Hi! Managers: Broadband, the new electricity and steam

In these turbulent economic times, countries are using this opportunity to develop their infrastructure, including Thailand with a Bt1.7-trillion investment budget. Infrastructure investments create some jobs directly however more importantly they act as what the OECD calls a "general-purpose technology [GPT] enabler: like their forerunners like electricity or steam power, the benefit will not be so much from its direct impact, but rather the applications it enables and the associated productivity gains".

For the modern-day equivalent of GPTs we can look at modern technologies. In 1912 the USA reached the level of penetration of five people per 100 for fixed-line phones. Eighty-five years later China caught up. For PCs the process of catching up took 22 years. But the Internet took eight years, mobile phones seven years and astonishingly only five years for broadband.

A lower barrier to entry plays a major part. Studying 170 economies between 2004 and 2007, median broadband prices per Mbit/s per month fell by a compound rate of 25 per cent per annum while average broadband speeds rose by 26 per cent per annum. Taking these two trends together, the performance/price ratio of broadband is doubling every 18 months.

In a 2009 report by the World Bank, Christine Zhen-Wei Qiang analysed the impact of broadband on growth in 120 countries between 1980 and 2006. It showed that an extra 10 percentage points of broadband penetration by 2006 accounted for a 1.21-percentage-point increase in per-capita GDP growth in developed economies, incredible given that the overall rate of growth during this period was only 2.1 per cent. Among developing economies, broadband appears to boost GDP growth by 1.38 percentage points for each 10 percentage points of penetration. Thailand's broadband penetration rate is a mere 2 per cent.

In recent weeks, the United States, Britain, Canada, Germany, Spain, Portugal and Finland have all included measures to expand broadband access in their planned economic-stimulus packages. Australia, France, Hungary, Ireland, Japan and South Korea have announced separate broadband plans.

In Thailand, under the banner "Meaningful Broadband", coined by Professor Craig Smith, who is a visiting professor at Chulalongkorn University, a group of leaders from the leading Thai Telecommunications companies have come together with the NTC under the auspices of the university to determine how they can work with central government to drive country-wide penetration of broadband as fast as possible. "Meaningful" content and services will be developed and promoted, seeking to provide positive and empowering effects on citizens' wellbeing, a "digital self-sufficiency" as it were. Perfect examples of this are telemedicine and religious and general education, although there are many more.

To be successful will require a huge partnership between central government, state-owned enterprises, private companies and government agencies. It will have to put aside regulatory disagreements and hurdles. It will require significant political will. But the socio-economic benefit to every citizen of Thailand could be astonishing, bringing much-needed investments and jobs and squarely putting Thailand in the forefront of enlightened countries both in Asean and the world.

Andrew McBean is senior vice president of DTAC. Follow his articles on every third Monday in the month.