Low-Cost Strategies for ICT Deployment in Developing Countries by Roberto Verzola Introduction The distinguishing feature of the information sector of the economy lies in the nature of information. The unique features of this sector therefore are better appreciated by first studying the nature of information. Information refers to a new awareness which resolves existing uncertainty. It is non-material. An expectant mother, for instance, may be uncertain about the sex of her child. When the doctor tells her, "it's a girl," the uncertainty has been resolved. The mother has received the smallest amount of information possible: the resolution of uncertainty between two equally possible outcomes. This smallest measure of information is called the bit. There are millions of ways a blank page may be filled with letters. A poem by Shakespeare resolves this uncertainty by providing one of all possible ways and therefore provides the reader a much bigger amount of information (among other things of course). There are billions of ways bits may be strung up serially on the tracks of a diskette. A particular program represents one instance of these billions of possibilities, another example of information. The non-material nature of information distinguishes the information sector from two other major sectors of the economy. The industrial sector is the sector of material goods which are non-living. And the agricultural and fishery sector is the sector of living goods. While information itself is non-material, it may need a material medium for storage and persistence. The baby's sex is information stored in the doctor's mind, later copied to the mother's. Shakespeare's poems are stored in books, on paper and ink. Computer programs are stored on magnetic or optical media. [1] The development of new information and communications technologies (ICTs) has propelled the full emergence of the information economy by making it easier and easier to transfer information from one medium to another and from one form to another. Digital technologies have further revolutionized ICTs, by allowing these transfers and transformations to occur with no information loss. With today's technologies, the cost of replicating information without loss is approaching zero. I explained further the implications of such low replication cost in the article "Towards a Political Economy of Information" (URL: http://glocal.peacenet.or.kr/training/). High start-up costs, near-zero marginal costs From this, we note another distinguishing feature of information goods: while the cost of moving or copying them is approaching zero, the initial costs involved in creating new information or in building the infrastructure for moving and manipulating them remain relatively high. It takes a lot of effort to invent a new design, write a book, or develop software. But the cost of replicating them, once they are developed, is nearly zero. It also takes much resources to set up information infrastructures like transmitting stations, telephone exchanges, microwave repeaters, satellite facilities, copper and fiber optic lines, oceanic cables, etc. But once they are in place, the marginal cost of information transfer through these facilities is nearly zero. Because of this, ICTs are very often much more accessible to those who can afford the high start up costs, than to those who cannot, to the rich than to the poor. Yet, those who are privileged to have access will then enjoy much lower marginal costs than those who don't and will therefore be in a much better position to compete vis-a-vis the latter. In short, the rich will tend to become richer, and the poor poorer. While there will obviously be exceptions, the logic of the information sector -- with its very high entry costs and very low marginal costs for those who are in -- will generally work in favor of those who have the resources, capital and existing infrastructure to take full advantage of the benefits of ICTs. Form of income: Information rents Because of the high costs of entry, it is often those who have access to huge resources who are in a position to set up the facilities for full utilization of the technology. In terms of content and software tools, private investors who do so clinch their control through statutory monopolies like patents and copyrights, which grant them the exclusive right to use the resources they have developed. In terms of the communications infrastructure, the huge investments involved exclude all but a few huge firms, who then lease out the resource under their control to other users. Either way, private control over the software and hardware infrastructure enables the owners to extract rents over the information resource. This rent-seeking system eventually extracts from the public wealth that is way beyond the cost of setting up and maintaining the system. The rent-seekers of the cyber-economy, or the cyberlords, therefore become the superfluous and unwelcome propertied classes of the information economy. In the article "Cyberlords: the rentier class of the information sector", I discussed in detail the nature of this rent-seeking system and how it manages to concentrate wealth in the propertied class of the information economy. ICTs and the Internet: a critique In the articles "The Internet: A Second Opinion" (URL: http://glocal.peacenet.or.kr/training/) and "Globalization: The Third Wave" (URL: http://global.peacenet.or.kr/training/), I explained in more detail how the Internet has in fact become the leading edge of the global information economy, the new infrastructure for marketing the information products of the more technologically advanced countries. As such, it will will facilitate the intrusion of global capital into developing countries, the extraction