Daily Independent (Lagos)
Aaron Ukodie
6 October 2008
International Telecommunication Union (ITU)Secretary-General Hamadoun TourÈ announced in New York at the weekend that worldwide mobile cellular subscribers are likely to reach the four billion mark before the end of this year. This represents about one mobile phone to two persons.
TourÈ was speaking at the high-level events on the Millennium Development Goals (MDGs)in New York, where he also participated in UN Private Sector Forums addressing the global food crisis and the role of technological innovation in meeting the MDGs.
MDGs were adopted following the United Nations Millennium Declaration by UN Member States in 2000, representing an international commitment to eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality, reduce child mortality, improve maternal health, combat epidemics such as HIV/AIDS and malaria, ensure environmental sustainability, and develop a global partnership for development that would include making available the benefits of information and communication technologies. ICTs have been recognized as an important tool to achieve the MDGs.
Since the turn of the century, the growth of mobile cellular subscribers has been impressive, with year-on-year growth averaging 24 per cent between 2000 and 2008. While in 2000, mobile penetration stood at only 12 per cent, it surpassed the 50 per cent mark by early 2008. It is estimated to reach about 61 per cent by the end of 2008.
"The fact that four billion subscribers have been registered worldwide indicates that it is technically feasible to connect the world to the benefits of ICT and that it is a viable business opportunity," said Dr TourÈ. "Clearly, ICTs have the potential to act as catalysts to achieve the 2015 targets of the MDGs."
While the data shows impressive growth, ITU stresses that the figures need to be carefully interpreted. Although in theory a 61 per cent penetration rate suggests that at least every second person could be using a mobile phone, this is not necessarily the case. In fact, the statistics reflect the number of subscriptions, not persons.
Double counting takes place when people have multiple subscriptions. Also, operators' methods for counting active prepaid subscribers vary and often inflate the actual number of people that use a mobile phone.
On the other hand, some subscribers, particularly in developing countries, share their mobile phone with others. This has often been cited as the success story of Grameen Phone in rural Bangladesh, for instance. ITU further highlights that despite high growth rates in the mobile sector, major differences in mobile penetration rates remain between regions and within countries.
The impressive growth in the number of mobile cellular subscribers is mainly due to developments in some of the world's largest markets. The BRIC economies of Brazil , Russia , India and China are expected to have an increasingly important impact in terms of population, resources and global GDP share. These economies alone are expected to account for over 1.3 billion mobile subscribers by the end of 2008.
China surpassed the 600 million mark by mid-2008, representing by far the world's largest mobile market. India had some 296 million mobile subscribers by end July 2008 but with a relatively low penetration rate of about 20 per cent, India offers great potential for growth. Market liberalization has played a key role in spreading mobile telephony by driving competition and bringing down prices.
India 's mobile operators increasingly compete for low-income customers and Average-Revenue-Per-User in India has reached around USD 7, one of the lowest in the world.
ITU recently published two regional reports for Africa and Asia, which indicate how mobile telephony is changing peoples' lives. Apart from providing communication services to previously unconnected areas, mobile applications have opened the doors to innovations such as m-commerce to access pricing information for rural farmers and the use of mobile phones to pay for goods and services. While mobile broadband subscribers remain concentrated in the developed world, a number of developing countries, including Indonesia , the Maldives , the Philippines and Sri Lanka in Asia-Pacific have launched 3G networks.
Broadband uptake enables a range of socially desirable and valuable online services, specifically targeting the MDGs in areas such as e-government, e-education and e-health. The use of broadband technologies can help overcome many of the basic development challenges faced by developing countries.
Africa records unprecedented growth
In Africa mobile sector growth has defied all predictions. Africa remains the region with the highest annual growth rate in mobile subscribers and added no less than 65 million new subscribers during 2007. At the beginning of 2008, there were over a quarter of a billion mobile subscribers on the continent. Mobile penetration has risen from just one in 50 people at the beginning of this century to almost one third of the population today. Mobile subscribers are also now more evenly distributed. In 2000, South Africa accounted for over half of all Africa 's mobile subscribers, but by 2007, almost 85 per cent were in other countries. Mobile success, driven largely by competition, is also spawning new services such as micro-payment prepaid recharging, single rate inter-regional roaming and the uptake of m-commerce applications.
