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Developing Countries To Spur Innovation In E-Commerce, Says Negroponte

"Many analysts tend to underestimate the potential of the Internet market in developing countries," according to Nicholas Negroponte, author of the bestseller "Being Digital" and founder of MIT's media lab.

"We will actually see e-commerce adoption happening with more speed and greater innovation in the developing world," said Negroponte in his keynote address at IDG's recent Internet Commerce Expo in Boston.

"Six years ago I predicted that were would be a billion people on the Net by the end of year 2000, and about $1 trillion worth of e- commerce conducted online," he said.

Much of this upcoming growth will come from developing nations, but most forecasting and market research companies seem to be underestimating the explosive growth of the global Internet, Negroponte said.

But some of the biggest challenges facing developing nations lie in decreasing the telecommunications costs for Internet access. "Most of these countries depend on telecom taxes for a large part of their treasury," Negroponte said.

Internet penetration will therefore depend on innovative business models where free Internet access is supported by advertising, a strategy which has already begun to appear in some countries.

Similar views were expressed by another keynote speaker, U.S. politician Newt Gingrich, formerly voted as "Man of the Year" by Time magazine.

Countries like India and China will open up huge new markets for the Internet economy, and are already experimenting with new business models for widespread access to information technology.

"For instance, cellphones are being used as mobile payphones in India," Gingrich said.

He urged the business and entrepreneurial sectors to get more actively involved in public life and policy making processes regarding new media.

E-commerce taxation should be avoided until the Internet economy accounts for about 10 to 15 percent of a country's Gross National Product (GNP), Gingrich recommended.

Despite optimism about the future of the Net in emerging economies, some experts expressed concern that regions like Asia may have fallen behind in e-commerce adoption.

"Asia got off to a great start in the Internet race two years ago--but the economic collapse has made many companies think twice about making substantial investments in Internet strategies," said Ian Finley, manager of enterprise marketing for Open Market, an e-commerce solutions provider.

The U.S. economy, on the other hand, has been booming and companies are scaling up their Internet investments--thus increasing the gap between the U.S. and Asia.