eWork and Regional Development: Background

Supply side dynamics of regional ICT

The rapid changes driven forward by the liberalisation of ICT and the development of the regulatory framework of the industry have, according to the European Commission, had some beneficial effects on the so-called Less Favoured Regions of Europe. However, although prices and quality of services have improved significantly in all regions, including rural and peripheral areas (for those services available there), they have improved most in the core and metropolitan regions (European Commission, 2000).

For many years, all suppliers of telecommunication services in Europe have been subject to the Universal Service Obligation (USO), which mandates the equal geographical distribution of the supply of traditional telephone services at a universal price. In today’s liberalised ICT regime, however, there seems little immediate prospect of the regulators extending USO to cover the new high speed (‘broadband’), mobile or other more advanced services. This means that rural and peripheral areas in many countries do not have access to these services (at least at affordable prices) and that there is little prospect of them doing so in the foreseeable future.

This implies that especially rural and peripheral regions must be proactive in securing affordable access to advanced ICT services; otherwise they will lose out to stronger, maybe more determined regions. Determination and strong leadership are important elements in ensuring that any region benefits from the digital economy. For example, the rural and peripheral region of the Western Isles of Scotland showed clear foresight and determination in the early 1990s by persuading the newly privatised British Telecom to install an ISDN (medium capacity telecommunications) network before most other regions in the UK. This was an early example of a successful public-private partnership.

There seem to be three types of solution which can be adopted by regions, especially those that are rural and/or peripheral and thus often need to look, at least partially, for non-market solutions in order to upgrade their ICT infrastructures (Millard, 2002a):

stimulation of demand, by attracting new business to the region and supporting local business in adopting eWork and eBusiness methods
co-ordination to pool demand for ICT in both the private and public sector
use of public funding such as European Union Structural Funds or national regional development funds. (See funding sources)

A whole range of technical options exists, to fit various circumstances. These include providing new optical fibre telecommunication lines, moving Internet Service Provider (ISP) points of presence further out into the rural areas, and improving local access. One solution for achieving broadband local access is ADSL (Asymmetric Digital Subscriber Loop), which provides broadband capacity over existing telephone lines, but has quite severe limitations of distance from the local telephone exchange. Other solutions include fixed wireless and satellite technologies which are rapidly gaining favour as the technology improves and becomes cheaper. In the UK, it is possible to use unlicensed spectrum thus avoiding government charges for this (Griffith, 2001).

However, other solutions are possible given sufficient determination and leadership. The large telecommunications companies are no longer the only providers of local infrastructure. It is possible for a local ISP to provide access infrastructure for its customers. For example, an enterprising ISP in Swedish Lapland has installed its own wireless technology to connect dozens of local small businesses to the Internet.

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