INFORMATION ECONOMY REPORT 2013 The Cloud Economy and Developing Countries Torbjrn Fredriksson ([email protected]) Chief, ICT Analysis Section, UNCTAD 28 April 2014, Tunis, Second SG13 Regional ITU Workshop for Africa on "Future Networks: Cloud Computing, Energy Saving, Security, and Virtualization Introduction to UNCTAD United Nations Conference on Trade and Development Founded in 1964

Overall aim: to promote the developmentfriendly integration of developing countries into the world economy. Focus areas: o o o o o International trade and commodities Investment and enterprise development ICTs Commodities Technology and logistics Africa and the least developed countries 2 UNCTAD and ICT

Collaboration with ITU and other UN agencies UN Group on the Information Society (UNGIS) Chairs and vice chairs: ITU, UNCTAD, UNESCO, UNDP and UNDESA 30 members Co-organizer of the annual WSIS Forum/WSIS+10 HL Event Lead facilitator of Action Line C7 on E-business High Level Event: 10-13 June 2014 Secretariat of the CSTD Follow-up to the WSIS next session 12-16 May 2014 Partnership on Measuring ICT for Development Member of its Steering Committee 13 members 3

IER2013 The Cloud Economy and Developing Countries Early stage but of growing relevance Need for objective analysis Lack of evidence Valuable input from ITU Study Group, Jamil Chawki First cloud analysis by UN secretariat What is Cloud Computing? A way of delivering applications, services or content remotely, rather than requiring users to

hold them on their own servers, computers or other devices. o Cloud computing is a model for enabling ubiquitous, convenient, ondemand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. (NIST, 2011) Webmail, online social networks and file-sharing among the most popular applications on the Internet, also in the developing world. Metaphor of the "cloud" misleading cloud is The Cloud Economy a Framework Key stakeholders and market relationships Source: UNCTAD.

What has enabled the Cloud? Processing power o Intels current 22 nanometre CPU is 4,000 times faster, uses 0.02 per cent of the energy and costs 1/50,000 of its first CPU released in 1971 Digital storage o The first IBM PC (1981) cost $3,000; accepted diskettes of 160kb o By 2010, a hard disk for $600 could store all music ever recorded Transmission speed o Dial-up connection in 1993: 56kbps o As of 2013, some consumer broadband packages 2Gbps some 36,000 times faster Cloud computing characteristics and models

Source: UNCTAD, adapted from NIST 2011. Cloud revenue estimates and forecasts vary 2010 and 2015, $ billions 2010 2015 Forecast by: SaaS Paas Iaas

Total SaaS Paas Iaas Total Gartner 10.0 (70.9%) 1.3 (9.2%)

2.8 (19.9%) 14.1 (100.0%) 21.3 (49.2%) 2.4 (5.5%) 19.6 (45.3%) 43.3 (100.0%)

Forrester 13.4 (91.1%) 0.3 (2.2%) 1.0 (6.7%) 14.7 (100.0%) 78.4 (83.5%) 9.8

(10.4%) 5.8 (6.1%) 94.1 (100.0%) These numbers do not include advertising revenue! Source: Berry and Reisman, 2012: 6. Cloud-related traffic on the Internet Mainly in developed countries but growing fast Source: Cisco Analysis. Top Global Cloud Companies by estimated number of servers 2012

Company Google Microsoft Amazon Web Services Facebook Akamai OVH Softlayer Rackspace (2011) Intel 1&1 Home country United States United States

Estimated number of servers 900,000 300,000 United States 250,000 United States United States France United States United States United States United States 180,000

127,000 120,000 100,000 79,805 75,000 70,000 Source: UNCTAD, based on information from company reports and other sources. Pros and cons with the Cloud Potential advantages Potential disadvantages Reduced costs for rented IT hardware and software than for inhouse equipment. Reduced cost of in-house IT management

Enhanced elasticity of storage/processing capacity Increased costs of communications (to telecom operators/ISPs) Greater flexibility and mobility of access to data and services Immediate and cost-free upgrading of software Data security and privacy concerns Unreliable services, e.g. due to inadequate ICT or power infrastructure Risk of vendor lock-in (limited interoperability and data

portability) with providers Enhanced reliability/security of data and services Source: UNCTAD. Increased costs for migration and integration Reduced control over data and applications The Broadband Challenge Gap to LDCs keep widening Fixed broadband subscriptions per 100 people, 2007-2012 Africa (2012): 1 Source: ITU.

