This is a 2012 update of the extent to which Internet broadband is affordable across the English-speaking Caribbean, and the changes that have occurred since May 2011.
In May 2011, we provided a snapshot of how affordable Internet broadband service was across the English-speaking Caribbean. In this post and one year later, we are updating our findings, and discussing the changes that have occurred since May 2011.
Approach
In our most recent Snapshot: Internet speeds and pricing update 2012, we looked at the variation of Internet download speeds and monthly pricing for select Internet plans across English-speaking countries in the Caribbean. Additionally, we:
- determined pricing for an Internet broadband service plan with an advertised download speed of 2 Mbps
- determined the best Internet plan by advertised download speed for up to USD 60.00, and
- compared the pricing for a 2 Mbps Internet plan obtained in May 2012 with those recorded in May 2011.
Key results of that exercise were:
- There is still a wide variation of Internet download speeds across the region, from 128 kbps in Belize, to 100 Mbps in Jamaica and Trinidad and Tobago.
- Internet pricing in Belize and Guyana for a 2 Mbps plan are considerably higher than those in the rest of the region, and would likely be beyond the reach of most domestic customers and businesses.
- Excluding Belize and Guyana, for an advertised download speed of 2 Mbps the average monthly rate across the English-speaking Caribbean, excluding access and activation fees but including taxes, was USD 65.37.
- Jamaica offered the best Internet plan by advertised download speed for up to USD 60.00: a 20 Mbps Internet plan at USD 46.53; whilst, Belize offered the worst, a 256K plan at USD 51.30.
- Between May 2011 and May 2012, changes in the monthly rate for a 2 Mbps plan occurred in Guyana, Barbados, Anguilla, Dominica and Saint Lucia.
Having examined pricing, this review focuses on the affordability of select Internet plans from across the same group of countries, i.e., those in the English-speaking Caribbean. The prices captured in the Internet spend exercise were compared against estimated monthly income, based on the per capita Gross Domestic Product (GDP) sourced from the United Nations as at 2010. The resulting ratios, which are expressed as percentages, indicate the proportion of a person’s income that would be spent on the stated plan, which indicates the extent to which it might be affordable to the average consumer.
How affordable is Internet service in 2012?
In 2012, there is still a wide variation across the Caribbean region in the proportion of a person’s monthly income that could be spent on Internet service. In Figure 1, which shows the percentage of monthly income that could be spent on a Internet service plan with an advertised download speed of 2 Mbps, the amounts vary from 1.62% in the Cayman Islands, to 12.26% in Saint Vincent and the Grenadines. The average proportion of monthly income among those 14 countries is 5.23%, with Dominica to Saint Vincent and the Grenadines falling outside that amount
It is highlighted that although calculations were performed for Internet spend amounts for Belize and Guyana, they have not been included in Figure 1. In Belize, a 2 Mbps plan would consume approximately 68.46% of the average individual’s monthly income, whilst in Guyana the monthly rate is over 2,760% (!) the typical monthly income. Hence, it is highly unlikely that the average residential customer in those two countries can afford a 2 Mbps plan – business customers might be more inclined to invest in such transmission speeds.
Out of the 16 countries initially assessed, only 10 countries have Internet plans with advertised download speeds of 4 Mbps. Figure 2, shows the percentage of monthly income for nine countries. Again Belize and Guyana have been excluded from the graph, since both of their results far exceed the typical income in their respective countries. In Belize the monthly spend for 4 Mbps plan as percentage of monthly income, was approximately 116%, while in Guyana, it was in the region of 5,415%.
For the countries included in Figure 2, a 4 Mbps plan would cost between 2.69% (in the Cayman Islands) and 41.07% (in Saint Vincent and the Grenadines) of a month’s income. The average across that grouping is 10.97%, which Saint Lucia and Saint Vincent and the Grenadines still exceed.
Figure 3 shows the percentage of monthly income spent on an 8 Mbps Internet plan. For this exercise, Belize and Guyana did not offer any plans at the speed, but other countries did.
An 8 Mbps plan would consume from 3.05% of a monthly income in the Cayman Islands, to 16.29% in Dominica. However, the average for that grouping is 8.80%, which surprisingly, is less than what obtained when assessing a 4 Mbps plan. This perceived inconsistency may be attributed to the fact that some of the higher priced countries, e.g. in Saint Lucia and Saint Vincent and the Grenadines, did not offer 8 Mbps plans and so could not influence the ratios calculated.
How has affordability changed since May 2011?
As indicated in our review of monthly spend on Internet service, there have been some changes in the rates payable for a 2 Mbps plan between May 2011 and May 2012. In Table 2, rate changes for a 2 Mbps plans were reported for five countries: Anguilla, Barbados, Dominica, Guyana and Saint Lucia. In turn, these changes resulted in an increase in amounts spent in Barbados and Guyana, by between 2% and 9%, making those service offerings less affordable in 2012 than they were in 2011.
On the other hand, in Anguilla, Dominica and Saint Lucia, there were substantial decreases in the price for a 2 Mbps plan over the past year. As a result, the proportion of monthly income spent on those services would have dropped by almost 40% in Anguilla, and by almost half in Dominica and Saint Lucia. Hence the average consumer in those countries should consider these plans more affordable in May 2012 than it was in May 2011.
A few discussion points…
Similar to our discussion on the affordability of mobile service earlier this week, in most countries assessed, and in the writer’s opinion, prices for Internet broadband service is still too high across the region, relative to the average income of consumers. Again, while having an Internet plan of 2 Mbps consume 5% of a person’s average income might not be considered unreasonable, the following ought to be considered:
- According to the ITU 2 Mbps is generally the minimum speed that is considered ‘broadband”. In some Caribbean countries, but more so in developed countries, residential customers can readily access speeds of up to 100 Mbps at what might be considered reltively reasonable prices. However, if a 2 Mbps plan is still being priced at levels that the average customer might find prohibitive, it does indicate that considerable strides have yet to be made to improve the affordability of Internet broadband service in the region.
- In addition to paying for Internet service, the average consumer most likely also be spending on mobile/cellular service, which according to our most recent affordability Snapshot, can cost as much as 11.55% and 22.48% for a Medium Voulme and High Vovulme basket of services, respectively. When all other essential expenses are considered, it is likely that Internet access will be less of a priority for most consumers.
- The regional broadband policy that has been developed is expected to be aligned with the Broadband Commission for Digital Development. Targets relevant to this discussion, which must be achieved by 2015, are: making broadband affordable, and increasing individual and household access to the Internet. As at the writing of this post, affordability has not been consistently realised across the region, which would in turn would drive increased take-up and use of Internet broadband.
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