Globalist Analysis

Robber Barons of the Internet Age?

Is government the biggest obstacle to developing country citizens’ access to the Internet?

An online case of the curse of bad government?


Many enthusiasts see the Internet and information technology as a lifeline that could accelerate the transformation of the less developed world.

And indeed, we have witnessed over the past decade the astonishing reinvention of India, from a land of handicrafts and bureaucracy to one of the leading creative centers in the web of ideas.

Much more needs to be done on this critical front. Sadly, many of the countries in the deepest holes are being denied access to the global web.

However, the problem is not simply scarcity of telecommunications infrastructure. Nor is it linguistic or cultural obstacles. The problem is bad government.

The governing elites in too many countries think it is more important for them to live in a style appropriate to their status than to give the kids Internet connections. Monopolies in key production and communication sectors are passed out to key associates.

Too often, only designated "entrepreneurs" can set up businesses, protected from competition and regulatory intervention. Not surprisingly, prices under these conditions do not reflect operating costs, and there is no concern for the benefits of using resources well. These businesses are run simply to generate a handsome profit for a lucky few.

When that happens, state-run telecommunications monopolies, entrusted to the hands of kleptocrats, are extracting outrageous fees for Internet use in many of the poorest countries of the world, particularly in Africa.

The table below shows the cost of 20 hours of Internet connection per month in some major countries.

The Cost of Going Online

Data Source: World Bank

As the table suggests, many low-income countries offer inexpensive Internet connections. But others charge mind-boggling fees.

None of the world's 40 richest countries charges as much as $40 for Internet use per month, yet the average charge in Africa is $65. Of the nine countries that charge more than $100, seven are in Africa.

In most high-income countries, Internet use costs less than 2% of income. The often exorbitant dollar charges in very poor countries put the Internet way out of reach for the average citizen.

By pricing the Internet so far above per capita income, telecommunications monopolies in poor countries are excluding not simply the average citizen — but everyone except a minuscule elite.

Worse, they are pricing institutions such as schools and even universities out of the market. In Africa, 37 out of 44 countries charge more than average per capita income for Internet use. In Burundi, such service costs $80.90 a month, 971% of average income. Compare that to Hong Kong, where Internet use costs $3.90 — or 0.2% of average income.

Lower rates are not a matter of the level of development — or the available infrastructure. Just consider these pairs:

Internet “Haves” Versus “Have-Nots”

Data Source: World Bank, World Development Indicators database

Internet access is kept out of the reach of almost everyone in Tanzania, Gabon, Azerbaijan and Haiti.

This is not because it would be impossible to provide it (just look to the partner in each pair of countries) — but because of shameless business practices. Prices are held at three, four or even six times the level in comparable countries.

As a result, people who would like to participate in the global exchange of ideas and commerce are denied the opportunity in some of the world's poorest countries.

Instead of the ubiquitous Internet access shops that charge a small hourly fee in many poor countries, the worst-governed countries exclude almost everyone, simply through their pricing policies.

Instead of serving the people, the telecommunications infrastructure in those countries is being used to siphon off income to those in control. The leaders responsible for these practices are locking their citizens into a prison of poverty, denying them access to the world's knowledge.

The evidence suggests that it is not too much interaction with global ideas and markets that locks countries into low-level poverty traps.

Countries with vigorous cultures and economies generally have low Internet fees: China, India, Brazil, Turkey. The countries that are the poorest and the most profoundly excluded from the gains of modern technology and ideas are those that are being starved of contact by their own government's policies.

President Abdoulaye Wade of Senegal is keen to expand the access of the poorest countries of the world to the Internet. That effort deserves broad support. However, President Wade should prove to the world how serious he is in that endeavour — by cutting the price of Internet use in Senegal in half.

Internet use in his country costs $41 per month. That price is low compared to Nigeria ($85), where service is often atrocious, or the Gambia ($133).

But contrast it with the price in Nepal, $13 — or in Vietnam, $20.

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