Long before the Covid-19 crisis, the telecom industry was already talking about broadband as a commodity. With mature markets reaching a high penetration of internet users, broadband prices were stagnating and the only solution was to come up with new add-on services like media content, security or smart homes. The pandemic has shown we might not be at the commodity stage yet. The incredible importance of broadband to work, school, commerce and leisure activities means it’s still possible to differentiate on quality and price. Even more important is the realisation there is still volume to grow: it’s no longer acceptable for just 80-90 percent of the population to have good broadband – it must be universal.
In several countries in Europe and the US, this is leading to the launch of new low-cost internet services targeting people who previously lacked the means to get online permanently. In some cases, the government is getting involved to close the gaps, while in other places operators are doing it on their own, recognising the need to serve a new class of customers.
At the start of the pandemic just over a year ago, many ISPs relaxed their terms of service to help customers stay online for work and school. No more limits on fixed broadband data, no disconnections for customers with payment problems, free speed upgrades and discounted services for key workers like teachers and healthcare workers were widely on offer. Some kept these offers going for several months or renewed them during later lockdowns, but most were temporary and mainly targeted existing customers.
More recently operators are recognising there is a bigger long-term issue: some parts of the population are still not online and may need some help with that. Some of the recent measures introduced include:
- Low-cost internet plans. In the UK, BT and Virgin Media have introduced cheap fixed broadband plans from GBP 15 per month for customers on social benefits. This follows regulator Ofcom finding that nearly 5 million households in the UK struggled to pay for telecom services in 2020. Vodafone meanwhile is going global with a campaign to help jobseekers get online.
- Social internet tariffs. Some countries like Belgium or France already required one or more operators to offer a discounted internet plan for unemployed people or those receiving other forms of social security. Portugal is the latest to introduce such a requirement, and Hungary has also been running a similar programme for low-income households.
- Broadband vouchers. Another way to target vulnerable groups is vouchers to purchase a computer and internet connection. Italy and Greece have both launched new programmes, making millions of euros available to low-income households to spend with any ISP.
- Right to internet. Germany recognised the necessity of internet by making it a legal right in the latest reform of the telecoms law. A minimum speed will be set later, which could lead to new types of internet packages. Belgium’s ombudsmen have also called for making internet a legal right, so people cannot be shut off if they have payment problems.
- Stimulus funds. The EU has called for 20 percent of its Recovery and Resilience Fund to go towards digital measures, and this can mean helping to bring fast broadband to unserved areas. Italy has already said it expects to spend a quarter of the money it receives from the fund on digital innovation, including bringing gigabit broadband to the whole country by 2026.
Most of the above plans assume the infrastructure is in place already to deliver quality broadband services to all households. However, in some countries not even a basic connection at 10 Mbps is available everywhere. This is notably the case in the US, where the new government has proposed spending USD 100 billion over the next ten years to improve broadband network access. The White House estimates almost one in ten Americans live in areas without access to fast internet.
The Biden administration also said it plans to look at ways to bring down internet prices in the long term. In the mean time it has put up around USD 10 billion to subsidise internet access for low-income households, schools and public libraries. US telcos are already trying to pre-empt any regulation with their own plans to close the digital divide, building on their existing infrastructure plans and introducing new service tiers for low-income groups. 5G fixed-wireless access may play a role in this too, but for now it is still a costly service with limited availability.
If all these plans come to fruition, a lot less people should be left offline in any future emergency. However, the past year should serve as a wake-up call to the telecom industry. Operators have focused more on enticing customers into big expensive bundles in recent years than on ensuring everyone has a quality connection. The industry has profited from the pandemic through the soaring demand for broadband, and this is helping to fund the investments needed in future fibre and 5G networks. It has also benefited from cost savings, thanks to greater use of digital service channels and reduced need for office space and travel. Now it’s time for some of these profits to go towards turning broadband into a true commodity, that everyone can afford.
