Point Topic: Broadband Affordability Is the Next Challenge

LONDON – Over the last decade, broadband has shifted from a luxury to a necessity; in some countries, it is now considered a human right. But however necessary it is, broadband remains unaffordable in many countries. This disparity in broadband affordability around the world will challenge the industry as it looks to increase penetration, according to the latest data from analyst firm Point Topic.

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

Analyzing prices from mid-2011, Point Topic compared the cost of a 12-month subscription to the cheapest fixed broadband service across 64 countries. Converting prices to purchasing power parity (PPP) equivalents and then combining the results with gross national income per capita allows direct comparison among the markets.

“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,” says Johnson.

Consumers face a number of barriers to entry, including education, literacy, and access to equipment, but increasingly, these barriers are minimal compared with the cost of a subscription. Johnson says, “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.

“How this is achieved is the big question,” Johnson adds. “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 100 percent of their population.”