of more wealth from these countries, and an even faster concentration of wealth among rich countries and global corporations. My critique of the new ICTs, best represented by the Internet, may be summarized as follows: - The entry costs are very expensive, and these entry costs recur every three to five years, as rapid obsolescence forces the frequent replacement of hardware and software. In effect, those who join the Internet are caught in a expensive technology trap. While many of the supposed benefits of these new ICTs may eventually prove to be illusory, the high costs of entry are very real. - In reality, the Internet is emerging as the infrastructure for the marketing and distribution of the information products of rich countries. The more it penetrates into developing countries, the greater the market of information economies expands. - The Internet will also facilitate rapid financial transactions which will benefit most the huge finance firms who have the facilities, clout and connection to take the best advantage of the new ICTs. These will all hasten the ongoing concentration of wealth. - ICTs will further weaken labor and strengthen capital, as machines are more and more in a position to replace labor and as the technology enables tighter management control. Many people will lose their jobs to machines, and new jobs created by new technologies will not be secure either, as they will also be under threat from a new round of replacement. On the other hand, ICTs will facilitate managing-at-a-distance even better than working-at-a-distance, empowering capital even more than labor. - The benefits of the Internet will be best enjoyed by those who live in countries where the ICT infrastructures are most developed. Most resources and effort spent on serving information on the Internet will not help the poorest and the least advantaged, who cannot afford commercial Internet services and whose lives revolve around basic needs and survival concerns. - Many of the promised benefits of the Internet will be as illusory as the broken promises of television, which has become the idiot box of the 20th century. The ongoing commercialization of the Internet will tend to turn it into the TV -- and idiot box -- of the 21st century. - In fact, very few seem to be looking at the negative effects of ICTs. The issue of radiation and its impact on human health persists -- from the near-microwave frequencies of the cell phone, to the video monitor radiation that direct shines on the user's eyes, to the very low frequency of power lines -- and remains a matter of dispute. The increasing dependence on computers for mental work, thinking, and even entertainment reminds us of the deleterious effects on the human body of machine-dependence and its resulting lack of exercise. To be connected or not? To some, these misgivings are enough reason to stay away from these technologies. Yet, the option to completely reject the new ICTs may have its own pitfalls. While one can argue that to use them is to immediately get tra pped in a losing battle; one can also argue that not to use them is to lose the battle by default. But is the battle in the information arena in fact worth fighting, or are we simply being drawn away from what are real wealth -- our ecological wealth, our natural resources, our cultural heritage -- to be exchanged with virtual and perhaps illusory wealth? The answers do not come so easily. Perhaps, we need to know more about the technology itself and to dip one foot to check the waters while reserving the option to get out if sharks and crocodiles lie in wait. If a developing country -- fully aware of the pitfalls and traps that lie in wait -- nonetheless wants to tap ICTs and continue exploring the possibility of bringing their benefits to its people, what then are the options available to such a country? This is the question we will try to answer for the rest of this paper. Cost of entry is a barrier A real obstacle to the introduction of ICTs in a developing country is the high entry cost of the technologies. In the Philippines, for instance, the following summarizes the costs of providing 51% of Filipino families access to different technologies: Technology CurrentCost per Total Cost for 51% Reach (%) family ($) reach (million $) B&W TV only 43% $ 100 $ 102 M Color TV only 14 300 1,413 VCR 12 250 1,241 Cable TV 2 1,000 6,236 Telephone 6 1,000 5,727 Fax 1 200 1,273 Internet 0.1 1,000 6,478 CDROM/DVD 0.1 300 1,943 Virtual Reality 0 2,000 (?) 12,982 Radio 84 10 20 (100% reach) Total 37,314 Considering the rapid developments in the field, some of these technologies become obsolete rather quickly, forcing those who have made commitments to deploy them into another round of huge investments every few years or so. Responding to high costs The introduction of ICTs is clearly an expensive proposition for most developing countries. They compete for our peoples' time, skills and attention, taking resources away from essential activities like food production, health services, basic education and so on. Yet, the possibilities of the new technologies are also tantalizing, and many people sincerely feel that these technologies also have some benefits to offer and, properly deployed, can facilitate solutions in providing for basic needs. How does a poor country solve the problem of providing for its people facilities which are terribly expensive and which are hardly affordable? I propose a five-point strategy for doing so: - stick to the idea of appropriate technology, make do without the online frills, and concentrate on low-cost offline technologies, which can bring in the most essential services; - use free/open software where they are available, because they take full advantage of the benefits of pooling