Connecting the world

Connecting the world: Ten mechanisms for global inclusion (Media report)

Global Internet growth is slowing down. Despite the ongoing digital revolution, some 56 percent of the world is still not online. The number of new Internet subscribers grew in single digits since 2013. The slowdown stems from barriers to Internet access that are created by deficiencies in the critical markets that deliver a meaningful Internet experience. We need new mechanisms so that the markets for connectivity, content creation, and retail remove these barriers to digital inclusion.

To bring the world online, the three main markets that enable the Internet need to work more effectively

People access the Internet thanks to three interdependent markets:

  • The Connectivity Market: which provides affordable and reliable access
  • The Content Market: which creates relevant and compelling reasons for people to go online
  • The Retail Market: which is the Internet industry’s sales and service arm and which helps people to discover the Internet

Markets that make the Internet function

To bring the rest of the world online, we need to make Internet access easier and cheaper, provide people with reasons to go online, and support people as they discover the Internet and use it for the first time.

—Bahjat El-Darwiche, Partner, Strategy&, part of the PwC network

The Connectivity Market needs to enhance affordability and boost capacity in an economically sustainable manner

The Connectivity Market contains an inherent tension: it needs to extend quality access to those not currently covered by high-capacity networks — which requires costly investment — while cutting prices to make the Internet more affordable to more people. The challenge is that in many developing countries data is already unprofitable.

Investment is needed to improve the capacity and quality of data networks so that they can support new users consuming up to 500 MB a month. The bulk of Internet users in developing markets connect to the Internet through 2G, a two-decades-old technology that is less efficient for data throughput and occupies the best spectrum slots. 2G networks provide a poor online user experience as the typically realized speeds are too slow.

Price cuts of an average of 70 percent are needed to enable 80 percent of the global population to afford 500 MB monthly of Internet usage.

Developing-country telecom operators often have negative margins on their data sales

Developing-country telecom operators often have negative margins on their data sales

There is a tension between the need to invest and the need to cut prices, particularly for telecom operators seeking to monetize growing data volumes to earn sufficient returns.

—Chris Weasler, Director of Global Connectivity at Facebook

Inclusion mechanisms for the Connectivity Market

Structural changes are needed in the Connectivity Market to achieve universal affordable access. Most supplier costs come from infrastructure outlays that relate to spectrum and technology choices.

  • Modernize networks: Get rid of 2G, an obsolete technology that is the least efficient for data throughput and that occupies the best spectrum slots. Upgrade to 3G or 4G/LTE and repurpose existing spectrum bands dedicated to 2G (especially 900 Mhz). Shifting spectrum resources away from 2G to 3G or 4G/LTE means significant changes in the industry cost structure and significantly improved affordability.
  • Decentralize content distribution: Networks in most developing countries lack the capacity to carry anything more than limited amounts of voice traffic. To relieve the pressure on these networks, route the traffic through other delivery mechanisms, such as Wi-Fi networks.
  • Build more national and international Internet infrastructure: More international and national Internet infrastructure such as data centers and Internet exchange points (IxPs) will speed up data transmission, improve its quality, reduce the need for extra local infrastructure such as content servers, and cut costs per user.

Inclusion mechanisms for the Connectivity Market

Inclusion mechanisms for the Content Market

The Content Market needs to overcome the challenge of creating more local and relevant material and services that will bring people online, while doing so in a manner that is financially viable. The unconnected will go online if they find compelling content that provides edification as well entertainment and that helps them to advance economically and socially. However, providers have to overbuild in the early stages of content creation and so incur substantial initial costs.

  • Education represents a significant portion of consumer spending in developing countries, making it a strong reason to go online. Already, consumers in China and India spend a large proportion of their income on education.
  • Social services, such as e-government, are an important content category that promotes digital and social inclusion, and they provide compelling reasons to go online. Too many people in developing countries cannot use basic government services because attending offices in person is expensive and time-consuming. Moreover, government services tend to be overburdened and under-resourced, which also provides opportunities for corruption. Social services online can allow people to obtain official documents and permits; business, education, and financial services; and agricultural information.
  • To provide economic opportunity, Internet content providers in developing countries need to make material higher quality and more timely and dynamic to empower users to more actively participate in a broader range of markets. This can involve supplying information on the cost of agricultural inputs and crop sale prices, or providing online markets through which rural producers can sell to urban consumers.

