Access to the digital economy in BRICS countries
Digital Economy Blog Series: Part 1
The world economy is rapidly reorganising along digital lines because of widespread and common digitalisation. From agriculture to health to tourism, it is digitalisation that is the next transformative element in each industry. Global value chains are now global digital value chains, led by technology companies. The development of the digital economy thus has implications on access to participation in the economy itself. Those who are digitally included or excluded are also economically included or excluded.
In 1962, the UN Secretary General stated, “development is growth plus change”. This maxim points to a long-held understanding among many economists about quantitative change leading to qualitative change. When we apply this thinking to the digital economy, we realise that the quantity of digitally mediated economic interactions is increasing so rapidly that we are compelled to consider the nature of qualitative changes that might occur in the economy as a whole.
When we speak of digitally mediated economy interactions, we mean not only interactions carried out over the internet or with digital means, but also economic interactions carried out in a context of digital technology use. Examples include the close digital surveillance of Amazon warehouse workers, the use of digital predictive intelligence in production, the digital provision of financial services, etc.
This opens up two interrelated questions: who has access to the digital economy? And just as importantly – what is the quality of life that this access affords? In other words – what does it mean to live, work and consume in a digital economy? How does this reality differ for different people?
These questions have parallels. Since 1990 the United Nations Development Programme has been publishing an annual Human Development Report (HDR). This report built on Amartya Sen and Mahbub ul Haq’s work on casting development in terms of its ends rather than its means (income). The human development index is a composite index of both quantity and quality, that is, of both measures of life expectancy and education as well as of income.
Access to the digital economy should also be understood and framed in this composite way. Access should not merely be about the number of people who own smartphones, but additionally about the quality of the inclusion made available by the digital economy, and the contours of the exclusion.
What should constitute access to the digital economy?
To truly understand access to the digital economy, we should understand the following factors:
- Access to the internet: This is the traditional way in which access to the digital economy is understood. It goes without saying that access to the internet should be a foundational factor in understanding access to the digital economy. With the onset of the Covid-19 pandemic, internet access has become even more crucial to access welfare benefits and ordinary services.
- Access to decent work: Access to the digital economy also means access to work in the digital economy – work that sustains a minimum standard of living at the very least. Not everyone’s work is similarly calibrated in the digital economy. For example, data scientists working at digital platforms have far superior working conditions than do delivery workers for digital platforms.
- Access to do digital business: The capacity to start and sustain a business is not universally distributed in both the non-digital and digital world. Technological changes routinely change economic structures and subordinate old kinds of business to new kinds of business. Expanding the access to do digital business also means promoting competition and innovation in the digital economy.
- Access to goods and services: Participation in the digital economy includes participation as a consumer. While digitalisation helps expand access to consumer goods and services, access issues still exist. For example, e-commerce services may not be available in remote places.
- Access to welfare: Digitalisation of welfare includes not only digital IDs but also the use of data analytics and digital interfaces for end users. All these practices have the potential to exclude those who fall outside observable norms and those without digital literacy.
- Access to information and expression: Participation in the digital economy means participating as an informed economic actor where access to most information is free. Ensuring the safety of all people online is important to create a free and even efficient digital economy, because the lack of safety discourages participation. Similarly, information enclosures restrict and distort economic participation.
In this post, we examine the first dimension – access to the internet – in BRICS countries. The institution of BRICS (Brazil, Russia, India, China and South Africa) today is not as relevant as it once was. However, this group of countries can still be analysed in comparison to one another because these countries have, in the recent past, faced common developmental challenges. In the context of global US hegemony, there is also potential for BRICS countries to demonstrate alternative approaches to digital economy governance at scale. Not all BRICS countries face the same geopolitical choices, much less the same domestic balance of economic forces. But this is also why an analysis of these countries can show varied policy choices and their varied outcomes.
