The green credentials of DevelopingTelecomsWatch are pretty weak - this blog has never dedicated an entire article specifically to an examination of the environmental impact of telecoms technology.
Moreover, the only time DTW has discussed 'green' technologies at length, when wind and solar-powered mobile base stations were evaulated more than a year ago, the focus was mainly on cost benefits for operators. Just a cursory mention was made how such solutions compare favourably - in terms of environmental impact - to diesel-powered generators in the vast numbers of sites where electricty distribution infrastructure is inadequate across developing countries.
Even in terms of the narrower arguments about cost control, last April's article was by no means constructed entirely of fulsome praise for wind-powered and solar-powered mobile network infrastructure. It was noted that while running costs can, of course, look very attractive, the costs of investing in new solar panels and wind turbines themselves are not trivial. DTW also reported concerns on the part of the GSM Association about the results of trials of sun and wind-powered base stations.
Mobile operators, then, mindful of these questions, could presumably be resistant to any attempt to make reliance on these green technologies mandatory.
This is precisely the situation which could be facing cellcos in India.
Writing for India's Economic Times earlier this month, Subhash Narayan asserts that the country's government "may ask telecom companies to install solar panels to generate backup power for cellphone towers, a move that could hurt the sector already troubled by a squeeze in margins."
A proposal being finalised by the Ministry of New and Renewable Energy (MNRE), writes Narayan, "is aimed at containing the use of polluting diesel gensets to provide back-up power" and "could increase the cost of network expansion significantly"
"The green drive will prevent these engines of development (telecom towers) from becoming grave environmental hazards," said an official with MNRE. "We are discussing the proposal with various stakeholders. A cabinet note is proposed to be finalised thereafter to get the clearance for the scheme," the official said, requesting anonymity
Predicatably, the industry response, as reported by Narayan of the Economic Times, is not terrible enthusiatic. "This could significantly impact the margins of companies already under pressure due to rising spectrum cost and the cut-throat competition in the sector," said 'an executive with a large private telco'.
Narayan asserts that the Indian government is not keen on providing any subsidy for solar power equipment, but says it could offer them soft loans under refinancing schemes of Indian Renewable Energy Development Agency.
This skepticism from India notwithstanding, one can still find evidence of cellcos in developing countries going down the green power route. Chinese vendor, ZTE, for example, seems to have encouraged MTN's Cameroonian opco to take delivery of an unspecified number of solar-powered base stations.
If you were asked to reach for an example of mobile financial services gaining traction really impressively, perhaps you would think immediately of the M-Pesa service offered by the Kenyan cellco Safaricom, in which Vodafone owns a minority stake.
I daresay most readers are somewhat familiar with the service. For those who are not, Safaricom's TV advertisement provides a concise demonstration of the simplicity and utility of M-Pesa:
Since its launch in 2007, M-Pesa has attracted widespread praise. In February 2008, the 'send money home'-themed marketing campaign, of which this ad was a component, scooped the 'Best Broadcast Commercial' gong at the annual Global Mobile Awards ceremony hosted by the GSM Association. This year, 'Best Mobile Money Service' was introduced as a new award category at the same ceremony - Safaricom and Vodafone were joint winners. More recently, M-Pesa has been feted by UN-HABITAT, the United Nations agency for human settlements whose mission is to promote socially and environmentally sustainable towns and cities with the goal of providing adequate shelter for all. In June, the agency announced the first Habitat Business Awards for best practice in categories including affordable housing, clean urban energy solutions and innovative ITC solutions. In the latter category, Safaricom made the winning submission for M-Pesa, which the jury felt boosts urban entrepreneurship and clearly demonstrates the impact of innovative IT solutions for sustainable urbanisation.
In its submission to the judges, Safaricom mentions Kenya's large 'unbanked' population - people, largely from the urban poor, to whom opening a bank accounts is off limits. The submission document explains that such people face challenges around the safety of carrying cash (mugging and carjacking are cited as dangers they face) and the high cost of transferring monies to relatives in rural areas via existing channels.
The benefits for the consumer, then, are quite clear - but what does a mobile operator such as Safaricom gain from entering the mobile money space? Dawn Marshallsay of mobileSQUARED, writing in January, emphasised how mobile financial services drive up cellphone usage. She also quotes Safaricom CEO Michael Joseph, who told delegates at a London conference that "banking is a value-added service for mobile, not a money-making product"
"The main purpose of mobile banking is getting the customer to have an emotional attachment with the operator as they entrust their monetary details with the operator. Customers then start using their phones more in general," Joseph continued.
