Broadband access in emerging markets still pricey

Despite falling prices, many consumers in emerging markets such as India and Philippines still cannot afford fixed and wireless broadband access, new report states.

Broadband prices in emerging markets such as India and Malaysia, despite falling from the previous year's levels, remain prohibitive to most people. This is stopping countries from tapping the technology to grow their economies, a report noted.

Released Monday, a study from research firm Ovum found that broadband prices are now cheaper than in 2010 in most of the countries surveyed. That said, majority of the population in emerging markets are still kept out from broadband access due to prohibitive prices and this is hindering economic growth, it stated.

"Demand for broadband services in emerging markets continue to be stifled by high prices," Richard Hurst, senior analyst at Ovum, said in a statement. "In some countries, broadband pricing was double or triple that of an equivalent service in a more developed market."

The study looked at broadband prices in 19 developing countries including Malaysia, the Philippines, India and Pakistan, Ovum stated.

Moreover, broadband access is limited to only the highest socio-economic strata in society because of the lower GDP per capita in most of these emerging markets, Hurst noted. For example, even though the Philippines recorded one of the lowest broadband prices out of the 19 markets, the study showed that many Filipinos still consider broadband to be unaffordable.

India, on the other hand, had the highest WiMax tariffs in Asia, Nicole McCormick, senior analyst at Ovum, revealed. High prices, coupled with low GDP per capita, mean that broadband services are "very unaffordable", she added in her e-mail.

"Despite the launch of 3G services by several Indian operators in 2011, HSPA (high speed packet access) services continued to be expensive, with the entry-level tariff priced at US$143 per year," the analyst said.

In terms of technology, Hurst said even though HSPA is the cheapest option for entry-level users with an average global price of US$223 per year, it also has a much lower data allowance. With that in mind, entry-level DSL packages offer the best value for emerging market consumers, Hurst suggested.

Cheaper broadband expected
Hurst went on to say that he expects tariff prices to fall slightly in the short-term as network operators and service providers reduce their prices and introduce packages to improve affordability and stimulate data usage. These measures are in a bid to attract more subscribers and drive revenue growth, he explained.

McCormick agreed, saying that prices will continue to spiral downward due to "increased competition and uptake of services".

She also expressed optimism that a positive cycle will emerge in that with lower broadband prices spurring adoption which, in turn, fuels economic growth, more people will soon be able to afford broadband access and increase their personal income, too.

Earlier, International Telecommunication Union (ITU) Secretary-General Hamadoun Toure called on Asian governments to not just drive national broadband deployment initiatives but also look to foster environments that encourage local content creation. These two components should be developed in tandem in order for "nation-level broadband projects to work", he stressed.