C A R I B B E A N                     C O M M U N I T Y                         S E C R E T A R I A T

TWENTY-NINTH MEETING OF                                       

THE STANDING COMMITTEE OF

CARIBBEAN STATISTICIANS                                                       SCCS/2004/29/2

Hamilton, Bermuda

22-24 November 2004                                                                     21 November 2004

BACKGROUND PAPER FOR THE DEVELOPMENT OF A PROJECT TO ESTABLISH A SYSTEM FOR THE PRODUCTION OF STATISTICS ON INFORMATION COMMUNICATION TECHNOLOGY (ICT)

1.         The need for Statistics on Information Communication Technology

The establishment of the CARICOM Single Market and Economy (CSME) and the Caribbean Court of Justice (CCJ) is a response to the opportunities and threats of globalisation and also of advances in information and communication technology.  A statistical framework that can provide timely, relevant and harmonised statistics from Member States is essential to support the establishment of the CSME institutions, to facilitate the negotiations at the WTO, the hemispheric arrangements of the FTAA, the new arrangements with the EU and other bilateral co-operations.  It is also essential to the improvement of the provisioning of goods and services of the peoples of the Region, enabling their participation in the development process and engendering a better quality of life in general.

The Statistics Programmes in the Region have traditionally focussed on the compilation of Economic Statistics mainly in the areas of Merchandise Trade, Balance of Payments, External Debt and National Accounts.  Recently in 2000/2002, greater attention was given to the development of Social/Gender and Environment Statistics through collaboration between CARICOM Secretariat Statistics Sub-Programme and the United Nations Statistics Division (UNSD) on the Project "Strengthening Capacity in the Compilation of Statistics and Indicators for Conference Follow-up in the CARICOM Region". One major outcome of the UNSD/CARICOM initiative was the  formulation of the CARICOM Programme aimed at building capacity to sustain the production of statistics in these areas.  There has been little focus however on the area of Information Communication Technology Statistics.  The 2000 Round of Censuses saw most Member States including questions on the ownership and use of computers and access to the Internet.  In the case of Trinidad and Tobago, there were surveys that were specific to e-commerce.

The need to develop Statistics on ICT is particularly significant in light of the decisions arising out of the First Special Meeting of Ministers with responsibility for Information, Communication and Technology, held in Antigua and Barbuda on 15 May 2002.  This Meeting reiterated the need to develop a Draft Policy on ICT to guide its development and to recognise the impact of the advances in ICT on the economies and societies of all Member States and the benefits that can be derived.

A Policy on ICT for the Region ought to incorporate the need to produce relevant statistics and indicators to measure and guide the development process.  These statistics can enable the integration of ICT in the process of socio-economic development, the reduction of poverty, greater accessibility to services and information and facilitate the inclusion of the peoples of the Region in the increasing competitive global environment.  The First Meeting of Ministers with responsibility for  ICT in May 2002 therefore received a presentation on Statistics on ICT which emphasised the critical importance of collecting, compiling and disseminating timely, accurate and comparable statistics to guide both public and private sector planning in relation to ICT Development. 

The Second Special Meeting of Ministers with responsibility for Information, Communication and Technology  which was held in Guyana in 2003, was advised of the developmental work on the framework for the collection of ICT statistics.  This work related to the establishment of a core data set to be produced by Member States in all areas of statistics inclusive of ICT statistics, as well as work in the area of International Trade in Services and the rudimentary work on a draft framework for the preparation of Satellite Accounts on ICT.

The Third Meeting of Ministers with responsibility for ICT also received a synopsis of the proposed developmental work in the area of Statistics on ICT in October 2004.

At the Third Meeting of Ministers of ICT held in Barbados in October 2004, the Secretariat presented an Action Plan for ICT development which articulated its potential in serving the development needs of people, increasing access to markets and information about market opportunities, increasing access to employment and incomes. A critical aspect of this development process will be the improvement in the quality of life of our peoples of the Region through exploiting the potential and opportunities of ICT in production, investment, trade and in general in economic and social activities.

The Third Meeting of Ministers of ICT accepted the Regional Action Plan for the development of ICT and suggested its implementation. Relative to the participation of the Region in the World Summit for the Information Society (WSIS) to be held in 2005, the Secretariat has been mandated to coordinate all the ICT activities in the Region including those leading up to WSIS and to develop a framework for collaboration of all regional organizations.

