The Effectiveness of Government Policies in Broadband Deployment: An Assessment of Singapore, Hong Kong SAR and South Korea

The Effectiveness of Government Policies in Broadband Deployment: An Assessment of Singapore, Hong Kong SAR and South Korea

Elizabeth Fife (University of Southern, USA) and Francis Pereira (University of Southern, USA)
DOI: 10.4018/978-1-60960-011-2.ch007
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Abstract

While the potential economic and social benefits of broadband internet use are significant, adoption levels vary greatly among countries around the world. Many governments, particularly those in Southeast Asia, have adopted aggressive policies to deploy broadband networks and to encourage the use of applications. Governments are motivated to promote broadband adoption in order to realize both economic and social benefits. This paper argues that the generally higher levels of broadband adoption rates witnessed in many Asian economies, is attributable in part to the aggressive policies pursued by these governments. There is some evidence to suggest that these governmental policies have been successful in achieving their stated goals.
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Introduction

Despite the fact that many countries around the world today have modern fiber optic telecommunications networks that support broadband access to the home, broadband penetration rates still vary dramatically (Figure 1). A key factor explaining this difference in penetration rates are government initiatives, particularly in the more developed Asian economies, to establish national “information superhighways. Specifically, the governments of South Korea, Hong Kong, Japan, Malaysia and Singapore, have launched “Version 4.0” of the National Information Infrastructure (NII) plan first deployed in the early 1990s.

Figure 1.

Broadband penetration rates per 100 households for select countries, December 2008 (OECD, 2009)

While governments may deploy national broadband networks for different reasons, a common significant reason is that efficient information infrastructures, theoretically, can enhance productivity by providing intelligent networks that can accommodate converging voice, data and electronic commerce applications (Frieden, 2005). These infrastructures can provide a competitive advantage in the knowledge-based industries that include data processing, insurance, management, customer relationship management and logistics and distribution.

Such a competitive advantage in the area of information and telecommunications technology (ICT), when combined with a stable economy and favorable regulatory system, should translate to higher levels of Foreign Direct Investment (FDI). In this respect, endogenous growth theory argues that it is technology and human capital, when endogenously present, that contribute to continuous economic growth and therefore play an essential role in a country’s development (Easterly, King, Levine, & Rebelo,1994; Barro,1997). Specifically, in developed countries, existing ICT infrastructures have been found to causally attract FDI; a higher level of ICT investment leads to a higher level of FDI inflows. This suggests that ICT contributes to productivity and economic growth indirectly by attracting more FDI (R. Gholami et. al., 2006).

FDI increases domestic capital formation, augments host country stocks of technology and managerial expertise, improves access to export markets, and provides a comparatively stable source of external financing (Matthews,1999; Lehman, 2002).

The deployment of such networks, either directly through the use of tax dollars or indirectly by use of appropriate policies, such as spectrum allocation by fiat, thus would allow national governments to exploit the benefits of e-government. This could encourage end-user adoption, by effectively lowering the usage cost of applications for the consumer, thus improving living standards and enhancing productivity. Specifically, tele-medicine would allow governments, particularly in developing countries where “transactions costs are high because of logistical problems (Sein and Harindranath, 2004), to extend universal healthcare services to remote areas and provide, especially for developing countries, an economically viable means to increase the quality of medical services. Similarly, tele-education could provide governments with the means to increase the level of educational services to resource strapped inner-cities and the means to extend the learning experience to the home.

This paper assesses the effectiveness of these government NII policies, in South Korea, Hong Kong, SAR, and Singapore to achieve the espoused goals of broadband development. Specifically, some of the questions that this paper addresses include the following:

  • Is there any empirical evidence to suggest that governments have been able to achieve their espoused economic goals through their national policies?

  • Have some national governments been more successful in achieving their stated goals? What are the factors explaining the differences in achievements?

  • Are there any social or cultural factors that can explain differences, if any, in the rate of adoption of these ICT applications and services?

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