2025 Broadband Advocacy Target 2
MAKE BROADBAND AFFORDABLE
By 2025, entry-level broadband services should be made affordable in low- and middle-income countries at less than 2% of monthly Gross National Income (GNI) per capita
Making broadband affordable is a critical step in achieving meaningful universal connectivity. The Broadband Commission’s affordability target was originally set to “less than 5% of average monthly income,” however in 2018, the Commission updated this target to specify that prices for entry-level broadband services should be below 2% of monthly GNI per capita in developing countries* by 2025.
*As of 2022, in LMICs (low- and middle-income countries).
According to the ITU’s 2022 Facts and Figures report, where data are available for both 2021 and 2022, more economies met the two percent affordability target for all five baskets of ICT services in 2022 than did so in 2021. Thus, 103 economies met the target with respect to the data-only mobile broadband basket in 2022 and 71 economies met the target with the fixed broadband basket (in each case 7 more than in 2021).
After a brief uptick in 2021, income-adjusted cost of fixed and mobile Internet services resumed its downward trend in 2022. An ITU report carried out in partnership with the Alliance for Affordable Internet (A4AI) last year found that after years of improvement, affordability of broadband services had worsened in 2021. This is largely due to a sharp drop in incomes (i.e. per capita income) as a result of COVID-19 rather than an increase in service charges, which continued to drop. Just 96 countries met the target for mobile broadband, down from 103 in 2020 while 64 countries met the target for fixed broadband, down two from 2020.
The report highlights that demand for broadband services grew despite becoming less affordable, illustrating that Internet access is not a luxury but a necessity. It also found that in developed countries, advertised speeds doubled for fixed broadband, suggesting operators catered to the demand for better quality as result of working from home.
Data consumption trends and COVID-19 have impacted the measurement of Target 2. ITU price baskets are used to track this target based on 2 GB of data per month for mobile and 5 GB for fixed. Yet data from Ericsson show that average mobile data usage per smartphone has been growing steadily reaching 11 GB per user in 2021 and forecast to more than triple by 2027, driven by 5G technologies. Global figures on fixed broadband data consumption is less complete. In the United States fixed broadband was over 500 GB per subscription in the last quarter of 2021. In Bahrain fixed broadband traffic per subscriber was 183 GB in 2019. In Malaysia fixed broadband traffic was 281 GB per subscriber per month in 2021 compared to 21 per mobile broadband subscriber. These figures suggest that both mobile and fixed broadband actual usage is far higher than the data allowances used in the ITU basket.
Data traffic has grown significantly due to COVID-19 and widespread use of videoconferencing. One hour of videoconferencing alone uses between 225 MB -1.6 GB depending on the quality and number of participants.
A recent study estimates that the amount required for foundational online activities (i.e. online public services, health information, shopping, learning and news) to be 660 MB per user per month. If common recreational online activities such as social media use are included it adds an extra 5.2 GB for a total of approximately 6 GB per month.
The policy debate on whether the current structure of cost recovery is optimal and whether OTT platforms should contribute to these costs is gathering pace. The key issue is that telecommunications operators have invested to ensure that their networks can support the exponential growth in OTT traffic but are, to date, only able to recover network costs from end users despite the two-sided nature of infrastructure markets. Frontier Economics has estimated that in the EU the weighted average incremental cost of carrying OTT traffic is EUR 11-29 per subscriber on fixed networks and EUR 20-33 per subscriber on mobile networks.
In May 2022 Axon Partners published a report commissioned by the European Telecommunications Network Operators (ETNO) that examined the benefits of contributions by leading OTT players to the cost of building telecommunications networks in the European Union. The report concludes that annual contributions by leading OTTs could increase the EU’s GDP by as much as EUR 72 billion by 2025, with a parallel increase in employment of up to 840 000 jobs annually; positive effects on both user experience and innovation levels; and a steep reduction of energy consumption and carbon emission levels. The report also recommends new regulation to “define a clear obligation for the OTTs concerned (i.e. only the largest among them) to negotiate the conclusion of a direct agreement with ISPs/telcos upon request, and to accept to pay a fair and proportionate contribution to network usage costs, and other conditions in such an agreement” and regulation that sets out procedures and substantive principles for the conclusion of these agreements, with a relevant supervisory and enforcement body, and the establishment of an effective and compulsory dispute resolution mechanism¹, similar to the recent innovation in the Australian News Media and Digital Platforms Mandatory Bargaining Code. Under this Code, the Australian Communications and Media Authority is empowered to appoint mediators and, in some cases, arbitrators for the resolution of disputes if news media and digital platforms cannot reach an agreement.
To date OTT platforms maintain their opposition to contributions and the debate in Europe continues. The European Commission also supports the proposition that platforms make “a fair and proportionate contribution to the costs of public goods, services and infrastructures”. The outcome in the EU will set an important precedent for the rest of the world.
Finally, while the target looks at service charge affordability, the price of a broadband-enabled device is often a bigger barrier, especially for non-Internet users. A report from A4AI found that that the average world price for a smartphone in 2020 was around one-quarter of monthly income with large gaps among geographical and income groups. In South Asia the figure rises to 40 per cent and in the LDCs it is 53 per cent. Among its recommendations for lowering device prices, A4AI calls for using USF funding to subsidize the cost highlighting the examples of Malaysia and Costa Rica. GSMA published a report with an overview of business models, innovations and policies that are helping to improve the affordability of Internet-enabled handsets in LMICs, particularly for underserved populations. The Broadband Commission also launched a working group to look into device/handset affordability in more detail.
- To ensure that commercial agreements negotiated between telecommunications operators and the leading OTTs are subject to basic procedural guarantees (e.g. good faith and a prescribed timeline for the conclusion of an agreement