50
PC100
SITES
(a)
(b)
Curve 2: Pure Ordinal
60
70
80
90
Curve 5: Pure Ordinal 1.4
50
1.2
40
1.0 30
0.8
20
0.6 0.4
10
0.2
0 0
10
20
30
40
50
0.0 10
20
30
40
50
60
PTER
PUNDSEC
(c)
(d)
analysis also shows that other social features that could indicate open-mindedness of high educaWLRQOHYHOKDYHDSRVLWLYHLQÀXHQFHRQEURDGEDQG demand.
DISCUSSION AND CONCLUSION The results of the empirical study show what could EHWKHPDLQIDFWRUVWKDWLQÀXHQFHERWKEURDGEDQG supply and demand in OECD countries. Regarding broadband supply, the existence of competition between telecommunication infra-
70
80
90
structures, especially between broadband technologies, seems to be the main driver for broadband deployment. The empirical analysis also allows XVWRGHGXFHDSRVLWLYHLQÀXHQFHRIWKHOHYHORI digitalization of the PSTN network on DSL coverage. On the other hand, low urbanization levels, and consequently the high cost of network deployment per user, appear to be the main constraint for broadband provision. Finally, the presence of unbundled access to local loop seems to have not a clear relationship with the deployment of broadband infrastructures, either positive or negative. Regarding broadband adoption, the analysis suggests that demand is higher when local Web
771
Patterns of Broadband Development in OECD Countries
content is available and when the use of new technologies, such as the PC, is generalized among the population. Also, social features that could indicate open-mindedness and high education level, seem WRKDYHDSRVLWLYHLQÀXHQFHRQEURDGEDQGGHPDQG The analysis also reveals a positive relationship between broadband supply and demand, as the availability of broadband infrastructures is still a key factor to explain the penetration in many countries. Once the empirical study has provided which are the main constraints and motivators for broadband deployment and adoption, these results can be used to shed light on the effectiveness of the different broadband policy alternatives, which is WKH¿QDOREMHFWLYHRIWKLVUHVHDUFK$FFRUGLQJWR Cava and Alabau (2006), these alternatives can be URXJKO\FODVVL¿HGDV D VRIWLQWHUYHQWLRQVWUDWHgies, (b) medium-intervention strategies, and (c) hard-intervention strategies. Soft-intervention strategies are characterized by low government involvement in broadband infrastructure deployment as they rely on market forces to ensure broadband supply. Some of the most representative examples of this orientation are the strategies of the United Kingdom, Switzerland, Denmark, and New Zealand. Soft-intervention strategies are strongly recommended by OECD (OECD, 2002a) and organizations such as the European Competitive Telecommunications Association (ECTA, 2004). The main arguments for this approach are that the development of broadband infrastructure is still at an early stage and an excessive government involvement may distort competition and affect future market development. On the contrary, hard-intervention strategies are characterized by very proactive government involvement in broadband infrastructure deployment. This is the case of countries such as the Republic of Korea, Norway, and Singapore, where there is a strong tradition of state intervention in the investments of the private sector. As an intermediate option, medium-intervention strategies are characterized by a relatively proactive government involvement in broadband infrastructure deployment to complement market functioning in geographic areas where there is a
772
lack of broadband infrastructures. The rationale for these strategies is that, under market conditions, there are certain areas that are scarcely populated such as rural or remote areas where broadband services might not be available. This type of public actions is very common in the European Union framework as member states have LQWURGXFHG ¿QDQFLDO VWUDWHJLHV XVLQJ VWUXFWXUDO funds to facilitate deployment in remote and rural areas in countries such as Italy, France, and Spain (European Commission, 2004). There are also similar strategies in the U.S. such as the Rural Utilities Service Telecommunications Program to subsidize the development of plain service telephone networks (PSTN) in rural areas that are prepared for broadband.6 According to the results of the empirical analysis, the most effective policy for accelerating broadband deployment would be the promotion of technological competition (i.e., between DSL and cable networks), which is in the foundations of the soft and medium-intervention strategies. On the other hand, since it has also been proven that one of the main constraints for broadband provision is the high cost of network deployment per user in rural or scarcely populated areas, it is reasonable to conclude that medium-intervention strategies that provide public funding for infrastructure supply in these areas, could be more suitable for a balanced broadband coverage in the whole territory. It is worth noting that, in the light of the empirical analysis, other competition policies such as the promotion of unbundled access to local loops seems to have no impact on broadband provision, either negative or positive. Nevertheless, it can be argued that this policy could encourage competition DQGWKXVKDYHRWKHUEHQH¿FLDOHIIHFWVVXFKDVWKH reduction of access prices and the improvement of ¿QDOVHUYLFHTXDOLW\ Regarding the policies to promote demand, the analysis suggests that soft-intervention strategies aimed WRLQFUHDVHSHRSOH¶VXVHRIQHZWHFKQRORgies and Internet could be very effective. To this purpose, public actions to raise the awareness of EURDGEDQGEHQH¿WVDQGWRLPSURYHVNLOOVIRUXVLQJ PCs or other user equipment could be useful to promote demand. However, the strong relationship
Patterns of Broadband Development in OECD Countries
between broadband supply and demand also allows the conclusion that medium-intervention policies aimed to guarantee the availability and quality of broadband networks could be useful to promote broadband demand. In conclusion, it can be stated that the crossnational empirical analysis can provide some useful information to design effective broadband policies that support the drivers and attenuate the constraints to broadband development. However, it should be pointed out that the inherent limitations of the empirical method do not allow us to infer strong political recommendations. In order to overcome these limitations, some improvements can be put in practice to tackle the problem of broadband develRSPHQWPRGHOLQJLQWKHIXWXUH ¿UVWWRLQFRUSRUDWH more data for the modeling process, both from a temporal perspective (time-series data) and from a spatial perspective (data at a regional or local scale), and second, to capture the effects of other W\SHVRIVRFLDOIHDWXUHVVXFKDVWKHLQÀXHQFHRI the public policies to promote broadband. To this purpose, the coding of government initiatives and their inclusion as independent variables should be an effort made in future work.
