Towards Universal Access: Connecting Communities via Mobile Communications

8/19/2019 Towards Universal Access: Connecting Communities via Mobile Communications

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Copyright © 2006 Nokia.All rights reserved.Nokia and NokiaConnecting People are registered trademarks of NokiaCorporation.

Nokia Corporation

PO Box 300

Fi-00045 Nokia GroupFinland

Phone: +358 (0)7180 08000

www.nokia.com

TowU

About Nokia

Nokia is a world leader in mobile communications, driving the growth and sustainability of the broader

mobility industry. Nokia connects people to each other and the information that matters to them with

easy-to-use and innovative products like mobile phones, devices and solutions for imaging, games, media

and businesses. Nokia provides equipment, solutions and services for network operators and corporations.

This brochure is printed on environmentally friendly paper.



ConteMobile communications devices are used all over

the world by more than two and a half billion people,

a figure which increases by over a million new

subscribers every day.

As a market leader, our vision at Nokia is a world

where the remaining four billion people are also

connected. We believe that individuals, communities

and nations worldwide can and should have

affordable access to all the social and economicbenefits that mobile technology can confer.

Nokia is aboutconnecting people

This booklet is about thatvision and how, workingtogether, we can make it real.

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1. A sh“Our vision ianything. A wpotential anmore than a

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Universal access to ICTs can be defined as the ability

of every individual to connect to people, information

and services, regardless of their location or income.

This is a key element in the vision of a truly inclusive

information society. Using access devices such as

computers, mobile phones, telephones, televisions

and radios, connected people can create, accumulate

and disseminate knowledge. Their professional

and social contacts improve, they interact with

commercial and public-sector organizations more

easily, and they become more productive.

Yet universal access remains a goal rather t han

reality. Widely differing social and economic

conditions have given rise to the concept of a “digital

divide”, between those with access to ICTs and those

without it.

The “digital divide” is based on the idea that ICTs

are in principle affordable only to higher-income

groups of the population and have a significant

impact on productivity and thus income. The divide

arises because these technologies increase income

disparities by making the rich even richer, creating

two classes: the “haves” and the “have nots”.

The digital divide is continuously at the top of the

agenda of any organization concerned about socio-

economic development. A clear consensus has been

in place for some time that bridging the digital divide

will go a long way towards boosting development.

More recently, the discussion has moved to how tobuild that bridge. This booklet focuses on meeting

that challenge in rural areas of the developing world.

2. Towards universal accessExperience and recent studies clearly demonstrate that universal access toInformation and Communication Technologies (ICTs) boosts the economic andsocial development of nations. When people can obtain information affordablyand reliably for productive use, improved business development and socialwelfare soon follow.

“...in cooperation with the private sector,make available the benefits of new

technologies – especially information andcommunications technologies”

UN Millennium DevelopmentGoal 8, Target 18

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3. TheThe real chauniversal acchalf of the w

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Mobility for a better world

As the rate of mobile-phone penetration continues

to grow around the world, it also contributes to the

socio-economic development of emerging markets,

sometimes in unexpected sectors.

Each country, each culture, uses mobile technology

in unique ways to improve the lives of its citizens;

but improved productivity at a national level is a

common factor. A study by the London BusinessSchool concluded that an increase of 10 mobile

phones per 100 people translates into an impressive

0.6-percentage-point growth in GDP. Moreover,

this represents only the direct impact. “Wireless

Unbound”, a white paper produced by McKinsey &

Company in cooperation with the GSM Association,

in 2006, found that the indirect impact is at least

three times as great.

The indirect impact (see Figure 2) includes hardware,

software, and handset vendors, as well as the surplus

enjoyed by consumers such as improved productivity.

Thus the total impact can potentially be as large

as eight percent of GDP. In developing countries,

where mobile phones often provide the main

communications networks, the growth dividend can

be twice as large as it is in developed countries.

