The Internet and the Development of the Digital Society
5. The digital age and the global economy are now closely linked. Since the 1990s, information technologies have accounted for a large share of investment and made a significant contribution to economic growth, supported by an intellectual property system that has provided effective protection for digital technologies in the new economy. Businesses, individuals and governments have all profited from the benefits delivered by the ever-increasing and broadening use of the Internet. The explosion of the Internet, and the increase in .com enterprises, has profoundly shaken the economic world and has generated new commercial models; they have also affected the legal world by posing new problems, inter alia, in relation to the protection of intellectual property on the Internet. Following a period of sudden growth, in 2001 the businesses of the new economy nevertheless experienced a significant crash, of such a magnitude that questions were raised as to how the Internet would develop in the future.
6. However, after what the Organization for Economic Cooperation and Development (OECD) described as "short-term turbulence" [1] and, even if in certain areas development remains slow, it is likely that the Internet will continue to play a major role in the world economy and intellectual property system. Since the importance of its influence in economic terms can be seen as a result of its own development, it is of interest, by way of introduction, to describe the current developments relating to the Internet by reference to a number of indices. These indices, detailed below, are especially important for this Survey, since they directly affect the world of intellectual property.
World Online Population
7. About 10% of the world's population is now online, representing more than 605 million users. [2] This figure is increasing more quickly than earlier foreseen, given that 1999 forecasts envisaged 250 million Internet users in 2002. Certain optimistic forecasts even estimate that the world online population could reach one billion by 2005. [3]
Source: World Telecommunication Development Report, ITU, March 2002
Countries Connected to the Internet
8. The number of countries connected to the Internet has increased significantly in the past ten years. Whereas at the beginning of the 1990s, a little over ten countries were connected to the Internet, this figure stood at 214 at the end of 2001. [4] However, the rate of Internet penetration still remains imbalanced throughout the different regions of the world. The regions with the largest numbers of users are mainly the North American (37%), Asian (31%) and European
(29%) regions. However, recent statistics demonstrate that the regional pattern in terms of number of Internet users is changing. In May 2002, the countries or regions with the highest level of Internet penetration were located primarily on the European continent: Sweden (64.6%), Denmark (60.3%), Netherlands (58.07%), United Kingdom (56.88%) and Norway (54.4%); in the Asian region: Hong Kong, SAR of China (59.58%); and in North America: United States (59.22%) and Canada (52.79%). [5] By contrast, although the number of users has increased slightly in Africa, the lack of telecommunications infrastructure means that this region of the world still represents less than 2% of the world online population.
Source: World Telecommunication Indicators, ITU, March 2002
Cost of Internet Access
9. A variety of factors explain the variation in the rate of Internet penetration in different regions. The cost of Internet access, which varies widely between countries and regions, is one of these factors. In this regard, the Secretary General of the International Telecommunication Union (ITU) has noted that the costs of access are often higher for developing countries. [6]
Source: World Telecommunication Indicators, ITU, March 2002
Languages Used on the Internet
10. The culture of the Internet, which was largely Anglo-American in its early stages, is in transformation. Where once the English language dominated, increasingly some of the 6700 languages that are spoken in 228 countries throughout the world are finding a voice on the Internet. It is envisaged that by 2003, non-English speakers will represent one third of the community of Internet users, [7] the major part of this expansion coming from Asia and Latin America. This diversification of the languages used online is in no way surprising when it is considered that 92% of the world population has a mother tongue other than English. It can therefore be anticipated that the Web will increasingly reflect the diversity of cultures and that this will be accompanied by an increase in its non-English content. According to forecasters, the most widely used language on the Web in 2007 will be Chinese. [8] The table below provides some statistics on the languages used online. The effect of this globalization of the Internet on intellectual property and, in particular as regards domain names, is discussed in Chapter III(c) of this Survey.
