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OECD Internet Economy Outlook 2012 and Its Policy Implications

Evolving from a data network of wire-connected computers to a broader network of portable devices, the Internet has become fundamental infrastructure in our economy. Supported by time series data, OECD Internet Economy Outlook 2012 begins with an overview of trends. It highlights how the Internet sector has proven to be resilient during the recent economic crisis. It then examines the various drivers and impacts of Internet use and deployment, as well as emerging technologies, e-health, digital content, security and privacy, and it also discusses a methodology for measuring the Internet economy.  This raises many important socioeconomic and political issues, as economies and societies become increasingly intertwined.

“Broadband, and the Internet in general, have become, what we call in the OECD, a general-purpose technology,” said Taylor Reynolds, OECD’s senior policy analyst on the Internet economy. He also believes there is a need for more international co-operation to “strengthen Internet governance and ensure the continuing free flow of information.”

According to the OECD report, the Internet economy now accounts for 13 percent of American business output. This underlines the importance of the internet as an important source of growth in the economy and a core component of the broader economy, which influence policy.

Data on rapid expansion of broadband is discussed. The two technologies that will shape the near future of connectivity, the report says, are very-high-speed fiber connections being deployed closer to population areas and new high-speed wireless connections.

The report also analyses digital content that is increasingly downloaded, streamed, or hosted in the “cloud”.  It discusses key trends that have characterized the growth of digital content markets and factors that have enabled this development.

Data in the report show that real-time entertainment applications have overtaken peer-to-peer (P2P) as primary drivers of network capacity in North America, accounting for 58% of peak traffic and almost 65% of peak downstream traffic in 2012. The streaming video service Netflix alone reached a peak of 32.9% of all U.S. downstream traffic in the same year.

Meanwhile, the report also looked at what it calls the “increasing sophistication of cyber security threats.”  Attacks on businesses, governments, and infrastructure are soaring, according to the report, and are costing the global economy billions of dollars each year.

The future of the Internet economy depends on whether users, businesses and governments feel safe using the network and trust it for critical applications and services.  As a result, governments are paying increasing attention to cybersecurity and data privacy threats. The report says that the privacy considerations are significant because as economies and societies become increasingly intermeshed with devices that continuously communicate with each other and provide information to users, data will be processed and delivered across multiple devices and networks. It will increasingly inform people about their surroundings, but also provide information about people to third parties.  Alongside this, the report discusses business models and the role of employment and skills as enabling factors for innovation in security and privacy.

While education is not specifically mentioned in the report, the implications and impacts on our campuses are clear.  EDUCAUSE will continue to monitor and report on this issue.

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