REFERENCES Bauer, J.M., Kim, J.H., & Wildman, S.S. (2003). Broadband uptake in the OECD countries: Policy lessons and unexplained patterns. Paper presented at the 14th European Regional Conference of the International Telecommunication Society, Helsinki, Finland, August 23-24, 2003. BDRC Ltd. (2001). The development of broadband access platforms in Europe. Technologies, services, markets. Brussels: European Commission. Retrieved July 29, 2007, from http://europa. eu.int/eeurope Cava, I., & Alabau, A. (2003). Comparative analysis of broadband policy. A methodological approach. Paper presented at the 14th European Regional Conference of the International Telecommunication Society, Helsinki, Finland, August 23-24, 2003.
Cava, I., & Alabau, A. (2006). Broadband policy assessment: A cross-national empirical analysis. Telecommunications Policy, 30, 445-463. Distaso, W., Lupi, P., & Maneti, F.M. (2006). Platform competition and broadband uptake: Theory and empirical evidence from the European Union. Information Economics and Policy, 18, 87-106. ECTA. (2004). ECTA News. Retrieved July 29, 2007, from http://www.ectaportal.com European Commission. (2004). Connecting Europe at high speed: National broadband strategies. Retrieved July 29, 2007, from http://europa. eu.int/information_society/eeurope/ Falch, M. (2004). How to achieve the goal of broadband for all. Paper presented at the ITS Conference, Berlin, Germany, September 14-17, 2004. Frieden, R. (2005). Lessons from broadband development in Canada, Japan, Korea, and the United States. Telecommunications Policy, 29, 595-613. Friedman, J.H. (1991). Multivariate adaptive regression splines (with discussion). Annals of Statistics, 19(1), 82-91. Gabel, D., & Kwan, F. (2000). Accessibility of Broadband Telecommunication Services by Various Segments of the American Population. Paper Prepared for the Telecommunications Policy Research Conference, Queens College, CUNY. Retrieved July 29, 2007, from http://itc.mit.edu/ itel/docs/MISC/gabel_kwan_tprc.pdf Garcia-Murillo, M., & Gabel, D. (2003). International broadband deployment: The impact of unbundling. Paper presented at the 31st Telecommunications Policy Research Conference, Arlington, Virginia. Gillet, S.E., Lehr, W.H., & Osorio, C. (2004). Local government broadband initiatives. Telecommunications Policy, 28, 537-558. Grubesic, T.H. (2004). The geodemographic correlates of broadband access and availability in the United States. Telecommunications Policy, 21, 335-358.
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Grubesic, T.H., & Murray, A.T. (2002). Constructing the digital divide: Spatial disparities in broadband access. Papers in Regional Science, 81(2), 197-221.
OECD. (2002b). Broadband access for business. Paris: Head of Publications Service, OECD. Retrieved July 29, 2007, from http://http://www. oecd.org/
Hair, J.F., Anderson, R.E., Tatham, R.L., & Black, W.C. (1998). Multivariate data analysis. Upper Saddle River, NJ: Prentice-Hall International, Inc.
OECD. (2003a). OECD telecommunication database 2003 on CD-ROM.
ITU. (2003a). World telecommunication indicators database on CD-ROM (7th ed.). Geneva: International Telecommunication Union. Retrieved July 29, 2007, from http://www.itu.int/ITU-D/ict/publications/
OECD. (2003b). Society at a glance: OECD social indicators 2002 Edition. OECD. OECD. (2003c). OECD communications outlook. Paris: Head of Publications Service, OECD. Retrieved July 29, 2007, from http://www.oecd.org/
ITU. (2003b). ITU Internet reports 2003: Birth of broadband. Geneva: International Telecommunication Union. Retrieved July 29, 2007, from http://www.itu.int/broadband
Rappoport, P.N., Kridel, D.J., Taylor, L.D., & Alleman, J. (2003). Residential demand for access to the Internet. In G. Madden (Ed.), The international handbook of telecommunications economics, Vol. II (pp. 55-72). Cheltelham, UK: G. Madden.
Lau, T.Y., Kim, S.W., & Atkin, D. (2005). An exDPLQDWLRQRIIDFWRUVFRQWULEXWLQJWR6RXWK.RUHD¶V global leadership in broadband adoption. Telecommunications Policy, 22, 349-359.
Salford Systems. MARS v1.0, © copyright. All rights reserved worldwide. Retrieved July 29, 2007, from http://www.salford-systems.com
Lee, C., & Chan-Olmsted, S.M. (2004a). Competitive advantage of broadband Internet: A comparative study between South Korea and the United States. Telecommunications Policy, 28, 649-677.
Savage, J. (2001). International public programs to provide broadband access to the Internet. Benchmarking analysis. Canada National Broadband Task Force. Retrieved July 29, 2007, from http:// www.broadband.gc.ca
Lee, C., & Chan-Olmsted, S.M. (2004b). Competitive advantage of broadband Internet: A comparative study between South Korea and the United States. Telecommunications Policy, 28, 649–677.
Steinberg, D., Colla, P.L., & Martin, K. (1999). MARS user guide. San Diego, CA: Salford Systems.
/L: ;X/& 7KHSROLWLFDOHFRQRP\RI privatization and competition: Cross-country evidence from the telecommunications sector. Journal of Comparative Economics, 30, 439-462.
World Bank. (2003). World development indicators 2003 on CD-ROM. Washington, DC: World Bank Group.
OECD. (2001). The development of broadband access in OECD countries. Paris: Head of Publications Service, OECD. Retrieved July 29, 2007, from http://http://www.oecd.org/pdf/M00020000/ M00020255.pdf
KEY TERMS
OECD. (2002a). Broadband infrastructure deployment: The role of government assistance. Paris: Head of Publications Service, OECD. Retrieved July 29, 2007, from http://www.oecd.org/sti/working-papers
774
Multivariate Adaptive Regression Splines Regression (MARS): An adaptive procedure for function approximation and regression. The structural model built by MARS considers a set of expansions in piecewise linear basis functions (BFs) of the form (x - t)+ and (t - x)+ , where the subscript “+” means “positive part” whose corresponding weighs are adaptively tuned.
