Measuring internet poverty

For the majority of the world, it is impossible to think of life without the internet. Think about life and work during COVID-19 when internet connectivity and digitalization were among the most necessary aspects of daily life. The internet allows us to stay entertained, informed, and, most importantly, connected. The internet is now a basic necessity like food, clothes, shelter, or electricity.

However, not everyone is connected. Many people either pay too much or don’t receive the bandwidth to use the internet effectively. People who can’t afford a minimum package of connectivity are the poor of the 21st century.

This is why World Data Lab (WDL) has developed a global measurement framework of internet poverty to measure the number of people left behind in the internet revolution. People who can’t afford a basic package of connectivity—set at 1.5 gigabytes (GB) per month at a minimum download speed of 3 megabits per second (Mbps) (equivalent to 6 seconds to load a standard web page)—are internet-poor. This is an analog to the extreme poverty line, currently at $1.90 (2011 PPP), which represents a basket of minimum basic needs (mostly of food, clothes, and shelter).

Globally, internet access is rising. Every second, five to six people join the group of internet users (broadly seven are added and one person dies). Today, an estimated 4.5 billion people are connected compared to only half a billion people 20 years ago. As the price of internet access declined sharply, more people started to use it—similar to the rise of mobile phones 20 years ago.

To reduce internet poverty, incomes need to rise, or internet prices must decline. The price of the internet also declines if the quality and quantity improve. Remember when the last iPhone was presented, the previous version became cheaper even though it was performing just as well.

Internet prices for every country are now available from Cable and the International Telecommunication Union (ITU). The cost of the average mobile internet package is $0.50 per day. However, quality varies across countries. Using our model of how prices vary with quality, we obtained the price of a standardized quality of internet use in each country. Setting a standard of 1.5 GB per month with 3 Mbps would allow an individual to browse web pages, check emails, and conduct some basic online shopping for 40 minutes a day. It is our equivalent of the “basic needs” of accessing the internet—enough to do the minimum, but not enough to watch videos or conduct other tasks such as accessing databases that demand higher bandwidth. How many people can afford such a basic internet package?

We assume affordability if it would represent 10 percent or less of a person’s spending. This is in line with recent World Bank estimates for West Africa where only around 20-25 percent of the population can afford mobile internet.

Figure 1. Internet poverty framework

Internet poverty framework

Source: World Data Lab

Based on this definition, World Data Lab estimates that there are around 1.1 billion people living in internet poverty today. This is a lower-bound estimate as it assumes that everyone in a country actually has access to the internet if they are willing to pay, in the same way that poverty headcounts assume that everyone has access to food if they have the money to pay for it.

Focusing on internet affordability, we find that almost anyone living in a rich country can afford to use the internet—even if the price might be rather high. By contrast, the price plays a crucial role in poor countries. At least in the short term, people in developing regions depend on an affordable pricing scheme for them to be able to access the internet.

In particular, our results show that poor countries with cheap internet (below $15 per month), are able to connect a much larger proportion of the population than poor countries with expensive internet. Only 13 percent of the population in poor countries with cheap internet live in internet poverty. Conversely, poor countries with expensive internet have 67 percent of their population in internet poverty. Of the 4 billion people who live in countries with average per capita spending of below $11 per day, 3.4 billion have access to cheap internet by our definition. Only 7.5 percent, around 588 million people, live in poor countries with expensive internet. This group of people must be the focus for eliminating internet poverty.

While there are large differences in incomes around the world, there are also substantial differences in the price for a minimum package of internet. These price differences are independent of per capita incomes. In the U.S., people pay almost double for the same internet package as in the Philippines. Malawi has about the same per capita income as Mozambique but pays on average three times as much for a basic internet package. Among emerging economies, India stands out as a poor country with low internet prices—thus an internet poverty rate of around 8 percent. By contrast, Malawi, Venezuela, and Madagascar have the highest prices in the world even though they are among the poorest countries in the world, suggesting issues with economic growth and internet supply (see Figure 2).

Figure 2. Internet affordability in 2021

Internet affordability in 2021

Source: World Data Lab estimates

As we have seen over the last year, internet connectivity should be a staple in everyone’s life. While the COVID-19 shock will make it difficult to end extreme poverty by 2030, it is still possible to end internet poverty. If every country encouraged competition and innovation so that prices would decline to the levels of India, then internet poverty would already today decline by more than half.

Emily Charlotes

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