The Secretariat has also prepared a project proposal aimed at strengthening the capacity of Member States of the CARICOM Region to produce statistics on ICT. 

2.         Considerations that can inform the Development of a System for the Production of ICT Statistics

The framework for the developmental work on ICT Statistics initially targeted the following areas:

(i)                 Measurement of the Contribution of the ICT Sector - Production and Trade;

(ii)               ICT Infrastructure; and

(iii)             Usage Statistics focusing on the number of users, characteristics of the users - households/individuals, businesses and government agencies, access to IT and type of use.

The indicators on ICT required to measure the achievement of the Millennium Development Goals (MDG) have been incorporated in the Social/Gender Component of the CARICOM Programme to enable the measurement of these variables as an interim measure while the framework for ICT Statistics is being developed.  Once the framework is developed the MDG indicators should be duly incorporated in this data system.

In the Draft Policy Agenda for Connectivity in the CARICOM Region, the three principal components that have been identified as being essential to the development of connectivity are:

(i)                 Infrastructure - defined as a combination of hardware, software, human resources and telecommunications networks that facilitates society access to digital information and services;

(ii)               Utilisation - which reflects the identification of the needs of sectors such as education, health, employment, culture and recreation in the use and application of digital information and services in generating knowledge to enhance the quality of life of the population; and thirdly

(iii)             Content - the availability of pertinent and high quality digital information and services for the Region's people and communities.  This addresses the need to focus on the development of content, relevant to the needs and issues identified by stakeholders reflecting local interests, gender, aboriginal and other special interests related to the population and at the community level.

It is necessary to devise approaches to include the issues of Content and the needs of Sectors such as Culture, Health, etc. relative to ICT applications and generation of knowledge in the development of a System to produce ICT Statistics.

The CARICOM Secretariat also executed a diagnostic study in 2001 on e-Commerce which was commissioned by the Commonwealth Fund for Technical Cooperation (CFTC). The results of the study provided qualitative information on the status of e-readiness for e-business in the Region for the individual Member States.  The report pointed out the complete lack of quantitative data regarding e-Commerce and IT and proposed that CARICOM should conduct further research studies and should establish a mechanism for on-going data-collection.  The report further recommended the conduct of surveys to assess the actual level of participation both in the public and private sectors in the area of education which should be matched by a skills survey with the IT industries in order to assess the requirements for e-business that can inform a regional IT educational plan.

These are some of the considerations that can inform the developmental work on ICT Statistics.

3.         Content and Potential Sources of Data on ICT for Monitoring and Guiding Economic and Social Development

3.1       Proposed Basic Statistics and Indicators on ICT

At the First Meeting of Ministers with responsibility for ICT in May 2002, the presentation prepared by the Statistics Sub-Programme identified the following basic indicators to be measured:

(i)                 Cable television subscribers; Internet hosts; Internet connectivity and usage; Radios; Television sets; Telephone mainlines; Mobile phones.  It was indicated that these variables should be measured to obtain information on the demography of ICT users, relative to urban/rural, age, education and gender;

(ii)               With respect to the Meeting in Grenada on the core data set inclusive of ICT statistics and indicators among the conclusions on the core data set, it was indicated that Member States must have a structure in place to effect the production of these priority statistics.  This structure should relate to the following concerns:

(a)               The adequacy of resources;

(b)               The need for access to up-to-date technology to compile, process and disseminate information;

(c)               A methodological approach that is harmonized across Member States with respect to concepts, definitions, classification systems,

(d)               The identification of sources of information on ICT and related issues of measurement; and

(e)               Collection and compilation of data by industrial activity, gender, geographical area, age, income group etc that can be cross-cutting themes for the production of the core statistics on ICT.

Elements of the data structure identified at the Meeting in Grenada included:

(i)         Investment:

(a)               Trade in goods and services;

(b)               Labour market;

(c)               Skills, training, occupation, wages, employment/unemployment (by gender).

(ii)        Inclusion and social cohesion:

            (a)       Culture, language, literacy.

(iii)       Quality of Life:

(a)               Wages;

(b)               Contribution to GDP;

(c)               Access to services (Education, Health, etc.).

Data on production and trade of ICT products are discussed in the sub-sections below.

