3.1. Connectivity

Broadband communication networks and the services provided over them support a variety of economic and social development goals, relating to health, financial inclusion, and education, among many others. ITU World Telecommunication/ICT Indicators Database shows that fixed broadband subscriptions have increased by 89% worldwide within just seven years – from 532 million in 2010 to one billion in 2017. Switzerland has the highest fixed broadband penetration in the OECD, with almost one subscription for every two inhabitants, while the OECD average is just below one per three inhabitants.

Communication operators have deployed fibre optics further into their networks, but often rely on other “last mile” technologies, such as copper, wireless and coaxial cable, where fibre does not reach all the way to customers’ premises. For this reason, the share of fibre (to the home/premises) can be relatively low in some high-income countries. Last mile technologies can provide relatively high connection speeds, but fibre boasts the highest maximum speeds. Countries without legacy telecommunications networks may be able to leapfrog directly to fibre – according to ITU data, it represents almost 70% of total fixed broadband subscriptions in China, for example – though these countries still tend to have lower broadband penetration overall.

A comparison of the average prices for specific OECD fixed broadband baskets, between 2013 and 2018, shows that “high usage” subscriptions appear to have decreased in cost, while prices for “low usage” have remained more stable. Prices can also vary widely between countries, with the average for the three most costly countries being around three times more than the average of the three least costly.

These price baskets are designed to provide a snapshot of prices at any given time, rather than a series. The lowest cost plan is selected at each point in time and may be different from earlier plans (e.g. with higher speed or an increased amount of data). In addition, these measures are not adjusted for the varying social, economic and geographic situations influencing prices in different countries. It is nonetheless worth considering an average for all OECD countries as an indicator of trends in these two segments of the market. However, declining unit prices do not mean that all users are paying less; consumers may choose to pay more for plans that offer higher included amounts of data, higher speeds, and so on, or may incur costs to switch plans.

The Services Trade Restrictiveness Index (STRI) for telecommunication services endeavours to capture characteristics of the policy environment that can restrict the free international trade of fixed, mobile and Internet services. Common restrictions include limitations on foreign ownership, government ownership of major suppliers, screening of foreign investment, and nationality or residency requirements for directors and managers. Pro-competitive reforms in the telecommunications sector are associated with a substantial reduction in the trade costs for business services in the overall economy. Since telecommunications is a capital-intensive network industry, improving access to essential facilities and reducing switching costs may enable new entrants to compete with incumbent firms.

Did You Know?

Korea, Japan, Latvia, Lithuania and Sweden are the only OECD countries where fibre makes up the majority of broadband connections.

Definitions

Fixed broadband penetration refers to the number of subscriptions, per 100 inhabitants, to services with a 256 Kbps advertised download speed or greater, provided over DSL, cable, fibre-to-the-home (FTTH), fibre-to-the-building (FTTB), satellite, terrestrial fixed wireless, or other fixed-wired technologies.

Fibre broadband refers to subscriptions where fibre reaches the subscriber’s premises or terminates no more than 2 metres from an external wall.

The high usage fixed broadband basket provides 200 GB of download data; low usage provides 20 GB of data.

Measurability

Broadband subscription data are typically supplied to the OECD and ITU by communications regulators that collect them directly from network operators according to common definitions. It is not currently possible to delineate business and consumer subscriptions and so both are counted. The data are presented in relation to the population in each country. Broadband subscription penetration rates do not provide information about the prices that users pay, realised connection speeds, or whether there are restrictive data caps. Countries performing well in one measure may be weaker in another.

OECD broadband pricing data are gathered directly from the websites of a set of three network operators with a combined market share of at least 70%. All DSL, cable, and fibre offers with advertised speeds over 256 Kbps are included. Offers relate to month-to-month services advertised clearly on operator websites and should be available in the country’s largest city. For more information see the OECD Broadband Price Baskets Methodology (OECD, 2017). The ITU also surveys prices for monthly subscriptions to entry-level fixed-broadband plans offering 1GB or more data from the 193 ITU member states. See: https://www.itu.int/en/ITU-D/Statistics/Pages/definitions/pricemethodology.aspx.

Launched in 2014, the OECD Services Trade Restrictiveness Index (STRI) is an evidence-based diagnostic tool that provides an up-to-date snapshot of services trade barriers in 22 sectors across 44 countries, representing over 80% of global services trade. The indices presented summarise binary, hierarchical and quantitative data into composite indicators. For more information see: http://www.oecd.org/tad/services-trade/methodology-services-trade-restrictiveness-index.htm

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