Access to a free and open Internet is what drives the digital economy.
Access to the internet has facilitated economic growth and social change for government, business, and society in countries both developed and developing, and regions both central and remote. Loss of internet access would reduce productivity by at least 15% for more than 40% of digitally intensive firms in the US (United States International Trade Commission 2014). Similarly, without internet access, the value added to the economy of Norway’s small town of Tromso in 2012 would have been approximately 10% lower (DAMVAD 2013).
There are currently a number of factors hampering access to the internet, and therefore hindering digitally-driven economic growth. Termed sources of “e-friction”, the Boston Consulting Group identifies four such barriers: infrastructure-related, industry-related, individual-related and information-related. These barriers encompass limited access resulting from stringent policy and regulation regarding internet and data openness, capital and labour shortages, poor online systems and security, and insufficient language capability (Boston Consulting Group 2014).
In particular, hampered access can result from overly stringent legislation or vaguely defined policy regimes. Examples of this include: localization requirements, market access limits, data privacy and protection requirements, intellectual property rights infringement, uncertain legal liability rules, and censorship. Removal of some of these barriers led to increased foreign trade in the US in 2011, estimated to have grown GDP by up to 0.3%, the equivalent of $41.4 billion (United States International Trade Commission 2014). A more clearly defined Internet Intermediary Liability regime is estimated to have the potential to increase the profitability of start-ups by 5% in India, 3% in Germany, 1% in Chile and 2% in Thailand (Oxera 2015).
Improved access can also be achieved through prioritising digital investment. Governments can ensure digital potential is reached by investing in infrastructure to improve levels of reliability in mobile and internet technologies. It is estimated that small businesses in Australia have the potential to contribute an additional $49.2 billion of private sector output over the next ten years through enhanced access to online technologies (PriceWaterHouseCoopers 2013).