Patterns of Broadband Development in OECD Countries
Multivariate Linear Regression: A regression method that assumes that the relation of the response to the explanatory variables is a linear function. The basic assumptions of multivariate regression are (1) multivariate normality of the residuals, (2) homogenous variances of residuals conditional on predictors, (3) common covariance structure across observations, and (4) independent observations. Digital Subscriber Line (DSL): A family of technologies that provide digital data transmission over the wires of a local telephone network. DSL takes advantage of the unused bandwidth of the local loop (frequencies above 3.4KHz) by creating 4312.5 Hz wide channels starting between 10 and 100 for digital data transportation. Asymmetric digital subscriber line (ADSL) is the most chosen broadband option in the world, holding more than 60% of the broadband market. The access device is a DSL modem. Hybrid Fiber Coaxial (HFC): A type of QHWZRUN EDVHG RQ ERWK RSWLFDO ¿EHU DORQJ ZLWK coaxial cable to provide interactive broadband VHUYLFHV 7KH ¿EHU RSWLF QHWZRUN H[WHQGV IURP WKH FDEOH RSHUDWRUV FHQWUDO RI¿FH WR WKH DUHD¶V KHDGHQGRXWWRDQHLJKERXUKRRG¶VKXEVLWHDQG ¿QDOO\WRD¿EHURSWLFQRGHZKLFKVHUYHVIURPWR KRPHV7KH¿EHURSWLFQRGHFRQYHUWVRSWLFDO signals to electronic and vice versa, and from this node to the user premises, the network is based on coaxial cables that connect 100 to 2000 homes in a WUHHDQGEUDQFKFRQ¿JXUDWLRQ%\XVLQJIUHTXHQF\ division multiplexing, an HFC network may carry a variety of services, including noninteractive (TV services) and interactive services such as broadband access to Internet. The access device is a cable modem. Local Loop Unbundling (LLU): A regulatory requirement that enables a competing telecommunications operator to use the twisted-pair telephone FRQQHFWLRQVIURPWKHWHOHSKRQHH[FKDQJH¶VFHQWUDO RI¿FHWRWKHFXVWRPHUSUHPLVHV7KLVORFDOORRSLV owned by the incumbent local exchange carrier. Broadband Digital Divide: The gap between those with effective access to broadband services
and those without. The term refers not only to the unavailability of physical access to broadband QHWZRUNVEXWDOVRWRWKHGLI¿FXOWLHVLQXVLQJWKHVH technologies because of lack of skills and literacy. Given that broadband is seen as the key driver for future social and economic development, the digital divide widens the gap in economic divisions around the world. Digitalization of Telephone Network: The replacement of analogue exchanges by digital exchanges. It allows the extension of ISDN coverage and improves the reliability and quality of the network.
ENDNOTES 1
2
3
4
5
6
This is because this is the most basic speed being offered by telecommunications providers in OECD countries and allows the comparison and contrast of the initial speeds available for broadband access. Nevertheless, ISDN technologies are considered not to constitute broadband. The material related to this empirical research is available by request. There are very few OECD countries that have two or more competing providers using different infrastructures on a widespread basis for broadband access (OECD, 2002b). This result coincides with (Distaso et al., 2006). $WWKHHQGRIRQO\¿YHFRXQWULHVKDG not mandated LLU in one form or another, Mexico, New Zealand, the Slovak Republik, Switzerland and Turkey (OECD, 2001). Overall, a greater number of higher-income economies have embraced LLU policies than have developing economies. Switzerland and New Zeland are two exceptions as LLU is not mandatory and DSL coverage is very high. This condition mainly consist of limiting the maximum local loop length to allow broadband technologies as ADSL or even VDSL.
775
776
Chapter XLVII
ICT Statistics for Broadband Promoting Regulatory Policy 'LDQD.RUVDNDLWơ Communications Regulatory Authority, Lithuania Tomas Lamanauskas Communications Regulatory Authority, Lithuania
ABSTRACT This chapter introduces the statistical analysis of a number of information and communication technologies (ICT) market indicators as a means to develop sound regulatory policies aiming to promote broadband take up. The chapter provides analysis of the concept of broadband, statistical analysis of ICT indicators, time series and cross-country series against broadband penetration, determination of FRQWHUPLQRXVIDFWRUVZLWKVWDWLVWLFDOO\VLJQL¿FDQWLQÀXHQFHRYHUEURDGEDQGSHQHWUDWLRQLQ(XURSHDQ VWDWHVDQGGHULYDWLRQRIFDOOVIRUUHJXODWRU\SROLF\SDUWLFXODUDFWLRQVRXWRIVWDWLVWLFDOO\VLJQL¿FDQW relations. The overall aim of the chapter is to offer a way how ICT statistical data could be employed to suggest preconditions for possible practical solutions in the domain of broadband promotion and in this way to bring the rhetoric of statistics down to an operational level.
INTRODUCTION The 21st century economy, or information economy, is based on information society on one hand and inIRUPDWLRQLQIUDVWUXFWXUHRQWKHRWKHUKDQG 7RIÀHU citing Rytel, 2001). As Professor W. Melody argues, this economy is founded on information/communication networks and dependent on effective reforms in the telecom sector (Melody, 2003). With this in mind, we can state that broadband functions as a conductor or link delivering information and communication technologies (ICT) gains to every individual.
Much attention is delivered to the issue of statistics on the development of the ICT sector and adoption of ICTs in the highest political forums—the World Summit on the Information Society could be just one out of many examples. However, statistical data in the ICT domain is quite often used for comparison purposes solely, which does not allow employing its potential to the full extent. We would say that the true value of statistical data is delivered when statistics, properly applied, suggest preconditions for possible solutions. Therefore keeping this principle in mind, delivering due regard to importance of broadband
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ICT Statistics for Broadband Promoting Regulatory Policy
development for the information economy, and understanding the importance of regulatory intervention on the progress of the aforementioned processes, we will employ statistical data on ICT development and adoption to deduce eligible and possible regulatory policy guidelines fostering broadband development. The overall aim of the research is to propose a way that ICT statistical data could be employed to suggest preconditions for possible practical solutions in the domain of broadband promoting regulatory policy, in this way bringing the rhetoric of statistics down to operational level. The chapter LVRUJDQL]HGDVIROORZV ¿UVWDQDO\VLVRIEURDGEDQG concept is performed; second, statistical analysis of ,&7LQGLFDWRUV¶WLPHVHULHVDQGFURVVFRXQWU\VHULHV is executed; third, conterminous factors having VWDWLVWLFDOO\VLJQL¿FDQWLQÀXHQFHRYHUEURDGEDQG penetration in European states are determined; fourth, calls for regulatory policy actions out of WKLV LQÀXHQFH DUH LGHQWL¿HG ¿QDOO\ JXLGHOLQHV for broadband promoting regulatory policy are provided. Our research will be focused mainly on the EU states. This geographical and political area was chosen with regard to several arguments: ¿UVWWKHUHLVDFRPPRQSROLWLFDODQGUHJXODWRU\ framework in this area; second, development of the common market and observed processes of evolving pan-European ICT networks assimilate business modes or supply side of the sector; third, the demand side of the sector or usage patterns of consumers in the area are or are about to be harmonized as well. All this constitutes that the choice of EU area underlies avoidance of possible VLJQL¿FDQW GLVFUHSDQFLHV GXH WR VSHFL¿FLWLHV RI national ICT policies and practices (this would be incurred if states from very different regions were chosen). We used the following methods: literature review, analysis and synthesis of statistical data, graphical, logical, and empirical analysis.
