From people to things: Building global connectivity

OECD Directorate for Science, Technology and Innovation

©Dennis MacDonald/Alamy Stock Photo

Connectivity is the foundation for the digital economy. The Internet has already connected more than three billion users across the globe and about 14 billion devices. 

A major challenge is how to extend connectivity not only to the next several billion users, but also the next 50 billion devices. Thanks to the Internet of Things (IoT), the economy is digitalising on an unprecedented scale, as devices and objects connect to the Internet’s network of networks and communicate with each other. A world is emerging where smart sensors and actuators will increasingly monitor the health, location and activities of people and animals, the state of the natural environment, the quality of food and more.

If connectivity is the foundation and enabler, the driver that makes all this possible is convergence. Thanks to digitalisation and the growing capabilities of the Internet, there has been an ongoing convergence between once distinct parts of the communication ecosystem. Fixed and wireless networks converge, voice and text, and telecommunication and broadcasting too. Your car, your home appliances: all are being connected. Companies best known for communication equipment increasingly provide content, and vice-versa. Each firm may have a competitive edge and niche function but old lines are blurring as new services and possibilities emerge all the time. Much of the time you will not be aware that the tram or stop you are waiting at are connected to the Internet, but they will have IP addresses.

The underlying communication and digital services industries, which are essential for building up global connectivity, are transforming, spurred by growth in fixed and mobile broadband penetration rates and by ever more innovation in software and smart devices.

Services such as voice, video and music are now offered not just on television and radio, but over the Internet and are increasingly integrated as content with devices or software applications, such as search. Online video distributors, such as YouTube or Netflix, offer content over broadband networks, beyond traditional cable and broadcasting services. TV broadcasters and manufacturers are also going digital and offering online packages, which can be accessed over the web. Users can choose between several devices to receive content and different price models, often at any time and any place and consumers can increasingly interact with that content. These changes have been equally profound in telecommunication with voice (VoIP) and text services such as WhatsApp, or KakaoTalk offered over the Internet, which are virtually toll free to users and competing head-on with traditional mobile texting. Both video and voice services may also be bundled on social media platforms such as Facebook and Linkedin. Meanwhile, many sectors from accommodation to transport have been disrupted as new applications enable new business services over the Internet.

But with newness and disruption come a range of challenges, as these over-the-top services undercut market positions hitherto firmly held by telecommunication, cable and broadcasting companies. Traditionally, these different areas have been governed by different policies, regulation and involve different market participants, which raises the issue of whether current regulation is adapted to this new reality.

In addition, industry consolidation is already taking place in communications markets, with more and more mergers being approved between mobile and fixed operators, and between communication networks and content providers. Many of these mergers can help bolster network capacity and are designed to offer integrated, bundled services to meet further customer demand. However, because of their market concentration these mergers may reduce choice of provider and competition for a time, as consumers in many countries have been finding out.. In short, policy makers have several dilemmas to address. How can they ensure roll out and maximum access when it comes to broadband, for instance, and not allow technologies, or indeed users, fall behind? How can competition, innovation and investment be assured at the same time? What role should public investment play? Is current legislation and policy fit for purpose?

Internet of Things

Answering such questions is important as we embark on the era of the Internet of Things (IoT). This not only concerns cars and home thermostats, but the likes of medical devices, even whole infrastructures. The pervasive nature of the IoT will be such that people will not always be aware of them in their home, city or workplace, but will see them as a supporting infrastructure for their way of life. The IoT is also enabling firms and public authorities to meet their objectives in new and innovative ways. In the private sector, productivity and efficiency gains will come from transforming how firms monitor their processes and outputs, equipping workers with smart devices to alert them to assembly line issues, stock changes, sudden market shifts, and more. Such devices may also help governments address important public policy goals, such as monitoring emissions and improving the environment, managing traffic or delivering public services more effectively.

The Internet of Things is happening now, with an upsurge in the development of machine-to-machine (M2M) communication modules enabling remote management applications for equipment and machines with no human intervention. OECD data since 2012 show that the number of M2M SIM subscriptions have grown from 72 to 124 million, corresponding to 10 subscriptions for each 100 inhabitants.

Together with two other developments–that of big data analytics and the advent of cloud computing with its better processing power and cost-effective tools for globally scalable applications–a new digital economy is evolving fast. It is up to policy makers to stay ahead of these trends by asking the right questions: for instance, what are the implications of an increasingly widespread deployment of IoT for communications infrastructures and services? What changes in existing policies and practices could facilitate the adoption of IoT enabled services, such as remote health monitoring? And what actions can be taken to build trust in the IoT applications and services?

But whatever the question, it is important to remember that as connectivity and convergence are at the basis of the Internet, they will influence the success of the Internet of Things too.

©OECD Observer No 307 Q3 2016

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To order your own paper editions,email

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019