Providing affordable connectivity everywhere

The opportunity

The internet offers many social, economic and educational benefits for those with access. Currently, however, there are only about 3.4 billion people with an internet connection — slightly less than half the world’s population.

Today, governments everywhere recognize that for all citizens to take full advantage of the benefits and opportunities promised by a new generation of innovative cloud-based technologies like AI, data analytics and the Internet of Things (IoT), affordable broadband internet access is essential. There is additional urgency for many countries because affordable internet access is a prerequisite for achieving the Sustainable Development Goals (SDGs) adopted by the United Nations in 2015.[22]

The challenge

As cloud-based services become increasingly central to our day-to- day lives, the need for robust, ubiquitous and affordable broadband connectivity becomes all the more critical. Significant gaps still exist across and even within countries.[23] For example, internet penetration is close to 100 percent in Korea, Qatar and Saudi Arabia, but below 2 percent in a number of sub-Saharan African nations.[24] Without specific steps to increase access, just 16 percent of people in the world’s poorest countries and only 53 percent of the total global population will be connected to the internet in 2020. At this rate, universal internet access in low-income nations won’t be achieved until 2042, a dozen years after the target date called for in the SDGs.[25]

Furthermore, the burgeoning Internet of Things (IoT) is creating even greater demand on internet access. Cisco’s Visual Networking Index (VNI) forecasts that the number of connected devices will increase from 17 billion in 2016 to 27 billion in 2021. A majority of these will require some form of low-cost wireless connectivity to the cloud via the internet.

Policy recommendations

Successfully closing the gap for those unconnected will take innovation in policy, technology and business models. The size of the gap makes clear that we cannot close it simply through “business as usual.” Certain policies can even create obstacles to investment by favoring a particular technology, industry sector or incumbent. Regulations that prescribe specific business models that must be used may in fact result in no competition, poor service and high prices. The pace of change is accelerating, and agility is necessary for today’s policymakers. The new challenge is to create the right enabling environment that will result in sustainable growth. To achieve this, promotion of the following is required.

Policy innovation: Reform of laws and regulations is needed to spur programs that expand internet access. Initiatives such as the Alliance for Affordable Internet, the U.N. Broadband Commission for Sustainable Development, and the 1 World Connected project play an important role in highlighting examples of policy innovation around the world and helping policymakers understand why some countries are succeeding in making internet access more affordable. Innovation may involve stimulating competition, removing financial barriers, altering tax policy, migrating government services and more. Creating open and competitive broadband markets in their own countries must be a core policy objective, and that means that policies to remove obstacles that limit opportunities to provide access are vitally important.

Technology innovation: Technology is changing rapidly — and nowhere is that more evident than in wireless communications. Our ability to harness spectrum for broadband has advanced exponentially over the past decade, with some wireless technologies able to provide gigabit-per-second connectivity. But access to spectrum often remains hindered by a regulatory model first developed over a century ago and optimized around exclusive use licenses protected by swaths of unused spectrum as a buffer from potential interference. Although this model is appropriate for some services, today’s technologies allow for sharing of spectrum, resulting in greater reuse of spectrum at lower costs and improving access for all. Today, more than half of the world’s internet traffic moves via unlicensed and shared spectrum. Policymakers should work to accelerate time to deployment of these new technologies by review and revising their approach to spectrum.

Spectrum management: Policymakers should accelerate efforts to open up new low-, mid- and high-frequency bands for both unlicensed and licensed use. TV White Space is one example of technology innovation in low-band spectrum. Controlled by databases, unlicensed access to TV White Space is delivering affordable internet connectivity today in several countries where regulators have allowed it — all without causing harmful interference to any protected service. Unlicensed spectrum is dramatically lower in cost than licensed spectrum because there are no auction or licensing fees that must be accounted for in an operator’s business model, enabling more rapid and lower-cost deployment scenarios. Since withholding spectrum from deployment results in artificial scarcity, it tends to also cause higher prices for access. Policymakers should also ensure that any spectrum licensed on an exclusive basis is actually deployed via “use it or lose it” policies. Spectrum regulators should also adopt policies to facilitate the sharing of underutilized spectrum. In the long run, enabling dynamic access to shared spectrum resources is key to making spectrum an abundant resource, as the digital fuel to the digital economy.

Business model innovation: Today’s telecommunications landscape is very different from that of the past, when national monopoly carriers delivered circuit-switched voice services with treaty-based international connections. Today’s environment includes numerous public and private networks interconnected through a wide range of commercial agreements. Today’s internet network of networks is the enabler for the digital transformation of business, government and leisure. Where the policy environment invites experimentation with new business models and partnerships, amazing transformations occur. Consider, for example, the impact of the availability of mobile money in Africa. Policymakers should be on the lookout for policy and regulation that inhibits this kind of innovation.

For example, when it comes to financing, many governments have imposed restrictions on foreign direct investments in telecommunications, mobile and broadband infrastructure, and have enacted other investment policies that effectively put barriers in the way of entrepreneurs willing to enter the market. Policies that encourage public-private partnerships and recognize the structuring needs of funding institutions are needed to facilitate access to capital.

In addition, in many countries, broadband access is taxed as a luxury good. This is counterproductive because it simultaneously reduces investment in infrastructure and increases the cost of access, as well as misunderstanding the importance of broadband access for utilizing everyday services. Policies like this contribute to the widening of economic and social divides. Policymakers should adopt tax policies that stimulate rapid investment in and adoption of connectivity solutions and that optimize taxation regimes to achieve connectivity goals.

Policymakers should, themselves, be innovative and adopt telecommunications policies that minimize unnecessary regulation of services and stimulate competition, while supporting the underlying goals of access and adoption. For example, reforming universal service funds to incorporate funding for broadband; ensuring net neutrality, which stimulates innovation in services; and reducing the regulatory burden on operators are all generally helpful. At the same time, the independence of regulators and freedom from regulatory capture are critical to stimulating investment.

Finally, there are a variety of approaches that can stimulate accelerated investment and deployment, such as “dig once” policies ensuring that new highway and rail infrastructure projects include conduits for fiber. In addition, infrastructure-sharing such as shared transmission towers can avoid wasteful duplication.
Demand-side stimulation through deployment of online government services and the development of locally relevant content and services can also help.