Home Africa and the Middle EastAfrica and the Middle East 2006 Wireless broadband – changing business in Africa and the Middle East

Wireless broadband – changing business in Africa and the Middle East

by david.nunes
Pertti JohanssonIssue:Africa and the Middle East 2006
Article no.:8
Topic:Wireless broadband – changing business in Africa and the Middle East
Author:Pertti Johansson
Organisation:Qualcomm Middle East and Africa (MEA)
PDF size:80KB

About author

Pertti Johansson is the President of Qualcomm Middle East and Africa (MEA). Prior to joining Qualcomm, Mr Johansson was the Founder and President of the consulting firm, Johansson Global Associates, LLC. Previously, Mr Johansson worked for Motorola Corporation in a number of executive management positions including Senior Vice President of Global Account Management, Senior Vice President and General Manager of the European, Middle Eastern and African regions, Vice President, Corporate Vice President and General Manager of the International Cellular Infrastructure Division, and Director of R&D and Product Marketing for GSM Networks. Mr Johansson has served on the boards of the Aegis Communications Corporation, the Strategic Account Management Association, the Pacific Telecom Council, the U.S.-Russia Business Council, Motorola Regional Management for Asia, Europe and Latin America, and the Finnish-American Chamber of Commerce. Pertti Johansson received his Bachelor of Science degree in Electrical Engineering- Telecommunications from the Helsinki Institute of Technology.

Article abstract

Given the growth of broadband wireless networks and the wide availability of inexpensive handsets, third generation (3G) broadband technologies will give developing countries a level of Internet access sufficient to wirelessly bridge the digital divide. As these technologies evolve, mobile voice and high-speed data services will far surpass the economic importance and relevance of wired communications. In the near future, the wireless Internet will contribute to uplifting and reshaping the economies of emerging markets across Africa and the Middle East.