High prices, low usage... Africa's broadband market needs a boost while mobile services have become more accessible and affordable, Internet access has generally not. It is estimated that there were some 50 million Internet users in Africa in 2007, translating into around one person among twenty. Over half of the region's Internet users are estimated to be located in North African countries and South Africa . In Sub Saharan Africa, only three per cent of the population is online. The scarcity of international Internet bandwidth and lack of Internet Exchange Points (IXPs)drives up prices. Africa , the poorest region in the world, has the most expensive Internet prices. The average monthly Internet subscription is almost USD 50 in Africa , close to 70 per cent of average per capita income.
Broadband penetration is low across the continent. There were around two million fixed broadband subscribers in Africa in 2007, less than a quarter of the population of metropolitan Lagos , the former capital of Nigeria . Only five African countries had a broadband penetration of more than one per 100 inhabitants in 2007. In comparison, the average broadband penetration in OECD countries was 18.8 in June 2007 and the lowest ranked country was Mexico, with a penetration of 4.6, or some 38 times more than the average for Africa. Fixed broadband access is mostly limited to urban centres. The low availability, poor condition and lack of competition in the public switched telephone network market constrains the deployment of fixed broadband access.
The future is wireless...
If broadband is to become more prevalent in Africa , it is likely to be through wireless technologies such as third generation (3G)mobile and WiMAX. In Mauritius and South Africa , 3G subscribers already outnumber fixed broadband subscribers. South Africa had 1.8 million 3G subscribers in September 2007 compared to 335 000 ADSL connections. Vodacom of South Africa reported that over 10 per cent of its 3G subscribers used data cards for connections to laptops, reflecting the popularity of 3G as a broadband access method. WiMAX is moving from an experimental testing phase to commercial deployment in a number of African countries. The spread of high-speed wireless technologies will intensify broadband competition in Africa . There is evidence that broadband pricing in Africa is lower in countries that have deployed both fixed and wireless broadband technology.
... and public access
The provision of voice telephony through public payphones is prevalent in some African countries. Liberalization of payphone markets has led to a proliferation of entrepreneurs reselling phone service. Take Togo for example, where about one quarter of fixed telephone lines are connected to private telephone cabins. The mobile boom has also created a large informal market reselling mobile airtime. This type of public access needs to be intensified for Internet access. Levels of home computer ownership and Internet subscription are extremely low in Africa and will remain so for years to come. Higher levels of ICT access will only be achieved through public facilities such as Internet cafÈs and schools. Practical programmes are needed to dramatically boost access through public facilities, including the full liberalization of public access licensing procedures to facilitate the creation of entrepreneur-operated facilities. This should be linked to e-government programmes in order to ensure that citizens can electronically interact with their governments.
A serious impediment to the development of ICT markets in Africa is the lack of electricity. Energy shortages and power failures raise costs, as operators must maintain their own generators. Governments could consider offering tax rebates to offset the high costs of energy for telecommunication operators. Import duty waivers and tax reductions could be extended to local companies supplying renewable power and equipment to mobile operators. Private-public partnerships between utilities and telecommunication operators could also address specific energy needs.
At a crossroads
As the end of the first decade of the new millennium approaches, Africa stands at a crossroads, with ICT policy makers faced with important choices. While the mobile sector has grown tremendously, sustaining this momentum and expanding access in areas where Africa is lagging behind such as Internet and broadband, will not come easy. Getting more users on board would mean targeting lower income segments of the population. These potential customers are highly sensitive to price and small changes can have a big impact.
Bringing down prices will be key in expanding access to more Africans. Governments can do their share by reducing taxes, interconnection rates and regulatory costs.
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