Greasing the Wheels of the Internet Economy. Jia-Rong Low, Strategies & Initiatives Director 25 June 2015

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1 Greasing the Wheels of the Internet Economy Jia-Rong Low, Strategies & Initiatives Director 25 June 2015

2 What does ICANN do? IP address ( ) (2607:f0d0:1002:51::4) Domain Names.com.org.net;.my.sg.cn.in.bd; شبكة., 戏.स गठन,. 游 2

3 The Internet Architecture 3

4 Greasing the Wheels of the Internet Economy ICANN Commissioned the Boston Consulting Group (BCG) to conduct this study in 2014 e-friction: Barriers that prevent countries, companies and consumers from realizing the full benefits of the Internet https://www.icann.org/en/system/f iles/files/bcg-internet-economy- 27jan14-en.pdf 4

5 Which Wheels to Grease? Update to the 2014 study This update expands on the analysis of e-friction, and defines clusters of countries that face similar challenges and can work together towards similar solutions. https://www.icann.org/en/system/f iles/files/bcg-wheels-greasefriction-16apr15-en.pdf 5

6 What is the Internet Economy? To grow to $4.2 trillion by 2016 (G20 countries) Growing at 15 25% (developing markets) Internet economy (trillion $) % Developed CAGR 8% Developing 18% 4.1% of GDP 5.3% of GDP Note: G20 countries only Source: EIU; Ovum; Gartner; Euromonitor; OECD; country specific sources; BCG analysis 6

7 The Internet is a growing economic force.but it is not frictionless Some practical examples: "Is there network coverage?" "Do I have an access device?" "How much is this going to cost me?" "No connectivity.." "I don't speak Thai!" "Will my bid go through in time?" "Can I trust Online payments?" "Can it be delivered here?" 7

8 e-friction Factors that prevent people from realising the Internet s full benefits Frictions reducing opportunities to access the Internet Industry Weighted 1/6 Frictions holding back companies from adopting the Internet Infrastructure Weighted 3/6 Frictions related to the availability of content Frictions deterring consumers from online activity 8

9 e-friction: 55 indicators 9

10 E-Friction Index Ranking (65 countries) Country Industry Individual Infor- 1. Sweden Finland Denmark Switzerland Hong Kong United States Iceland Norway Netherlands Canada Germany United Kingdom Austria Australia Singapore Belgium New Zealand Ireland France Estonia Japan Israel Qatar UAE Korea, Rep Slovenia Bahrain Malaysia Poland Portugal Romania Czech Republic Top Bottom Quintiles Note: Best e Friction available is 0, worst is 100 Country Industry Individual Infor- e-friction Infrastructure score mation e-friction Infrastructure score mation 33. Spain Panama Hungary Italy Bulgaria Greece Ukraine Kuwait Chile Jordan Russia Saudi Arabia Turkey Kazakhstan Philippines Thailand Argentina South Africa Mexico Brazil China Morocco Venezuela Colombia Kenya India Indonesia Peru Vietnam Bangladesh Egypt Pakistan Nigeria

11 e-friction and GDP Source: World Bank GDP per capita (current US$) year 2012; Bangladesh omitted on this chart as GDP per capita under $1,000 11

12 Reducing e-friction Which Wheels to Grease?

13 Which Wheels to Grease? An Agenda for Businesses and Policy makers 1 Do not see "wealth as destiny": many levers exist to reduce e-friction, whatever the level of GDP 2 Drive for literacy: basic literacy, English-language skills and ICT skills all help reduce e-friction 3 Encourage local relevance: local content in local languages drives usage, requiring encouragement of local ecosystems, including e-government services 4 Get companies online: SMEs that use the Internet intensively grow faster, employ more people than those that don t, and trade more internationally 5 Population density and large rural populations make infrastructure deployment more challenging, requiring important policy choices and technological experimentation Take holistic approach. Encourage joined-up policy making, including multistakeholder involvement from across the ecosystem and learnings from relevant peers 6 13

14 Wealth does not equal destiny e-friction score vs. GDP per capita 0 e Friction score GDP per capita ('000 US$ log scale) Wide spread of e Friction scores at each wealth level Source: World Bank GDP per capita (current US$) year 2012; Bangladesh omitted on this chart as GDP per capita under $1,000 14

15 Literacy and Local Relevance Source: World Bank GDP per capita (current US$) year 2012; Bangladesh omitted on this chart as GDP per capita under $1,000 15

16 Literacy and Local Relevance (2) Source: World Bank GDP per capita (current US$) year 2012; Bangladesh omitted on this chart as GDP per capita under $1,000 16

17 The Internet and SMEs Past three years Cumulative revenue growth % (3) Average Heavy web use +18% Med / light web use +11% +7% Higher e-friction Lower e-friction 17