|
Global Internet Statistics by Language |
|
|
Language |
|
|
English |
230.6 |
|
Total non-English including: |
403.5 |
|
Chinese |
68.4 |
|
Japanese |
61.4 |
|
Spanish |
47.2 |
|
German |
42.0 |
|
Korean |
28.3 |
|
Italian |
24.0 |
|
French |
22.0 |
|
Portuguese |
19.0 |
|
Dutch |
12.4 |
|
Malay |
8.0 |
|
Swedish |
6.8 |
|
Arabic |
5.5 |
|
Turkish |
4.6 |
|
Danish |
3.5 |
|
Czech |
3.1 |
|
Thai |
2.4 |
|
Romanian |
2.3 |
|
Farsi |
2.2 |
|
Greek |
2.0 |
|
Hebrew |
2.0 |
|
Total Online Population |
619 |
Source: Global Reach (last revised September 30, 2002), at http://www.global-reach.biz/globstats
Developments in Means of Internet Access
11. Faced with users' demands for faster Internet connections, the technologies that enable access to the Internet have undergone significant changes. Broadband technologies have developed, including ADSL (Asymmetric Digital Subscriber Line). Various methods of Internet access now exist, and include the telephone system (Plain Old Telephone System (POTS)), the Integrated Services Digital Network (ISDN) and ADSL.
12. As shown by the table below, the rate of penetration of each of these technologies varies considerably among the countries of the European Union. It is noted that, despite increased demand for faster Internet connections, the telephone system remains the most popular mode of Internet access. The rate of penetration of other technologies such as ADSL, the high performance of which when compared to the conventional telephone system is well recognized, is still low. Nevertheless, since 2000 there have been rapid developments of these new technologies. In addition, ADSL is now present in all European Union member States except Greece. [9] The countries with the highest rate of ADSL penetration are Sweden (4.6%), Denmark (3.9%), Belgium (3.9%) and Austria (3.3%).
Source: BDRC Ltd. Report, "The Development of Broadband Access Platforms in Europe" commissioned by the European Commission, from Figures 1a and 1b, at pp.7 and 8, August 2001
13. At the international level, it is observed that the development of broadband technologies is uneven among the different regions in the world. The table below, which compares the potential growth of these technologies in Europe, the United States of America and Japan, indicates a high number of subscribers in the United States of America. However, a recent report commissioned by the European Commission, [10] foresees significant development of these technologies in Europe and Japan between 2002 and 2003. In 2003, the rate of penetration of broadband technologies is expected to reach 11% in Europe and 8% in Japan.
Source: BDRC Ltd. Report, "The Development of Broadband Access Platforms in Europe," commissioned by the European Commission, at p.139, August 2001
14. Although these new technologies are still at an early stage of development, their progress merits examination because, in the long term, they could have a significant impact on the intellectual property system. To a large extent, they facilitate the downloading of intangible assets protected as intellectual property, including music and video and, as a result, their growth could substantially increase the number of online transactions relating to these works.
Online Activities
15. According to the OECD, in most countries the Internet is used mainly for e-mail and searching for information relating to goods or services. In the United States of America, for example, e-mail and information searches represent the most common uses of the Internet, constituting 84% and 67% respectively of individuals' activities online. There is, however, a trend toward other categories of activities, such as purchasing of goods and services, watching films, or listening to the radio. These developments in Internet use inevitably have an impact on intellectual property, insofar as these activities involve works protected by intellectual property laws. This issue is dealt with in Chapters I and III(a) of this Survey.
1. For these online activities, only individuals aged 15 and over were surveyed.
2. All respondents were asked about this activity. If the response is restricted to individuals enrolled in school, the share of Internet users completing school assignments would increase to 77.7%.
Source: OECD "Information Technology Outlook - ITCs and the Information Economy," Figure 9 at p.197. Copyright OECD, 2002
Value of Commercial Transactions on the Internet
16. The value of commercial transactions on the Internet has increased substantially over the past five years. Whereas in 2000, it was estimated at US$433 billion, it is envisaged that in 2002 it will represent US$1.9 trillion and, by 2004, US$6 trillion. [11]
Source: Data published by Gartner, Inc.
Percentage of Online Commercial Transactions Compared to Overall Commerce
17. Despite the significant value of commercial transactions over the Internet (including sale or purchase of goods or services between businesses, households, individuals, public or private organizations, over the Internet), [12] their share of global trade remains small. As indicated in the table below, in certain OECD countries the use of the Internet in commercial transactions represents 0.4 to 3.78% of all commercial transactions. It appears, therefore, that businesses use the Internet mainly as a marketing tool rather than as a commercial tool and that consumers are still reluctant to make transactions over the Internet.
