Scaling Mobile for Development: A developing world opportunity


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Mobile for Development is a growing sector, with well over 1,000 live services now tracked by the GSMA across the developing world in verticals such as money, health, education and entrepreneurship. The problem is that while the sector has enjoyed continued growth in a number of services over the last 5-7 years, scale and sustainability have generally not been achieved. This work is designed to inform and add insight to help address challenges to mobile-enabled services that can help to facilitate service delivery in developing countries.

This research has been developed by Mobile for Development Intelligence with support from the Rockefeller Foundation. This being the interim report, we overview and provide analysis on the barriers to scalability, while at the final report stage we will provide further analysis and communicate recommendations to stakeholders on how these can be overcome.

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Scaling Mobile for Development: A developing world opportunity

  1. 1. Scaling Mobile for Development A developing world opportunity GSMA Mobile for Development Intelligence With support from the Rockefeller Foundation Interim report April 2013 with support from
  2. 2. OverviewThe mobile phone holds the power of ubiquity. Across the developing world, around 40% of people now activelysubscribe to mobile services. Including those with access to a mobile despite not owning one would push theconnected population to well over 50%. However, while access to core services such as banking, electricity andsanitation is near universal in developed regions such as Europe and the United States, it is enjoyed by below 50%in several developing regions.This confluence underlines the opportunity held by Mobile for Development, which seeks to draw investment andpartnership to scale mobile-enabled services that can help to facilitate service delivery in the absence of traditionalmodes of infrastructure that would otherwise do this. Indeed, Mobile for Development is a growing sector, withwell over 1,000 live services now tracked by the GSMA across the developing world in verticals such asmoney, health, education and entrepreneurship. The problem is that while the sector has enjoyed continuedgrowth in the number of services over the last 5-7 years, scale and sustainability have generally not been achieved.This work is designed to inform and add insight to help address this challenge. It has been developed by Mobile forDevelopment Intelligence with support from the Rockefeller Foundation. Our collaboration involves a researchprocess and production of an interim and final report in April and May 2013 respectively, with a series ofstakeholder workshops also held to drive thought leadership in this area. This being the interim report, weoverview and provide analysis on the barriers to scalability, while at the final report stage we will provide furtheranalysis and communicate recommendations to stakeholders on how these can be overcome. with support from 2
  3. 3. About usMobile for Development Intelligence is a freely available, online platform of mobile market and impact data, analysisand access to an active community of practice in Mobile for Development. We believe that open access to high qualitydata will improve business decision making, increase total investment from both the commercial mobile industry andthe development sector and accelerate economic, environmental and social impact from mobile solutions.For more information, visit 3
  4. 4. CorrespondenceFor more information, please forward direct correspondence to:Tim Hatt thatt@gsma.comCorina Gardner cgardner@gsma.comAdam Wills awills@gsma.comMartin Harris 4
  5. 5. 1. Market landscape: current and outlook 62. Impact of mobile on development sectors 353. Platforms, multiplicity, scalability and re-use 634. User-centric innovation 885. Appendix 111 5
  6. 6. 1. Market landscape: current and outlook2. Impact of mobile on development sectors3. Platforms, multiplicity, scalability and re-use4. User-centric innovation5. Appendix 6
