The idea that faster broadband is a cure for all sorts of financial woes seems to have become established as fact with precious little evidence. Don’t get me wrong – I love the internet and it really has changed my life. But as an economic medicine, you cannot ignore the side-effects.
Technology trade body ScotlandIS unconsciously reveals some of the contradictions in its contribution to the general election debate, entitled "Enabling a Digital Scotland". To take one example, the report recommends opening up public sector procurement online, and concludes: “A greater understanding of the benefits of buying from local businesses is urgently required.”
This statement, however, comes immediately after ScotlandIS says: “Government contracts provide small businesses trying to open up export markets with the very best of reference sites”, while a quote from EU research points out that “Globalisation tends to increase regional disparities.”
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Like it or not, the internet is one of the main locomotives of globalisation. Putting more procurement tenders online opens the process up to local businesses, but it also gives more access to international competitors. Undoubtedly some Scottish companies would benefit, but historically the winner in this sort of contest has more often been the equivalent of Tesco than a corner shop. Of course nobody would seriously suggest opting out of the global market offered by the internet, but its benefits are far from unalloyed. The same can be said of the call for faster broadband echoed in this ScotlandIS report. Everybody wants it, but I have yet to come across a set of really convincing business arguments for high-speed internet access. For the greatest number of subscribers worldwide, fast broadband represents mainly an alternative to walking to the nearest video rental shop. Already in the USA, just one online video company, Netflix, accounts for 20 per cent of all the country’s internet data traffic in the evening’s peak viewing times. Speed up broadband further and the most likely beneficiaries seem likely to be providers of high-definition and 3D viewing. There is absolutely nothing wrong with giving people access to these services, but that doesn’t mean they are boosting the national economy. In fact, widespread broadband penetration can have a negative financial impact, as it did in South Korea. The government’s success there in wiring the nation also brought massive levels of piracy, sufficient to effectively destroy the local movie and computer-game industries. Although broadband alone wasn’t responsible for these problems, it does illustrate the risk. Examples of the economic benefits of greater broadband access are rather harder to find. ScotlandIS refers to the “Blueprint for Scotland” from the Scottish Council for Development and Industry (SCDI). It suggests the concept of the “distributed city”. The basic idea is that you wouldn’t have to move from your home in the Highlands to go to work. Instead, you would use broadband to hook up with the main office computer network and phone system. This form of telecommuting is supposed to stop rural depopulation. It’s an idea close to my heart, because it’s something I practise – but I also illustrate a major pitfall as far as using the concept to provide employment in Scotland. The “distributed city” has no geographical boundaries. Provided you have an internet connection, you can telecommute from anywhere. This is what I do – not from isolated rural Scotland, but from Ibiza. My broadband connection is no better than that in much of the Highlands, but it’s sufficient. And there are other compensations. I’m not saying that broadband can’t help deliver work to isolated rural areas, but again, the internet means that competition for these jobs is global. The other part of the argument for faster broadband is statistical. Evidence is that the wealthiest countries have the highest levels of internet penetration. The problem here is separating cause from effect. Could it just be that, if you can afford it, you will get a faster internet connection? Equally, the countries with the best broadband systems aren’t necessarily the most technologically innovative. Most would regard the USA as holding that crown, and yet its internet service is not the envy of the world. It’s definitely patchy in coverage. I’m not saying for a moment that Scotland should give up its aspirations to be a world-class centre of technology. But I do think you should be careful about what you wish for.Find out about donating to The Caledonian Mercury
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