Access to the internet in BRICS countries
The internet is increasingly a doorway to accessing real goods and services, including essential goods and services. During the pandemic, people are ever more reliant on the internet for even basic services like health and education. The pandemic has also intensified the digitalisation of welfare delivery. All in all, understanding different dimensions of access to the internet itself is an important part of understanding access to the digital economy. We assess BRICS countries on the following dimensions of access to the internet:
- Availability of internet services
- Gender-segmented availability and use of internet services
- Affordability of internet access
- Neutrality of internet access (net neutrality)
- Arbitrary lack of internet access (internet shutdowns)
The table below summarises BRICS countries access to the internet according to these dimensions:
|Country||ICT Access Index (the higher the better)||Is net neutrality legally mandated?||Female internet users as a percentage of total female population (2019)||Female mobile phone ownership as a % of total female population (2019)||Price of 1.5GB internet as a percentage of GNI per capita (2020) (the lower the better)||Number of internet shutdowns in January-May 2021|
Below, we summarise the internet access status quo in all BRICS countries before teasing out patterns and conclusions.
Although 74 percent of Brazilians have access to the internet, this access differs according to region. The Southeast has better connectivity than the North. These disparities were brought into sharp relief in the pandemic, prompting the government and NGOs to distribute SIM cards to facilitate online learning. The pandemic led to an increase in internet access for the working class and the extremely poor.
In 2014, Brazil adopted the Marco Civil da Internet, or the Civil Rights Framework for the Internet. This framework law covers various aspects of civic digital rights including privacy, net neutrality and safe harbours for ISPs. It was under this framework that Brazil adopted net neutrality in 2016, amidst widespread proliferation of zero rating plans on mobile networks.
Other figures from Brazil also indicate a parity in terms of internet access between men and women in Brazil. In fact, studies conducted in 2021 indicate that Brazil’s percentage of male internet access (74%) is lower than female internet access (76%). Further, a study conducted in 2020 on mobile internet users noted that women accessed the internet exclusively much more than men, across races. However, the same study also noted that while the number of black women exclusively using mobiles to access the internet was greater than white men, the type of use also matters. The study noted that black women substantially fell behind white men in financial transactions, use of e-government services, and taking courses. The inequality in terms of meaningful usage of the internet was also observed by the Executive Secretary of the Economic Commission for Latin America and the Caribbean. Therefore, while the numbers show a lack of a divide when it comes to internet access, meaningful access as a matter of quality is a concern.
Internet access in Brazil is relatively expensive and getting more so. This is in part due to the Bolsonaro government’s neglect of infrastructure provision. There is evidence to show that high costs of equipment as well as services are a barrier to internet access in Brazil, and contribute to the rural-urban divide in access.
Internet shutdowns are uncommon in Brazil, and there is no mention of internet shutdowns within the existing surveys conducted in recent years. On the other hand, there have been instances between 2012 and 2016 where judicial orders blocking access to certain digital operators have been passed in Brazil. The most prominent example is the national shutdown of WhatsApp in 2016 through a judicial order, as a penal action for failing to break their end-to-end encryption. These internet disruptions in Brazil have reportedly cost Brazil a loss of an estimated $116 million in 2015-2016. The Freedom House Report 2020 also discusses the use of jammers by the Army and the President’s office, for security purposes.
Russia’s high overall internet access is characterised by a greater number of mobile internet users compared to fixed broadband users. There is also a high level of regional disparity in internet access. Women’s access to the internet is high, although more women than men report never using the internet. The rate of growth of women internet users is lower than that of men internet users. (This source was translated using Google Translate.)
Russia has the world’s fourth cheapest mobile internet. The primary reason for the affordability of Russia’s internet is a competitive market structure involving 4-5 major ISP players and thousands of smaller ISPs that provide competitive rates.
In 2016, the Working Group on Implementation of the Principles of Net Neutrality, commissioned by the Federal Anti-monopoly Service of Russia, presented a document titled ‘Core Document on Net Neutrality’. This document provided a legal basis for neutrality and framed the principle in terms of consumer welfare and as a competition-friendly measure. Reportedly, the Russian government was in talks with telecoms companies for four years, during which time the companies would slow services like BitTorrent, before publishing this document.
In 2021, unlike in previous years, the Russian government did not respond to protests with internet shutdowns. However, the government announced it would throttle speeds for Twitter due to systemic non-compliance with content takedown requests.