  7. 7. What you need to know Key findings Key implicationsDeveloping world is becoming connected at a rapid pace: nearly Harness the scale: while growth in the number of people using a40% of people in the developing world now subscribe to mobile mobile will moderate over the next 5 years, we still expect 130services, with subscribers having grown at over 10% a year since million new mobile services subscribers every year to 2017. This2007. Taking into account people who have access to a mobile, means an increasing total addressable mobile for developmentdespite not owning one, would push the connected population to market, uniquely positioned to use the mobile as an alternative towell over 50% traditional modes of service delivery Bridging the coverage gap is multi pronged: to bridge the gap will require both further network roll-out and alternativeNetwork coverage is key: despite the rise in penetration, there is solutions, such as by using green power for rural base stations.still a wide gap in coverage between urban and rural areas, with There is also a role for GSMA in lobbying for benign regulatorymobile penetration in urban areas up to double that of the rural environments, and community power, which can be used both topopulation aid mobile connectivity and access to utilities such as water and electricitySmartphones have grown, but are not the engines of growth: Featurephones and smartphones blur: it is increasingly importantsmartphones have grown to the point where we estimate just to consider the convergence in price and functionality betweenunder 10% of people own one in the developing world, compared higher end featurephones and lower end smartphones. M4Dto virtually no take-up in 2007. This is dominated by low cost service providers should be aware that as smartphone penetrationAndroid devices, which have steadily declined in price to below rises, while this opens a more personalised experience, it carries$100. We expect growth to continue over the next 5 years, but trade-offs, such as lower build quality and battery lifemainly for mid and higher income segments Mobile data is the common denominator: more people, includingDemocratising data: mobile operators and internet players are those at the low income end, will gain access to mobile data, eitherdeveloping more innovative ways to get data into the hands of on featurephones or smartphones. M4D services can tap into alower income segments, such as through hybrid data plans or even range of handsets and through a range of mediums (e.g. pre- 7zero-cost mobile internet browsing
  8. 8. Mobile: the closest to ubiquity• On an ownership basis, the mobile phone is the most widely owned communication device in the developing world• The PC is owned by a much smaller share of people, with tablets smaller still• Access to a PC will be greater than ownership given device sharing, but the same is true of mobile, so the gap is unlikely to change Penetration of population (developing world) 50% 39% 40% 36% 33% 30% Mobile 30% 27% 24% Smartphone 20% PC Tablet 10% 8% 5%5% 5% 2%3% 3%4% 1%2%0% 2%3% 1% 1% 2% 0% 0% 0% 2007 2008 2009 2010 2011 2012 Note: mobile is proportion of people that subscribe to mobile services Source: GSMA-MDI estimates based on GSMA Wireless Intelligence, Strategy Analytics, Telegeography 8
  9. 9. Access to services• While access to basic services such as electricity and sanitation is near universal in most developed markets, it remains a minority in developing regions• Mobile access – either through direct ownership or having access to a mobile in the household – is more widespread, positioning it as a unique catalyst helping to increase access to these services Western Europe Sub Saharan Africa* 100% >90% >90% >90% 100% 83% 80% 80% 65-70% Don’t own, but have access to mobile in household (indicative) 60% 60% 15-20% Ownership 40% 40% 49% 20% 20% 26% 33% 31% 0% 0% Mobile Financial Electricity Sanitation Mobile Financial Electricity Sanitation services services *Mobile and financial services includes select countries Source: GSMA Wireless Intelligence, GSMA Mobile Money program, IEA, World Bank, GSMA-MDI Analysis 9
  10. 10. High growth economies, even higher in mobile • There are now around 6 billion people living in the developing world, six times that of the developed • Incomes remain much lower, but have grown at 5% a year over the last 4 years • Mobile adoption has grown even faster, but still over half the developing world population is yet to own a mobile, leaving a large opportunity for the mobile industry, and in turn presenting social and economic opportunities in connecting low income segments (e.g. Mobile for Development sector) Population GDP/capita ($) Growth, 2007-11* 7 60 15% 12.8% 5.9 6 50 41.8 10% 5 Thousand/year 40 4 4.9%Billion 30 5% 3.2% 3 20 2 0% 1.1 1 10 4.1 -0.3% 0 0 -5% Developing Developed Developing Developed Developing Developed GDP/capita Mobile ownership *Compound Annual Growth Rate. Population and GDP/capita are for 2011 Source: GSMA Wireless Intelligence, IMF, GSMA-MDI Analysis 10
