The digital divide widens: Warning for 2000

Directorate for Science, Technology and Industry

Figures out in November show that Internet acces costs vary quite markedly across OECD countries. For consumers and small businesses, the most significant costs of engaging in electronic commerce are the prices of local communications and access.

The most striking changes over the last year have been in the charges to Internet service providers. In October 1999 telecommunication operators in seven countries – Belgium, Denmark, Ireland, Italy, the Netherlands, Poland, Spain, Switzerland and the United Kingdom – offered Internet access at no charge. Users in those countries only pay the telephone charges. In some market with ‘free’ Internet access, a considerable part of the Internet service providers’ revenue is earned from termination charges paid by the telecommunication carrier. Some “free” Internet provider services are available in a number of other countries, such as Australia, France and the United States, but the leading telecommunication operators in those countries still charge fees. (The survey compared prices for the largest telecommunication operator in each OECD country.)

The average price of the OECD’s off-peak basket, for 20 hours of service, fell slightly over the past 12 months from US$46.42 to US$43.86 (expressed in purchasing power parities). However, the disparity between pricing across the OECD increased with some countries witnessing steep declines and others increases. At off-peak times, prices range from US$22 to US$95 for 20 hours of service, reinforcing a digital divide across the OECD area.

While Internet access charges continue to fall, phone rates for using the Internet are rising in some countries. For 20 hours of service at off-peak rates, phone charges (fixed charges plus usage) rose 16% on average. In contrast, Internet access prices fell by 34%. This divergence reflects the differing levels of competition in both markets. The telephone usage charge as a percentage of total costs rose from 56.5% in 1998 to 70% in 1999. 

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©OECD Observer No 219, December 1999 

Economic data


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