Adapt and Adopt: Governments’ Role in Internet Policy

Adapt and Adopt: Governments’ Role in Internet Policy

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Adapt and Adopt: Governments’ Role in Internet Policy

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  • The 2012 BCG e-Intensity Index

    The BCG e-Intensity Index measures the relative maturity of countries’ Internet economies on the basis of three factors: enablement, engagement, and expenditure. (See Exhibit 2.)

    • Enablement, which accounts for 50 percent of the total weighting, involves fixed and mobile infrastructure. How well built is the national broadband infrastructure and how available is access? What volume of data can it handle? How fast are its upload and download speeds?

    • Engagement, 25 percent, measures how actively businesses, governments, and consumers are embracing the Internet. What is the percentage of companies that do business online? Are consumers using the Internet for activities ranging from social networking to personal finance? Do governments provide information services online, and do they put a priority on Internet access and technical literacy in schools and training programs?

    • Expenditure, 25 percent, measures the proportion of money being spent in online retail and advertising.

    For 2012, we have added 35 countries to the 50 in the 2011 index, including, for the first time, 14 countries on the African continent. The index now comprises all 27 EU nations (plus Croatia, which will join the EU in 2013) as well as most of Latin America and Asia.

    The following are our key findings from the 2012 index.

    BCG e-Intensity Index scores continue to grow, but growth is far from even. From 2009 through 2012, the population-weighted average annual growth rate for the index was 24 percent. The spread between countries with the highest and the lowest intensity ratings doubled during this period. The gap that has widened the most is in the enablement subindex. This is not surprising since enablement measures infrastructure, without which there is little opportunity for engagement or expenditure. Put another way, the Internet’s “rich” countries are expanding their wealth while the “poor” are struggling to keep up or falling further behind. (See Exhibit 3.)


    The scores of Central and Eastern European (CEE) countries are rising rapidly—faster than those of the EU-15 and OECD nations. In several CEE nations, accelerated growth is directly attributable to government activity, including investment in new and advanced enablement technologies. Countries such as Estonia, Latvia, and Lithuania, although small, have recognized the impact the Internet can have on economic recovery and future development.

    In OECD nations, 56 percent of fixed broadband connections are DSL, 30 percent cable, and only 14 percent fiber-optic. Some leading Western economies have among the lowest rates of fiber-optic penetration—7 percent in the U.S., 1 percent in France, and 2 percent in the U.K.—whereas fiber-optic broadband accounts for more than half of Internet subscriptions in Japan, Hong Kong, and South Korea.

    The BCG e-Intensity Index shows that scores for Brazil, Russia, India, China, and Indonesia—the BRICI nations—rose especially quickly from 2009 through 2012. As we have pointed out previously, these markets vary considerably: Brazil and Russia are more advanced than India and Indonesia, and China is far beyond all its BRICI brethren. The Internet and mobile phones are deeply embedded in the lives of hundreds of millions of Chinese people. By 2015, or shortly thereafter, China will likely be the largest online retail market in the world, with close to 10 percent of retail sales occurring online.

    Many African countries are growing quickly, although the base is generally low. The advent of the mobile Internet is responsible for especially fast growth in several countries. Submarine fiber-optic connections to Kenya have brought down prices and expanded broadband access. Nearly 12 million of the country’s 40 million people now use the Internet—three times the number in 2009. Nairobi, developing into a center of technology incubation, has earned the nickname “Silicon Savannah.”