together the intellectual resources not only of a country but of the whole Internet community; - apply genuine compulsory licensing where commercial software is the only option; GCL is an internationally-recognized mechanism that allows poor countries access to technologies on their own terms; - set up public access stations that do not require the ordinary citizen to pay a fixed monthly charge; and - work out a system of public ownership over the hardware infrastructure to minimize rent-seeking by private interests, which can lead to further concentration of wealth. Appropriate technologies Countries must practise extreme care in selecting the technologies to tap, identifying those which are lower-cost, simpler, and capable enough to provide the most essential services. Often, as Schumacher pointed out, these are intermediate technologies, which greatly improve on the old ways of doing things but are very accessible to poor communities because the technologies are simpler and more affordable. Schumacher's ideas remains as relevant as ever in the information sector. An example of appropriate technology is low-power, community-based radio broadcasting. As the table of technology costs above shows in the case of the Philippines, this technology can provide 100% access and approximate interactivity with very affordable investments, while the more advanced technologies would require billions of dollars of investments every several years or so and yet leave half of the population unserved. In computer communications, appropriate technology would be offline technologies, i.e., technologies based on store-and-forward email and email-based services such as mailing lists, email-enabled access to ftp sites, Web sites, etc. Such technologies would be text-mostly, offline, low-bandwidth, and low-cost. They would run over the basic POTS ("plain old telephone system") network, instead of requiring a huge and expensive network of dedicated data lines. Free/open software The basic principle in overcoming high resource requirements is to pool meager resources and the share the benefits with as many people as possible. This is exactly what free/open software does: it pools the intellectual resources available over the Internet, and shares the results freely with the rest of the world. The result is something dramatic, effective and reliable. Free/open software have proven themselves equal to if not better than commercial software in terms of quality and reliability. The most popular example of this approach is the Linux/GNU operating system. A philosophy of freedom Linux represents a philosophy of freedom. It is freedom that makes free software like Linux/GNU "free": the freedom to use it; the freedom to copy and share it; and the freedom to modify it, because the source code is available. These freedoms are the mark of free software. A legal document called the General Public License (GPL) was carefully formulated by the Free Software Foundation, also headed by Richard Stallman, to protect these freedoms while the protected software goes through the process of use, sharing and modification. Thus, free software can also be defined as software that is protected under the GPL. The access to source code that Linux/GNU makes possible represents at the R&D level the same kind of pooling of resources, an approach perfectly suited to a poor country like the Philippines. The source code of a computer program is the equivalent of the schematic diagram of a piece of electronic equipment, the architectural plans of a building, or the mechanical drawings of a machine. Once a piece of equipment, a building, or a machine becomes complicated enough -- as most pieces of software are -- modification becomes extremely difficult without the corresponding schematic diagram, architectural plan, mechanical drawing, or source code. Microsoft doesn't make its source code available; Linux/GNU does. Since the Linux source code is available, Linux can be customized much more easily and flexibly than software without source code. Windows users have to wait a long time for an improved version of the software to be released by Microsoft. Linux is being improved all the time by the Internet community, which includes thousands of independent developers and programmers who volunteer their time and effort making the software faster, more robust, and generally better. Working in harmony with the nature of information One of the key concepts in ecology, is the idea of harmony. We must learn to search for harmony and to work for it, because the dynamic balance that it represents gives peace to our lives. Thus, today, it is now commonly accepted that we must work in harmony with nature instead of in opposition to it. For to conquer nature and to defeat it is, in truth, a self-defeating goal, because we are part of nature. Information has its own nature. It is non-material; basically a numeric measure of resolving uncertainty. By its nature, information is easy to duplicate at little cost, unlike material goods which require significant amounts of matter and energy to go into every unit. As the economist would say, the marginal cost of reproducing information approaches zero. It is this nature of information which determines its social character, why people tend to copy it, to share it, to exchange it. As the mathematician would say, the acquisition of information is not a zero-sum game, it is a positive sum-game. To use a popular term today, sharing information goods like software is a "win-win" situation, because you do not lose what you give away. Free software like Linux/GNU works in harmony with the nature of information, because it recognizes and takes advantage of its social nature. Intellectual property rights (IPR) like software copyrights, on