Broadband prices: too expensive in emerging markets

Alex Zaharov-Reutt
Monday, 15 August 2011 13:28

Your IT - Mobility

Uh-oh'¦ broadband prices in '19 emerging markets' are 'beyond the reach of the vast majority of emerging market consumers', with prices only due to 'fall slightly in the short-term'.

If you live in a country with an 'emerging market', chances are you're paying 'far more for fixed and wireless broadband' than your mature market counterparts.

Sadly, this means that many in emerging markets find that broadband is 'completely out of reach for the majority' of those users, something that presumably isn't helping to close the gap that is the 'digital divide'.

The news comes from Ovum, the analytical oglers who boldly go ogle the same kinds of stuff their competing analysts look at and then write about, thus ensuring the world is aware of Ovum's oracling abilities.

There are 19 emerging markets in which Ovum studied broadband prices, including countries such as Malaysia, the Philippines, India and Pakistan, following on from the same exercise last year.

While there was the good news that 'prices in most markets fell compared to 2010', the no-so-good news is that 'broadband continued to be beyond the reach of the vast majority of emerging market consumers', which is, unsurprisingly, a 'major inhibitor to unlocking the growth potential in these markets'.

One of Ovum's senior analysts, Richard Hurst, burst forth with the statement that: 'Demand for broadband services in emerging markets continues to be stifled by high prices. In some countries, broadband pricing was double or triple the price of an equivalent service in a more developed market.

'In addition, lower GDP per capita in most emerging markets means that broadband is only available to the highest socioeconomic groups', continued Hurst.

This is evident when you look at Ovum's claim that even though the Philippines and Malaysia 'had the lowest broadband tariffs of the 19 countries in its sample', broadband 'is still unaffordable in the Philippines'.

The explanation for this is that: 'Entry-level WiMAX services in the Philippines cost as much as $223 per year for wi-tribe's entry-level WiMAX while Globe's entry-level HSPA service was the most affordable broadband tariff in the Philippines, costing USD 1.28 per 100 MB.'

Ovum continues: 'In fact, the broadband services using HSPA technology were the cheapest option for entry-level users, with an average global price of $223 per year. While this was far cheaper than entry-level broadband services based on DSL and WiMAX technologies, HSPA packages had a much lower data allowance, Overall, Ovum found that entry-level DSL packages offered the best value for emerging market consumers.'

Ovum's Richard Hurst concluded: 'While prices remain high, we expect them to fall slightly in the short-term. Network operators and service providers will reduce their prices and introduce packages to improve affordability and stimulate data usage so they can attract more subscribers and drive revenue growth.'