BACKGROUND The broadband adoption and regulatory policy promoting the broadband take up is studied in a
number of researches. The role of the government in the development of alternative broadband networks is studied in the work by Gillett, Lehr, and Osario (2004), who provides a taxonomy distinguishing four categories of government action based on the QDWXUHRIWKHJRYHUQPHQW¶VUROH JRYHUQPHQWV DV EURDGEDQG XVHU LQÀXHQFLQJ WKH GHPDQG RI EURDGEDQG JRYHUQPHQWDVUXOHPDNHULQÀXencing the regulatory framework that affects the commercial deployment of the infrastructure and VHUYLFHV JRYHUQPHQWDV¿QDQFLHULQÀXHQFLQJ ¿QDQFLDOLQFHQWLYHVWRLQYHVWDQGGHSOR\QHWZRUNV and acquire services, and (4) government as infraVWUXFWXUHGHYHORSHULQÀXHQFLQJWKHVXSSO\VLGHRI EURDGEDQGPDUNHWSODFH%DVHGRQWKH¿QGLQJVRI the research on numerous U.S. cases, the authors conclude that public authorities play an important role for the wider adoption of broadband and that involvement in the development of broadband infrastructure is continuing to grow (Gillett et al., 2004). Chlamtac et al. discusses possible models as to how the public sector can be involved in broadband SURMHFWV UDLVLQJDZDUHQHVVRIWKHEHQH¿WVRI broadband, (2) carrying out tasks related to assessment of potential demand, (3) usage of public funds effectively in broadband projects, and (4) determination of level of involvement and modeling broadband deployment (Chlamtac et al., 2005, as cited in Tadayoni & Sigurdsson, 2006). Quite similarly, roles of councils/local governments in promoting broadband are distinguished by van Winden and Woets (2004), who investigate actions of local governments in different cities and GLVFXVVWKHSDUWLFXODUEHQH¿WVDQGULVNVRISXEOLF sector involvement in broadband infrastructure deployment. Tadayoni and Sigurdsson (2006) further applied and elaborated the taxonomy of Gillett et al. (2004) in their investigation of the technological, economic, and political/regulatory drivers and barriers of alternative broadband infrastructures, including the role of government in fostering their H[LVWHQFH)ROORZLQJWKH¿QGLQJVRISUHVHQWHGFDVH studies, the authors argue that lower market entry barriers and public sector involvement are the main two factors acting as drivers for alternative broad-
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ICT Statistics for Broadband Promoting Regulatory Policy
EDQGLQIUDVWUXFWXUHV¶GHSOR\PHQW)XUWKHUPRUHLW is noted that alternative broadband operators tend to employ more open, operator-independent business models in opposition to traditional broadband market players. A study conducted by Choudrie and Dwivedi (2005) on methods used to examine technology adoption issues both in the context of organizations and households that are employed in the papers published in peer reviewed journals between 1985 and 2003 proposes that survey and case study methods are most frequently used in the context in organizations; authors have as well found that in the case of technology adoption by households, a much greater variety of research methods employed is observed, including surveys, multimethods, ethnographic studies, time use diaries, and second data analysis. The authors conclude that the choice of a particular method to be employed is relevant to the extent to which a researcher is a part of the context under study. We admit that most analyses on government policies in the domain of broadband are based on case studies. However, government institutions make and argument their choices with statistics, while deciding upon policies. Therefore, the chapter suggests the statistical approach to formulation of broadband promoting regulatory policy.
ANALYSIS OF THE CONCEPT OF BROADBAND &ODUL¿FDWLRQRIWKHFRQFHSWRIEURDGEDQGLVLPSRUtant for academic exercise purposes as well as for numerous groups of stakeholders—for consumers, service providers, application and content developers, policy makers and regulators, and public interest groups. As Flournoy (2004) points out, broadband is a technological term having to do with the quantity and quality of information to be exchanged over a distance using channels of telecommunications. But the term includes much more—broadband is a business and social goal to be achieved, a way of expressing corporate and public aspirations for a more perfect society EDVHGRQSHRSOH¶VDELOLW\WRJHWPRUHRIZKDWWKH\
778
want, and faster. Here we dedicate our efforts to GH¿QLQJWKHEURDGEDQGQRWLRQ The European Commission distinguishes the following main features of common understanding of the term “broadband:” (1) it is Internet connection, (2) it is “always on,” (3) it provides a speed that LVVLJQL¿FDQWO\IDVWHUWKDQGLDOXSDQG LWVXSports delivery of innovative content, applications and services (Connecting Europe, 2004). Prima IDFLHWKH¿UVWIHDWXUHFRXOGVHHPGRXEWIXODVPDQ\ technological applications are not limited to one network, but this feature cannot be ignored—the current interest in broadband is largely due to the Internet, permitting familiar services to be delivered in unfamiliar ways; moreover, the Internet until now has been generally delivering traditional and new services at lower quality with less reliability than conventional networks but broadband access promises to change all that (Broadband and the Internet, 2001). The second feature, “access 24 hours a day,” is highlighted by many sources in XQLVRQIRUH[DPSOHWKH1DWLRQDO2I¿FHIRUWKH Information Economy (Australia) (Inquiry, 2004), Kim, Bauer, and Wildman (2003), Telstra (Inquiry, 2004), (Always on, 2002), and others. 0DQ\WHFKQRORJLFDOGH¿QLWLRQVOLQNWKHFRQFHSW of broadband to the transmission capacity, probably because broadband was originally an engineering term referring to an amount of information that could be carried between a sender and a receiver through a communications channel, with the implication that a broadband network can carry a lot more information than the traditional methods of accessing the Internet, typically referred to as “narrowband” or “dial up,” using a telephone line and modem (Inquiry, 2004). The Electronic Industries Alliance notes that the concept of broadband captures the notions of greatly increased transmission speed along with transmission capacity and it also enables interactive services (Broadband, 2004). However, there is little consensus as to what “a lot” of information means or which of the evolving technologies are attributed to broadband ones. The European Commission (European Electronic Communications, 2004), for comparison purposes, considers broadband as “capacity equal to, or higher than, 144 kbps;” the Federal Communica-
ICT Statistics for Broadband Promoting Regulatory Policy
