Internet uptake lags despite falling broadband prices
On average, prices for mobile voice, mobile data and fixed broadband services are falling steadily around the world and in some countries even dramatically.
This is according to a new statistical report − Measuring Digital Development: ICT Price Trends 2019 – released by the International Telecommunication Union (ITU) this week.
The report, which is a global analysis of the prices of telecommunication services, reveals the reduction in price relative to income is even more dramatic, which would suggest that, globally, telecommunication and ICT services are becoming more affordable.
“Keeping telecommunication and digital services as affordable as possible has always been important to ensure broader Internet uptake, especially for lower-income households and consumers,” says Houlin Zhao, ITU secretary-general. “In the face of COVID-19, this is more vital than ever. People who do not have access to the Internet may not be able to access information about how to protect themselves from coronavirus, telework, learn remotely and connect with families and friends during quarantine.”
The falling prices, however, don’t translate into rapidly increasing Internet penetration rates, especially in least developed countries (LDCs), the international body found.
This, it says, points to the fact that affordability may not be the only barrier to Internet uptake; rather factors such as low level of education, lack of relevant content, lack of content in local languages, lack of digital skills, and a low-quality Internet connection may also prevent effective use.
Mobile data basket
According to the report, mobile data basket prices have decreased from 2013 to 2019 relative to gross national income (GNI) per capita.
“The global average price of a mobile data basket of at least 1.5GB dropped from $20.4 in 2013 to $13.2 in 2019, equivalent to a compound annual growth rate (CAGR) of -7%, driven mostly by the 2013 to 2015 sub-period, followed by relative stability over the past four years.
“Over the past six years, there has been an explosion in the number of active mobile data subscriptions, increasing from 27.4 to 83 per 100 inhabitants, or a CAGR of 20.3%.”
At a regional outlook, the report determined the least affordable baskets relative to income are found in Africa, at 11.4% of GNI per capita on average.
The other regions are considerably less expensive, it states. “Europeans have access to the cheapest baskets, at 0.8% of GNI per capita, followed by the CIS region (2.2%), Asia and the Pacific (2.7%), the Americas (2.9%) and the Arab States (4.1%).”
“In Africa, the most affordable baskets are available in Mauritius and Gabon, the only two countries with a basket below the Broadband Commission target of 2%. In the next three countries, Seychelles, Nigeria and Botswana, prices accounted for between 2% and 3% of GNI per capita, suggesting there is a good chance the Broadband Commission target may be reached in these countries by 2023.
"In many African countries, however, mobile data baskets are still out of reach for a large part of the population, costing more than 10% of GNI per capita, in situations where incomes are already limited.
“In eight out of 10 African countries, the data allowance included in the cheapest price (with at least 1.5GB) did not exceed 2GB. The highest allowance for this price is observed in Botswana and the Democratic Republic of the Congo, amounting to 5GB.”
In terms of rankings, SA is ranked on the 129 spot when it comes to mobile data prices as percentage of GNI per capita, with 3.9%.
It’s important to note that local regulatory authorities have attempted to address the cost of data in the country, following an outcry from citizens about high prices.
Under the banner #DataMustFall, South Africans used social media platforms to draw the attention of politicians, the public and regulators, to put pressure on operators to make mobile Internet access more affordable.
The 2019 State of Mobile Web report released by Opera showed that on average, South Africans pay around $7.19 (R106) for 1GB of data.
Last December, the Competition Commission recommended that telcos reduce data costs and instructed the leading operators, MTN and Vodacom, to cut their mobile data pricing by half.
To date, all four of the local mobile operators, Vodacom, MTN, Cell C and Telkom, have reached deals with the competition watchdog, following its data price reduction recommendations.
Mobile voice basket
In terms of the global average price of a mobile voice basket, the report found that between 2008 and 2019, the price decreased from $21.4 to $11.8, equivalent to a CAGR of -5.3%.
When benchmarked among 184 economies, SA ranks in the 90 position, with the average price of the mobile voice basket at 1.6% of the GNI per capita.
“Expressing mobile voice prices as a share of GNI per capita introduces large variations in price, with Africa and LDCs experiencing relatively high mobile prices.
“In most countries, an entry-level mobile voice basket remains fairly affordable. In 70 countries, a low-usage mobile voice plan was available for less than 1% of GNI per capita, and in a further 37 countries it stood below 2%.
“Although causality is difficult to prove, price reductions have undoubtedly helped contribute to the rapid rise in the mobile voice penetration rate, alongside growing competition and better price monitoring and evaluation by regulators.”
Fixed broadband basket
According to the ITU report, fixed broadband packages remain generally more expensive than mobile data packages (although data allowances are not always directly comparable).
“In 2019, the average price for an entry-level fixed broadband basket with a minimum of 5GB monthly usage stood at $28 globally. In developed countries, the price was somewhat higher, at $31 monthly, whereas in developing countries ($27) it was just below the global average.
“In LDCs ($29), it was just above the global average. From a regional perspective, what stands out are the low prices in the CIS region, at an average of only $11. In the Americas and Africa, fixed broadband prices are highest ($33), followed by Europe ($29), the Arab States ($22) and Asia and the Pacific ($22).
“In Africa, the fixed broadband basket cost the equivalent of no less than 33.3% GNI per capita.”
Turning to South Africa, the country is ranked 117 out of 173 economies with 6.5% of GNI per capita.
“Fixed broadband prices in Africa range from a cost representing less than 2% of GNI per capita in the Seychelles and Mauritius, to over 100% in Malawi, Rwanda, Niger, Madagascar and Burundi,” states the report. “As such, those first two countries are the only African countries to have achieved the Broadband Commission target for 2025.”