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Geopolitics & Security

How Can Universal Internet Access Be Achieved by 2030?


Commentary3rd November 2020

As part of an ongoing policy project looking at the global digital divide, we have been holding a series of expert roundtables to explore different aspects of the problem. This blog post reflects on how internet access can be achieved and is the second in a series over the coming weeks. 

Expanding internet access is critical to development. As we transition into a period of managing and living with Covid-19, the fundamental importance of internet connectivity and universal access has become ever more acute. Internet access is becoming the backbone of public service delivery and the foundation of an increasingly digitised economy.  

Closing the digital divide is a question of policy and strategy. We recently convened a group of experts to discuss how universal internet access can be achieved, focusing on the ways that technology can be deployed to solve the challenge, the investment required to reach universal access, and the policies necessary to facilitate this 

 

How can technology solve the access challenge? 

In this session, participants discussed the opportunity that technology itself presents to address the challenges of achieving internet access: namely whether technology can solve the 4G coverage gap; if technological developments will drive down the cost of a basic smartphone; and whether technological advancements can close the digital skills gap and develop content that is relevant to those currently not online.

Looking at 4G coverage, one of the greatest challenges to overcome is rural connectivity. There are already a range of technical solutions that could solve these challenges, from satellite, fibre, fixed wireless access and more to address the technical coverage challenges. But participants felt the greatest barrier was not technological but market failures. Until governments and regulators begin to address the challenges in making the economics work, the deployment of the appropriate technologies to address rural access will not be solved.

Literacy and digital skills are one of the greatest barriers to internet usage, even where 4G coverage is available. Participants explored how AI, voice activated technology, and speech recognition are beginning to overcome this literacy challenge already. The technology has advanced rapidly and can be cheap to deploy. One major breakthrough is Google’s language translation capabilities, built into phones rather than relying on the cloud. The next technological frontier would be to design user interfaces specifically for the illiterate and for those that do not speak one of the dominant languages, or for those with disabilities. Whilst this capability should – and with some sensitisation would – be in high demand, the challenge is around making the financials work, and government interventions may be necessary in the first instance to drive uptake for the poorest and most likely in need of such interfaces. More broadly, tech has a huge propensity to facilitate learning – not just in basic literacy and numeracy, but augmented and virtual reality and other advanced technologies can build a richer learning experience at scale. The pandemic illuminated what was already possible by driving the demand for remote learning, but it is now for governments and the wider donor community to assist in building the market for the most underserved communities.

Participants finally discussed what was technological possible to drive affordability of data. A free basic tier of data provided by governments would be a starting point, but there are also a range of ways companies could innovatively address this. Hot spot technologies such as Express Wifi allows Internet service providers and mobile network operators to monetize their WiFi business in a range of ways. Zero-rating programmes such as the Discover programme at Facebook should be seen as an early sensitisation tool for those least familiar with the internet, and in time can drive demand for wider internet use, with broader productivity opportunities that would be self-fulfilling for the wider industry.

It was concluded that the technology by and large exists to drive universal internet access. The greatest challenge is not whether the technology is there, but how to make the business case work for those technologies to be scaled. Tech developments are geared towards following the money. Unless the market is made through government policy for scale at lower income levels, the gains to be had from tech developments will focus on the more affluent, lucrative areas of the market.

Can the total cost of all one-off investments be met within 10 years? 

The focus of this session was on who should pay to drive universal internet access, and then how could those investments be met. It was quickly established that the regulatory environment played an enormous role here, and whilst most of the investment should be met by the private sector, public investment was necessary to drive demand in particular in order to incentivise the private sector to meet that demand.

In the previous roundtable, it was concluded by participants that connectivity should be considered as a public interest good. However, in this session it was quickly established that whilst internet access drives a lot of positive externalities, it cannot be considered a public good in the economic sense, and most of the investment in connectivity needed to come from the private sector, as is the case in high income countries. The exact balance between public and private investment to reach universal coverage will nonetheless vary by context: the political, economic and regulatory environment will drive the type of discount rates that operators apply, and consequently the business case for making such an expansion. However, the majority of investment needed to reach universal 4G coverage will be upgrading 2G networks, which is a marginal investment for operators. If the demand is there, they will do this.

Participants unanimously agreed that demand is one of the greatest barriers to investment. This is where public investment could be instrumental to stimulate broadband demand. Demand was considered predominantly a question of affordability. The Covid-19 pandemic has brought into sharp focus the usage gap in much of the developing world. Before the pandemic, much donor investment was focused on rural connectivity, and yet huge swathes of peri-urban populations such as Latin Americas’ favelas are kept off-line not through lack of coverage but because they could not afford or did not know how to use the internet. National pandemic containment strategies have driven an increase in remote learning and digital public service delivery, and consequently a number of pilots have emerged to address communities’ abilities to get online when internet coverage is already available. One exciting development discussed by a participant were pilots for guarantee mechanisms to support device purchases. Early findings have found that default rates even amongst the poorest populations are very low for mobile services, which suggests that it would not take a significant investment to stimulate demand and accrue a sizeable social impact.

