Study: Mobile access lifts emerging markets

Increasing mobile penetration can accelerate socioeconomic growth and benefits in developing economies such as Bangladesh, reports Alcatel-Lucent.
Written by Jamie Yap, Contributor

Improving access to mobile communications can bring about an "incremental" impact on the economic and social growth in developing markets in terms of gross domestic product (GDP) and human development index (HDI), a new study has revealed.

Released Monday, the study, done by Bell Labs and the World Economic Forum's Global Agenda Council (GAC), argued the "right combination of actions and investment can accelerate the economic impact of broad access to mobility by as much as 36 percent, measured in GDP". Bell Labs is the research arm of telecommunications infrastructure maker Alcatel-Lucent.

"Putting Broadband in the Palms of People's Hands: A Model to Drive Faster Economic and Social Growth" was a result of studying the mobile landscape in emerging economies, including Bangladesh, Kenya and Venezuela. It concluded that there was a correlation between mobile penetration and the prosperity of emerging economies.

Earlier research by the World Bank calculated that every 10 percent increase in mobile penetration leads to 1 percent increase in GDP in low- to medium-income economies, the new report cited. Bell Labs and GAC, however, argued that there is "potential" to grow socioeconomic benefits "even more quickly" in both GDP and HDI.

The Human Development Index is a measure of the quality of life based on life expectancy, education and standard of living.

There is a "strong link between increased telecommunications penetration and faster economic and social development", and that mobile communications in particular opens up "groundbreaking opportunities to transform industries and improve living conditions in developing countries", the organizations noted in the report.

In other words, if more people are granted access to mobile communications, economies "can grow and improve lives", they added, noting that mobile networks provide the means to connect more people to services, information and markets in today's digital economy. The ability to be connected is "especially important" to users living in developing countries.

For instance, people can learn English through a mobile service, which also improves literacy, while farmers can use their mobile to check market prices and text offers to each other, the report suggested.

Three areas to accelerate growth
According to the study, 86 percent of the world's population live in developing countries, yet mobile access there is "still far behind adoption in developed regions".

In Bangladesh, for instance, the urban populace's connectivity is growing at a reasonable pace, but the country has a large, under-served mobile population, particularly in the rural areas. From this example, the authors listed three key issues which will have the most impact on socioeconomic growth in developing economies: infrastructure; applications and affordability.

Infrastructure, the organizations noted, is key to accelerating the provision of universal and ubiquitous mobile access. However, new, sustainable business models that enable access at low cost with green technologies are required. Such a "rethinking" of infrastructure is necessary because if current traffic and tech adoption patterns continue, there will be "underserved" rural areas and "overloaded" urban networks.

The report also pointed out that adoption of mobile services is hampered by a lack of applications--while there are apps that appealed to niche segments of underserved populations, there are few apps that can be bundled as a suite in order to add value to users. Adoption rate accelerates only when mobile apps are relevant and appeal to a large portion of the rural base, it added.

Apps, the authors emphasized, need to be both "relevant" and "scalable", rather than innovative, to achieve broad deployment. One example is Mamakiba, a mobile app that helps Bangladeshi expectant mothers with irregular incomes, save and prepare the costs of prenatal care and childbirth.

Lastly, affordability must be "fully embraced" in order to meet the "price pressures of the poor". In Bangladesh, for example, monthly service charges and handset prices are prohibiting mobile phone ownership, especially among the poor, the organizations said in the report.

According to the study, the total cost of mobile communications should be less than 5 percent of household budgets in order to be a "realistic" option for low- to middle-income users. Phone manufacturers, content creators, government agencies, and wealthier consumers who upgrade their handsets regularly, can all play a part in putting "affordable hardware and connectivity into the hands of the poor", the report concluded.

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