It's hard to justify spending tax-payer money on initiatives that benefit only part of the population. Image: Ahmed Aqtai
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Estonians can register a new company online without leaving their desks. Brazilians can file their taxes online. Muscovites and Porteños - citizens of Buenos Aires - participate in municipal government decisions and interact with city administrators through mobile apps. In a not-too-distant future, every interaction with a government could be online. The time and cost savings for citizens and governments would be huge. But in reality, only those who are connected to the internet can benefit. Many aren’t. Half the world is unconnected.
For governments, this divide could hamper their well-intended digital-transformation efforts. It is hard to justify spending tax-payer money on initiatives that benefit only part of the population - or even worse, only those at the top of the pyramid who can afford 24/7 connectivity.
Pre-paid mobile is the most popular way to connect to the internet, accounting for more than 75% of mobile users in Africa, Asia and Latin America. But when users run out of pre-paid credits, they cannot access digital government services on their phones.
This often happens, and has dramatic effects. For example, in Brazil, eight out of every 10 pre-paid mobile users run out of credits before planned, and effectively become unconnected citizens, unable to access any digital service, including e-government.
Another factor that widens the divide is the uneven speeds at which citizens connect to the internet. The worst connected individuals access the internet at speeds up to 200 times slower than the best connected. High-bandwidth services such as m-health and m-education are out of reach for large parts of populations, especially those who would benefit most from them. Government digital innovations that could help billions are not deployed and adopted as quickly as they should be because, for many, high-speed data access is not affordable. Government digital transformation programmes will never fulfill their potential without internet for all.
A potential solution to this conundrum can come from private-sector innovation. In the mid-2010s, Qualcomm was trying to accelerate mobile data adoption in Latin America. In a region where disposable income is low, affordability of mobile data was a significant factor for internet adoption. If there was a way to segregate mobile data usage from payment, adoption would increase. That would require corporations or governments to justify, on economic grounds, paying for some sort of internet access for their clients or citizens.
This innovative model was called “1-800 Data” because it resembles the toll-free numbers of voice fixed telephony services, but for mobile data. It enables corporations and governments to pay for clients’ and citizens’ mobile internet access to their e-services. It guarantees that everyone can use their services, regardless of whether they have a mobile data plan. Dialogue between Qualcomm, the Brazilian government, the telecoms regulator and mobile operators made Brazil the first country where “1-800 Data” was available to 100% of the population, regardless of which mobile operator they used.
Banks proved to be a great first adopter of this new paradigm. They quickly realized that online transactions are 50 times cheaper than if done inside a branch. However, from their clients’ perspective, the economics ran the other way round. It cost clients nothing to walk into a branch or ATM and get their balances. But it cost them money to access the same information on their mobile phones. So banks contracted all mobile companies in the country, and advertised that clients could access banking online and through apps for free, anywhere, anytime.
The impact of “1-800 Data” was astonishing. The number of clients who made transactions online doubled in the first six months after the initiative was launched. The number of transactions made per client also doubled, and altogether the number of online transactions quadrupled. Ten million clients benefited daily from free access to online banking services. The costs saved by moving transactions online were many orders of magnitude higher than the additional telecommunications costs, and new business earned extra income.
Mobile carriers welcome this kind of innovation, and were quick to implement upgrades in their networks to support such models. They benefit not only from additional revenues, but also from the reduced cost to acquire new mobile data customers. Customers who use their smartphones to access free online services are more likely to subscribe to mobile data products.
Since then, “1-800 Data” has seen widespread adoption. Many other banks followed suit, as did players from diverse industries and in many Latin American countries. M-commerce and marketplace players offer free navigation as a strategy to increase completed transactions. M-education players bundle content and free connectivity to reduce churn. Consumer goods companies develop their brands with free music streaming.
With the cost of data going down, more use cases are invented every year. Their offerings are available to anyone with a smartphone in areas covered by mobile data service. While mobile data does not yet provide universal coverage, in most countries it covers the great majority of the population, and operators are investing more than $1 trillion annually in capital expenditures to expand and improve coverage.
Online government services have massive potential to change lives. They offer new ways for governments to serve and interact with citizens. Ultimately, they create economic growth and unlock broader benefits for society. One simple tried-and-tested innovation shows how to overcome barriers and promote access and usage of e-government. It is actively being discussed and implemented through Internet for All platforms by governments around the world.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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