Classroom Companion: Business

 
Chapter 1 · The Digital Economy

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1.2 
 Definitions
Definition 1.1
The digital economy is an economy based on information and communication tech-
nology (ICT).
The digital economy is based on information and communication technologies 
such as the Internet, smartphones, mobile and wireless networks, optical networks, 
Internet of Things (IoT), cloud storage and cloud computing, sharing services, 
apps, and cryptocurrencies. The size and impact of the digital economy are driven 
by people’s adoption of these technologies.
.
Figure 
1.1
 shows the share of households with access to the Internet for the 
period 2005–2019 (ITU statistics, 
2018
). In 2005, only 20% had access to the 
Internet. Fourteen years later, in 2019, about 60% of the world’s population has 
access to the Internet. Over the last decade, access to the Internet has increased in 
all parts of the world. However, there are significant differences—a digital 
divide—in Internet adoption between countries and within countries. While about 
85% of households in the developed has access to the Internet, less than 50% of 
. Fig. 1.1 Percentage of households with the Internet for the period 2005–2019. (Authors’ own 
figure)
1.2 · Definitions

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the households in the developing world has access to the Internet. A key question 
for the next decades is how to provide Internet access to the developing parts of 
the world.
An important evolution in the digital economy is the number of people using 
public narrowband and broadband mobile technologies. Cellular narrowband 
mobile systems (2G) offer global services such as telephony and SMS. Cellular 
broadband mobile systems (4G and 5G) support the use of smartphones to access 
the Internet. These technologies also support telephony and SMS, eventually phas-
ing out the use of 2G and 3G systems. The number of users of public mobile net-
works has surpassed the number of people in the world—in 2020 there are 105 
active mobile cellular subscriptions per 100 inhabitants in the world. The reasons 
for this are that many people have access to more than one device (e.g., one private 
smartphone and one for work) and that mobile phones are used as autonomous 
communication devices for connecting sensors and other devices on the Internet of 
Things (IoT) and the public infrastructures.
.
Figure 
1.2
 shows the access to 4G/LTE mobile networks for the period 2015–
2020. Observe that even in the least developed countries, about 40% of the popula-
tion has access to 4G/LTE networks. For the same group of countries—i.e., the 
least developed countries—close to 90% of the population has access to mobile 
cellular networks, and about 75% of the populations has access to 3G networks. 
Hence, access to the mobile telephony is more widespread than access to the 
Internet.
. Fig. 1.2 Worldwide access 4G/LTE mobile networks. (Authors’ own figure)