Where one operator in a developing country achieves differentiation as the only provider of such services, benefits for that operator, then, would presumably include achieving a high degree of customer stickiness in a market where the vast majority of mobile users are highly price sensitive (due to their relative poverty vs. their counterparts in developed countries) and where prepaid plans are dominant.
This model, in which consumers are locked into a specific mobile operator's set of financial services, is open to challenge, however. Earlier this month, Richard Wray of the UK's Guardian newspaper wrote about a recently-announced deal between mobile banking firm Monitise and Paynet, a company which operates ATMs and electronic payment services across Kenya, Tanzania and Uganda in partnership with thirty-five banks. Wray writes that the deal "will bring financial services to millions of people in Africa for the first time". The suite of services will include checking balances, moving money between accounts, and enabling customers to fill a mobile-wallet with cash to pay bills or send money to relatives.
A pretty close resemblance to M-Pesa and other mobile operator-run services, then. The crucial difference emphasised by Wray, though, is that while operator-branded services demand that users are customers of a particular MNO or are connected with a specific bank, the Monitise system is open to any financial institution and any mobile phone network that wants to plug into it. If I have understood this correctly, it seems, then, that M-Pesa and rival services such as Zain Kenya's Zap are to be challenged by an operator-neutral alternative. Monitise CEO Andrew Lukies believes that "mobile money is most effective as an 'open ecosystem' where you can transact with anybody or any organisation, regardless of your bank or mobile operator. Another differentiator, according to the Monitise Group's press release on this deal, is that "uniquely among mobile banking services, [it] enables people without a bank account to use its services, as well as providing traditional mobile banking to those with accounts."
Assuming any such threat can be withstood, services like M-Pesa - improving the lives of the unbanked while providing cellcos with a customer retention tool - seem to be good for consumers, good for society and good for the operator.
None of this is to suggest that M-Pesa and services like it are never subject to criticism or concerns around their reliability and security.
Earlier this month, writes Victor Juma of Kenya's Business Daily, a technical hitch in the M-Pesa service caused anxious customers to crowd at outlets to have their accounts updated. For several days, it seems, users were unsure of whether some transactions had been properly credited to their accounts.
The service also appears to have been targeted by organised criminals depositing counterfeit currency via M-Pesa agents. Kenya's Daily Nation newspaper reported on 4th August that staff in two bureaus in the towns of Kutus and Kianyaga had received fake money worth Sh29,000 (about USD 380). Accounts used by the fraudsters were topped up without agents spotting the counterfeit cash. I assume that fraudulent deposits of this kind can be stopped once noticed, but this incident demonstrates that no system is completely immune from human error. Having visited Kenya, but never having stepped inside a retail bank there, I have no idea whether counter staff in banks there are more highly trained than M-Pesa agents and therefore less prone to making mistakes of this kind. Whatever the case, my feeling is that if mobile operators in developing countries are to capitalise on consumers' lack of access to traditional financial services and institutions, the authorities in those countries would be justified in insisting that the cellcos' services are subject to many of the same regulations imposed on the banking sector. I daresay, however, that incidents like the two mentioned here are relatively rare, so none of these observations are meant as a very serious criticism of mobile financial services in developing countries.
Kenya - and more specifically Safaricom's M-Pesa - stands out as a mobile money success story. How far is it an exceptional story? Can we expect services of this type to face greater obstacles to consumer acceptance and commercial success in other developing countries?
Sarah Rotman of the Consultative Group to Assist the Poor (CGAP) could presumably take a view on this, having written in July about the question of whether the success of mobile banking in Kenya can be replicated in neighbouring Tanzania. Rotman notes that unlike the rapid service uptake and quick development of an agent network in Kenya, things have moved much slower for Vodacom’s M-Pesa product in Tanzania. Explanations offered are as follows:
Geography/demographics: Tanzania is a less densely populated country than Kenya, which is important in light of the idea that the density of an agent network is a key factor in the success of any mobile financial services suite.
Market and competition: Safaricom in Kenya dominates its market (77.59% market share as of June 2009, according to WCIS), holding its own very well against established competitors and new entrants. Vodacom in Tanzania has just a 35.28% market share (according to WCIS) and is losing ground to the local operation of the Zain group and Millicom International Cellular's Tigo-branded operator.
Control over agent networks: according to Rotman, it appears that Vodacom Tanzania has less direct control of and influence on its airtime distribution channel than Safaricom. Also, Vodacom works directly with just six airtime wholesalers, compared with 300 for Safaricom. Safaricom’s airtime distribution network was a key element in the rapid development of the M-Pesa agent network.
Marketing and strategy: Initial Vodacom M-Pesa marketing seems not to have communicated the easily understood 'send money home' message we say in the Safaricom advertisement. As a result, writes Rotman, customers were unsure of what the product offered them and if it was really geared at the average Tanzanian.