tions Commission (FCC) and Canadian Broadband Task Force consider broadband to deliver data rates above 200 kbps (FCC, 2004; Kim at al., 2003); in Australia, a rate of 200 kbps has been accepted (Household broadband, 2001; Inquiry, 2004); OECD goes for as much as 256 kbps downstream capacity (Connecting Europe, 2004). Another approach to determining data rate speed is related to services provided: certain services can dictate the data transfer rate required for broadband. For example, a data transfer rate of 1.544 Mb/s is suitable for full motion videoconferencing, whereas for business applications 384 kb/s is the typical data rate; companies offering residential high speed Internet access over phone or cable modem typically advertise a data transfer rate of 1 Mb/s and up for downstream data and 120 kb/s and up for upstream data (Understanding broadband, 2003). Such a variety of possible approaches does not allow IRUPXODWLQJDVLQJOHGH¿QLWLRQ.LPHWDODUJXH that broadband refers to a general-purpose comPXQLFDWLRQVWHFKQRORJ\UDWKHUWKDQRQHVSHFL¿F technological solution; therefore, common features of broadband additionally include the reliance on some form of packet switching and superiority to traditional networks in terms of latency and jitter (Kim et al.; Best practice options, 2004). Another approach to the broadband notion suggests that broadband is the ability of a single access line or wireless or satellite link, connected
to telecommunications network, to provide support for a fast, always-on access to digital content, applications, and a range of services (Best practice options, 2004), some or all of which can occur simultaneously (Inquiry, 2004). Flournoy (2004) argues that broadband is a two-way communication FRQFHUQHGZLWK³ODVWPLOH´DQG³¿UVWOLQH´DVZHOO In Canada, broadband refers to two-way access to a variety of services via a high-speed connection to the public data network and/or Internet (Understanding broadband, 2003). Systematic analysis of the approaches to broadband shows that broadband is analyzed as an access rather than a transmission technology. There are other aspects important for full understanding of the broadband concept, such as addressability, different applications and content, sophisticated network design/architecture. The main characteristics to be included into the notion of broadband are shown in Figure 1. Following the discussion on broadband concept above, we conclude that broadband is to be viewed as a local access link performance, which does not OLPLWXVHU¶VFDSDELOLW\WRUXQWRGD\¶VDSSOLFDWLRQV delivered over public data networks which encourages the development of new applications. :KLOH¿QLVKLQJWKLVGLVFXVVLRQRQEURDGEDQG notion, it is important to mention technologies for broadband provision. Fundamentally, there are two groups of technologies—wired and wireless
Figure 1. Layout of broadband technological aspects
Access to public data networks (the Internet)
Network design & architecture
Access applications & content
Addressability
Always-on
Bi-directional communication
Latency & Jitter
Speed
BROADBAND
Composed by the authors
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ICT Statistics for Broadband Promoting Regulatory Policy
technologies. Wired technologies include xDSL, FDEOH PRGHP ¿EHU RSWLFV )77[ DQG SRZHU line communications (PLC) (Point, Skouby, & Van Daele, 2004). Wireless technologies propose greater variety, including the following groups: wireless local area network, metropolitan area network, wide area network, cellular world wide area network technologies, satellite, and high altitude platform stations (Flournoy, 2004; Point et al., 2004).
STATISTICAL ANALYSIS OF ICT INDICATORS General Remarks on Broadband Development In 2003, there were 98.8 million broadband subscribers in the world (Informatization, 2004). In July, 2006, the worldwide number passed 247.1 million broadband lines (World Broadband Statistics, 2006), and 400 million subscribers are forecasted by 2009 (IMS Research, as cited in Telecomredux, 2005; World Broadband Statistics, 2005). As statistical evidences from different sources show, xDSL is the leading platform of choice for broadband, accounting for about 67% of world subscribers; Cable modem follows with 23%, and all other technologies gain as little as 10% of world subscribers; North America is the only region where broadband via cable modem VLJQL¿FDQWO\RYHUFRPHV['6/ :RUOG%URDGEDQG Statistics, 2006). In structural view, xDSL is H[SHFWHG WR JDLQ HYHQ PRUH VLJQL¿FDQW VKDUH LQ future (IMS Research, as cited in Telecomredux, 2005; Burke, 2004). However, in this context it has to be admitted that dependency on xDSL is not a SDQDFHDIRUFRXQWU\¶VEURDGEDQGPDUNHW²['6/ is not available at every single geographical point of a territory (rural, remote, low density areas, etc.) and is mostly provided by the incumbent entities. 7KLV ZD\ WKH JURZLQJ OLRQ¶V VKDUH DFTXLUHG E\ xDSL is to be considered reservedly. In the world, countries have different broadband penetration ranging from 30% (Iceland) to 0% (developing countries) (World Broadband Statistics,
780
2006). 7KHVSHHGRIVXEVFULEHUOLQHV¶JURZWKLQ countries varies much as well. A comparison of “top ten countries” by number of lines (as of June 30, 2006) and by percentage of growth of number of lines (second quarter, 2006 and 2005) indicates, that the biggest markets are not necessarily the fastest growing ones—fast growth is more related to low penetration rate. Five European countries fall in the list of top 10 having the biggest number of broadband lines in the world (Germany, UK, Spain, France, Italy), and four European countries fall in the list of top 10 best performing in broadEDQGOLQHV¶JURZWK LQWKH¿UVWDQGVHFRQGTXDUWHU of 2006) (Germany, UK, Spain, France) (World Broadband Statistics, 2006). Lithuanian growth LQOLQHV¶QXPEHUZDVWKH¿IWKIDVWHVWLQWKHZRUOG LQ¿UVWTXDUWHU :RUOG%URDGEDQG6WDWLVWLFV 2005), and together with Slovenia and Estonia is valuated as driving broadband growth in the whole Eastern Europe region in the second quarter, 2006 (World Broadband Statistics, 2006). The broadband sector is one of the fastest growing sectors in EU since its emergence, and the yearly growth of broadband lines counted up to 41.75% (July 2005 – July 2006) (Broadband access, 2006). Although in relative terms this JURZWKLVORZHUWKDQLQWKHSUHYLRXVPRQWKV¶ period (61.86%), in absolute numbers it is higher than the growth recorded between July 2004 and July 2005 (Broadband access, 2006). Penetration of broadband varies much in EU member states (MS)—the ratio of penetration between highest-penetrated Denmark (29.42%) and lowest-penetrated Greece (2.68%) is 11 times. There might be a number of reasons causing such a difference and Figure 2 deals with determination RISRVVLEOHIDFWRUVLQÀXHQFLQJEURDGEDQGSHQHWUDtion and development.
