Over a period of a full decade, the seeds were planted for IGADD’s eventual deployment in Indonesia. After having played a leadership role in the worldwide movement to close the Digital Divide, IGADD’s founder, Craig Warren Smith, narrowed his focus to one constituency: investors. And one country: Indonesia. IGADD’s concept is to transform Southeast Asia’s mobile phone explosion into a “user revolution” suited to the needs of the masses. By helping the Indonesian government develop an investment policy, IGADD seeks to formulate an innovation class of public/private partnerships that could generate investments that empower Indonesians at all socioeconomic levels.

Introduction

Investor Group Against Digital Divide (IGADD), founded by Craig Warren Smith, is a non-government coalition of institutions currently focused on Southeast Asia, beginning with Indonesia. Its framework has been in development since 1999,[1] and its Southeast Asian focus was well-established by 2003. Leading global institutions of all sectors have all played a role in its evolution: Harvard University, Massachusetts Institute of Technology, Microsoft, Intel, Google, Nokia, and United Nations. Besides engaging the corporate social responsibility arms of IT corporations, Prof Smith’s IGADD strategies also tapped innovations from the world’s major technology laboratories.Today, Professor Smith advances the notion that Indonesia, of all countries, is the optimal “beta test site” for the policy innovations needs to close the world’s Digital Divide. A nonprofit policy research institution, The Habibie Center, named after a technology-minded former Indonesian president, serves as IGADD’s secretariat. IGADD’s initial challenge is to aggregate the collective intelligence of Indonesia’s ICT stakeholders to crack the code on how to hook-up 50 million new broadband connections by the year 2012, creating a critical mass of ICT infrastructure needed for the transformation of Indonesian society.

To build support for its formulations IGADD reaches across all sectors. But it targets international investors, building commercial support for commercial initiatives that close the digital divide. “Digital divide” in this case refers not merely to extending technology access to the poor, but or more complex challenge: extending the “user revolution” to those at the bottom of the pyramid in emerging markets, allowing low-income users to benefit from the same empowering and democratizing impacts that can now be enjoyed by residents of broadband-rich cities like Seattle or Singapore. To achieve this goal, the primary economic instrument used by IGADD is public-private partnerships (PPP.s). Its strategy is to help governments establish new investment policies that empower consumers.

This document traces Dr. Smith’s journey over the source of this decade in which he gathered ideas, policy perspectives and relationships that are now being directed to Indonesia. Supporting his efforts, a coalition of leading non-governmental institutions, led by Dr. Ilham Habibie, are deploying IGADD as a national model for closing Digital Divide. In a Memorandum of Agreement created on February 6, 2008, the Republic of Indonesia’s Ministry of Information and Communications has established a “strategic partnership” with IGADD. In the MOU, the government has requested that IGADD establish an investment policy that would enable 50 million new Internet connections by the year 2012, and then conceive an “ecosystem” application that would generate educational and economic benefits to users.

IGADD as the “third way” to close Digital Divide

The concepts imbedded in Financial Solutions to the Digital Divide (and then later transferred into IGADD) were contrary to conventional wisdom at the time for the formation of the global movement to close the Digital Divide. This movement in 1999 when Digital Divide was the top topic of global gatherings, such as the World Economic Forum (Davos), United Nations sponsored conferences and, later, national conferences in dozens of countries.

Till recently, two opposite viewpoints dominated such discussions of Digital Divide.

The FSDD perspective argued for a third approach: the need for government and private sector leaders to form reform coalitions in large emerging markets in which entrepreneurs in the private sector join forces with reformers in government to disrupt market forces that currently prevent low-income consumers from benefitting from digital technology.

Though the “third way” reflected by FSDD is now commonly accepted around the world, Professor Smith contends that only in Indonesia are conditions in place for a country’s leaders to produce the disruptive alliances needed to demonstrate how to close the Digital Divide on a national scale.

During the long period of IGADD’s formulation, Prof Smith accumulated some powerful allies. Individual donors and institutional funders and corporations that have supported his digital-divide research financially and with in-kind contributions include (for the intergovernmental sector: United Nations, OECD, UNESCO, ITU); for the corporate sector: Microsoft, IBM, Hewlett Packard, Intel, Google, Nokia, Electronic Arts, Yahoo; for foundations (Ford Foundation, Rockefeller Foundation, Open Society Institute (philanthropy of George Soros), Markle Foundation, Bill and Melinda Gates Foundation; for universities, Harvard, MIT, National University of Singapore, Carnegie Mellon University and University of Washington.

