20 Mbps for Everybody, for $20 a Month, by 2020?

One should understandably be skeptical about much of what gets said by government officials, for the obvious reason that much of what gets said is for some political purpose, and is not necessarily reflected in real-world policy.

But there probably are reasons to believe that multiple pronouncements by government and non-governmental group officials will actually correspond to a high degree with actual supply of broadband services by private suppliers. First, the pronouncements.

The Secretary-General of the International Telecommunication Union, Dr Hamadoun Touré, is in favor of setting a United Nations goal of ensuring that everybody in the world can access broadband Internet access at speeds of 20 Mbps, selling for $20 a month (£13.25) by 2020.

More to the point, are the corollaries also true? If consumers can buy 20 Mbps access for $20 a month, will they also be able to buy 10 Mbps for $10 a month, or 5 Mbps for $5 a month, or 2.5 Mbps for $2.50 a month?

One way of estimating demand is to note that in many markets, once households reach income of about $10 a day ($300 a month), the possibility of those households falling back into poverty decrease dramatically. And financial stability is conducive to discretionary purchases. At $300 a month income, a household might reasonably expect to afford Internet access costing $9 a month.

The key is more a matter of economics than anything else. How fast will substantial numbers of users in the developing world reach monthly incomes of $100 a month? At that level of income, it is reasonable to expect users to pay $2.50 to $3 a month for broadband.

If one assumes that in 2005 the middle class population of China was about eight percent, by 2030 it will be as high as 72 percent. In India, where the percentage of middle class people in 2005 was perhaps in the low single digits, by 2030 some 41 percent of India’s people will be middle class, defined as households with annual disposal income between 200,000 rupees up to one million rupees ($3,606 to $18,031 in annual disposable income).

Over the last decade, there has been a 50 percent jump in the number of people in the “middle class in Latin America and the Caribbean, The World Bank reports. Roughly speaking, about 30 percent of people in the Latin American and Caribbean region were middle class in 2009, using a definition of income between $10 a day and $50 a day.

A report on the Latin American middle class  found that the middle class in the region grew to an estimated 152 million in 2009, compared to 103 million in 2003, an increase of 50 percent. Even if one assumes a slowing rate of growth, there comes a point where the ability to pay $2.50 to $3 for broadband is predictable.

Even more predictable is the ability of more households to buy access packages providing higher speeds.

The other important development is that ISPs are finding ways to slash costs. Between 2008 and 2009, 125 countries saw reductions in access prices Internet access prices 

, some by as much as 80 percent, the ITU says.  

Between 2009 and 2011, for example, prices for fixed broadband have dropped by 52.2 percent on average and mobile broadband prices by 22 percent, globally.

Affordable broadband programs are starting to emerge in countries such as Sri Lanka and India, with service providers offering connectivity solutions starting as low as US$2 per month.

At present the United Nations (UN) global digital development targets for internet access are focused on ensuring that “all countries should have a national broadband plan or strategy or include broadband in their Universal Access / Service Definitions” by 2015.

The existing goal also includes affordable broadband. By 2015, entry-level broadband services should be made affordable in developing countries, quantified as a monthly price that is less than five percent of average monthly income.

By 2015, 40 percent of households in developing countries should have Internet access.

By 2015, Internet user penetration should reach 60 percent worldwide, 50 percent in developing countries and 15 percent in the Least Developed Countries, the U.N. already says.

Europe’s Digital Agenda expects 100 percent of EU households to have access to service speeds of at least 30 Mbps by 2020, while the United Kingdom is aiming for 90 percent of people to have access to speeds of 25 Mbps  by 2015.

The point is that we have reasons to be quite optimistic about such goals.