Determination of Statistically 6LJQL¿FDQW,QÀXHQFHVRQ%URDGEDQG Penetration in European States :H KDYH XVHG D FRUUHODWLRQ FRHI¿FLHQW DV D WHVW LQVWUXPHQW LQ RUGHU WR GHWHUPLQH IDFWRUV LQÀXencing broadband penetration. We have checked broadband penetration against the indicators used
ICT Statistics for Broadband Promoting Regulatory Policy
)LJXUH*URZWKLQEURDGEDQG¿[HGDFFHVVOLQHVLQWKH(XURSHDQ8QLRQ 80000 435% 70000
400% 350%
361%
60000 278% 50000
300% 250% 200%
208%
40000 133% 30000
82%
150% 100%
36%
20000
500% 450%
10000
50% 0%
0 JAN 2003
JUL 2003
JAN 2004
JUL 2004
JAN 2005
JUL 2005
JAN 2006
JUL 2006
Total BB fixed access lines % variation ince January 2003
Source: Broadband access, 2006.
Figure 3. European Union broadband penetration rate as of July 1, 2006 35 30 25 20 15 10
Denmark
Netherlands
Finland
Sweden
Belgium
UK
France
Luxemburg
Estonia
Austria
Spain
Italy
Portugal
Malta
Slovenia
Czech Rep
Lithuania
Ireland
Hungary
Latvia
Cyprus
Slovakia
Poland
Greece
0
Germany
5
Source: Broadband access, 2006
by international organizations to evaluate ICT development with the presumption that similar IDFWRUVPLJKWKDYHLQÀXHQFHIRUEURDGEDQGSHQHWUDtion as for the other communication services. We have limited our research to 25 EU member states, taking all the states as a single region (EU25). We have also split the 25 states into two subregions in order to analyze whether there are differences in statistical relations. The EU15 subregion refers to the “old” member states (EU before enlargement of May 1, 2004) and the EU10 subregion refers to
the “new” member states (those entered the EU on May 1, 2004). Our analysis was horizontal as well as vertical (i.e., we have made spread in countries and dynamics in time), and serves as an evaluation of liaisons between broadband penetration and different ICT development parameters for the whole region. We take note that the statistical data used comes for the period since 2001 December 31 to 2006 July 1, 2006, while broadband penetration statistics was used as of July 1, 2006, July 1, 2005, and July 1, 2004.
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ICT Statistics for Broadband Promoting Regulatory Policy
Figure 4. Assessment of relation of categories of indicators to broadband penetration by average rankLQJRIFRUUHODWLRQFRHI¿FLHQWV 5
EU10, rank
EU15, rank
EU25, rank
4 3 2 1
EQP 04 EQP 05 EQP 06 INFR 04 INFR 05 INFR 06 MRKT 04 MRKT 05 MRKT 06 HUM 04 HUM 05 HUM 06 ENV 04 ENV 05 ENV 06 EQP 04 EQP 05 EQP 06 INFR 04 INFR 05 INFR 06 MRKT 04 MRKT 05 MRKT 06 HUM 04 HUM 05 HUM 06 ENV 04 ENV 05 ENV 06 EQP 04 EQP 05 EQP 06 INFR 04 INFR 05 INFR 06 MRKT 04 MRKT 05 MRKT 06 HUM 04 HUM 05 HUM 06 ENV 04 ENV 05 ENV 06
0
Calculated and composed by the authors
We have performed a desk research of statistics on ICT development and logical analysis while choosing the indicators of ICT development to be used in our research. Subsequently, 77 ICT LQGLFDWRUV ZHUH JURXSHG LQWR ¿YH FDWHJRULHV L equipment indicators showing the penetration of different end user devices; (ii) infrastructure indicators, showing the legacy infrastructure in an economy; (iii) market indicators, showing the SRWHQWLDORIWKHQDWLRQ¶VHFRQRP\DQG,&7PDUket; (iv) human capabilities indicators, showing the general and e-literacy of population; (v) and environment indicators, showing the context of broadband development in a particular economy. A full list of the grouped ICT indicators used for our analysis is provided in Appendix 1. We have taken three directions to determine FRUUHODWLRQ FRHI¿FLHQWVRI(8UHJLRQLQRUGHUWR GHWHUPLQHWKHPDLQLQÀXHQFLQJIDFWRUVDQGFRHI¿FLHQWVRI(8VXEUHJLRQDQG(8VXEUHJLRQLQ order to compare and determine whether there are GLIIHUHQFHVRILQÀXHQFHEHWZHHQVRFDOOHG³ROG´ and “new” member states (detailed data on correlation is provided in Appendix 1). Every indicator in every category was ranked from 5 to 1, subject to how high the correlation of broadband to a particular indicator was: correla-
782
WLRQFRHI¿FLHQWDERYHGHOLYHUHGUDQNWRWKH LQGLFDWRU XQGHU TXHVWLRQ FRUUHODWLRQ FRHI¿FLHQW between 0.65 and 0.85 delivered rank 4 to the inGLFDWRU FRUUHODWLRQFRHI¿FLHQWEHWZHHQDQG 0.65 delivered rank 3 to the indicator; correlation FRHI¿FLHQWEHWZHHQDQGGHOLYHUHGUDQN WRWKHLQGLFDWRU DQGFRUUHODWLRQFRHI¿FLHQWEHORZ 0.2 delivered rank 1 to the indicator. This ranking was performed in accordance to Kardelis (2002) V\VWHPRIFRUUHODWLRQVLJQL¿FDQFHQDPHO\³YHU\ KLJK´ FRUUHODWLRQ VLJQL¿FDQFH LV LQ WKH FDVH LI FRUUHODWLRQFRHI¿FLHQWLVDERYH³+LJK´FRUUHODWLRQ VLJQL¿FDQFH PHDQV WKDW WKH FRUUHODWLRQ FRHI¿FLHQW LV EHWZHHQ DQG ³0LGGOH´ FRUUHODWLRQ VLJQL¿FDQFH PHDQV WKDW WKH FRUUHODWLRQFRHI¿FLHQWLVEHWZHHQDQG³/RZ´ FRUUHODWLRQVLJQL¿FDQFHPHDQVWKDWWKHFRUUHODWLRQ FRHI¿FLHQWLVEHWZHHQDQG³9HU\ORZ´ FRUUHODWLRQVLJQL¿FDQFHPHDQVWKDWWKHFRUUHODWLRQ FRHI¿FLHQWLVEHORZ7KHDVVHVVPHQWRIDFDWHJRU\¶VWRWDOUDQNZDVPDGHDVDVLPSOHDYHUDJH mean of ranks of indicators within the category under question. 7KH LQWHUSUHWDWLRQ RI WKH ¿QGLQJV RI WKLV UHsearch is as follows. In EU25 member states, the PRVWVLJQL¿FDQWFRUUHODWLRQRIEURDGEDQGSHQHWUDtion is with equipment category of indicators. PC
