<<February 26, 2000>>

Peter T. Knight
Knight, Moore - Telematics for Education and Development
Communications Development Incorporated (CDI)
Strategy, Policy, Design, Implementation, Evaluation
1825 Eye Street, NW, Suite 1075
Washington, DC 20006, USA
Tel: 1-202-775-2132 (secretary), 1-202-721-0348 (direct)
Fax: 1-202-775-2135 (office), 1-202-362-8482 (home)
webmail: ptknight@netscape.net
IP for CU-SeeMe:
http://www.knight-moore.com/projects/GSTF.html -- about GSTF

Dear Peter:

(1) Many thanks for your msg (ATTACHMENT I).

I like your statement in the last para;

It is our belief that content produced in developing countries
will flourish when the cost of bandwidth is eliminated or greatly
reduced. Over time the price of bandwidth will fall sharply
anyway, but if the global digital divide is to be attacked,
mechanisms to encourage this content production need to be put in place now."

Providing ample bandwidth to users to have their imagination "flourish"
for creation of contents is the principal idea of the 80 giga optical fiber
network throughout Canada.

(2) This is not same as the transfer of knowledge from developed to
developing countries, but GENERATION of the knowledge which can
encourage their autonomy with dignity and economic sustainability in the
knowledge society of the 21st century.

People in economically under-developed countries are not necessary intellectually under-developed --
see INDIA WIRED in Business Week, March 6, 2000, Page 82-91 (ATTACHMENT II).

I am afraid that Japan (which used to be the No. 2 high-tech country
after the US) is now behind India -- Business Week a few weeks ago
ranked Japan as the 15th country in the Cyber-world.

(3) A keynote speaker at the Founder's Conference of the Clark Institute of
Telecommunications and Information (CITI) on 2/5th said that the wealth
in the 21st century is to be measured by knowledge, but not by hard currency.

The New York Times, February 6, 2000, said;
"Japan has the hardware of the Western press, but there is no
software. The inside is empty."

Best, Tak

Date: Mon, 14 Feb 2000 16:48:31 -0500
From: "Peter T. Knight" <peter@knight-moore.com>
To: "Peter L. Woicke" <pwoicke@ifc.org>
CC: "Assaad J. Jabre" <ajabre@ifc.org>, Mohsen Khalil <mkhalil@ifc.org>,
Kent Lupberger <klupberger@ifc.org>,
Carlos Braga <cbraga@worldbank.org>, James Bond <jbond@worldbank.org>,
Eduardo Doryan <edoryan@worldbank.org>,
Vinod Thomas <vthomas@worldbank.org>,
Kerry McNamara <kmcnamara1@worldbank.org>
Subject: Proposal to Create Global Services Trust Fund

Mr. Woike,

I keep WNVC (WorldVision TV) on most of the day on my desk, and about
11:15 AM today, Mr. Wolfensohn came on Japanese TV with the head of
SOFTBANK announching a new IFC investment/partnership to invest in
internet enterprises for the developoing world. I called up Bruce
Leighton with whom I have been discussing a possible IFC investment in
the Sao Paulo firm Telematica, which is also a customer of Nahuelsat,
another IFC investment. I mentioned this investment to you during the
infoDev Symposium on the New Networked Economy: What is at Stake for the
Developing Countries.

Bruce was in Jamaica, but I found out there was a press conference going
on via videoconference with Tokyo at IFC on precisely this topic, so I
hurried over and managed to participate in the last 25 minutes of it.
This is, after all, the age if instant communications.

I also got the press release, and it mentioned that SOFTBANK Emerging
Markets will be promoting "free or subsidized Internet service to
schools and other educational instituteions to increase knowledge and
access for people in developing countries."

The Global Service Trust Fund (see attached website page and click on
through to see the actual full proposals) is the outgrowth of the
intervention I made from the floor during the infoDev Symposium when
Mr. Wolfensohn challenged the audience to suggest ideas to deal with
emerging Global Digital Divide. In fact this proposal is an outgrowth of
an infoDev project.

