The Internet has become a pervasive and fundamental part of daily life. Its impact both on economic development and on solving problems in areas such as health, education, basic financial services, and agriculture is well documented. Still, some 4 billion people—more than 55% of the world’s population—are not online. Many live in hard-to-reach areas and do not have access to the infrastructure required for online use. Others do not see the benefits of getting connected, often because of limited relevant digital content. Still others are illiterate, and a great number are poor. Inequality—in terms of gender, income, or other factors—compounds the problem.
Governments, companies, and local and international organizations are working to extend Internet access and use. Future of the Internet: Internet for All, a new report by the World Economic Forum prepared in collaboration with The Boston Consulting Group (BCG), shows that significant progress has been made since the “digital divide” first became apparent some 15 years ago. But the problem is big, complex, and multidimensional. The Forum’s report is an important step in bringing together parties that can comprehensively analyze the issue of universal Internet access and use and recommend solutions.
The barriers to greater Internet use fall into four categories: infrastructure, affordability, skills and awareness, and local adoption and use.
This is a big hurdle for many countries, especially those that are impoverished or that have large rural or remote populations. Many developing markets require massive investment to move up to more advanced mobile technologies. Governments can facilitate and encourage infrastructure investment when they have a clear long-term plan for the economy, a transparent regulatory framework, and a tax system that encourages investment. Many have successfully employed both digital strategies and national broadband plans. Regulatory policy and decisions have a big impact on infrastructure investment with respect to both mobile-spectrum scarcity and fixed-line networks.
Given the substantial investment required for some projects, cooperation between parties in the public and the private sectors (and sometimes among countries) is important to realize global connectivity, especially for the most fundamental infrastructure. Innovation in technology and business models, among other areas, has repeatedly proven to be a powerful barrier breaker. When there is no clear business case for investing in remote areas on the basis of voice and data charges alone, a more flexible and experimental approach to both offering and regulating services may be needed to help unlock financial incentives for the private sector.
Cost remains a major constraint for the segment of people worldwide—almost 13%—who live below the international poverty line, for those who find the cost of devices and access too high, and for those who do not believe that Internet use provides sufficient value for their money. While the cost of smartphones has fallen significantly, it is still out of reach for many. The cost of fixed-line or mobile access in emerging markets can also be excessive for low-income earners—often well above the affordability threshold set by the United Nations of 5% of average income. Affordability also disproportionately affects other segments of the population, such as women and rural residents.
Government policy in a number of areas, notably taxation, can have a direct impact on cost. Device manufacturers and operating-system companies, including some new players, are making progress. The downward trend in smartphone prices, particularly in emerging markets, is welcome and likely to continue. Some organizations are using new business models to extend affordable access. Applying other revenue pools to cross-subsidize services and to bundle different services together can inspire new ideas.
Research has shown that a lack of skills and an absence of awareness of the value of the Internet are two of the biggest barriers to Internet adoption and use. In many countries, basic literacy is a problem, but even in more developed countries the absence of awareness remains a huge hurdle. Cultural acceptance can also be an impediment.
Fostering awareness of the value of the Internet, encouraging its cultural acceptance, and helping people acquire the skills to go online are top priorities. These efforts need to be based on an understanding of local conditions and customs, especially with regard to how families and communities influence learning and how people are exposed to new ideas. Governments, private-sector players, society, and local and international organizations can all combine to promote basic skills building. For widespread digital use to take hold and for digital economies to grow, governments need to address literacy and education enrollment issues, as well as the use of information and communication technology (ICT) tools in education.
While basic skills drive Internet usage, advanced ICT skills are essential to put the Internet to work in businesses and to develop digital economies. Governments, companies, and others need to invest in building both. Individuals and communities that become connected and are encouraged to develop more advanced skills will find a world of information and assistance online. Assistance often comes from social institutions or international communities and organizations that are committed to using the Internet to expand ICT skills.
Digital ecosystems that produce local content and apps are vital for building digital literacy, attracting local users, and serving local needs. Digital services can also address local problems and boost competition in an increasingly international digital-services market. In addition, using the Internet can have a big impact on local businesses, especially small and midsize enterprises (SMEs).
Both the public and the private sectors can encourage adoption and use by facilitating local content development and putting in place policies that make it easier for businesses, especially SMEs, to benefit from digital technology.
One of the most effective steps that governments can take is to fully digitize interactions with their citizens and the provision of government services. Governments also play a direct role in promoting content development by others. Some are encouraging private-sector ICT development by including local businesses in government procurement and e-services programs.
The private sector can contribute to content development and profit directly from its efforts. As economies expand and incomes rise, the experience of some countries, such as India and Brazil, shows that the Internet—particularly the mobile Internet—is emerging as a powerful vehicle for consumer commerce in places where physical retail infrastructure remains underdeveloped. (Approximately 200 million Indians used their cell phones to access the Internet in 2014; mobile connections are expected to represent 70% to 80% of all Internet connections in India in 2018. At $16 billion in 2014, e-commerce sales in Brazil represented about 4% of the nation’s total retail sales of $429 billion—enough to include the country in the top ten e-commerce markets worldwide.) Far-sighted companies and organizations are facilitating content development by helping to incubate new ideas and provide necessary wraparound services to would-be content creators. SMEs drive Internet use and boost their countries’ economies, as well as their own businesses, when they add websites and mobile apps and, as a result, increase revenues and growth.
These four issues are interdependent and need to be addressed in a comprehensive manner. There is no one-size-fits-all solution to any of them. Each country or region will need to identify the set of problems it faces and develop an orchestrated approach, based in part on learning from what has worked elsewhere, that addresses the relevant issues. Segmenting the barriers that countries need to overcome can help to identify which hurdles are the highest in each region or market and to pinpoint the solutions that have been successful (or that have at least made progress) in the context of common circumstances, such as economic and geographic conditions. The report includes a checklist to help policy makers and others assess where their countries stand, evaluate which hurdles are the highest, and determine the best path forward.
Internet for All is a starting point for in-country programs (on which BCG will collaborate), beginning with the Northern Corridor countries in East Africa, that are being designed to expand Internet access and use in 2016. The barriers are real, and the costs are significant. But policy makers and others may want to consider the costs of inaction—of not extending access and use. The consequences of doing nothing are potentially much higher, resulting in, for example, fewer jobs and less economic development, a bigger digital divide, poorer education, worse health care and lower life expectancy.
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