  11. 11. Growth will come from the developing world• Growth in active mobile subscribers in Active mobile subscriber growth the developing world has been very 25% strong the last 5 years at over 10% 20% 16% 15% 13% 12% 11% 10% 8% 8% 6% 5% 4% 3% 4% 4% 3% 5% 2% 2% 1% 1% 1% 1% 1% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Developed Developing• Even though we expect growth to slow Humans that subscribe to mobile services to 2017, this still translates into around 4 130 million new people subscribing to 2.8 2.9 3.0 3 2.5 2.7 mobile services every year in the 2.1 2.3 Billion developing world 1.7 1.9 2 1.5• By contrast, most mature markets have 0.8 0.8 0.8 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1 reached saturation (something which will happen in developing regions, but not 0 for several years) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Developed Developing Source: GSMA Wireless Intelligence, GSMA-MDI Analysis 11
  12. 12. Penetration• We draw an important distinction Developing world between total penetration and active 140% 120% 110% Difference due subscriber penetration 104% 107% to: 100% 94% 99% 86% - multi SIM 80% 80% 70% ownership• Total penetration reflects all SIM cards 51% 60% - Inactive SIMs 60% 47% (for mobiles, tablets etc), but also counts 41% 41% 43% 45% 46% - Other 40% 30% 33% 36% 39% connected multi-SIM owners (common in the 24% 27% devices (e.g. 20% developing world to save money on calls) tablets, 0% dongles) and some people who are registered but 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 are only very infrequent users of their phone Developed world Difference between 134% 140% 126% 129% 131% 132% developing and 118% 122%• Active subscriber penetration reflects our 120% 108% 112% developed world 98% 104% due to: estimate for the number of people who 100% 76% 77% 78% 78% 79% 79% 79% - Maturity of 80% 69% 72% 74% 75% actively subscribe to mobile services market 60% - Ownership 40% barriers (e.g.• This is a more representative measure in 20% income levels, cultural factors) market sizing Mobile for Development 0% - Access vs. – Reflects potential human user base of a 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 outright service Total connections Active subscribers ownership – Overlay population with access to a mobile (relevant for some sectors such as Source: GSMA Wireless Intelligence, GSMA-MDI Analysis mobile learning) 12
  13. 13. Regional view: soaring growth in India, Africa• There is considerable variation in Active mobile subscriber penetration 100% mobile penetration within the 74% 80% 68% developing world, although 58% 60% 52% 60% 50% 48% penetration has risen fairly evenly over 38% 42% 43% 41% 40% 33% 40% 25% 29% 29% the last 5 years 13% 17% 20%• Central/Eastern Europe is nearing 0% maturity in penetration terms, while Central Latam East Middle East South Asia Africa most other regions still have significant /Eastern Asia/Pacific headroom Europe 2007 2012 2017 (f) Active subscriber growth (5 year CAGR) 19%• South Asia (e.g. India, Bangladesh, Sri 20% 16% Lanka) and Africa are the highest 15% 11% growth regions at close to 20% over 10% 10% 8% 9% 7% the last 5 years, and we expect these 4% 4% 4% 5% 3% regions to continue as growth leaders 2% over the next 5 years, albeit at a slower 0% pace Central Latam East Middle East South Asia Africa /Eastern Asia/Pacific Europe 2007-12 2012-17 (f) Note: developing world only Source: GSMA Wireless Intelligence, GSMA-MDI Analysis 13
  14. 14. Rise in the developing world Mobile penetration 2007 2012 2017 Note: penetration is of active mobile subscribers (e.g. those who subscribe to mobile services) Source: GSMA Wireless Intelligence, GSMA-MDI Analysis, Google Fusion 14
  15. 15. Urban/rural divide• Large coverage gap Active subscriber penetration – Cost of network roll out 100% – Return on investment to mobile 80% operator 62% 63% 60% Urban 40%• Shared access brings several 40% 30% 32% Rural 20% implications 20% – Augments the M4D reachable audience 0% – Latent demand for mobile ownership South Africa Ghana India – Virtual SIM technology (e.g. Movirtu) • Multiple log ins on one phone, each with a separate tariff (e.g. for Active subscriber penetration, South Africa women who could not otherwise 100% 14% No access to phone own a phone) 22% • Mobile as a utility (for now) 80% 25% Access to shared – Design of M4D services (personalised 60% 39% phone in household nature) 40% 50% Own basic or – This form of access likely to continue in rural markets in particular 20% 38% feature phone 12% Own smartphone 0% 1% Urban Rural Source: GSMA Wireless Intelligence, AMPS, Ghana Statistical Service, GSMA-MDI Analysis 15
  16. 16. Income divide• We show here one estimate based on Active subscriber penetration, South Africa data from South Africa 100%• If these figures are accurate and 9% 22% indicative of other countries, there are 29% No access to phone 80% 20% interesting implications that arise 60% 37% Access to shared• Little difference in penetration 34% phone in household between incomes of below $850/year up to $11,000 year ($2-$30/day) 40% 71% Own phone 20% 38% 41%• Implies mobile seen more as utility than luxury, even for those with little disposable income 0% Less than $850 $850 to More than $11,000 $11,000 Annual household income (pre tax) Source: AMPS, GSMA-MDI Analysis 16