While there are plenty of reasons to be bullish about the success prospects of mobile money services offered by cellcos to unbanked people in developing countries, then, it seems this enthusiasm should perhaps be tempered by an awareness of possible competitive threats from operator-neutral solutions and an understanding that a one-size-fits-all approach might not work effectively across a multi-country footprint.
For an entity supposedly up for sale and coveted by a wide variety of interested parties, Zain's African unit has certainly been very busy creating new partnerships and gaining publicity for its various activities.
One example of this, brought to my attention by TelecomPaper this week, is the operator's cooperation with Western Union, whereby the two organisations will work together to deliver mobile money transfer services in countries in Africa and the Middle East through Zain's new Zap platform. The service enables Zain subscribers to manage their bank accounts, top up mobile airtime (and transfer airtime to other subscribers), pay utility bills, pay for goods in retail outlets, and transfer money to friends and family.
The opportunity around providing financial services to the unbanked in Africa and in developing countries worldwide is a certainly a rich one. At the Mobile World Congress in Barcelona earlier this year, GSM Association CEO Rob Conway observed that "there are over one billion people in emerging markets today who don’t have a bank account but do have a mobile phone." Conway feels that mobile operators "are perfectly placed to bring mobile financial services to this largely untapped consumer base" and that "mobile money for the unbanked has the potential to become a USD 5 billion market opportunity over the next three years."
Conway was speaking during an announcement made jointly with the Bill & Melinda Gates Foundation, which provided a USD 12.5 million grant to the Mobile Money for the Unbanked (MMU) programme, the aim of which is to "encourage the expansion of reliable, affordable mobile financial services to the unbanked."
With Rob Conway having set out the scale of the opportunity for MNOs, the Foundation's Bob Christen was keen to stress the humanitarian benefits, noting that "technology like mobile phones is making it possible to bring low-cost, high-quality financial services to millions of people in the developing world so they can manage life’s risks and build financial security."
Mobile financial services then, should surely be a vital component of the strategy of any telecoms group whose operations are, in large part, in developing countries - a nice revenue opportunity plus wonderful CSR benefits around poverty alleviation.
Setting up services of this kind, however, can be challenging. The last time I heard this discussed at a conference (East Africa Com in Kenya this April), delegates were asking questions about regulatory complexity and about to what degree securing the necessary participation of established financial institutions was going smoothly.
Bearing this in mind, it is perhaps worth noting that while Zain's announced partnership with Western Union sounds exciting, much of the text refers to this being a work in progress - not yet fully operational and subject to regulatory clearance in countries worldwide.
This leads me to wonder whether it would be sensible to dedicate considerable efforts to this venture if up to sixteen of the operations in which the service will work are really to be sold in the near future.
Another initiative possibly set to do wonders for Zain's image as an organisation committed to improving lives in Africa was announced only days ago. Dubbed "Weather Info for All", this involves Zain, Ericsson, the Global Humanitarian Forum and the World Meteorological Organization. The aim is to "radically improve Africa’s weather monitoring network in the face of the growing impact of climate change," which is said to be responsible for some 300,000 deaths worldwide each year and over USD 100 billion of economic losses, mainly because of shocks to health and agricultural productivity. As the Weather Info for All announcement indicates, "Sub-Saharan Africa accounts for close to a quarter of these losses, and is the region at the most immediate risk of droughts and floods."
Africa suffers not only from the effects of these adverse weather conditions, but also from a dearth of reliable information about when and where disaster is likely to strike. This is due to the continent having a weather monitoring network eight times below the WMO minimum recommended standard, and less than 200 weather stations that meet WMO observation requirements, compared to several thousand each in Europe, North America, and parts of Asia.
The Weather Info for All initiative is aimed at adding 5000 weather stations across Africa. Zain has got the ball rolling by providing access to tower sites in Kenya, Tanzania and Uganda.
Mobile network infrastructure provides an unrivaled wealth of support for weather stations - connectivity, power supply and security.
Ericsson, meanwhile, will develop mobile applications to help communicate weather information via mobile phones to the vulnerable communities whose lives can be wrecked by adverse conditions.
I know less about the levels of investment and commitment required of Zain with regard to the Weather for All Initiative than I do about the amount of hard work needed to roll out mobile financial services for the unbanked. Both initiatives, however, have in common a sense of being long term endeavours. Again, I ask whether all of this activity might suggest that the sale of Zain's African operations is rather unlikely.
Wind/solar hybrid powered base station deployed by Avea: pic from Cellular News
By March this year, according to Informa Telecoms & Media, there existed over 4.1 billion mobile subscriptions globally. At the start of this decade, the number of global subs was just 482 million. Ten years earlier than that, there were fewer than 5 million subscriptions worldwide.
