Con­nec­tiv­ity for all

Financial Mirror (Cyprus) - - FRONT PAGE -

Over the last decade, the num­ber of new In­ter­net users tripled. But, though a large majority of the world’s pop­u­la­tion re­mains off­line, the pace of ex­pan­sion has slowed sharply in re­cent years. Is the In­ter­net revo­lu­tion los­ing steam?

From 2005 to 2008, the num­ber of In­ter­net users in­creased at a com­pound an­nual rate of 15.1%, bring­ing the num­ber of peo­ple on­line to some 2.7 bil­lion. But, ac­cord­ing to a new re­port by the McKin­sey Global In­sti­tute, the growth rate fell to 10.4% in 2010-2013. Given the enor­mous eco­nomic ben­e­fits of con­nec­tiv­ity, find­ing ways to pro­vide In­ter­net ac­cess to the world’s re­main­ing four bil­lion peo­ple should be a high pri­or­ity.

Of course, that is eas­ier said than done. Around three-quarters of the un­con­nected – 3.4 bil­lion peo­ple – live in just 20 coun­tries. In 2012, about 64% lived in ru­ral ar­eas, com­pared with only 24% of In­ter­net users, while about half live be­low their coun­try’s poverty line and me­dian in­come. Some 18% are older than 54, com­pared with about 7% of the on­line pop­u­la­tion, and roughly 28% are il­lit­er­ate, whereas the lit­er­acy rate for In­ter­net users is close to 100%. Fi­nally, women com­prise 52% of the off­line pop­u­la­tion and only 42% of the on­line pop­u­la­tion.

Th­ese groups face par­tic­u­larly high bar­ri­ers to In­ter­net con­nec­tiv­ity, be­gin­ning with in­ad­e­quate in­fra­struc­ture, in­clud­ing poor mo­bile In­ter­net cov­er­age or net­work ac­cess and un­re­li­able elec­tric­ity sup­ply. In­deed, 1.1-2.8 bil­lion peo­ple can­not get on­line via a mo­bile net­work, be­cause their area lacks suf­fi­cient cov­er­age.

Another bar­rier is af­ford­abil­ity: In­ter­net ac­cess is sim­ply too costly for many low-in­come peo­ple. Beyond the need to ad­dress in­suf­fi­cient com­pe­ti­tion, in­ad­e­quate reg­u­la­tion, and high taxes on In­ter­net-en­abled de­vices and ser­vice plans, there is the fun­da­men­tal chal­lenge of sup­ply­ing cost-ef­fec­tive ac­cess to the most re­mote re­gions. In ten coun­tries, largely in Africa and the Asia-Pa­cific re­gion, fixed broad­band prices ex­ceed per capita GDP.

The third ma­jor bar­rier to In­ter­net adop­tion is user ca­pa­bil­ity. The high level of il­lit­er­acy among those who re­main off­line of­ten im­plies an in­abil­ity not only to read and write, but also to use dig­i­tal tech­nol­ogy. An es­ti­mated 43% of In­dia’s un­con­nected cit­i­zens are il­lit­er­ate.

With­out tech­no­log­i­cal so­lu­tions, such as user in­ter­faces that fea­ture text-to-speech and voice-recog­ni­tion ca­pa­bil­i­ties, peo­ple who have not at­tained ba­sic lan­guage pro­fi­ciency will strug­gle to en­gage with In­ter­net con­tent. The lack of rel­e­vant lo­cal-lan­guage con­tent may also limit use.

Mak­ing mat­ters worse, mis­per­cep­tions of the In­ter­net – for ex­am­ple, that it is a se­cu­rity risk or solely for the wealthy – mean that many peo­ple will re­main re­luc­tant to use it, even if af­ford­able ac­cess be­comes avail­able. In many emerg­ing economies, a lack of trust in the sys­tem has fu­eled re­sis­tance to do­ing business on­line.

The fi­nal bar­rier to In­ter­net adop­tion is a lack of in­cen­tives. As re­search by the Ox­ford In­ter­net In­sti­tute on broad­band in East Africa has shown, many poor peo­ple in ru­ral ar­eas may know lit­tle, if any­thing, about the In­ter­net, or may not be of­fered it. Given that tai­lor­ing con­tent to such po­ten­tial cus­tomers is ex­pen­sive, In­ter­net ser­vice providers are un­likely to do so with­out clear in­cen­tives like gov­ern­ment support or high profit mar­gins. Ad­ver­tis­ers are not in­ter­ested in reach­ing such mar­kets.

McKin­sey has de­vel­oped a new In­ter­net Bar­ri­ers In­dex that ranks 25 de­vel­oped and de­vel­op­ing coun­tries on their per­for­mance in the face of th­ese chal­lenges. The top five coun­tries are the United States, Ger­many, South Korea, Ja­pan, and Spain. The bot­tom five are Nige­ria, Pak­istan, Bangladesh, Tan­za­nia, and Ethiopia.

Nearly half of the world’s off­line pop­u­la­tion lives in ten coun­tries that face a sig­nif­i­cant strug­gle to over­come all four bar­ri­ers. In the bot­tom five coun­tries in the McKin­sey in­dex, the av­er­age In­ter­net pen­e­tra­tion rate was only 15% in 2013. The off­line pop­u­la­tion was largely young and ru­ral, with low lit­er­acy rates.

Five other coun­tries – Egypt, In­dia, In­done­sia, the Philip­pines, and Thai­land – face medium to high bar­ri­ers across the board, es­pe­cially when it comes to in­fra­struc­ture and in­cen­tives. With an off­line pop­u­la­tion of more than 1.4 bil­lion peo­ple, th­ese coun­tries had an av­er­age In­ter­net pen­e­tra­tion rate of 19% in 2013. Another 1.1 bil­lion peo­ple live in coun­tries where a sin­gle bar­rier – es­pe­cially a lack of aware­ness of the In­ter­net, weak pur­chas­ing power, or low lev­els of dig­i­tal lit­er­acy – dom­i­nates.

Iden­ti­fy­ing the par­tic­u­lar bar­ri­ers af­fect­ing a coun­try or re­gion en­ables the de­vel­op­ment of ef­fec­tive so­lu­tions – not least be­cause some bar­ri­ers, such as aware­ness, are far cheaper to tackle than oth­ers, like in­fra­struc­ture. That is the pur­pose of the In­ter­net Bar­ri­ers In­dex. By map­ping the ma­jor so­cial, po­lit­i­cal, and eco­nomic ob­sta­cles to In­ter­net adop­tion, the in­dex can help make ef­forts by gov­ern­ments and net­work and ser­vice providers as tar­geted and ef­fi­cient as pos­si­ble.

The im­per­a­tive to ad­dress the for­mi­da­ble chal­lenges to fur­ther ex­pan­sion of In­ter­net us­age is clear. Do­ing so would cre­ate con­sid­er­able po­ten­tial for eco­nomic growth. Many gov­ern­ments have recog­nised this to some ex­tent, set­ting am­bi­tious goals for mo­bile In­ter­net cov­er­age, broad­band in­fra­struc­ture, and pub­lic Wi-Fi ac­cess. But in­vest­ment in in­fra­struc­ture is not enough. Only com­pre­hen­sive, tar­geted, and na­tion­ally tai­lored strate­gies, backed by a strong com­mit­ment from pol­i­cy­mak­ers, can bring the next one bil­lion peo­ple on­line.

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