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Digital Economy + Sharing Economy = Networked Economy

A great deal of discussion is taking place about topics such as the digital economy, sharing economy and networked economy. Obviously these are concepts rather than being well-defined, but they are being used by the various players in the market to argue for or against certain developments.

For example, in some of the broadband debates around the world, the digital economy is the key reason why national broadband infrastructure gets developed. Yet, in other countries, that reason is hardly ever used, using the argument instead that the digital economy started a decade ago and that broadband had little to do with it.

Equally one can (wrongly) argue that the sharing economy can be achieved without the need for broadband, in the traditional sense of the word.

But what both the digital and the sharing economy have in common is that they depend on networking. This networking can be done through smartphones, tablets, and computers in general, as well as sensors and other devices that can be placed under the heading IoT and M2M.

As argued before, what a networked economy means is that computer-based transactions, not people, are driving the need for all-fibre networks. This networked economy is supported by IT developments such as datacentres, data analytics and cloud computing—combined these technologies with their connected devices—are the largest users of the network. Both the shared and the digital economy are based on these fundamental infrastructure elements. The avalanche of transactions triggered within the networked economy requires an all fibre-telecoms infrastructure, not because of a need to download movies, but because of the need for affordable and ubiquitous access, enormous capacity, low latency, robustness and symmetric access—as well as the very high levels of reliability, quality and security that are necessary in the new networked economy.

At the same time wireless technologies (4G, LTE, 5G and Wi-Fi) are becoming increasingly important in providing that always- and everywhere-on connection. The increase in traffic over these networks means that their base stations will have to be directly connected into the all-fibre infrastructure in order to provide the quality required for its infrastructure role in the networked economy.

Perhaps the most important element of the networked—and therefore global—economy is that it offers new economic and social opportunities. There are already plenty of examples of global companies reaping the benefits of this—Google, Facebook, Microsoft, Airbnb, Netflix, Uber, Amazon, Apple. And looking at the American market literally hundreds of smaller, mostly city-based, companies, are tapping into these opportunities. This is also the principle upon which the concept of smart cities is based. In China alone over 500 cities are now actively pursuing smart city policies, and the UK is also shaping up as another leader, with IoT and M2M as the new frontiers in the networked economy.

As mentioned above, this new economy requires the extremely high quality infrastructure that is provided by all-fibre networks, and countries all over the world are looking at closing down their old networks, starting with their copper cable networks and followed later on by the coax cable networks. Countries such as the USA and Japan are leading this trend, and Telstra in Australia has made a similar announcement. And interestingly, because of its aggressive push for all-fibre networks, Paris is now in the top 5 of the most networked cities in the world.

Other countries leading the network economy include Sweden, Netherlands, Singapore, South Korea and Hong Kong, with, surprisingly, Spain catching up quickly. However, similar to Paris, there are also cities that no longer want to rely on national policies or the national strategies of the telcos; apart from the countries mentioned above, cities that have made it into the top ten list of best-connected cities include Stockholm, London, Copenhagen, Helsinki, New York City, Oslo and Tokyo.

In contrast countries and cities that have poor or second-rate connections will fall behind in the networked economy. A good example here would be Australia. It started off with a full-fibre national network plan in 2009 but in 2013 the conservative government turned the clock back—instead of rolling out fibre it is re-engineering the old copper and coax networks, claiming that this is good enough for the country. Sydney is the only Australian city that made it on the top 40 list of connected cities it sits in 19th position; it received a special mentioning that it was not performing at the expected level considering the size of the economy. However, it was also noted that its mobile broadband speed is world leading. Sydney’s main drawback is its underdeveloped infrastructure for fixed broadband. Furthermore, high IP transit prices reduce the affordability of ICT services in Sydney.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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