I hope you and your key managers will give this proposal (also included
in the form of a Word document attachment) serious consideration. It
would greatly reduce the cost of operation of technology-enhanced
education, especially distance education and training and telemedicine
applications in qualifying developing countries, and thus enhance the
profitability of IFC investments in these areas.

We are suggesting that the World Bank Group convene a task force
including private sector participants and other international
organizations to develop the operational aspects of the Fund (a kind of
international e-rate mechanism), and that ITU, UNESCO, and WHO perform a
similar function with regard to the proposed policy conditionality as
regards telecommunications, education, and healthcare policies.

I look forward to hearing your reaction to this proposal and seeing how
we can work together to develop profitable applications in developing
countries which could take advantage of free or highly-subsidized broad
bandwidth. It is our belief that content produced in developing
countries will flourish when the cost of bandwidth is eliminated or
greatly reduced. Over time the price of bandwidth will fall sharply
anyway, but if the global digital divide is to be attacked, mechanisms
to encourage this content production need to be put in place now.

With best regards,

Peter T. Knight
World Bank Class of 1997 (took me slightly over 20 years to graduate to
the private sector;-)


(This was March 6, 2000 issue in hard copy -- T. Utsumi's note.)



India Wired (int'l edition)
Information technology is lifting the economy,
and the politicians are backing it

During his eight years in the U.S., Tushar A. Dave was impatient. The
physicist and computer engineer had a successful career developing
microprocessors, but he longed to ''do something creative'' in India. So
in 1988, he and a co-worker from Intel Corp. started a
semiconductor-design company in Bangalore.

Soon, Dave was feeling the frustrations of being in a backwater of the
global economy, frustrations that have driven countless other Indians to
take their talents and innovations to Silicon Valley. In early 1998, his
Armedia Inc. announced a breakthrough: the design for a chip that
instantly decodes the vast flood of digital video in highly compressed TV
signals. That way, high-definition programs can be viewed either on
new digital TVs or on existing sets. Trouble was, Dave couldn't find a
market: Most Indians don't even have color TVs yet. Digital TV has
barely arrived. ''Everyone thought we were foolish,'' says Dave, 42.

Until, that is, Henry T. Nicholas III, CEO of chipmaker Broadcom
Corp., caught wind of Armedia. The Irvine (Calif.) company had the
knowhow to compress video images for digital broadcast signals oversatellite
and cable--but not the technology to decompress them so they
could be viewed on televisions. A year later, Nicholas bought Dave's
company for $67 million. ''It has been a seamless transition,'' says
Nicholas. ''It helped us build the world's most highly integrated HDTV

BLOSSOM. This sort of ascent from obscurity is occurring on a
massive scale across India's thriving information-technology sector. For
more than a decade, this giant, impoverished, and inward-looking nation
has toiled in the shadows of the global economy. Despite world-class
skills and education, India's army of engineers has mostly been used as
cheap contract labor, performing the tedious task of writing reams of
software code for foreign giants from General Electric Co. to American
Express Co. Many thousands of others migrated to the U.S., staffing the
labs that produced cutting-edge products for companies such as Intel,
Sun Microsystems, and Cisco. Rarely, however, did companies in India
generate proprietary technology of their own.

Now, India's IT industry has begun to blossom. After showcasing their
value by helping foreign corporations debug computer networks in time
for Y2K, Indian design and engineering companies are now suppliers of
everything from animation work for such Hollywood films as The
King and I to the 3-D imagery used in Airbus Industrie flight
simulators. Software services outfits Wipro Technologies and Infosys
Technologies provide a wide range of Net-related products for foreign
companies--from browsers used on new-generation wireless phones to
e-commerce Web sites.

Just as important, thanks to the efforts of Silicon Valley returnees, India
is spawning success stories in chips, computer equipment, and wireless telephony.