  17. 17. User behaviours – what do people do on their phone? Calls and texts (per month)• In Africa, call minutes are generally 400 350 322 higher than texts (e.g. around 3-4 303 300 minutes per day vs. 1-2 SMS) 228 250 Call minutes made 200 and received• There is also the use of other functions 150 120 116 SMS 100 67 using a mobile 50 20 13 19 – P2P money transfers 0 – Cash ins and outs using a mobile South Kenya Tanzania India Thailand Malaysia account Africa Other mobile transactions (per month)• Text-based communication should be 10 seen beyond just SMS 8 P2P money transfers – Social networking – e.g. 5% of African population uses Facebook, but this 6 Airtime top ups using goes up to 30% among those who use 4 mobile money the internet 2.3 2.0 1.9 Cash outs using – As people get even low end phones 2 0.8 mobile money with basic data access, social networks 0.2 0.1 likely to become more popular mode of 0 communication on mobile East Africa Asia Pacific Note: SMS data for India, Thailand, Malaysia not available for this report Source: GSMA Wireless Intellignce, GSMA Mobile Money for the Unbanked 2011 Global Mobile Money Adoption Survey, Internet World Stats 17
  18. 18. Prepaid and contract plans Prepaid ContractTerm None Commit to minimum (e.g. 18, 24 months) Minimum = contracted months x monthly tariffCustomer spend Limited by size of top up (often $5 or under) Maximum = minimum + overage + other (e.g. roaming) Low income Logistical (e.g. proximity to an airtime vendor) Lack of identity documentsBarriers to acquisition SIM registration provides identity barrier Poor credit history Lack of credit history Lower customer lifetime value on airtime fees; Higher customer lifetime value on airtime fees; less willing to subsidise handsetsMobile operator view more willing to subsidise handsets Limited ownership of customer Better knowledge/relationship of end users Lower data/VAS uptake Africa, Middle East, Latam, parts of Asia (e.g. North America, Western Europe, parts of AsiaIs the dominant structure in China, India) (e.g. South Korea, Taiwan) Source: GSMA-MDI Analysis 18
  19. 19. How do the mobile operators think about different markets? Contract share of base Digital pioneers Connected players Note: sphere size based on population Fast growers Discoverers Smartphone penetration Challenges Strategic focus Digital pioneers and connected players • Intelligent networks • Service innovation E. Asia, N. • Monetising network investment • 4G roll out • Revenue diversificationAmerica, Nordics, Australasia, • Data explosion and network capacity W. Europe • Stagnation of traditional revenue Fast growers Middle East, Latam, SE • 3G network roll outs • Growth of users generally Asia, E. • Low cost internet ecosystems • Data take-up from low ARPU Europe, Russia, China, • Strengthening customer engagement • Low post-paid penetration S. Africa Discoverers • Network deployment and coverage • Cost effective network coverage Africa, S. Asia • Profitability with very low ARPU customers • Service innovation addressing local needs 19 Source: GSMA, MDI Analysis
  20. 20. High growth, low spend• Growth of the mobile sector in many Mobile vs. economic growth developing countries is higher than in 20% 16% 14% mature markets given their high 15% 11% 11% 9% Mobile economic growth and continued rise in 10% 7% 4% 5% revenue mobile penetration 5% 3% 2% 2% 1% 0% 0% Real GDP -5% -4% -10% Brazil China India Kenya US UK Italy Mobile ARPU, $• However, people spend much less on 60 10% mobile in developing markets, as the 48 50 8% vast majority of users are 40 32 prepay, making airtime costs a higher 6% 30 24 share of income (e.g. 2-3% on 4% 20 13 average, more for markets such as 10 5 2% 10 3 Kenya, compared to around 1% in 0 0% developed markets) Brazil China India Kenya US UK Italy ARPU Share of income• This ratio would be even higher among the base of pyramid users Note: Figures are for 2011. ARPU is per month in US $ Source: GSMA Wireless Intelligence, IMF 20
  21. 21. Healthier competition helps prices Mobile operator competition (HHI)• There is a higher concentration of market share Rwanda in developing relative to developed markets Mexico China• However, this has mitigated in many developing markets over the last few years Kenya (the opposite has occurred in some notable South Africa developed markets such as the US and UK) Ghana UK• Lower concentration generally translates into a HHI = sum of squared more competitive marketplace, particularly by Indonesia subscriber market share reducing prices Germany The greater the value, the greater the concentration of Brazil• In combination with several other factors (e.g. market share (generally less US competitive) increased network coverage, lower handset prices), this has helped drive an increase in India mobile penetration in the developing world 0 2,000 4,000 6,000 8,000 10,000• Key for governments to understand this 2007 2011 virtuous circle to promote healthy competition Source: GSMA Wireless Intelligence, GSMA-MDI Analysis 21
