Indiscriminate investments hurt SA's connectivity

SA's private sector is making ICT investments aimed at immediate returns on investment.

This has partly resulted in the country falling seven places - to ninth rank - on the 2011 Nokia Siemens Connectivity Scorecard.

This is according to ICT analysts, who note that the high cost of ICT services in SA allows investors to achieve revenue growth from comparatively lower capital investment.

The Connectivity Scorecard is a global ICT index that ranks countries on their ICT infrastructure deployment, and measures the extent to which these technologies are used by the public sector, businesses and consumers for socio-economic growth.

The global study rates “useful connectivity” in 50 countries, half of which are defined as “innovation-driven economies”, and the other half as “resource and efficiency-driven economies”.

In 2009, SA occupied the fourth position among resource and efficiency-driven economies, trailing Malaysia, Turkey and Chile respectively.

The 2010 edition of the scorecard saw a substantial revision to the indicators used for the study. SA also moved up to second place in the resource-driven economy rankings, with a connectivity score of 6.18.

This year, however, with the further inclusion of new data indicators in the scorecard, SA fell back significantly, with an overall score of 4.68. Malaysia continued to lead the resource and efficiency economies.

SA fared particularly poorly in the consumer market, lacking in both consumer infrastructure and consumer usage and skills.

According to Vitalis Ozianyi, senior research analyst at Frost & Sullivan, businesses in SA limit investment to expected levels of paid service consumption.

“That is a good thing and very necessary, but there is little attention given to the layer that must sit on top of the telecoms infrastructure, namely the networks, the devices, the content and the user of these. The 'C' in ICT is being addressed, but not the 'IT' part,” says Goldstuck.

He is also of the view that SA will continue falling down the ladder if more effort isn't made by the state and the regulator to speed up the creation of an enabling environment for connectivity, and specifically affordable and available access for all.

Ozianyi also urges government to invest time and expertise in overcoming existing barriers to the provisioning of ICT infrastructure.

“The investments would range from facilitating clearing of existing backlogs for development of ICT regulations, effective and efficient use of frequency spectrum,” he stresses.

He also believes SA dropped its ranking because of lack of mechanisms and adequate infrastructure to fully utilise the potential of communication systems in business, education and healthcare.

“SA has several islands of excellence in the use of ICT in business; thus, the country is bound to score lower when the connectivity index considers spheres that affect the wider population such as healthcare and education,” he says.

Ozianyi adds that utilisation of business mobile data services in the country is hampered partly by the cost of broadband and Internet access.

As for cloud computing as a connectivity index, notes Ozianyi, SA's adoption and participation will be unlocked by development of regulations for protection of information. “Lack of these regulations restrains the growth of public clouds and results in a poor score.”

However, he points out that with growing competition, the country expects more strategic investment from the private sector.

“Future investments will not only be aimed at expanding existing services, but also will be in applications and services that are currently not given major attention.

“One critical area that requires investment is skills development that is geared towards educating and nurturing ICT innovators with an understanding and capability of applying technology to overcome problems experienced by the wider population,” Ozianyi continues. “This will enable the country to regain its status as a producer of technology.”

He also calls on private sector participants to invest in services and applications that complement the day-to-day functions of consumers and businesses.

“Government and the private sector should jointly invest in digitisation and automation of all government functions and processes that are yet to be covered,” he maintains.

Professor Leonard Waverman, author of the Connectivity Scorecard, says while many advanced countries are forging ahead in terms of infrastructure and their use of ICT, the real connectivity gaps are in the developing world with the exception of strong growth in mobile telephony.

“One thing which is clear is that developing countries must make ICT more affordable, stimulate its adoption and overcome barriers to its use to remain relevant and competitive,” says Waverman.

Among the innovation-driven economies, the US remained a strong performer in this year's scorecard, but failed to capture the top position from Sweden by only a narrow margin.

Moreover, though Korea and Japan performed well in this category, their rankings fell because business investment and use of ICT failed to match the levels achieved in Northern Europe and the US. Malaysia maintained its lead among the 25 resource- and efficiency-driven economies for the fourth consecutive year.

India and China continued to trail behind the smaller, richer economies, the study found. However, China climbed three places to 14, whereas India was only ranked 21 out of 25 countries.

Apart from a few strong performances, most of the countries in this group scored poorly according to the latest data used in this year's study.

To see the full report, visit www.connectivityscorecard.org.

Related story:
SA drops in connectivity ratings