The issue of ICT Content will have to be more fully refined for incorporation in the framework being proposed for the measurement of ICT statistics. The basic indicators on ICT will be more fully reformed by the experiences in other organizations.

3.2       Production Data on ICT

With respect to production, the measurement of the contribution of ICT can benefit from the use of a Satellite Accounting approach to estimate the contribution of the ICT sector.  The Central Framework of the 1993 System of National Accounts (1993 SNA) is an integrated accounting structure that is exhaustive and consistent within the boundary of the economic activities which it covers.  This implies that each transaction, unit, product and purpose is treated in a unique and consistent manner within the system.  The implication of this is that it does not allow for conflicting or alternating approaches.

Satellite Accounting depicts a methodology annexed or linked to the 1993 System of National Accounts (1993 SNA) providing a detailed analysis of supply and demand of goods and services of the phenomena being analysed, say tourism, health or ICT, in such a way that the analytical capacity of the 1993 SNA can be expanded in a more flexible manner without overburdening the central system.  Some of the characteristics or definitions of the satellite approach may therefore differ conceptually from the central SNA framework.  The Satellite approach also allows for the integration of monetary accounting data with physical data say Tourism GDP with visitor arrivals.

The Secretariat highlighted the satellite account approach at the First Meeting of Ministers with responsibility for Information, Communication and Technology in Antigua and Barbuda.  It was indicated that ICT Satellite Accounts would provide a picture of the contribution of the ICT sector to GDP, as well as the contribution of the specific industries in the sector.  The implication of the utility of ICT Satellite Accounts for policy formulation was therefore an enhancement in the measurement of the contribution to GDP, to Exports and so forth. It was explained in the presentation that in the process of compilation of National Accounts estimates of ICT activities are measured but are however scattered across various industries.  The satellite approach will serve to connect all the constituent parts of ICT into a complete set of accounts.  These industries may include the following:

(i)                 Printing and publication of newspapers and other similar media;

(ii)        Assembly type manufacturing of equipment such as computers, televisions and communication equipment and apparatus;

(iii)             Distribution of television, computers and communication equipment and apparatus;

(iv)       Carrier Services;

(v)        Fixed telephony services;

(vi)              Mobile telecommunication services;

(vii)            Internet telecommunication services;

(viii)          On-line information Services;

(ix)              Library and archive services;

(x)                Repair services to computers, televisions etc; and

(xi)              Courier services.

Coverage of these activities in the National Accounts should produce figures on total production of ICT when they are combined in the Satellite Accounts.  The Secretariat also indicated that the ideal choice of Classification System to measure these statistics was the United Nations Central Product Classification (CPC) version 1.0.

At the Twenty- Seventh Meeting of the Standing Committee of Caribbean Statisticians (SCCS) held in Grenada in November 2002 at the request of the CARICOM Secretariat, the Director of Statistics of Belize whose presence was funded under a Japan/UNDP Project further extended the developmental work of the Secretariat by outlining the use of the Satellite Accounts approach in measuring the contribution of ICT to GDP.  He also defined the ICT sectors using the approach of the OECD.  This presentation was included in the Working Document prepared for the Second Special Meeting of Ministers.

At the Twenty-Eighth Meeting of the Standing Committee of Caribbean Statisticians held in the Turks and Caicos Islands an overview of the satellite account approach to measuring ICT was further articulated by the Belize representative.  He explained that in setting up the account, the characteristic industries and goods of the sector would be taken into account as well as issues relating to trade and transport.  He also pointed out that the Central Product Classification must be used and that supply and use tables are the pillars on which the accounts are built.  Mention was also made of the usefulness of an ICT Satellite Account in identifying weaknesses and gaps in National Accounts.

There exist therefore, a basic framework that can be further developed and tested to compile the contribution of ICT to production.

3.3       Trade in ICT Goods and Services and the facilitation of Trade through ICT

Apart from Production, Trade in Services and Goods would also affect the development process in two ways as it relates to ICT.  Firstly, the actual ICT goods and services that are traded also have implications for the state of economic growth and development, the premise being the more ICT goods and services that are traded, the greater the acquisition and facilitation of economic growth and development and the generation of knowledge.  The identification of ICT commodities in Merchandise Trade should not pose tremendous difficulty once these commodities are identified at the most detailed level of the SITC Rev. 3 or HS classification systems.

