6. Affordability, government charges and digital inclusion


This module summarises Chapter 6 which focuses on good practices aimed at increasing the affordability of broadband services and digital inclusion. It outlines mechanisms that help reduce the costs of services and devices, taking into consideration taxation and government charges. It also examines how to promote further digital and financial inclusion, by using ICTs to overcome barriers resulting from such factors as affordability or for people with special needs.

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Main policy objectives
Tools for measurements and analysis
The LAC region
Leading good practices


Main policy objectives

The main policy objective should be to encourage more people, businesses and governments to increase their use of ICTs. This is easier said than done: penetration still lags behind in LAC countries, businesses have not fully incorporated ICTs into their processes, and usage is still low by international standards. This general objective can be broken down into more specific goals:

  • Expand connectivity. Policy makers should promote the widespread adoption of ICTs by tackling the obstacles to growth. Such actions could include the promotion of competition, skills for effectively participating in the digital economy, a neutral taxation system, the development of local content, and incentives to promote ICT usage in the private and public sectors (addressed in Chapter 10 on business uptake and in Chapter 12 on digital government, as well as in Chapter 11 on e-health and Chapter 9 on education and skills for the digital economy).

  • Increase affordability. Governments should aim to increase affordability, not only through expansion of services but also through more specific policies and regulation that have a positive influence on lowering pricing of services and devices, and through targeted redistribution mechanisms aimed at tackling market failures.

  • Encourage financial inclusion. The use of mobile telephony and broadband for mobile banking can bring poor people into the formal financial system at a relatively low cost, even though challenges related to privacy and security still need to be addressed (Chapters 14 and 15).

  • Promote the inclusion of those with special needs through the use of ICTs. The use of ICTs helps reduce many of the obstacles faced by people with special needs, helping to fully include them in economies and societies. ICTs have a major contribution to make in integrating those with special needs.

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Tools for measurement and analysis

Affordability is a relative concept that does not lend itself to precise indicators. Market prices should be evaluated periodically to evaluate trends. Specifically, average and minimum available prices should be collected and compared with the distribution of income. This allows for precise measurement of how many people and households need to spend more than an acceptable share of their income to acquire broadband services. International price comparisons are also a useful measurement tool.

Taxation, at least partially, can be measured through estimated total taxes levied on total cost of ownership (TCO) and total cost of use (TCU), the difference between both indicators being the inclusion in TCO of upfront payments (activation and terminal equipment). Other fees along the value chain (as explained below) can be benchmarked with international data. As a reference, the GSMA has been publishing annual statistics on taxation of mobile services for over a decade.

Progress in gaining access to information and communications technologies (ICTs) among people with special needs can be measured by general indicators that track what percentage of members of such groups have adequate access, and that track the infrastructure that supports such access. The ICT Consultation in support of the High-Level Meeting on Disability and Development at the 68th session of the United Nations General Assembly (ITU, 2013) proposes a full set of indicators for monitoring and promoting the needs of people with disabilities/special needs, but effective implementation of this measurement agenda is not yet complete.

On the one hand, access to ICTs for people with special needs is based on the technology available for each type of impairment the availability of accessible ICT products and services across markets, and affordability. However, progress towards broader enabling conditions also has to be measured. This might include reference to ICTs in disability legislation; the rate of awareness of people with special needs of the use of ICTs; the share of GDP spent on research and development on ICT-enabled solutions for those with special needs; and total patents filed or awarded for ICT-enabled solutions for people with special needs. Other more specific indicators relate to health care, education, professional and lifelong learning, employment, independent living, government services and participation in political and public life. Finally, financial exclusion can be measured based on data showing the percentage of the population who use traditional as well as mobile and online banking.

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Overview of the situation in the LAC region


A crucial aspect of broadband uptake in the LAC region is affordability. Affordability is a relative concept that should be measured against income. It reflects the financial resources that households and businesses need to access services. In the OECD-IDB questionnaire, when asked about the main barriers to online and ICT services in middle- and low-income groups, LAC countries ranked “High prices for devices/services” as the greatest obstacle (Figure 6.1).

