Why
Are 4 Billion People without the Internet?
Three obstacles to extending the reach of the Web — and thereby
reducing poverty in developing countries — can be fixed.
One of
the most effective ways to reduce poverty in developing countries is to extend
the reach of the Internet. Over the last 20 years, the online world has created
millions of jobs and billions of dollars of economic activity. Entire new
sectors have emerged, such as e-commerce, social media, and data analytics. In developing
countries, the Internet is even more powerful than it is elsewhere. It can
connect people who have known only subsistence to the modern economy, and
provide them with opportunities for social and economic advancement. Yet most
people in developing countries, some 56 percent of the world’s population,
still do not use the Internet.
Most people in developing countries, some 56
percent of the world’s population, still do not use the Internet.
Why has progress been so slow? There is a
temptation for policy makers to blame protectionism, especially when the
telecommunications sector is involved. From this perspective, some decision
makers are constraining Internet development because they fear it will invite
foreign competitors, who will compete unfairly with local Internet service
providers or telecom operators. These are important issues, but they do not
sufficiently explain why so many people aren’t online.
We dug deeper to understand the factors that
keep more than 4 billion people unconnected. Using the Internet is daunting for
many people in developing countries for three main reasons: Access is too
expensive; the Internet lacks content that is relevant to them; and the
Internet is too unfamiliar. The consequences are that many people can’t easily connect,
they give up trying too soon, or they don’t attempt to connect in the first
place because they cannot appreciate how it might help them.
The first barrier, affordability, is the most
important — and may offer the most significant opportunity for change. Assuming
that Internet usage means consuming 500 megabytes of data per month at current
prices, only 17 percent of people in South Asia and 11 percent of people in
sub-Saharan Africa can afford to use the Internet. (This amount,
although considered reasonable in developing countries, is still less than
an average mobile data user consumes in developed countries.) To make the
Internet affordable to everybody, global prices would need to fall by an
average of 90 percent — which is implausible with current infrastructure costs.
At today’s prices, the margins on data are negative for many connectivity
suppliers in developing countries.
To remove the affordability barrier, we need
to make access cheaper and more efficient. This can be accomplished by modernizing
the data infrastructure — specifically, by replacing 2G, which was designed for
voice and text but not for data, with more up-to-date 4G and 5G broadband
systems. The most cost-effective way to upgrade is to repurpose frequencies
currently occupied by 2G, which would automatically move existing subscribers
to speedier access.
Modernization
also means building more data centers and Internet exchange points (IXPs) in
developing countries. This would provide the critical infrastructure that knits
together national and international networks, and that makes connections faster
and cheaper. At present, the more populous developing world has just a fraction
of the international infrastructure of the developed north. In North America,
for example, each IXP serves just 4.1 million people. By contrast, in South
Asia, each IXP must handle 215 million. If the number of IXPs in developing
countries rose, access to information, employment opportunities, and economic
growth would also rise.
Which brings us to the second barrier:
relevance. We know that when the price of data falls, the market for
Internet-based content and entertainment in developing countries grows quickly.
Many “work-around” enterprises already exist, helping people sidestep the
constraints of streaming on mobile bandwidth and retrieve information at a
lower cost. In Nigeria, for example, Kiora, a content developer and
distributor, allows a user to download a full-length film in a few
minutes by connecting to a hot spot. He or she then has 48 hours to watch the
video.
People in developing countries are more
likely to spend their scarce income going online if they see it improving their
lives through education and commerce. Some people in developing countries are
willing to spend money on online education because the colleges and schools
near them are of poor quality or unreliable. Additionally, they find it cheaper
to obtain the latest edition of digitized textbooks through shared terminals
than to buy hard copies.
E-government services can also bring people
online, especially those living in remote areas. Travel to government offices
can be difficult and expensive, and face-to-face interactions often expose
individuals to corruption. The Indian government’s Common Services Centres
Scheme currently reaches 199,000 villages, with the ultimate aim of reaching
2.5 million rural locations. The centers give people access to official
services such as identity documents and passports; business services, including
mobile plan top-ups and financial products; education services; weather
information; and soil information.
To be
sure, many people in developing countries either have
not heard of the Internet or associate it with
expensive computers, smartphones, and telephone contracts. This is the third
barrier. One way to remove this obstacle is through a consultative approach,
such as meeting in local communities with potential Internet users, and
offering them the training and validation they need to feel less wary about
going online. In Sri Lanka, for example, local entrepreneurs run training
centers that educate people in Internet use and let them experience the
benefits of online communication.
Which groups can put these actions in place?
All the stakeholders in the digital ecosystem can play a part: governments,
telecom operators, Internet service providers, development institutions, and
businesses.
• Governments can attract more people to
the Internet by increasing the availability of e-government services.
• Telecom operators and Internet service
providers can help by adjusting their contracts to simplify the value
proposition so that consumers pay by the experience, such as for each app they
use. This is cheaper and easier to understand than the current model, in which
people living on just a few dollars a day have to commit to a long-term
contract before knowing what they will find online, making Internet access a
financial risk.
• Development institutions can provide
support for the costly international infrastructure that leads to faster and
cheaper access. For example, the World Bank contributed to the funding of the
Eastern Africa Submarine Cable System (EASSy), which became operational in
July 2010 and drastically cut wholesale and retail Internet prices.
• Consumer brands can accentuate their
access to “the fortune at the bottom of the pyramid” by subsidizing Internet
access. In India, Hindustan Unilever operates a free radio-on-demand service to
remote villages that lie beyond traditional media coverage. The company now
provides close to 43 million people with free news and entertainment, while
advertising its brands.
The benefits are clear for each of these
stakeholders. Getting the world online can reduce world poverty by 7 percent by
expanding world output, creating millions of jobs, and giving today’s poor the
chance to advance socially and economically. People will go online as much for
edification as gratification. It will alter the character of the Internet,
creating billions of Web pages in languages that are today marginalized. And it
will lay the groundwork for a global society in which economic opportunities
can expand more freely, widely, and productively than they do today.
by Bahjat El-Darwiche, Mathias Herzog, and Rawia Abdel Samad
http://www.strategy-business.com/article/Why-Are-4-Billion-People-without-the-Internet?gko=cd483&utm_source=itw&utm_medium=20160607&utm_campaign=resp
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