Increasing Broadband Internet Penetration
In the OIC Member Countries
159
reduction in adoption as a result of incremental taxation could yield a negative impact on GDP
growth. The taxation initiative could be complemented with selected targeted subsidies to be
assigned to vulnerable households or residents in rural areas.
In addition, the reduction of broadband service prices can be achieved through a number of
targeted public policy initiatives. These initiatives are generally implemented with the
objective of achieving universal broadband adoption. The underlying rationale for these
policies is that, beyond a competition model, government policies should be implemented to
further price reductions of broadband in order to make it accessible to segments of the
population affected by limited affordability.
One approach to achieve this is for the government to offer a subsidy on the cost of broadband
access. This could be done in the form of a plain voucher or a tax refund for qualifying
segments of the population (e.g. students). In previous experiences, the critical success factors
in this approach are two:• Establish upfront who is supposed to determine what constitutes an “affordable”
offer? The public service provider or the regulator,
• Ensure that whoever will define the “social” offer has the right economic expertise.
The second option is to negotiate an agreement between the government and private sector
broadband providers to offer low-priced services, but in this case limited to institutions (such
as schools, libraries, or health clinics). Several countries have enacted policies in this domain.
In the United States, the FCC provides a 65% subsidy to rural public or non-profit rural health
care providers to use toward the cost of broadband network deployment or subscriptions
through its Health Connect Fund. The Korean government spent $24 billion on a public
backbone network, which service providers used to offer broadband to 30,000 government
and research institutes and 10,000 schools. Scotland’s 2004 Broadband Pathfinder Project
offered grants to wire schools, libraries, and public buildings.
The third option comprises offering free Internet access through Wi-Fi services located in
public areas, such as squares, libraries, and transportation hubs. The provision of free Wi-Fi
Internet access is being conceived as one of the building blocks needed to build a city’s
international competitiveness. There are several features and options of a free Wi-Fi program:• Coverage of public spaces: squares and parks, public transportation, including metros,
public libraries,
• Type of service: amount of time provided for free access (1hr. limit while commuting,
open unlimited access),
• Type of service provider: under contract with telecommunications operators or other
broadband player, offered by the city administration,
• Quality of service: basic video streaming quality,
As it is obvious, the options outlined above are not mutually exclusive and can be applied
simultaneously.