The area of International Trade in Service will however pose more difficulty in identifying ICT Services traded, since this area of statistics is not well developed in the Region. Related to the actual trade in goods and services is the use of ICT in facilitating international trade of goods and services.  There is increasing use being made of the Internet for business transactions in goods and services.  One critical concept in the area of Trade in Services is that of mode of delivery.  The Manual of International Trade in Services identified the following modes of delivery of services:

Mode 1 - Cross border in which the service crosses the border from the territory of one country into that of any other;

Mode 2.- Consumption abroad - a consumer moves outside his home territory to another consume a service and included with this with the popularity of emails will be expenditure on internet services at business centres in hotels as well as internet cafes;

Mode 3 - commercial presence (through the establishment of a commercial presence abroad); and

Mode 4 - presence of natural persons (which occurs when an individual moves into the territory of another to deliver a service).

3.4       Labour Market Implications

ICT impacts on the demand of skills required of the working age population.  Increased use of ICT in the production and delivery of goods and services can affect demand through employment displacement, as well as demanding new areas of skills of the labour supplied.  At the level of firms and organisations there are implications for Human Resource Development to enable the training and continuous training of employees to maintain a competitive labour force.  On the supply side, there will also be implications for persons offering their labour relative to decisions on their career paths that should take into consideration the new skills being demanded and which should be accredited regionally.  There are also implications for trade unions and other staff associations relative to the issue of labour displacement

3.5       Analysing the Impact of ICT - Special Surveys and Studies

Understanding the status, impact and the real contribution of ICT in the Region will also require as recommended in the e-Commerce report special surveys and the monitoring of qualitative information that can track the pattern of development of e-commerce and IT in general.  A methodology and a priority list for the conduct of these studies should be incorporated in the system to be developed for ICT statistics.  Some examples of these that impact studies and special surveys include: surveys of Internet Service Providers that help in profiling internet users; measurement of outcomes relative to the content of ICT; impact of ICT on small businesses, on communities, on health delivery and education.

4.         Conclusion - Immediate Next Steps

The immediate next steps can be:

(i)                 To explore the findings from the Year 2000 Round of Population and Housing Censuses relative to the questions on ICT;

(ii)               To develop Common Guidelines for the production of a System of ICT Statistics;

(iii)             To embark on a pilot study utilising two to three Member States to assemble quantitative information on the contribution of the ICT Sector to GDP and the supporting indicators;

(iv)              To identify critical priority areas for special surveys and studies to enrich the empirical information with qualitative data; and

(v)                To continue the thrust in enabling the measurement of critical services sector based on the concept of modes of delivery to ascertain the real contribution of ICT to Trade including its impact in enabling trade both in goods and in services. This can be executed in any developmental work in place on International Trade in Services.

There is dire need to execute further work in compiling the required data to inform and support the development of ICT and its deployment in the Region.  There is also need to track the flow of services, including cross-border services that utilise IT and the impact of these services on the Region.  In addition, the potential for the transformation of CARICOM societies using the advances in IT must be exploited.  Developmental work on Statistics on ICT is especially imperative, if the Community is going to re-engineer itself into a viable Single Market and Economy (CSME) and take meaningful action within the context of hemispheric and global agendas.  The availability and use of ICT resources by the population in Member States determine the diffusion of ICT within and across Member States with implications for the participation of peoples of the Region in the new globalised economy.  Therefore, there is adequate justification for a Project to be undertaken in this area.

ACTION REQUIRED

The Meeting is invited to:

:           consider the proposed development work in the development of ICT Statistics as presented to the Third Meeting of Ministers of ICT.

*****

Classifying Information and Communication Technology (ICT) Services

Introduction

The WPIIS has made significant contributions in recent years to the development of standards in the domain of information society statistics. The group's first contribution was the definition of the Information and Communication Technology sector (ICT sector) based on ISIC rev. 3. That definition is now endorsed by the United Nations Statistical Office (UNSO) and used by a number of National Statistical Institutes (NSI). At the last meeting, WPIIS agreed on a list of ICT goods based on the Harmonized System. Definitions developed by the group in the domain of e-commerce and ICT use have gained wide acceptance. 

These standards were developed by making the best possible use of existing international classifications or the best possible use of recent developments by NSIs. This strategy was chosen to accelerate the process of generating internationally comparable statistics.