With the Net fast bridging the once-vast geographical gap that separated
the West and Japan from India's immense pool of English-speaking
technical talent, the country's IT industry is set to explode. This year,
software products should account for $5.7 billion in exports and
one-quarter of the growth in India's $400 billion economy, which
should expand by nearly 7% this year. Within eight years, predicts a
recent study by McKinsey & Co. and India's National Association ofSoftware &
Service Companies (Nasscom), India's annual IT exports
could hit $50 billion--about 33% of total exports, up from 10% now.
Domestic IT revenues could approach $40 billion. That could create 2.2
million jobs--and push India's growth rate near the double digits that
many East Asian Tigers enjoyed before the 1997 crash.

If so, India may chart a new course for development among emerging
markets. Since the 1950s, Asia's dynamos have focused on
manufacturing exports. India may be the first to rely on brainpower-led
growth. What's more, IT may succeed despite notoriously bad roads,
airports, and container terminals. Prospering in IT services ''doesn't
require a lot of big capital investment in anything,'' notes Grady E.
Means, who heads PricewaterhouseCoopers' global corporate-strategy
practice. ''India is for real, for real, for real.''

MAJOR MOMENT. Because its strengths dovetail so nicely with the
needs of the West, moreover, India could become a more influential
global player. U.S. Ambassador to India Richard Celeste even argues
that ''IT has become the driver for our bilateral relations'' with New
Delhi. Technology ties will be high on the agenda when President Bill
Clinton arrives in India on Mar. 20.

Of course, anyone with much experience in India knows it has always
had enormous potential--but a maddeningly difficult time living up to it.
Time and again, corrupt governments and outbursts of xenophobia or
communal violence have soured confidence just when India seemed
ready to take off. Also, Internet Age economies require a freewheeling
business environment. Although successive governments have made
great strides to reduce stifling, socialist-era regulations, many officials
are reluctant to relinquish power.

A Net-led takeoff also requires ample telecom capacity, computers, and
electricity. Yet India has fewer than 22 million phone lines and wireless
phones--fewer than one per 100 households. China adds almost that
many lines each year. What's more, only four Indians out of 1,000 have
a computer, a dismally low rate by world standards. Power shortages are chronic.

But India has a free media and democratic institutions, things China
lacks. And India is moving to solve its shortcomings. In telecom,
thegovernment is dismantling curbs on foreign investment and competition.
A half-dozen consortiums are building fiber-optic networks. Satellite
communications and TV set-top boxes, meanwhile, will help bring the
Net to households that still lack phone lines or PCs.

Clearly, the politicians are starting to get it. India's ruling Bharatiya
Janata Party, in power since 1998, has made information technology the
cornerstone of its political agenda of generating high economic growth
while surrendering little sovereignty to multinationals. The BJP also
hopes that the spread of IT will unify a nation divided by cultural and
economic differences. Local politicians are pushing the IT cause, too.
Even before they have adequate roads, water supplies, or schools, many
remote villages in India are getting connected. From craftspeople to dairy
farmers, rural Indians are starting to turn to the Net to sell goods and
monitor prices.

The main catalyst for the wiring of India, however, is the surge in global
demand for electrical engineering and software of all kinds. As
multimedia takes off, the need for such services will mushroom. Indian
companies are becoming proficient in chip design, Web-based services,
and telecom software, among other fields. While these skills are scarce
in the U.S. and Europe, India has them in profusion. The country's
universities are pumping out 120,000 engineering graduates a year, and
the number reaches nearly 1 million when polytechnics and the country's
3,000 computer-training institutes are included. And nearly 100 such
institutes are opening every month. Many Indian outfits are also known
for high-quality work. Of the 21 companies worldwide that hold the
Carnegie Mellon Software Engineering Institute's highest ranking, 12
are from India--including Motorola Inc.'s Bangalore subsidiary,
Citigroup software subsidiary I-Flex Solutions, Infosys, and Wipro.

Thousands of India's high-tech graduates have already made it to the top
in the U.S. Now, with abundant business opportunities at home, Indians
from Silicon Valley to Wall Street are bringing their expertise,
connections, and capital back. If this occurs on a large-enough scale, it
could do for India what the reverse brain drain from the U.S. did for
Taiwan's electronics manufacturing boom.

