Monday, August 15, 2011

High prices stifle broadband in emerging markets

MELBOURNE, AUSTRALIA: Despite falling prices, consumers living in emerging markets are still paying far more for fixed and wireless broadband than their mature market counterparts, putting it completely out of reach for the majority of them, according to Ovum.

The independent telecoms analyst studied broadband prices in 19 emerging markets, such as Malaysia, the Philippines, India and Pakistan, to see what has changed from its last look in 2010.

Ovum found that while prices in most markets fell compared to 2010, broadband continued to be beyond the reach of the vast majority of emerging market consumers. This lack of affordability is a major inhibitor to unlocking the growth potential in these markets.

Ovum senior analyst Richard Hurst commented: “Demand for broadband services in emerging markets continues to be stifled by high prices. In some countries, broadband pricing was double or triple the price of an equivalent service in a more developed market. In addition, lower GDP per capita in most emerging markets means that broadband is only available to the highest socioeconomic groups.”

Ovum found that the Philippines and Malaysia had the lowest broadband tariffs of the 19 countries in its sample, however broadband is still unaffordable in the Philippines. Entry-level WiMAX services in the Philippines cost as much as $223 per year for wi-tribe’s entry-level WiMAX while Globe’s entry-level HSPA service was the most affordable broadband tariff in the Philippines, costing USD 1.28 per 100 MB.

In fact, the broadband services using HSPA technology were the cheapest option for entry-level users, with an average global price of $223 per year. While this was far cheaper than entry-level broadband services based on DSL and WiMAX technologies, HSPA packages had a much lower data allowance, Overall, Ovum found that entry-level DSL packages offered the best value for emerging market consumers.

Hurst commented: “While prices remain high, we expect them to fall slightly in the short-term. Network operators and service providers will reduce their prices and introduce packages to improve affordability and stimulate data usage so they can attract more subscribers and drive revenue growth.”

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