World Economy

Internet Access Can Boost Global Growth by $6 Trillion

Internet Access Can Boost Global Growth by $6 TrillionInternet Access Can Boost Global Growth by $6 Trillion

Bringing internet access to the 4.1 billion people in the world who do not have it would increase global economic output by $6.7 trillion, raising 500 million people out of poverty, according to a study by PricewaterhouseCoopers company.

The report, titled Connecting the world: Ten mechanisms for global inclusion, was prepared for Facebook by PwC’s strategy consultants Strategy&, The Guardian online reported.

Getting everyone in the world online is not as tall an order as one might think, according to the company: affordability, rather than infrastructure, is the main barrier to internet adoption in most areas. More than nine-tenths of the world’s population live in places where the infrastructure exists to get them online, but the majority of them cannot afford to do so.

For 66% of the world, a 500MB data plan costs more than 5% of their monthly income, the level the report’s authors describe as “unaffordable”. Even if it’s expensive, if there’s enough of a reason for someone to get online, they may look past the cost.

  Cut in Price Needed

By contrast, in most of the developing world, the necessary infrastructure is already in place to get internet to the whole population, if they could afford it. China, Brazil and Indonesia all have 100% of their populations covered by internet-capable infrastructure.

While cost reductions sound easier to achieve than total infrastructure creation, that can understate the magnitude of the reductions needed. To get 80% of their populations online, for instance, Ethiopia, Nigeria and the Philippines would all have to see a cut in the price of internet access by well over 90%.

Improvement of existing technology, or even simply installing existing technology in developing nations, will suffice to bring about much of this cost reduction. For instance, the vast majority of the world’s mobile spectrum is being used to deliver 2G internet: if it was upgraded to 3G or 4G, the cost of mobile data would plummet. But such an upgrade requires money spent upfront, not only by carriers, but also by users, who must buy (comparatively) more expensive phones.

  Middle East Changing

The Middle East can add $380 billion to regional economic output by bringing the whole region online according to Strategy&.

In an environment of low commodity prices and regional instability, the Middle East is changing as it achieves sustainable economic growth, explained the study.

Innovation and digitization will play as important a role in the future as government spending. This is because the Internet is a major driver of growth, and creator of new, high value jobs around the world, which makes digital inclusion a powerful tool for development and poverty reduction.

Extending the reach of the Internet to the unconnected is, however, looking increasingly difficult. There are 4.1 billion people around the world—56% of the world’s population—who are not online, with more than 200 million unconnected in the Middle East. The pace of Internet growth has slowed in recent years in developing countries, leaving billions of people disconnected from the modern economy.

To achieve universal Internet access will require the removal of significant barriers in the markets serving the Internet, according to the study.

“The centrality of the Internet to the 21st century economy means that enabling universal access is a fundamental development challenge of our era. These global and regional solutions can help bring the whole of the Middle East online because of the interconnected nature of the Internet,” said Bahjat El-Darwiche, a co-author of the study and a partner with Strategy&.

Bringing the whole world online would create huge benefits for developing countries and for businesses across industries over the coming five years, including:

* Additional global economic output of $6.7 trillion

* Social and economic improvement for over 4 billion people

* $400 billion growth opportunity for telecom operators

* $200 billion opportunity for content providers.