Pricey Broadband Stifles Uptake In Developing Nations

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Ovum has warned that the high cost of broadband in developing markets has put it out of reach for many

Brits should think twice before complaining about the cost of their broadband connection following new research that revealed the high cost of connectivity in developing markets.

Telecoms analyst Ovum studied the broadband prices in 19 emerging or developing markets such as South Africa, Colombia, Nigeria, Malaysia, the Philippines, India and Pakistan. It found that the high broadband prices in those markets is stifling local uptake, putting it out of reach for the majority of the population, compared to more developed nations such as the UK.

Ovum Findings

The Ovum study did however find that prices in most of these developing markets had fallen compared to 2010 levels, but concluded that “broadband continued to be beyond the reach of the vast majority of emerging market consumers. This lack of affordability is a major inhibitor to unlocking the growth potential in these markets”.

“Demand for broadband services in emerging markets continues to be stifled by high prices,” said Ovum senior analyst Richard Hurst. “In some countries, broadband pricing was double or triple the price of an equivalent service in a more developed market.

“In addition, lower GDP per capita in most emerging markets means that broadband is only available to the highest socioeconomic groups.”

Ovum quoted South Africa as having the most expensive broadband tariffs of the 19 countries in its sample. It found that entry-level services in South Africa cost as much as $1,443 (£888) per year, with the prices of high-end services up to $6,000 (£3,694) per year.

Nigeria’s broadband tariffs were also among the most pricey in Ovum’s sample, and it warned that because that country has a lower GDP per capita, it means that it is also some of the most unaffordable. Ovum found that lower end entry-level services cost as much as $1,211 (£745) per year in Nigeria.

“While prices remain high, we expect them to fall slightly in the short-term,” said Hurst. “Network operators and service providers will reduce their prices and introduce packages to improve affordability and stimulate data usage so they can attract more subscribers and drive revenue growth.”

Lack Of Competition

It will come as no surprise to some experts that South Africa is the country where it is the most expensive to get online. This could be because the South African market suffers from a lack of effective competition and is still mainly dominated by a single fixed-line incumbent (Telkom SA), although a second fixed-line provider has emerged in recent years (Neotel).

Things are slightly better on the mobile side, where Vodafone’s Vodacom unit and MTN Group, coupled with Cell C, dominate the mobile sector in that country.

Wireless Alternatives

Unfortunately many developing nations suffer from a problem that is now spreading to Europe and the UK, namely that of copper theft. This is where thieves strip out the valuable copper from telephone and even electric wires, in order to sell it to the black market.

This, coupled with the high installation costs of fixed-lines, has meant that many developing nations are looking at wireless (i.e. mobile) alternatives for broadband provision. This includes 4G technologies such as WiMAX, LTE, or older mobile standards such as HSPA.

Charities such as Computer Aid International are doing their bit to try and get developing nations hooked up to the World Wide Web. In October last year, for example, it announced that its solar powered Internet cafe, built in a self-contained shipping container, had gone live in Keyna.

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Author: Tom Jowitt
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