The change of mind-set among bright Indian expatriates has beendramatic. Take
Ashish Dhawan, 30, and Raj Kondur, 28. When
students at Harvard Business School five years ago, the pair drew up a
scheme to launch a venture-capital firm in India to invest in software and
Net businesses. But the scene was so primitive then that they concluded
''it would have been a bad professional move,'' says Kondur. So they
took New York jobs at Goldman, Sachs & Co. and Morgan Stanley.
Then in 1998, Dhawan returned to New Delhi to get married--and
witnessed the IT revolution. ''It was the right moment, and it was
moving fast,'' he recalls. So he persuaded Kondur to join him. Before
they left New York, the duo raised $65 million in commitments for IT
ventures from technology hedge fund Digital Century, Microsoft,
Goldman CEO Henry Paulson, and Citigroup Co-CEO Victor Menezes,
a Bombay native. In November, they launched their fund, Chrysalis.
Over the following three months, they visited 150 companies and saw
500 business plans. Chrysalis expects to be fully invested this year, two
years ahead of schedule.

The dynamism that the IT revolution has unleashed has resulted in the
kind of wealth creation most Indians have never seen. By rewarding
employees with stock options and then going public on Nasdaq, Infosys
(market cap: $27 billion), has created several hundred millionaires.
Now, stock options for employees has become the norm in the Indian IT
business. India's 120 technology stocks now account for 30% of the
Bombay Stock Exchange's capitalization, up from 8% a year ago. Since
then, Nasscom says, the value of tech stocks has grown tenfold, to $41 billion.

GOING GLOBAL. No wonder there's a gold-rush energy level in
many Indian cities. In Bangalore, signs on the street advertise computer
courses, while massive billboards try to lure programmers to sign up
with new companies. In one office tucked in a leafy residential section,
young workers at Net-solutions provider planet-asia.com race up and
down the stairs of the spartan office building where they work around the clock.

Planetasia is an example of the new, global-minded Indian startup. The
outfit's 150-strong client roster ranges from consumer-products giant
Unilever to Singapore's eComCFO, which offers Web-based business
services for small companies. Its services are fast and cost clients 40%
less than in the U.S. ''Their tech guys are full of good ideas, andmanagement
is committed,'' says eComCFO founder P. Bala: ''I'm hooked.''

Such homegrown Indian companies are intent on moving up the food
chain. Sankhya Infotech in Hyderabad is one of three companies in the
world to develop a complete software package that delivers 3-D
animation for the flight simulators on which jumbo-jet pilots and crews
hone their flying skills and learn new aircraft technologies.
Sankhya--''knowledge'' in Sanskrit--devotes one-third of its energies to
Airbus. Its specialty is compressing training programs into modules of
64 megabytes or less so they can be sent over the Net. The two-year-old
company also has a joint venture with Israel's Magic Software for virtual
reality software.

Now, co-founder N. Srinivas is working on simulation software
packages that cater to different accents and languages. The company will
soon go public, and even though it expects to have revenues of less than
$5 million in 2001, it already is being extolled as one of the year's hottest issues.

In fact, virtually every Indian IT corporation is thinking globally. BPL,
India's largest cell-phone operator, with $1 billion in annual sales,
develops analog chips that go into cell-phone voice-mail systems sold by
Japanese companies such as Panasonic. BPL also designs the
sophisticated switching systems used in air-traffic-control systems sold
by Harris Corp. of the U.S. At its helm is Rajeev Chandrasekhar, 36.
He returned to India in 1991 after spending six years at Intel developing
microprocessors, including working on the team that developed the
Pentium chip. Under Chandrasekhar, BPL became the first Indian
company to introduce e-mail access through the cell phone. The
company aspires to be India's top player in the wireless Internet. ''The
India-is-terrible cloud has gone,'' he says.

The global push is creating India's first major multinationals. Most
already have U.S. and European operations. Computer education
institute NIIT even has operations in China and Indonesia, where it
trains in the local languages. India's largest publicly listed software
developer, Wipro Technology, is planning to move its headquarters from
Bangalore to Santa Clara, Calif., since most of its customers--ranging
from Cisco Systems to new dot-coms--are based in the U.S. Afterwatching its
software business grow by 59% annually since 1995, to
$220 million, clients now are hiring Wipro's 6,500-strong Indian
engineering staff to design or manage Web services. ''There's growing
need for IT services as the U.S. goes to e-commerce, and it is not going
to be met domestically,'' says CEO Vivek Paul.

