IGADD

At first politicians were clueless. What did they know about turning entire countries into “information societies?” Soon, reformers saw “closing the Digital Divide” as a way to undermine the power of entrenched elites in government bureaus who had restrained the spread of new markets into the countryside. Now ministries in some countries have formed reformist coalitions. They are ready to join wireless entrepreneurs to bring the internet into the countryside.

When “digital divide” was first uttered in 1993, the phrase was used by citizen pressure groups who wanted to force the new Internet companies to pay the additional costs of extending their products and services to the poor. The framers of the 1996 US Telecommunications Act, after noting the existence of the Digital Divide, disappointed social activists by insisting it wasn’t government’s role to redress it. The various federal government programs that had been set up to close the Digital Divide in the Clinton era were discontinued under Bush. After 2000 governments in advanced countries no longer pressured high-tech companies to respond to Digital Divide.

But as concern over the Digital Divide declined in the US, it surged in emerging markets. Many developing countries searched for a formula to close the Digital Divide which would free them from undue control my foreign interests. By 2002 you could find 1.4 million “digital divide” references to speeches and project descriptions via Google search. The concern culminated in Geneva’s World Summit on Information Society (revisited in Tunis two years later) where 13,000 delegates were convened to discuss the matter. But despite all the speeches and official “targets” to close the Divide, no formula emerged to harness market forces that shape the direction of new technology as it spread into the developing world.

Phase one: Promoting A Digital Divide Superfund

Because everyone assumed market forces couldn’t be altered, governments thought the answer must be to create “superfunds” that would subsidize the delivery of digital technology to the poor. Many of the first intergovernmental task forces to close the Digital Divide sought to become “honest brokers” between public and private sectors. They proposed the creation of huge trust funds they thought would be funded by billionaire IT moguls and G-7 governments. The Japanese Ministry of Foreign Affairs (MOFA) made a pledge of $15 billion in development assistance to developing countries to promote closing the digital divide. But the Japanese found it difficult to fulfill the pledge after neither the US nor other high tech nations chipped in. Adding to the disappointment, some developing countries found that they were unable to gain revenue from spectrum license fees, which many had touted as a way of funding digital super-funds.

Phase Two: E-Readiness

Wanting to embolden reformers, influential researchers in universities, such as superstar economist Jeff Sachs, joined forces with reformers to promote a concept called “e-readiness,” sometimes called “network readiness.” The term refers to quantitative rankings of countries regarding the extent to which they were able to muster the complex policy changes that would be needed to become an “information society.” By 2001 it was clear that some countries were doing a terrific job becoming e-ready, while others were not – a reality that was actually deepening the digital divide between countries. A study by National University of Singapore professor Wong Poh Kam showed that this pattern of deepening inequities between nations was particularly evident in Asia.

Phase Three: Taking on the Phone Companies

Many government reformers blamed the “PTTs” for the failure to close the Divide. The term refers to the incumbent “Post, Telegraph and Telephone” companies which set standards and serve as the 800-pound gorillas of telephony. After fifty years of telephony most fixed-line infrastructures were expensive, slow, bulky, and narrowly confined to cities. By 2000, most developing countries had only between 2-5% phone penetration rates, despite prodding by the World Trade Organization’s Telecom Services Act. There was clear evidence that restructuring telecommunications was a pre-requisite to e-readiness. An ITU study found that countries that liberalized or privatized their telecom sector had doubled telephone penetration between 1996 and 2000, compared with only incremental growth by the unreformed countries.

Phase Four: Embrace Wireless as a “Disruptive Technology”

Reformers in many countries found that it wasn’t easy to dislodge the entrenched power of the incumbent telecommunications companies, most of which were under the control of powerful government bureaucrats, even after the World Trade Organization passed its “Telecommunications Services Act.” The Act forces WTO members to liberalize their telecommunications regulations and offer spectrum to new companies. Just as in the business sector, some reformers evoked the name of Austrian-born economist Joseph Schumpeter, to argue that the only way to accelerate each country’s transition into information society’s is to promote “disruptive technologies” by backing entrepreneurs whose business models promise to undermine the control of the old guard.