Beneficial connections

At an individual level, there are numerous examples

of the income-generation potential of mobile

phones. These include being within reach, avoiding

travel, gaining access to information, using the

mobile phone itself as a business, and performing

financial transactions.

So for individuals, greater access to mobile

technology has life-changing potential. For societies,the impact of greater access has significant

implications for socio-economic development.

In the next chapter, real examples from four sectors

are presented: entrepreneurial activity, healthcare,

education, and financial transactions.

“Encouraging the spread of mobile phonesis the most sensible and effective responseto the digital divide”

The Economist, March 12, 2005

Figure 2: Economi

in three A

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The fisherman’s friend

Mohammed Koya is a fishing-boatcaptain in India with two boatsand canoes. His mobile phone is apowerful business tool. “There’smore to fishing than landing yourcatch,” he explains. “You have tosell it at the best price. That meansbeing in the right place at the righttime. Even when I’m 25 kilometersout at sea, I just pick up the phone,check out the going rates and fixthe deal. I even ask the agent toget the catch from the boat so I cancontinue fishing.”

The Village Phcommunicatio

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a coupler and a cab

Staying within reach

For small-business owners in developing countries,

better access to customers, suppliers, skills and

finance is a huge benefit. Even those who do not

have an office or storefront can put up a simple signby the side of the road, announcing their services

and contact numbers.

Similarly, mobile communications make workers

more accessible. Those who take informal

employment (often seasonal jobs) and have a

phone are easy to reach when work is available.

Their numbers are saved in employers’ contact lists,

bringing continuing value to both parties.

New business initiatives

The spread of mobile technology has inspired an

entrepreneurial spirit in developing countries, leading

to the creation of new types of businesses.

Illiterate people can pay a small fee to phone ownerswho key-in and send text messages on their behalf.

”Airtime brokers” transfer their customers’ credit to

distant locations. And new business initiatives can be

found beyond the realm of mobile services, such as

the business of recharging handsets in areas without

a reliable electricity supply.

As businesses in rural areas flourish and incomes

increase, tax revenues rise in turn. Thus economic

growth in developing countries can be driven by

the private sector rather than financial aid.

The benefits of mobility:Entrepreneurial activity

Often the first sector to be spurred into action by mobile technology is nativeindustry, with thousands of individuals becoming self-employed as soon asthey own a mobile phone. Mobility not only inspires creative, profitable newbusiness ideas, it also provides new opportunities for existing businesses.

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The benefits of mobility: Education

Mobile technology opens up amazing new opportunities in teachingand learning. It offers learning opportunities unrestricted by locationor time, enabling people to learn anywhere, whenever they choose.For students and teachers alike in the developing world,the implications are enormous.

Learning goes mobile

Constantly evolving technologies present education

professionals with exciting possibilities to utilize

mobile phones in their work. When mobile phones

are perceived as multimedia computers rather than just communication devices, new perspectives open

up for the design and development of how they could

be used in formal and informal learning. Support for

informal learning means that knowledge sharing can

become embedded in everyday life, and everyone has

the potential to become a content creator.

Rather than delivering learning content in a

linear fashion, educators can work with pieces of

multimedia content. For example, RoadForum, an

audio-based application, enables mobile-phone

users to share news, tips and technical hints

with colleagues. Previously, this sort of internal

communication would have been delivered more

formally, via media such as handbooks or an

organization’s intranet.

Bringing excitement to ruralclassrooms

Bridgeit is an innovative, award-winning education

initiative that delivers interactive, multimedia

learning materials and enhanced teaching skillsinto the classrooms in remote areas. K nown as

“text2teach” in the Philippines, the program runs

in more than 200 schools, enabling some 120,000

students to improve their learning opp ortunities.

Bridgeit combines existing mobile products and

satellite technologies to deliver digital, multimedia

materials to teachers and students who otherwise

would not have access to them. Teachers use mobile

phones to access a library of educational videos,

which are then downloaded via satellite to a digital

video recorder connected to a classroom television.

Teachers can play the video, introduce activities and

lead discussions.

