Communication for All Bodil Josefsson Head of Communication for All initiative Ericsson believes in an all communicating world where telecommunication is affordable for all
Mar 28, 2015
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Communication for All
Bodil Josefsson
Head of Communication for All initiative
Ericsson believes in an all communicating world where telecommunication is affordable for all
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Marrakech, September 19th 2005
Source: The Economist - March 10, 2005
On March 14 United Nations launched a“Digital Solidarity Fund”
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Marrakech, September 19th 2005
Some facts... In the next 5 years, another 1B subscribers are forecasted in the GSM
networks, whereof BRIC (Brazil, Russia, India and China) cater for over 400 Million.Source: EMC and UN statistics end 2004
People in poor countries spend a larger proportion of their income on telecommunications than those in rich ones. Source: The Economist, March 2005
A developing country which had 10 more mobile phones per 100 population between 1996 and 2003 would have enjoyed per capita GDP growth that was 0,59 percent higher than an otherwise identical country.Source: London Business School, 2005
A mobile network costs 50% less per connection than fixed lines and can be rolled out appreciably faster. Source: Vodafone Policy Paper, March 2005
97% of the population in the villages investigated knew about mobile telephony and 50% had used mobile phones. In contrast, 76% did not know what a computer is and only 3% had used one.Source: Socio-economic study in Tanzania by UNDP/SIDA, autumn 2004
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Reaching 3 billion users…
1 billion 2 billion 6 billion
Users
UsageIn
crea
se U
sag
e
Increase Penetration
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… with end-user spend of only 3,5 USD per month!
0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000
10
6,7
5
3,3
Potential subscribersUSD/
month mobile spend 20082004
Millions of usersCurrent penetration
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Can you achieve –Can you achieve –
High margins with low ARPU? Profitability with low tariffs? Profitability with pre-paid?
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Argentina
Australia
Austria
Belgium
Brazil
Canada
Chile
China
Colombia
Czech
Denmark
Egypt
FinlandFrance
Germany Greece
Hong Kong
HungaryIndia
Indonesia
Ireland
Israel
Italy
Japan
Korea
Malaysia
Mexico
Netherlands
New Zealand
Nigeria
Norway
Philippines
PolandPortugal
Russia
Singapore
South Africa
SpainSweden
Switzerland
TaiwanThailand
Turkey
UK USVenezuela
0%
10%
20%
30%
40%
50%
60%
70%
80%
0 10 20 30 40 50 60 70
ARPU USD
EB
ITD
A M
arg
in %
Yes – Low ARPU with healthy margins!
Source:Merril Lynch – Global Wireless Matrix 3Q2004
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VenezuelaUSUK
Turkey
Taiwan
Switzerland
SwedenSpain
South Africa
Singapore
Russia
Portugal
Poland
Norway
New Zealand
Netherlands
Mexico
Malaysia
Korea
Japan
Italy
Israel
Ireland
IndiaHungary
Hong Kong
Greece Germany
FranceFinland
Egypt
Denmark
Czech
Colombia
China
Chile
Canada
Brazil
Austria
Australia
Argentina
0%
10%
20%
30%
40%
50%
60%
0 0,05 0,1 0,15 0,2 0,25 0,3 0,35 0,4 0,45 0,5
Revenue per Minute
EB
ITD
A M
arg
in %
Yes – Low tariffs with healthy profitability!
Source:Merril Lynch – Global Wireless Matrix 3Q2004
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Yes – Pre-paid with healthy profitability!
VenezuelaUS UK
Turkey
Thailand
Switzerland
SwedenSpain
South Africa
Singapore
Russia
PortugalPoland
Philippines
Norway
Nigeria
New Zealand
Netherlands
Mexico
Malaysia
Japan
Italy
Ireland
Indonesia
IndiaHungary
Hong Kong
GreeceGermany
FranceFinland
Egypt
Denmark
Czech
Colombia
China
Chile
Canada
Brazil
Belgium
Austria
Australia
Argentina
0%
10%
20%
30%
40%
50%
60%
70%
80%
0% 20% 40% 60% 80% 100% 120%
Prepaid %
EB
ITD
A M
arg
in %
Source:Merril Lynch – Global Wireless Matrix 3Q2004
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Low ARPU markets can have high margins!
Low tariffs do not have to hurt profitability!
Pre-paid does not necessarily lead to low profits!
It is how well the business is managed that matters!
Yes!
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Market potential- an estimate of the potential (Source: World Resource Institute)
680 million households in 20 emerging markets making less than US$ 6000 anually / household
Total households annual earning, US$ 2 trillion
Willingness to spend 5% on telecom connectivity (excluding applications & enterprise)
Total annual potential market,
more than US$ 100 billion.
