Friday, August 26, 2005
The cellphone revolution
Stories about the impact of mobile phones on the economic development process (the topic of my dissertation research) seem to be multiplying in the media. Yesterday, the NYT carried a long story on the subject by Sharon LaFraniere, reporting from South Africa.
Isn't it amazing how this sounds exactly the Indian experience, where mobile phones were deemed to be a rich person's plaything and taxes and duty structures were imposed accordingly? The first phones in India cost in excess of Rs 40,000 (1995 prices) and calls were billed at Rs 16.5 per minute for incoming and outgoing calls. Obviously, at those rates, the device could be nothing but a rich man's plaything. Once the telecom sector was deregulated post-1999, there has been explosive growth. On the 10th anniversary of the introduction of mobile phone services in India (on August 23rd), the user base was at about 59 million.
In India, as in Africa, the problem going forward, as mobile services expand into rural markets off the electricity grid, will be how to effectively recharge the phone. My personal take is that it opens up a secondary business opportunity for entrepreneurs willing to collect cellphones from a large number of users and recharging them either off a car battery or from a location that is on the grid. And if all else fails, there's always Peter Ash's revolutionary new cellphone charging technology.
From 1999 through 2004, the number of mobile subscribers in Africa jumped to 76.8 million, from 7.5 million, an average annual increase of 58 percent. South Africa, the continent's richest nation, accounted for one-fifth of that growth. Asia, the next fastest-expanding market, grew by an annual average of just 34 percent in that period.
Africa's cellphone boom has taken the industry by surprise. Africans have never been rabid telephone users; even Mongolians have twice as many land lines per person. And with most Africans living on $2 a day or less, they were supposed to be too poor to justify corporate investments in cellular networks far outside the more prosperous cities and towns. But when African nations began to privatize their telephone monopolies in the mid-1990's, and fiercely competitive operators began to sell air time in smaller, cheaper units, cellphone use exploded. It turned out that Africans had never been big phone users because nobody had given them the chance.
Isn't it amazing how this sounds exactly the Indian experience, where mobile phones were deemed to be a rich person's plaything and taxes and duty structures were imposed accordingly? The first phones in India cost in excess of Rs 40,000 (1995 prices) and calls were billed at Rs 16.5 per minute for incoming and outgoing calls. Obviously, at those rates, the device could be nothing but a rich man's plaything. Once the telecom sector was deregulated post-1999, there has been explosive growth. On the 10th anniversary of the introduction of mobile phone services in India (on August 23rd), the user base was at about 59 million.
In India, as in Africa, the problem going forward, as mobile services expand into rural markets off the electricity grid, will be how to effectively recharge the phone. My personal take is that it opens up a secondary business opportunity for entrepreneurs willing to collect cellphones from a large number of users and recharging them either off a car battery or from a location that is on the grid. And if all else fails, there's always Peter Ash's revolutionary new cellphone charging technology.