Bridgeit provides te

focusing on space,

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The benefits of mobility: Financial transactions

In developing countries, mobile commerce extends financial services to peoplewithout easy access to a bank. These markets, which have no complicatedbanking legacy, are setting the pace in m-commerce. If any type of transactioncan be conducted by a mobile phone, it will be.

Airtime: A new currency

In many developing countries where mobile-

phone networks have been established, airtime

has emerged as a new type of currency. Operatorservices that allow Over-the-Air (OTA) transfers

of airtime enable users to send and receive

a common “currency”.

In sub-Saharan Africa, basic financial transactions

involving airtime constitute a major part of mobile

phone usage. Subscribers can send airtime credit to

family and friends in faraway locations. Many stores

will accept airtime as a form of payment, or provide

customers with the equivalent in cash.

For people who previously had no bank account

or live far from a bank, this radical innovation

represents a convenient new way to conduct financial

transactions. Many people once considered to be

“unbankable” now have access to banking services

that are secure, trustworthy and easy to use.

As well as being a convenient payment method,

this also increases security. Companies no longer

need to transport large amounts of cash to and from

remote areas, where they could expose themselves to

different risks.

Small denomitransactions

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Philippines, wherefinancial transactio

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In developing coun

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of transactions.

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Handsets

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6. Affordableconnectivity

Access to appropriate technologybrings significant socio-economicbenefits, and mobile technology isthe most effective way to cater forlower-income segments in rural areas.There are now therefore two keyquestions to be asked: What do ruralconsumers need? And how can it bemade affordable?

Connectivity: Deliveringthe right solutions

From lower-income consumers’ perspective,

connectivity means access to a handset and a

service. Each must possess three key attributes.

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Affordability: Offeringthe right price

Affordability has two dimensions: Cost – how much

you pay; and cash – how the payments are made over

time. It is important to treat the issues separately,

because the solutions to tackle each one are different.

Total cost of ownership

From a consumer point of view, cost has only one

meaning: How much of their income they will need

to spend to be connected. Market research shows that

lower-income consumers are prepared to spend five

to ten percent of their disposable income on mobility.

So the total cost of ownership (TCO), which comprises

service fees, taxes and handset prices (see Figure 3),

must be within those b oundaries.

TCO is the ultimate driver of mobile-phonepenetration. Its true extent and influence are

examined and analyzed in “Tax and the Digital

Divide”, an independent report commissioned in

2005 by the GSM Association (GSMA). According to the

economic models prepared for this study, the lower

the TCO, the higher the penetration. The same relation

is valid for the service price, as it represents on

average over 70 percent of TCO: the lower the service

price, the higher the penetration.

However, this significance does not apply to the

handset price, which represents on average less than

15 percent of TCO. Although lower handset prices do

help to reduce the amount of black-market sales,

they do not necessarily increase penetration rates,

which are strongly influenced by the service price

and taxation.

For operators to offer an affordable service to

consumers, they need to embrace the right business

models for the low-ARPU market. The whole cost

structure, including all the operators’ costs, from

building further network coverage to marketing andacquiring new customers, needs to be considered.

Operators can only offer long-term, affordable services

to customers when their businesses are profitable.

Operators can do much to reduce their cost of

network ownership and operation. There are several

technologies that make building coverage more

affordable, such as shelterless base-station sites

that require no air conditioning, and the Nokia

Smart Radio Concept that uses 50 percent fewer

base-station sites to provide coverage. Furthermore,

industry standard technologies such as Adaptive

Multirate Codec (AMR) and Single Antenna Interference

Cancellation (SAIC) reduce the investment needed in

network infrastructure by increasing individual base-

station cell size by about 30 percent as well as adding

capacity and quality benefits.

As an example of innovative business models, the

Nokia Connect Market Expansion Toolkit allows

operators to develop diverse service offerings at

different prices, meeting the needs of lower-spending

customers in a profitable way.