ICT Statistics for Broadband Promoting Regulatory Policy
penetration in households and PC equipped employees in all enterprises are the most correlated to broadband penetration; however, PC-equipped employees in different types of enterprises correlate to broadband penetration almost the same OHYHO 1RWHZRUWK\ WKH EURDGEDQG SHQHWUDWLRQ¶V correlation of PC penetration shows growing tendency over the years of investigation. It means WKDW SHRSOHV¶ VWUDLQ WR XVH D SDUWLFXODU VHUYLFHV depends on technical means at their disposal, and QDPHO\SHQHWUDWLRQRIEURDGEDQGLVLQÀXHQFHGE\ penetration of end user means to get the service. 7KHVHFRQGPRVWVLJQL¿FDQWFRUUHODWLRQRIEURDGband penetration is with the human capabilities category of indicators; the strongest relationship is determined between broadband and attainment of people to formal education, that is, 25-64 year olds participating in education and training, 25-64 year olds with at least upper secondary education, and 25-64 year olds with tertiary attainment and individuals using Internet for formalized education activities (school, university, etc.). Again, relationship between broadband and human capabilities indicators gets stronger over the years. It means that broadband penetration is highly dependent RQHGXFDWHGVRFLHW\ZKLFKH[SHULHQFHVEHQH¿WV IURPXVLQJWKHVHUYLFH7KHWKLUGPRVWVLJQL¿FDQW correlation of broadband penetration is with the environmental category of indicators—number of Internet hosts (means a variety of content available to users), research and development expenditure (means searching for innovative technologies and applications), ICT expenditure (on IT hardware, equipment, software, services), which means acquiring means to use more sophisticated services, e-government supply and e-government demand as well as e-commerce supply and demand. Summarizing, favorable environment to provide and to receive electronic communications services, in particular environment-facilitating demand for broadband as well as user understanding of technological achievements, is the group of factors sigQL¿FDQWO\LQÀXHQFLQJWKHEURDGEDQGSHQHWUDWLRQ Among the infrastructure category of indicators, WKHPRVWVLJQL¿FDQWDUHLQWHUQDWLRQDOEDQGZLGWK per inhabitant (high relation) and international bandwidth per economy (medium relation). These
mean potential and actual technical quality of broadband services in terms of speed; however both are interdependent with broadband penetration. Indicator of investments into infrastructure shows that amount of investments per subscriber matters, but amount of investment per revenue does not. Noteworthy, technological variety of broadband does not have a strong relation to broadband penetration in EU25 region (according xDSL as % of all subscriptions), but we think this is due to VLJQL¿FDQWGLIIHUHQFHVEHWZHHQ³QHZ´DQG³ROG´ European countries with regard to broadband development stage. It seems that the importance of technological variety increases with the growth of broadband penetration. Therefore, greater technological variety from the beginning of broadband development gives more impetus to the growth of penetration in later stages of the development. This means that from a technological point of view, penetration of broadband is related to the quality of individual service to subscriber. In the set of market indicators, the strongest relation to revenues LQWHOHFRPPDUNHWDQGHFRQRP\¶V*'3 LQGLFDWRUV of wealth), prices for wholesale leased lines of high capacity (necessary to service providers without their own networks) are of medium importance in EU25. Summarizing, the positive general trends of economy development and the market developPHQWDUHQHFHVVDU\EXWQRWVXI¿FLHQWIDFWRUVIRU broadband development. In EU15 member states, equipment and human capacity categories are the ones to be mostly emSKDVL]HG,QWKH¿UVWVHWSHUFHQWDJHRIKRXVHKROGV with home PCs has the strongest relation to broadband penetration. These categories are followed by environment set of indicators and infrastructure set of indicators, but market set of indicators does not VHHPWREHVLJQL¿FDQWO\LQÀXHQWLDORYHUEURDGEDQG penetration. In EU10 member states, indicators in environmental set has the highest rank. Among the indicators, e-government and e-commerce indicators show the highest correlation, followed by R&D expenditure and ICT expenditure indicators. Infrastructure and market indicators are of similar VLJQL¿FDQFH,QWKHVHFDWHJRULHV,QWHUQHWSHQHWUDtion, total teledensity, international bandwidth
783
ICT Statistics for Broadband Promoting Regulatory Policy
(infrastructure) and telecom revenue (market) could EHPHQWLRQHG,QWKHKXPDQFDSDFLWLHVLQGLFDWRUV¶ group, the highest relationship is observed to individuals taken computer courses, and people involved in tertiary education. Noteworthy, huPDQFDSDFLWLHV¶LQGLFDWRUVVKRZWKHGLPLQLVKLQJ relationship over time to broadband penetration in EU10. In the Equipment category, which shows the weakest relationship to broadband penetration in EU10, the noticeable relationship is observed to PC equipped inhabitants, but not to PC equipped employees.
