Module 4: Other key issues to be addressed in creating an enabling legal and regulatory framework to encourage internet use for business development

II. Bridging the digital divide

“The digital divide” refers to the gap between those with regular, effective access to digital technologies and those without. The digital divide results from the socio-economic differences between communities that in turn affect their access to digital information – mainly but not exclusively through the Internet.

The presence of a digital divide, particularly between rural communities and urban centres, directly affects the ability of SMEs to reach and compete in the larger domestic and even global markets.

The digital divide is also an example of a problem that likely requires more from the government than other ICT-related concerns, which can be left more to the private sector.

In many instances, market mechanisms alone will not suffice to ensure widespread individual access to the network, since much of the population often lacks the income required to obtain the services or they are otherwise located far from places where private sector investment is present. A digital divide exists in these areas precisely because the market is too small or insignificant for private sector players to consider. Low-income and rural communities are increasingly left behind, which in turn limits the ability of SMEs in these areas to use the Internet for business development.

Beyond the moral duty of governments of bridging this gap, however, it should also be pointed out that numerous examples exist of the Internet being used by SMEs in rural and unserved areas – leading not only to better lives and opportunities in these places and for these people, but also contributing to overall socio-economic development.

• Internet access will enable SMEs and entrepreneurs to use e-mail and VoIP to coordinate directly with buyers of local goods and products in the cities, effectively bypassing middlemen and earning a greater share of the revenues.
• Numerous websites allow local artisans to sell directly to the mature markets in the developed countries where their products are likely to fetch higher prices. Examples abound from for-profit sites like Novica.com (which is a partner of National Geographic) to non-profit marketplaces like PEOPLink
• The Internet also helps to level the playing field for SMEs in remote areas by providing them with key information and ideas on market prices, opportunities and trends.

Therefore, bridging the digital divide – or, putting it in another way, providing rural communities with access to information and communications technology (especially the Internet) – is therefore an important policy goal to the extent that it assists SMEs in these areas to grow. From a broader viewpoint, it helps enterprises to make a more meaningful contribution to overall countryside development.

A. Key Policy Considerations

• What are possible policy options for providing connectivity to rural and remote communities?
  • Competition policy;
  • Universal Access Fund and other related schemes;
  • CD-based applications.
• Ease of access to the Internet is a fundamental aspect, but it is not the sole factor. Effective access also depends on the ability to use ICT effectively, and on the quality of digital content that is available and can be provided. Once an appropriate level of access is achieved, the individual, community or SME then requires an education that includes literacy and technological skills to make effective use of it. What programmes need to be in place in terms of relevant education and training? How can these be effectively funded, made sustainable and documented?
• The availability of broadband connections may affect SMEs’ decisions to adopt e-commerce. Broadband’s faster speeds improve overall online experiences for both individuals and businesses, encouraging them to explore more applications and spend more time online. In contrast, slow internet connections and data transfers discourage SME adoption of the Internet.