Friday, September 17, 2010

Consumers in emerging markets paying 3 times more for broadband, says Ovum

KUALA LUMPUR: Consumers living in emerging markets, including Malaysia, Russia and Saudi Arabia, are paying up to three times more for broadband than their mature market counterparts, according to Ovum.

Ovum said on Friday, Sept 17 that research by the independent telecoms analyst into broadband in 15 emerging markets showed emerging consumers -- despite earning the lowest wages -- are paying far more on average than the rest of the world.

Ovum practice leader and author of the report on 'Broadband pricing in emerging markets', Angel Dobardziev said:'' 'The cost of broadband in some emerging countries is three times as high as in mature markets, which when coupled with low wages, makes it an unaffordable luxury for all except a small group at the top of the socio-economic pyramid.

'The striking difference in broadband prices in mature and emerging markets means there is a huge divide in terms of uptake of services.'

The broadband pricing in emerging markets compares DSL, WiMax, and HSPA. Emerging markets are Asia (India, Malaysia, Pakistan, and the Philippines); Eastern Europe (Poland and Russia); Middle East and Africa (Bahrain, Jordan, Kenya, Nigeria, Saudi Arabia, and South Africa) and South and Central America (Colombia, Mexico, and Venezuela).

In the Philippines, the competitive broadband market ensured some of the lowest tariffs amongst those sampled by Ovum.

However, given the country's low GDP per capita (US$1,890), these broadband tariffs are quite unaffordable. Wi-tribe's entry-level WiMAX tariff of US$323 is amongst the lowest WiMAX tariffs as compared to other emerging countries sampled. With greater download speed, this is also competitive compared to PLDT's entry-level DSL tariff of US$400.

Dobardziev said the key to making broadband more affordable for emerging markets will be an increase in supply and competition, which is currently modest in most markets and non-existent outside the key urban areas.

'However, many markets will require concerted regulatory and policy efforts to increase competition and supply and bring affordability within reach of the mass consumer market. As yet it is unclear how quickly this will happen,' she said.

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