ShareThisBy TAVIA GRANT
Tuesday, November 14, 2006
More than two billion people in the world have a cell phone. But for the world's largest mobile phone companies, a new race has begun for the next billion.
Most growth will come from the developing world, which already has more cell phones than now exist in the industrialized countries.
"By 2008, there will be over three billion people using mobile communications," said Johanna Liukkonnen, Nokia Corp.'s industry marketing manager. "All the growth, even in the next three years, relates to emerging markets."
Nokia, along with its biggest competitors Motorola Inc. and Vodafone Group PLC, wants to extend its reach to the world's most remote regions, and not just for profit. Nokia sees it as a social duty, too, which explains why it came this week _ with a display of cell phones and antennae _ to the Global Microcredit Summit in Halifax.
Nokia has teamed up with the Grameen Foundation of Bangladesh to develop less-expensive cell phones used in Africa that are durable, dust-resistant and have flashlights _ a useful function for the many regions without electricity. It has also discovered how microcredit _ essentially, tiny loans to millions of poor people who lack collateral _ can pry open new, and vast, rural markets.
In Bangladesh, small loans have been used to fund village entrepreneurs, who then purchase cell phones and lease out time to their neighbors.
"It's a win-win-win model, all the way down," said David Keogh, deputy director of the Grameen Foundation's Technology Center in Seattle.
"Worldwide, rural markets have not really been cracked open by the telecom operators, simply because they're not willing to invest . . . what we've done with organizations such as (African phone company) MTN is to say, 'you have a channel to market: it's the microfinance sector.'"
Two African phone companies _ MTN Uganda and MTN Rwanda _ that partnered with Grameen are posting profits from the initiative and have extended their reach in their countries, Keogh said.
Motorola, meantime, last year unveiled a phone that costs less than $40, aimed specifically at emerging markets. Vodafone recently jointly released a study showing the growing opportunity in South Africa for lower-income clients to use mobile phone banking.
The plans aren't without risk. Margins are tight _ though Motorola says it still makes a small profit on its cheap phones _ and government regulations can squeeze growth.
But by moving early into markets such as Uganda and the Philippines, telecom companies hope to get a head start on building customer loyalty. They also expect profits will grow as poorer clients raise their incomes.
It's certainly a win for those in the developing world, particularly in rural areas. Access to cell phones and other personal communications devices are letting customers monitor market prices, conduct banking transactions and learn to read.
"It's amazing and provides income to a lot of people," said Khadija Shamte, a Kenyan management consultant attending the Microcredit summit.
"It's already worked in Uganda and I'm particularly interested to see how that could work in Kenya."
She noted that regular phones in her country are down almost half the time _ and that's in the small parts of the vast country serviced by land lines.
Much of the move to rural cell phone use started with the "telephone ladies" of Bangladesh. Nine years ago, Grameen Bank started arranging small loans to women in rural villages, who in turn earned money by running a village payphone.
The bank has since given loans to more than a quarter of a million borrowers to buy cell phones, and telecommunication services are offered in nearly half the villages in Bangladesh.
Grameen has since jointly launched for-profit mobile phone services in Uganda and Rwanda that focus on unserved areas. Each village payphone operator can get a $200 loan for a Nokia-designed cell phone, which comes with an antenna, car battery as a recharger, marketing signs and a manual.
After three years, Uganda has more than 6,000 village phones, with about 150 rolling out per month.
Building markets, one cell phone at a time
About 1.9 billion people subscribed to cell phone services in the second quarter of 2006.
Africa
154.9 million
An increase of 58.9 per cent from 97.5 million cell phone users in the same period last year.
Americas
161.1 million
An increase of 54.9 per cent from 104 million cell phone users in the same period last year.
Asia-Pacific
730.2 million
An increase of 31.2 per cent from 556.3 million cell phone users in the same period last year.
Eastern Europe
304.6 million
An increase of 42.4 per cent from 213.9 million cell phone users in the same period last year.
Western Europe
393.2 million
An increase of 6.2 per cent from 370.3 million cell phone users in the same period last year.
USA/Canada
244.6 million
SOURCE: GSM ASSOCIATION