18 Country clusters and actions Developing Rural 0 e Friction score All-rounders Iceland Germany Finland Sweden High-Income HK US Denmark Switzerland Austria Norway Middle-Income Overachievers Canada Belgium UK NL Overachievers Australia Estonia Slovenia NZ Singapore Korea France Ireland Portugal Japan Malaysia Poland Czech Bahrain Israel UAE Romania Qatar Spain Ukraine Panama Hungary Bulgaria Chile Greece Italy Jordan Kuwait Turkey Saudi Philippines Russia SA Kazakhstan Brazil High-Income Kenya Thailand Morocco Indonesia China Mexico Argentina Aspirants Vietnam Egypt Venezuela India Colombia Peru Pakistan Nigeria Middle-Income Developing Rural Urban Aspirants Middle-Income Rural 10 GDP per capita ('000 US$ log scale) 100 Well-oiled GDP/Capita ca. $1-4k Define coordinated set of interventions across multiple e- Friction components Developing Rural High e-friction for most components Predominantly rural population Proposed Actions Drive for literacy: basic literacy, English and ICT skills Encourage local relevance: local content in local languages ; local ecosystems, including e-govt services Examples: Indonesia, Philippines, Vietnam Explore innovative approaches to infrastructure deployment 18

19 Country clusters and actions Middle-income Rural 0 e Friction score All-rounders Iceland Germany Finland Sweden High-Income HK US Denmark Switzerland Austria Norway Middle-Income Overachievers Canada Belgium UK NL Overachievers Australia Estonia Slovenia NZ Singapore Korea France Ireland Portugal Japan Malaysia Poland Czech Bahrain Israel UAE Romania Qatar Spain Ukraine Panama Hungary Bulgaria Chile Greece Italy Jordan Kuwait Turkey Saudi Philippines Russia SA Kazakhstan Brazil High-Income Kenya Thailand Morocco Indonesia China Mexico Argentina Aspirants Vietnam Egypt Venezuela India Colombia Peru Pakistan Nigeria Middle-Income Developing Rural Urban Aspirants Middle-Income Rural 10 GDP per capita ('000 US$ log scale) 100 Well-oiled Middle Income Rural GDP/Capita roughly $5-15k High e-friction for several components 4) High rural population (urban under ca. 60%) Mostly 3 rd./4 th. Quintile countries Examples: Thailand, China, S. Africa Proposed Actions Define coordinated set of interventions across multiple e- Friction components Explore innovative approaches to infrastructure deployment 19

20 Middle-income overachievers 0 e Friction score All-rounders Iceland Germany Finland Sweden High-Income HK US Denmark Switzerland Austria Norway Middle-Income Overachievers Canada Belgium UK NL Overachievers Australia Estonia Slovenia NZ Singapore Korea France Ireland Portugal Japan Malaysia Poland Czech Bahrain Israel UAE Romania Qatar Spain Ukraine Panama Hungary Bulgaria Chile Greece Italy Jordan Kuwait Turkey Saudi Philippines Russia SA Kazakhstan Brazil High-Income Kenya Thailand Morocco Indonesia China Mexico Argentina Aspirants Vietnam Egypt Venezuela India Colombia Peru Pakistan Nigeria Middle-Income Developing Rural Urban Aspirants Middle-Income Rural 10 GDP per capita ('000 US$ log scale) 100 Well-oiled Middle Income over achievers GDP/Capita $4-10k Generally moderate e-friction across components 3) Mostly 3 rd. Quintile countries Examples: Malaysia, Romania, Jordan Proposed Actions Define multiple focused interventions for each underperforming component of e-friction Industry and/or Individual friction in many cases most in need of addressing 20

21 Holistic approach joined-up policy making Different stakeholders involved: Infrastructure promote investment Trade and commerce Local online services, Local content Education Multi stakeholder approach necessary to reducing e Friction 21

22 Holistic approach Strategize Prioritise which efriction source to address; develop strategy together 22

23 Which Wheels to Grease? An Agenda for Businesses and Policy makers 1 Do not see "wealth as destiny": many levers exist to reduce e-friction, whatever the level of GDP 2 Drive for literacy: basic literacy, English-language skills and ICT skills all help reduce e-friction 3 Encourage local relevance: local content in local languages drives usage, requiring encouragement of local ecosystems, including e-government services 4 Get companies online: SMEs that use the Internet intensively grow faster, employ more people than those that don t, and trade more internationally 5 Population density and large rural populations make infrastructure deployment more challenging, requiring important policy choices and technological experimentation Take holistic approach. Encourage joined-up policy making, including multistakeholder involvement from across the ecosystem and learnings from relevant peers 6 23

24 Engage with ICANN Thank You and Questions Website: icann.org BCG Report: twitter.com/icann twitter.com/icann4biz facebook.com/icannorg gplus.to/icann weibo.com/icannorg linkedin.com/company/icann flickr.com/photos/icann youtube.com/user/icannnews slideshare.net/icannpresentations 24

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