Due to its high absolute population number, India has the highest number of unconnected persons among all countries. Not only is India’s internet connectivity rate the lowest among BRICS countries, it is also highly disparate among regions, genders and classes. This differential access has affected education during the pandemic. In fact, a 2021 survey showed that more than half of the students in both rural and urban areas do not have access to the internet.
Women’s use of the internet is restricted at both the household and community levels. Women’s access also differs according to region, with Bihar showing the lowest access figures for women (20.6 percent), and Sikkim the highest (76.7 percent). However, women’s ownership of mobile phones is increasing.
As Reliance Jio took over India’s telecom market through deep discounting, India briefly had the lowest mobile internet prices in the world. However, this led to an already tottering telecom industry to ruin itself through low prices amidst high costs. The market is now slowly correcting itself and internet prices are rising alongside, leaving India behind other countries in terms of internet affordability.
In 2016, the Telecoms Regulatory Authority of India (TRAI) passed a regulation disallowing differential pricing and mandating net neutrality. India’s debate on net neutrality was heavily dominated by Facebook’s Free Basics, a program to provide access to certain websites for free. This regulatory debate featured escapades such as Facebook presenting its users with a survey asking them if they wanted to save internet freedom, and misleading them into clicking a button that sent TRAI emails against net neutrality.
In 2020, India had the highest number of internet shutdowns in the world (75). In 2019 and 2020 together, the internet in India was shut down in different areas for more than 13,000 hours. Jammu and Kashmir has by been the target of the longest internet shutdown in India (552 days). Residents had no or only 2G internet access. While there are detrimental effects to businesses, internet shutdowns have been used by the government to stifle dissent, such as the internet shutdown around Delhi on 26 January 2021 during the farmers’ protest.
Over 70 percent of China uses the internet today, a remarkable growth from under 2 percent in 2000 and close to the rate of use in advanced economies. In 2020, the population of internet users rose by 8.6 percent, the highest growth since 2012, spurred by the pandemic. Internet penetration in rural areas (55.9 percent) is lower than the average, but has seen a sharp increase in recent years. Public investment in building internet infrastructure is primarily responsible for this increase in access in China.
48.8 percent of China’s internet users are women, reflecting a negligible gender gap in access. In 2020, China ranked 12th in the world in data costs. This was after a significant 93.9 percent drop in prices that year.
China does not mandate net neutrality. Reportedly, its large technology companies used favoured network access to grow. It is not clear if this favoured access was in comparison to foreign platforms (many of which were and are banned through the Great Firewall) or to other domestic platforms. The existence of the Great Firewall, which is a collection of blocking and filtering hardware and software that restricts access to certain websites, itself is inimical to net neutrality, as the government can choose to block access to certain websites even if ISPs cannot themselves decide to do so for differential pricing. Local governments also regulate content through commercial ISPs.
South Africa’s relatively low internet access has directly affected welfare measures and education during the pandemic. It has also affected vaccination rates. Internet access is low in South Africa at least partially due to high costs of access.
The country’s high price of internet connectivity can be traced to its concentrated wireless broadband market. This market operates as a duopoly. In fact, the Competition Commission acknowledged that data prices in South Africa were too high, and recently reached an agreement with telecom service providers to reduce prices by up to 43 percent. The Commission also found that some companies were charging South African consumers higher prices than in other countries of operation, and that smaller data bundles were relatively higher priced, affecting the poor disproportionately.
A study published in 2020 pegs the gender gap percentage in terms of mobile internet users in South Africa at 13 percent, with 67 percent of men being mobile internet users as opposed to only 58 percent of women. There is also a gap in terms of smartphone ownership – 84 percent men against 75 percent women. The study also discusses safety and security related concerns being a major barrier to internet access for women. Lastly, the study has a gender-wise breakdown of various barriers to internet use, of note for women among which are high handset and data costs, issues of time required to learn how to operate a mobile handset, and relevance of the internet.
South Africa has no regulatory framework for net neutrality, although the government’s stated position is broadly in favour of net neutrality. Due to the pandemic, the South African government has allowed zero-rating for some players in the education and health sectors. The Internet Service Providers Association of South Africa is against net neutrality mandates.
South Africa does not have a history of internet shutdowns, despite these being a common occurrence in the region.
