BARCELONA, Spain-The show is in Spain, but last week’s 3GSM World Congress was all about emerging markets in Africa, Asia and South America.
After rising by an average of 25 percent for the last three years, global handset growth will slow to a 13-percent clip in 2007, according to new figures from iSuppli. The slowdown will continue to lag for several years, the market research firm predicts, dipping below 6 percent by 2010.
But while handset penetration nears-and perhaps surpasses-100 percent in some nations, carriers, content providers and phone manufacturers should feast on the low-hanging fruit of developing markets, according to a number of executives on hand last week.
“It’s an amazing testament to where we are as an industry that this room is packed,” Telenor ASA CEO John Frederik Baksaas told attendees in Barcelona. While consumers in more advanced markets have become dependent on wireless, “We anticipate there are 3.8 billion people still without that kind of mobile connecting,” he said.
The Norwegian carrier has gained traction in developing European countries, Baksaas said, as well as in Pakistan, Bangladesh and two other Asian markets.
New markets, new challenges
Such territories present substantial challenges to mobile companies: users typically earn far less than their counterparts in the West or Far East, requiring cheaper handsets, no-frills service and, often, prepaid plans. The average monthly wireless spend per user in Brazil, for instance, is about $7 a month, said Vivo President Roberto Lima, but the nation claims the sixth-largest mobile market, edging out Japan. And Brazilians in outlying villages “may go downriver every two or three days” to charge handsets for friends and neighbors.
Emerging markets also offer opportunities not found in other markets. Fishermen can use wireless phones at sea, for instance, to find the highest-paying buyers for their catch. Mobile handsets are often used for both voice and Internet access where fixed-line infrastructures don’t exist, and can be used to transfer funds in regions where banks are scarce.
“Mobile-phone services might be available where the nearest bank branch might be a two-hour bus ride away,” said W. Roy Dunbar, president of global technology and operations for Mastercard International, stumping for m-commerce efforts in remote regions. “The rate of mobile payments could parallel the adoption of mobile communications in the developing world.”
Indeed, wireless is already leapfrogging other technologies in some developing areas. Mobile porn providers report surprisingly high uptake of their wares in markets where Internet access is largely unavailable. Warner Music Group last week unveiled a pact with Egypt’s Orascom and is working with other carriers in China, South Korea and North Africa to sell mobile music where other distribution channels may not even exist.
“There are 2 billion people in the world who’ve already adopted mobile communications, and billions more who have yet to enjoy these benefits. And it’s significant to note that while it took 12 years to connect the first billion, it took less than three years to connect the second,” said Warner President Edgar Bronfman Jr. during a keynote speech. “For music, this means spiking over the CD and cassette entirely.”
So while carriers and content providers in the West struggle to gain traction with mobile TV and full-track downloads, the sheer number of potential subscribers coupled with a growing dependence on wireless makes for fertile ground in developing markets. Effectively tapping such regions could spur economic development, fueling uptake and boosting monthly spending on voice and data services.
“India’s ARPU is among the lowest, but don’t let that ARPU sway you away from an opportunity,” said Dinesh Wadhawan, chief executive officer of the India Times. “This is just the beginning. . I think low ARPUs will turn into big revenues very soon.”
