Investments in the deployment of 4G network across African countries declined by seven per cent in 2020, the International Telecommunications Union (ITU) has said. The ITU in its latest report tagged “The Economic Impact of Broadband and Digitization through the COVID-19 Pandemic,” noted that the decline was in spite of the rising need for more broadband connectivity.
According to the report, the decline in 4G investments was caused by the COVID-19 pandemic, thus widening the digital divide. The ITU disclosed that the pandemic also drove 30 per cent increase in internet traffic worldwide with changes in time of day and geographic distribution patterns.
“Telecommunication/ICT capital investment in developed countries accelerated (from 0.5 per cent compound annual growth rate (CAGR) between 2010 and 2019 to 1.8 per cent between 2019 and 2020 in Member States of the Organisation for Economic Co-operation and Development (OECD)) to accommodate the increase in traffic, combined with the deployment of 5G and optical fibre infrastructure,” ITU stated in the report. It added, however, that investments declined by 7.0 per cent between 2019 and 2020 in Latin America, 2.9 per cent in Asia and the Pacific, 3.4 per cent in the Arab States, and 7.0 per cent in Africa, thereby indicating a widening of the digital divide.
“The decline of capital expenditures (CAPEX) per capita in developing countries has resulted in a decreasing growth rate of 4G coverage and lagging deployment of 5G. 5G is currently reaching 3.34 per cent of the population in Latin America, and 0 per cent of the population in Africa,” the global telecommunications body observed.
On the impacts of broadband economy, ITU noted that an increase in broadband penetration, a partial decline in service prices, and a decrease in GDP per capita, the 2010–2020 fixed broadband model indicates that the infrastructure continues to have a significant impact on the world economy.
“In fact, the coefficient of impact has increased slightly since the 2020 study: with a global dataset extending to the Economic impact of broadband and digitization through the COVID-19 pandemic. At the end of 2020, an increase of 10 per cent in fixed broadband penetration yields an increase of 0.80 per cent in GDP per capita. The difference between the two coefficients is, however, within the boundaries of the confidence intervals and therefore cannot be considered statistically significant,” ITU said in the report.
The ITU, however, noted that most countries in Africa have not recorded any economic impact of broadband. “Consistent with the results of the prior study, most countries in the Africa region see no economic impact from fixed broadband penetration. This is because adoption of fixed broadband in the region over the past three years has been limited,” it stated.
“As expected, fixed capital formation continues to be the catalyst for GDP growth, suggesting an important contribution to the economy. Similarly, the educated labour force variable continues to affect economic growth; it is estimated that 1 per cent more skilled labour would increase a country’s GDP by 0.05 per cent,” it added.
The body added that the 2021 study revealed that a one per cent drop in broadband prices will boost adoption by more than 0.42 per cent an increase in the coefficient from 0.30 per cent in the 2020 study. “This is statistically significant and could indicate that pricing is becoming even more relevant in driving adoption, which would seem plausible once broadband starts to reach a more price-sensitive population.
“This is another confirmation of the relevance of affordability for expanding fixed broadband penetration. Supply dynamics suggest that, as expected, income levels affect operators’ revenues and investments. Consumption propensity for broadband services seems to have a significant impact on increasing the supply of digital offerings,” it said.
ITU added that fixed broadband operator revenues were found to have a significant impact on the performance of the industry, implying a reinvestment of the output to the productive basis of the economy.