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Democracies must step up to close the global digital divide

The case for a Global Fund for Digital Equity

Democracies must step up to close the global digital divide

A version of this piece was published by the Atlantic Council. It was written to complement a panel at the Atlantic Council’s 360/Open Summit: Investing in a secure, democratic digital future for all. Watch on Demand.

As Western leaders gather this week for the Summit of the Americas in Washington and foreign policy experts convene in Brussels for the Atlantic Council’s 360 Open Summit, expanding internet access to the nearly half of humanity currently unconnected must be high on the agenda. This issue is critical not only for economic and social development, but for national security and the future of democracy. During the pandemic, we’ve seen every day how critical a lifeline the internet is to enable people to keep learning, working, accessing healthcare and government services, and engaging with their communities. And yet, while billions of unconnected people fall further behind in a rapidly digitizing world, it is largely not the democracies of the world stepping up to connect them, but rather digital authoritarians.

Through its “Digital Silk Road” initiative, China is spending billions of dollars to build the internet abroad, with China Development Bank often financing the purchase of equipment from Chinese owned, backed, or affiliated companies. It is estimated that Huawei alone controls 29% of the market for network equipment. Without change to the current trajectory, most new internet users will take their first online steps into a state-controlled, authoritarian-inclined digital landscape. At each step in their digital journey — from the fiber they use to connect, to the hardware and software they use once online — their data will feed Chinese-owned or backed enterprises who have shown few qualms supporting authoritarian agendas. Not only is China increasing its control over critical infrastructure and enhancing their surveillance capabilities, but in doing so, it is expanding its sphere of influence. 

Yet, for many governments who want to expand internet access and grow their digital economies, Chinese financing is often the only option. In Africa, Chinese investment in ICT infrastructure surpasses spending from African governments, G7 nations, and multilateral agencies combined. For all the awareness raised by the pandemic about the need to expand reliable, affordable internet connectivity, the democratic world hasn’t yet come up with a compelling alternative to Chinese money.

Despite nearly all democratic countries having interests threatened by the expansion of authoritarian control over internet infrastructure, there has not been a corresponding investment in increasing global internet access. There have been a few recent announcements, including President Biden’s Build Back Better World Initiative (B3W) and the EU’s “Global Gateway” strategy, both of which plan to mobilize development and private capital to invest in infrastructure in low and middle-income countries. These initiatives must deliver on their promises for much needed financing, but we’re yet to see anything on the scale needed to meet Chinese ambitions or that radically challenge the way internet connectivity is being built today. If we’re to meaningfully tackle digital divides in a way that promotes openness, democracy, and human rights online, we need both. 

Underinvestment in closing the gap has been largely rooted in the false belief that the free market will deliver ubiquitous digitalization. With 25+ years of opportunity and hundreds of billions of dollars in government subsidies for domestic expansion, it is clear that traditional telecom operators alone will not connect everyone. Time and again these operators have created broadband deserts, leaving behind communities they deem too poor or too remote to be sufficiently attractive to connect.

It doesn’t have to be this way. We generally know how to connect the unconnected, and Non-Traditional Operators — a collection of municipal networks, community networks, cooperatives, and other smaller and social ventures — who are more grounded in their communities and often community owned, have already shown remarkable progress in connecting the unconnected.

In South Africa, Zenzeleni, a community-owned wireless service provider, offers affordable, reliable internet access to rural residents at the same speeds as those in the country’s urban centers. In Mexico, Rhizomatica is profitably connecting rural, indigenous communities in Oaxaca who no other telecom operator would come serve. The most affordable broadband in the world is arguably a municipal network in Ammon, Idaho which offers residents 1GB upload and download speeds for less than $10 per month.

These are the types of operators that can get us to universal internet access. They typically offer some of the fastest speeds and lowest prices because they’re maximizing value for the communities they serve, not shareholders, often while still turning a profit. Yet, nearly universally, these Non-Traditional Operators struggle with access to capital.  

Most of these networks are too big for microfinance and philanthropy (which typically tops out at $500,000) and too small for the huge low-interest loans offered by development finance institutions, international aid, and commercial banks. Even when Non-Traditional Operators have projects big enough for these kinds of financial institutions, these communities must often overcome histories of redlining and discrimination and a lack of investor understanding that a telecom operator can look like them.

A Global Fund for Digital Equity led by an alliance of democratic countries could fill this capital gap and be a transformative force to overcome the barriers to internet access, supporting and scaling the Non-Traditional Operators who show most promise in connecting the unconnected. This would be the fastest route to digital equity, to countering Chinese influence, and to supporting an internet that protects democracy and human rights. 

There are numerous models to draw from — from the US Development Finance Corporation’s loans and credit guarantees, to green banks, to multilateral pooled funds. It’s clear that a significant amount of money is needed now and that intermediaries who can disburse grants and loans in the size, structures, and blends that communities need will be required in order to be effective. 

The need to expand internet access has never been clearer. The consequences of leaving China to build the global internet have never been starker. Connecting the unconnected is one of the great challenges of our time, and we know how to solve it. Democracies of the world must step up.

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