2025 Broadband Advocacy Target 2
MAKE BROADBAND AFFORDABLE
By 2025, entry-level broadband services should be made affordable in low- and middle-income countries (LMICs) at less than 2% of monthly Gross National Income (GNI) per capita
Making broadband affordable is a critical step in achieving meaningful universal connectivity. The Broadband Commission’s affordability target was originally set to “less than 5% of average monthly income,” however in 2018, the Commission updated this target to specify that prices for entry-level broadband services should be below 2% of monthly GNI per capita in developing countries* by 2025.
*As of 2022, in LMICs (low- and middle-income countries).
According to the ITU’s 2022 Facts and Figures report, where data are available for both 2021 and 2022, more economies met the two percent affordability target for all five baskets of ICT services in 2022 than did so in 2021. Thus, 103 economies met the target with respect to the data-only mobile broadband basket in 2022 and 71 economies met the target with the fixed broadband basket (in each case seven more than in 2021).
After a brief uptick in 2021, income-adjusted cost of fixed and mobile Internet services resumed its downward trend in 2022. A 2023 ITU Brief report shows that mobile internet services depend on a complex interaction of factors and that while there are affordability differences across regions, most of the variation in affordability across countries depends on income level
Transformative risks and opportunities
Where is demand coming from? Mobile data from smartphones; current data does not show full picture
The COVID-19 pandemic prevented accurate measurement of Target 2. ITU price baskets are used to track this target, based on 2 GB of data per month for mobile and 5 GB for fixed. Yet data from Ericsson show that average mobile data usage per smartphone has been growing steadily, reaching 11 GB per user in 2021 and forecast to more than triple by 2027, driven by 5G technologies. Global figures on fixed broadband data consumption are far from complete. In the United States, demand for fixed broadband was estimated to be over 500 GB per subscription in the last quarter of 2021. In Bahrain, fixed broadband traffic per subscriber was 183 GB in 2019. In Malaysia, fixed broadband traffic amounted to 281 GB per subscriber per month in 2021 compared to 21 per mobile broadband subscriber. These figures suggest that both mobile and fixed broadband actual usage are typically far higher than expected in many countries – which is a positive sign that the demand driver for data is present and increasing.
Demand from changing work patterns: videoconferencing driving consumption
Data traffic has grown significantly due to COVID-19 and widespread use of videoconferencing. One hour of videoconferencing alone uses between 540 MB -1.62 GB of data, depending on the quality and number of participants.
Baselining data demand may be needed: key online activities and cost of baseline devices
The World Bank estimated in 2021 that the amount required for popular online activities (i.e., online public services, health information, shopping, learning and news) is around 660 MB per user per month, and if common recreational online activities such as social media use are included, an extra 5.2 GB is added, to give a total of approximately 6 GB per month.
In addition to the amount (and price) of data needed for basic online activities, the price of a broadband-enabled device is often a big barrier to accessing broadband, especially for non-Internet users. In 2021, the median cost of an entry-level internet-enabled handset was 19% of monthly GDP per capita across LMICs. The cost and affordability of entry-level internet-enabled devices remained relatively unchanged across LMICs overall in 2021 but with regional variations. By region, the median cost was 25% of monthly GDP per capita in Sun-Saharan Africa and 23% in South Asia.
The GSMA has also published a report with an overview of business models, innovations and policies that are helping to improve the affordability of Internet-enabled handsets in LMICs, particularly for underserved populations. Recommendations included reducing sector-specific taxes and fees and public-private partnerships to de-risk handset financing. The Broadband Commission launched a Working Group to investigate device/handset affordability in more detail.
Reviewing cost recovery vis-à-vis need to upgrade and update both networks and regulatory policy to promote digitally-enabled economic growth and digital inclusion
The policy debate on whether infrastructure providers alone should bear cost recovery is gathering pace, or should governments consider broadening this cost base. Increasing the cost base should also recognise increasing market participation to fair market access. The key issue is that telecommunications operators have invested to ensure that their networks can support the exponential growth in network traffic but are, to date, only able to recover network costs from end users. This question was investigated in the Broadband Commission’s 2021 ‘Report 21st Century Financing Models for Bridging Broadband Connectivity Gaps’ which recommended broadening the base of contributors so that ‘all who derive benefits from the digital economy, as consumers or as producers contribute objectively, equitably and fairly’. Frontier Economics has since estimated that in the EU the weighted average incremental cost of carrying OTT traffic is EUR 11-29 per subscriber on fixed networks and EUR 20-33 per subscriber on mobile networks. In recent months, some countries have begun to revisit and review these policies related to data delivery and the cost associated with network infrastructure (e.g. European Union, Brazil and the Caricom States of the Caribbean.) In 2020, Republic of Korea proposed legislation for large OTT platforms to agree commercial terms for network access with South Korean ISPs.