Today, we stand on the threshold of a new Internet era, with information services holding vast potential to enhance the lives of billions more people. It will be a journey of discovery, with mobile communications paving the way to the Internet.
The spread of voice communications continues its dizzying rise, already shooting past three billion mobile users. The next stage in the evolution of world communications is widespread information services. People need to be taken on a journey of discovery, to learn how to use services and explore the rewards for themselves.
The welfare of billions across the world will be improved by universal access to relevant, practical ICT. In healthcare, education, agriculture, business and public services, information offers a myriad of ways to help people in their daily lives. However, the route to the sources of information everywhere in emerging
markets is not straightforward.
Mobile Internet for the masses
Access is, of course, fundamental. The sheer cost-effectiveness and convenience of mobile technologies will prove decisive. Mobile devices are pervasive, with penetration growing at a rapid pace. They also offer great interactivity and are highly affordable. Yet that is only part of the story. Conventionally, the industry has talked
about the technologies needed to provide connectivity, as though simply giving people access to services is
enough. We now know that we need to go further, involving new thinking at all levels. This is a journey that involves
the entire industry and beyond: operators, local communities, governments, content creators, local businesses and communities, as well as the individual consumers themselves. Even the best connected countries have much scope to improve how well the Internet and information services are being used. In emerging markets, that essentially boils down to building the competence and motivation to use information services, as well as rolling out the infrastructure.
New types of services will be needed
People intuitively understand the value of voice communications. Telephone conversations are natural, their content is user-generated and in the local language. It is easy to learn how to make a telephone call, even for people who are illiterate. However, little of this applies to existing information services. “The Internet for the next billion consumers will be very different to the services prevalent in advanced markets, says Mr. Jawahar Kanjilal, global head of emerging market services at Nokia.
“The mass of consumers in emerging markets lives in semi-urban and rural areas. Villages are far apart. A trip to
the city is a big event in many people’s lives. We need to understand that their context is highly local.
“Many of these potential customers do not know what the Internet is and what it can do for them. Rather than
talk about the technologies involved, the industry needs to turn this around and take the consumer’s point of view
as our starting point.”
Affordability is crucial to success
For consumers, affordability translates into total cost of ownership (TCO). TCO is the total amount needed to buy and use the service. This includes the price of the mobile device, the price for the service and the tax levied on both. Recent years have seen a 33 percent reduction in mobile handset prices across emerging markets, yet TCO has decreased by only 1 percent. “We estimate that 2.7 billion people earn two US dollars or less per day, and have a budget of three US dollars or less per month to spend on ICT,” says Mr. Frank Oehler, head of business
development at Nokia Siemens Networks. “To meet this market need, it is important that operators can offer affordable services. And they must keep operational and capital expenditure per subscriber very low to create sustainable business.
“All this means that providing mass access to information services is a major challenge for operators. It demands
a mix of innovative technology and novel business models that focus on major issues such as reducing the
power consumption of base station sites, sharing site infrastructure to reduce capital costs, and solutions that
cut backhaul costs. One solution that meets these criteria is Nokia Siemens Networks Village Connection, which is extending mobile and internet cover-age into rural areas,” continues Oehler.
Lowering costs for consumers will encourage greater mobile penetration and accelerate the adoption of services.
This will inevitably lead to productivity improvements and social enhancements that help to drive up economic activity.
Costs must be easy to understand
Transparency and simplicity in pricing is also vital for building confidence among consumers. While developed
markets have experienced tremendous growth in data use driven by flat rate pricing tariffs, these are typically
pitched too high for lower income consumers in emerging markets. Operators and service providers need to find
new and innovative pricing models that suit consumers in the lower-income segment.
Costs can be reduced further through schemes in which a mobile device is shared. Or Internet kiosks
can be set up to provide on-demand access within a village and for smaller settlements in the local area. This
enables consumers to use services for themselves, see how the services work and understand the value that they can bring into their lives.
Learning the skills and value of ICT
Through a shared experience, consumers can create competence and motivation, which are two further steps along the journey towards mass adoption of information services via mobile communications. “Building consumer awareness and capability takes time. Ease of use is essential,” explains Kanjilal. “SMS-based services have the potential to open up the market because of their simplicity
and the ubiquity of GSM mobile networks. There are also opportunities in using voice-based services, which is important to overcome the illiteracy barrier.” As well as matching people’s income patterns and competence, information services need to fit their needs. Consumers will only be motivated to use services that they can see bringing immediate, tangible benefits and improvements to their lives.
Recent Commonwealth Telecommunications Organization research on local e-content discovered that people
in emerging markets welcomed information services, especially about job opportunities, markets, education,
banking, health and travel. Livelihoodbased services, as well as popular entertainment services, will be key areas for future services.
Enhancing quality of life
It is early days, but new services are already popping up on the radar. In Kenya, for example, Safaricom’s M-PESA service, which offers mobile-based payment, is generating much interest, with registrations surpassing 6,000 per day. The service is aimed at prepaid mobile subscribers without bank accounts. “People with lower incomes will not part with any money unless they see intense value from a service,” says Kanjilal. “Services must focus on enhancing people’s income and quality of life. Meanwhile, they have limited entertainment options. A mobile device incorporating FM radio brings a personal music experience as well as access to information. Even a low-end mobile phone is a good media device. And personalization, such as ringtones, is also important, helping to satisfy people’s aspirations.
“With a simple mobile device you can access a huge range of services, from banking to celebrity gossip,” continues Kanjilal. “Services must be relevant, in the local language and tailored to the many different local markets that exist in each country.” Creating and bringing the right services to people will involve all
stakeholders in a new ecosystem that encompasses operators, Internet service providers, infrastructure vendors, handset manufacturers, local companies, healthcare providers, banks and educational establishments.
“Mobile operators are big stakeholders and it is in their own interest to create business models that help to sustain the local content ecosystem. Revenue sharing arrangements must encourage more local content producers to create locally orientated services,” comments Kanjilal.
Regulatory niceties and necessities
One of the most important partnerships in the local ecosystem will be that between governments and the private sector. “Regulators must ensure a level playing field with easy access to the market, it is key to everything else,” explains Mr. Erkki Ormala, vice president, technology and trade policy at Nokia. “Global experience shows that the TCO for consumers is dependent on lowering or eliminating additional costs, such as handset and infrastructure equipment import duties and taxes on services. When this prerequisite has been achieved, other issues such as adopting global network standards and technologies can be addressed. Ormala points to India as a shining
example of what can be achieved by emerging markets through deregulation: “Today, we see India as one of the
fastest growing mobile markets enjoying some of the world’s lowest tariffs. Without regulatory reform this success
would not have been achieved.” Yet telecom's deregulation is no longer enough. As mobile access expands
to encompass advanced services, other issues will come to the fore. “A major disruption comes with the rise of mobile broadcasting services such as delivering TV over 3G networks,” comments Ormala. “With very few exceptions around the world, telecom's and broadcast regulatory authorities are separate. With the convergence of technologies, no longer can we make a clear distinction between services. There is a huge opportunity for emerging markets to leapfrog mature markets to create a regulatory environment more advanced than anything
seen in Europe and the United States.” Clearly there is a lot to think about, and many twists in the road ahead.
But on the journey towards improving people’s lives with information services, there are two things we can be sure of: that the potential for socioeconomic betterment is huge, and that the services themselves will be very different to
the established Internet model seen in mature ICT markets