Active mobile broadband subscriptions per 100 people, 2010-2012 Africa (2012): 6 The Data Centre and Server Divides Source: DataCentreMap and World Bank. The Internet Exchange Point (IXP) Divide Distribution (%) of IXPs by region, June 2013 Issue recognized by African Union Commission through the African Internet

Exchange System project, funded by the EU-Africa Infrastructure Trust Fund and the Government of Luxembourg. Source: Packet Clearing House. Studies of IXPs in Kenya and Nigeria show significant reduction in latency Quality of Service requirements vary Latency and upload speeds main bottlenecks for developing countries.

Source: Cisco Analysis. Broadband Quality of Service Africa Meet minimum requirements for advanced cloud services Meet minimum requirements for basic cloud services Egypt Ghana Kenya Morocco South Africa Tunisia Source: UNCTAD, based on Cisco Analysis 2012. Do not yet meet requirements

for basic cloud services Algeria Angola Cte d'Ivoire Mauritius Mozambique Namibia Nigeria Senegal Sudan Uganda United Republic of Tanzania Zambia Zimbabwe Regulatory issues Cloud data can become subject to multiple jurisdictions

The transfer of data out of the users jurisdiction may raise issues of control, effective oversight and audit. For some regulated sectors, such as financial services, cloud-related transfers and storage outside the jurisdiction may breach national rules. Key legal areas to address: o Data protection o Privacy o Cybercrime Source: UNCTAD. Standardization issues Cloud computing new and evolving area Cloud service providers offer different approaches, based on different business models, capabilities and customer profiles Standards critical to achieve interoperability, spur

competition and enable effective use of multiple providers Standard-setting activities on cloud mainly in and by developed countries risk that specific needs and requirements of developing countries are not adequately addressed Source: UNCTAD. Policy recommendations Welcome the cloud economy but tread carefully Assess cloud readiness, define national strategy with relevant partners Consider all cloud relevant configurations Enhance access to reliable, affordable broadband Address relevant laws and regulations Recognize supply side opportunities of the cloud economy Consider Government's own use of the cloud

Engage in standardisation forums Seek support from Development Partners Supply-side cloud opportunities in developing countries Data centre services o Local and foreign providers o Government-owned centres Provision of cloud services for local customers o Infrastructure as a Service (IaaS) first step in lowincome countries o Platform as a Service (PaaS) o Software as a Service (SaaS) Cloud aggregation, system integration, brokerage and related services o Leverage experience with national business, legal and

communications environment. Data centre developments in Africa some examples Communications providers o Galaxy Backbone and Globacom (Nigeria) o Safaricom (Kenya) Government projects o Kenya: data centre capacity for its own use as well as for public access to reduce costs for businesses and organizations that need to host data in-country. o Ghana: three data centres that will host data from all government ministries, departments and agencies. Cloud services in Africa some examples MTN (South Africa) launched cloud service business

packages for SMEs in Ghana and Nigeria in December 2012 Vodacom, a South African telecommunication operator has partnered with Novell, an IT provider, to offer cloud services Pamoja Cloud Services, owned by SEACOM (South Africa) targets demand for IT-as-a-Service from SMEs in Africa Cloud aggregation services companies in Nigeria: Computer Warehouse, Resourcery, City Business Computers and Computer Information System Mothers-2-mothers (M2M), a South African NGO, combines the cloud with database technology and mobile services to reduce the incidence of HIV/AIDS transmission from mothers to children Policy recommendations Welcome the cloud economy but tread carefully Assess cloud readiness and define national cloud strategy with relevant stakeholders Consider all cloud configurations: public/private/hybrid

clouds implemented nationally, regionally or globally Enhance access to reliable, affordable broadband Address laws and regulations concerning privacy, data protection and cybercrime Recognize supply side opportunities of the cloud economy Consider Government's own use of the cloud Seek support from Development Partners THE INFORMATION ECONOMY REPORT 2013 can be downloaded free of charge at Getting to the cloud Source: UNCTAD. Areas and bodies for cloud computing

standardisation Source: Standardisation activities for cloud computing, NTT

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