How Much Lower Must Retail Internet Access Costs Drop to Reach Everyone?

How much more must Internet access costs drop before the cost of a subscription is not a major barrier to Internet use by most people across South Asia and Southeast Asia?

About an order or two of magnitude.

In 51 countries surveyed by the Alliance for Affordable Internet, there are approximately two billion people earning less than $2 a day ($60 per month), according to World Bank data.

In such countries, Internet users now have to spend anywhere between 5.5 percent and 114.5 percent of their average monthly income in order to access an entry-level Internet access package, according to the Alliance for Affordable Internet.

The problems arguably are greatest for people living in rural areas, for obvious reasons. Incomes tend to be lower in rural areas, while infrastructure costs are higher.

Success in supplying Internet access has five common elements, including government policies that encourage private investment.

Licensing frameworks that encourage competition also help.

Efficient spectrum allocation also is important.

Laws and partnerships designed to reduce infrastructure costs also matter.

Providing access at community centers, schools, libraries and other anchor institutions is especially important in rural areas.

According to the International Telecoms Union, at the end of 2013, the average price for an entry-level fixed broadband connection in the developing world represented more than a quarter of an average citizen’s monthly income.

That is far higher than the ITU target of costs no more than five percent of monthly income.

Prices for entry-level mobile broadband package--arguably the more important metric--ranged in 2013 between eight percent and 12 percent of monthly income.

Citizens in developed nations pay on average one percent to two percent of their monthly income to connect.

In the 51 countries analyzed by the Alliance, the cost of fixed broadband remains about 40 percent of an average citizen’s monthly income, while the price for an entry-level mobile broadband package hovers at just above 10 percent of monthly incomes.

The good news is that mobile prices are a quarter of the fixed network price, and are the likely way most people are going to get Internet access.

Costs will come down. The only issue is how fast, and which Internet service providers will do so. Virtually all the progress is going to come from spectrum-based suppliers.