Home Global-ICTGlobal-ICT 2006 Mobile – driving economic growth today

Mobile – driving economic growth today

by david.nunes
Craig Ehrlich Issue: Global-ICT 2006
Article no.: 6
Topic: Mobile – driving economic growth today
Author: Craig Ehrlich
Title: Chairman
Organisation: GSM Association (GSMA)
PDF size: 296KB

About author

Craig Ehrlich is the Chairman of the GSM Association (GSMA), the global trade association representing 700 network operators and 150 manufacturers and suppliers. Mr Ehrlich was formerly Group Managing Director of SUNDAY Communications Limited. He served Hutchison Cablevision as Managing Director and Hutchison Telecommunications as Group Operations Director. Mr Ehrlich sits on the boards of Roamware, Philweb, ECI Telecom and Hutchison Mobile Communications. He is Vice Chairman of an investor group that recently won a 3GSM licence and acquired controlling interest in Eastern Telecoms in the Philippines. Craig Ehrlich has a BA in Political Science from UCLA, a Master’s in Urban Studies from Occidental College and a Public Affairs Fellowship from the Coro Foundation.

Article abstract

The mobile phone is the most widely used form of telecommunication in the world. Mobile communications boost the earnings of many users, change the local economy and even significantly raise the GDP of many countries. The GSM Association has sponsored a series of projects to bring mobile telephony to developing regions of the world, including: the GrameenPhone’s Community Information Centres; the ‘shared access to voice’ programme that lets mobile phones be used as payphones; and, Internet booths in South Africa.

