A Digital Agenda for Chile: A Role for Government Robert Pepper, Senior Managing Director Global Advanced Technology Policy 15 September 2007

Agenda The importance of broadband and ICT Where Chile stands among its peers Appropriate roles for government

The importance of broadband and ICT

Where Chile stands among its peers

Appropriate roles for government

The Good News Chile is a regional leader Chile has a strong foundation to build upon Government is focused

Chile is a regional leader

Chile has a strong foundation to build upon

Government is focused

The Importance of Broadband and ICT

Goals for Public Policy Economic Grow GDP Productivity growth and investment Jobs Maximize social welfare=consumer + producer welfare Innovation Social policies Inclusion Diversity Culture Public Safety Citizenship

Economic

Grow GDP

Productivity growth and investment

Jobs

Maximize social welfare=consumer + producer welfare

Innovation

Social policies

Inclusion

Diversity

Culture

Public Safety

Citizenship

OECD, UN, World Bank, WEF all recognize the power of ICT to accelerate economic growth and social inclusion Education for all Healthcare for all Universal Connectivity Increase competitiveness Attract private investment Generate Innovation Reduce transaction costs Services for citizens and businesses Cost-effective government processes Anytime accesibility Many nations initiatives are geared towards becoming digital For social inclusion To boost productivity and economic growth For government efficiency and effectiveness

Education for all

Healthcare for all

Universal Connectivity

Increase competitiveness

Attract private investment

Generate Innovation

Reduce transaction costs

Services for citizens and businesses

Cost-effective government processes

Anytime accesibility

Broadband connectivity is a fundamental element to support productivity growth and competitiveness U.S. Productivity Growth 1974 1995 2001 2010 48% 1.2% 2.1%* Expected impact of Internet Business Solutions in US and EU: * Productivity growth rate based on U.S. Government estimates EU Productivity Growth 1996 2000 2010 2001 30% 1.3% European Union 1.7%** **Productivity growth rate estimate based on 10 year OECD average from 1992-2001 Source: Net Impact, 2002. McKinsey & Company, Cisco Analysis US

Productivity Which Drives Standard of Living Standard of Living Doubles in 14 Years 5% 100% 25% 50% 75% Years Compound Productivity Growth Standard of Living Doubles in 72 Years 1% Standard of Living Doubles in 24 Years 3% Source: Net Impact Study 0 9 18 27 36 45 54 63 72

Essential Infrastructures Transportation Energy/power Water Communications From telephony to connectivity/broadband

Transportation

Energy/power

Water

Communications

From telephony to connectivity/broadband

Chile and Its Peer Groups

Three Peer Groups for Benchmarking Latin American region Countries with similar GDP per capita Aspirational peers

Latin American region

Countries with similar GDP per capita

Aspirational peers

The ICT Development Map Chile Compared to Latin America Regional Chile’s ecosystem is rated higher than the rest of the region, but its infrastructure rating is in line with its neighbors

The ICT Development Map Chile Compared to Similar Countries (+ - 30% of Chile’s GDPpc) Chile’s ecosystem rating is again ahead of this group of somewhat similar countries, while it’s infrastructure rating is merely in-line.

The ICT Development Map Chile Compared to its Aspirational Peers Chile compares favorably with countries in emerging markets, but not with the more advanced ones.

Chile –ICT Indicators Source: Digital Planet – WITSA; EIU

Chile –ICT Indicators Source: WEF-GITR (ITU)

Chile –ICT Indicators Source: EIU

Chile –ICT Indicators Source: WEF-GITR (ITU)

Chile –ICT Indicators Source: WEF-GITR (ITU)

Chile and Its Peer Groups Summary Leads Latin America Lags global leaders (“aspirational peers) Middle of the pack compared to GDP peers Doing well but significant opportunity to grow and lead

Leads Latin America

Lags global leaders (“aspirational peers)

Middle of the pack compared to GDP peers

Doing well but significant opportunity to grow and lead

Appropriate Roles for Government

Assessing Roles for Government Role for government does not = regulation Chile’s advantages A foundation where the market is working Leveraging/advancing Chile’s advantages Driving competition, investment, innovation lowers prices and creates demand Filling the gap Insuring inclusion Low income barriers to adoption/use Un/under served areas--low density remote areas Provide leadership

Role for government does not = regulation

Chile’s advantages

A foundation where the market is working

Leveraging/advancing Chile’s advantages

Driving competition, investment, innovation lowers prices and creates demand

Filling the gap

Insuring inclusion

Low income barriers to adoption/use

Un/under served areas--low density remote areas

Provide leadership

Driving Competition, Investment, Innovation Fostering platform competition, lower entry barriers Access to rights of way Spectrum for wireless broadband Enable/foster demand creating applications Number portability “ Light touch” regulation for applications; e.g., VoIP, IPTV

Fostering platform competition, lower entry barriers

Access to rights of way

Spectrum for wireless broadband

Enable/foster demand creating applications

Number portability

“ Light touch” regulation for applications;

e.g., VoIP, IPTV

Filling the Gap—Policies for Inclusion Addressing adoption barriers ICT education Funding community/neighborhood access points Lower cost of adoption—increasing PC adoption Extending networks to un and underserved areas Facilitate “capex” investment—financing tools Use of public rights of way, land, facilities Shared costs of construction

Addressing adoption barriers

ICT education

Funding community/neighborhood access points

Lower cost of adoption—increasing PC adoption

Extending networks to un and underserved areas

Facilitate “capex” investment—financing tools

Use of public rights of way, land, facilities

Shared costs of construction

Lessons Learned Leadership matters Success depends on Public-Private Partnership Government role Leadership—set concrete goals Establish fair, transparent, competitive framework and market structure Lower entry barriers and costs Support low density deployment and low income use Create/support demand creating government services Private sector role Invest in, build and operate broadband networks Compete

Leadership matters

Success depends on Public-Private Partnership

Government role

Leadership—set concrete goals

Establish fair, transparent, competitive framework and market structure

Lower entry barriers and costs

Support low density deployment and low income use

Create/support demand creating government services

Private sector role

Invest in, build and operate broadband networks

Compete