Affordability is the next challenge for broadband

The current affordability of broadband around the world highlights a stark contrast in broadband prices, which will challenge the industry as it looks to increase global penetration, according to research by Point Topic.

“Broadband prices can be over a thousand times higher in real terms in the poorer countries,” said Oliver Johnson, CEO at Point Topic.

Analysing tariff data from the middle of 2011, Point Topic has compared the cost of 12 months of subscription to the cheapest, and usually slowest, fixed broadband service. Converting prices to purchasing power parity (PPP) equivalents for over 2,000 tariffs from around the world and then combining the results with the gross national income per capita (GNI/capita) again at PPP rates for the relevant country allows direct comparison between the markets. The analysis is based on data from 64 countries.

“The analysis allows us to see how much of an average yearly income in each country would be needed to pay a year’s subscription for the cheapest option available. The results gap between rich and poor, the haves and have nots in broadband terms is revealing,” said Johnson.

According to Point Topic, broadband has been shifting from a luxury to a necessity and in some markets a human right over the last decade. For consumers there have been a number of barriers to entry including education, literacy, access to equipment and so on but increasingly these are minimal compared to the cost of a subscription.

“It’s in everyone’s interest that broadband penetration keeps increasing globally. Governments gain revenue, businesses gain competitiveness and individuals get access to a wealth of benefits online. At a time when economic growth is a major challenge broadband is a great mechanism to add a percentage point or two to GDP,” said Johnson.

He concluded: “How this is achieved is the big question. Mobile and satellite are great and offer access quickly and easily where other options cannot. However, data caps and high overage costs mean they have their limits but given the high cost of fixed infrastructure deployment, particularly outside urban areas, they are going to be part of the mix. There really is no option but central subsidy for many markets when it comes to broadband and even the richest nations are going to have to dig deep to allow access to broadband for a hundred percent of their population.”