Broadband in Emerging Markets

One of the key drivers for the mass adoption of mobile phones has been the reduction in costs for low-usage subscribers. This has been the result of efficient pricing in the two-sided mobile market – in other words, the interaction of retail charges for outgoing calls and wholesale inter-network charges for incoming calls. This pricing structure for voice calls has enabled mobile operators to cushion low income subscribers from the full cost of mobile subscription and usage. As a result, subscribers have been able to get their mobile service at low or no cost, and able to receive voice calls without having to pay.

However, the affordability for mobile voice thanks to the two sided charging structure does not apply to mobile broadband. There is a fundamental difference between the data and voice markets: unlike voice, where mechanisms exist to divide charges between both sides of the market, at present the cost of data is recovered from one side of the market only – the data user. This adversely affects the affordability of mobile services.

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