In Business Model, Internet Access, Mobile

Economic growth solves lots of problems, so long as the gains are distributed widely. By the same measure, economic growth helps nations achieve Internet access development goals.

Adoption of Internet access services have income correlations of an important sort.

Policy analysts often argue that mobile, Internet access and other communications services become mass market services when the percentage of household income required to buy them dips to no more than three percent (some use a five-percent standard) of household income.

The implication is that the value chain and ecosystem has to be aligned to keep costs “affordable” for most households. And that is an obvious challenge for poor households.

Lower-income households must spend more of their income to obtain mobile service, a product that seems to be deemed a necessity among “bottom of the pyramid” households in Bangladesh, Pakistan, India, Sri Lanka, the Philippines, and Thailand.

The share of mobile expenditure decreases as personal income increases, which indicates that Engel’s law operates in the selected countries.

In other words, the poorer the individual, the greater share of income that is devoted to mobile services, as holds true in the case of other subsistence goods like food, healthcare, and housing.

We can argue about the causal relationships between use of the Internet and economic growth or social welfare. But in one sense, economic growth leads to higher use of the Internet, if indirectly.

Higher incomes mean buying Internet access gets more affordable, as a percentage of household income.

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