Full Article

The mobile phone – the most widely used communications technology in history – has become a major engine of development and a bridge across the digital divide. There are many compelling anecdotes of farmers, fishermen and other business people in the developing world using mobile phones to boost their income significantly. The mobile phone gives communities lacking fixed-line networks easy access to vital information about everything from market prices to job opportunities to vaccination programmes. The economic benefits of this newfound access to information and communications are increasingly well quantified. A recent study by the international consultancy McKinsey found that the mobile industry accounts for as much as eight per cent of GDP in China, India and the Philippines. Moreover, a ten per cent increase in mobile penetration in a developing country can boost the annual economic growth rate by 0.6 percentage points, according to researchers at London Business School. That is a substantial boost given that most national economies grow by only a few percentage points each year. Thanks to the economies of scale generated by the vast global market, the cost of buying and using a mobile phone is falling steadily and mobile penetration in many parts of the developing world is rising rapidly. The industry is notching up more than one million new mobile connections every day – most of them in the developing world. Mobile lines worldwide overtook fixed lines in 2002. Today, there are about 2.5 billion mobile connections – approximately double the number of fixed-line connections. There is still much to do to improve the affordability of mobile communications. In some developing countries, governments regard mobile phones as luxuries rather than an essential communications tool. This often leads to excessive taxes on mobile phones and mobile calls, so many people cannot afford to purchase and use a handset. At the same time, governments in some countries support the development of fixed-line networks rather than mobile networks. Some universal service funds set up by governments to provide access to telecommunications redistribute money from the mobile industry to the fixed industry. Similarly, regulation governing access to international networks and the interconnection between domestic networks often favours fixed operators over their mobile counterparts. This kind of discrimination against mobile makes no sense. Mobile networks are the only viable way to connect the billions of people in the developing world who lack access to telecommunications. Fixed networks are simply too expensive to bridge the digital divide. According to the World Bank, the cost of connecting an individual to a fixed network is typically ten times the cost of connecting them to a mobile network. Many governments need to consider whether their taxation, universal service and regulatory policies hinder, rather than encourage, the usage of mobile phones by their people. Even with the aid of governments, the standard mobile phone business model, in which each customer has their own handset, won’t connect all the unconnected. Despite the growing availability of ultra-low-cost handsets, we estimate that there are up to 1.5 billion people in the world that will not be able to afford their own mobile phone for the foreseeable future. Finding ways to serve these people is one of the primary goals of the GSM Association’s Development Fund. Formed in October 2005, the fund supports small-scale projects piloting innovative ways of using mobile communications to the benefit of the developing world. These pilots, designed to be easily scalable and replicable, test whether a specific innovation makes technical and commercial sense. The fund provides both financial support and the expertise of consultants from Accenture Development Partnerships. The GSM Association is also a partner in the ITU’s Connect the World Initiative. Among the first projects supported by the Development Fund have been ‘shared access to voice’ pilot programmes in Algeria, India, Kenya, Nigeria and South Africa. In most cases, the fund is working with a mobile operator to equip local entrepreneurs, typically based in rural communities, with specially adapted SIM cards that allow their handsets to function as a mobile payphone. Software in the SIM card monitors usage and calculates an airtime charge for each call. Initial results have demonstrated that the concept is sound. Now, these pilots are evolving into wider-scale rollouts. The Development Fund is also seeding ‘shared access to data’ pilots in several countries, such as South Africa, Kenya and Bangladesh. These pilots use enhanced GSM networks to bring Internet access to computers stationed in fixed booths run by entrepreneurs, who charge a fee to local people who wish to get online. After conducting a pilot project with the Development Fund, mobile operator GrameenPhone is rolling out 500 Community Information Centres in villages across Bangladesh. Run by local entrepreneurs, each of these centres is connected to GrameenPhone’s EDGE network, enabling customers to access the Internet at speeds of up to 128 kilobits per second. MTN, a local mobile operator, and the Development Fund have connected an Internet booth to MTN’s HSDPA (High Speed Downlink Packet Access) mobile network in a suburb of Johannesburg in South Africa. This gives customers an experience similar to that offered by fixed broadband networks in London or New York. The capacity of the HSDPA network allows many people to use the Internet simultaneously. We believe this pilot site will highlight the importance of rolling out HSDPA in the developing world. Where fixed-line networks are sparse, HSDPA is the key to bringing the vast resources available on the Internet within the reach of ordinary people. Of course, network speed is not the only factor that will make these services a success. Ease-of-use is also vital. MTN has created a special home page providing easy access to the most popular services, such as job information, e-government, telemedicine, entertainment, news and school/university results. Both shared data and shared voice services can provide people with valuable information that boosts their personal and economic welfare. For example, a telephone call, email or Internet search could save people from making long journeys to contact relatives, search for employment or find out which market is offering the best prices for their crops. In fact, the Development Fund pilots are demonstrating that there is an unmet demand for telecommunications services among even the poorest people in a society. They are prepared to pay a small fee to make a telephone call if it gives them access to valuable information that would otherwise have taken considerable time and effort to obtain. Each shared voice handset in the pilot projects is being used by an average of 30 customers and we are hopeful that our shared access initiatives will stimulate the creation of many sustainable and profitable small businesses. The work of the Development Fund goes beyond shared access initiatives. We are running pilot projects that will demonstrate how mobile technologies can be used to help track the spread of diseases, such as HIV/Aids or Avian Flu. In Rwanda, we are testing handset software that allows health workers in the field to submit information about the spread of HIV/Aids and the availability of medicine directly into central disease surveillance systems. That allows health authorities to react much faster to shortages of vital drugs. We are also testing new approaches to fuelling and managing mobile network base stations in remote areas that are not connected to an electricity grid. In Nigeria, the Development Fund is running a pilot project with Ericsson and MTN that uses bio-diesel to power a base station in a village not connected to the electricity grid. The pilot is demonstrating that bio-diesel, which can be produced locally, can reduce the cost and environmental impact of extending mobile coverage to rural areas. While the reach and influence of the Development Fund is expanding rapidly, we are open to further partnerships that can harness the vast potential of mobile communications to bring about social and economic progress. We believe the fund can serve as a lightning rod that channels the mobile industry’s huge capacity for innovation towards the specific needs of the developing world.

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