Sunday, November 22, 2009

Nice Talking to You


Most of us living in the developed world have barely noticed what has happened already and is now driving toward maturation in the developing world. The cell phone has properly linked everyone on Earth today. The remaining areas lacking coverage are minor and merely prove the global nature of present coverage. The minor fraction of the population without an actual service contract is still part of a family with at least one device. Growth of subscribers today consists of putting one’s wife on the account with an unused spare phone which everyone soon has.


The most important first step toward evolving a modern economy is providing effective individual communication. That was why cities got built in the first place and why the advent of telecommunications fueled the development of the modern world.


It is now shockingly simple for me to deal directly with a coffee grower on some hill side in Kenya and entertain the idea of marketing his product in my own town. Few have fully woken up to the possibilities except those folks in Nigeria who want you to abet their involvement in a criminal act.


This is early days in the global commerce revolution and all we are likely to get now is broker’s buzz. But the present existence of that buzz is the prelude to a huge economic expansion. It is like the early eighties with mainland China.


When I penned my predictions on the general form of global economic expansion I made several broad-brush assertions. The developed world included then about one billion people and that by now has expanded by fifty percent. The developing world was primarily India and China and they had over two billion people and were rising swiftly on the S curve. In short I saw that half the globe’s population was engaging in a rapid growth build out of their economies to reach the developed world’s standards.


I recognized that the remainder would struggle to become engaged in this process and saw no easy way to change all this at all. The big states were doing better than expected and that now certainly includes Brazil were they have been treated to an outbreak of good government, as has China and India.


In fact the pleasant surprise is to see the large states sort out their governance issues. It will never be perfect and who are we to say. Right now it is essentially business as usual working in these countries.


The rest of the developing world was then terribly fragmented presenting a whole range of governmental options. It was easy to predict a generational move up the S curve but difficult to see when and how when presented with the political history.


All of a sudden, a Masai cattle herder can talk to a business man in China and even transfer money and check out the website. Importantly, they all can. At worst a phone is available to borrow as needed.


The rapid expansion of microfinance is also unleashing the natural entrepreneurial strength of all populations everywhere.


This has been all created almost out of whole cloth just over the past five years as cell phone capability and effective market penetration have intersected. Today the whole developing world is connected or if not is perhaps two years out for m been so connected.


And adding the provision of banking services makes the device indispensible to every adult in the developing world because it delivers the totality of the developed world to the user.


This means that the economic growth rate of the remainder of the globe is about to climb to over five percent annually and plausibly closer to ten percent as experienced by China and India. This will be greased along by massive capital investments coming out the developed world and equally out of BRIC.


I am no longer hesitant in predicting that the entire world will be modernized over the next two generations. After all, once communications are established, the rest is all about education and steel and concrete. Of course some excuse for a fiscal policy and a government that at worst gets out of the way is also helpful.



Nice talking to you ... mobile phone use passes milestone


A UN report reveals that half the globe now pays to use one, with the fastest growth taking place in Africa


There are an estimated 4.1bn mobile phone subscriptions. Photograph: Alamy


The speed and scale of the world's love affair with mobile phones was revealed yesterday in a UN report that showed more than half the global population now pay to use one.


The survey, by the International Telecommunications Union (ITU), an agency of the UN, also found that nearly a quarter of the world's 6.7 billion people use the internet.


But it is the breathtaking growth of cellular technology that is doing more to change society, particularly in developing countries where a lack of effective communications infrastructure has traditionally been one of the biggest obstacles to economic growth.


By the end of last year there were an estimated 4.1bn mobile subscriptions, up from 1bn in 2002. That represents six in 10 of the world's population, although it is hard to make a precise calculation about how many people actually use mobile phones.


Africa is the continent with the fastest growth, where penetration has soared from just one in 50 people at the turn of the century to 28%.


Much of the take-up is thought to have been driven by money transfer services that allow people without bank accounts to send money speedily and safely by text messages, which the recipient - typically a family member - can cash in at the other end. Vodafone's M-Pesa money transfer service was launched in Kenya in 2007 and now has 5 million users.


The ITU report points to the Gambia, where mobile subscriptions have rocketed amid stiff competition among mobile operators. Out of almost a million telephone subscribers, there are more than 800,000 mobile subscriptions but only about 50,000 fixed telephone lines in service.


