DIGITAL ECONOMY OUTLOOK 2015KEY MESSAGES

• Digital economy a priority• ICT sector gaining traction• Price deflation on services• Convergence is a driver• Companies are online• Youth are showing the way • Trust is key to the future of the

digital economy

Main points

• Countries acknowledge the significance of the digital economy to boost competitiveness, economic growth and social well-being– 27 out of 34 countries have a national digital strategy– They are over-arching and cross sectorial

• The digital economy goes beyond the ICT industry – Demand side objectives feature prominently within

the digital strategies – Governments need to and are working in multiple

policy areas

Digital economy is a priority for governments

• World exports of manufactured ICT goods grew by 6% per year while ICT services grew at 30% per year 2001-2013

• Out of total Business Enterprise Research Development (BERD) the ICT sector accounted for 33%

• Patent applications in ICT accounted for almost 40% of applications, almost in line with 2000-2002.

Positive outlook for the ICT sector

Employment of ICT specialists across the economyAs share of total employment, by category

• While employment in the ICT sector remained stable, employment across all sectors of the economy is up, and reach over 3% of total employment in most OECD countries

• Fibre is increasingly being deployed, fibre increased its share of total fixed broadband subscriptions to 16.5% in June 2014

• Consumers are getting more for their money, e.g. fixed broadband prices per Mbps decreased significantly between 2012-14

• Mobile is getting more affordable, mobile broadband baskets for smartphones decreased up to 52% compared to 2012

Faster and cheaper communications

• The industry is being impacted by convergence and consolidation

• Services, including TV and video, are now carried over IP networks blurring boundaries between traditional telecom and broadcasting

• As a result, a number of countries have introduced legislation to prohibit blocking and discrimination of services (net neutrality)

The communications industry continues to converge

• Almost all businesses rely on ICTs, by 2014– 95% of enterprises had broadband up from 86% in 2010– more than three quarters of business had a web presence (76%)– a large majority (90%) were interacting with public authorities

online – cloud computing has accelerated, 22% of companies were using

these services

Companies are online

Enterprises using cloud computing, 2014

• However, adoption remains low for– e-commerce, only 21% of firms sold

online (up only 2 percentage points from 2009)

– more sophisticated software, only 31% of companies used Enterprise Resource Planning (ERP) in 2014

• And in all cases, large firms adopt more than smaller ones

…but there is still more to do

• 81% of adults in the OECD area use the Internet (95% of 24yr olds); however, less than 49% of those over 65 used it, but with great variations

Individuals’ Internet use continues to differ by age and education (1)

Age gaps in Internet use, 2014As a percentage of population in each age group

• Individuals shopping online has increased from 31% in 2007 to 50% in 2014 and through their phones (24% in 2011 up to 38% in 2013)

• The breadth of Internet activities carried out by users with tertiary education was on average 58% larger than those with less education

• E-government varies widely across countries– 64% of OECD individuals used online government

services

Individuals’ Internet use continues to differ by age and education (2)

• Smartphone adoption in OECD countries grew by 30% in one year (2012-13)

• The rise of online and mobile banking is changing market boundaries and competition in the traditional retail banking sector, including the rise of P2P lending platforms

• The introduction of the “Sharing” Economy – while these models enable collective consumption, they are challenging existing regulatory frameworks

• Crowdsourcing increasingly being used to develop ideas and products including using social media to solicit feedback and to raise capital, particularly in early stages

Mobile and data are driving new business models

• Users are increasingly concerned, 64% of respondents are more concerned about privacy than they were a year ago

• Security and privacy are top priorities for governments (ranked 2nd and 3rd)

• Driving a new generation of cyber-strategies and the need for privacy and security professionals

• And the increasing need for national strategic approaches to privacy, incorporating a whole-of-society perspective with the flexibility to capitalise on technological developments (e.g. data analytics and the Internet of Things)

Trust is critical to the growth of the digital economy

• IoT relies upon connectivity between devices and sensors– The number of connected devices in OECD countries is

estimated to be 14 times larger in 2022– Wireless networks are essential

Internet of Things – where are we?

Number of M2M/embedded mobile cellular subscriptions

• IoT will bring benefits across the economy by allowing for innovative approaches to dealing with ongoing challenges, for example improved energy efficiency

• IoT will facilitate the development of new technological applications like autonomous machines

• A risk-based approach to security and privacy in this space will be instrumental

Internet of Things –what’s the potential?