I feel proud to be associated with an industry that has grown so impressively, but am mindful of the challenges ahead as mobile operators seek to connect the next billion customers. These prospective subscribers are poor people with very restricted spending power. A popular argument put forward to explain factors responsible for keeping such people locked into poverty can be exemplified thus:
The earning potential of a semi-skilled handyman living in a shanty town on the fringes of a large African city is hampered by his not being able to advertise how he might be contacted by anyone wanting his services. He spends more time walking the streets asking for work than he does working and getting paid.
A farming community lives a largely subsistence lifestyle, growing crops to meet its own needs and selling the surplus to buy other vital goods and services. The farmers routinely fail to get the best price for this surplus because they have no way of finding out at which markets they they will find the highest levels of demand.
A person living in a remote community needs to register a birth or death in the family. The state bureaucracies have no touchpoint in the community so completion of this routine paperwork involves taking time away from productive activities to travel to a bigger population centre.
All of these problems can be resolved through access to telephony and/or the Internet. The handyman can write his mobile number and details of the services he offers on signs, placing these at road junctions or other prominent locations. I saw a lot of this kind of hand-made advertising on my recent trip to Kenya. With (mobile?) Internet access - or even just by making a few calls - the farming community can review market information and send its produce to where the best price can be commanded. In a small, isolated community provided with some form of Internet access, e-government solutions may obviate the need for long, expensive, time-consuming journeys.
Communications services, then, look set to have a vital role in alleviating this poverty. This role has been quite neatly explained by The Next Billion Network, an initiative incubated at the MIT Media Lab. The phrase used in the this group's mission statement is about deploying innovative mobile technologies which help poor people in developing countries to "reduce friction in their local markets from the bottom up". The Next Billion Network's founders believe that these new waves of mobile subscribers will make their voices heard—and connect to the global information network. "This will unleash a wave of entrepreneurship, collaboration and wealth creation, turning the newly connected into a powerful force in the world economy," the founders say, adding that "the kind of world that emerges from this transformation will depend on our ability to recognize it as an opportunity."
For mobile operators to continue to act as a catalyst for developments of this kind, they will need to resolve a number of challenges around keeping the total cost of service ownership low for poorer people in developing countries. These challenges are many and varied. The one referred to in the title of this post is around powering mobile networks in locations lacking reliable electricity grid infrastructure.
In emerging markets, cost-conscious operators have long been concerned about the OPEX implied by running diesel-powered generators to power off-grid base stations. The fuel itself must be bought and operators must also take fuel transportation costs into account - significant costs when fuel must be supplied to remote areas with poor roads
Solar power and wind power look like good alternatives - the power sources themselves are free and inexhaustible. Added to that, CSR-conscious telcos can bask in positive press coverage of their reduced carbon footprint.
In September last year, however, I read that trials of these technologies have largely been quite disappointing. My former Informa Telecoms & Media colleague Matthew Reed, the editor of Middle East and Africa Wireless Analyst, reported disatisfaction on the part of the GSM Association with the trialing of base stations powered by the sun and wind. The GSMA's Development Fund Director Dawn Haig-Thomas said: "There have been a number of trials that have failed, and we've been digging into the reasons," adding that "we've seen trials where the geography hasn't been correctly considered – where solar panels and wind turbines have been placed in inappropriate places, or not in optimum places."
In addition, Matt Reed reports, "many sites are also missing electronic control devices that manage power fluctuations or alert systems that tell operators to switch on backup diesel generators, if the base station is low on power, perhaps because it has not been windy or sunny enough."
Further, Matt writes, a big reason for the lack of take-up of alternative energy sources is that although operating costs might be low, the solar panels and wind turbines have historically been too expensive. In addition, notes Matt, "lots of solar panels were needed to power a base station, which would force operators to buy more land on which to site them." Wind generators, until recently, he notes, "were only manufactured with massive turbines that were more appropriate for wind farms than for small base stations."
Matt observed, however, that better solutions are becoming available. A number of deployments of wind and solar powered base stations have been announced in the month's following Matt's article. I have to assume that these deployments involve solutions to the kinds of problems Matt raised.
The most recent one that I know about is the deployment by Turkish mobile operator Avea of what it claims is the first hybrid wind/solar powered base station in the country - manufactured by Scottish firm Proven Energy. A Cellular News piece on this story this week quotes Erol Barendregt, Director of Turkish reseller GirasolarTürkiye, which installed the equipment: "The hybrid solution is the best option because the sun and wind resources have opposite cycles and intensities during the day. Wind and solar power are understood to be among the best natural alternatives to fuel based electricity generation. By using both in a system that is designed to supplement each other you get a continuous and reliable power supply."