the other hand, work against the nature of information because they create statutory monopolies that artifically create information scarcity, so that the privileged monopolists can dictate their price of a good that, by nature, is easily available to all once created. That is why, despite that power of Bill Gates and his fellow cyberlords, they will never be able to completely implement their so-called property rights over information, because they work against the very nature of information. The social nature of information will continually assert itself and people will continue to copy and to share whatever information they find useful and worth sharing. On the other hand, free software and its copying license, the GPL, work in perfect harmony with the nature of information. In the future, IPR will become obsolete and GPL and similar practices consistent with information's social nature will become the general rule. When we work in harmony with the nature of information, it becomes easier to improve, and its quality, reliability and usefulness rised rapidly This is probably why Linux is superior to Microsoft Windows in many respects. It can do many tasks (multitasking) and service many users (multiuser) at the same time. It has all the facilities for communicating with other computers (networking): it can be used as a workstation, as a server, or both; e-mail is built-in; and it is Internet-ready. Linux can also be configured with a graphical user interface. Unlike Windows which inexplicably stops every now and then (sometimes taking your work file with it), Linux machines run twenty-four hours a day for months with no problem. Ask any local Internet service provider (ISP): many use Linux, hardly any uses Windows NT. Linux, furthermore, is Unix-compatible, a Unix look-alike. Who hasn't heard of Unix? It is THE operating system, the one which runs on almost every computer from lowly 386s to supercomputing Crays. Nearly all computer science departments in every self-respecting university in the world use Unix as their platform for teaching and research. The latest developments in computer science often make their appearance on Unix first, before trickling down later to other operating systems like Microsoft Windows or the Mac OS. Social movements and non-government organizations (NGOs) should look beyond the cost effectiveness of Linux, into its philosophy of freedom in software. It is a philosophy consistent with the advocacies of cause-oriented groups, voluntary associations and alternative movements -- a philosophy of pooling resources, sharing, and working in harmony with nature and with information. Genuine compulsory licensing (GCL) If the General Public License (GPL) ensures public access to free/open software, genuine compulsory licensing (GCL) provides an internationally-recognized mechanism for public access to commercial software and other copyrighted or patented goods. GCL works as follows: Somebody who wants to use/commercialize patented or copyrighted material approaches NOT the patent or copyright holder, but the government for a license to do so. The government grants the license, whether the original patent or copyright holder agrees or not, but compels the local licensee to pay the patent/copyright holder a royalty rate that is fixed by law. Many countries in the world have used and continue to use compulsory licensing for important products like pharmaceuticals and books, in order to bring down their prices and make them more affordable to ordinary citizens. GCL would legalize the operations of computer shops which offer copying of commercial software as a service to the public, but would require these shops to pay a reasonable royalty -- usually between 5 and 10 percent of the local price of copied item -- to the original copyright owners. It would allow the government television channel, for instance, to show on television the Discovery Series, while paying a reasonable royalty set by law. Genuine compulsory licensing (also called mandatory licensing in some countries) is a demand of many countries who want to access technologies but cannot afford the price set by patent/copyright holders. While this internationally-recognized mechanism was meant for the benefit of poorer countries, even the U.S. and many European countries use it. In the article "Cyberlords: the rentier class of the information sector", I explained why GCL is an important demand which not only helps poor countries to acquire access to expensive technologies on their own terms, but which also splits the cyberlord class because small cyberlords welcome GCL while big cyberlords oppose it. When referring to compulsory licensing, it is important to emphasize that it must be genuine, because the GATT/WTO agreement pays lip service to compulsory licensing but defines it in a way that negates its essential purpose by giving back to cyberlords the power to set the terms of the license. What about hardware? Even free software like Linux/GNU are expensive in terms of the hardware necessary to run them and the time needed to learn them, to master them, and to modify them for our particular requirements. These additional investments have to be justified vis-a-vis the competing requirements of our impoverished people, only a small minority of which have access to potable water, to medical care or to a telephone. Unlike information goods, hardware is material. Therefore, the cost of replicating hardware and building infrastructure cannot take advantage of the near-zero marginal cost that information goods enjoy. Harware is therefore expensive. To look at the options open to a developing country which wants to provide access to ICTs to its citizens despite the huge capital requirements for doing so, it is useful to