Imagine a situation after ten years. A family separated in Jumla, Biratnagar and Kathmandu are talking on video-mobile, the son is offering his father a cup of coffee by instructing to a computerized coffee maker from 400 kilometers away and the daughter, a medical practitioner,  is checking her ill mother in Kathmandu from Jumla.

Can we contemplate such a situation in Nepal in just a decade? Yes, if we initiate proper policies promptly.

Since the discovery of fire and invention of wheels, nothing else has influenced human civilization more than information and communication technology. The information and communication technology (ICT) is revolutionizing the way we do business, live our lives, teach our children, treat the ills, travel distance, do research and entertain ourselves.

Just about a couple of decades ago nobody imagined the prospects of the ICT in changing human civilization so vastly and ubiquitously, and now it is over $650 billion industry. Not only that in 2005, global spending on ICT has reached approximately $2.8 trillion, from $2.1 trillion in 2001. It is estimated that this growth will increase to over $3.2 trillion by 2007.

ICT is certainly the lynchpin for the overall aspects of development. However, it is both an opportunity and a challenge to a poor and underdeveloped country like Nepal. In order to develop strategies to respond to the challenges and opportunities, we need to have a good understanding of the impacts of ICT on economic growth, on services, and on the process of globalization. The focus needs to be on ensuring that the broad policy environment encourages innovation and risk taking, stimulates the economic growth, and fosters the widespread use of ICT to achieve productivity benefits and other broad national objectives.

ICT innovation and national economy:

ICT contributes to the economy in terms of wealth creation, employment and exports. This is in-addition to the impact on other areas of economic and social activities. Studies have shown that ICT can impact economic growth in at least three different ways. First, the actual production of ICT can have a positive effect on growth. Secondly, the role of ICT as an input in the production of commodities and services has a potential to positively impact growth. Finally, the use of ICT can generate positive externalities, which contribute to productivity.

The most-important role of government in technology development adoption is maintaining an environment conducive to private-sector innovation and investment. For example, government policies help to determine levels of investment in the economy, which in turn drives productivity, economic growth, and job creation. Public and private investment in research and development leads to new products and processes that can spur productivity and investment in new facilities and equipment gives companies an opportunity to incorporate more-productive technologies into their operations. Therefore, it is important to support private sector in such initiatives.

The competitive drive of private industry will dominate the process by which the ICT industry evolves. Private firms will define it; nurture it; shape it; and build it. That's what happened in Indian IT enabled services and outsourcing sector. India established itself in the lucrative global market for offshore IT-services such as software development; IT enabled services; and business process outsourcing. India achieved IT services export revenues of $7.78 billion in 2001, and has set a target of $50 billion by 2008. The Indian IT software and services industry is projected to grow to seven per cent of India's GDP and 35 per cent of exports by 2008. Nepal can seek ways to attach with India and share some percentage of their glory.

Industry gurus claim that new entrants can become successful players in this industry as the US companies are diversifying their outsourcing relationships, niche markets are emerging, and market for IT services is expanding. But the most promising opportunity for newer entrants like Nepal may be IT-enabled services and not software development. This is because software outsourcing is an increasingly competitive industry with countries such as India having substantial advantages. While the wages in data entry and other such tasks are lower than for software development, these businesses typically employ greater numbers of people. Furthermore, the skills developed through such extensive use of computer programs and IT systems could form the basis for an eventual software development industry.

IT enabled services have the potential of bringing developments within the reach of the common people as well. Examples of services especially relevant to rural population are market information on, prices, raw materials, and credits to local farmers, artisans and traders; relevant data on agriculture and livestock; employment opportunities (domestic and abroad), information on civic rights and responsibilities; health and sanitation (e-medicine) and education and literacy (e-learning); news dissemination (voice mail, email, e-postal service) etc.

Initiatives into such sectors will not only tap revenue for the government but also give a respite to hundreds of IT trained manpower coming out of Nepalese institutions every year. However the aspirations of ever increasing number of job seekers can only be met by giving practical knowledge in areas like communication style and culture, project management and foreign languages particularly focused to offshore business.

Putting "e" to work:

The boundaries between the ICT and other industries are becoming much more blurred because ICT is becoming more of an enabling technology, providing essential support for the development of all technologies and industries.  The convergence of technologies, and the development of the networked economy, will result in the technology becoming more pervasive but less visible. There is solid economic growth potential in the convergence of ICT, but an even greater potential in its application in other industries such as education, health, business, agriculture, transportation, service industry creating new areas like e-business, e-governance, e-learning etc.

