Month: January 2023

What is Digital Inequality and Why does it Matter?

Posted on by beaconvcadmin

Digitalization has influenced banking services around the world to move online. It is common these days to see bank branches closing down as many commercial banks have shifted their focus to digital banking in order to better serve customers’ demands and satisfaction. However, even in countries like Thailand, which is known for having high smartphone and social media penetration rates, many people are still needing to wait in line at bank branches to conduct their own financial transactions or to seek assistance in obtaining government financial aid (aid which is provided via an online system such as “Khon La Khrueng” or คนละครึ่ง). Understanding why these situations occur helps to highlight the fundamental problems that need to be fixed to ensure that everyone is included in the new digital economy.

 

What are the Causes of Digital Inequality?

Digital inequality refers to the disparities in knowledge and ability to use digital and information technology based on different demographics, socioeconomic backgrounds, and information technology experience and competencies. The problem is not merely one of access, as disparities also exist among people who have access to digital technology. The digital gap is also caused by lower-performance computers, lower-speed wireless connections, and limited access to subscription-based content.

 

These disparities stem from barriers in three areas: availability, affordability, and adoption.

  1. Availability: digital infrastructure needed to access online services through alternative channels, such as wireless data plan, wired broadband, and fiber services.
  2. Affordability: to stay connected, individuals must pay for device acquisition and service subscriptions, which are continuous expenses. 
  3. Adoption: people are prevented from utilizing the internet by knowledge hurdles, such as a lack of digital literacy or educational constraints.

 

Digital Inequality is a Human Rights Issue

Computers and smart devices have become vital to almost every aspect of daily life, from fundamental activities like paying bills and shopping, to more enjoyable activities like entertainment and socializing. They are also essential for maintaining relationships with loved ones. Access to the internet has opened up new opportunities for employment, health care, financial support, and pursuing both informal and formal education. Those without access to the internet are missing out on information that may help them find jobs, online entertainment, and many other essentials. Research shows that households that adopted broadband are on average 8.1% more likely to be employed, and earned on average 2,202 USD higher annual household income. Lack of internet access has also been consistently linked to a high risk of mortality from COVID-19. Hence, the capability to access and work with data and digital technology should be considered as fundamental human rights. Without it, there are no opportunities to access what the knowledge economy and digital connectivity can provide.

 

Is Inequality Persistent in Thailand?

Thai people are renowned for being active online with some of the highest proportions of social media users in the world. Approximately 50.05 million Facebook users are located in Thailand, representing 71.5% of the country’s population. The smartphone penetration rate was 59.3% in 2022, ranking Thailand the 12th place in the world. Thailand also ranks 87th in the world with 54.5 million internet users (77.8% of the country’s total population).

 

While Thailand’s internet availability is high, affordability and adoption remain problematic. According to the International Telecommunication Union (ITU) and TDRI, only 21% of Thai households have computers, which is lower than the global average and the developing countries’ average, at 49% and 38% respectively. Moreover, computer affordability is worse for low-income households. According to the National Statistical Office of Thailand in 2017, only 3% of low-income households (households with an average annual income of less than 200,000 baht) have Internet-connected computers, compared to 19% of households with higher income. Low accessibility to proper digital devices has caused immense inequality for Thai students’ education, especially since the start of the Covid-19 pandemic. Covid-19 has widened the gap of digital divide among students as learning has been moved online. Recent studies suggest  that learning loss will be the greatest among low-income students as they are less likely to have access to high-quality remote learning or to a conducive learning environment, such as a quiet space with minimal distractions, to devices they do not need to share, to high-speed internet, and to parental academic supervision. 

 

Digital inequality has not only amplified the importance of technology in education, but also affected the wellbeing of Thais. During the pandemic, the Thai government offered subsidy programs to help Thai citizens with their economic hardships. The most well-known package was “Khon La Khrueng”, roughly translated as “Let’s Go Halves”, in which the government subsidized half of all qualifying payments via an e-wallet application. To sign up for government’s aid and make payments, individuals needed to have internet-capable devices, data plans, and access to Wi-Fi to receive the benefit. 

 

Given Thailand’s smart device penetration rate of 59.3%, this meant that almost half the Thai population were excluded from the government program. Challenges also emerged in relation to adoption: elderly and low-income persons who were likely to be targets of such campaigns were also less likely to be familiar with using mobile applications.  

 

Due to these issues, the government was pressured to allow people to register for “Khon La Khrueng” offline at branches of government-supported banks, resulting in lengthy waiting lines. The congestion at the banks made many people lose work opportunities while still not alleviating the struggle to register for the package. This case truly highlights the need for digital education to be able to obtain a fundamental support population in the present world. 

 

What Has Been Done to Reduce Digital Inequality

As highlighted previously, there are three main obstacles that prevent the realization of digital inclusion: availability, affordability, and adoption. This section will focus on the approaches taken by private organizations, governments, and financial institutions to reduce the gap in each dimension.

