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Africa sees steepest ICT price falls

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 19 May 2011

The regional ICT price trends highlight that while prices are falling in all regions of the world, the greatest price drops occurred in Africa, where fixed broadband prices fell by over 55% and mobile cellular prices by 25%.

This is according to data from the International Telecommunication Union's (ITU's) 2010 ICT Price Basket (IPB) released on Monday, showing that consumers and businesses globally are paying on average 18% less for entry-level ICT services than they were two years ago.

The data also shows these users are paying more than 50% less for high-speed Internet connections while relative prices for mobile cellular services decreased by almost 22% from 2008 to 2010, with fixed telephony costs declining by an average of 7%.

Over the same period, says the ITU, the number of mobile cellular subscriptions worldwide grew from 4 billion to 5.3 billion.

However, the international body states that despite this encouraging trend, Africa continues to stand out for its relatively high prices.

Drop zones

It also discovered that the top 10 countries showing the greatest decrease in the ICT Price Basket value were countries with high values to begin with, the organisation states, adding that aside from Bangladesh, all are from Africa.

“While the drop is mainly due to price decreases in fixed broadband services, in several countries, including Azerbaijan, Bhutan, Benin, Kenya, Sri Lanka, Tanzania and Uganda, mobile tariffs also decreased considerably,” notes the ITU.

It adds that fixed broadband Internet access in particular remains prohibitively high, and, across Africa as a whole, still represented almost three times the monthly average per capita income. Only one out of 10 people in Africa are using the Internet.

The top countries with the relatively cheapest broadband prices are all high-income economies and include many of those ranked at the top of the IPB overall, the study found, including Monaco, Macau (China), Liechtenstein, the US and Austria.

Customers in 31 countries - all of them highly industrialised economies - pay only the equivalent of 1% or less of average monthly gross national income (GNI) per capita for an entry-level broadband connection.

In 32 countries, however, the monthly price of an entry-level fixed broadband subscription corresponds to more than half average monthly income.

“In 19 of those countries, a broadband connection costs more than 100% of monthly GNI per capita. And in a handful of developing countries the monthly price of a fast Internet connection is still more than 10 times monthly average income.

“Many of the countries where the cost of broadband Internet access is extremely high are UN-designated least developed countries, but the group also includes Tajikistan, Swaziland, Uzbekistan, and Papua New Guinea,” notes the ITU.

It's a miracle!

Not surprisingly, the ITU continues, both broadband penetration and Internet user levels in these countries remain extremely low.

It also emerged that relative overall prices decreased by over 50% in Azerbaijan, Bhutan, Sri Lanka, Bangladesh, Venezuela, Guyana, Uganda and Austria.

“With ICTs now a primary driver of social and economic development, these results are highly encouraging,” says ITU secretary-general Dr Hamadoun Tour'e.

“Our next challenge is to find strategies to replicate the 'mobile miracle' for broadband, which is fast becoming basic infrastructure. Countries without affordable broadband access risk falling quickly behind.”

According to the ITU, this year's IPB figures underline the fact that pricing remains a major factor in perpetuating the 'digital divide' between the rich and poor.

IPB results reveal a close link between the affordability of ICT services and national income levels: people in high-income countries pay relatively little for ICT services, while those in the world's poorest countries pay relatively more, the organisation says.

“ICT prices correspond to less than 1% of GNI per capita in much of Europe and Asia and the Pacific's high income economies, as well as in the US and Canada. At the other end of the scale, the cost of ICT services averages 17% of GNI per capita in developing countries,” says the ITU.

Out of reach

The ITU believes the overall fall in prices for fixed broadband services is mainly due to price decreases in developing countries, where the fixed broadband sub-basket dropped by 52%, compared to 35% in developed countries.

However, it explains, it should be noted that steep price drops often reflect the extremely high cost of broadband in developing countries. Even at half the price, the service is often still far beyond the pockets of average citizens, it adds.

The ITU's IPB is a composite affordability measure based on three sub-baskets - fixed telephone, mobile cellular and fixed broadband Internet services - and computed as a percentage of average GNI per capita.

As a comprehensive benchmarking tool, the IPB monitors the relative price of ICT services and provides an indication of how affordable services are, across countries, and over time.

Published annually, the latest IPB compares 2008 and 2010 tariffs at global and regional levels and highlights the difference in prices between developed and developing regions. Covering 165 economies, it is the only price basket to monitor the affordability of ICT services worldwide.

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