This paper proposes a similar approach in the development of a list for ICT service commodities. The strategy consists of proposing updates to the UN Central Product Classification (CPC) in selected areas and in identifying ICT service commodities within the updated CPC on the basis of the guidelines developed by WPIIS.

The update of the CPC proposed in this paper is based on the North American Product Classification (NAPCS). That system was developed with input from industry insiders and particular attention was given to services originating from the information sector, as defined in the North American Industry Classification System (NAICS). Most producers of core ICT services are classified within that sector. There is therefore an opportunity for WPIIS to leverage existing development work.

The proposed strategy also has the advantage of fostering collaboration, in particular with the Voorburg Group on Service Statistics and the UNSO. This is consistent with the spirit of co-operation established at the World Summit on the Information Society that took place last December.

The proposal to co-operate was well received at the last Voorburg Group meeting. This paper is largely based on a submission to its Tokyo meeting. The Classification sub-committee of the UNSO also welcomed the suggestion to collaborate on this project of common interest.

Why not the current CPC?

The CPC (version 1.1) does not explicitly isolate some core ICT services.[1] Products that did not exist or were at an early stage of development when the CPC was elaborated are now significant. This is the case for products such as web site hosting, application provisioning or network management services.

What are the limits of the proposed approach?

The UNSO does not plan to change to the CPC's aggregation structure prior to the 2007 revision. However additions and changes at the 4 and 5 digit level of the classification are possible before that time. The proposal submitted here should therefore be seen as the initial stage of a process that could lead to a more fundamental assessment of the product classification, both in its structure and amount of detail.

The CPC is a known international standard. Updating it in selected areas could influence the international comparability of statistics outputs for many years to come.

How should the list of ICT services be determined?

The concept underlying the list of ICT industries is used to develop the list of ICT services. This is reasonable since it is based on characteristics of products rather than on characteristics of industries. "For manufacturing industries, the products of a candidate industry must be intended to fulfill the function of information processing and communication, including transmission and display; or use electronic processing to detect, measure and/or record physical phenomena, or to control a physical process. Components primarily intended for use in such products are also included. For service industries, the products of a candidate industry must be intended to enable the function of information processing and communication by electronic means." (See DSTI/ICCP/IIS(2003)1/REV2).

The concept does not restrict the list of ICT services to those primarily produced by ICT industries, nor does it imply that all primary products of ICT industries should be included in the list of ICT commodities. However, in this case it appears to largely be the case. This paper does not propose a discussion of the principles underlying the definition of ICT services. Rather it suggests a pragmatic approach based on the following assumptions:

·           The primary outputs of ICT service industries are, for the most part, ICT services.

·           The production of ICT services as primary outputs by non-ICT industries is not material.

These assumptions can be challenged and comments by delegates are welcomed. Available information in Canada suggests they are reasonable.

The identification of core ICT services is likely not to be very controversial.  The principal outputs of ISIC  6420 - Telecommunications, 7200 - Computer and related services and 7123 - Renting of office machinery and equipment (including computers) are, for the most part, in-scope. The services of these industries are generally intended to enable the function of information processing and communication by electronic means, the accepted guideline to recognize ICT goods and services.

There are three possible exceptions:  CPC 84170 - Program distribution services, CPC 84300 - On-line information provision services and CPC 83633 - Sale of internet advertising space (except on commission). The first is an output of ISIC 6420 - Telecommunications, the second and third outputs of ISIC 7240 - Data base activities. These services consist of the delivery of content by electronic means. Such services are explicitly excluded from our ICT definition. They are also excluded from the proposal presented below.

The primary products of these industries as delineated in CPC version 1.1 are shown below. The categories that appear in bold and italic (84170, 83633 and 84300) are those that we might wish to exclude.

What parts of the CPC need updating?

This paper proposes an update to computer and related services (the primary products of ISIC 7200) only. It does not propose to update the CPC for telecommunications as this was done recently.