  22. 22. Smartphones and featurephones• We estimate still less than 10% of 100% Subscribe to mobile services (penetration of population) people have a smartphone in the 80% 68% 77% developing world (nearing 50% in 52% 60% US/Europe) 43% 42% Smartphone 33% 29% 40% Basic/feature 20%• Smartphone penetration will phone rise, but less for low income 0% segments Central Latam Middle East Asia Africa South Asia US /Eastern East /Pacific /Europe Europe• Regional variation, especially for smartphones Subscribe to mobile services 1,000 840 – Higher in Latam 800 – Lower in Africa (where the smartphone may serve more of a 600 496 Million Smartphone community role (e.g. community 312 355 400 health worker, agricultural co- 202 Basic/feature op’s) for the time being 200 124 phone 0• By sheer size, East Asia Central /Eastern Europe Latam Middle East Asia/Pacific Africa East South Asia (dominated by China), Africa and South Asian regions have the most mobile subscribers Note: figures are estimated for 2012 Source: GSMA-MDI estimates based on GSMA Wireless Intelligence, Strategy Analytics 22
  23. 23. Outlook Mobile in the developing world 47% 5 50% 39% 4 40% Penetration 3.0 3 24% 2.3 30% Billion 2 1.3 20% 1 10% 0 0% 2007 2012 2017 Active subscribers PenetrationKey influencing factors Investment1. Networks and coverage Coverage expansion (urban to rural) Mobile penetration will continue to inexorably rise, but… Handset range2. Handset utility and Handset priceaccess to data The shape and dynamics are more Innovation in access to data fluid, particularly in terms of the Subsidies impact on lives of the base of pyramid versus the mass market3. Income growth GDP growth Growth in GDP per capita Source: GSMA-MDI Analysis 23
  24. 24. Networks and coverage: roll out so far • 2G coverage is generally much more widespread than 3G in developing markets (average 2G coverage is around 95% of population, with 3G often below 70%) Network coverage, Kenya (Safaricom) • 3G coverage is growing, but there remains a sizeable urban- rural coverage gap due to roll out costs 3G network coverage 100%3G coverage (population) 80% 60% Would rely on network expansion to 40% rural areas 20% India 0% 0% 20% 40% 60% 80% 100% Population living in urban area Source: Safaricom , GSMA Wireless Intelligence, GSMA-MDI analysis 24
  25. 25. Networks and coverage: roll out to come• Coverage will continue to increase, especially for 3G Network coverage - APAC• But what does this really mean? 100% 90% 90% 85%• Handsets can access data on 2G networks (via 80% GPRS), but the capacity (e.g. number of people using data) is less than 3G 60% 60% 50%• For the Base of Pyramid and other lower income segments, 2G coverage is sufficient to enable further 40% rises in mobile penetration and even data use 20%• 3G coverage is a leading factor for higher intensity smartphone penetration (e.g. watching video) – in 2% 0% other words, what people do on a phone, not supporting whether they can own a phone 2G 3G 4G LTE 2011 2017 (f) Source: Ericsson, GSMA-MDI Analysis 25
  26. 26. Networks and coverage: challenging economics in the pipeline? Network costs of data traffic • Mobile networks transfer data over radio spectrum, while fixed broadband networks transfer data via copper or fibre optic • This means the data economics are more Network cost per month challenging using mobile • Currently, this is not a problem because most people in developing markets use featurephones, which use less data than smartphones, and much less than a home Average mobile Average home broadband connection data usage broadband usage • However, as more people use data that networks have to absorb, the cost of data to consumers may rise, with more stringent usage caps also a possibility • Usage caps are more likely to impact mid and high end users, with price rises impacting 0 1 2 3 4 5 6 7 8 9 1011121314151617181920 mid and lower income segments Data traffic (GB) Mobile Fixed broadband Source: Enders Analysis, GSMA-MDI analysis 26