Social Services

Bringing the world online is a development challenge. By mobilizing the successful techniques used to help people adopt other products and services, we can enable people in the developing world to participate fully in the modern economy and benefit from the Internet's transformative impact.

—Mathias Herzog, Principal, PwC U.S.

Inclusion mechanisms for the Retail Market and the last half-billion

The Retail Market needs high-touch marketing and consultative selling models, brand subsidies, and simpler value propositions. These will enable people to become aware of the Internet, many for the first time, and to learn how to use it. Finally, an additional mechanism of innovative approaches will be required to connect the last half-billion people who are outside of the range of modern transport, energy supply, and retail systems.

  • High-touch sales models can provide the Internet with the same community selling, education, and validation that poorer consumers want before they buy new goods or services. In particular, learning centers educate people to become technology-literate. Cyber-cafés often act as learning centers. They are cost effective as they use shared devices and pooled access.
  • Brand subsidies can enable the poorest to use the Internet. Subsidies have provided millions in India with access to the Internet for the first time.
  • Simpler value propositions, such as bundled access and content plans or “pay-per-app” plans, reduce the financial risk for new users. They also ease the distribution of Internet services.

Inclusion mechanism for the last half-billion

  • Disruptive technologies will bring the Internet to the last half-billion unconnected people. They will be connected by emerging solutions, including a combination of non-terrestrial technologies, such as unmanned aerial vehicles, and ground-based networks.

Cyber-cafés play an important role in allowing people to discover the Internet in Ghana, Kenya, and Zambia

Cyber-cafés play an important role in allowing people to discover the Internet in Ghana, Kenya, and Zambia

These 10 mechanisms can bring the rest of the world online

In the Connectivity Market

  1. Shifting the spectrum away from 2G: Internet becomes more affordable
  2. Better offline distribution of content: People able to download locally cached content and consume it offline
  3. More national and international Internet infrastructure: Internet access prices are cheaper

In the Content Market

  1. Relevant educational content: Provides a compelling reason to go online
  2. Social services online: Allows citizens to engage with their government more easily and makes them less vulnerable to corruption
  3. Economic opportunity content: People go online because they can earn more, be more productive, and have wider market access

In the Retail Market

  1. High-touch sales models: Provide the community selling, education, and validation that poorer consumers desire before taking on new goods or services
  2. Brand- or subscriber-subsidized access: Gives the poorest cheap access
  3. Simpler value propositions: Reduces the financial risk for new users

For the last half-billion

  1. Disruptive technologies: Technological innovations will reach the remotest and the very poorest

All the world online

The coming transformation of the Internet

As more people from developing markets use online resources, the nature of the Internet will start to change:

  • There could be five Internet users online in developing markets for every user in developed markets, compared to the current ratio of two to one
  • Internet users in the developing world will seek more content related to education, economic opportunity, and social needs
  • They will likely download entertainment from either Wi-Fi hotspots or other technologies, and consume it offline
  • There will be millions of new Web pages reflecting languages and cultures that are now barely visible online

The coming transformation of the Internet

The inclusive Internet of the future will be different from today’s Internet. It will be linguistically, culturally, and economically more adapted to the needs of the previously unconnected, and it will be the primary channel for the provision of critical services to those most marginalized in today’s physical economy.

—Milind Singh, CEO and co-founder of Dosh

About the Strategy& Digital Prosperity Project

The Strategy& Digital Prosperity Project brings together leading experts to provide thought leadership at the intersection of technology and economics. The project has developed measures of digitization and digital maturity to better inform policymakers and business leaders on how to use digitization to further economic and social progress.

The members of the project are: Bahjat El-Darwiche, Mathias Herzog, Rawia Abdel Samad, Jad El Mir, and Roshni Goel. Milind Singh was part of the project when he was with Strategy&.


The authors would like to acknowledge the central role of numerous participants in meetings and interviews, in particular from Facebook. Without their expert insights, the study would not have been possible in the present form.

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