Impact of Reducing Data Plan Costs on the Digital Divide in China: A Digital Lifestyles Perspective

Abstract

The digital divide first emerged as an important social and human rights issue in the 1990s. With the rapid development of wireless network technology (e.g., Wi-Fi and cellular networks) and mobile terminal devices (e.g., mobile phones, laptops, and tablets), this issue has shifted to concern mobile Internet access. The three main Chinese telecom operators (China Mobile Communications Corporation, China Unicom Communications Corporation, and China Telecom Communications Corporation) have recently promoted unlimited data plans (UDPs) to reduce information usage costs and increase mobile data use. However, assessments of the impact of these policy changes on the mobile digital divide are limited. This study therefore offers insights into how a reduction in information costs can eliminate this divide. Using a difference-in-differences (DID) approach based on a monthly panel of system-generated mobile app data for subscribers, we find that the UDPs have various effects on promoting the use of mobile Internet and on the digital divide, depending on whether subscribers are of high or low socioeconomic status (i.e., urban versus rural and rich versus poor). We show that the relative differences are alleviated, but the absolute difference further increases after the implementation of a UDP subscription. In addition, a UDP subscription has heterogeneous effects on lifestyles. For the poor or those in rural areas, only promoting UDP does not effectively narrow the mobile digital divide because of insufficient cognition about and persistent weaknesses in the use of information technology.