The Need to Do More

An International Costa Rica Case Study on ICT Stimulation:

Information and Communications Technologies (ICTs), combined with innovations in broadband connectivity and the rich ecosystem of applications and services, can transform the lives of individuals and entire countries.

Today, the digital divide is proving stubbornly persistent, and attempts to connect the remaining offline populations must overcome major challenges. Per the latest ITU estimates, over two thirds of the global population now live within mobile broadband network coverage. ITU data has also shown that ICT services are becoming more affordable. Despite these favorable conditions, more than half the world’s population — some 3.9 billion people — were still offline at the end of 2016.

Historically, supply-side measures have tended to focus on the provision of services through the expansion of networks and technological coverage areas. Today, however, attention is shifting to programs to boost effective demand for broadband services, which are coming to the fore as a key contributor to narrowing the digital divide.

Despite these growing efforts to get the underserved population online, we need to do more.

The infrastructure to provide connectivity is paramount, but only a first step, and the impediments to productive use — namely affordability, awareness, and ability — are significant challenges. Demand stimulation is the term given to addressing these impediments, recognizing it’s not enough just to address getting citizens online. We find when all the challenges around affordability, awareness, and ability are adequately addressed, and the value of ICT and broadband connectivity are realized, people benefit greatly from these valuable tools.

Governments have a vested role in the solution, given the positive impacts of broadband and ICT on their citizens, budgets, competitiveness and economic growth. However, the greatest positive benefits are achieved when governments and the private and civil sectors collaborate, leverage their respective expertise and resources and ultimately work together towards common goals.

The original report provides examples of such public-private partnerships, from countries around the world. They include: Costa Rica, Columbia, Senegal, Republic of Korea, India, and Kenya. The examples address a range of issues or impediments, and describe the associated solutions needed to stimulate demand and productive use. While not exhaustive, these examples provide a useful window into different ways governments and the private and civil sectors can collaborate for mutual benefit, to get underserved populations productively online.

This article shares the details about how one of these countries is working to do more. Read how the Costa Rican government, NGOs and the private sector are helping to encourage and even accelerate broadband adoption.

Costa Rica’s Connected Homes Program Benefits Vulnerable Socioeconomic Groups
Costa Rica’s Hogares Conectados (Connected Homes) program is a public-private partnership for providing increased access to information technologies via subsidies for computer equipment and Internet access.

The program targets approximately 140,000 families in vulnerable socioeconomic groups (representing approximately 15% of total Costa Rican households.)

The goals of the program are to reduce poverty and inequality, as well as to promote job creation and economic growth. The partnership is between state institutions including the Vice Presidency and the Rector and Regulator for Telecommunication, and Internet Service Providers (ISPs), with support from NGOs and other institutions.

The program officially kicked off in the summer of 2016. The estimates show that as many as 55,000 families (approximately 5% of the population) could be lifted out of poverty and able to satisfy their basic needs within the next few years, aided by this program.

To be included, there are multiple criteria for determining eligibility. The first criteria — households at or below poverty income levels — includes all households in the bottom 3 deciles of income.

In addition, households in the 4th and 5th decile of income who have special social needs (such as elderly and disabled persons, indigenous persons, female heads of household, self-employed persons, and students meeting certain criteria) also qualify for subsidies. The eligible households have been identified by the government through their participation in other social programs, via the Joint Institute for Social Aid (IMAS).

The program implements 3 levels of subsidy, depending on income and other special social needs:
• The most vulnerable households receive an 80% subsidy (this results in approximately a $6 subscription price per month for the household).
• The second group receives a 60% subsidy (resulting in approximately a $12 monthly price).
• The third group receives a 40% subsidy (resulting in approximately an $18 monthly price).

The ratio of household income to the cost of Internet service and a basic computer configuration was used in arriving at the subsidy amounts for the 3 levels. A threshold was chosen to determine the maximum income level that would be eligible for subsidies, with the result that income deciles 6 and above are not eligible. The budget for the program is approximately $128 million over 5 years.

The subsidy, which lasts for 3 years, covers computer equipment (e.g., a laptop computer) and monthly Internet service of 2 Mbps, using Universal Service Fund (FONATEL) assets. The program aims to help achieve 60% national household Internet and computer penetration for Costa Rica by focusing on the lower income brackets where penetration is proportionally lower. Per the Encuesta Nacional de Hogares (National Household Survey) published in July 2015, only 19% of the poorest households in the country have a computer. This compares to approximately 51% household computer ownership across the entire socioeconomic spectrum of the country.

Even in the most optimistic projections for the program, impoverished and socially vulnerable members of the population without Internet access will still exist for the foreseeable future. Thus, the program must be sustainable beyond the 3-year period of the initial subsidies. While some percentage of those families receiving, the subsidy will improve their economic status and no longer qualify after 3 years, there will be new families qualifying for the subsidy at that point, while others could qualify for a renewed subsidy. Additionally, new USF funds will continue to be collected which aids in the programs sustainability and helps address the availability of future subsidies to qualifying families that did not receive the subsidy in the initial phases.

Clearly, this is a long-term investment, and ongoing monitoring and evaluation are critical to assessing the impacts of this program for Costa Rica.

This article was adapted from the report Enabling the Use of ICTs and Broadband: Understanding What Works to Stimulate ICT Adoption, published November 2016 by the Broadband Commission for Sustainable Development. A PDF of the report can be found at www.broadbandcommission.org/Documents/publications.