In an earlier post, we examined the amount spent on Internet service in the Caribbean. Now, in the last of our Snapshot series (for now), we look at the affordability of that service across the region.

Access to and the availability of Internet service is becoming increasingly important as we transition to knowledge-based societies. However, it is important that the service is affordable to ensure that as many people as possible can comfortably bear the expense. This post aims to explore how affordable an Internet service plan with a common download speed is across the English-speaking Caribbean, and how the region might compare with more developed countries.

Methodology

In an earlier instalment of this series, Snapshot: Internet speeds and prices in the Caribbean, we looked at the variation of Internet download speeds across the region, and compared pricing for an Internet service plan with an advertised download speed of 2 Mbps. The key results of that exercise were:

  • There is a wide variation in Internet download speeds across the region, from 64 kbps in Dominica, to 100 Mbps in Jamaica and Trinidad and Tobago.
  • Internet pricing in Guyana for all of the available plans are considerably higher than those in the rest of the region, and would be beyond the reach of most domestic customers, and even businesses.
  • Excluding Belize and Guyana, for an advertised download speed of 2 Mbps, the average monthly price across the English-speaking Caribbean (excluding access and activation fees but including taxes) was USD 55.30. When weighted by population, the average monthly rate fell to around USD 38.00.

This assessment now focuses on the affordability of Internet plans with an advertised download speed of 2 Mbps. Using the prices previously obtained, they were compared against the estimated monthly income per country based on per capita Gross Domestic Product (GDP). The resulting ratios, which have been expressed as percentages, indicate the portion of a person’s income that would be spent a 2 Mbps Internet plan.

Results

Figure 1 shows a wide disparity in the affordability of a 2 Mbps Internet plan across the region. Attention is drawn to the fact that Guyana was excluded from the exercise, since the price of a 2 Mbps plan there far exceeded the average monthly income of its residents. Additionally, the price for a similar plan in Belize is approximately 72% of the average Belizean’s monthly income, which suggests that take up of that plan by the average consumer might not be realistic. As a result, it has also been excluded from the graph.

Figure 1: Portion of monthly income as a percentage consumed by a 2 Mbps Internet plan (Sources: ISP websites, IMF, CIA)

For the remaining countries, a 2 Mbps Internet plan could account for up to 14% of a subscriber’s income in St. Vincent and the Grenadines, but in the Cayman Islands it could account for less than 1.8%. On average across the sample group, the plan would represent approximately 5.5% of a subscriber’s monthly income.

Discussion

For the purpose of general comparison, and similar to what was done when examining Internet spend, Figure 2 shows the percentage of a person’s monthly income that would be expended in select OECD countries for Internet plans with advertised download speeds of less than 2.5 Mbps. The average was approximately 1.5% of a person’s monthly income, as opposed to 5.5% as in the case of the English-speaking Caribbean (with Belize and Guyana excluded).

Figure 2: Portion of monthly income as a percentage consumed by Internet plans under 2.5 Mbps in select OECD countries as at September 2010 (Sources: OECD)

Recognising that, on average, the percentage of monthly income in the Caribbean is over three times that of surveyed OECD countries, some of the challenges with regard to take-up of Internet service in the region becomes evident. Most critically, Internet pricing for a baseline broadband plan in the Caribbean can consume a sizeable portion of a person’s income, when compared with all other critical expenses that must be accommodated. Hence the majority of citizens might not be able to afford it, especially since they would also need to possess a computing device with which to connect to and make use of the Internet.

Additionally, as it relates to prices offered by ISPs for Internet service, English-speaking Caribbean countries are not as populous as most OECD countries, and so would be at a disadvantage. The latter would enjoy lower prices due to economies of scale that can be realised in-country, and possibly across groups of countries (such as the EU). Further, higher population densities, greater urbanisation and more established support infrastructure would also lead to efficiencies in respect of network deployment, which would be reflected in the prices offered. It may therefore be little surprise why take-up of Internet service has not achieved critical mass in the region, and its use has not become more fully integrated into Caribbean societies.

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