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Smartphone costs keeping billions offline

New research from the Alliance for Affordable Internet (A4AI) finds high cost of internet-connected devices in many countries keeping people offline.

Billions of people are unable to access the benefits of the internet because of the high cost of mobile devices, according to a new survey of smartphone prices in 70 low and middle-income countries.

A staggering 2.5 billion people live in countries where a smartphone costs a quarter or more of average monthly income. This is equal to the share of income the average European household spends on housing and utilities.

The cost of a device in some countries is higher still:

  • In Sierra Leone the average person must pay more than six months’ income - US$ $265 - for a smartphone.
  • In India, where almost a fifth of the global population lives, the cheapest smartphone from leading operator Jio costs $346, more than double average monthly income.
  • In Burundi where a smartphone costs $52, low earnings mean the average person would pay 221% of monthly income.

A4AI asserts that access to an affordable internet-connected device is the first step to internet access and provides a lifeline for individuals as well as small businesses that drive economies and create job opportunities across the world.

“But almost half the world’s population remains without internet access while COVID-19 has underlined like never before the importance of digital connectivity,” the organisation states.

In some countries devices pose less of a financial barrier to internet access, such as in Botswana where smartphones are available priced at just $26 (4% of average monthly income), Jamaica ($20 or 5% income) and Mexico ($43 or 5.7% income), highlighting the stark divide between countries.

Published by A4AI the report looked at both the price of devices and their affordability (price relative to income) to show how accessible handsets are for people living in 70 low and middle-income countries with a combined population of over 5 billion people.

“Once seen as luxury goods, today mobile handsets are essential doorways to the internet,” said Teddy Woodhouse, Web Foundation Research Manager. “The vast majority of the next billion people who come online will do so using a mobile device and so if we’re to make sure more people can access the internet’s benefits, handsets must be more affordable.”

“The COVID-19 has shown that to be without internet access can mean missing out on critical health advice, losing your livelihood and being cut off from your loved ones when physical distancing becomes the norm. The internet is a lifeline, and we need to do everything possible to remove the barriers that stand in the way of people getting online.”

Half world’s population offline

Almost half of the world’s population remains offline, even as the UN has set ambitious targets to get more people connected. Web Foundation analysis predicts the UN Sustainable Development Goal (SDG) 2020 target for universal internet access will be missed by decades unless there is urgent action from governments.

The biggest barrier stopping people from using the internet today is price, with the cost of data too expensive for most people in low-income countries and with handsets priced too high for many to be able to afford the large upfront cost.

While smartphone affordability has improved steadily over many years, the report warns that this trend could be reversed as a result of COVID-19, which has disrupted supply chains and threatens to fuel poverty across the world as the full effect of pandemic’s economic disruption takes hold.

The report calls for governments and multilateral organisations to use policy tools to reduce the costs of handsets for consumers, including:

• Reduce taxes on low-cost devices to bring down the purchase price of the cheapest devices and to encourage manufacturers and retailers to offer lower-prices products.

• Use universal service and access funds (USAFs) to subsidise devices for those least able to buy handsets.

• Support projects that help people spread the cost of devices, giving people access to credit and other financial tools so they do not need to pay the full cost of a device up front.

• Policy action to lower the cost of devices in the countries covered in the report — many of which have low levels of internet use — can help make the internet more accessible for billions more people.

Driving digital inclusion

ICT and telecommunication companies continue to see opportunity in Africa’s fast-growth mobile device market, specifically in smartphone adoption.

An example is advent of solutions from KaiOS Technologies, in partnership with several tech companies including Orange and Mozilla to deliver services to markets in Africa, including Malawi and Nigeria.

Multinational ICT and telecommunications company Huawei believes that with mobile connectivity now integral to the modern economy, a key part of any national development programme must be digital inclusion. This is being achieved by expanding mobile broadband coverage, but there is another important consideration: smartphone affordability.

Huawei points to a recent GSMA report which shows that smartphones make up 39% of the 774 million mobile connections in Sub-Saharan Africa.

“This is projected to grow significantly, but for Africa’s people to fully reap the dividends of mobile connectivity, it is critical that 4G-enabled smartphone handsets be made more easily attainable for the entry-level market,” Huawei states.

This calls for financial innovation alongside the technological innovation that characterises the sector. Smartphones must become cheaper if Africa is to unlock the full potential of its people, it adds.

Fortunately, there are already encouraging signs that manufacturers, policymakers and network operators are partnering to integrate such financial innovation into the drive towards digital inclusion, Huawei states.

“In Kenya, Safaricom recently rolled out a device financing programme, in partnership with Google and Teleone, allowing low-income earners in Kenya to access quality 4G phones at low instalments from as little as Kshs 20 (R3) a day. The country has a high mobile telephony penetration, but this has traditionally involved 2G phones. The campaign aims to bring a million more customers into the digital economy.

Airtel Africa has expanded 4G adoption on the continent with its “more for more” data offers, increasing average data use, with 4G now accounting for more than 60 per cent of its data revenue.”

However, one of the most effective means of encouraging smartphone adoption is reducing the tax burden on mobile phones and services in the form of import duties and sales taxes. In this context, policymakers have a powerful role to play in empowering citizens with easier access to digital connectivity.

Huawei continues that as smartphones become the norm, broadband spectrum can follow suit, and network operators can transition to a 4G- and 5G based platforms, with all the high-speed, mass-connectivity benefits that brings.

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