This article is part of our special report Broadband: driving recovery?.
Broadband technology is boosting GDP globally – especially in the developing world – but Europe remains the only continent where telecommunications business is running at a loss, according to speakers at the Mobile World Congress.
Speaking at a forum on the future of broadband in Barcelona on 26 February, Indonesian Telecoms Minister Tifatul Sembiring said that – despite concerns in Indonesia about the impact of the financial crisis in the US and Europe – growth in broadband was central to optimism that the country's buoyant economy can be maintained. Indonesia’s economy grew by 6.5% of GDP during 2011.
Broadband can open up the potential of Africa
“When broadband coverage reached 6.5% of the population in Indonesia, this resulted in a twofold increase in sales of 13.5%. Broadband is first and foremost an economic priority,” said Sembiring.
In markets such as Nigeria, where broadband is currently available to only 1% of the population, each 10% increase in usage would create a corresponding 1.2% increase in GDP growth, Edward Deng, vice president of Huawei, told delegates.
“In broadband, the [Indian] government will create ‘anchor’ demand and then there will be serendipitous commercial developments,” said Vijay Kelkar, an economist who chairs the board of the Forum Federations in India and formerly headed the country's Finance Commission.
European broadband costs too low
Europe is the only world region where telecommunications companies are making losses, Luigi Gabardella, a board member of the European Telecommunications Network Operators' federation (ETNO) – told delegates.
He said that although telecommunications companies averaged growth of 10% worldwide last year according to industry estimates, they suffered a corresponding 10% loss in Europe.
Gabardella blamed low prices for European broadband, but he added that problems faced by data overload would soon start to affect even broadband-penetrated markets.
Broadband provision should be liberalised
Finding solutions to this problem offered European companies a chance to discover innovative new solutions for growth, he said.
China views broadband no less strategically than tangible infrastructure projects such as roads and shipping, the country’s former chief negotiator in its accession talks to the World Trade Organisation told the forum.
Long Yongtu, who is now a member of the influential Chinese think tank Boao Forum for Asia, said the Chinese government was committing $300 billion to broadband over the next five years because of the benefits to the poor through improvement to health, education and “social harmony”.
He added that trade policy on broadband provision should be liberalised within the ambit of the World Trade Organisation.