Digital basic basket for meaningful connectivity
Last updated: 17/11/2023
In the region, there is a significant demand gap, understood as the difference between the availability of the service and its effective uptake, largely explained by low-income levels.
In this regard, ECLAC proposes the implementation of demand-side subsidies through the provision of a Digital Basic Basket (DBB), enabling lower-income segments of the population to secure effective connectivity and thereby benefit from the use of digital technologies.
In its comprehensive modality, the basket consists of a fixed broadband and/or mobile broadband plan, along with one or more access devices (smartphone, tablet, and laptop). It also includes, as a third component, content aimed at developing basic digital skills.
This proposal seeks to provide connectivity to households, not only to individuals. In addition, it is a modular tool with the flexibility to adapt to different needs and objectives, since not all countries share the same characteristics in terms of Internet access gaps.
To determine the cost and design of a demand-side subsidy mechanism such as the provision of the Digital Basic Basket (DBB), the following elements, among others, must be considered and defined:
- •Services included in the DBB: whether both fixed and mobile broadband services will be covered, or only one of the two.
- •Devices provided as part of the DBB: • whether all devices (smartphone, laptop and tablet) will be included, or only some of them.
- •Target population segments: for example, households in the lowest-income quintiles or households headed by women.
- •Mechanism for contracting services and purchasing devices: whether resources will be provided directly to beneficiaries for the contracting and purchase, or whether this will instead be managed through a public entity.
- •Duration of the subsidy and whether it will be progressive: that is, for how long services will be subsidized for beneficiaries, and whether there will be a gradual reduction of the subsidy.
Regarding the development and strengthening of basic digital skills, it is proposed to distribute free content, for instance through preloaded applications on devices, with information on the proper use of access terminals, as well as on health, education and entrepreneurship. It would also include guidance for conducting online transactions, together with basic aspects related to security and privacy in the handling of personal data.
The Digital Basic Basket can be implemented in stages, starting with a pilot project targeted at a specific segment of the population. This would make it possible to adjust the mechanism and determine its implementation costs more precisely.
As a reference, the unit cost of the comprehensive DBB has been estimated for five countries in the region.
Unit cost of CBD and affordability in relation to the average household income
Note: The costs are indicative, as the estimates were based on publicly available information from operators and providers regarding broadband services and devices. These values may change in the case of wholesale purchases or if agreements are reached with providers to reduce prices. The components of the basket can be adjusted to the specific context, which may also reduce its overall cost.
Source: Own calculations based on selected Internet service providers in each country for broadband service tariffs, selected marketplaces in each country for device costs, and ECLAC’s Household Survey Data Bank (BADEHOG), 2022 round, for income information.
As can be observed, the cost associated with the Digital Basic Basket (DBB) may represent a significant share of household income, particularly for those in the most vulnerable quintiles. In some cases, this percentage reaches 44% of income, underscoring the severe difficulty faced by lower-income households in securing adequate connectivity.
CBD cost disaggregated by services and devices
Source: Own calculations based on selected Internet service providers in each country for broadband service tariffs, selected marketplaces in each country for device costs, and ECLAC’s Household Survey Data Bank (BADEHOG), 2022 round, for income information.