This is our fifth installment of the multi-part series on the granularity of the recent comprehensive white paper done for Nokia (News - Alert) by Diffraction Analysis, “Government broadband plan: 5 key policy measures that proved to make a difference. In the previous posting the focus was on leveraging a framework for infrastructure sharing. This week the deeper dive focus is on how inclusive and/or social offers as part of broadband packaging can ignite broadband service adoption.
The business services model is important
As has been the case with the previous posting in this series, we start with a chart because visualization of the impact inclusive and/or social offers highlights a tilt on the phrase “If you build it they will come.” As the chart shows, with the proper incentives if you build it and price it right they really will come.
Figure 7 shows clearly that countries with inclusive or social offers in their broadband plans have seen subscriptions grow significantly faster than those without. As the authors of the study point out, and as the chart illustrates well, from an equivalent starting point, the growth in Internet usage per 100 inhabitants is 18 percent on Year 4 for countries with social/inclusive offers versus only 10 percent growth for those without.
Source (News - Alert): Nokia, White Paper: Government broadband plan: 5 key policy measures that proved to make a difference
And, it is also noted that the trend of the gap growing between those with such offers and those without only grows with time and at an increasing rate.
The paper walks through two interesting use cases, Uruguay and the U.S. What makes them a nice comparison is the difference between a developing versus a developed country.
First up is Uruguay’s plan, “Conectividad Educativa de Informática Básica para el Aprendizaje en Línea “(CEIBAL), which was launched in 2007. Translated it means roughly IT Educational Connectivity for Online Learning. It has a laudable mission. The objective is the distribution of one laptop to every child in the country, and all of the teachers in the primary public school system, and then to get them on the Internet with broadband.
By September 2009, 380,000 computers had been distributed with roughly 70 percent of the laptops going to kids who didn’t have access to a computer at home. In short, it enabled the closing of the computing part of the digital divided. Internet access is typically via Wi-Fi in the vast majority of schools and in 250 outdoor public places, as well as other educational private and public institutions.
The “one laptop per child” project was completed in April 2012 by the initiative “Universal hogares” of ANTEL, the Uruguayan government-owned telecommunications company, to provide internet access to low-income households. These households can benefit from a permanent connection to the internet if a phone line connects their premises, at a cost of UYU 490 (€15 or US$ 19). While the offer includes traffic of only 1 gigabyte per month, it is possible to add more data for a fee.
The total cost of the CEIBAL program on a 4-year period was around €300 (US $380) per child. The cost includes the devices, replacement of devices after 4 years, maintenance, internet costs, content production and training courses for the teachers.
In short, a real bargain in many respects, especially given the long-term benefits, and a boon to broadband adoption.
On the U.S. front the view is from a bit closer in. In June 2015, the US Federal Communications Commission (FCC (News - Alert)) voted to subsidize broadband services for low-income households. The Commission approved the addition of Internet subsidies to the Lifeline program which assists around 12 million households.
A bit of context is in order. It may surprise readers but less than 50 percent of households with an income smaller than $25,000 per year have access to the Internet. Conversely, 92 percent of households with incomes of $100,000-$150,000 have broadband access. The good news, which should help close the access divide in the U.S. is that because of the subsidy of $9.25 per month for Internet the gap in access caused by income disparities should close rapidly.
In addition, in July 2015 the administration launched “ConnectHome.” This is a pilot program to bring broadband to over 275,000 low-income households across the U.S. It is a significant “pilot” in that it includes 27 cities including New York, Boston and Seattle. Managed by the US Secretary of Housing and Urban Development, ConnectHome is funded by private industry, non-profit organizations and local leaders, who have pledged to spend $70 million over the next several years. Among other companies, eight nation-wide internet service providers have announced they will support the program.
As the authors note, the key success factors are:
•Takes into account both connections and devices
•Involves private players to ensure long-term efficiency
•Sets the priority on the most vulnerable populations
The most salient points are the need for governments when looking at ways in which to accelerate broadband adoption to take into account those success factors. After all, the goals at a high level are stimulating economic vitality through expanding connectivity and giving the populace tools, in the case of Uruguay putting PCs in homes and schools, for leveraging those connections. And, involvement by the private sector, as with the other recommendations, is key. It is the creation of a virtuous circle where making the right offer really does mean if you build it they will come and they will use.
Edited by Stefania Viscusi