The Future of the Internet Economy

30 Years has Gone By Fast

The Internet has, in a short space of time, become fundamental to the global economy. More than a billion people worldwide use it, both at work and in their social lives. Over the past three decades it has grown from an experimental research network and now underpins a range of new economic activities as well as activities and infrastructures that support our economies, from financial markets and health services to energy and transport.

The Internet is making economic activity more efficient, faster, and cheaper, and extending social interaction in unparalleled ways. Increasingly, the largest productivity gains for businesses come from using online networks in some form. The multinational food giant Nestl, for example, now receives all of its orders directly from supermarkets over the Internet. The shipping company UPS used online networks to optimize its delivery routes, saving 12 million liters of fuel in 2006 from nearly 100 000 trucks.

The Internet has also brought unprecedented user and consumer empowerment as well as opportunities for new innovative and social activities. Individuals have greater access to information, which facilitates comparisons and creates downward pressure on prices. Internet users are extremely active, creating new content themselves and interacting in new ways.

The Internet is quickly permeating all economic and social domains, and most public policy areas. For instance, e-government has become the prime tool for supporting government functions and interaction with citizens and businesses. Healthcare systems are increasingly making use of the Internet and online networks to increase affordability, quality and efficiency, through electronic patient record systems, remote patient monitoring and healthcare delivery, along with improved diagnostics and imaging technologies. Educational performance is found to be correlated with home access to, and use of, computers  all other things being equal. Moreover, environmentally-friendly technologies based on the Internet in buildings and transport systems and alternative power generating systems can help address climate change and improve energy efficiency.

The influence of the network of networks is inherently global; helping to forge closer integration of our economies and societies. Moreover, as the Internet expands even further it can help the economic and social development of people of all countries. While there have been remarkable developments in recent years, much remains to be done: about 20% of the worlds population use the Internet, but over 5 billion people still lack access to it.

Before the rapid development of the Internet, separate systems  telephone, television and video, individual computer systems  stored and transmitted voice, video and data. Today, these systems are converging onto the Internet. In addition to convergence of network platforms, convergence is also taking place at several other levels: at the content level with Video on Demand (VoD) and television over Internet Protocol networks (IPTV); at the business level, with companies offering combined television, Internet and telephone services to subscribers; and at the device level, with multi-purpose devices that can combine email, telephone and Internet, for example.

THE FUTURE OF THE INTERNET ECONOMY
Indeed, this has become the era of converged media. Users upload some 10 hours of video per minute alone to the video sharing site YouTube. By 2008, nearly 300 million people are registered to use free VoIP (voice over Internet Protocol) software Skype, enabling them to make phone calls worldwide at little or no extra cost via their existing Internet access. Converged media are also increasingly becoming mobile with the expansion of wireless broadband networks.

As convergence takes place and investment in next generation networks (NGN) begins, the role of very fast optical fibre networks to the home becomes increasingly important given that emerging applications, such as high-definition television and video-on-demand, require increasing amounts of bandwidth.