Taxation and other government-imposed charges

According to the GSMA, which periodically assesses taxes in the mobile sector worldwide, LAC countries on average charged 20.1% on TCO in 2014. For the set of countries analysed in previous studies, from 2010/2011, total tax on TCO increased from 17% to 18.4% (Figure 6). For the 27 OECD countries tracked by the GSMA (excluding Turkey, which currently taxes mobile services at 38.32%), total tax went from 20.0% to 20.95% in the same period.

Source: GSMA (2015), 2014 State of the Industry. Mobile Financial Services for the Unbanked,

Most LAC countries apply some sector-specific taxes along the production chain. Most of these taxes end up affecting end-user prices, which in turn decrease demand and affordability. These charges also have implications for the deployment of networks, which have a negative effect on supply, quality and coverage. They can also distort choices if not applied in a technologically neutral manner, something that is particularly important in an industry dependent on dynamic technological change.

Financial inclusion

While communication services have become widespread in the LAC region (109% penetration of mobile telecommunication services, for example, according to GSMA), a large proportion of low-income populations are still largely excluded from financial services. Average banking penetration for high-income OECD countries is 94%; in the LAC region, an average of 51.3% of the adult population has accounts in financial institutions (e.g. banks) (World Bank, 2014).

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Good practices


Affordability is defined in terms of the relative burden of paying for broadband services with a given income, for a given set of benefits derived from access. Thus, broadband affordability can be increased in three different, non-mutually exclusive ways: by increasing income, by lowering prices (especially entry-level prices) or by increasing the utility derived from broadband access (such as by shifting the perceived importance broadband access in people’s spending priorities).

Taxation and other government-imposed charges

Given the potential influence ICTs have on social and economic development, as well as on reducing inequality, government charges in the sector should be a matter of national policy, and the cost-benefit analysis of the government charges should be carefully analysed. Some general guidelines included in the Toolkit regarding the simplification, neutrality and transparency of tax regimes can help to maximise adoption and use and minimise distortions.

Financial inclusion

At the centre of the disruptive effect of ICTs for financial services are mobile financial services, or mobile money applications. To unlock the potential of mobile money in the LAC region, the following good practices could be encouraged:

  • Allowing non-traditional financial institutions to provide financial services to business and personal customers: adapting financial frameworks for non-banks is key for harnessing the potential of ICTs.
  • Simplifying the process of opening accounts: “Know your customer” (KYC) requirements, such as requiring a formal address and identification, increase operation costs, reducing the affordability of services and acting as a deterrent for vulnerable populations.
  • Reducing capital requirements for financial services providers: requirements need to be proportional to the risks undertaken by smaller agents and non-banks in offering these services.
  • Relaxing conditions for agents that can execute certain operations, such as cash in and cash out, to expand the geographical coverage of simple financial services.
  • Improving the conditions for international remittances, one of the fastest-growing uses of mobile banking: regulations tend to be restrictive, and many countries allow inbound remittances but forbid outgoing services.
  • Promoting interoperability of systems. Although mandating specific interoperability models rather than spurring a market-based approach may slow deployment, initiatives that encourage interoperability are desirable.

Individuals with special needs

According to the World Health Organization, approximately 5% of the world’s population has disabling hearing loss, and more than 4% are visually impaired (of whom about 13% are blind). Broadband, and, more generally, ICTs, could help to reduce the exclusion and inequality faced by individuals with these and other physical and cognitive challenges. However, to enable all citizens to fully realise their potential, broadband access without services and applications adapted to the special needs of users is not enough. The full potential of ICTs needs to be implemented to improve labour market opportunities and social empowerment of those with special needs. This would involve several goals and specific good practices:

  • Improving awareness, at the earliest stages of conception, of developing ICT products and services compatible with and adaptable to the requirements of those with special needs.
  • Including and engaging people with special needs and their organisations in the design of public policies.
  • Ensuring that governments lead by example and incorporate into their day-to-day routine ICT products and services appropriate for those with special needs. Requirements that take into account the needs of people with special needs in public procurement is a key tool for promoting inclusion and developing a robust market of accessible ICT products and services.

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Introduction •  Regulatory frameworks and digital strategies •  Spectrum policy •  Competition and infrastructure bottlenecks •  Extending broadband access and services •  Affordability, government charges and digital inclusion •  Convergence •  Regional integration •  Skills and Jobs •  Business uptake, entrepreneurship and digital content •  E-health •  Digital government •  Consumer protection and e-commerce •  Digital security management •  Privacy protection


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