Digital dividends: A gap too far?

It is now 21 years since Sri Lanka became the first country in South Asia to introduce commercially available internet services.

It is now 21 years since Sri Lanka became the first country in South Asia to introduce commercially available internet services. The company that pioneered the service in April 1995, Lanka Internet Services Ltd, no longer exists. Indeed, much has changed since those heady days of modems and narrowband. As the user base and applications keep expanding, how is the cyber factor changing our society?

Answering this question occupies a good deal of my time and energies these days. As one who has been chronicling the rise of the information society in Sri Lanka for over two decades, I have many insights to share.

First, the latest headline figures. By June 2015 (latest data available), there were some 4.3 million internet subscriptions in Sri Lanka. Most of them (83%) were mobile subscriptions, according to the Telecommunications Regulatory Commission (TRC) – the official keeper of IT and telecom related statistics.

Since internet subscriptions are sometimes shared among family members or co-workers, the actual number of users tends to be higher. We can estimate that around 6 million Lankans now use the internet (28% of total population). There is no typical user in this game.

Unconnected majority
What about the rest – the as yet unconnected majority?

There can be various reasons why people don’t use the internet, including a lack of need or interest, non-availability of the service in their areas, affordability issues and the absence of basic skills.

The Census and Statistics Department’s latest (2014) survey on computer literacy in Sri Lanka found that the skill had reached 25%. Since the survey covered only desktop computers and laptops, they could be underestimating the digital skills of our people who quickly master smartphones and other digital devices. But the stark fact remains: not everyone in our society has the ability to operate a digital device to get online. Such disparities are not confined to Sri Lanka. There is still a digital divide in many societies – between urban and rural areas, across income groups and among men and women.

There are gaps among countries too. The 2015 edition of the ‘Measuring the Information Society Report’ shows how developing countries are lagging developed countries in mass access to new information and communication technologies, or ICTs. The report, compiled annually by the UN’s International Telecommunications Union (ITU), records gains on some fronts and glaring gaps on others.

On the plus side, 95% of the world’s people now live in areas covered by mobile signals. The number of mobile subscriptions worldwide rose to an estimated 7.1 billion in 2015, close to the number of humans on the planet. More importantly, mobile phones have cut across income and societal barriers: on average, eight in 10 people in the developing world now own a mobile phone. Many are ‘feature phones’, but the number of smartphones is rising fast thanks to cheap Chinese devices.

It is the combination of mobile phones and internet browsing that is particularly transformative. The ability to go online anywhere and anytime impacts how we work, earn and relax. By 2015, the ITU report says, 40% of the world’s population was accessing the internet – most of them through mobile devices. In South Asia, however, it is still less than half the global rate (16.6% in 2014), according to national data collated by the World Bank.

Digital dividends
An increasing supply of services alone does not ensure universal coverage. Perhaps the best example of this is the many unconnected households lying right beneath high tension wires carrying the nation’s electricity distribution network.

In recent years, digital technologies have spread rapidly around the world, boosting economic growth, expanding opportunities and improving service delivery. Yet their aggregate impact has fallen short and is unevenly distributed. For digital technologies to benefit everyone everywhere, it is first necessary to close the remaining digital divide, especially in terms of internet access.

This is the key message in the World Development Report 2016 (WDR 2016), released by the World Bank in January. The latest edition of this global assessment is themed on digital dividends – that is, the broader development benefits from using these technologies (see:

WDR 2016 recognizes making the internet universally accessible and affordable as an urgent development priority. “Nearly 60% of the world’s people are still offline and can’t fully participate in the digital economy,” it says.

Gadgets and networks are necessary, but not sufficient, to take ICTs within everyone’s reach. The report notes how, in recent years, technology costs have come down, but consumer access costs still vary greatly across countries. This is due to “policy failures such as troubled privatization, excessive taxation and monopoly control of international gateways”.

To get the most out of the digital revolution, countries need to work more on what the report calls “analogue complements”. That means strengthening regulations to ensure competition among businesses, adapting workers’ skills to the demands of the new economy and ensuring that all institutions are accountable. Without such physical factors, digital dividends cannot easily accrue. When enabling policies are in place, swift progress can and does happen. As a case study, WDR 2016 does a cost comparison of mobile phone owning and using across countries using a basket of services including 30 outgoing calls a month (on and off-net, peak and off-peak), plus 100 SMS messages, with prices sampled in the fourth quarter of 2013. It finds that six of the 10 cheapest countries to use a mobile phone in are in South Asia (in ascending order: Sri Lanka, Bangladesh, Nepal, Bhutan, India and Pakistan). In all these, the cost of ownership is typically below $5 a month.

“If you want to make a [cheap] mobile phone call, go to Sri Lanka” says the heading of the report’s figure 4.2, which illustrates the comparisons.

Google Loon
Such affordability was no accident. It resulted from the confluence of technology, regulation and markets. ICT researchers call it the ‘budget telecom model’ – where low-cost technologies, coupled with business process innovations, helped telecom operators to reduce costs. Introducing pre-paid packages was a critical element: it allowed small and irregular payments, eliminating transaction costs for companies and simplifying ownership for new users. Can a budget telecomlike model help bring low-cost internet within the reach of South Asia’s majority of unconnected people? That remains to be seen. The ICT policy research organization LIRNEasia has been studying this prospect for several years. In this context, Sri Lanka’s new partnership with Google’s Project Loon ( can take things forward.

The collaboration with the global information giant entails setting up a network of 13 high-tech balloons strategically positioned some 20km above the island. These heliumfilled, solar-powered balloons will act as ‘floating cell towers’ that distribute 3G mobile signals wider than ground-based towers can. The deal with Google was brokered by Lankan-born Silicon Valley venture capitalist Chamath Palihapitiya. The government’s Information and Communications Technology Agency (ICTA) hailed it a major accomplishment.

Right now, operators rely on their own networks of terrestrial towers for signal coverage. This naturally concentrates on where more people, businesses and offices are located. Thus, the south-western quadrant of the island enjoys much better signal coverage than many other areas. There are gaps that the market alone would probably never fill.

If we look at publicly available mobile signal coverage maps of Sri Lanka on, we can see plenty of areas not yet covered by 3G from any telecom network.

In theory, Google Loon’s 13 balloons over Sri Lanka should extend our ISPs’ mobile broadband coverage to the whole land area of 65,610 sq km. Each balloon can provide connectivity to a ground area about 40km in diameter using a wireless communication technology called LTE. (Project Loon by itself does not provide free wireless internet or WiFi. Existing rates and packages of mobile operators would apply.) But universal signal coverage does not necessarily mean universal access or universal use. For that, much more needs to be done on the ground. That’s where “analogue complements” make a big difference.