go back to the information superhighway analogy. A government which wants to provide universal access to transportation services will have the following approaches available: * one family / one car * walkways, bicycles * efficient public transport Most U.S. cities have taken the first approach. This is unfortunately the default approach taken by many developing countries, which mistake a car-oriented society as a mark of progress. This misguided policy is further encouraged by industrial economies which export cars and other transport equipment to developing countries. A common way of doing so is by granting loans to cash-strapped governments to enable them to engage in road-building sprees so that people will buy more cars. We know today that this approach is unsustainable even for rich countries which may be able to afford them. There will certainly be not enough resources available to provide the metal as well as the fuel necessary to provide one car for every Indian or Chinese family. Even if there were, our atmosphere will never be able to accomodate the highly pollutive as well as greenhouse gases that will be emitted as a result of such an approach. Despite this, many developing countries continue to consider increasing car ownership as an indicator of national progress. The second approach would emphasize non-motorized transport systems like covered walkways and bike paths. To a poor country, bicycle manufacturing is much more technologically accessible than car manufacturing. It will also require much less in terms of a road network and fuel. This is, recalling Schumacher, appropriate technology. The third approach is one that emphasizes public access to a commonly-owned resource that is too expensive to be acquired on an individual basis. It nicely complements the second approach. While the three approaches are not necessarily mutually exclusive, it often happens that one option precludes the other. In Metro Manila, for instance, government transport policies were heavily biased in favor of private cars, resulting in a rapid increase in private car ownership in the region. As the traffic situation deteriorated and road congestion worsened, it became very difficult to expand public transport services as the politically powerful car lobby insisted on retaining the private car biases in the government's transport policies. Therefore, instead of improving the bus and jeepney system, the government took the much more expensive option of building overhead rail systems, which will displace buses and jeepneys and free more roads for even more private cars. Had the government paid early attention to the development of alternative transport systems like walkways, bike paths and an efficient public bus system, middle class families would not have found the private car a necessity for urban living, and neither would it have been necessary to build very expensive overhead rail-based systems. The experience of Curitiba in Brazil is a good example of this enlightened approach. Unfortunately, government are often drawn away from this enlightened approach by the attractive loans dangled before them by countries who want them to build more roads instead so that they can buy more cars. The clear lesson from this experience is that an early enlightened approach can make it much easier for a government to provide universal public access at a much lower cost, than if market forces were allowed to rule and set the direction of development of services. Letting the "free market" direct the deployment of infrastructure would lock a country into very expensive options which are most beneficial only for the suppliers of the technology. Let us now pose the question: what would be the analogue in the information sector of walkways, bike paths, and an efficient public transport system, the approach that makes much more sense, particularly to developing countries, that the one-family, one-car approach? The hardware solution: public facilities / universal access Publicly-owned, publicly-accessible facilities represent this strategy of resource-pooling and resource-sharing, a proven strategy among poor countries. This approach contrasts sharply with what seems today to be the dominant idea for introducing ICTs: "a computer on every desktop," recalling the "one family, one car" approach in the transportation sector. These two contrasting approaches are as follows: - public libraries vs. a library in every home - public viewing centers vs. a television in every home - public calling stations vs. a telephone in every home - the public access terminals vs. a computer on every desktop The first represents a community-oriented approach that emphasizes sharing and minimizes cost; the second represents an individualistic approach that creates a huge demand for suppliers. It is clear what strategy the ICT industry wants governments to take. It is also clear what strategy will be able to deliver universal access at a cost which cash-strapped governments can afford. Unfortunately, many governments do not give this issue much thought, and accept without question the approach which the ICT industry is taking. The Philippine government, for instance, had in 1998 a project to install a public calling station in every one of the 1,500 municipalities of the country. The budget for the project was drastically reduced; instead the government is relying on private telcos to install telephones, which they are doing, but mostly in urban centers, and the target is to install one in every home. Public ownership of the infrastructure Because the ICT infrastructure is very expensive, the effort to set it up presents an opportunity for collective pooling of resources by an entire community. Once the infrastructure is set up, it can then