Huge market potential in emerging markets
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The power of mobile telephony
Mobile phones substitute for fixed phones in poor countries, but complement fixed lines in rich countries
Mobile phones are lower cost and far quicker to roll out than fixed lines
Higher mobile penetration leads to higher GDP
Access to mobile communication saves travel time etc
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Market characteristics
Mobile the only phone
Cash economies
Initially willing to share subscription (or pay per use)
Lack of basic utility and communication infrastructure in rural areas
“Business is good for development and development is good for business”Ian Johnson, World Bank, Vice President Sustainable Development.
Traffic based...
And subscriber based
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Areas to addresswhen extending access to more users
Phones
Infrastructure
Applications
Customerhandling
New businessmodels
Financing
Regulation and taxation
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The phone!Evolution from shared phones to individual phones
Village phone
Family phone
Personal phone
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Targeted applications are needed4 priority areas identified
Healthcare informationcampaignstreatment
Education information sharingInternet access
Mobile bankingmoney transfer
mobile wallet
B2B tradingpricing / market infohiring
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Technology Leapfrogging
Developing markets are not hindered by high levels of fixed investment therefore operators can leapfrog directly to new technologies and this is happening (WiMAX, EDGE, GPRS, 3G, WLAN etc)
Operators in many emerging markets are providing advanced services within months of their introduction in the developed world.
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Population in GSM Markets
without coverage
Population with GSM coverage,
but no subscription
GSM Subscribers
2,200
2,600
1,400Non GSM Markets
World population 6.4B
GSM provides global coverage
•Cost efficient coverage
•Optimized entry solutions
•Scalability
•Cost efficient capacity
•New services
•Improve quality
Sources: EMC and UN Q1 2005
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Sharing of infrastructure among operatorsSharing of infrastructure among operators
Revenue
Coverage
Savings
Shared Networks
Other examples of sharing: Roads Airports Other infrastructure
Other examples of sharing: Roads Airports Other infrastructure
Core network Transmission Radio network Network Mgt
Core network Transmission Radio network Network Mgt
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NetworkNetwork
Operator 1 Operator 2Operator 2 Operator 3Operator 3
NetworkNetwork NetworkNetworkNetworkNetwork
Operator 1Operator 1 Operator 2Operator 2Operator 2Operator 2 Operator 3Operator 3Operator 3Operator 3
NetworkNetwork NetworkNetwork
ConsumersConsumers
NetworkNetwork
Operator 1 Operator 2Operator 2 Operator 3Operator 3Operator 1Operator 1 Operator 2Operator 2Operator 2Operator 2 Operator 3Operator 3Operator 3Operator 3
ConsumersConsumers
3% penetration
20% penetration
Benefits with shared networks
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Breakeven monthly cost (assuming 3 years depreciation)
0
1
2
3
4
5
1 3 5 7 9 11 13 15
Number of needed hops for connection
Tra
ffic
cap
acit
y n
eed
Mb
ps
The transmission challengeTrade-off between capacity and distance
Satellite more cost-efficient
Microwave more cost-efficient
“Normal” mobile network (for surface coverage)
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Outsourcing of operations- rightsizing capacity
Traditional purchasing
ManagedCapacity
Time
Customerdemand
Over capacity
Under capacity
Over capacity
Under capacity
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Evolution towards more advanced servicesAdding data to the existing voice network
URBAN SUB-URBAN RURAL
Add data : Introduce GPRS
Net
wo
rk c
apab
ilit
ies
Voice: GSM (existing nation-wide coverage)
Increase data speeds : Upgrade of existing GSM/GPRS to EDGE
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Cost for data alternativesEdge is cheapest if aiming at national deployment
Edge
WiMAX
Number of users
CAPEX (in MSEK)
CPE cost around 300
USD
No CPE cost, as EDGE will be built in to all phones in
the future
Note that this graph is only illustrative, and does not give any exact indications
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The challenge with WiMAX BC In emerging markets,how many computers are there within a radius of 20 km?
20 km
GSM gives universal access WiMAX adds capabilities to regions where the digital divide is already bridged
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Conclusion Fixed networks will not be built out
for voice services in emerging markets. Mobile networks will be the dominant infrastructure.
Cost-efficient infrastructure, useful applications and low cost terminals are needed.
New business models may be needed to overcome hurdles for operators to target low-spending users
Voice and SMS services will be the initial services, but data capabilities can easily be added to this infrastructure when needed
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