Professor Smith’s journey occurred in three phases, culminating the current “deployment phase” in Indonesia:

Phase One: 1996-2002: IGADD’s intellectual origin was a contentious argument between Prof Smith and Microsoft Co-Founder Bill Gates III in 1997 in Redmond Washington. It was part of an 18-month assignment when Prof Smith served Microsoft’s corporate affairs division as a fulltime strategy consultant. In a meeting with Prof Smith, Mr. Gates argued that “the digital divide will close by itself” without the need for interference from governments and without altering the market forces that were already shaping digital technology. Prof Smith, by contrast countered that Microsoft must change is corporate practices in a fundamental way if it is to be a leader in the effort to close digital divide. Rejecting this viewpoint, Microsoft relegated the topic of digital divide to the philanthropic programs of the company – out of reach of Microsoft’s core business strategies. “The largest funder of technology R&D in the world, Microsoft was in a position to alter its R&D activity to create products and services specifically to close Digital Divide”, but Microsoft did not embrace this approach till much later”, said Prof Smith.

“Stint with Microsoft helped me understand the implications of the challenge to close Digital Divide. Rather than continue as a corporate consultant, I committed myself to do what I could to establish a global movement to close Digital Divide,” said Prof Smith. “I wasn’t the only one thinking along these lines – the management guru CK Prahalad had much more influence than myself. But I believe I was the primary catalyst for putting this topic on the agenda of the United Nations and the world’s governments.”

He formed a coalition of the largest US-based international foundations to conduct a research on corporate practices in the ICT sector. Based on exhaustive interviews and secondary research, he wrote a book that addressed the question of whether the leading multinationals were altering their research and management practices in light of the Digital Divide. Conducting interviews with 65 of the largest IT, telecom and finance companies, he found that these corporations had turned to their philanthropic and marketing programs. “These projects did not affect the core commercial practices of these companies. Rather, their interest was to ‘showcase’ initiatives that showed positive impacts of technology on the poor, drawing the media’s attention to the positive impacts of technology. These initiatives had the effect of distracting the attention of the media and regulators, while boosting the image of the companies, he said. At the same time, he argued, none of them were engaged in meaningful efforts to change market forces for digital technology on behalf of the poor. His conclusion was that current practices of IT corporations were partly responsible for widening the gap between rich and poor in emerging markets. His book, published by University of Indiana (Digital Corporate Citizenship), revealed this trend.

He prevailed upon Bill Gates Senior (father of Bill Gates, the CEO) to host a major conference on the eve of the 1999 WTO conference. “It pointed to the third way to close the Digital Divide, advocating market-based solutions to the Digital Divide. I invited world leaders to this conference and introduced Kofi Annan (then UN Secretary-General), James Wolfensohn (President of World Bank). At a time when everyone thought that the Bill and Melinda Gates Foundation would choose Digital Divide as its main cause, my event created a worldwide buzz,” said Prof Smith. “At this event, he was able to have deep discussions with some of the world’s most influential academics, such as MIT’s Nicholas Negroponte and Harvard’s Jeff Sachs, who later became partners in his efforts to close Digital Divide.

Following the Seattle conference, Kofi Annan invited Professor Smith to move to New York City to help establish his United Nations ICT Task Force, which was the broadest “super-umbrella” for all worldwide ICT task forces being established at this time. In that role he was asked to make personal site visits to technology billionaires around the world, including those in India and China. He sought out their views on the topic and asking them to join with the United Nations to close the Digital Divide.

Phase Two: 2002-2004 Later, Prof Sachs and Prof Negroponte offered him a joint appointment at Harvard and MIT and he moved to Cambridge MA. They charged him with the task of generating an interdisciplinary task force for his “Financial Solutions to the Digital Divide” project. His task was formidable: linking both academic institutions which for centuries had opposite viewpoints about the role of technology in society. Prof Smith’s work led to ideas for how microcredit programs and agricultural cooperatives could be strengthened by digital technologies, creating the basis for a “bottoms-up” economy.