Major telco sector vendors want a piece of the action in this space. In October, Ericsson, for example, unveiled a wind-powered 'Tower Tube' base concept developed in partnership with Vertical Wind and Uppsala University in Sweden. According to a Global Mobile Daily article at the time, vertical rotor blades work silently, minimising the load on the tower during operation.
A more recent announcement by the Swedish vendor, made in February, concerns its involvement in the development of solar-powered base stations. A GMD article dated February 18 notes that the Orange-branded mobile operator in Guinea is to deploy 100 solar powered base stations across the African country, in partnership with Ericsson. The base stations, says the article, make use of Ericsson's energy-efficient hybrid diesel-battery solution and solar panels, which will replace one of a base station site's diesel generators with a bank of specially designed batteries capable of handling a large amount of charging and discharging.
Chinese vendor Huawei also has solar powered solutions on offer. GMD reported in September that the company had deployed Pakistan's first solar powered base station for Warid Telecom, thereby enabling the operator to extend its network reach into remote areas of the country with limited access to the electricity grid.
Sri Lanka's Dialog Telekom has opted for a mix of solar and wind-powered base stations in trials designed to investigate the uses of several forms of equipment from eight different vendors. This was reported by GMD in February.
So there seem to be a few renewable energy developments going on in emerging markets worldwide. I could not comment to what degree these recent deployments and trials have addressed the concerns raised last year by the GSMA.
When I used to be involved in the organisation of telecoms sector conferences and exhibitions around the world, my marketing team worked hard to ensure that the events were attended both by reporters from international industry publications and by journalists from the mainstream news media of the host country. It was always quite gratifying to see copy about the presentations and discussions in the local vernacular in the days following the conference.
I imagine, then, that my former colleagues in the Com World Series team over at Informa Telecoms & Media may have been a little annoyed to see a round up of stories clearly emanating from the recent East Africa Com conference in Nairobi which failed to mention the event. Perhaps the host country's Daily Nation newspaper is not actually at fault here, having sourced the piece from Reuters.
Putting these gripes aside, I was interested to see that of the numerous points raised at the event by Vitalis Olunga (who heads up the GSM Association's African chapter), the Reuter/Daily Nation article led with his comments about taxes on mobile phone use.
Mr. Olunga, whose day job is with market-leading Kenyan cellco Safaricom, is quoted as saying that excise duty rates of more than 10% across Kenya, Uganda and Tanzania are too high. "If they reduce it, it will promote the usage of mobile. Rwanda has given us a good example where they introduced it at 3%," he told Reuters at a regional telecoms conference (this is the point at which the journos could have named the conference!)
Olungu said that a cut would also help cushion the sector from forecast falls in ARPU as the region increasingly feels the impact of the global financial crisis.
Susan Mochache, also spoke at the event, is an assistant director at the Communications Commission of Kenya. Ms. Mochache told Reuters her organisation expected tariffs to fall anyway due to growing competition.
I flew to Nairobi with the beginnings of a bad head cold. I got off the plane with somewhat impaired hearing as a result. So I may have missed some nuances of what was discussed at the conference. Even so, I am pretty sure that the exhange of views about taxes and tariffs which is implied in the Reuters/Daily Nation piece is not something that unfolded on stage...
I recently made reference to an emerging markets-focused publication which I consider to be an excellent source of information and insights: Expanding Horizons magazine, which is offered to ICT decision-makers in the private and public sectors by Nokia and Nokia Siemens Networks. The latest issue is a special edition packed with interesting articles from the last 2-3 years. Expanding Horizons aims to explore the socio-economic benefits that mobile technologies offer as well as best practices from around the world in order to encourage affordable mobile communications and bring the Internet to the next billion consumers. Its editors also aim to demonstrate how to create favourable environments for market growth in developing countries.
One of the most recent articles opens with a challenging question: Why is TCO (Total Cost of Ownership) of USD 5 per month possible in India, Pakistan, SriLanka and Bangladesh but not in 76 other emerging markets covered in a study conducted by Nokia in 2007. For the purposes of the study, TCO was defined as a combination of the service fee, taxes and mobile device price. The study found that the average TCO for subscribers in these developing countries was USD 13 per month and its authors asserted that bringing this figure down to less than USD 5 would enable a majority of low-income prospective subscribers to use mobile services. Surely, then, all four South Asian countries with outstandingly low average TCO should have very high mobile penetration rates when compared to the broader selection of emerging markets. Let's look at mobile penetration in these four countries as of December 2008, according to the World Cellular Information Service.