There could, however, be a need to re-think the classification of telecommunications services in a few years. The CPC largely reflects market regulation and limitations of technologies. Both the regulatory framework and telecommunication technologies are evolving rapidly. In particular, the opening of some markets to competition and the deployment of broadband technologies are setting the stage for bundling of services. In Canada major cable operators are upgrading their networks to offer VoIP (Voice over the Internet Protocol) within the next 2 years, and major telecommunications carriers are planning to video over DSL within a similar timeframe; some already do. Some believe that competition for the "broadband home" will lead suppliers to offer bundles of services (e.g. voice telephony, Internet access and video) to attract and retain clients. If this method of marketing services becomes widespread, the existing statistical classification of services could become obsolete. Changes in regulations could have a similar impact. There are still too many uncertainties to predict the impact of these changes on markets (and therefore on product classifications). It is also not clear whether these changes will be the same across countries.

The NAPCS proposal for information technology services[2] is close in coverage to the CPC grouping for computer and related services. It is designed to describe the principal products of four NAICS industries: 511210 - Software publishers, 51811 - ISPs and Web Search Portals, 51821 - Data Processing, Hosting, and Related Services, 54151 - Computer Systems Design and Related Services. The activities covered by these industries mostly relate to ISIC 7200 - Computer and related services, and the products it describes are mostly covered by CPC 8314 - Computer consultancy services, 8315 - Computer facilities management services and 8316 - Systems maintenance services. Software is covered by CPC 47520 -  Records, tapes and other recorded media for sound or other similarly recorded phenomena (except cinematographic film and cards with magnetic stripe); packaged computer software, and CPC 73310 - Licensing services for the right to use computer software.

Although similar in coverage, the structure and detail of the CPC and NAPCS are significantly different. The amount of detail found in the NAPCS is likely not practical for an international classification.

At the highest level of the NAPCS proposal, the following categories of ICT services are identified:

·           IT technical consulting - expert opinion on technical matters related to the use of IT.

·           IT design and development services - design and development of IT solutions such as custom applications, networks and computer systems.

·           Hosting and IT infrastructure provisioning services - access to IT infrastructure (hardware, software and networks) enabling the hosting of applications and the processing of information.

·           IT infrastructure and network management services - management and monitoring of a client's IT infrastructure.

·           IT technical support services - technical expertise to solve IT related problems.

·           Information and document transformation - technical expertise and equipment to transform information from one format or media to another.

·           Internet access and backbone services - connection to, and carriage of traffic on, the Internet.

·           Published Software - software developed for wide distribution and produced for multiple sale or licensing.

Of the above broad service categories, only IT technical consulting does not have sub-components in NAPCS. The level of detail appropriate for use in the CPC is a matter of judgment and practical experience. Input from other statistical offices on this matter would be most useful.

The proposal below goes slightly beyond the most aggregated level of NAPCS (as shown in paragraph 18 above), but reorganizes the NAPCS aggregates into five categories in order to respect the constraints of the CPC structure.

·           8314 - IT technical consulting and support services - access to human resources with the expertise and skills to address IT related problems. It regroups 3 high level categories of NAPCS:  IT technical consulting, IT technical support services and, Information and document transformation. It is proposed to distinguish consulting from support services at the 5-digit level.

·           8315 - IT design and development services - access to human resources to design IT solutions such as custom applications, networks and computer systems. It corresponds to the NAPCS high level category with the same title. It is proposed to distinguish applications from systems design at the 5-digit level.

·           8316 - Hosting and IT infrastructure provisioning services - access to IT infrastructure (hardware, software and networks) and expertise to host ICT applications and process information. It corresponds to the high level NAPCS category with the same title. It is proposed to distinguish web hosting, applications provisioning and business process management at the 5-digit level.

·           8317 - IT infrastructure and network management services - management and monitoring of a client's IT infrastructure. It corresponds to the high level NAPCS category with the same title.

·           8318 - Software - Software developed for multiple sales or licensing. It corresponds to the high level NAPCS with the same title. The 5-digit detail of the CPC is retained for the time being but this treatment should be re-assessed for the 2007 revision.

The following table presents a CPC based list of ICT services after the proposed update to the CPC (new categories shown in italics). The right column shows the principal industry of origin.

The proposed level of detail is based in part on the relative importance of these products in Canada, and in part on the author's perception of what is feasible at the international level. Delegates are invited to give their country's perspective on this. 

Has the proposed classification been tested?

The section of the NAPCS underlying the proposed changes to the CPC has been successfully used in both Canada and the United States in more detail than suggested here.

