TECH TALK: 3GSM World Congress 2006: Emerging Markets and Mobiles

Information Week wrote about the growing penetration of cheaper mobiles into the third world.

With a saturated market in Western Europe and North America and a user base adopting costly new third-generation features at a seemingly glacial pace, the mobile phone industry is turning to the Third World and asking the heads of developing countries to lift regulatory barriers.

According to Motorola CEO Ed Zander, addressing a forum at the 3GSM World Congress on Wednesday (Feb. 15), mobile phone penetration is a powerful engine for economic growth. He said, Every time you have ten more phones per 100 people, you have an increase in GDP (gross domestic product) of 0.6 percent.

Zanders company is a leader in providing ultra-low cost (less than $40) handsets to poor countries, shipping at a rate of 31,000 phones a day.

He said, “We stand on the brink of a new world where mobile communications will help people overcome poverty and realize their potential.” But he said that countries that continue to impose taxes on handsets, and other restrictions on mobile operators, will delay or even deny the economic benefits from connecting the unconnected.

Zander struck a theme common to this years 3GSM gathering, where thrift has supplanted the race to add handset features and maximize ARPU (average revenue per user). Zander was among several panelists in a session on developing markets who cited the economic virtue of deregulating mobile telephony in countries like Bangladesh, Nigeria, the Philippines, parts of Russia and dozens of other countries that represent the potential of 3 billion new subscribers by 2010.

This theme was echoed in a story in the International Herald Tribune:

Bringing services to the two-thirds of the world’s population that does not yet use cellular phones, most of whom are in Asia and Africa, is an issue that has been festering for years and that emerged as a central theme at the 3GSM World Congress in Barcelona, the biggest industry gathering of the year. It brings together the sector’s top executives, who come to tout their newest products, but also to speak about the future of their constantly evolving business.

“Emerging markets are on everybody’s mind,” Adrian Nemcek, the president of Motorola’s networks division, said during an interview this week. “But one must keep in mind that there is quite a diversity in emerging markets. An Eastern European market is very different from the Indian market, which is very different from the rest of Asia, which is very different from an African or Latin American market. Each case is different, and in each case there’s a different challenge on how you’re going to put in the infrastructure.”

While there are companies for sale and there is no lack of new licenses being issued to cellphone companies by the governments of developing countries, there remain numerous challenges, ranging from the prosaic to the particular. Companies running networks in Iraq pay millions of dollars to protect their workers and infrastructure, and in some cases companies operating in remote parts of Africa and Asia produce their own electricity to supply power to the base stations, the backbone of the network.

Perhaps the strongest brakes on telecommunications development, excessive regulation and cripplingly high taxes, often come from the countries themselves, which are ostensibly trying to encourage investment.

One thing is clear from 3GSM World Congress: the innovation in mobile technology continues. As devices become more powerful and cheaper, and the networks migrate to higher speeds, the impact of mobiles in our lives is only going to increase.

TECH TALK 3GSM World Congress 2006+T

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Rajesh Jain

An Entrepreneur based in Mumbai, India.