India: 28.31&
Pakistan: 51.68%
SriLanka: 49.48%
Bangladesh: 28.95%
Of the 76 countries found to have higher average TCO, quite a large number have outperformed these South Asian markets in terms of mobile penetration. Let’s pick out some examples, choosing only countries with lower per capita GDP and/or ranking lower on the Human Development Index than India. Again, the figures are from the Informa Telecoms & Media World Cellular Information Service:
Vietnam: 79.37%
Yemen: 28.53%
Kyrgyzstan: 65.83%
Cameroon: 31.01%
Nigeria: 44.50%
I wish I had time now for a detailed discussion about why some of the above countries, all of which have higher average mobile services TCO than the South Asian markets, have done better in terms of getting mobile devices into the hands of larger slices of their populations. In lieu of that discussion, for which I hope to find time another day, it does, at least seem fair to assert that while low average TCO is highly desirable, it is clearly not the single most important factor for mobile services to be taken up by the less affluent population segments in developing countries.
This is not to say, of course, that it is not worth trying to understand how TCO can be minimised. Nokia were interested enough to commission a follow-up study, executed by LIRNEasia, a regional ICT policy and regulation capacity-building organization active across the Asia Pacific.
So what explanations were found for the USD 5 TCO in the four South Asian countries? The Expanding Horizons article states that "surprisingly, the data led to the exclusion of such factors as per capita GDP, mobile penetration and growth rates, population size and density, and governance." In each instance, the article continues, other countries surveyed with more favourable values for any one of these characteristics also had monthly TCO levels substantially exceeding the crucial USD 5 per month. Instead, "our study told us that the two factors most common among the four countries that had the lowest TCO levels was superior market access and business model innovation," said Mr. RohanSamarajiva, executive director of LIRNEasia. "In addition to the availability of low-cost handsets and modern wireless infrastructure equipment, a market requires a ‘disruptive competitor’... one who does not play by the established rules."
To summarise, the strategies of these 'disruptive competitors' have, according to the article, involved shifting the operator’s focus to lower income consumers and increasing network utilization. The article continues that this kind of strategy is built on the principle of widening the user base significantly, handling a greater volume of smaller transactions very efficiently, driving down customer acquisition costs and creating an efficient network architecture. All of this is done, continues the article, with the goal of allocating the network’s fixed cost structure over a broader user base while significantly raising more marginal revenue through higher numbers of previously under-served, low-income consumers.
In the case of Bangladesh, my guess is that the first-mover in terms of being a 'disruptive competitor' would have been Grameenphone, famous for its association with the Village Phone microfinance initiative, now replicated in African and other Asian markets, which puts mobile devices in the hands of low-income subscribers in rural areas and enables them to build sustainable businesses. In the case of the other three markets, the identities of the 'disruptive competitors' does not immediately spring to my mind. Perhaps some helpful reader has a view.
As someone used to spending a busy week doing business at the Mobile World Congress, I have spent a little time this week wondering what opportunities I might be missing by not attending this year. Given that I am writing this on a pleasant South Florida morning, looking out at a swimming pool, a line of trees and the St. Lucie River beyond them, it might seem odd that I would spend even a second missing the harsh lighting and the long slog around Barcelona's Fira. Two reports from Spain, however, seem to vindicate my decision to use this short hiatus between one job and another to enjoy a family holiday.
The first comes from Dean Bubley of Disruptive Wireless. Dean highlights a few things he's taking away from this year's MWC, of which I was most interested in the idea of "CTO-to-CFO friction" within mobile operators resulting in revived HSPA+ plans and LTE deployment timelines "being pushed out a bit". Dean also reports detecting less overall pessimism about the economy than he had expected but wonders if that might be "because the real doom-mongers all had their travel expenses cut this year." Interesting though these observations are, the part which made me feel really good about taking a vacation during the cellular sector's annual get-together was Dean awarding a "villains of the year" gong to "the GSMA Stasi demanding photo ID to get into the Fira precincts in the morning." While I daresay I will throw myself back into the MWC fray again in 2010, this is the kind of thing I don't miss.
The other MWC report reaching me here in sunny Palm City, Fla. is the ever-amusing Week in Wireless, penned by the mysterious 'Informer' who observes that attendance was noticeably down on previous years. The Informer’s straw poll of a score or so of exhibitors puts the contraction at an estimated 20-25 per cent. The Informer was intrigued to notice that this year there was no sign of exhibition staff scanning badges at hall entrances, something which has been done in recent years to gauge footfall. The Informer wonders if this was a cost-cutting exercise and reserves judgement about the suggestion made by "one naughty cynic" that not measuring traffic in the exhibition halls simply removes any obligation on the part of the GSMA to report exact figures to exhibitors "in a year where those figures might not have encouraged onsite rebooking." The Informer is quite right to label this a cynical suggestion.