Developing countries now account for about two-thirds of the mobile phones in use, compared with less than half of subscriptions in 2002.


The adoption of mobile technology has outstripped the growth of fixed-line connections, which rose from 1bn to 1.3bn over the same period, with market penetration stuck just below 20% for some years.


The figures demonstrate that many people in the developing world are bypassing the older technology altogether.


In the developed world, many people use more than one mobile device, with subscriptions exceeding population by 11% in Europe.


On the other hand, a single mobile phone may have several users in poorer countries, where handsets are sometimes shared or rented out by their owners.


"There has been a clear shift to mobile cellular telephony," the ITU said. "In contrast to the growth in the mobile sector, fixed telephony has experienced nearly no growth in the last decade."


The agency painted a positive picture of a world being opened up and given fresh opportunities by improved communications: "The spread of mobile cellular services and technologies has made great strides towards connecting the previously unconnected."


The report also recorded a marked increase in internet use, which more than doubled from 11% of people using the net in 2002 to 23% last year.


Here the report identified a clear gap between the rich and poor world: fewer than one in 20 Africans went online in 2007, for instance, and less than 15% in Asia, whereas Europe and the Americas recorded penetration of 43% and 44% respectively.


Across the world just 5% of people have broadband internet at home, although this rises to 20% in the developed world.


In Africa, fixed broadband penetration stood at a mere 0.2% in 2007. But the report highlighted the potential of mobile broadband to expand the availability of high-speed internet access.


By the end of 2008, there were close to 335 million mobile broadband subscribers across the world, although not all of these would be users, the report conceded.


At the moment the developed world is far ahead, with 14% penetration in mobile broadband, compared with less than 1% in the developing world. The report found that there was a persistent "digital divide" between rich and poor countries in the use of communications technology.


Sweden was the world's most advanced country in the use of information and communications technology, in an index of 154 countries that took various factors into account such as access to computers and literacy levels.


South Korea and Denmark were placed second and third in the list, while the UK was ranked 10th.


"Despite significant improvements in the developing world, the gap between the ICT [information and communication technology] haves and have-nots remains," the report said.


One problem it identified was that the cost of mobile and internet services in developing countries was relatively high as a proportion of average income. The global economic downturn could also affect the development of communications technology if cash-strapped consumers cut their spending, the report said.


But its prognosis was relatively sanguine: "Despite the economic downturn, current global ICT developments are unlikely to change drastically, given the pervasive nature of information and communication technologies."


Calling Everest


Then you hear your mobile. Being 29,198ft above sea level is no longer an excuse for not answering. In 2007 China Telecom installed a mast near the Everest base camp.


With 100,000 phone masts erected each year, the number of places with "no signal" is dwindling fast. "More than 90% of the global population now has access," said Gabriel Solomon of mobile trade body GSMA. Even North Korea has lifted a ban, though access to handsets and international lines are heavily restricted.


Remote spots like Bhutan or Tibet are increasingly in reach. Networks are also covering Africa, with a $50bn investment in the sub-Sahara region alone. Only unpopulated areas like Antarctica or Chile's Atacama desert will remain off the hook. Closer to home, a few areas remain silent, but Solomon says that after the 2012 digital switchover UK coverage will be "ubiquitous".


Zoe Wood


Mobile phone use passes a milestone


A UN report reveals that half the globe now pays to use a cellphone, with the fastest growth taking place in Africa


By CHRIS TRYHORN, TOM PHILLIPS, ZOE WOOD, XAN RICE AND TANIA B
THE GUARDIAN , LONDON


Friday, Mar 06, 2009, Page 9


The speed and scale of the world’s love affair with mobile phones was revealed in a UN report on Monday that showed more than half the global population now pay to use one.


The survey, by the International Telecommunications Union (ITU), an agency of the UN, also found that nearly a quarter of the world’s 6.7 billion people use the Internet.



But it is the breathtaking growth of cellular technology that is doing more to change society, particularly in developing countries where a lack of effective communications infrastructure has traditionally been one of the biggest obstacles to economic growth.



By the end of last year there were an estimated 4.1 billion mobile subscriptions, up from 1 billion in 2002. That represents six in 10 of the world’s population, although it is hard to make a precise calculation about how many people actually use mobile phones.



Africa is the continent with the fastest growth, where penetration has soared from just one in 50 people at the turn of the century to 28 percent.



