TPRC 2024: The 52nd Research Conference on Communications, Information and Inter

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Abstract:
Device affordability is one of the key barriers to Internet access and use in most low-and-middle income countries. Reducing and/or eliminating taxes on devices has emerged as a major way to make devices more affordable. However, the empirical evidence on the impact of reducing and/or eliminating tax on device access remains limited. To help fill this gap, this study estimates the impact of Colombia’s 2017 VAT exemption on smartphone penetration rates. Using the Synthetic Control Method (SCM) applied to country-level panel data from 2009 to 2021, our study finds that smartphone penetration in Colombia reached 66.8 percent in 2021. This represents an increase of 7.6 percentage points over the 59.2 percent level of its synthetic counterpart, equivalent to a 12.8 percent relative increase. These results were validated through placebo tests and other robustness checks. These findings confirm that reducing and/or eliminating taxes on smartphones improves smartphone penetration and contributes towards bridging the digital divide. The work can be extended by exploring VAT exemptions in other countries and reductions on other forms of taxes.

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Abstract:
Current economic and political factors, aligned to keep a geopolitical balance of power between the countries that produce telecom equipment – companies such as Ericsson, Nokia, Samsung, Mavenir, NEC and Fujitsu vs. Huawei and ZTE – are providing a challenging battle when it comes to emergent markets in developing countries. Worldwide there are wide arguments that Huawei and ZTE deliver better and cheaper equipment with usually lower rates of borrowing from the Chinese financial service industry. Furthermore, it is implied that other vendors are more expensive and if chosen the cost will hinder the expansion of infrastructure in rural areas.

This paper will present the result of the evaluation of data sourced from both regulators and industry in emerging markets on the choices made by telecom infrastructure providers, when to select or decline a vendor to be a trusted partner. For this purpose, we have reviewed both policy and industry actions in Latin America and the European Economic Area as both are representative of the challenges telecom infrastructure investment confront. Source documents revised in English, Spanish and Portuguese include reports and evaluations for partners section in those two regions.

Our analysis calls for a more careful appreciation of such statements. Instead of focusing just on the pricing of active equipment alone which makes a share of total cost of a radio access site or an end-to-end network, a more comprehensive approach to analysis is to compare the actual difference in costs, taking into consideration all factors, including the coverage, energy efficiency and quality network operations can provide. We also gathered evidence that the saving on buying infrastructure by the operator tends to improve their free cash flow that is not used to buy more equipment or improve coverage, but to increase the share price and dividends to shareholders.

The evidence collected points to some observations that require careful evaluation, take the case for example the comparison of CAPEX vs Sale and indicator of potential scale of impact on end-user prices. The more comprehensive approach in this paper takes into account what does it cost to build infrastructure, how much of that money goes into RAN equipment and how much goes to steel towers, power, and blue collared workers and other costs that are independent of the vendor chosen. There is also a need of determining if it is really the case that the operators in e.g. Latin America or Africa who do not use Chinese equipment have poorer network / coverage, and if it is the case that the operators using Chinese equipment have better networks.

The European Union has elaborated in the last few years policies and restrictions towards privacy and security breaches by Chinese telecom equipment and has successfully enforced on telecom operators’ requirements to include comprehensive estimates (E.g. Costa Rica).

Decision making when it comes to vendors require to make in-depth questions such as: What are the other hidden costs associated with choosing a non-trusted vendor like Huawei or ZTE? The distribution of such costs between the society and private telecom operators of infrastructure is of importance, to understand private companies’ incentives and risk incentives. Furthermore, the issue of trust is very relevant when it comes to choosing partners and short and medium term “savings” in infrastructure development in telecoms are not easy or cheap to rectify once the network is deployed to comply with regulation from countries or regions – such as the European Economic Area - that have objections to networks managed by non-trusted vendors. Hence the so-called benefits can end up taking a significant toll in terms of costs and loans to comply with those requirements.

It is our belief that our main contribution is to provide a framework where all these factors are taken into consideration both regulators and network operators will carefully consider present and future choices of vendors worldwide. Since the goal is to create, deploy and maintain networks that are cost viable, economically profitable, and trusted to provide the privacy and security citizens of democratic countries are entitled to, as these will be the foundation of the evolving digital economy in emerging markets .

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Abstract:
I measure across- and within-household inequalities in the adoption of digital technologies. I leverage nationally representative household surveys in 98 low- and middle-income countries to build a new dataset covering 2,030,308 households surveyed between 2015-2023 – a dataset representative of 4.2 billion of the world’s population. Where feasible, I link household-level surveys with within-household women’s surveys. I then use this dataset to provide harmonised survey-based estimates of mobile phone ownership and use (for financial transactions), computer ownership and use, internet access at the household, and women’s use. I document three patterns: 1) Women’s phone ownership lags household ownership across the wealth distribution, with particularly stark gaps in South Asia. 2) Even when women own phones, their reported use of the internet (ever) or for financial transactions is lower and heterogeneous across low- and middle-income countries. 3) While mobile phones have wide proliferation, computers and internet access are often much poorer.