Global Superhighway: Relative Cost of Broadband Shows Why Music Services May Stay in Western Markets a While
It's no secret that smartphone and tablet sales are exploding around the world. What's less visible is how access to mobile broadband varies worldwide. A recent report by the International Telecommunications Union (ITU) shows the differences in price and penetration of mobile broadband in various countries. These differences matter because affordable mobile broadband is necessary for the rich-media features offered on smartphones and tablets like music videos, apps or streaming services.
Across six regions, a 500 MB postpaid handset plan is the most affordable and costs less than 6% of per capital gross national income (GNI). Prepaid plans are common in much of the world. (Africa is an exception to affordability.) Both pre- and post-paid plans cost at least (and often more than) 20% of per capita GNI.
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Most of the lowest mobile broadband prices, in terms of per capita GNI, are in Europe. A 500 MB prepaid mobile broadband plan is lowest in Austria, costing 0.1% of per capita GNI. The United Kingdom is second-lowest (0.3%) and Germany third-lowest (0.4%).
The United States ranks 53rd in prepaid mobile broadband, far lower than comparable countries. At 2.1% of per capital GNI, the United States fares even worse in postpaid mobile broadband, ranking at No. 56.
For the most part, music services have invested in markets with affordable mobile broadband. For example, Spotify is available in seven of the 10 countries with the most affordable mobile broadband access. (Sweden, where subscription revenue accounts for more than 90% of digital music revenue, wasn't on the ITU's chart.) At 2.5% of per capita GNI, Mexico has the highest mobile broadband price of countries in which Spotify operates.
The countries with the most expensive mobile broadband are more likely to have been passed up by music services. Of the 20 least affordable 500 MB prepaid mobile broadband plans, 14 can be found in Africa. A plan costs 126.4% of per capital GNI in Congo and 109.1% in Sierra Leone. Senegal ranks 119th out of 126 with a cost of 35.7%.
Countries that represent roughly the middle third of the ITU's list have strong potential for music services. Indonesia, India, Colombia, Argentina and Japan are heavily populated countries with moderate mobile broadband costs — five to seven times that of most Western European countries, in terms of per capita GNI, but far better than the countries in the bottom third. Brazil will be the country with the highest mobile broadband price, 4% of per capital GNI, when Spotify eventually launches there.
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