Much of the take-up is thought to have been driven by money-transfer services that allow people without bank accounts to send money speedily and safely by text messages, which the recipient — typically a family member — can cash in at the other end. Vodafone’s M-Pesa money-transfer service was launched in Kenya in 2007 and now has 5 million users.

The ITU report points to the Gambia, where mobile subscriptions have rocketed amid stiff competition among mobile operators. Out of almost 1 million telephone subscribers, there are more than 800,000 mobile subscriptions but only about 50,000 fixed-telephone lines in service.



Developing countries now account for about two-thirds of the mobile phones in use, compared with less than half of subscriptions in 2002.



The adoption of mobile technology has outstripped the growth of fixed-line connections, which rose from 1 billion to 1.3 billion over the same period, with market penetration stuck just below 20 percent for some years.



The figures demonstrate that many people in the developing world are bypassing the older technology altogether.



In the developed world, many people use more than one mobile device, with subscriptions exceeding population by 11 percent in Europe.



On the other hand, a single mobile phone may have several users in poorer countries, where handsets are sometimes shared or rented out by their owners.



“There has been a clear shift to mobile cellular telephony,” the ITU report said. “In contrast to the growth in the mobile sector, fixed telephony has experienced nearly no growth in the last decade.”



The agency painted a positive picture of a world being opened up and given fresh opportunities by improved communications.



“The spread of mobile cellular services and technologies has made great strides towards connecting the previously unconnected,” it said.



The report also recorded a marked increase in Internet use, which more than doubled from 11 percent of people using the Internet in 2002 to 23 percent last year.



Here the report identified a clear gap between the rich and poor world: Fewer than one in 20 Africans went online in 2007, for instance, and less than 15 percent in Asia, whereas Europe and the Americas recorded penetration of 43 percent and 44 percent respectively.



Across the world just 5 percent of people have broadband Internet at home, although this rises to 20 percent in the developed world.



In Africa, fixed broadband penetration stood at a mere 0.2 percent in 2007. But the report highlighted the potential of mobile broadband to expand the availability of high-speed Internet access.



By the end of last year, there were close to 335 million mobile broadband subscribers across the world, although not all of these would be users, the report conceded.



At the moment the developed world is far ahead, with 14 percent penetration in mobile broadband, compared with less than 1 percent in the developing world. The report found that there was a persistent “digital divide” between rich and poor countries in the use of communications technology.



Sweden was the world’s most advanced country in the use of information and communications technology (ICT), in an index of 154 countries that took various factors into account such as access to computers and literacy levels.



South Korea and Denmark were placed second and third in the list, while the UK was ranked 10th.



“Despite significant improvements in the developing world, the gap between the ICT haves and have-nots remains,” the report said.



One problem it identified was that the cost of mobile and Internet services in developing countries was relatively high as a proportion of average income. The global economic downturn could also affect the development of communications technology if cash-strapped consumers cut their spending, the report said.



But its prognosis was relatively sanguine: “Despite the economic downturn, current global ICT developments are unlikely to change drastically, given the pervasive nature of information and communication technologies.”





MOBILE BILLIONAIRES

The rapid growth of the mobile phone industry has created billionaires by the bucketload, particularly in developing countries where well-connected business families have been able to gain control of the telecommunications market.



Carlos Slim, a Mexican entrepreneur, was ranked as the world’s second-richest man last year — behind Warren Buffett and ahead of Bill Gates with an estimated fortune of US$68 billion.



Besides Telmex in Mexico, he controls companies across Latin America. He recently came to the rescue of the New York Times with a US$250 million investment that cemented his position as one of the world’s most powerful businessmen.



The next wave of challengers come from Africa and Asia. Sunil Mittal built the Bharti group into India’s biggest mobile phone operator in 10 years.



The son of a politician, he was one of the first to see the potential of the wireless telephone market opening up in the mid-1990s. In 2005, Vodafone paid US$1.5 billion for a 10 percent stake and Mittal is estimated to have a personal fortune worth US$3.3 billion.

In China, the world’s largest mobile market is still dominated by government-controlled companies, but Hong Kong billionaire Li Ka-shing (李嘉誠) has made much of his fortune by investing in overseas markets.



Li was behind the rise of Orange in the UK, before selling it to France Telecom at the top of the dotcom bubble. He has since reinvested money in the rather less successful 3 network.

