(No.143) Measuring the economic and social impact of the Internet to inform policymaking

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Workshop Theme: 
Access and Diversity
Theme Question: 

Emerging issues Q1, Access and Diversity Q2/Q4

Concise Description of Workshop: 

The universal, transformational character of the Internet means that it affects the everyday activities of individuals, companies and governments in numerous ways and tends to produce broad, economy-wide effects. Policy makers are keenly aware of the Internet’s increasing economic importance but there is, as yet, no widely accepted methodology for assigning an economic or social value to the Internet economy.
Understanding the economic and social impact of the Internet is vital because policy makers look to broadband and mobile data networks as platforms for innovation and development, while governments increasingly fund broadband rollouts, either through direct public investment or via the modification of universal service programs, to extend access and achieve these goals. Quantifying the benefits of an open, flourishing Internet can help convince governments of the need to extend access and protect its functioning.
This workshop will discuss various approaches to evaluating the the Internet economy from and economic and social standpoint. These outcomes can help shape future data gathering and analysis by the OECD and other researchers.
Some potential discussion issues for the panel:

  1. How can data from Internet exchanges can be leveraged to help measure the growth of the Internet
  2. What priority should governments give to understanding the economic impacts of the Internet?
  3. What are some of the Internet sources of data that could help us better understand the impact of the Internet throughout the economy?
  4. Where are the most promising avenues for future research on economic impacts of the Internet?
  5. As operators continue upgrading to higher-speed networks (e.g. fibre, high-speed wireless), are there incremental benefits that would not have been possible on older network infrastructure and how could the differences be measured?
Organiser(s) Name: 

OECD will be responsible for the organization but will work closely with partners from industry, civil society and the Internet technical community.

Previous Workshop(s): 
Submitted Workshop Panelists: 

Moderator: Taylor Reynolds, OECD, (confirmed)
Lee McKnight, Syracuse University - (invited)
Nevine Tewfik, Government of Egypt - (confirmed)
Theresa Swinehart, Executive Director, Global Internet Policy, Verizon - (confirmed)
Erika Mann, Facebook - (confirmed)
Bill Woodcock, Packet Clearing House - (confirmed)

Name of Remote Moderator(s): 
Verena Weber, OECD
Gender Report Card
Please estimate the overall number of women participants present at the session: 
About half of the participants were women
To what extent did the session discuss gender equality and/or women's empowerment?: 
It was not seen as related to the session theme and was not raised
Reported by: 
Taylor Reynolds
A brief substantive summary and the main issues that were raised: 

The OECD organised a workshop examining ways to measure the economic and social impacts of the Internet as a way to support informed policy making.  The session ran from 11:00 – 12:30 on the 7th of November.
The panel consisted of a moderator and five panellists.
Taylor Reynolds (OECD) opened the session by explaining how policy makers increasingly want to understand the social and economic impacts of the Internet. But measuring the impact of the Internet is difficult because it has fundamentally changed sectors across the economy. Junkyards, for example, have gone from being local businesses to international parts distributors. The OECD organised an expert roundtable in September 2011 on measuring the Internet economy and the 50+ participations agreed on three broad approaches for categorising measurements.  These include direct, dynamic and indirect impacts.  Mr. Reynolds then introduced the panellists.
Lee McKnight (Syracuse University) began by speaking about the long history of work to measure the Internet economy. He said the difference between correlation and causality is very important in this area but the causality has been difficult to establish. One key challenge is that the variables current used may not be detailed enough to capture the right effects.  For example, data measuring the number of mobile connections would not take into account the different types of connectivity that exist. Some may question whether 2G and LTE connections should be combined. He also discussed the need to capture new effects, such as the role of virtualisation. The rise of cloud computing services, and the virtualisation it offers, could have a very profound impact on areas such as employment in the global economy.
Nevine Tewfik (Government of Egypt) began by referring to the cut of Internet connectivity in 2011 in Egypt. She said that this type of decision to cut activity is precisely why it is so important to understand the social and economic impacts of the Internet. Governments all have national budgets and there are competing demands for resources so it is important for Internet policy makers to understand the impacts so they are argue for investments.  She also stressed though that in the midst of discussion about the benefits of the Internet that we should not overestimate what the Internet can do either. As we are witnessing, the Internet alone cannot bring about political and economic change, but it certainly can support it. Egypt is gathering data now to better understand the impacts. The government commissioned econometric studies three years ago and the work is continuing. Finally, one of the key priorities for Egypt is understanding how the Internet is supporting education. With 40,000 schools, it is vital for policy makers to understand the impact of ICTs in education. 
Erika MANN (Facebook) linked measuring the Internet economy to the need for good legislation that is based on good data. Much of our current understanding is based on studies that have been focused on traditional sectors such as the telecommunication and software industries. But now we are moving into an Internet economy so the scope of the research is going to be very important. A simple study on social media likely will not capture all the benefits permeating throughout the economy and society.  Another area of concern is that the Internet supports the economy and society in different ways in different geographic areas. She also mentioned a recent study by Deloitte that found that Facebook supported EUR 32 billion of activities in Europe. That converts to an economic impact of 50 billion and supports 232 000 jobs. She gave an example of a business built on Facebook’s platform. Wooga is a rapidly growing German game developer that established itself on Facebook’s platform and currently has 50 million users.
Bill Woodcock (Packet Clearing House) made the connection between explained that he was one of the authors of the OECD’s recent paper on carrier interconnection.
-142,000 carrier agreements were basis.  99.51% of agreements are not formalized in a written document.
-Other key finding. When one of the parties in the agreement was in the US, they all chose to use the US as the rule of governing law.  Companies choose countries for governing law where friendly to the Internet industry.
-Also data show the growth of multilateral agreements. That is where there are multiple parties to the same agreement. Large carriers do not use them but very large in terms of number addresses and routes served.
Patrick Ryan (Google): Spoke of the importance of the Internet in the economy and why it was important to measure it. He explained that many of these benefits do not show up in official statistics but are there nonetheless.