 

Availability

Hardware innovation has emerged as a way to improve the accessibility of the internet. Starlink, a low-latency broadband internet system project, has introduced the internet via satellite, which is expected to benefit people in remote areas where telecom cell sites and fixed broadband internet services are inaccessible. The average download speed for Starlink is slightly below the average for the entire fixed wireless internet category, at 105 Mbps and 131 Mbps respectively (though far better than rivals Viasat and HughesNet). Although there is still much to be done (Starlink will likely need at least 10,000 satellites to cover a majority of the globe), rapid progress has already been made, with Starlink available in 32 countries, using more than 2,300 satellites.

 

Governments are also acknowledging and trying to solve this infrastructure issue. Net Pracharat, a nationwide project aimed to extend high-speed internet to all villages in Thailand, covered 24,700 villages with free public Wi-Fi hotspots in 2017 and reached 6.6 million users in 2019. However, problems remain. Internet use from community locations declined during the pandemic as a result of concerns regarding the spread of Covid-19 in public areas.  Similar projects have been developed to increase internet connectivity, including National Broadband Plan (Philippines) and Palapa Ring (Indonesia). This highlights the need to expand internet connectivity programs to households, not just public areas. 

 

Recently, Kasikornbank has introduced Solar Plus, offering a free of charge service of solar roof installation for Thai households. Proven by Teltonika and Bartech, the service could be combined with cellular routers, offering internet connectivity for households. This self-sustained technology would provide the end-users superior internet connection in places without access to the power distribution grid. It would therefore allow expansion of internet connectivity at a more affordable price.

 

Affordability

Although the price of internet devices has been declining, upfront costs remain a major barrier for the low-income population. Thus, some governments have implemented smartphone and computer subsidies for low-income or senior citizens to increase adoption. For example, Singapore has a program called Mobile Access for Seniors which provides subsidized smartphones and mobile plans to low-income seniors.  The Singaporean government has also offered affordable-price computers to students or persons with disabilities who come from low-income households via the project “NEU PC Plus”. The Vietnamese Ministry of Information and Communications in collaboration with smartphones’ manufacturers launched a universal smartphone program, aiming to push smartphone penetration to 100% by reducing the price of a smartphone to approximately 20 USD. 

 

Private entities have also begun finding ways to reduce this gap. For example, UOB launched a project called UOB My Digital Space which provided students in Singapore with digital learning devices including a new laptop and a Wi-Fi dongle with monthly data usage together with online learning resources to take them beyond the school curricula for their longer-term development.

 

Adoption

To date, most efforts aimed at closing the digital inequality gap have focused primarily on availability and affordability problems. Although investment by government and private sector players to build out the requisite infrastructure and make internet service affordable are critical, the benefits will not be fully realized if households lack the knowledge to use and fully realize the benefit of these services. Accordingly, several startups have emerged to tackle this challenge. Jules, a Singapore-based startup, works with 200 preschools in Singapore, Malaysia, Vietnam, Taiwan and China to train children between the ages of four to eight in computational thinking. The company runs a “School of Fish” curriculum where children are taught digital skills such as programming, animation, and game design through games and animated storytelling. Ruangguru is an Indonesia-based startup that collaborated with the country’s Ministry of Communication and Informatics (Kominfo) to create Indonesia’s Digital Literacy Space Program in 2021. The company created content that covers digital security, digital ethics, and digital culture. The program is expected to train 50 million students by 2024. In addition to startup efforts, Saturday School, a Thai educational non-profit foundation, creates the Saturday Film camping program aiming to equip students with the skills necessary to convey stories through various kinds of media. The foundation has also partnered with corporations to foster children’s digital literacy via several projects including Young Safe Internet Leader Camp Version 1.0.

 

Financial institutions are also launching initiatives to increase digital literacy. KLOUD is an example of a project by Kasikornbank that aims to facilitate individuals’ learning by offering a co-working space to offer an alternative space to students who lack internet access or appropriate learning environments. KLOUD also hosts knowledge sharing events for the public, including financial literacy, cyber literacy and green awareness. 

 

The adoption barrier is also a huge threat for ASEAN nations competing in the digital economy. Despite having the third largest population in the world, the sixth highest GDP, and the fourth highest trade value, ASEAN’s digital economy only accounts for 7% of its GDP, lagging behind China’s 16%, the EU-5’s 27%, and the US’s 35%. Accordingly, the Go Digital ASEAN program was launched to increase digital skills participation across all 10 ASEAN nations, reaching everyone from farmers and home-based handicrafts producers to small-scale hotels, restaurants, and shops. The project has already reached Phase 2, which will provide more advanced training for up to 200,000 underserved MSMEs on skills like business and financial literacy.