This stuff, as the Informer says, is for the conspiriacy theorists. More important than this, the Informer feels that there was also a lot less news than in years past. This is what makes me feel OK about missing out this time. I daresay the next time I attend the old buzz I know and love will be back.
In my most recent post, I was reflecting on the large population of Polish migrant workers in the UK, something which came up in the context of discussing mobile international money remittance services worldwide. The Informer reports remarks made in Barcelona this week by Chris Bannister, CEO of P4/Play, Poland's newest mobile operator, which has been in business for around two years. Mindful of the significance of this large Polish presence in the UK for his international business, Bannister complained about the serious problems caused by failing to get a roaming agreement with Telefónica-owned O2 UK until only three months ago.
According to the Informer, Bannister also has to contend with mobile number portability taking a whopping 51 days in Poland. The Play CEO says that 15% of his subscribers are former customers of the operator's longer-established rivals. Bannister suggests this figure could double if more effective MNP was introduced. The Informer writes that "the incumbent players, Vodafone (Polkomtel), Orange and T-Mobile (PTC), have no interest in seeing this happen", according to Bannister, who also discussed data roaming rates: he can get Eur 3.75 from T-Mobile (I assume this means T-Mobile Germany) whereas E-Plus will do it for Eur 0.25.
Play is one of the core members of the Mobile Challengers Group, an alliance of third and fourth placed competitors in various European cellular markets. The aim of the group is to challenge the competitive environment of the European mobile industry. One of this association's stated intentions is to create a level playing field for all operators and to provide greater choice and better conditions for consumers.
The Informer writes that five CEOs from the Mobile Challengers Group were on hand in Barcelona to raise their grievances about what they see as the protectionist activities of incumbent carriers. The Informer feels that "the existence of this group reflects the power structure of the GSMA, which is controlled by the largest players" and was told by one employee of one of the member companies, when asked about the Mobile Challengers Group's relations with the GSMA: "they hate us."
The Informer observes that "some might view the challengers’ complaints as sour grapes from carriers that lack the scale to compete with more successful players", but feels that 51 days for MNP in Poland and Mr. Bannister's reported discrepancy in wholesale roaming rates does indeed smack of protectionism.
In addition to all of this, I noticed a few WiMAX stories emanating from Barcelona, some of which have a bearing on the question of how far that technology is set to succeed in emerging markets. I will turn my attention to that next time. For now, I really should get on with enjoying my holiday.
An averagely busy life does not allow for blog entries as long as novellas. I also doubt that posts as long as that would be read from start to finish by equally busy readers. Some topics, though, are worth exploring at length, and I was conscious yesterday of having downed tools before getting close to sharing more than a tiny fraction of what I've learned about the theme I was discussing - how successfully the telecoms sector is reconciling its for-profit commercial imperatives with a desire to improve the lives of poor people in developing countries. What follows today, therefore, is a little more exploration of this broad topic.
A company which got a mention here yesterday was Grameenphone, the cellco which owns the largest share of the mobile market in Bangladesh - 46.75% by December 2008, according to Informa Telecoms & Media's World Cellular Information Service. We considered the idea that the MNO's owners, Telenor and GrameenTelecom, have been at odds, with Muhammad Yunus, the Nobel Laureate behind the Grameen family of companies apparently claiming that Telenor's need to build shareholder value has not always sat comfortably with the social and non-profit agenda of its Bangladeshi partners.
For many, I will be rehashing a very familiar story as I take a look at the form this agenda has taken. Some readers may know the story less well and not be fully aware of how cellcos elsewhere in the world have been inspired by Grameen Telecom/Grameenphone initiatives. The tale is one of my favourite examples of the telecoms industry changing lives for the better so I will indulge myself by repeating it, hoping that there is something new here for at least one reader of this blog.
The most famous Grameen Telecom/Grameenphone project must be Village Phone, an inititative which provides telecoms services to underprivileged people in rural Bangladesh. Prospective Village Phone subscribers must first become members of Grameen Bank and take out a small loan. This loan is then used to purchase a handset and SIM card. Once given a phone, the subscriber is encouraged to provide services to people in the adjoining area. In this way, the borrower repays the debt to the bank and earns a profit. In 2006, I welcomed a representative of Grameen Telecom to a conference I hosted in Dubai. Participants watched a moving video which showed how the Village Phone project was transforming the lives of poor Bangladeshi villages, mostly women.
This model has been replicated elsewhere in Asia and also in Africa. I think the most recent example is that of the Village Phone project launched in Indonesia by the Grameen Foundation, Qualcomm and Bakrie Telecom, a CDMA WLL operator that is seeking to establish a national presence with its Esia brand.
