Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Five billion people worldwide have made mobile services an integral part of their daily lives today. 3G networks, devices, applications and services have brought about a new era of affordable telecommunications resulting in unparalleled growth, as evidenced by the last billion mobile users being added during a period of 18 months.
Despite the incredible recent growth of mobile subscribers and the developing demand for 4G, the market potential for 3G remains enormous, with Ericsson projecting 3.4 billion mobile broadband subscribers by 2015.
Where is this new growth occurring? Industry analyst firm Ovum forecasts that the most aggressive growth in the mobile sector over the next five years will come from emerging markets such as Africa, China and Southeast Asia. In these regions, mobile broadband connectivity means more than just e-mail access, web browsing and Tweeting. In many emerging markets, 3G enables access to vital communication and information services that stimulate progress in every sector of society, making the convergence of mobile communications, computing, media and consumer electronics a reality. At the same time, new devices, services and “connected” business models are redefining market sectors such as entertainment, education, finance and healthcare.
For example, consider the challenge of providing healthcare services to people in isolated locations. 3G mobile broadband is helping people overcome geographic barriers that have traditionally hampered access to healthcare. Wireless health solutions utilizing 3G networks and a growing number of connected devices are enabling medical professionals to reach more people for routine and emergency services, personal health management, remote diagnostics and security monitoring services.
The financial services and mobile commerce sectors are also being positively impacted by 3G, providing a new level of convenience for users on the move. In Africa and India, access to mobile broadband is making secure banking and payment solutions available to people who previously were unable to obtain traditional financial services.
These services are just a few that are benefitting from 3G in emerging markets, where operators are affordably addressing the growing global demand for broadband data services which is not being fully met by their existing fixed-line networks. The World Bank estimates that connecting an individual to a mobile network can be accomplished at just one-tenth the cost of providing a new fixed-line connection.
This power to affect impactful change is particularly important where geographic and socio-economic obstacles often lead to low teledensity and Internet penetration rates. The Telecom Management Group has estimated that a 1% increase in mobile penetration in developing countries is correlated with a 4.7% increase in average per capita income. Even more impressive, a 1% increase in Internet penetration results in a 10.5% rise in average per capita income.
China’s mobile penetration rate has doubled each of the past two years to reach 60%, which also translated into a 29% growth rate in overall Internet penetration. With China typically experiencing a 12% annual increase in per capita income, access to services created by mobile data networks is certainly having a tangible impact on a country-wide level. Global consulting firm LECG projects that the annual consumer welfare gain from 3G services could reach $66 billion in China.
More importantly, mobile access to the Internet and other 3G-enabled services is helping to close the extensive socio-economic gap between China’s urban and rural populations. After 3G licenses were awarded at the beginning of 2009, rural Internet users grew from 22 million to 107 million during the year. The country’s Ministry of Industry and Information Technology projects this growth will continue, with 3G users in China exceeding 500 million in just four years as mobile devices and services become more affordable.
With a mobile penetration rate around 45%, Africa’s wireless industry is poised to experience phenomenal growth as well. Many Africans’ first experiences using the Internet are on mobile devices. Innovative applications are improving the lives of rural users across the continent, including wireless marketplace applications that help farmers and fisherman research the buying price of crops or fish prior to making a lengthy trip into the nearest town or city.
Southeast Asia is another growth region for 3G, exemplified by a very competitive wireless market in Indonesia with many operators seeking to gain customers across the island chain. Clear differentiators are network coverage and performance, making it no surprise that the world’s first commercial CDMA2000 1x EV-DO Revision B service was launched by Smart Telecom in January of this year. Operators in Malaysia, Thailand and Vietnam are also seeing tremendous demand for 3G mobile broadband services.
This growth spells good news for both operators and consumers using 3G phones to access voice services, information, personal resources, Internet and media services that have been out of reach for many people in these regions. As more 3G-enabled services come to market in developed and emerging markets, the cost of devices will decline further, making voice and mobile broadband services even more affordable.
The impact of mobile services in emerging markets goes far beyond subscriber numbers. The services being enabled by 3G networks are bringing extensive and substantial social and economic benefits to these countries that, for many, were unavailable in the past. As a result, operators in these regions will continue to bring new applications, devices and services to market to meet this growing demand, further enriching the lives and livelihoods of their customers.
Perry LaForge is the executive director of the CDMA Development Group (CDG).
