Sunday, June 29, 2003


David Victor of the Program on Energy and Sustainable Development of Stanford University made a presentation at the workshop on energy systems in which he suggested, as have others, that there are parallels between electrical power and ICT sectors.

Obviously, the electrical power grid and the telecommunications network are both utilities. The utility of each depend not just on the network, but on the devices it enables at the ends. Paul David famously suggested that the full economic benefits from electrification were not realized until electrical machinery connected to the grid was installed in factories, transportation systems, and other applications. He suggested that this took more than a generation after neighborhood grids energized by small generators were combined into large grids about the turn of the last century. He suggested that a comparable effect in the field of ICT might be the creation of the Internet, and that we could expect to see the most important benefits from the computer revolution realized in the next few decades.

Electricity was developed as a system for the provision of electrical lighting, and clearly the early applications were considered to provide benefits exceeding costs. Thomas Hughes, in his book “Networks of Power” traces the early history of electrification, noting the development from lighting technology, to urban trolleys, to other applications. He described a technology system in which what we would now call “killer apps” in an ICT context were added to the electrical network, adding more and more value to that network.

Indeed, we can consider radio, television, refrigerators, air conditioning, and computers to be applications of electricity adding new value to the electrical network. I suppose an interesting aspect of the history of electrification was that before it arrived, power from steam engines or water wheels was distributed from one engine to a large number of machines. With electricity, it became possible to have small motors, attaching a motor to each machine.

ICT began with telecommunications, with telegraph and telephone as perhaps the first “killer apps”. The first computers were stand alone devices. The PC revolution, which resulted in large numbers of “micro-computers” lead to the radical expansion of the Internet, and we began to think in terms of grid computing and large computer networks.

The following table contains data shown to me by my colleague Christine Qiang (from Pohjola, Matti (2003). “The Adoption and Diffusion of ICT Across Countries: Patterns and Determinants”, To be published in The New Economy Handbook, Academic Press, 2003).

Information Infrastructure 2001 per 1000 inhabitants
Mobile Telephones Telephone Mainlines Personal Computers Internet Users
Northern America 382 660 623 467
Western Europe 572 747 325 345
East Asia and Pacific 278 222 158 177
Eastern Europe & Central Asia 199 232 81 65
Middle East and North Africa 163 147 62 61
Latin America and the Caribbean 142 145 49 63
Sub-Saharan Africa 30 19 12 9
South Asia 9 20 4 4

Connection to the Internet requires both a computer and telephone service. I would assume that most people who have computers also have telephones. The data above suggest that availability of personal computers is the limiting factor for Internet connectivity.

It has been estimated that 1.5 to 2 billion people have no access to commercial electrical service, and that perhaps 3 billion people are underserved (in terms of affordable access).

It may be that with most PCs connected to the Internet, Internet growth will now be slower, limited to the rate of growth of the network of PCs. Thus, the cost of providing Internet service to someone with a PC and telephone is much smaller than the cost of buying a PC and then connecting to the Internet. Moreover, rates of growth may later be limited by the availability of telephone lines, and even by the lack of adequate electrification.

Victor pointed out in the workshop that there were similarities in the historical monopolistic development of the electric power grid and the telephone network. The growth of mobile phones and Internet service was much more rapid than of fixed lines, in part because the differentiated services could be institutionalized with market competition, taken out of the historical monopolistic pattern.

I also see a parallel in that electrical devices were typically owned by the users and marketed by firms other than the electric company, as computers were owned by users and marketed by other than the telephone company.

Victor’s comments on the difficulty of development of markets for electrical power, and the problems of developing adequate regulatory capacity (in developed as well as developing countries) seem to me likely to apply also to developing markets for communications and adequate ICT regulatory capacity.

In short, I suspect that those of us interested in ICT development in poor nations might well make common work with the electrical power people in understanding the underlying social and economic institutions and forces, and how they may be utilized for sustainable development.

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