TREND: As economic incentives put increasing pressure on developing world governments to connect the next billion Internet users, issues surrounding the affordability of broadband access and the need for further investment in infrastructure remain significant obstacles
According to the International Telecommunications Union’s 2012 report Measuring the Information Society (see page 7), the number of Internet users worldwide doubled in the five years to 2010 to reach 2 billion people. With 70% of the global population yet to experience the transformative benefits of broadband Internet access, the focus has intensified on how to reach the next 3rd billion Internet users.
Research indicates that broadband penetration increases dramatically once its annual cost falls below 3% of annual family incomes (World Economic Forum 2012, page 42). Whilst this target has been largely surpassed in the developed world, there are 30 countries in which broadband cost exceeds 50% of average annual family incomes (Broadband Commission Annual Report 2012, page 42). In Africa, fixed broadband Internet access costs on average nearly three times the monthly average income per person (ITU 2012, page 4). Significant progress can be made if governments in the developing world can successfully transition from taxing technology purchases and infrastructure projects towards incentivising technology adoption as multiplier of jobs and economic growth. A 2012 report by the World Economic Forum suggests that Brazil, Russia, India, China, Turkey and Indonesia could expand Internet users by 860 million by reducing the cost of broadband by 50% (World Economic Forum 2012, page 83).
In 2011 the ITU reported that the cost of the “ICT Price Basket” (covering tariffs for fixed/mobile telephony and fixed broadband services) continued to fall in global terms – with the cost of access to fixed broadband in particular falling by over 50% in the previous two years (see page iii). The ITU welcomed this trend, but emphasised that broadband is still too expensive in many developing countries where it can exceed more than 100% of average monthly income (in comparison to 1.5% of average monthly income in the developed world) (Ibid). In its subsequent 2012 report (see page 5) the ITU noted the encouraging growth of mobile and wireless broadband services in developing countries, but underlined that this cannot serve as a substitute for fixed-broadband which continues to provide higher speeds, capacity and quality of service (whilst requiring much larger investments in infrastructure).
The World Economic Forum offers a number of policy recommendations which could actively address future levels of broadband adoption (page 87). Their report suggests that a mixture of (1) government investment and regulatory incentives coordinated with national broadband plans with clearly defined ICT-related objectives; (2) increasing the availability of low cost pre-paid or subscription broadband packages from telecommunications providers including entry level packages with restricted speed/data caps; and (3) creative approaches such as pre-loaded data onto devices and maximising the accessibility of free public Internet access providers. In the case of the second recommendation above, the adoption in 2009 by Safaricom (see page 84) of a $5 pre-paid service with a 200MB data cap is attributed to doubling the purchases of personal computers in Kenya between 2009-2010 (average PC market growth in Africa for that period was 3%).