In July 2008, Global Mobile Daily reported on the project, whose name, 'Uber ESIA', means 'joint cooperation' in the Indonesian language, and which is aimed at delivering affordable access to remote rural areas using 3G CDMA technology. Similar to the original Bangladeshi model, the plan is to work with local Indonesian microfinance institutions to enable clients to borrow sums needed to purchase a Village Phone 'business in a box' consisting of a mobile 3G CDMA-based device and charger, marketing materials, tariff posters, business cards and training materials.
This clip (in Dutch, with English subtitles) tells the story of the Ugandan initiative:
Qualcomm's involvement in the Indonesian Village Phone project is further evidence to support a point made in yesterday's post - that telecoms operators are not the only communications services ecosystem participants which can support initiatives designed to improve the lives of poor people in emerging markets.
Another example of this is the 'Village Connection' system developed by Nokia Siemens Networks. I remember this being discussed in an email-only publication to which I was once a regular contributor, the weekly 'Telecoms Vision' newsletter associated with the Informa Telecoms & Media Com World Series. In February last year, this carried an article based on an interview with Rauno Granath, NSN's Head of New Growth Markets. Granath explained that the Village Connection solution, which is comprised of GSM access points located in villages, connected via IP links to regional access centres, was "carrying live traffic in many villages in India." The article stated that the system lends itself to new business models such as operators potentially franchising parts of their business to local village entrepreneurs.
Granath was keen, however, for NSN not to be prescriptive about business models, saying "the Village Connection solution enables new thinking in sharing the responsibilities as well as the business between the new stakeholders, but it doesn't mandate it. I would expect to see a whole variety of ways of working." The article suggested that as different business models emerge, so too could different operator approaches to charging, and went on to discuss other offerings in the NSN portfolio designed to make taking on new subscribers even more viable. An example given was that of improved radio performance and planning through which it becomes possible to allow a reduction in sites, saving money on hardware and, in isolated areas, on power. Also discussed were further ways of reducing power consumption, and thus the Total Cost of Ownership (TCO) for prospective new subscribers from among the poor of the developing world. These included base stations that can work without air conditioning and combined solar and wind power systems.
Another efficiency measure discussed by Granath concerned airtime distribution purely on an SMS basis rather than scratch cards. "It sounds trivial," said Granath, "but when we think about the tens or hundreds of millions of vouchers that operators need to distribute throughout their subscriber base every year, it starts to get big effects."
The article made the point that these are all admirable attempts to make supplying services to rural populations viable but asked the question of whether such potential subscriber additions are really worth the effort for operators. Granath was adamant that "there is still a lot of pure business sense for operators to reach the rural areas, particularly in markets like India where even the rural population is dense." Apart from which, it may be unavoidable if, as Granath pointed out, universal service obligations are imposed by governments.
For more on the Nokia Siemens Networks view on extending service availability in emerging markets, I would heartily recommend a look at the latest edition of the company's Expanding Horizons newsletter. With an editorial co-authored by Rauno Granath, this is a useful round up not only of NSN's activities in this field, but also related material such as an interview with Gabriel Solomon of the GSM Association, who worries that high taxes on mobile communications are threatening to suppress economic and social development in sub-Saharan Africa.
As I continue to tease former colleagues at Informa Telecoms & Media whose Facebook status updates suggest they are gearing up for a week of very hard work at the Mobile World Congress (while I head off for a family holiday in Florida), I was pleased to note that a senior figure at the company is predicting that the effects of the economic downturn notwithstanding, emerging markets will get a look in during the various conference sessions and workshops and in the countless discussions between individual participants.
Mark Newman, the business information and events firm's Chief Research Officer begins his preview of this year's Barcelona show by asking how how exhibiting vendors "can... showcase new mobile Internet devices, mobile applications and next generation mobile broadband network technology while at the same time satisfy[ing] operators' overriding single objective in 2009 - cutting costs as the mobile industry faces up to the global economic downturn."
All very austere. Almost as harsh as my wife returning from a lunch with friends today and sharing with me the news that several people present have either been made redundant or are expecting the axe to fall very soon.
My own view of the downturn, however, is to be grateful for the fact that however long or deep this recession proves to be, none of us living in the developed economies of Europe or North America will experience the levels of absolute poverty suffered by people in what we call emerging markets. I was therefore heartened by the final comment of Mark's MWC preview: "Growth potential in emerging markets has been a regular theme over the last few years and will remain so at this year's event". For me, that's exactly as it should be, especially if we take the view that telcos and vendors making a profit in developing economies is compatible with improved lives for the poor.
the blogging alter-ego of a globe-trotting Englishman with a professional interest in the telecoms sector in emerging markets and developing countries worldwide.
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