Saturday, March 26, 2011

Infrastructure: Positive and Negative

A pair of contrasting examples on the topic of infrastructure have my mind in motion. This is likely to be more of a ramble than usual, but perhaps it's going somewhere:

The first example is of logistics, specifically package delivery systems. The example was given, in the context of developing sites for an international audience, of locations where package delivery is not reliable or even available. In the US, we are accustomed to relatively fast and reliable delivery via the postal system and private carriers (FedEx, UPS, etc.), but in developing and underdeveloped nations, they lack such facilities, and as such e-commerce is a difficult proposition. In that way, the logistics infrastructure, the old fashioned business of trucks and men to carry things about, is essential to electronic commerce.

A few red herrings:
  • Package delivery is said to have evolved from a local service to more of a national one. Companies would deliver their own goods at first, then evolved to hire private couriers to transport goods in the local market, then courier services formed a large and international network. It's an interesting parallel to the Internet.
  • Infrastructure also includes the notion of free riders. To the shipper, the price of delivering an envelope to the office next door is the same as delivering the same envelope to a location in a remote area of Montana. The cost, per unit, to the shipping company is much greater in the latter case (you may have to have a man drive a vehicle a few hundred miles to deliver one envelope to one person). So in this way, people in remote locations pay less for logistical support than ones in urban areas.
The second example is of landline networks, specifically telephone service. The example in this instance is the high rate of adoption of mobile telephones in developing nations which stands in stark contrast to the low adoption rate of mobile in more economically mature nations. The difference is chiefly in the existence of a telecommunications infrastructure. In the US, the wired network is virtually ubiquitous, highly reliable, and quite cost-efficient, so land-line service is a given; whereas in third-world nations, where there is no wired network, the cost of establishing one would be significant, and it's cheaper and more efficient to simply go wireless. The point is that, in this instance, infrastructure inhibits rather than supports innovation.

And a few more red herrings:
  • Mobile adoption is low in the US, but in other relatively developed areas such as Europe and Japan, mobile has been more readily adopted. In terms of infrastructure, the reason is the same: while these other nations are fairly well industrialized, they lacked a reliable and efficient wired network infrastructure. Given the geography, it simply is not feasible to implement a land-line network on the island of Japan. And as to Europe, I haven't heard a reasonable explanation, but their land-line telephone service remains famously abominable in terms of high cost and low reliability.
  • It would also seem counterintuitive that mobile service is lacking in remote locations of the US, as this would seem to be a natural solution to the difficulty of geography, but I suspect that the reason for this is largely profitability: third-world nations are rather small and densely populated, so the number of people who can afford mobile service within the radius of a transceiver likely make it worthwhile to implement one, whereas the problem with the vast expanses of thinly-populated territory in the US is lack of the same ratio of subscribers to transceivers.

No comments:

Post a Comment