These core ideas are now core concepts for IGADD in Indonesia. Later, as a Visiting Professor for Harvard’s Kennedy School of Government, he was deployed to Singapore’s Public Policy Programme (now called Lee Kuan Yew School of Public Policy) where he taught science and technology policy. In this role he advised ICT ministers from many Asian countries, including India, Thailand and Indonesia. He was particularly active in Singapore and worked with the ICT Minister Surapong to negotiate with multinational corporations operating in Thailand. His aim was to encourage the global corporations to develop new products and services and pricing models could fit the circumstances of the rural sector. In fact, his efforts were partly successful. Thailand became a global model of innovation in market-based solution to the Digital Divide and Prof Smith became directly involved in the first low-cost personal computer project espoused by national governments. The Thai initiative became a catalyst for global policy changes at Microsoft and, later, by Intel. Today, Microsoft follows the advice given by Prof Smith a decade ago, by creating separate research and product-development divisions, specifically for middle-to-low-end consumers of emerging markets.

Phase three: 2004 through present. While still living in Singapore, Intel supported Prof Smith as a consultant to bring the “Financial Solutions to Digital Divide” seminar to Indonesia in November 2004, hosted by the Harvard Club of Indonesia. The executives of the Harvard Club encouraged him at that time to meet with Ilham Habibie, which began their close association and friendship. At this point, he already had a relationship experiences with the Republic of Indonesia in two governments, first by helping its Foreign Ministry host the G-15 Summit focused on Digital Divide in 2000, and also by hosting the ICT minister at Harvard University, introducing the Indonesian government delegations to the famed economist Jeff Sachs.

The Investor Group Against Digital Divide seminar at the Harvard Club in Jakarta was a breakthrough for alumni clubs in Indonesia, which rarely get involved as actors in policy discussions. The meeting was the first in Indonesia that brought together IT corporations, telecommunications operators, and banks (including World Bank). They considered how they could join innovative coalitions that would like direct competitors. They discussed ways to take a proactive role on the digital divide issue, even before the new SBY government came to power. At the conclusion of the session, they discussed the idea of sharing costs and risks by joining new strategic alliances that would use mobile telephony as a Trojan Horse for opening new markets and boosting jobs and education opportunities for Indonesians.

In 2006, he again contacted Ilham Habibie and proposed that he would return to Indonesia to continue the investor-outreach process begun at the Harvard Club. Financially supported in part by Dr. Habibie, he visited Indonesia several times in 2007. In one such visit, Microsoft Managing Director Tony Chen encouraged Prof Smith to visit the Institute of Technology Bandung (ITB), the leading technological in the country. At ITB, Prof Smith began his association with Prof Amein Langi. After the two had long discussions that revealed their common views regarding digital divide, Prof Smith later introduced Prof Langi to Ilham Habibie, and together the three met with the ITB Rector. The introductions sealed an alliance: ITB agreed to give full support to a coalition, called Investor Group Against Digital Divide. At an event at The Habibie Center in July 17, 2007, the three institutions signed a Memorandum of Understanding (MOU) which established their formal partnership. Significantly, the signing ceremony was attended by the Minister of Information and Informatics (Kominfo), which offered “full support” to the coalition – later solidified in the government’s own MOU with IGADD. Thus, was the Investor Group Against Digital Divide born as an operational entity, not just a research program.

Ilham Habibie accepted Professor Smith’s invitation become chairman of IGADD. The chairman provided the “first money” to IGADD, a modest retainer to Prof Smith that allowed him to intensify his networking in Indonesia and his efforts to promote Indonesia to international donors as a global center for innovation.

While preparing to launch IGADD in Indonesia, Professor Smith returned to the United States where he spent several months exploring an ethical foundation for the IGADD model. Specifically, he extended his networking activity beyond corporate corporate-social responsibility programs of the major IT multinational corporations to their technology laboratories. He was invited to lecture during 2007 at Google, Microsoft, Yahoo, HP, IBM, and Electronic Arts, where he learned that researchers were designing next generation technologies that served humanistic impacts. Prof Smith also established a role as “Senior Advisor” to the University of Washington’s Human Interface Technology Laboratory, a leader in the field of “human computer interaction” (HCI). Prof Smith drew upon his networks in the HCI field to conduct a global lecture tour of the world’s largest technology laboratories.

During this period, Smith also developed a friendship with Tim O’Reilly, the California’s based founder of the movement called “Web 2.0,” which had a transformative effect on business models in advanced countries. Web 2.0 is also known as the “user revolution,” reflected in social networking sites, such as YouTube and Facebook. As a member of O’Reilly’s network, Prof Smith engaged in discussions about how Web 2.0 and humanistic perspectives could be incorporated into applications for emerging markets in Southeast Asia. Looking ahead to making Indonesia into a global center for development of such technologies, he discussed with Mr O’Reilly’s ways to bring the user revolution to Southeast Asia.

