Monday, October 15, 2018

Cost of Using Internet Access Drops, Globally

By 2025, entry-level (fixed network) broadband services should be made affordable in developing countries at less than two percent of monthly gross national income per person. That matters as the cost of using internet access services as a percentage of income is a key measure of affordability.

More importantly, the total number of active mobile broadband subscriptions is expected to reach 4.4 billion by end 2018, up from 3.3 billion, at the end 2015,  the International Telecommunications Union says. That matters since mobile internet access is the way most people in developing countries use internet access services.

This is a clear case of perceiving a “glass half empty, or half full.”

In January 2017, the Broadband Commission lowered the de-facto standard for Internet  affordability to two percent of average income, from the previous five percent levels, evidence of significant price declines.

Although the majority of the world’s population (52 percent or 3.7 billion) currently remain unconnected, 3.8 billion people or 49 percent of the global population will be online by the end of 2018.

In less developed countries, prices fell from 32.4 percent to 14.1 percent of GNI.

The point is that, when making cross-country comparisons, costs must be adjusted for purchasing power.

Around 1995, the cost of buying a U.S. business connection supporting a kilobit per second might have been US$1.50 to $1.75. In other words, a 56 kbps connection might have cost as much as $98 a month.

By about 2006, even consumer internet access costs had dropped to about two cents per kbps. So a 10 Mbps connection might then have cost the same as the 56 kbps connection of 1995. In 2017, U.S. 100 Mbps connections cost about the same as a 56 kbps connection of 1995.

As speed has grown and apps have evolved, consumers now use more data (megabytes), so the cost per consumed megabyte also has fallen, even as people use more data.

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While complaints about high prices never seem to stop, in developed markets as well as the United States, the percentage of disposable income spent on fixed network internet  access is about 1.7 percent of gross national income per person.

The glass is half full.

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