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Mobile devices are too expensive for billions of people — and it’s keeping them offline

This post was written by Teddy Woodhouse, Web Foundation Research Manager for Access and Affordability. Follow him on Twitter @TeddyWoodhouse.

Mobile devices, once seen as consumer luxuries, are today the essential first step to getting online. But for billions of people around the world, they remain too expensive. That’s the conclusion of new research from the Alliance for Affordable Internet and the Web Foundation, looking at the affordability of mobile devices in 70 low and middle-income countries.

From luxury to lifeline: Reducing the cost of mobile devices to reach universal internet access.

This is a problem because mobile phones are the cheapest devices available to access the internet today. They will be the way that the next billion people connect. That so many people are unable to afford the upfront cost of a handset is a drag on progress towards universal internet access and a more inclusive digital society, a goal that unites governments, technology companies, civil society organisations, and the United Nations.

A lifeline, not a luxury

The Covid-19 crisis has made this goal of internet access for everyone more urgent than ever. The internet — and the devices that let people use it — are not luxuries. They are lifelines. Now being used for everything from remote learning and working to contact tracing and telehealth, internet connectivity has never been more important.

Yet, almost half of the world’s population remains offline. And those without internet access are disproportionately women, and people on low incomes and in rural areas — groups already likely to be most affected by the impacts of the pandemic. In order to avoid a world where digital inequalities drive further inequalities in health, wealth, and education, we need action to address barriers to connectivity.

The cost of connectivity

The biggest factor keeping people offline is cost. The internet is still not affordable for many around the world. This applies to data, which is still too expensive for most people in low-income countries. And, as our report shows, the cost of internet-connected devices is another financial barrier preventing many from getting online.

This report surveys the cost of devices in 70 countries with a combined population of over five billion people. In each of these, we collected the cheapest available price for a smartphone from the website of a major mobile network operator. We used these prices to calculate the affordability of devices — their price relative to income.

Here’s what we found

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

In some countries devices were less affordable still. In Sierra Leone, the average person needs to save six months’ salary to buy the cheapest available smartphone. In India, where almost 18% of the global population now lives, the price of the cheapest smartphone from leading operator Jio was 206% of average monthly income. This is striking in a country that has some of the lowest priced internet data in the world.

Other countries have very affordable devices, showing stark differences for different populations. Botswana topped the survey for most-affordable devices, with a low-cost smartphone priced at just 4% of average monthly income, with Jamaica (5%), Mexico (5.7%) and Costa Rica (6%) following closely behind. We also see a wide disparity among people living in regions of the world. In Africa, devices were least affordable at 62.8% of average monthly income compared with 11.7% in the Americas and 16.2% in Asia Pacific (excluding India). With India included, the Asia Pacific figure jumps to 87.4% owing to the country’s role as an outlier with a very large population and high costs.

Worryingly, the Covid-19 crisis could make phones less affordable, with twin factors of disrupted supply chains (consultancy firm IDC estimated the largest year-on-year drop for smartphone shipments in the first quarter of 2020) and increased poverty as the full effect of pandemic’s disruption to jobs starts to bite around the world.

Government policies can lower handset costs

Internet access is critical not only for individuals’ wellbeing, but also for the health of a country’s economy. With the economic disruption of Covid-19, digital growth will be particularly important. Governments are not short of incentives to prioritise policies that ensure as many people as possible can access the internet.

Device affordability is driven by a range of factors, such as production costs and market competition, consumer preferences and the average income in a country. But governments and multilateral bodies have a range of tools at their disposal to make mobile devices more affordable for consumers:

1. Reduce taxes on low-cost devices

Policymakers can make quick progress on device affordability by reducing taxes that apply to low-cost devices. When this saving is passed down to the consumer, this brings down prices and, if applied only to devices below a certain price, can encourage manufacturers and retailers to drop prices to qualify for the tax exemption and encourage greater competition in the low-cost device market.

2. Use universal Service and Access Funds (USAFs) to subsidise devices 

The poorest households face the largest affordability barrier. USAFs exist to make telecommunications services available to the widest number of people possible, particularly marginalised and underserved communities. This should include addressing the device affordability barrier which few USAFs currently cover. These funds can be used to make devices more affordable, including with subsidy programs for those least able to buy devices.

3. Support projects to help people spread the cost of devices

For many, a major barrier to buying a device is the large upfront cost. While some countries have well-established credit systems letting consumers spread the cost of a handset over monthly payments, for many people such facilities are not available, particularly in lower-income countries, the places where people are least likely to have large amounts of cash on hand for such purchases. Where credit facilities are available, they may not be available to those living on lower incomes.

One important way to make devices more affordable for these users is to develop and scale innovative financing models to reduce the upfront capital people need. Several examples already exist, many of them supported at a pilot-level by funders like development agencies. The next step is to move this from experiments to scale successful projects. The public and private sectors and civil society should work together in partnership to support projects like this to make more financing options available for consumers.

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

Read the report to learn more and explore the data.

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