Throughout the session participants returned to the overriding challenge of creating the right enabling environment for investment to shore in. Multilateral Development Banks’ (MDBs) - such as the World Bank and IFC, as well as the regional banks’ – primary aim is not to provide the infrastructure investment itself, but rather to support countries build an enabling environment to stimulate private investment. Whilst this may sound like a simple shift in the policy and regulatory environment, political dynamics are often not aligned to these measures. Ministers are under political pressure to deliver now, and if MDBs are unable to provide cheap and rapid credit to execute (facilities which are almost always tied to financial reporting, and environmental and social requirements), ministers are incentivised to search elsewhere to secure that investment and demonstrate progress: either through domestic revenues or to vendors backed by sovereign funds. Thus, while administrations can illustrate progress in the short term, their countries often incur sizeable public debt in the process, whilst inheriting an infrastructure network that they may yet be ill-equipped to manage.

One of the greatest challenges therefore is not one of investment but rather politics. For example, the evidence is clear that lowering taxes on devices, given the elasticity of the market, would not only stimulate demand, but lead to direct economic benefit that could be felt in five years’ time. However, the nature of political cycles means that such interventions are hard to execute. Even if the political leadership sets a vision to drive widescale broadband access, for many treasuries, telecom revenues are a primary source of income, tantamount to suspending inflows that would pay teacher or civil servant salaries. Cognisant of the political challenges of taking medium term transformational interventions, the World Bank has begun incentivising Ministries of Finance to take those harder, medium term decisions by providing immediate fiscal support to bridge the short-term cash flow challenges that these policies entail. MDB interventions like these which support governments to make the difficult political decisions now can shape the right policy and regulatory environment to usher in the private investment needed to achieve universal internet access by 2030.

Which local constraints to internet access require local policy reform, not more money? 

This session was specifically focused on the policy and regulatory environment necessary to solve universal internet access. This focus group discussed human capacity – both within the policy sector, as well as across the population – as critical to the policy debate on improving internet access. Participants also felt that national policies were often too narrowly focused on the large Telcos and were missing the wider range of actors in the sector, and that the international community should be playing a larger role in guiding national policy environments.

Participants agreed – independently from the other sessions – that once the right strategies, policies and regulations are in place, investment can and will follow to bring down the cost of internet services. These include competition and regulatory oversight, addressing implementation gaps, and revising fiscal policies that suppress internet use. In Kenya, where the VAT from personal devices has been cut, the rise in access has been immediate.

Participants believed that human capacity in the national policy environment was shortcoming. A level of financial and technical assistance was essential for policy development to be grounded on evidenced-based research, good practices, and to ensure specific telecom reform was aligned with other sector growth initiatives such as agricultural development. The absence of telecoms lawyers in the public advocacy space were cited as a critical missing component, as they are “hoovered up” by the private sector and the regulator.

It was felt there was not enough focus on policies to close the skills gap. In Africa, only a few countries have put in place strategies for digital technologies, such as artificial intelligence, to address the basic skills gap. Where strategies are in place at the continental level, countries have not contextualized them. And yet human capacity development is critical to drive internet access. Policymakers needed to think harder about different ways to build skills within the community. Engaging young people as teachers themselves rather than using traditional styles of classroom-based teaching could be an effective way to transfer skills and empower the next generation of technology experts.

Participants felt that policies and regulations were often designed to cater only to monolithic national operators. Smaller actors, such as commercial internet service providers, cooperatives or community networks need to be accounted for too. Universal service access funds were not designed to subsidise incumbents, yet are often used this way instead of being applied to develop a broader ecosystem of actors. To have the desired effect, regulation needs to be more granular, more adaptive, more responsive, and allow municipalities to define their own connectivity solutions.

The international community plays an important role in encouraging national governments to improve the policy environments for access, as they can help share best practice, create policy templates and normalise behaviour. For example, the Digital Transformation Strategy for Africa, can act as a guide for policy development at the national level. There are common challenges faced across countries that require consensus action to address. Lack of connectivity was increasingly a rural/ urban problem rather than a Global North / Global South issue. Greater transparency is necessary so that we know where the specific access issues lie. We cannot solve the problem unless we understand it. Often, we rely on industry reports without any means of validating them. Spectrum auctions are working well in some countries and not in others. There are strategies for addressing this that can translate across countries, for example in setting the reserve price, and countries can look to alternative models, such as the not-for-profit models adopted in Kenya and in the UK, to unlock their own backhaul infrastructure challenges.

The challenge for international and even regional organisations is in contextualising solutions to the local environment. As one participant said, “policy and regulation is a long game. If you want to engage in it, you have to be prepared for a marathon, not a sprint.” Often international organisations do not have the resources to engage with a national or community level project for the time required to deliver results. Looking for ways to expand and scale the work of international and regional organisations at a country or community level is critical. One way could be to build the skills and knowledge of policymakers through creating platforms for peer exchange and learning, that exist beyond the time frame that international bodies can commit to.

As highlighted in the other break out sessions, the right policy and regulatory environment is essential for facilitating private investment and technological development in closing the digital divide. The international community has a significant role to play in shaping national policy settings.

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