By Monica Zlotogorski, Editor of TM Forum’s Inside Latin America and Vice Chair of TM Forum’s Latin America Advisory Board For those of you who
regularly read my emerging markets columns every month, my confession
may not come as a big surprise: I’m an optimist about the future of
emerging markets, and I think that the communications industry has a
lot to do with how emerging markets have been shaping up in the past
few years. Going back to a quote included in my most recent article on emerging markets, where I referenced a recent special report issued by The Economist
(“The Power of Mobile Money: A Special Report on Telecoms in Emerging
Markets,” Sept. 24, 2009): “In the grand scheme of telecom’s history,
mobile phones have made a bigger difference to the lives of more
people, more quickly, than any previous technology… Mobile phones will
have done more than anything else to advance the democratization of
telecoms and all the advantages that come with it.”
The communications industry is progressing in emerging markets, but it
is also going mostly mobile. In about two years, mobile is forecast to
eclipse fixed broadband as the way most people use the Internet. The
reason the use of mobile phones for Internet access is booming in
emerging markets is simple: A large segment of mobile users don’t have
a PC background or access. Poor fixed-line communications
infrastructure has become an important driver of growth for
mobile-technology companies.
Several industry analysts have already expressed the idea that for a
lot of people in emerging markets, the mobile phone will be the primary
way of accessing the Internet. According to Tony Cripps,
wireless-software analyst at Ovum, Asia is already leading the way in
mobile data. According to Morgan Stanley, China Mobile made 25 percent
of total revenues from mobile data two years ago, compared to AT&T,
where the share was 18 percent.
In India, one of the fastest growing communications markets in the
world, approximately 9.3 million people used their mobile phones to
access the Internet in the quarter ending June 2009. Mobile Internet
access over mobile phones is still in its infancy in India, but without
a doubt, it will continue to grow. In Russia, the third biggest market
for mobile telephony after China and India, mobile Internet is still
little used (around 2 percent of subscribers in 2008), but it is also
due to grow, with mobile payments as one of the key areas of growth.
There’s no other option for one of the markets with the highest mobile
penetration rates worldwide. In Latin America, according to IDC, mobile
Internet penetration in Brazil (another key emerging market) reached 9
percent of the 8.1 million subscribers. But just like in India and
Russia, the mobile Internet is also expected to take off in the country
where the 2016 Olympic Games will take place.
Pyramid's third quarter 2009 Latin America mobile data concluded that
significant opportunities for network operators clearly lie in mobile
Internet services. “The increasing importance of mobile Internet in the
data revenue pie is a clear trend in every single market, growing the
fastest in Brazil, Chile, Argentina, Venezuela and Mexico,” concluded
Cesar Jimenez, an author of the Pyramid report “LA Mobile Operators
Turn a Deaf Ear to Ringtones.” In five years, “mobile Internet access
in Latin America will account for $16.5 billion, or almost 79 percent
of all non-messaging mobile data revenue, whereas ringtones will make
up 4 percent.”What about Africa? Even there, mobile Internet is an
opportunity for service providers.
Mobile Internet: Opportunities & Challenges
There are clear variations across emerging markets, but an area that
may well span across all emerging markets is mobile banking. For
example, 1 billion users worldwide have phones but no bank accounts.
Juniper Research has already forecasted that average revenue
opportunity for operators will exceed $5 billion by 2013. “Unlike
developed markets, where mobile players must often force their way into
a well-established value chain, emerging nations are fertile ground for
m-banking services.”
As market penetration rates for mobile services continue to increase in
emerging markets, the advertising industry will also benefit. According
to a report by Pyramid Research, “the emerging markets where mobile
advertising is gaining ground will account for more than 35 percent of
mobile subscriptions globally by 2013. South Africa and Indonesia stand
out as markets where the mobile sector's share of overall advertising
spending will surpass that of the Internet medium as early as 2009.”
According to a worldwide mobile outlook released this week by IDC, the
fact that many emerging markets are “forced to address their domestic
social, political and economic challenges — ranging from the absence of
many critical infrastructures, like banking and electricity, to low
literacy rates and low purchasing power that translates into low ARPUs
— are also fast emerging as crucibles of innovation in such areas as
mobile banking, mobile money transfer and mobile education and
medicine, not to mention green initiatives.”
For operators in emerging markets where ARPU is low, the need to
gradually test “new and innovative business models that beg emulation
by their counterparts in developed economies” is also a matter of
business survival. The ground for operators in developing countries
appears to be very fertile (and a lot of the global opportunity is
there), but clearly profitability will ultimately come out of a brand
new way of thinking. A fresh way of doing business is the only way to
stay alive in today’s tough economic climate.
Posted
11-11-2009 7:14 AM
by
Monica Zlotogorski