IDENTIFICATION OF BASIS FOR REGULATORY POLICY ACTIONS 7KH¿QGLQJVRIUHVHDUFKVKRZWKDWWKHUHLVYDULRXV intensity of interrelations between different factors against broadband penetration. The very concept of WKHFRUUHODWLRQFRHI¿FLHQWSURYLGHVWKDWWKHKLJKHU WKHFRHI¿FLHQWLVWKHVWURQJHULQÀXHQFHRIDIDFWRU on the observed phenomenon might be expected, EXWH[LVWHQFHRILQÀXHQFHper se is determined by logic—that is by deciding, if a particular factor can KDYHLQÀXHQFHRQWKHREVHUYHGSKHQRPHQDRUWKH correlation is not more than coincidence. So we KDYHFKHFNHGHYHU\IDFWRUSUHVXPDEO\LQÀXHQFLQJ the broadband, against criteria of logic and r2. As regards logic, we have checked whether the particuODUIDFWRUFDQLQÀXHQFHRUZKHWKHULWLVLQÀXHQFHG by the broadband penetration. As regards the r2 criteria, we have selected the factors, presumably causing 25% or more of the broadband penetration LH FRUUHODWLRQ FRHI¿FLHQW LV DQG KLJKHU )LQDOO\ZHJRWIDFWRUVLQÀXHQFLQJEURDGEDQG and 7 more factors with bidirectional relations to the broadband. Based on these factors we have derived several guidelines for regulatory policy encouraging the broadband development. 7DNLQJWKHLGHQWL¿HGIDFWRUVKDYLQJXQLGLUHFWLRQDODQGELGLUHFWLRQDOLQÀXHQFHRYHUEURDGEDQG penetration, the guidelines for regulatory policy promoting broadband development can be grouped into four broad domains: regulatory policy action lines at the society level, regulatory policy action lines at the household level, regulatory policy ac-
784
tion lines at the market level (wide approach), and regulatory policy action lines at the market level (narrow approach). Regulatory policy action lines at the society level include: (i) to implement the computerization of schools and other establishments of education and training; (ii) to promote the life-long learning and education style of personal development; (iii) with these and presumably other action lines, to create the social-cultural environment, favorable to the growth of broadband demand. Early and overall computerization of education establishments, provision of relevant software and training ZLOOVHUYHLQGLUHFWLRQV ¿UVWWKHFDSDELOLWLHVRI people to use PC and e-environment will be formed; second, habits of people to use e-environment for different purposes will be molded, and people will be ready for more sophisticated applications; third, e-environment will be a natural part of everyday life. The life-long learning system will encourage people to use different sources of information, including the inexhaustible sources on the global network; usage of network on narrowband access would turn to usage of network on broadband access due to natural demand to get better services with time. All this will inspire a networked, information society, where broadband access is a must. Regulatory policy action lines at the household level include: (i) to provide motivation for people to acquire broadband related technical means; (ii) to encourage people to connect to the Internet using different motifs; (iii) to aggregate purchasing of broadband by the state. Encouraging people to acquire the technical means to get broadband services directly to the home would lower the initial barriers to become a broadband subscriber. For example, the Lithuanian initiative to allow deduction of income tax, if PC, software and / or Internet access is DFTXLUHGLVDJRRGH[DPSOHRISURYLGLQJ¿QDQFLDO incentives important for broadband penetration. Noteworthy, not every place or region of a state can be connected to network with broadband access under pure business incentives; here aggregated purchases by state for its establishments in the region might serve as a factor lowering the initial price of connection for private entities (when the main installment is purchased by the state for state
ICT Statistics for Broadband Promoting Regulatory Policy
Table 1. The most important factors and suggested regulatory policy action line
The most important factors interrelated with broadband penetration
Y/B1 logic
r2
Proposed regulatory action line
analysis
PC, per 100 inhabitants
Y
56.3%
Motivating people to acquire broadband related
PC, per 100 households
Y
68.4%
technical means
PC equipped employees, small enterprises
Y
49.6%
PC equipped employees, medium enterprises
Y
59.3%
Motivating business to acquire broadband
PC equipped employees, large enterprises
Y
57.9%
related technical means
PC equipped employees, all enterprises
Y
60.8%
International bandwidth, per inhabitant
B
60.1%
Internet penetration, per 100 inhabitants
B
48.9%
Internet penetration, per 100 households
B
74.5%
B
77.8%
B
27.1%
16-74 year olds individuals regularly using the Internet, once a week, within the last 3 month Internet penetration, small enterprises Fixed penetration, per 100 inhabitants
Y
26.0%
Telco revenues, USD per subscriber
B
32.2%
Telecom investment, USD per inhabitant
B
25.7%
GDP, $ per capita
Y
44.2%
25-64 year olds participating in education and training, %
Y
51.2%
25-64 year olds with at least upper secondary education, %
Y
52.6%
25-64 year olds, tertiary attainment, %
Y
46.6%
Y
35.2%
Individuals using Internet for formalized education activities (school, university, etc.), % Enterprises using e-learning applications for training and
Encouraging people to connect to Internet; Favorable general environment to broadband market development and demand growth Encouraging business to connect to Internet Promoting infrastructure competition; Promoting services competition Promoting competition Promoting competition and the legacy Infrastructure provision 1RQHVSHFL¿F *HQHUDOPDFURHFRQRPLFSROLF\
Promoting the life-long learning and education; Computerization of schools and other places of education and training
Y
28.8%
Internet hosts (total)
Y
38.6%
Internet hosts (per 10.000 inhabitants)
Y
61.0%
e-government usage (demand side)
Y
61.2%
e-government availability (supply side)
Y
30.9%
Y
61.9%
Y
60.5%
education of employees, small and medium enterprises, %
Promoting competition
Promoting content development Promoting e-government usage and egovernment supply (content); Provision of e-
ICT expenditure, IT hardware, equipment, software, services, % of GDP R&D expenditure, as % of GDP
government services Support programs dedicated to development of new technologies, applications, safety; Promoting content development