  27. 27. Networks and coverage: Green Power and alternatives• Lack of reliable coverage in rural areas is Network sites on the electricity grid partly because many network sites are off the electricity grid Kenya 90% 10%• For these areas, mobile operators can On grid Tanzania 69% either power sites using a diesel generator 31% Off grid or alternative means Uganda 59% 41%• Green Power increasingly used in sub Saharan Africa (e.g. Kenya) – Requires capex commitment from the Power solution for off grid sites MNO, but is a cheaper power source than diesel in the long run (ROI 2-3years) 28% Kenya 60% – Number of green sites steadily increasing 12% 24x7 DG – Infill solution to increase rural coverage 31% DG-battery hybrid Tanzania 65% 4%• Smaller, but more limited, infill possibilities Green Power include IP-based connections (e.g. Range 40% Uganda 58% Networks) 3% Note: DG = diesel generator. Data as of September 2012 Source: GSMA Green Power for Mobile, Range Networks, GSMA-MDI Analysis 27
  28. 28. Networks and coverage: utility access through mobile Potential impact on mobile ARPU for off-grid customers is 14%+ 2. CPM from retail distribution network • Leveraging extensive rural sales dealer/ retail network for distribution or sale of1. Power from BTS infrastructure charging/ lighting devices through commercial partnerships• (i) Outsource power solution to ESCo who sells • Examples: Fenix International and MTN Uganda, Nokero, Azuri Technologies community energy services or• (ii) Sell power from over-capacity of BTS power equipment• Examples: OMC Power, Desi Power, Applied Solar Technologies (AST) 3. Power with payment technology • Opportunity for micro e-payments: high volumes of small payments for off-grid domestic and small business energy • Examples: m-Kopa, Mobisol Source: Digicell, GSMA Mobile Enabled Community Services 28
  29. 29. Handsets and data: featurephones and Android• Smartphones are still less than a third of handset Handset sales share sales in most emerging markets, with 100% Featurephone featurephones (e.g. Nokia, Samsung models) 80% 29% dominant Other 67% 60% 78% smartphone 24% BlackBerry 40%• Android is by far the largest smartphone platform; iPhone it now takes a quarter of all handset sales in Latin 20% 43% America and nearly 15% in the Middle East and 24% Android 14% 0% Africa US MEA Latam• Android has particular advantages for developers Handset ASP ($, wholesale) compared to other platforms 700 605 600 – Lower cost devices in the ecosystem 500 – Larger audience 400 337 312 266 226 223 300 215 – Open source (more flexible) 200 65 100 0• Convergence: Android with featurephones Android Note: ASP (Average Selling Price) and sales share for Q3 2012 Source: Strategy Analytics, company websites, GSMA-MDI Analysis 29
  30. 30. Handsets and data: smartphones blurring with featurephones• There is now a convergence between smartphones at the low end and featurephones iPhone 4S X100 (China) Nokia Asha 305 at the high end on price and functionality (smartphone) (smartphone) (featurephone)• Important implications: OS iOS 5 Android 2.3 Series 40 – As prices fall, smartphones open to wider audience, with potential for richer experience Screen Touch Touch Touch – However, cheaper smartphones may compromise on quality (e.g. build, battery power – Price ($, >$500 $99 $60-90 problematic for rural areas) wholesale) – In time, smartphone adoption will rise even among lower income segments Camera (MP) 8 5 2 – Over short to medium term, featurephones likely to remain the dominant handset type in most Processing 1,000 650 1,000 developing countries power (MHz) • Reliable phones for voice calls and SMS • Potential for enhanced experience using data Note: prices indicative, as of January 2013 Source: Strategy Analytics, company websites, GSMA-MDI Analysis 30
  31. 31. Handsets and data: the subsidy divide• The developing world accounts for a Global share of handset subsidies majority of handset sales but a minority of subsidy (portion of handset cost paid 100% for by mobile operator) 80%• This is because most people using a mobile phone in the developing world do 60% 54% so on a prepaid plan (which operators 43% generally do not subsidise) 40% 22%• The economics governing customer 20% 18% 13% 12% 13% 12% lifetime value mean that this is unlikely 7% 3% 3% to change over the next 2-3 years 0% 0% North Western Asia Pacific Central and Central and Africa Middle• This means that the mobile community America Europe Latin America Eastern East Europe (operators and others) are looking at Handset sales Handset subsidy new ways of enhancing the experience of lower income users, such as through innovative access to data Note: data is for 2011 Source: Strategy Analytics, GSMA-MDI Analysis 31