Another beneficiary of the UK’s early lead in mobile telephony is Charles Dunstone, founder and chief executive of Carphone Warehouse.



His partner David Ross recently suffered heavy losses in property investments though, dragging down the value of their stakes in Carphone as Ross pledged his shares as loan collateral.

Increasingly, this first generation of European entrepreneurs are being eclipsed by businessmen able to exploit faster growth in developing countries.



Naguib Sawiris, for example, runs Orascom, Egypt’s first multinational company.



Founded by his father, the group invested heavily in mobile communications and now has interests across the Middle East, Africa, Bangladesh and Pakistan. Sawiris is estimated to be worth nearly US$13 billion.



In South Africa, the rise of the mobile phone industry has been epitomized by Phuthuma Nhleko, who led a management buy-in of MTN in 2002 as part of the black economic empowerment initiative.



He has since led MTN to become Africa’s largest mobile operator with more than 80 million subscribers in 21 countries.





CASE STUDY 1: BRAZIL



When Alan Roberto Lima was growing up in Vila Alianca, a notoriously violent favela on the western outskirts of Rio de Janeiro, only the community’s elite could afford mobile phones.



“The bandits and the big businessmen,” said Lima, 33, whose family has lived in the community since 1962, when the government evicted thousands of slum dwellers, including his mother, from the city center and packed them off to housing estates such as Vila Alianca and the City of God, the favela made famous by Fernando Meirelles’ hit film.

Today things have changed. Just as the heavily armed drug traffickers have seized control of the slums since the 1980s, so too have mobile phones.



“Cellphones are like cellulite — any old bum has it,” said Lima, who pays US$57 a month for his Nextel radio phone with 400 free minutes and which helps him run his beachwear business, which produces more than 1,000 pairs of Bermuda shorts each month for the chic boutiques of Ipanema and Copacabana.



Brazil is at the forefront of the mobile phone revolution. Figures released last month by Brazil’s telecommunications regulator, Anatel, showed that 1.3 million new mobile phone users were registered in January alone, taking the total number of users in Brazil to 151.9 million out of a total population of 190 million.



On the frontline of the mobile phone’s charge in South America are the red brick shanty towns of cities such as Rio and Sao Paulo, where the use of pre-paid mobile phones has exploded over the last 15 years.



Mobile phone companies are increasingly targeting the slums in search of new customers. Vila Alianca has half a dozen mobile phone shops for its 65,000 residents.



“Without my mobile, my business would become completely unviable,” said Lima, whose family business employs four people and helps dress Rio’s fashionable beachgoers.

“I live far away [from the clothing stores] and if I had to go there all the time I’d never make any money,” he said.



What’s more, he said, the people he makes clothes for are reluctant to come and do business in his neck of the woods.



Vila Alianca is controlled by the Pure Third Command drug faction and armed men can be seen patrolling the streets with automatic rifles day and night.



“They don’t come to the favelas,” Lima said.



“The only people around here who don’t have cellphones are the people who don’t have anything to eat,” said Lima, who recently bought a mobile phone for his nine-year-old daughter, Amanda, the fourth mobile phone in his home deep in the shanty town. “And even they have them sometimes.”





CASE STUDY 2: UK



“When I went for my army selection day, they took my phone away and I just felt lost,” said David Morris, 17, from Staffordshire, northern England, who got his first one at age 10. “My fingers were jittering about. It’s like the phone is a part of you.”



He admitted: “I don’t really talk on my phone, I just text, because it’s easier than having a conversation.”



Text is the cornerstone of teen dating rituals, with the wannabe soldier’s inbox inundated with messages signed LOL — laughs out loud.



“I’m not blowing my own trumpet but it’s mostly girls that text me,” he said. “When a girl was texting me recently, I sent 115 messages in one day, and she was just a friend.”

According to Carphone Warehouse, British youngsters see their mobile phone as their “best friend,” with one in four using it to download music and photos.



The industry gets them young, and David said there was pressure to have the “right” phone.

“My first one was a Sony Ericsson. It wasn’t very good, and my friends kept saying you’ve got to get a better phone. And in the end I did, so there is peer pressure,” he said.



David’s best friend is now an LG Viewty with a touch screen that’s “awesome” and 5Meg camera. But he doesn’t use the 3G function — his sister has turned it off after his brother ran up a big bill.




