40 percent of monthly income?!

Why emerging markets need smart internet policies

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The Alliance for Affordable Internet (A4AI) has released its latest study into, well, the affordability of internet access. The study shows how big the challenge is on that front in emerging markets – for over two billion people there, fixed-line broadband costs on average 40 percent of their monthly income, and mobile broadband costs on average 10 percent of their monthly income.

The United Nations’ “affordability target” for internet access is five percent of monthly income, so there’s clearly a ways to go in many developing countries. Almost 60 percent of global households are still unconnected and, unsurprisingly, those who can’t afford to get online tend to be poor, in rural communities and/or women. As my colleague Biz Carson wrote the other day, women are being left behind in the related smartphone adoption stakes too.

A4AI comprises players from [company]Google[/company] and the World Wide Web Foundation to the international development departments of the U.S. and U.K., and its report — unveiled Wednesday at Mobile World Congress in Barcelona — takes into account drivers of connectivity such as electrification and policy. As A4AI executive director Sonia Jorge pointed out quite reasonably in a statement, those who are unable to afford internet access are quite often those who most need it to improve their lot.

Still, she noted, good national “policies and principles” can make a big difference. For example, the A4AI report praised Latin American countries such as Costa Rica, Colombia and Peru for having solid infrastructure rollout plans. Costa Rica, which topped the affordability rankings of 51 emerging and developing economies, has been working to provide universal access since 2009.

According to A4AI, the policy areas that need attention include national broadband plans, competition-friendly environments (remember, many of these countries still have powerful telecoms monopolies), good spectrum allocation policy, the promotion of infrastructure-sharing, and “widespread public access through libraries, schools, and other community venues.” Strong political leadership helps, they added.

This is very much a long-term game. In the meantime, we have initiatives such as Google’s Loon, which is not quite ready yet, and [company]Facebook[/company]’s Internet.org, which is out there but somewhat divisive, both in terms of its impact on carriers and its threat to net neutrality. Both come with a still-fuzzy commercial imperative; from a societal standpoint, it is surely healthier for governments in emerging markets to foster more neutral and competitive alternatives.

White space broadband, which Google and [company]Microsoft[/company] have both been championing, could provide part of the solution (particularly in rural areas), but again it’s being held back by sluggish policy-making. Very few countries have authorized its use thus far, due to concerns over its impact on the broadcasting industry – the technology uses the spectral gaps between TV stations, though it’s now proven that it can avoid interference – and perhaps its threat to telecoms monopolies as well. Again, smarter government can make all the difference.


2 Responses to “Why emerging markets need smart internet policies”

  1. Just a few weeks ago i was surprised (or maybe even shocked) by mobile data prices in China. As far as i knew the China gov cared about the internet but had no clue what the prices for mobile were and wasn’t expecting this.
    Anyway just a few days ago i saved the links to 3 tables with their offerings. Best i can tell the first number should be CNY (1 USD-=6.27CNY), then voice minutes included and data, in the last one the data is second

    So 1GB data and 400-500 mins is between 20.4$ and 21.7$ , 6GB and 1400-2000 minutes is 62-63$. That’s rather poor pricing for any market, when you factor in the average income in China, it gets much worse.
    No wonder Chinese smartphone users use little data, they can’t afford it.
    Many other nations have much better prices , no clue why the China gov is not doing anything to enable/enforce much cheaper mobile data.
    China and India are some 35% of the world’s population so i guess i’ll have to check out India prices next but there even 3G coverage is problematic.

    • India prices are much better but income levels are very different there too. After a quick check it seems 2GB of data can be had at some 4.1$.