offer universal access, charging only enough to maintain good quality service and provide for future requirements. This is the rationale for public ownership of natural monopolies and large infrastructures. To open such public works to private ownership open the door to rent-seeking with no time bound, extracts additional cost from users to support the profit-driven rent-seekers who will charge as much as the market will bear, and contributes to the further concentration of wealth in the hands of the rich. Because of the low marginal costs of moving and reproducing information goods, the information sector attracts more than its usual share of rent-seekers. A conscious effort by the government to encourage public or community ownership of ICT infrastructures can avoid this problem. Conclusion: The Philippine Greens' Programme for the Information Sector Within the Philippine Greens, we have developed a critical analysis of the emerging global information economy and have formulated what we believe is an appropriate set of responses to the entry into our country of the Internet and various other information and communications technologies (ICTs). This set of responses contains many of the elements discussed above, as well as other policies which, we hope, represent a well-rounded policy framework for the information sector. These information policies include: 1. The right to know. It is the government's duty to inform its citizens about matters that directly affect them, their families or their communities. Citizens have the right to access these information. Neither the State nor private corporations may use "national security", "confidentiality of commercial transactions", or "trade secret" as reasons to curtail this right. 2. The right to privacy. The government must not probe the private life of its citizens. Citizens have the right to access information about themselves which have been collected by government agencies. The government must not centralize these separate databases by building a central database or by adopting a unified access key to the separate databases. Nobody should be forced against their will to reveal any information they do not want to make public. 3. No patenting of life. The following, whether or not modified by human intervention, may not be patented: life forms, biological and microbiological materials, biological and microbiological processes, genetic information. 4. The moral rights of intellectuals. Those who actually create an intellectual work or originate an idea have the right to be recognized that they did so. Nobody may claim authorship of works or ideas they did not originate. No one can be forced to release or modify a work or idea if he or she is not willing to do so. These and other moral rights of intellectuals will be respected and protected. 5. The freedom to share. The freedom to share and exchange information and knowledge must be recognized and protected. This freedom must take precedence over information monopolies such as intellectual property rights (IPR) that the State grants to intellectuals. 6. Universal access. The government will facilitate universal access by its citizens to the world's storehouse of knowledge. Every community needs access to books, cassettes, videos, tapes, radio and TV programs, software, etc. The government will set up a wide range of training and educational facilities to enable community members to continually expand their know-how and knowledge. 7. Compulsory licensing. Universal access to information content is best achieved through compulsory licensing. Under this internationally-practiced mechanism, the government itself licenses others to copy patented or copyrighted material for sale to the public, but compels the licensees to pay the patent or copyright holder a government- set royalty fee. This mechanism is a transition step towards non-monopolistic payments for intellectual activity. 8. Public stations. Universal access to information infrastructure is best achieved through public access stations, charging subsidized rates. These can include well-stocked public libraries; public telephone booths; community facilities for listening to or viewing training videos, documentaries, and the classics; public facilities for telegraph and electronic mail; educational radio and TV programs; and public stations for accessing computer networks. 9. The best lessons of our era. While all knowledge and culture should be preserved and stored for posterity, we also need to distil the best lessons of our era, to be taught -- not sold -- to the next generations. There should be a socially- guided, diversity-conscious selection, undertaken with the greatest sensitivity and wisdom. It is not something that can be left to a profit-oriented education system, to circulation- or ratings-driven media, or to consumption-pushing advertising. The information economy is growing at a phenomenal rate, often independently of the capacity of communities to absorb it, or of governments to control it. This growth is driven mostly by global forces external to our own society but very much present within it. Left by themselves, these global forces will simply treat our country and our communities as fodder for their relentless drive in search of profit and growth. On the other hand, we want the balanced development and interaction of our agricultural, industrial and information sectors in a way that enhances the overall quality of life in our communities. These are often orthogonal, if not opposite directions. To be able to attain that dynamic balance between these sectors so that they enhance each other and contribute to the overall health and sustainability of our communities -- this is the challenge of the information sector. file: lowcost.rtf