Broadband prices have fallen across the board since 2008, but remain higher in the developing world. (ITU)
You might not guess it from your Internet bill, but the United States has some of the cheapest broadband in the world -- right up there with Kazakhstan, India and Bangladesh.
That’s one of many surprising, and occasionally puzzling, revelations in a new report from the International Telecommunication Union, which tracks the use, cost and penetration of information networks around the world. Many of the overarching trends the ITU identifies are likely things you’ve heard before: Internet use is growing, particularly on phones; growth has plateaued a bit in developed countries; a huge gap remains between the most and least wired nations. That gap has, more or less, Western and wealthy Asian countries on the more wired end of the spectrum, with African and poorer Asian countries on the other.
But there are some surprises -- like where Internet access is most expensive. While a number of factors play into the cost of getting online, geography seems to matter quite a bit, at least on the extreme ends of the spectrum. Island nations have more expensive Internet, perhaps because of the unusual cost of running the infrastructure into the country. These are the countries where a monthly fixed broadband subscription is most expensive, as measured by its normalized (i.e., at purchasing power parity) cost. The first number is the cost of Internet access, relative to the average purchasing power in that country. The second number is the absolute cost.
1. Eritrea, 1596.50 ($1,951.67 USD)
2. Cuba, no cost PPP ($1,760.45)
3. Democratic Republic of the Congo, 650.91 ($400.22)
4. Kiribati, 615.46 ($428.28)
5. Solomon Islands, 502.61 ($259.17)
6. Papua New Guinea, 271.10 ($185.58)
7. Timor-Leste, 175.44 ($99.00)
8. Sao Tome and Principe, 163.14 ($116.77)
9. Vanuatu, 158.75 ($105.17)
10. Madagascar, 132.72 ($63.70)
Notice that eight of the top 10 are islands -- more on that later. Now here are the countries where a monthly subscription is cheapest in dollar terms. Most of these are poorer countries, with the obvious and significant exception of the U.S.:
1. Sri Lanka, 8.94 ($4.51)
2. Macao China, 9.30 ($7.86)
3. Maldives, 11.46 ($8.22)
4. Bangladesh, 11.79 ($4.65)
5. India, 14.37 ($6.01)
6. United States, 14.95 ($14.95)
7. Kazakhstan, 15.44 ($13.16)
8. Bosnia and Herzegovina, 15.68 ($8.32)
9. Uruguay, 16.33 ($14.91)
10. Ukraine, 15.10 ($7.53)
Of course, the raw cost of an item is less telling than the affordability -- that is, the cost relative to the typical income in that country, which the report calculates as a percentage of the gross national income per capita. These are the places with the most affordable Internet in the world by that metric. Macao, a city-sized Special Administrative Region in China, is the cheapest, with Internet costing only 0.2 percent of the average resident's annual income. You can see that richer countries tend to do well here, perhaps because the state buys lots of infrastructure on the front end that makes it more affordable for individual buyers.
1. Macao China -- .2% of GNI per capita
2. Kuwait -- .4%
3. United States -- .4%
4. Switzerland -- .6%
5. Luxembourg -- .6%
6. Andorra -- .6%
7. United Kingdom -- .7%
8. Japan -- .7%
9. Norway -- .7%
10. Hong Kong -- .7%
And these are the countries where a monthly subscription is most expensive, by percentage of income. Cuba is by far the most expensive; Internet access there is almost four times the average national income:
1. Cuba -- 386.9% of GNI per capita
2. Solomon Islands -- 280.2%
3. Afghanistan -- 221.3%
4. Niger -- 210.2%
5. Madagascar -- 177.8%
6. Malawi -- 169.7%
7. Papua New Guinea -- 150.5%
8. Mozambique -- 149.3%
9. Sao Tome & Principe -- 103.0%
10. Togo -- 101.2%
What’s going on here? On the most fundamental level, it’s often an issue of supply, demand and competition. Macao, which sits amid the web of underseas fiber-optic cables that connect China, Japan, Singapore and the Phillipines, has vastly more Internet infrastructure than the Solomon Islands. It also has lots of competition among Internet providers, simply because there are enough people to support it. The Solomon Islands, on the other hand, are just linking up to the cable that connects Sydney and Guam. There seems to be a similar situation in other parts of the developing world, where more than half the population lives in rural areas -- making them costlier to wire to the Internet, in both absolute and per-customer terms. That keeps prices high and adoption low.
The underseas telecom cables that (don't quite) connect the Solomon Islands to the rest of the world. (TeleGeography/submarinecablemap.com)
There are a vast array of other factors at work, of course. Things like literacy, education and poverty help determine how many people have the skills and disposable income to support a local Internet industry. Industry liberalization and privatization also tend to drive costs down, as do national policies that support a strong infrastructure or promote Internet literacy. Bahrain, for instance, saw a big year-over-year jump in its cellphone penetration rate after passing a policy that let users keep their number when they switched providers. Costa Rica’s mobile penetration more than doubled after 2008, when the country passed a law ending a long-standing monopoly there.
Meanwhile, Cuba’s Internet remains so wildly expensive because it’s only available to the average person at 118 government-run cafes, where computers cost $4.50 an hour to use. By comparison, CNN reported in August, the average state employee makes about $20 a month.
The good news is that the Internet has gotten dramatically more affordable worldwide over the past five years -- down from 115.1 percent of GNI per capita in 2008 to just 22.1 percent in 2012. That, along with infrastructure expansion and tech-friendly policy, has allowed 40 percent of the world’s population to get online.
Of course, that still leaves the other 60 percent -- to say nothing of the 39 “least connected countries,” or LLCs, where Internet penetration and participation is particularly low. Fortunately, current trends project those countries to adapt both fixed and mobile broadband pretty rapidly, even as growth in more developed countries plateaus. In Africa, for instance, Internet penetration has doubled in the past four years. That's pretty good.
