A new study by Alliance for Affordable Internet (A4AI) and Web Foundation indicate that billions of people around the world are offline because smart mobile devices, which can give them access, are too expensive for them to afford.
The researchers noted that mobile devices, which were once seen as luxuries items, are now the essential first step to getting online, but for billions of people in developing country, those devices are still not affordable.
The study focused on the affordability of mobile devices in 70 low and middle-income countries, including Ghana, where mobile data penetration is about 89%, largely due to multi-simming, as a greater majority of smart mobile devices and SIM cards are in the hands of the middle to upper class urban and peri-urban dwellers.
As part of the study, research collected the cheapest phones in the 70 countries and weighed their prices against the incomes of citizens, and it showed that out of the about five billion combined population of the 70 country, 2.5 billion of them would have to spend a quarter or more of their monthly income to buy the cheapest smart phone.
In Sierra Leone, the report noted, the average person needs to save six months’ salary to buy the cheapest available smartphone. In India, where almost 18% of the global population now lives, the price of the cheapest smartphone from leading operator Jio was 206% of average monthly income. This is striking because India is a country that has some of the lowest priced internet data in the world.
According to the study report, “this is a problem” because mobile phones are the cheapest devices available to access the internet today and yet billion of people cannot afford them.
“That so many people are unable to afford the upfront cost of a handset is a drag on progress towards universal internet access and a more inclusive digital society, a goal that unites governments, technology companies, civil society organizations, and the United Nations,” it stated.
It said the mobile phone has become a lifeline, and no more a luxury, particularly in this Covid-19 crisis, which has made the goal of internet access for everyone more urgent than ever.
“The internet — and the devices that let people use it — are not luxuries. They are lifelines. Now being used for everything from remote learning and working to contact tracing and telehealth, internet connectivity has never been more important,” it emphasized.
Most vulnerable
According to the report, in spite of the urgent need for mobile phones by all, almost half of the world’s population remains offline, adding that those without internet access are disproportionately women, low income earners and rural dwellers who are most likely to be affected most by the impacts of Covid-19.
“In order to avoid a world where digital inequalities drive further inequalities in health, wealth, and education, we need action to address barriers to connectivity,” it said.
Apart from India and Sierra-Leone, where the cost if very high, some country showed signs of affordability. Botswana topped the survey for most-affordable devices, with a low-cost smartphone priced at just 4% of average monthly income, with Jamaica (5%), Mexico (5.7%) and Costa Rica (6%) following closely behind.
“We also see a wide disparity among people living in regions of the world. In Africa, devices were least affordable at 62.8% of average monthly income compared with 11.7% in the Americas and 16.2% in Asia Pacific (excluding India),” it said.
The report said the worry is that, the Covid-19 crisis could make phones less affordable, owing to two key factors – as other studies predict a huge drop in smartphone shipment and increased poverty as the full effect of COVID-19 take a toll on jobs around the world.
Government intervention
The researchers therefore propose government intervention to ensure lower handset costs to ensure the march towards universal access to the internet is not derailed.
They argued that internet access is critical, not only for individuals’ wellbeing, but also for the health of a country’s economy, saying that with the economic disruption of Covid-19, digital growth will be particularly important, so governments needs to incentives the populace or prioritize policies that ensure as many people as possible can access the internet.
“Device affordability is driven by a range of factors, such as production costs and market competition, consumer preferences and the average income in a country. But governments and multilateral bodies have a range of tools at their disposal to make mobile devices more affordable for consumers,” they said.
A4AI and Web Foundation therefore propose the following that governments can do to ensure affordable internet in spite of the effect of Covid-19:
- Reduce taxes on low-cost devices
Policymakers can make quick progress on device affordability by reducing taxes that apply to low-cost devices. When this saving is passed down to the consumer, this brings down prices and, if applied only to devices below a certain price, can encourage manufacturers and retailers to drop prices to qualify for the tax exemption and encourage greater competition in the low-cost device market.
- Use universal Service and Access Funds (USAFs) to subsidize devices
The poorest households face the largest affordability barrier. USAFs exist to make telecommunications services available to the widest number of people possible, particularly marginalized and underserved communities. This should include addressing the device affordability barrier which few USAFs currently cover. These funds can be used to make devices more affordable, including with subsidy programs for those least able to buy devices.
- Support projects to help people spread the cost of devices
For many, a major barrier to buying a device is the large upfront cost. While some countries have well-established credit systems letting consumers spread the cost of a handset over monthly payments, for many people such facilities are not available, particularly in lower-income countries, the places where people are least likely to have large amounts of cash on hand for such purchases. Where credit facilities are available, they may not be available to those living on lower incomes.
One important way to make devices more affordable for these users is to develop and scale innovative financing models to reduce the upfront capital people need. Several examples already exist, many of them supported at a pilot-level by funders like development agencies. The next step is to move this from experiments to scale successful projects. The public and private sectors and civil society should work together in partnership to support projects like this to make more financing options available for consumers.
Policy action to lower the cost of devices in these countries — many of which have low levels of internet penetration — can help make the internet more accessible for billions more people.
