Affordable internet access will have ripple effect, spur economic growth

Electronic payments using debit cards and smartphones are now ubiquitous and we forget that they have only been around in the last few years.

Imagine though, a situation where for every digital transaction using a debit card or QR code, the user is required to pay a 10 sen surcharge.

This rent on using a digital payment system may delay digital payment growth, as consumers will think twice before using the system for small item payments, and the cashless payment privilege that we enjoy now may only come a few years down the road.

Ultimately, the economic welfare achieved in a system with such rents is inferior to the benefit of having the entire economy powered by a society that uses widely accessible, and affordable technology.

Efficient economic models and consumer choices are rarely that, and that is why common welfare is rarely achieved by market discipline only.

Consumers may continue to purchase a service as long as the rent is tolerable, or appear negligible to cost.

A rentier system may continue to exist and even prosper when there are no legitimate alternatives, or it continues to operate relatively well.

You may not like the movie ticket price and the administration fee imposed on online ticket purchases, but you can’t be bothered to drive 20 minutes to the other nearest cinema. You may think your broadband service is not great, but it’s the better of the two available in your area.

This is not to say we get cheated all the time – an economy can only offer things in proportion to its capacity (it doesn’t make sense to have 20 mobile telecommunications providers).

We can keep service providers honest by continuous public engagement with them and the authorities who gave them the licence in the first place. Secondly, among the selected service providers, competition – one that is transparent to consumers – must accompany all types of services.

Other than goodwill, public welfare is not always obviously rewarding. If a regulator sets an environment for a complete internet penetration rate at a very affordable price for the population, the reward is all activities spurred by this cheap and ubiquitous access will, at some point, lift the entire economy.

The associated infrastructure and services, such as online shopping, data centres, parcel and food delivery services, business and work from home, and gig jobs, will be created, or upgraded. The growth in the economy is not merely generated by a few rent owners, but by a wider range of industries covering all layers of society.

It doesn’t mean that the economy is guaranteed to create the next internet, or social media giant.

But if you don’t set the condition for an economy enabled by technology in the first place, you are not starting at all. You may still need to turn back to the house after driving out of your neighbourhood to get the cash you left on the countertop. Or, you would still have to line up at the post office to buy a money order.

Internet access plans should be reviewed from time to time to take into account technological progress and prevailing economics. The government’s approach of continuously seeking better mobile data and broadband rates for the public is the right one.

The Rahmah mobile data package and broadband rates review through Mandatory Standard on Access Pricing is set to benefit everyone. Some may get it directly via better access, and some through the general economic growth that comes with the internet economy.

The views expressed here are the personal opinion of the writer and do not necessarily represent that of Twentytwo13.

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