 

Closing Thoughts

Digital inequality is not all about internet connectivity. Despite considerable investment to develop the necessary infrastructure, the advantages will not be fully realized until people embrace and use the services. In other words, the affordability of data plans and devices together with digital literacy are essential to cope with the digital divide.

 

Although the situation of digital inequality in Thailand is relatively less severe compared to neighboring countries, many Thai students were still left behind when in-class instruction switched to online learning. Thais from lower socio-economic backgrounds were also left behind with unequal access to government programs intended to provide economic relief.

So far, both private and public sectors have made tremendous efforts to narrow the digital gap and include all people in digital transformation. Still, there are countless steps left to reach the goal of digital equality. Research shows that digital agents are crucial for getting people to adapt to digital technology. Banks can utilize their current resources, primarily staff and physical branches, to deploy agents and help close the inequality gap. Particularly in Thailand, bank branches are all over the country and can play a leading role in driving adoption in rural areas. As financial transactions are increasingly executed online, instead of laying off branch staff, banks may consider changing their role from day-to-day transaction operators to digital navigators who can educate banks’ clients in-person about how to make financial transactions online, troubleshoot issues, and other digital skills such as helping them to become familiar with banks’ digital products. This transformation shortens the time to achieve the goal of digital equality. 

 

Banks may also share digital infrastructure to individuals, which could help increase the level of internet accessibility, especially in the rural areas where households rarely have internet access. Since branches and ATMs always need to be connected with the internet, banks might see an opportunity to split the network and share public Wi-Fi to facilitate bank-related activities.  A similar project was seen in New York City in 2015, using payphones instead of ATMs.  In that program (LinkNYC), payphones in New York City were transformed into free Wi-Fi hotspots

 

In conclusion, all three factors that contribute to digital inequality (availability, affordability, and adoption) must be considered as part of the transition plan so that all humans have equal opportunity to thrive in the new digital economy.

 

About Beacon Impact Fund

In recent years, society has placed an ever-growing level of importance on social impact.  As seen in the examples above, many of the world’s problems (whether they be categorized as environmental, social, or governance issues) are being tackled by startups, which are well suited for the fast experimentation and innovation needed to address these problems. Kasikornbank, as one of Thailand’s leading financial institutions, has also launched many ESG initiatives to help drive Thailand’s transition to a sustainable economy, including several of the projects discussed previously regarding digital inequality.  It is clear that affecting material change to these areas requires active participation by all.

 

Beacon VC sees a great opportunity to not only support these startups which are seeking to create positive social impact, but also to drive the conversation and collaboration between startups and large corporations to magnify and accelerate that impact, and is proud to announce the launch of the Beacon Impact Fund.  Beacon Impact Fund is a 30 MUSD fund that will invest in for-profit startups that have quantifiable, sustainable, and scalable impact. Beacon Impact Fund intends to invest to accelerate the shift to a sustainable economy, improve social equality by promoting financial inclusion, digital literacy, and equal-opportunity growth, and to support good governance and privacy protections in both business and consumer markets.  The hope is for the Beacon Impact Fund to inspire new generations of innovators to solve the planet’s biggest challenges, and to inspire investors and institutions to take a proactive approach to creating impact, as achieving meaningful impact will require support by all stakeholders.

 

References:

https://www2.deloitte.com/us/en/insights/industry/public-sector/state-broadband-access-digital-divide.html

https://tdri.or.th/en/2020/05/covid-19-emphasizes-the-need-to-bridge-the-digital-divide-and-reduce-online-educational-inequality/

https://www.mckinsey.com/industries/education/our-insights/covid-19-and-student-learning-in-the-united-states-the-hurt-could-last-a-lifetime

https://www.ookla.com/articles/starlink-hughesnet-viasat-performance-q4-2021

https://thailand.un.org/sites/default/files/2021-12/eBAT-ebat_21-00630_E-learning-Thailand-Mapping-digital-divide%5B95%5D%5B83%5D%5B100%5D.pdf

https://saturday-school.org/partner-with-us/

https://www.iseas.edu.sg/wp-content/uploads/2021/03/ISEAS_Perspective_2021_50.pdf

https://hanoitimes.vn/vietnam-to-universalize-cheap-smartphones-to-entire-population-311236.html

https://www.bain.com/contentassets/37a730c1f0494b7b8dac3002fde0a900/report_advancing_towards_asean_digital_integration.pdf

https://teltonika-networks.com/industries/use-cases/solar-powered-remote-wi-fi-

https://futurumresearch.com/futurum-tech-webcast/the-digital-divide-where-is-the-telco-industry-in-its-journey-to-closing-that-divide-futurum-tech-webcast/

 

 

Author: Supamas Bunmee (Jae)
Editors: Krongkamol Deleon (Joy), Woraphot Kingkawkantong (Ping)