Broadband speed, pricing drag on digital economy

Report highlights fetters on digital economy growth

Australia's Internet infrastructure is the biggest factor holding back growth of the digital economy according to a report issued by the Boston Consulting Group.

A new report from the firm ranks countries based on what it describes as "e-friction" — factors that act as fetters on the development of the Internet economy.

Reducing e-friction can boost the performance of SMEs in the digital economy.

"Because the digital economy is growing quickly (often outpacing the offline economy), high e-friction countries are in danger of missing out on a high-impact propellant of growth and job creation," states the report which was prepared by BCG on behalf of the Internet Corporation for Assigned Names and Numbers (ICANN).

The four categories of friction highlighted in the report relate to communications infrastructure, industry (such as a shortage of capital or talent), individual friction (factors that affect individuals' online experience), and information (incorporating factors such as a country's "commitment to Internet openness").

Australia ranked 14 out of 65 countries ranked from least to highest e-friction. However, the nation's ranking was dragged down substantially by its ranking in the infrastructure category.

Although the size of Australia's local ICT skillsbase had some impact on the country's ranking "infrastructure's the real dimension where we're well down the list," said Miguel Carrasco, the managing director of BCG in Australia.

"The biggest factor is actually pricing in terms of fixed broadband pricing and mobile network pricing, and then there's other dimensions like speed; so the broadband speeds, both the peak and average fixed broadband speeds and the peak and average mobile speeds, where we are significantly lower than a lot of other countries," Carrasco said.

"Our speeds are lower and our prices are higher," Carrasco said. The ranking highlights "the importance of ensuring the policy settings support a competitive market, and that competition drives down pricing," he said.

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