21 November 2003


(Reissued as received.)

GENEVA, 20 November (UNCTAD) -- Free and open-source software (known as FOSS) -- software that has made its source code or programming language public -- is dramatically affecting the evolving information and communications technology (ICT) landscape.  Multinational companies and governments have begun using it in earnest, and influential software firms that previously balked at its anti-proprietary nature have now stepped into the fray.  But aside from what it means to the computer industry and the business community in general, FOSS has major implications for developing countries, reducing barriers to market entry, cutting costs and facilitating the rapid expansion of skills and technology.  It may “dramatically improve the digital inclusion of the developing world”, according to the United Nations Conference on Trade and Development (UNCTAD) in its E-commerce and Development Report 2003, released today.

As computer hardware becomes increasingly sophisticated and reliable, the software to go with it is more and more complicated, sometimes more expensive, and almost always more difficult to configure and maintain. The FOSS produces better software that can match the unending improvements in hardware -- which explains the promise it holds for developing countries.  Its success demonstrates that complex software can be built, maintained, developed and extended without anyone owning the underlying intellectual property.  As such, the report contends, it represents "a viable mode of software production that presents a real choice for firms and governments making ICT decisions", particularly in developing countries.

With the emergence of FOSS, software use policy becomes an important issue, and the report maintains that countries need to reformulate ICT policy accordingly if they are to benefit from it.  An annual publication of UNCTAD since 2001, the report looks at developments in the area of e-commerce and ICT, particularly as they relate to developing countries.  This year's edition examines FOSS and some of the issues involved in choosing between open-source and proprietary software.

What is FOSS?

The "free" in FOSS means the freedom to run a programme for any purpose, study how it works and adapt it to one's own needs, redistribute copies to others, improve the programme and share those improvements with the community so that all benefit.  Its open source code -- which is how software was originally developed in the 1960s -- encourages users to freely inspect, modify and redistribute derivative versions.  Its copyright statements vary in strictness and formality.  All FOSS programmes, however, promote the notion that the source code -- a list of instructions that make up the “recipe” for a particular software application -- should not be “closed” by making it the property of a particular business or institution which might then cease to distribute it publicly and impose legal and technical restrictions on copying, alteration and redistribution.  Its technological opposite, closed-source or proprietary software, is "the touchstone of the conventional intellectual property regime for computer software", the report says, and "an important reason why the software industry can generate sizeable revenues and earnings".  The source code of proprietary software is deliberately kept secret by its producers, who rely on user licences and copy protection technology to restrict users’ rights to copy and install their programmes.  The open-source process inverts that logic.

The UNCTAD believes that FOSS is here to stay for the foreseeable future:  it is unlikely that anyone using a personal computer connected to the Internet today is not regularly accessing some FOSS programme.  More than half of all Internet servers are running on FOSS versions of the UNIX operating system, and 30 per cent run on the GNU/Linux operating system.  Some 65 per cent of Internet servers use the open-source Apache Web server to send out Web pages, while the FOSS-based Sendmail software routes about 40 per cent of all e-mail travelling over the Internet.  Nearly 90 per cent of all domain name system (DNS) servers rely on FOSS to match Web addresses (URLs) to the computers that host Web site files.

As such FOSS products as GNU/Linux, Apache and OpenOffice gain market share, a large part of the IT industry is developing FOSS-based products (see table at end of this release).  IBM is now a major champion of open-source software, and last year announced $1-billion-plus revenues from sales of Linux-based software, hardware and services. Other technology leaders, including Hewlett-Packard, Motorola, Dell, Oracle, Intel and Sun Microsystems, have also made major commitments to FOSS.


Wide Range of Benefits

Open-source environments often produce reliable, secure and upgradeable software at relatively low cost.  The FOSS helps eliminate the national-level economic losses resulting from duplication of work, particularly in public and academic settings.  It can have an anti-monopolistic effect on the IT market and industry in a country because it allows anyone to provide IT services, administration, management and maintenance for compliant software and thus reduces barriers to entry.  The FOSS also helps users avoid getting locked into financially disadvantageous and long-term relationships with particular proprietary software vendors or producers.

Open-source software also meets the need for public and open standards for software applications and data files that handle public information.  It saves governments being forced to upgrade or convert hardware or software systems when vendors discontinue support for technical or financial reasons, with the resulting cost implications.

The FOSS can also produce synergistic effects throughout the IT services industry and the broader economy, leading to job creation and export opportunities, UNCTAD finds.  Its ability to “look under the hood” allows for extensive customization that can take account of the technical, commercial, regulatory, cultural and linguistic particularities of a multitude of users and localities.  Its low cost may accelerate overall ICT adoption in developing countries, particularly given the increasingly stringent enforcement of intellectual property rights demanded by proprietary software producers.  Money spent on licences may be better used to create more and better technically qualified employees whose skills can be put to wider use, providing higher service levels than is possible with proprietary applications.  Such experts could perform real software development, fix “bugs”, rather than just reporting them, and eventually create customized software for export.  By making FOSS a policy prerogative, governments can ensure that the sharing of software knowledge benefits all IT stakeholders, down to the end user.

While cost reduction is not a goal, it is a useful side-benefit that FOSS tends to be more affordable.  The service component for managing a software environment in a public or corporate institution can be so high as to reduce proprietary software licensing costs and fees to a marginal status, but this may not always be the case in developing countries, where the services of an IT expert and programmer may be available locally, unlike the hard currency needed to pay for licences and upgrades.

An often-debated notion is how local ICT industries can develop if they are “giving away” their intellectual property by producing and using FOSS. The reality is that the bulk of ICT software business comes from selling solutions that bundle system development, deployment and management, software customization and hardware, rather than just end-user licences.

For more information, contact:  Press Office, tel:  +41 22 907 5828,

e-mail:  press@unctad.org, www.unctad.org/press; or Y. Kalindaga, tel:

+41 22 907 2042, e-mail:  yusuf.kalindaga@unctad.org