If Nepal is to benefit from technology, we need to 'put "e" to work'. Whether companies manage traditional exports in new ways or exploit opportunities in new export sectors, they should start 'putting "e" to work' to sharpen their competitive edge. The danger of not investing in technology is that Nepali exporters will be left behind, as more and more world trade moves online. Another significant application of ICTs is known as e-governance which refers to government's use of ICTs to exchange information and services with citizens, businesses, and other arms of government. The most important anticipated benefits of e-governance include improved efficiency, convenience, and better accessibility of public services. E-governance is the public sector's use of information and communication technologies with the aim of improving information and service delivery, encouraging citizen participation in the decision-making process and making government more accountable, transparent and effective.

Integrating Nepal through ICT:

Incubating innovations, putting "e" to work and molding the network effects that evolve out of the constellations of bits and bytes can sparkle on the digital galaxy through a milky-way aka information highway. To provide access in countries like Nepal we have a couple of technologies such as CDMA, VSAT, Fiber Optics, WiFi, WiMAX, GSM, wireless radio other than PSTN access. CDMA is an economical way of providing Internet access in the rural areas.

CDMA system now is installed in more than 50 districts and covers more than 1570 VDCs. However, CDMA has bandwidth constraints and may not be advisable for higher applications like e-medicine and e-learning. Further it doesn't give much space for the local users to be innovative as it brings in 'vendor lock-in' in the form of Nepal Telecom. Fiber optics and VSAT are getting cheaper and could be used to provide high bandwidth for such purposes. We need to think of ways to bring wireless fidelity (Wi-Fi) applications, so as to make use of unlicensed radio spectrum to deliver cheap and fast Internet access. Similarly opening cheaper technologies such as VOIP could pave the way for high commercial and social activities in the rural areas. For this we may establish wireless broadband network by setting up repeater stations around the mid hilly regions. New technologies are making this a reality. Now radio equipment are available that has 100Mbps to 150 Mbps transmit power and works between over 50 km to 100 km range. These days the conventional radio technologies like HF or VHF are being also used for data communication allowing users to browse the Internet and email messages or send and receive faxes.

Policy responses:

Policy responses for the development of the ICT sector should have two interlinked dimensions namely ICT as an enabler for development and as an economic sector. Many factors may be outside the role of government but the most positive action a government can do is to focus on creating the right business environment, institutional integration, improving the educational system, deregulating the telecommunications market, development and deployment of the work force and take steps to support local entrepreneurial firms. In Nepal policies should be designed to enhance universal access connectivity in different parts of the country; to encourage resourceful local contents to utilize the ICT services effectively; to support capacity building of human resource and institutional capacity; and to encourage research on ICTs. In addition, policies should also be made to focus on the application of convergence of ICTs for general public.

With the rising importance of digital economy particularly focused to ICT and ICT led development a new Ministry of Information and Communication Technology could be established by removing IT from Ministry of Environment, Science and Technology, and Telecommunications from Ministry of Information and Communications. This would help all the ICT players to converge on a single platform rather than jumping from one node to another. This would pave the way for a single comprehensive ICT Policy and one umbrella Act by integrating the existing IT policy, the broadcasting component of the communication policy and the telecommunication policy. Further policies and legislation on ICT could be reviewed periodically to synchronize with the rapid changes in the ICT environment.

Information and communication technology is extremely cost-effective compared with other forms of capital. Studies have shown that modest yet key investments in basic education, access and trade can achieve remarkable results. The use of ICT facilitates the transfer of technology and knowledge, and can lead to network effects such as lower transaction costs and more rapid innovation, which in turn improve the overall efficiency of an economy. This line of reasoning can be used as an argument to justify an active ICT policy that stimulates the ICT sector and the use of ICT in rural hinterland. For example service providers can be encouraged to go the rural areas by provisioning support like full waiver of VSAT fees to ISPs and ICT enabled service providers; reduced customs duty on computers and communications equipment and tax exemption for a significant period.

Conclusion:

The widespread adoption of ICT has enabled the global knowledge economy, greatly increased GDP growth and productivity, and reshaped the world's competitive landscape. However what we have to understand that ICT is not a panacea. Technology does not, on its own, drive transformation-that comes from the policy environment, strategic decisions and change strategies embraced by individuals, firms and governments. The way in which ICT investments are managed, and ICT products and services used, has a major impact on the economic and social benefits achieved. Therefore Nepal must be prepared to accept the challenges of the rapid advancement of ICT and try to use it for national development at large.

rajib@nepalit.com.