Saturday, April 13Inside Business Africa

Prices of telecoms services fall amid slow penetration

While prices of telecommunication services continue to decline, but they are to translate into rapidly increasing Internet penetration rates.

As contained in the “Measuring Digital Development: ICT Price Trends 2019” report of the International Telecommunications Union (ITU), the global analysis of prices for mobile-voice, mobile-data and fixed-broadband services suggests that affordability is not the only barrier to Internet uptake.

ITU observed that on average, prices for mobile-voice, mobile-data and fixed-broadband services are decreasing steadily around the world and in some countries even dramatically.

The reduction, according to the United Nations (UN) arm in charge of global telecommunications, price relative to income is even more dramatic, suggesting that, globally, telecommunication and information and communication technology services are becoming more affordable.

It, however, noted that both trends do not translate into rapidly increasing Internet penetration rates which suggests that there are other barriers to Internet use.

ITU Secretary-General, Houlin Zhao, noted that 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.

“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,” Zhao stated.

The latest statistics from ITU confirm that affordability may not be the only barrier to Internet uptake and that other 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.

According to Director, ITU Telecommunication Development Bureau, Doreen Bogdan-Martin, the  COVID-19 crisis has clearly shown us that nobody is safe until we are all safe.

“By the same token, we will not be able to use the full potential of digital technologies until we are all connected. To connect all, we need to address all factors that may prevent meaningful connectivity, “he stated.

Some of the key findings include that an entry-level mobile-voice basket remains broadly affordable in most countries. For instance, in 70 countries, a low-usage mobile-voice plan was available for less than one per cent of gross national income (GNI) per capita, and in a further 37 countries it stood below 2 per cent. 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.

The report also noted that the expansion of bundled services has further reduced prices, as combined data-and-voice baskets are generally less expensive than the sum of the two separate baskets in most markets.

The ICT Index also informed that prices have decreased from 2013 to 2019 relative to GNI per capita.

It pointed out that the global average price of a mobile-data basket of 1.5 GB shrank from 8.4 per cent of GNI per capita in 2013 to 3.2 per cent in 2019, at a compound yearly growth rate of almost -15 per cent. When expressed in USD, the global average price of a mobile-data basket of at least 1.5 GB dropped by 7 per cent on average annually between 2013 and 2019.

According to it, good progress has been made towards the Broadband Commission for Sustainable Development’s target of achieving affordable broadband costing 2-5 per cent of GNI per capita by 2025, but still more remains to be done. There are still nine developing countries and 31 LDCs that have yet to reach the 2 per cent target by 2025.

ITU submitted that Fixed-broadband packages remain generally more expensive than mobile-data packages (although data allowances are not always directly comparable). Over the past four years, the affordability of fixed broadband has not changed substantially, but advertised download speeds continue to increase.

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