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We Really Can’t Live Without the Internet

Nathaniel Bullard

(Bloomberg Opinion) -- The internet came to life 50 years ago this week, with a simple message sent from the University of California, Los Angeles to the Stanford Research Institute. The system crashed only two characters into the transmission of the word “login”: SRI received only “lo” — “as in ‘lo and behold!’” in the words of UCLA’s Leonard Kleinrock. The UCLA terminal operators’ logbook, with its record of “Talked to SRI host to host,” is the internet’s birth certificate.

Five decades later, half the world uses the internet. It took almost the entirety of human existence for half the world’s people to live in cities. It took 27 years for the global population on the internet to grow from less than 1% to more than 50%.

It’s hard to imagine contemporary government, finance or media running without the internet. The internet, and with it the process of digitizing businesses and economies, is now a matter of national focus in dozens of countries.

Earlier this year, my BloombergNEF colleagues analyzed 40 national industrial digitization strategies. They then ranked countries based on the ambition of their digital efforts, the alignment of public- and private-sector goals, and the capital, workforce and technology employed to digitize at greater scale. Of the top 10, four countries are Asian, and four are European.

BloombergNEF’s analysis identifies key commonalities between the countries that have been most successful in using internet-enabled technologies, such as the internet of things and artificial intelligence to make domestic industries more globally competitive. The most successful models align private-sector goals with national digital policies that focus on a few strategic areas. Digitization is not just for wealthy economies (the top 10 include Singapore, with a per capita GDP of $94,000, and China, with a per capita GDP of $17,000), but the skills gap is a concern everywhere. And every country fears falling behind in artificial intelligence strategies, even the perceived leaders such as Germany, the U.K. and Israel.

There’s another thing that worries newly digitizing countries: information and communications technology infrastructure. For most of the emerging markets BloombergNEF analyzed, building the infrastructure to allow connectivity and internet access is the crucial first step. That ICT backbone, as BloombergNEF calls it, is not just as important as reliable electricity, but it’s also inextricably linked to it in developing countries. Highly distributed, increasingly renewable power in emerging markets depends upon ICT to integrate with the electricity network and carry out transactions between buyers and sellers off the grid. That same ICT network depends upon reliable power to operate.

Today, neither network can live without the other. And no country’s digitization strategy will work without these networks being integrated and reliable. In the developed world, electricity was a precursor to the internet; in the developing world, both networks are growing together. Many countries that are building both networks simultaneously are layering their digitization strategies on top as well. This combination of networks and strategies will be crucial for all economies to grow and adapt, be they already rich or still emerging.

Weekend reading

We misremember the internet’s origins, says Ingrid Burrington. Lower-income children ages 8 to 12 spend almost two hours more time in front of screen media than higher-income children of the same age. There is also a significant homework gap in computer access by income. The Porsche 911 and Nissan GT-R are among the 10 cars with the lowest five-year depreciation. The BMW 5, 6 and 7 Series are among the 10 cars with the highest five-year depreciation. The downturn in U.S. shale drilling has been so steep and brisk that oilfield companies are scrapping pumps, pipes and storage tanks. The secret (and large) supply chain of an AmazonBasics alkaline battery. Nobel laureate M. Stanley Whittingham is working to find the ultimate limit of lithium-ion storage batteries. A profile of Sylvie Bénard of LVMH Moet Hennessy Louis Vuitton SE, the executive in charge of the luxury group’s sustainability efforts. WeWork’s business model was risky, it required an unusual source of investment, “and these days Softbank is the most unusual of all.” Softbank Group Corp.’s Masayoshi Son spoke to an almost empty room at the Future Investment Initiative in Saudi Arabia. The history of U.S. military service dogs. Video series of 16 counterintuitive fundraising lessons from seed and series A venture firm NFX. Alcoa Corp. is selling a 32,000-acre ranch in Rockdale, Texas, that includes 14 lakes, mineral rights and an aluminum smelter it shut down in 2008. Nigeria is reviving a steel plant on hold since the Soviet era. Bumper sticker and parking permit safety risks, according to the National Capital Region Threat Intelligence Consortium. Bloomberg Economics’ New Economy Drivers and Disrupters Report.

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To contact the author of this story: Nathaniel Bullard at nbullard@bloomberg.net

To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Nathaniel Bullard is a BloombergNEF energy analyst, covering technology and business model innovation and system-wide resource transitions.

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