Internet access is multidimensional
Our analysis has shown that much like poverty, internet access should be understood multidimensionally. Access and the benefits of access are different for different genders, and further inquiry can reveal the difference in access along other social categories. For instance, several studies show that men and women use the internet for different purposes. Women’s access to the internet is also mediated by patriarchal notions, with community leaders sometimes restricting access. Women can also be over-represented at the tail end of the distribution: that is, more women than men are likely to have never used the internet at all. Women’s access to the internet is affected by intra-family norms of asset ownership, which restricts their smartphone ownership. These norms matter because internet access in BRICS countries is primarily through mobile data. Online safety is paramount for women and other marginalised populations, and the lack of online safety can discourage internet access and use. We will examine online safety in detail in a future post.
Further, a high level of access in ordinary times is limited in its usefulness if the government can shut the internet down at the slightest provocation. India stands alone among the BRICS countries, and also in the world, in its excessive use of internet shutdowns. These shutdowns affect not only people’s rights to freedom of speech and assembly, but also their rights to essential services such as health and education. They also adversely affect businesses.
The pandemic has had a dual impact
The pandemic has brought more people online, but divides in access to essential and other services have become starker. Government assistance can help in closing these divides, but such assistance has been uneven among BRICS countries. In fact, governments often switched to digital welfare and service delivery during the pandemic. In India, when sudden and harsh lockdowns left migrant workers stranded with no food and no source of income, some state governments made additional food provisions available through the public distribution system. However, this included a digital registration layer for those who did not have ration cards at the place of residence, which is most migrant workers. With low internet access, smartphone penetration and even lower digital literacy among migrant workers, this layer added to the exclusion.
Nowhere is the digital divide as stark as it is in education. Yet, few governments have invested in making digital educational infrastructure available to all. Here again, intra-family dynamics, such as the ownership of a single smartphone for the family, affect educational outcomes. The digitalisation of education is being pushed with scant regard to making the requisite infrastructure available to all.
BRICS countries have different approaches to net neutrality
Net neutrality regulations in BRICS are on a spectrum rather than a yes-no binary. The regulatory choices of governments are contingent on the market context, particularly on the level of competition in the data market, and the public value of zero-rated services. In countries where the risk of market capture is low, guidelines or co-regulation can and do work. In countries where market capture has been imminent, such as the case of Free Basics in India, regulation has transpired as a response to risky offerings. China, of course, has used the absence of net neutrality to support the growth of domestic digital companies, as well as to achieve political goals.
It is well-known that digital markets tend towards monopoly. In the case of internet provision, this tendency is linked to internet access and therefore access to essential goods and services. Cheap internet access can sometimes come at the cost of monopolisation, such as in India. Relatedly, monopolisation can lead to high costs of access, such as in South Africa. Regulators should recognise patterns of deep discounting and maintain competition in these markets, if there is no public internet provision at scale.
Encouraging community networks
For countries and regions that have high cost of internet access, community networks can be a useful alternative. Community networks are electronic networks built and maintained for a particular geographical community, usually by a non-profit organisation. They can provide access in areas ignored by telecom companies due to their financial unviability. Community networks were popular in the early years of the internet, providing access and sometimes even facilitating participatory democracy. Recently, Brazil’s telecoms regulator announced community networks as a regulated option for internet service provision. Community networks can be strengthened by friendly regulation, including for spectrum and funding.
Recognising when digitalisation is not the solution
The pandemic provided an impetus to digital delivery of necessities such as health and education. This does not mean, however, that these services are best delivered digitally. Inequitable internet access and other infrastructural and social issues make exclusively or predominantly digital delivery of these services an unattractive proposition for the poor and the marginalised. Digital delivery can replicate and even exacerbate the inequalities in these services. Governments should ensure that non-digital means of service delivery are available just as easily as digital means, and that the funding of digital means is not driven by diversion of funding from already struggling non-digital means.
Overall, this comparison among BRICS countries has shown that internet access is deeply tied to development today. Thus the internet access story is a development story. Governments in BRICS countries need to simultaneously ensure that internet access expands and is equitable and just in its process and outcomes.
Views are personal.