This new, more affordable service offering encourageslower-spending customers to make their calls outside

peak hours, resulting in a more efficient use of

resources. Lower-spending users can now afford to

use mobile services, possibly for the first time.

Opting for manage

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reduce costs, and t

extending their net

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consumers spend a

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this amount of cas

There are innovati

income consumers

For example, micro

entrepreneurial in

phone into a profit

Source:Tax and theDigital Divide, GSMA, 2005

Figure 3: Total cost of ownership over the life of the

phone and subscription

Figure 4: Lower-in

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National telecom policy in India aims to bridge the digital divide

To help bridge the digital divide between urban and rural India, national telecompolicy is being refocused away from a statutory “Universal Service Obligation”toward a more market-driven “Universal Service Opportunity” for industry players.

The goal is to repeat the successful growth model of mobile communicationsoverseen by the Telecom Regulatory Authority of India (TRAI) in urban centers,which was largely driven by opening up private-sector participation.

From 1994, competition was encouraged as the government adopted a seriesof pro-growth incentives, including changing the high entry fees assessed tooperators to a revenue-sharing scheme, introducing a calling-party-pays regime,and allowing operators to create innovative schemes to offer mobile handsets

to subscribers.

The results were impressive. Between 1999 and 2005, charges per minute fellfrom 14 rupees (then 0.32 US dollars) to 0.40 rupees for local calls (0.01 US dollars)and to 1.50 rupees (approx 0.03 US dollars) for calls across Indian operators.With mobile tariffs equal to fixed-line tariffs, the number of mobile subscribersclimbed from fewer than five million to approximately 60 million. The Indiangovernment also reduced handset import duties significantly, giving another boostto the rate of mobile penetration.

To increase mobile-penetration rates in rural India, TRAI aims to create a similarlyfavorable business case that will be attractive to operators. This envisagesproviding an initial subsidy to help establish the necessary mobile infrastructure toserve rural areas. Other proposals include offering financial incentives to backboneproviders; ensuring adequate power supplies to help reduce the need for expensiveback-up systems; and lowering duties, levies and taxes that increase service costs.

India already has one of the fastest-growing mobile-phone markets in the world.At the end of August 2006, the nation had some 111 million mobile subscribers,with a net addition of approximately three million new subscribers every month.TRAI’s policy initiatives to increase mobile-penetration rates in rural areas promiseto drive those figures even higher.

Public se

Figure 6: The role

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Whereas it took traditional fixed-line telephone

networks more than a century to reach one billion

users, mobile communications services achieved the

same in only a tenth of that time. The exponential

growth of mobile communications means that the

number of mobile-phone users increases by more

than one million every day. Some 80 percent of this

growth comes from developing countries.

The mutual efforts of stakeholders in the mobility

industry can enrich the lives of billions of people in

developing countries. These people will know more,

interact more and achieve more than ever before.

Pervasive and affordable access, delivered via mobile

devices and networks, can help improve people’s

education, economic wellbeing and health. It also

enables businesses to be more agile and responsive,

contributes to the creation of new small enterprises,

and builds stronger communities.

Working together deliversbenefits for all

Nokia offers a broad base of skills and services,

which allows us to provide optimal value in every

type of market across the globe. Our work addresses

the full scope of mobility, from the underlying

network technologies to the ways in which end-users

experience mobile life, to the methods operators

use to market and support mobile services.

We believe that mobile technology can enrich

the lives of millions of people living and working

in rural areas of developing countries.

No single individual, company or organization can

do this alone. But together, we can extend the reach

of mobile communications in rural areas and move

towards making universal access a reality.

8. Embracing the benefitsof universal access

Universal access is a natural aim for a company that is all aboutconnecting people. As a global citizen, Nokia recognizes and embracesthe socio-economic benefits offered by mobile access to Information andCommunication Technologies. As a commercial enterprise, we welcome thechallenges and opportunities presented by competition, provided there is alevel playing field and a sense of fair play.

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Towards Universal Access: Connecting Communities via Mobile Communications

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