  32. 32. Handsets and data: democratising data Internet (OTT) players • Google • Google Free Zone • Opera Mini • Free internet access for Google search, Gmail, Google+. Further browsing is charged • Mozilla • Trials in Philippines, South Africa, Indonesia from November 2012, full roll-out pending success of trials Likelihood of using Target audience Smart phone • Facebook Zero, Wikipedia Zero data Bubble size = penetration • Free access to these sites on mobile internet Feature phone • Key implications: Handset cost • Designed for basic and featurephones (e.g. majority of mobile users in emerging markets) Mobile operators • Data into the hands of lower income groups • Content creation (see slide 31, ‘Implications for user• Hybrid data plans engagement’) - Prepay element: customer caps spend on data each month - Contract element: commitment term - Avoids barriers to contract (e.g. proof of identity) - Operators more willing to subsidise handsets (featurephones or smartphones) Source: Google, Opera Software, Facebook, Wikipedia, mobile operator websites, GSMA-MDI Analysis 32
  33. 33. Income growth• The last 5 years have brought about 10% 9% 8% Income per capita growth (CAGR) significant growth in the income per 5%5% 5% 4% 4%4% capita in many emerging 5% 3% 3% 2% 2% markets, while this has broadly 1% 2% stagnated in developed countries 0% 0%• We must caution the likely skew from -1% higher income groups -5% 2007-12 2012-17 (f) Base of Pyramid (under $2/day)• The proportion of the population in the 100% BoP has been falling (and will likely 77% 73% 76% 74% 80% 71% 69% have continued falling since 2008), although there is significant 60% 52% 39% regional variation 40% 33% 22%• To the extent this decline 20% 17% 12% continues, combined with declines in 0% the cost of mobile ownership, this will Latam East Asia/Pacific South Asia Africa be an additional driver for mobile 2002 2006 2008 penetration and, in middle income groups, upgrades to smartphones Source: IMF (income per capita), World Bank (Base of Pyramid), GSMA-MDI Analysis 33
  34. 34. Implications for user engagement Content creation on mobile Mobile• As mobile penetration rises, we expect growth in ownership user generated content to follow• This is already being seen with mobile activity on Wikipedia… Growth in content – Orange Kenya: 87% growth in mobile Wikipedia creation on mobile page views in 4 months to October 2012, following launch of Wikipedia Zero (growth for rest of Kenya of -7%) Time – Orange Niger: 77% growth on the same basis (6% growth for the rest of Niger) Growth in Opera Mini use in Africa 250% 216%• …and Twitter 184% 200% – 57% of tweets from Africa come from a mobile 150% Users – Local content is key: 68% of twitter users get news 99% through the platform, 22% search for jobs 100% 83% 83% Data usage 47% 41% 35% 50% 32% 30%• …and high growth in use of the mobile version of 0% the Opera Mini browser in Africa (mainly featurephones) Ethiopia Ghana Kenya Nigeria South Africa Note: Opera Mini figures are for the 12 months to March 2012 Source: Opera Software, Wikimedia, Portland Communications, GSMA-MDI Analysis 34
  35. 35. 1. Market landscape: current and outlook2. Impact of mobile on development sectors3. Platforms, multiplicity, scalability and re-use4. User-centric innovation5. Appendix 35
  36. 36. What you need to know Key findings Key implicationsM4D is growing: there are now over 800 live mobile-enabledproducts and services in the developing world, with growth having The need for scale: while the number of M4D services continues toaccelerated over the last 3 years. There are also interesting rise, there remains a general lack of scale achieved (with somegeographic distributions: mobile money in exceptions, such as in the mobile money sector). The drive forAfrica, learning/education in Asia, with health and agriculture more impact must be balanced by the need for scalebalancedEmergence of new business models: as new sectors in the M4D Diversification likely to continue: while some sectors havespace have emerged since 2009, so too have new business models. established clearly defined business models that are unlikely toDonor funding remains the most common model in mHealth, but change (e.g. mobile money, where mobile operators make moneyothers drawing revenue from consumers or business (e.g. using on transaction volume), others are still evolving (e.g. an increasingB2C, B2B and B2B2C) are used in the money, learning and focus on B2B in the mobile entrepreneurship sector)entrepreneurship sectors in particular Balance basic functionality with growing data adoption: SMS likelySMS remains dominant, but new technologies are emerging: 67% to remain a ubiquitous delivery medium given its ease of use, butof M4D services use SMS as an access medium, its popularity M4D services designed to run via the mobile internet, throughhaving increased since 2009. USSD also remains popular, with the apps, or be hosted in the cloud are likely to increase, particularly inuse of the mobile web and apps on the rise sectors focused on interactive content and P2P (e.g. mLearning and entrepreneurship) 36