In the United States, product data were collected for the Information Sector (NAICS 51) and the Computer Systems Design and Related Services industry (NAICS 5415) as part of the Annual Services Statistics Program[3].  The same product classification was used for the main ICT services industries, that is, Software Publishers, ISPs and Web Search Portals, Data Processing and Hosting, and Computer Design and Related Services. The use of a single product classification for these industries reflects the extensive overlap observed in the products they offer.  NAPCS based data were published for the first time in February 2003 in "Services Annual Survey - 2001".

The experience in the United States was conclusive. The use of NAPCS has led to a significant increase in the amount of product detail published from the Services Annual Survey, and the data provide new insights on the output structure of the targeted industries.[4]

A similar approach was used in Canada. The relevant sections of NAPCS are used in two surveys which are part of a broader Service industries annual statistics program.

·           The Annual Survey of Internet Service Providers is a sample survey of establishments primarily engaged in the provision of Internet access services.

·           The Annual Survey of Software Development and Computer Services is a sample survey of establishments classified in the following three NAICS industries: Software Publishers, Data Processing Services, Computer Systems Design and Related Services.

The product classification has been tested at different levels of details for reference years 1999 to 2002. The results discussed here are those for the 2001 reference year.

The Annual Survey of Software Development and Computer Services has been conducted since the early 90s. A preliminary version of the NAPCS classification system was introduced with the 1999 survey. Commodity data have been collected every year since then at different levels of detail. The population targeted by this survey is quite diversified and was known to house many multi-service establishments. It was also known that significant overlap existed between the boundaries of the various industries covered by this survey. The collection of product data is particularly important when these conditions exist, allowing the measurement of total market size and of industry specialization ratios.

The product classification proved relevant and applicable. All products, except network design, collocation and video and audio streaming represented more than 4% of revenues in its principal industry of origin. More than half of the respondents to this survey reported revenues in 3 or more product categories. The single service establishments (29%) tended to be of small or medium size and to serve one of the following markets: IT technical consulting, software publishing and computer systems design and development.

The significant overlap between the outputs of the 3 NAICS industries covered by this survey was confirmed. Thirteen of the twenty 20 services tracked by the survey were produced in all industries and eighteen in two of the three industries. Collocation services and data storage services were the only services originating from a single industry. Despite the overlap between the outputs of these industries, the specialization ratio for each industry was above the threshold of 70 % deemed sufficient to define an industry in the Canadian system.

The Annual Survey of Internet Service Providers has been conducted for the first time in 2000 (for reference year 1999). The industry is highly specialized with more than 88% of its revenues generated from the provision of Internet access services. Despite the high level of specialization, more than 80% of establishments reported revenues in 3 or more product categories. In total, the industry reported revenues from the provision of  14 products in addition to its primary products, but only 3 of those accounted for more than 1% of the it's revenues: web site hosting (3.9%), sales, rental and maintenance of IT equipment (1.1%) and other services (3.0%). This industry is also the second largest producer of collocation and video and audio streaming services, two relatively small markets.

The coverage of the product classification was very good for all industries targeted by these two surveys. Unclassified revenues accounted for less than 7.5% of total revenues in all cases, and for only 5.4% of the combined revenues of the four industries. A similar observation can be made regarding the situation in the United States. Unclassified revenues ranged from 5.1 % of total revenues for NAICS 54151 - Computer Design and Related Services to 11.0 % for NAICS 51419 - Other Information Services. The module for product detail was relatively easy to implement in Canada for both surveys. The incidence of non-response and need for follow-up has been low.

Conclusion

The implementation of NAPCS for ICT related services has been a positive experience in both Canada and the United States. The data collected provide new market information and help understand the structure of these dynamic industries. It also was relatively easy to use for most respondents. The integration of this system, or of a similar system, in the CPC would promote international comparability in an area of considerable interest. 

Delegates are asked to express their position on the following questions:

·           Is the strategy outlined, that is to propose amendments to the CPC so that the latter can be used to define a list of ICT services, acceptable and feasible?

·           Are the proposed amendments to the CPC acceptable and feasible?

·           Is the proposed list of ICT services (scope and level of detail) acceptable?

·           Should this proposal, or a proposal amended by the group, be tabled at the next meeting of UN classification sub-committee tentatively scheduled for October 2004?

·           If the proposal is accepted by the UN classification sub-committee, do delegates agree that the proposed list of ICT services be submitted to the ICCP committee with a view to its declassification?

Annex 1

NAPCS categories and links to the proposed CPC