Source: OECD "Information Technology Outlook - ITCs and the Information Economy," Figure 5 at p.140
Percentage of Individuals Purchasing Goods and Services over the Internet
18. The number of individuals who purchase goods and services over the Internet is generally quite small in relation to the overall number of Internet users. This percentage varies considerably between countries. Among OECD countries, Sweden, for example, has the highest figure, given that 43% of individuals residing in Sweden and using the Internet bought goods online in 2000. It is followed by the United Kingdom (33%) and the United States of America (30%). In Finland and Australia, as reported by the OECD, one in seven individuals buys goods on the Internet, and there would appear to be potential for even greater growth given that around half of all households in these countries owned a computer in 2000. This relatively small amount of business-to-consumer (B2C) commerce can be explained, inter alia, by the increasing concern of users with respect to protection of personal data and security of Internet transactions.
1. Age cut-off: 16 years and older except for Canada and Finland (15+), Italy (11+), the Republic of Korea (6+) and Australia and Turkey (18+).
2. Third quarter 2001.
3. Last quarter 2000.
4. Individuals belonging to households in urban areas.Source: OECD, "Information Technology Outlook - ITCs and the Information Economy," Figure 7 at p.143. Copyright OECD, 2002.
Categories of Goods Purchased on the Internet
19. In the same way that habits of consumption differ from one country to another, the type of goods purchased on the Internet also varies among countries. Overall, computer goods, clothing and digital products represent the largest share of Internet sales. For example, computer goods represent the largest number of Internet sales in the United States of America, Japan and the Republic of Korea. Digital goods such as music, computer software and books also represent a significant source of sales. This is notable insofar as transactions of these goods, which may be the subject of intellectual property rights, either as a mark, patent or copyright, will necessarily have an impact on the intellectual property system and rightsholders.
Source: OECD, "Information Technology Outlook - ITCs and the Information Economy," Figure 11 at p.145. Copyright OECD, 2002.
Distribution of Internet Sales between National and International Markets
20. Transactions that take place over the Internet are mainly concluded between parties located in the same territory. The statistics for online sales for nine European Union countries (see table below) indicate that European companies have a strong propensity to sell over the Internet to purchasers located in their countries, or in the European Union. According to the OECD, these results reflect a global trend of European commerce. In addition, they constitute relevant information from the point of view of the discussion of private international law and the extrajudicial settlement of Internet-related disputes (see Chapter IV of this Survey).
Source: OECD, "Information Technology Outlook - ITCs and the Information Economy," Figure 13 at p.147. Copyright OECD, 2002.
[1] See OECD Report, "Information Technology Outlook - ITCs and the Information Economy," (2002), available at http://www.oecd.org/pdf/M00030000/M00030907.pdf.
[2] See Nua Internet Surveys, Nua.com report, "More than 600 million people have Net access," (November 1, 2002), at http://www.nua.com/surveys.
[3] See Nua Internet Surveys, at http://www.nua.com/surveys.
[4] See International Telecommunication Union (ITU), "World Telecommunication Development Report," (March 2002).
[5] See Nua Internet Surveys, at http://www.nua.com/surveys.
[6] See the statement by Mr. Yoshio Utsumi at the United Nations General Assembly, on June 17, 2002, at http://www.un.org/News/fr-press/docs/2002/AG1295.doc.htm.
[7] Statistics as at September 2002, provided by Walid, Inc., see http://www.walid.com.
[8] Statistics as at September 2002, Ibid.
[9] At the time the information to produce the graph in question was collected.
[10] See BDRC Ltd. Report, "The Development of Broadband Access Platforms in Europe," commissioned by the European Commission (August 2001).
[11] These statistics compiled by Gartner Group cover only business-to-business (B2B) transactions. See http://www4.gartner.com/5_about/press_room/pr20010313a.html.
[12] See OECD (2002), supra note 1, Table 1 at p.131.
