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Internet access in the Pacific: what can users afford?

As Pacific islands develop and extend ICT policies it will be essential to seek ways of overcoming the existing pervasive income barrier

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Affordable and accessible communications are vitally important to remote communities, with the Internet becoming an increasingly essential communications tool. However, prices charged for dial-up Internet services within various Pacific Island countries are very high relative to household income, forming a major barrier for take-up of Internet subscriptions.

The excessive price of Internet access in Pacific Island countries, coupled with the geographic limitations on the availability of Internet – and in particular broadband – services, creates a digital divide, with people unable to take advantage of the Internet’s potential for social and economic benefit. Even those able to subscribe to Internet access are limited by the bandwidth available in many Pacific Island countries. Broadband has limited coverage – typically restricted to the major population centres – and relatively low bandwidth, with services with downstream bandwidths in excess of 512kbit/s currently available only from operators or ISPs in the larger countries, such as Fiji, Papua New Guinea and Vanuatu.

Users restricted to dial-up services have a very different experience to that of broadband users. With dial-up, users can send and receive emails, browse Web pages and use instant messaging (“chat”) services. These are all applications that are suitable for low-bandwidth services, and for which some brief delays are tolerated. Broadband users, however, will be seeking a far richer interactive experience – with broadband, downloading large amounts of content, such as video and music, becomes feasible. Moreover fast broadband enables access to real-time applications such as voice and video telephony, streaming media and online games, for which any delays due to congestion are less acceptable.

Our analysis

Dial-up Internet services in Pacific Island countries typically incur usage-based charges, normally the number of hours used per month, with the different plans corresponding to various levels of monthly usage, ranging from five to 120 hours. Usage in excess of these monthly allowances incurs an additional per-hour fee. There are some exceptions to this rule:

  • in Papua New Guinea, the ISP Datec’s charges are determined by the data volume downloaded
  • ISPs in Fiji, Palau and Samoa offer unlimited usage plans
  • the ISP in Niue allows free non-commercial dial-up Internet access (for up to 60 hours per month), after which usage is charged per hour at the business rate.

In the Cook Islands, Palau and Papua New Guinea it is also possible to purchase prepaid Internet dial-up access, which provides users with more flexibility with their Internet usage.

We considered three different usage levels – ten, 25 and 100 hours per month – calculating the monthly fee for the cheapest option in each case (see Exhibit 1 to Exhibit 3 below). The results show that users in Pacific Island countries pay far more than Australians and New Zealanders for dial-up Internet use. The exception to this is Niue, where services are free for up to 60 hours per month, however for our high usage level Niue becomes by far the most expensive country at nearly USD1800 per month (not shown on the graph below due to scale).

Exhibit 1: Monthly cost of dial-up Internet services for a low level of use (ten hours per month) [Source: Network Strategies]
Monthly cost of dial-up Internet for low level of use [Source: Network Strategies]
Note: In Niue, dial-up Internet is free for non-commercial use for up to 60 hours per month.

Exhibit 2: Monthly cost of dial-up Internet services for a medium level of use (25 hours per month) [Source: Network Strategies]
Monthly cost of dial-up Internet for medium level of use [Source: Network Strategies]
Note: In Niue, dial-up Internet is free for non-commercial use for up to 60 hours per month.

Exhibit 3: Monthly cost of dial-up Internet services for a high level of use (100 hours per month) [Source: Network Strategies]
Monthly cost of dial-up Internet for high level of use [Source: Network Strategies] Note: Niue (USD1771 per month) not shown for reasons of scale.

In many Pacific Islands, even for low usage, the monthly fees for dial-up plans represent a significant portion of monthly income, suggesting that affordability is a major barrier to uptake (Exhibit 4). For example, in Australia and New Zealand, the dial-up monthly fee for all levels of use represents 0.5% or less of monthly income, whereas in the Pacific Islands just 10 hours per month usage can comprise between 2.4% and 14.7% of monthly income. The exception to this is Niue, where personal Internet use is free for up to 60 hours per month. For 100 hours usage per month the monthly fee can be well over 10% of monthly income, up to nearly 152% in the extreme case of Vanuatu.

Exhibit 4: Monthly spend on dial-up Internet services as a proportion of average monthly income for low, medium and high levels of use [Source: Network Strategies]

Country
Low-level use
10 hours per month
Medium-level use
25 hours per month
High-level use
100 hours per month
Australia
0.2%
0.2%
0.2%
Cook Islands
6.4%
14.0%
38.1%
Fiji
2.4%
7.0%
8.0%
Federated States of Micronesia
10.4%
23.3%
77.8%
New Zealand
0.3%
0.3%
0.5%
Niue
0.0%
0.0%
57.3%
Palau
6.5%
10.8%
15.1%
Papua New Guinea
7.4%
7.4%
7.4%
Samoa
2.5%
4.6%
24.8%
Tonga
12.0%
12.0%
12.0%
Vanuatu
14.7%
40.2%
151.8%

In numerous countries Governments, acknowledging the role of the Internet as a driver for economic growth and social well-being, are taking active steps to ensure that the Internet is accessible to all communities, regardless of location and income. As Pacific islands develop and extend ICT policies it will be essential to seek ways of overcoming the existing pervasive income barrier.

Notes for analysis of monthly spend:

  • Prices include GST (at the rate relevant to that country) and are in US dollars
  • All prices were converted to US dollars using 2007 Purchasing Power Parity (PPP) rates sourced from the World Bank, where available, with the remaining PPP rates sourced from the World Health Organisation
  • All plans were current as at February 2009
  • The prices for each country represent the plan resulting in the lowest monthly spend.

March 2009

 

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