Global Telecom Costs Have Dropped Over Past Two Years, ITU Reports

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GENEVA--The cost of information and communications services worldwide has dropped sharply over the past two years, according to new figures released by a United Nations agency May 16.

Hamadoun Toure, secretary-general of the U.N.’s International Telecommunications Union, said that the cost of basic entry-level services fell by more than 18 percent on average between 2008 and 2010, a development he described as “highly encouraging.”

The cost of high-speed internet broadband service fell the most, declining by more than 50 percent on average over the two-year period, the ITU said. The cost of mobile cellular services fell by 22 percent in the same period, while the cost of fixed-line services fell by 7 percent.

Speaking to reporters, Toure said the biggest price drops were registered in developing countries, where costs of communications services--in particular broadband internet--have traditionally been higher in both relative and absolute terms.

The greatest price drops occurred in Africa, where fixed broadband prices fell by more than 55 percent and mobile cellular prices fell by 25 percent on average between 2008 and 2010.

“A number of new cellular mobile companies are now operating in developing countries, and authorities there have established a much more business-friendly environment,” the ITU chief said. Also contributing to the sharp drop in developing country prices was the “very significant cooperation” from developing country governments in establishing legal frameworks conducive to more competitive communications markets.

Toure said the fall in communications services had little to do with the recent global financial and economic crisis, which telecom providers emerged from relatively unscathed.

Market Shows Resilience.

“Markets showed good resilience to the financial crisis,” Toure said. “I said the ITC sector would help take the world out of the financial crisis, and that’s what happened.”

The cost measurements are based on the ITU’s Price Basket, which compares the cost of fixed telephone, mobile cellular and fixed internet broadband services with monthly average income, thus providing an indication of the affordability of these services. The Price Basket covers the cost of the three communication services in 165 countries.

The price for fixed internet broadband fell the sharpest overall, declining by 52 percent in developing between 2008-2010 and 32 percent in developed countries.

However, “it should be noted that steep price drops often reflect the extremely high cost of broadband in developing countries,” the ITU noted. “Even at half the price, the service is often still far beyond the pockets of average citizens” in the developing world.

In fact, the price gap between rich and poor countries for the three services in the ITU’s Price Basket still remain astronomically high in relative terms. In Europe, North America, and the advanced economies of the Asia-Pacific region, the average cost of fixed-line, mobile, and broadband internet combined averages less than 1 percent of monthly income, the ITU noted, whereas consumers in developing countries pay 17 percent of their monthly income on average for the three services.

In 32 low-income countries, the monthly price of an entry-level fixed broadband subscription (data transmission speed of less than 2 megabytes per second) averaged more than half of monthly income, and in 19 of these countries, basic broadband services cost more than an average monthly salary.

For Africa as a whole, broadband internet still costs almost three times average monthly income, with only one in 10 people on the continent having access to internet service.

And in a handful of developing countries--mainly those designated by the United Nations as least developed, as well as some central Asian countries such as Tajikistan and Uzbekistan--the cost of high-speed broadband internet (2MB-plus) still remains more than 10 times average monthly income, the ITU said.

The ITU said the 10 countries with the greatest relative decrease in combined fixed-line, mobile, and internet broadband prices between 2008 and 2010 were Azerbaijan, Bhutan, Sri Lanka, Bangladesh, Venezuela, Guyana, Uganda, Austria, Moldova and Tanzania.

By Daniel Pruzin