STARTUP BUG. Such successes are creating models for
entrepreneurs. Last year, the number of new tech companies registered
with Nasscom quadrupled, to 520. This year, it expects to have more
than 1,000. Everyone has the startup bug. High-flying executives at
petrochemical giant Reliance and the Indian offices of Cadbury
Schweppes PLC and Hewlett-Packard Co. are leaving to start IT
ventures. That's a major change in a country where people once aspired
to spend their careers with one company or government ministry.

Venture money is starting to pour into India as well. From next to
nothing in 1998, more than $1 billion, bankers estimate, will flow into
India's high-tech industry in the next six months. And if current
restrictions on venture capital are eased as expected this month, India
could see at least $3 billion in venture money annually.

Longer term, the technology boom will have its biggest impact on
India's domestic economy. Already, the country has 10,000 cybercafes.
Within three years, Goldman Sachs estimates that the number of India's
Net users will balloon from 2 million to 70 million.

That spells a bright future for consumer e-commerce--and a way for old
industries to transform themselves. One of India's oldest textile
companies, S. Kumar, is spending $250 million to install satellite-linked
Internet kiosks in its 30,000 retail outlets. The idea is to turn them into
online shopping destinations. ''We are leveraging our network and our
brand name,'' says Chairman Vikas Kasliwal, 43, a Harvard graduate
and son of S. Kumar's founder.

Some Indian politicians think that the IT revolution heralds a
fundamental change in India's feudal political system. Leading the pack
is Chandrababu Naidu, the ''laptop minister'' of Andhra Pradesh. He
has begun computerizing government offices and local schools, and is
luring considerable investment. Since October, six other Indian states
have appointed IT secretaries to attract investment. New Delhi also isbanking
on IT to propel India. ''Our biggest challenge is to create
conditions where people can live a good material life,'' says Sudheendra
Kulkarni, a close aide of Prime Minister Atal Bihari Vajpayee. ''The IT
revolution is central to that vision.'' In a bid to boost PC use by 25% a
year, the government is eliminating taxes on hardware and software and
is easing the standards for listing Net companies on the stock exchanges.

The government is also at last starting to break up the logjams that have
held up the telecom sector. New Delhi has restructured its telecom
regulatory agency, is breaking up state monopolies, and is talking about
letting foreigners own 100% of telecom companies. The changes are
badly needed. Foreign telecoms have committed almost $2 billion, but
local red tape has prevented them from putting it to work.

India has reached a pivotal moment. Just once before, when they
achieved independence from Britain in 1947, have Indians had such an
opportunity to remake themselves. ''The '80s were the Asian Tigers'
decade; the '90s, China's. The IT revolution will make this decade
India's,'' says New Delhi economist Surjit Bhalla. Given India's many
false starts, it's too early to declare success. But as the benefits of
joining the global IT revolution become ever more apparent, India may
be ready at last for its moment on the world stage.

By Manjeet Kripalani in Bangalore, with Mark L. Clifford in Hyderabad

Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.

Return to Global University System Early 2000 Correspondence

* Takeshi Utsumi, Ph.D., P.E., Chairman, GLOSAS/USA *
* (GLObal Systems Analysis and Simulation Association in the U.S.A.) *
* Laureate of Lord Perry Award for Excellence in Distance Education *
* Founder of CAADE *
* (Consortium for Affordable and Accessible Distance Education) *
* President Emeritus and V.P. for Technology and Coordination of *
* Global University System (GUS) *
* 43-23 Colden Street, Flushing, NY 11355-3998, U.S.A. *
* Tel: 718-939-0928; Fax: 718-939-0656 (day time only--prefer email) *
* Email: utsumi@columbia.edu; Tax Exempt ID: 11-2999676 *
* http://www.friends-partners.org/GLOSAS/ *