Full Article

When Alexander Graham Bell first conceived of the telephone in 1876, he touted it as the ‘miracle discovery of the age’, yet the public was mostly unaware of its possibilities. Today, the concept of the telephone has given way to a slew of other inventions, including the cell phone. Like the telephone, the Internet can be tagged as a ‘miracle discovery’ since it has revolutionized the computer and communications like nothing else. Today, the combination of the cell phone and the Internet has had a significant impact on the way we work, increasing efficiency and contributing to the health of many regional economies. In fact, the wireless Internet will contribute to uplifting and reshaping the economies of emerging markets across Africa and the Middle East. Many believe that access to communications is a basic right, and that bringing access to information and communications to underserved communities strengthens cultures and promotes commerce and societal participation. The economic importance of enabling access to basic telecommunications service has long been recognized around the world as critical for development, yet such access is still unobtainable by many. As wireless communications technologies continue to evolve offering mobile voice and high-speed data services, the economic importance and relevance of these wireless networks are far surpassing those of the wired world. Wireless communications will provide universal, ubiquitous, equitable and affordable access to information. Already taking off around the world, third generation (3G) broadband technologies are the catalyst that will broaden the Internet’s influence on the world. The telecommunications industry is at the point where the availability of broadband wireless networks is coinciding with the availability of inexpensive handsets. With very inexpensive cell phones becoming common, developing countries will experience a level of Internet access not previously seen, allowing for a wireless bridging of the digital divide. The rapid growth of wireless penetration, compared to fixed lines, is largely attributable to the relatively low incremental cost of adding subscribers to cellular networks. Wireless networks can be built far more quickly than fixed-line networks, and the technology allows users a variety of ways to obtain access to the network. Wireless networks are ideal vehicles for the delivery of Internet services to developing countries because they do not require the costly and lengthy network infrastructure build-outs of wired networks. Paired with the fact that inexpensive handsets are readily available, it is only logical that in the future, the majority of people accessing information over the Internet will use their cell phones as their main information-access devices. In developing countries, mobile consumers are realizing the convenience, mobility and advanced capabilities of cell phones, and it is in those markets where the cell phone-to-PC ratio is the widest. For example in the Middle East, the telecommunications regulatory authority in the United Arab Emirates estimates that 91 per cent of the population has cell phones, whereas only 19 per cent have PCs. This difference indicates cell phones have a much broader reach than PCs, and illustrates the potential of the wireless Internet. Wireless technologies have clearly emerged as the predominant method of accessing information and communications services worldwide. In 2002, the number of wireless phone subscribers across the globe overtook the number of fixed-line connections. In Africa, wireless phones account for at least three quarters of all telephones. In the region, over the last five years, approximately eight times as many mobile wireless connections have been made relative to other fixed access methods. In emerging markets like the Middle East and Africa, where the wireline infrastructure availability varies greatly between the city and rural areas, the wireless networks provide the fastest, most secure and cost-effective means of providing broadband access to rural areas. It is in these areas where 3G wireless broadband will have the greatest economic impact on the region. Wireless technologies are already making a profound economic contribution to Africa, by creating a positive impact on employment, increasing business efficiency, and boosting tax revenues and GDP. In Africa, telecommunication service revenues, as a percentage of Gross Domestic Product (GDP), have grown the fastest compared to other regions. Today, they represent almost five per cent of GDP in Africa, compared to 4.5 per cent in Oceania, 3.8 per cent in Asia, 3.3 per cent in Europe and 2.9 per cent in the Americas. This highlights the importance of the telecommunication sector for the African economy. In addition, a significant number of studies have emerged that establish a positive link between the use of mobile phones and economic growth in developing countries. A recent study attempted to quantify the effect of increased mobile penetration on GDP, and found that between 1996 and 2003 a developing country with ten more mobile phones per 100 people could expect to experience annual GDP growth that was 0.59 per cent higher than an otherwise identical country. While research has shown a positive correlation between teledensity and GDP growth, an even stronger relationship exists between Internet penetration, which can be further accelerated through 3G wireless technology, and GDP growth. Because 3G wireless broadband technology can provide both voice and high-speed data in a more cost-effective manner than wireline infrastructure, the implementation of 3G wireless broadband will further accelerate GDP growth in developing countries. Wireless phones also have an important impact on economic growth by increasing productivity. A survey of small businesses in South Africa found that 89 per cent made use of mobile phones. Of these, 62 per cent reported increased profits. Benefits of the technology that were highlighted in the survey included increased availability to clients, reduced travel and assistance in breakdowns/ emergencies. Wireless devices also enable the realisation of economic benefits through the availability of up-to-the-minute price and cost information. For example, fishermen and/or farmers can use the data capabilities of 3G-based wireless phones to check real-time market prices for their commodities and can then find the best offering price for their products. Increased efficiency of communications, such as these, for businesses is becoming ever more important; it will help businesses in Africa and the Middle East to compensate for the lack of other modern amenities needed to keep up with the global pace of business. The success of implementing 3G broadband wireless technologies is already evident in India. With the introduction of 3G technologies in 2002 and subsequent regulatory reform by the Government of India, the country witnessed a 6 per cent increase in total teledensity amounting to more than 80 million new wireless subscribers and a drop in tariffs by 75 per cent to less than one rupee per minute. As a result, India currently has the lowest mobile tariffs in the world. These inspiring results demonstrate the potential impact on the economies of other emerging markets through the implementation of 3G technologies. In the future, in addition to increasing productivity, wireless technology will be able to transform economic relationships and processes in the private and public sectors of these emerging markets. E-commerce, such as business-to-business and business-to-consumer transactions are taking up an increasing market share, and broadband uptake through 3G wireless is closely linked to this development. Services, such as banking and electronic payments have become prevalent in countries where 3G wireless broadband is widely deployed. The economic impact of 3G wireless broadband will further be amplified in underserved areas, particularly with the extension of credit and transactional facilities to those who previously had no access to banking services. Similar arguments apply to mobile commerce and data services, as well as a range of other applications, including e-government, e-health and e-education. In some parts of the developed world like Japan, the adoption and advanced usage of the wireless Internet occurred earlier, and at a much more rapid pace, than that of the wired Internet; these early adopters are a good example of what is possible for the future of wireless communications in other regions. Japan and South Korea quickly recognized the potential of the wireless Internet and subsequently developed applications and functions for this platform, rather than for the PC. In Korea, mobile banking applications have been widely accepted as a cost-effective channel to deliver banking and trading services and the number of customers who use mobile banking-enabled handsets has surpassed the ten million mark, according to a recent article in The Korea Times. Comparatively, in Japan, the wireless Internet has supported the emergence of such business applications as systems maintenance and sales force automation, resulting in greater operational efficiencies and lower costs. This rapid adoption and development of daily applications for business, as well as recreation, has fuelled an explosion in the use of the wireless Internet that has far surpassed the wired Internet. Telecommunications has certainly come a long way since the days of Alexander Graham Bell, and the drive to explore the potential of new technologies continues. Several decades ago, the telecom industry invented ways for us to communicate with each other wirelessly; since then, the industry has worked hard to refine and invent technologies and to bring new products and services to consumers. Simultaneously, the wired Internet has grown to provide a viable method of information dissemination, a mode of communication and collaboration and a tool for e-commerce. Today, 3G broadband wireless technologies are evolving to bring together the enormous capabilities of the Internet and the convenience and affordability of wireless phones. Communications has become a realistic and attainable basic right, and it has never been more important to the businesses and overall economies of emerging markets like Africa and the Middle East.

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