After returning to Asia, Prof Smith brought O’Reilly’s ideas and those from leaders of HCI fields to the IGADD partners. He argued that establishing Indonesia as a broadband-enabled society should be the highest priority of IGADD -- since only through broadband could Indonesians benefit from the Web 2.0 user revolution. Prof Smith’s partners, Ilham Habibie and Armein Langi, embraced this idea as did the Republic of Indonesia’s Communications and Informatics Ministry, in its partnership with IGADD, established on February 6, 2008.[3]

Preparing IGADD to solicit sponsors for its work in Indonesia, Prof. Smith needed to overcome the perception that Indonesia lacked fertile ground for technological innovation. Prof Smith joined Ilham Habibie, in a tour of California to “socialize” IGADD. They met with the founding chairman of Qualcomm in San Diego and other companies in Silicon Valley, such as HP, and Intel. They also made a similar trip to Singapore, where we met with executives of Hewlett Packard, and where they providing Google’s new Southeast Asian managers with their first seminar on Digital Divide.

In fact, Prof Smith for several years has advocated that Indonesia should be an important country to demonstrate Google’s innovations. The IGADD team, preparing a web portal in Bahasa Indonesia for Digital Divide.org is seeking to build a support team within Google that will back IGADD’s technological innovations, and (it is hoped) encourage Google’s executives to emerge as prime sponsors of IGADD.

During this time, Ilham Habibie attended one of Professor Smith’s seminars in Thailand, which addressed the crucial role of bringing Web 2.0 and the “user revolution” in emerging markets. Our discussions on this Web 2.0 theme, combined with THC’s annual conference in 2008, led us to the theme of Democracy 2.0, a term coined by Ilham Habibie. The Democracy 2.0 theme also created a bridge between IGADD and The Habibie Center (THC), a think thank focused on the theme of democratization. It allowed IGADD to open discussions with move towards tapping THC as secretariat for IGADD.

IGADD has already had impact in Republic of Indonesia. Its ICT ministry, Kominfo, embraced the theme coined by Prof Smith, called “20 by 12” (20% broadband penetration in Indonesia by 2012). Furthermore, Kominfo now agrees that IGADD should also develop an applications framework, drawing upon concepts of Democracy 2.0. Thus, an ethical model for ICT penetration could emerge from Indonesia that could serve as a national model.

Even before beginning operations in Indonesia, the International Telecommunications Union (ITU), based in Geneva already looks upon IGADD in Indonesia as a potential source of global innovation on bringing ethical perspectives into the Digital Divide discussions. Furthermore, the European Community is also interested in IGADD. Drawn to the idea that IGADD may emerged as a source of global innovation on the Digital Divide, theme, an EU funding program focused on Southeast Asia agreed to an initial seminar of IGADD on March 25 at The Habibie Center, invited Prof Smith to Europe for discussions. Potentially, this meeting sets the stage for possible participation in IGADD by the EU itself, including its national governments and flagship corporations. Similarly, other companies that Prof Smith been cultivating for years – Intel, Microsoft, HP, and Nokia (now Nokia Siemens Network) -- have invited proposals from IGADD from Prof Smith.

Meanwhile, IGADD’s core team has grown to include influential volunteers, several of which are working without pay on a growing team. Besides reaching out to investors, IGADD is also planning to engage young Indonesians with IT skills who are students and alumni of Indonesian and foreign universities. Their involvement will be aggregated through a Bahasa Indonesia web site, to be created by Digital Divide.org. Thus, the plan for achieving “20 by 12,” and generating broadband applications for Indonesia, will not be mandated by IGADD. Rather, it will emerge through the participation of Indonesians themselves.


THE IGADD PRINCIPLES

Several principles guide IGADD’s current work:

[1] In 1999, Prof Smith organized a “Financial Solutions to the Digital Divide” (FSDD) conference in Seattle. For details on this history, see DigitalDivide.org. Between 1999 and 2005 conducted many seminars around the world using the FSDD label. In 2006, FSDD’s name was changed to Investor Group Against Digital Divide, which set the stage for the implementation of FSDD’s concepts in Indonesia.
 
[2]Microsoft and Bill Gates himself have since repudiated this view.

[3]The MOU between IGADD and Kominfo is available in English and Bahasa Indonesia upon request.