Copyright Page
© 2023 International Monetary Fund
WP/23/27
IMF Working Paper
Fiscal Affairs Department
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
Prepared by Edward Oughton, David Amaglobeli, and Mariano Moszoro*
Authorized for distribution by RodrigoCerda
February2023
IMF Working Papers describe research in progress by the author(s)and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
ABSTRACT: We develop a detailed model to evaluate the necessary investment requirements to achieve affordable universal broadband. The results indicate that approximately $418 billion needs to be mobilized to connect all unconnected citizens globally (targeting 40–50 GB/Month per user with 95 percent reliability).The bulk of additional investment is for emerging market economies (73 percent) and low-income devebping countries (24 percent). We also find that if the data consumption level is lowered to 10–20 GB/Month per user, the total cost decreases by up to about half, whereas raising data consumption to 80–100 GB/Month peruser leads to a cost increase of roughly 90 percent relative to the baseline. Moreover, a 40 percent cost decrease occurs when varying the peak hour quality of service level from the baseline 95 percent reliability, to only 50 percent reliability. To conclude, broadband policy assessments should be exp//c/Yabout the quantity of data and the reliability of service provided to users. Failure to do so will lead to inaccurate estimates and, ultimately,to poor broadband policy decisions.
RECOMMENDEDCITATION: Oughton, E.J., D. Amaglobeli,and M. Moszoro,2023,”Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband”, IMF Working Paper23/27.
| JEL Classification Numbers: | H54,Q01 |
| Keywords: | Broadband, Digital Infrastructure; Public Investment; Sustainable Development Goals |
| Author’s E-Mail Address: | eouahton@.amu.edu, damaalobeli@Jmf.ora,and mmoszoro@Jmf.ora |
| JEL Classification Numbers: | H54,Q01 |
| Keywords: | Broadband, Digital Infrastructure; Public Investment; Sustainable Development Goals |
| Author’s E-Mail Address: | eouahton@.amu.edu, damaalobeli@Jmf.ora,and mmoszoro@Jmf.ora |
Title Page
WORKING PAPERS
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
Prepared by Edward Oughton, David Amaglobeli, and Mariano Moszoro1
Contents
I. Introduction
II. Evolution of Digital Connectivity
III. Method for Costing Digital Infrastructure Investments
A. Estimation of Data Demand Density
B. Estimation of Necessary Infrastructure Upgrades
C. Estimation of Costs
D. Model Data
IV. Cost Drivers for Digital Infrastructure Investment
V. Digital Infrastructure Investment Needs
VI. Sensitivity Analysis
VII. Conclusions
References
FIGURES
1. Population Coverage by Type of Mobile Network, Latest Year Available (percent)
2. Examples of Shifting Consumer Patterns Resulting from the COVID-19 Pandemic
3. Sequential Method Illustrated as a Box Diagram
4. Visualizing Population Density Deciles for each IMF Country as the Sub-national Level Across
5. Visualizing Key Country Metrics for Population Density Deciles by IMF Income Groups and
6. Estimate of Required Annual Investment by Income Group and Region
7. Country-level Estimates of Required Investment
8. Proportion of Necessary Investment Relative to GDP
9. Visualizing Investment Costs for Population Density Deciles for each IMF Country at the Sub
10. Evaluation of the DICE Model Against the ITU Connecting Humanity Modeling Method
11. Exploring the Impact of Data Consumption on Cost Sensitivity
12. Exploring QoS Reliability on Cost Sensitivity
Tables
1. Data Sources
The authors would like to thank Rodrigo Cerda, Chloe HyungsunCho, Dmitry Gershenson, Florence Jaumotte,Salma Khalid, Manabu Nose, Soheib Nunhuck, Carlo Pizzinelli, AbdelhakSenhadji, and Herve Tourpeand participants of the IMF’s Fiscal Affairs Department Seminar for their valuable comments and Mengfei Gu for outstanding research assistance. This project was partially financed by the European Union under the EU-IMF Public Financial Management Partnership Program (PFM-PP).
The authors would like to thank Rodrigo Cerda, Chloe Hyungsun Cho, Dmitry Gershenson, Florence Jaumotte, Salma Khalid, Manabu Nose, Soheib Nunhuck, Carlo Pizzinelli, AbdelhakSenhadji, and Herve Tourpeand participants of the IMF’s Fiscal Affairs Department Seminar for their valuable comments and Mengfei Gu for outstanding research assistance. This project was partially financed by the European Union under the EU-IMF Public Financial Management Partnership Program (PFM-PP).