Increasing Broadband Internet Penetration

In the OIC Member Countries

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penetration has reached 32% of the total population. However, the increase in data traffic is

putting pressure on operators to deploy 4G technology. The auctioning of technology-agnostic

licenses has been an incentive towards 4G deployment which is planned to reach 100%

coverage by 2020.

Beyond the incentives to investment, there are some initiatives that discourage capital

spending. One of them is the increase in mobile license renewal fees and the reduction in the

duration of the concessions from 20 years to 15. These measures will have a negative impact

on the operators’ willingness and ability to commit capital for the deployment of 4G and need

to be reviewed against estimated negative impacts.

Demand policies

As discussed above, Cote d’Ivoire’s broadband demand gap is significant: close to 51% of the

population is served by broadband technology but do not purchase service due to economic,

digital literacy, cultural or linguistic barriers.

First and foremost, the government has recognized that increased service adoption is

dependent on lowering the total cost incurred by consumers by purchasing and operating the

technology. The competition lever for stimulating price reduction has been already pulled,

given the assignment of a fourth wireless license to the Libyan operator will increase

competitive intensity, which could result in lower prices. Beyond, competition, the Ivoirian

government has reduced taxes incurred by consumers when purchasing broadband terminals.

However, service use is still impacted by 18% in value added tax, to which a sector specific tax

is added

. In general terms, since high taxation increases the total cost of ownership of

wireless services, higher wireless consumption taxes raise the affordability barrier and reduce

adoption. In this context, current taxation policies are likely to have a detrimental effect on the

public policy strategy aimed at deploying mobile broadband. If taxes limit adoption of wireless

broadband, it is relevant to ask what the ultimate impact of reduced penetration might have on

economic growth. Hypothetically, it is safe to assume that a reduction in adoption as a result of

incremental taxation could yield a negative impact on GDP growth. To address this, the

taxation initiative could be complemented with selected targeted subsidies to be assigned to

vulnerable households or residents in rural areas.

Moving to the digital literacy domain, the Ivoirian government has been developing policies

aimed at improving digital literacy (for example, “One citizen, one computer”). Digital literacy

is defined as the “ability to use digital technology, communication tools or networks to locate,

evaluate, use and create information” (Hauge and Prier, 2010). Initiatives aimed at building

digital literacy need to involve both embedding programs in the formal education system and

targeting non-formal initiatives to specific segments of the population (elderly, handicapped,

rural poor, etc.).

These levies are documented in the International Telecommunications Union Eye database and have been analyzed in

Katz (2015).

The impact of taxation on the digital economy

. Geneva: International Telecommunications Union.