Which countries have the highest broadband access costs?
Posted On June 18, 2021
A new study by the University of California, Berkeley, shows that the cost of getting broadband access in many developed countries is far higher than it was in the past, leading to a gap between the cost to service a typical household and the cost a typical business can make on a comparable service.
“There’s a growing number of people who say that if we could just get the price down, we could have a lot more economic freedom,” said study author Michael Schoenfeld, a research fellow at UC Berkeley.
“It’s not just about getting a lower price, it’s about making sure that people are able to pay for what they want.”
The study used data from the World Bank and other sources to show that the median household income in most developed countries dropped from about $60,000 in 2008 to about $50,000 by 2020.
In the U.S., the median income fell from $55,000 to $47,000, and in Japan, from $49,000 of median income to $46,000.
In Canada, the median increased from $38,000 (the last time the study looked at it) to $37,000 and in the U., from $32,000 average income to over $30,000 a year.
“If we had access to cheap Internet, there would be more and more opportunity for people to move out of rural areas,” said Schoenfield, who was not involved in the research.
“The poor people are being pushed out of their homes, and the middle class is being squeezed out.
We need to start talking about broadband and how it can be a tool to help the poor.”
The cost of the average household to connect to broadband in the world’s most populous country has been on the rise.
The median cost for an average household in 2015 was $1,300, according to the World Economic Forum.
That was up from about half that in 2008, when it was $750.
And while it’s still lower than the median annual income in some countries, it was higher than the $1 million a household can earn in the United States.
“Even the top 20 per cent of households in the developed world are getting about $5,000 [a year] in broadband, but the bottom 40 per cent are getting nothing,” Schoenstein said.
“People are being priced out of those cities, and it’s really pushing people out of the rural areas and into the cities.”
In many countries, a typical customer would get about three gigabytes of bandwidth for about $150, or roughly $1 per hour of streaming video.
“They get two gigabytes for about two cents a day,” Schünfeld said.
But that could be reduced to $1 a day for about six hours of video, which is “quite a bit of money,” he added.
For example, in the Philippines, where the average monthly bill is about $1.50, the average customer would pay $1 for about three hours of streaming.
Schoenfeld said that the average price per hour varies by market.
“In China, the price is about four times higher than in the rest of the world,” he said.
The cost is also rising in some parts of the developing world.
In South Africa, the cheapest price per minute is about 50 cents in the capital Cape Town.
In Nigeria, it is less than a dollar per minute.
In Thailand, the cost is between $1 and $2.50 a minute.
“So that is going up, and that is increasing,” Schueld said.
Schölzfeld said it was important to take into account the differences between a typical home and a business.
“You might be able to get away with getting a couple of gigabytes per month, but if you have an office and you are getting 15-20 gigabytes a month, it could be difficult to get broadband,” he explained.
“That’s why it is important to look at how much people are paying, because you need to make sure that you are not going to have a price that is too high or too low for people.”
Schoenbeld said a new approach is needed.
“We need to be careful that we do not make the mistake of making it the primary goal of government to subsidize broadband,” Schöllzfeld explained.
Instead, he and his colleagues want to look more closely at the cost per megabit-per-second, or Mbps, for the overall average customer in a given country.
“And we want to make the assumption that there are people that are getting very, very good broadband, and we want those people to be subsidizing it,” he concluded.
The study was published on July 25 in the Journal of Economic Perspectives.
The paper, “Cost of Access to Broadband: How Much Does it Cost?” was written by University of Minnesota economics professor Joseph Stiglitz, who worked on the project, and published in June in the American Economic