CASE STUDY 3: KENYA



Boniface Kamau’s bank is fast, efficient and only shuts when it is out of power. It instantly sends money to his mother across town, pays his electricity bill and transfers cash into a savings club pool. Did he mention that his Nokia handset also makes voice calls, sends text messages and takes pictures?



“Sometimes I ask myself how people lived before we had these things,” said the 37-year-old taxi driver who works from Nairobi’s international airport.



Mobile phones are now ubiquitous in urban Africa. No longer a status symbol, they are an essential part of life, affordable even to the very poor. And in Kenya the recent transformation of a phone into a “moving bank,” in Kamau’s words, means that financial services has joined communication in being transformed from being a privilege to a basic right.

Kenya has had mobiles for a decade but recent fierce competition among service providers has drastically reduced costs and continued the rapid growth in phone ownership. In 2001 Kamau scraped together nearly US$140 to buy a basic phone and free himself from the weekly 30-minute wait to use a public call box.



Today the equivalent handset sells for little more than US$14. A SIM card costs less than US$1.50; customers can top up with US$0.26 worth of credit. Many people own multiple phones to take advantage of the best call prices.



Having never owned a landline, Kamau’s initial joy at owning a mobile came from talking to his relatives in other towns whenever he felt like it. It was useful too. When his wife Pauline bought a phone, she could call if there was a problem with the children, or if she needed groceries.



As a work tool, the phone soon paid itself off. His customers who went on trips abroad could now text him before boarding a return flight in Europe or Asia so he could pick them up. First-time clients could contact him for subsequent trips around town.



“Business became so much easier,” Kamau said. “I never turned my phone off because there was always money to be made.”





CASE STUDY 4: CHINA




Wei Fang, 41, was managing on a monthly income of less than 500 yuan (US$72) when she splashed out on her first mobile phone two years ago.



“It was more than 100 yuan, and I was working in a factory. So you can imagine how expensive it was for me. But I’m so far from home, and if I didn’t have a phone my family would worry,” she said.



More than 600 million Chinese people own mobiles. Tens of millions are migrants, like Wei. The phone is their only sure way of keeping in touch with spouses, children and parents whom they see once a year at best. Wei works in Shenzhen, hundreds of kilometers from her teenage son and parents in Guangxi.



While she now has a better job, as a live-in maid, she tries to keep her phone bill below 50 yuan a month.



“Usually my contact with my son is one message a week,” she said. “My phone doesn’t have functions like a camera. I send messages more than calling because texting is cheaper, and the cheaper the better is the rule for me.”



Phone owners sent 700 billion messages last year. For younger people, especially the urban middle class, mobiles are a status symbol, upgraded every nine to 12 months. Flashy new models appear on billboards; you can even buy one encrusted with diamonds.

The world’s largest Internet population is also turning to handsets to access the Web, and young people love mobile gaming: Usage rose 62 percent last year.



But mobiles have another function — sharing news shunned by the media and removed from the web by censors. Facts, lurid rumors and satirical jokes spread quickly via text message.

Two years ago, hundreds of thousands of texts created a massive protest against a chemical plant in Xiamen — although the authorities reportedly later blocked messages. In unrest, witnesses routinely post pictures or video on blogs, or send them to friends. In general, they are ordinary citizens venting frustrations or sharing information; dissidents are aware that officials can and do monitor calls and texts. At tense moments, the mobile network can abruptly disappear — as in Tibetan areas of west China in the run-up to this month’s 50th anniversary of the failed uprising in Tibet; last year, people filmed the unrest on their handsets.




CALLING FROM EVEREST



It’s a beautiful moment. You’re literally on top of the world, having climbed to the summit of Mount Everest.



Then you hear your mobile. Being 8,848m above sea level is no longer an excuse for not answering. In 2007 China Telecom installed a mast near the Everest base camp.



With 100,000 phone masts erected each year, the number of places with “no signal” is dwindling fast.



“More than 90 percent of the global population now has access,” said Gabriel Solomon of mobile trade body GSMA.



Even North Korea has lifted a ban, though access to handsets and international lines are heavily restricted.



Remote spots like Bhutan or Tibet are increasingly in reach. Networks are also covering Africa, with a US$50 billion investment in the sub-Sahara region alone. Only unpopulated areas like Antarctica or Chile’s Atacama desert will remain off the hook. Closer to home, a few areas remain silent, but Solomon says that after the 2012 digital switchover UK coverage will be “ubiquitous.”


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