Increasing Broadband Internet Penetration
In the OIC Member Countries
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• Limited affordability: certain portions of the population either cannot afford a device
or purchase the subscription needed to access the Internet,
• Limited awareness of the potential of the broadband service or lack of digital literacy,
• Lack of cultural relevance or interest: the value proposition of applications, services,
and content provided by the Internet does not fulfill a need of the adopting
population.
Broadband service providers are also facing challenges that prevent them from investing in the
development of forward-looking broadband infrastructure. The global telecommunications
industry is facing the challenge of continuing to deploy network infrastructure that
accommodates the exponential growth in data traffic. Annual global Internet traffic in 2016
has reached 88.7 billion gigabytes per month. Having grown at an annual rate of 30% in the
past five years, it is expected to continue increasing at a compound annual growth rate of 22%
through 2020. Internet traffic will grow fastest in the Middle East and Africa (27% compound
annual growth rate) reaching 10.9 billion gigabytes per month in 2020. To accommodate the
growing traffic, broadband service providers need to deploy fixed and mobile networks
capable of delivering data flows at faster speeds. While pressured to increase capital spending
for deploying ultrafast networks, broadband service providers are facing increased
competition from Over The Top (OTT) platforms (such as Google, Facebook and Netflix) with
the potential to capture a growing share of traditional telecommunications revenue streams.
The intensity of competition among broadband service providers and between
telecommunications and OTT players is putting pressure on the broadband industry revenues,
which have not grown after 2011.
Governments and private broadband service providers have recognized the presence of
barriers to increasing broadband penetration reviewed above. The broadband supply gap
tends to be focused in rural and isolated areas. A workable business case for broadband
deployment is typically predicated on the possibility of serving aggregate clusters of demand
generally concentrated in population dense geographies. While this is feasible in the case of
urban and suburban settings, rural geographies do not provide an attractive market, while
increasing the capital required for deployment. Several approaches can be put in place to
address this barrier. For example, one approach focuses on alleviating some of the constraints
of the rural broadband business case. Some governments deploy publicly owned backbone
networks with the objective of reaching remote locations. Since traffic backhauling represents
approximately 30% of the operating costs of running a broadband network, a government-
owned network represents an opportunity of cutting transit costs to subsidize rural
broadband network operations. Another approach to tackling rural broadband deployment
involves the introduction of innovative ways of allocating radio spectrum to reduce the costs of
constructing wireless networks. Conventional spectrum management approaches, which imply
high costs to acquire spectrum licenses, raise a potential hurdle to deploying broadband in
rural areas. In this context, some governments have designated rural areas where a common
band of spectrum is assigned on a cooperative basis on a shared basis.