By | November 14, 2023
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Over the past 30 years, Internet access has gone from a luxury few could afford to a necessity trusted by the masses, an integral part of their well-being and prosperity. Technological hardware has evolved in accordance with Moore’s Law, resulting in smaller, more powerful and more affordable electronic devices. But too many are still left out — not because of the cost of a phone, but because of the cost of Internet service. The variation in the affordability of internet access is the focus of the latest Internet Poverty Index (IPI) 2023, which projects the distribution of individuals priced out of a basic mobile internet package and thus living in internet poverty.

IPI is based on three pillars: quality, quantity and affordability. For each country, a quality- and quantity-adjusted internet price is calculated for a standardized basket—1 GB per month at 10 Mbps. Prices are adjusted to reflect a consistent level of quality to facilitate comparisons between countries. The internet price at the country level is then compared to the purchasing power of individuals in that country, with those who would need to direct more than 10% of their combined daily expenditure towards the assumed basket bad internet. Based on the latest IPI data, World Data Lab predicts that 1.05 billion people currently live in Internet poverty.

Here are three key takeaways from IPI 2023:

The number of people living in internet poverty has fallen over the past decade and that decline has continued over the past 12 months.

Since 2015, the internet-poor population has decreased by 685 million or around 40%. This reduction has occurred as the global population has grown by 535 million, meaning that the proportion of people living in internet poverty has decreased from 24% in 2015 to 13% in 2023. Asia has developed most favorably over this period, experiencing a decrease of more than 50% — from 915 million in 2015 to 418 million in 2023 (Fig. 1). Africa has also seen a significant decrease from 665 million to 524 million. In the past year, 42 million people have lifted themselves out of internet poverty, slightly below the average for the previous five years.

Figure 1. Internet poverty and pricing 2015-23

Source: Internet Poverty Index 2023 by World Data Lab

The reduction in internet poverty has been driven by a general decline in prices.

The price of a standard basket of access has declined on all continents since 2015, allowing more consumers to afford access (Fig. 1). Africa experienced the strongest price reduction: in 2015, Africa had the second most expensive internet prices in the world (after North America); now it’s the cheapest. Despite the low prices, Africa is still home to the largest internet poor population – 524 million – given that it has the highest rate of conventional poverty.

Although prices have fallen globally, there are variations between countries and regions.

Since 2015, countries have experienced an average price reduction of 24%. However, certain geographical, demographic and political factors have led to different results. In the Caribbean, prices have actually increased by 17% since 2015. The region’s challenging geographic environment, which makes it difficult to develop cost-effective infrastructure, coupled with the absence of competition in telecommunications markets has undermined progress. In contrast, many West African countries have experienced significant price reductions due to infrastructure development, with Angola (90%), Guinea Bissau (75%), The Gambia (72%), Sierra Leone (69%) and Cote d’Ivoire (59%). %) all of which benefit from a newly laid submarine cable connecting them to Europe’s telecommunications network.

One factor that has a significant impact on pricing is the policies that govern the telecom market. Crucially, policies can be changed by stakeholders relatively quickly and cheaply, making them an area of ​​focus when analyzing price drivers. Data from the IPI indicate that promoting a competitive market environment can be an effective way to drive down Internet prices and improve the quality offered, as new service providers entering the market can invest in infrastructure expansion and try to acquire customers by offering competitive prices. An example of this can be seen in Botswana, which has experienced a 76% reduction in prices since 2015. This has been driven by a wide range of policy initiatives aimed at “making markets work more efficiently by increasing competition”, exemplified by the implementation of National Broadband Strategy (2016) and Universal Access and Service Fund (UASF) (2015).

Figure 2 shows the distribution of the lowest and highest internet prices per country. A notable trend is that all the countries with the lowest Internet prices are themselves low- or lower-middle-income countries, while the majority of countries with high prices are upper-middle- or high-income countries. Although this trend is relatively consistent across the global data set, GDP per capita does not explain significant variation in prices as many poor countries have high prices, such as Lebanon ($38), Honduras ($20) and Eswatini ($19), and many rich countries have relatively low prices; examples include France ($11), Spain ($11) and New Zealand ($11).

Figure 2. Lowest and highest internet prices in 2023

f2In recent years, the world has made great strides in reducing internet poverty. While income poverty has stagnated since COVID, internet poverty declined due to a near-universal reduction in internet prices. Further price reductions will be essential to achieve further progress, as low prices give poor people a chance to connect and proactively use the internet. One encouraging factor from the latest data is that monthly prices below US$7 for a basic internet package have already been achieved in eight low-income countries, most of which face many other infrastructure constraints. If all countries in the world had such a low price for a minimum package of Internet services, Internet poverty would decrease by another 44%.

#Internet #Poverty #Brookings

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