Essential concepts for a broadband strategy

1. „Broadband in the 21st century“
CEPS, Brussels,
May 26th, 2009
Broadband ahead!
Essential concepts for a broadband strategy
Dr. Martin Fornefeld
Gilles Delaunay
Stadttor 1 D – 40219 Düsseldorf
Albertstr. 12 D – 10827 Berlin
phone +49 (0)211 – 3003 420 ·
fax +49 (0)211 – 3003 200
www.micus.de info@micus.de
1 Bild: Tagebau bei Cottbus, Brandenburg, von „Flicker/smitty42“, Creative Commons License © 2009 MICUS Management Consulting GmbH

2. MICUS: who we are and what we do
a consulting partner for private companies and the public sector in Germany and Europe.
Market research and strategy development for public services and private companies
Information and communication technologies
Modernization of the public administration
(examples)
• The use of Galileo applications in public services
On behalf of the German Ministry of Circulation, Building and Urband Development, 2009
• Assessment of the Re-use of Public Sector Information (PSI)
On behalf of the European Commission, 2008
• Alternative communication channels for critical processes
On behalf of the German Federal Administration for IT security, 2007
2 © 2009 MICUS Management Consulting GmbH

3. Evidence of the impact of Broadband
on Growth and Productivity: ‘actnow’ in Cornwall
Empirical evidence in the business services sector
Cornwall 1998-2001 Cornwall 2001-2005, with actnow
0% 20% 0% 20%
7,96% 17,67%
5,26% 5,49%
2,56% 11,55%
UK 1998-2001 UK 2001-2005
0% 20% 0% 20%
8,65% 6,99%
5,01% 2,88%
3,46% 4,00%
GVA growth Employment growth Productivity growth
3 © 2009 MICUS Management Consulting GmbH

4. Broadband workers and broadband companies: who are they?
Broadband workers have access to a large information base and a worldwide business
network: high productivity, high innovation potential
Broadband companies specialize in information intensive activities:
- High productivity, increase productivity in other economic sectors
- Innovation intensive to stay ahead of worldwide competition
Companies with broadband connection: 74.5% + 13.2%/year
„Broadband companies“: 23.1% + 3.0%/year
(EU27, 2006, MICUS based on Eurostat statistics)
4 © 2009 MICUS Management Consulting GmbH

5. Knowledge-intensive jobs are essential to sustaining
high employment levels in a global economy
European/ American workers are highly qualified, but with high salary levels.
We are not competitive for routine jobs and „low intelligence“ occupations.
A current situation
under high pressure
from the global economy
-1,319,000 jobs/year go further in developing
+1,424,000 jobs/year comparative advantages in
Come back to a lower +105,000 jobs/year
• high competencies
life standards level • innovation capacity
(only broadband-related)
• information intensive activities
+2,112,000 jobs until 2015
(net jobs creation, best case, EU27)
Broadband development belongs to a coherent strategy
towards high competences and information intensive activities.
5 © 2009 MICUS Management Consulting GmbH

6. Broadband is all about innovation
70% of jobs creation related to broadband is directly due to innovation.
Broadband development is strongly related to innovation policies.
„In developed markets, innovation is a priority.“
(CEO Briefing 2007, Economist Intelligence Unit)
Broadband impact, %GDP
+ 1,00%
+ 0,89%
EU27:
+ 0,80% +0.71% + 0,70%
+ 0,63%
+ 0,60%
+ 0,47%
Innovation is about “making the first move”. + 0,40%
In an open, global economy, being among
+ 0,20%
the group of pioneers is necessary to get
the benefits of innovation. + 0,00%
Less Quickly Large Advanced
developed developing industries knowledge
The impact of broadband is stronger in the broadband societies
most advanced and innovative countries.
6 © 2009 MICUS Management Consulting GmbH

7. Do not underestimate human factors
Not all companies having a broadband connection do take advantage of
broadband potentials. Entering the „knowledge economy“ is not trivial.
Correlation between internet use, infrastructure and human
factors at the national level (EU27)
Infrastructure factors Human factors
66% 34%
Internet use
Positive impact
+13% connected companies
but only +3% annual adoption Only +0.29% annual
of broadband applications in productivity increase!
businesses
A very slow process,
independently from investments in new infrastructures
Even worse in SMBs and less developed countries:
the digital divide is still growing.
7 © 2009 MICUS Management Consulting GmbH

8. Scenarios: best case, base case and worst case
More than 1.5 billion jobs can be created until 2015
Employment, EU27, 1000s jobs, cumulative 2006-2015
2.000
Employment growth, 1000s jobs,
1.500
year 2005 =0
1.000
Best case
Base case
500
Worst case
0
Growth, EU27, bn€, cumulative 2006-2015
-500 1.000
2006 2008 2010 2012 2014 900
GDP Growth, bn€, year 2005 = 0
800
700
600
Best case
500
Base case
400
Worst case
300
200
100
0
2006 2008 2010 2012 2014
© 2009 MICUS Management GmbH – page 8

9. Policy recommendations
Four main strategic lines apply in all cases:
1. Develop the broadband infrastructure.
2. Rely strongly on education
for a long-term development of the knowledge society.
3. Use adequate drivers to foster the use of online applications
in companies and by individuals.
4. Promote innovation.
But: No “one suit fits all”.
Distinguish adequate strategies
for each level of development.
9 © 2009 MICUS Management Consulting GmbH

10. Tank you for your attention
Thank you for your attention
Dr. Martin Fornefeld
+49 211-3003 420
fornefeld@micus.de
MICUS Management Consulting GmbH
www.micus.de
10 © 2009 MICUS Management Consulting GmbH