Lack of competition in broadband markets keeping millions offline

A research published by the Alliance for Affordable Internet (A4AI), an initiative of the Web Foundation, shows that consolidated broadband markets are keeping prices high and putting life-changing internet access out of reach for hundreds of millions of people.

Although broadband markets had historically become more competitive, helping to bring down the cost of data, the report copied to the Ghana News Agency, suggests this trend is now stalling, with some countries backsliding and markets becoming more consolidated.

It said people living in countries with consolidated broadband markets pay $3.42 more per GB of mobile data than those in similar countries with competitive markets, according to the 2019 Affordability Report sponsored by Sida and Google.

This premium is unaffordable for many people, particularly in low-income countries, keeping them offline. When people have no option to switch providers, they are likely to pay inflated prices for mobile data.

The report estimates that 1GB data in a monopoly mobile market could be as much as $7.33 more expensive than if it were a two-operator market.

This means that across sub-Saharan Africa, people living in markets with no competition could be paying an additional 5.83 per cent of their monthly income for 1GB, on average.

The report shows that in Africa only 24 per cent of the population is online while 70 per cent and 47 per cent of the population are online in the Americas and Asia, respectively.

It said data is least affordable in Africa with a 1GB data costing 7.1 per cent of average monthly income making broadband prohibitively high compared to 2.7 per cent and 1.9 per cent for the same data per month in the Americas and Asia, correspondingly.

It noted that with 260 million people living in areas dominated by just one major mobile network operator, the lack of choice had a huge impact on internet affordability and access.

It added that around 900 million people currently live in countries where the cost of internet access is kept high by consolidated markets.

According to the report, if governments and companies take steps to increase market competition, they can dramatically boost the number of people able to access the internet.

This report analyses market competition as the number of service providers, their market share and competitive behaviour, and additional external factors, such as regulatory environment.

Sonia Jorge, Executive Director at Alliance for Affordable Internet, said: “Internet access gives people the tools to earn a living and start a business. It offers them ways to build skills and achieve their ambitions.

And it provides them access to information to support their families and be active citizens in their communities. The billions of people still unconnected are missing these opportunities and so are societies where digital exclusion remains the norm.

Competitive broadband markets provide the foundation needed to make universal access a reality. Yet, governments must also play their role by pursuing public access policy and investments that build healthy, competitive markets that drive down the cost to connect.”

While internet access is considered a basic good by many, almost half of the world’s population remains unable to connect.

The primary barrier to internet access is cost. In low and middle-income countries, 1GB data costs 4.7 per cent of average income — more than double the UN threshold for internet affordability. Across Africa, this is making access unaffordable for millions.

Women, people on low-incomes, and those living in remote and rural areas are disproportionately unable to access the internet — a digital divide that threatens to mirror existing inequalities and further exclude these communities.

In the report, A4AI calls on governments to focus their policies and regulations on building healthy broadband markets that improve competition, bring down prices and expand internet access.

It supports the adopting of policy and regulation that support market competition, including fair rules for market entry and incentives to encourage new competitors.

Again, it calls for costs for new operators to be brought to compete by supporting affordable access to wholesale internet data, so that competitors are not locked out by high capital barriers to entry.

It urges governments to invest in public internet access, such as free public WiFi and tele-centers, and support community networks to expand internet coverage to those not served by commercial markets and provide consumers with more choices to get online.

The A4AI warns governments that a failure to build and sustain competitive markets will push up broadband prices and undermine efforts to get everyone online thereby preventing millions of people from accessing the internet’s economic, social and creative opportunities.

Source: GNA

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