Slipping behind

2012-07-04 00:00

I’M in the middle of a visit to South Africa, my first in a couple of years, and while I’m enjoying many of the wonderful things about the country — the great food, the warm people, the winter sunshine, and, of course, my friends and family — I have to admit that the Internet situation has got me crawling up the walls.

You see, living abroad, I’ve become accustomed to cheap, unlimited, rapid, and omnipresent wireless Internet, a kind of uncapped amenity like water or electricity, available everywhere in abundance, at home, at my local coffee shop, even on the train. This perpetual high-speed connectivity has shaped my life and my consumption habits. All my banking is done on my iPad, I order all my delivery food via a handy iPhone app, I download Kindle books on the train, and I check my e-mail about 50 times a day. I am able to do all this even though I live in the relatively primitive United States, which ranks only 13th in the global Internet speed stakes (top speed awards go to, in order, South Korea, Japan, Hong Kong, the Netherlands, Latvia (?), Switzerland, Ireland, the Czech Republic, Romania and Belgium).

Given this state of affairs, coming to South Africa has felt a little like slamming the brakes on my life. Over and over, I’ve been struck by the frustrating slowness of many Internet connections (South Africa has an average connection speed of less than one Mbit/s. The global average is two), and by the limitations placed on Internet consumption (only 30 minutes of free wireless at the coffee shop — what is this, Soviet-era Russia?).

Now, I’ll admit that home ADSL through iBurst or Telkom is not too slow (although not as fast as I’d like), but the caps are frustrating and the cost of uncapped Internet seems excessive. Mobile Internet through a cellular provider is convenient, but often painfully slow and again, there are those annoying caps unless you’re willing to spend a fortune. Even business connections at various offices seem slower than they should be, and the prices are excessive for the speeds you get. It’s all very frustrating to me personally, but more than that, it also makes me worry about the economic future of South Africa.

I realise that this may sound a little silly, as given all the other challenges the country is facing, slow Internet may seem like a first-world problem. However, the truth is that, in the modern world, Internet connectivity is every bit as important for economic development as decent roads or reliable electricity are.

Consider, for example, a 2011 McKinsey report that showed that between 2004 and 2009 (which is about a million years ago in Internet time — Twitter was practically just a start-up, the iPhone was in its first generation, and the iPad was a mere twinkle in Steve Jobs’s eye), the Internet contributed about 20% to GDP growth in the world’s eight most developed economies, and 3,4% to their total GDP. What’s more, the report indicated that contrary to popular belief, the Internet was a net job creator — according to McKinsey, among small, micro and medium enterprises: “[T]he Internet created 2,6 jobs for each job lost to technology-related efficiencies.”

The Internet, you see, is more than just a means of communication: it’s something very similar to electricity, a transformative utility that has fundamentally changed the economics of production (which, incidentally, is the premise of a good 2009 book by Nicholas Carr called The Big Switch). The Internet makes the production of goods and services more efficient and faster, it reduces differences in time and eliminates distance, and, perhaps most interestingly, it enables the creation of all kinds of new business models.

Thanks to high-speed Internet, for example, law offices in the U.S. are able to outsource routine legal work to cheaper employers in India, French fashion designers are able to get their latest ideas for unflattering trousers into production in China within days, and shipping companies are able to get those trousers to market quickly and in the right quantity. Quality Internet infrastructure has helped India create development hubs like Bangalore, where Voice over Internet Protocol (VoIP) allows call centres servicing foreign customers to flourish, and the Internet has helped us fill needs we didn’t know we had, like the need to take and instantly share photographs that look like they were taken in the seventies (thanks Instagram).

The point is that we’re at the beginning of the revolution in production that the Internet has launched, just like at the turn of the 19th century, when electricity was slowly beginning to replace less efficient sources of power. If South Africa doesn’t want to be left behind in this new industrial revolution, its leaders need to take the provision of high-speed, cheap broadband far more seriously.

— moneyweb

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