  37. 37. Evolution • Strong growth in the number of M4D services launched over the last 3 years • Crucial to consider scale of each sector, not just the number of services or projects Timeline of launches 250 1000 200 800 Cumulative launchesLaunches per year Entrepreneur 150 600 Learning 100 400 Agriculture Health 50 200 Money 0 0 Pre 2005 2005 2006 2007 2008 2009 2010 2011 Note: figures based only on mobile-enabled products and services in developing world tracked by GSMA (including those merged/closed) Excludes services in pipeline with an impending launch Source: GSMA-MDI Analysis 37
  38. 38. Mobile for Development landscape• We show below the geographical distribution of live M4D services in the developing world tracked by the GSMA• Mobile money has a concentration in Africa, learning and education in Asia, while health and agriculture are more evenly split between these two regions Live deployments 600 500 400 Central/Eastern Europe Oceania 300 Africa 200 Latam Asia 100 0 Money Health Agriculture Learning Entrepreneurship Note: figures based only on mobile-enabled products and services in developing world tracked by GSMA As of September 2012; excludes services in pipeline with an impending launch Source: GSMA-MDI Analysis 38
  39. 39. Definitions for analysis and methodology Our work so far… Current GSMA resources Further research & definitions Analysis & initial findings Over 800 M4D Findings Augmenting research Analysis services tracked Business model Device Delivery technology Enablers •Where will the service •What type of device is the •What mobile delivery •What kind of products and generate revenue from? service aimed at? technology will the service services are being offered? utilise? •Consumer •Basic phone (e.g., •Interactive content •Donor •Feature phone (e.g., •Native Voice •Push content •Business •Smart phone (e.g., •IVR •Payments •Open Source •PC/ laptop •SMS •Peer to Peer •Government •Tablet •USSD •Data Collection •Advertising •Other •Text-to-Audio •Call Centre •Web •Inventory management •Apps •WAP Source: GSMA-MDI Analysis 39
  40. 40. Business model Product/service type Consumer • Rolled out as a value added service (VAS) by an MNO (MNO led) • While it may not earn revenue from customer directly, VAS designed to drive new customer uptake/ reduce customer churn. Call Centre •Simple voice call to a trained human content provider Consumer •Revenue generated directly by end user Interactive •Content based services that users can access by querying a central database(non MNO led) •e.g. subscription, one off mobile money payment content •May be delivered via IVR, SMS, USSD, app, WAP, etc. • Businesses targeted by service to generate revenue Peer to peer •Social networks and posting systems, users create and access Business • Generally supports internal business processes (e.g. Inventory content management), or core business services (e.g., recruitment) content •Wide range of delivery mechanisms, even including voice •Content pushed out (one way) via voice message or SMS Advertising • Revenue generated from advertising delivered through service itself Push content •May be “broadcast” or “narrowcast” (customised by location / user profile) Data •Create customised surveys and send them to fieldworkers’Government • Primary funding comes from government mobiles collection Inventory •Supply chain management and stock ordering toolsOpen Source • Service based around open source software/framework • Value derived from external parties adopting service •Product security / validation tools management Donor •Primary funding comes from donor organisations, usually in a lump sum grant Payments •Mobile wallets, payment gateways and a wide range of payment based services Source: GSMA-MDI Analysis 40
  41. 41. Spotlight: use cases of mobile by sector Corporate & NGOFinancial inclusion Health Agriculture Learning Entrepreneurship use•Money transfer •Health education •Helplines for advice •Literacy and •Business advice •Prepaid airtime•Airtime and prepaid and promotion and trading numeracy helplines vending systems services •Reminders for assistance •Financial literacy •Job posting and •Surveying tools•Bill payment patients to take •Broadcast and •Technology literacy trading platforms •Fieldworker•Bank account medicines narrowcast advice •Language learning •Training and skills communications management •Remote patient and weather development tools •Workforce training monitoring and updates •Store / SME •Crisis monitoring•Micro-credit •Entrepreneurial diagnosis •Crop insurance and management tools tools•Micro-savings skills and career •Healthcare micro- agricultural •Inventory ordering •Supply chain•Micro-insurance development payments financial services and management management tools•Corporate •Job advice and •Data collection •Fair trade tools •ICT training payments connection tools for health compliance tools resources for small•Mobile commerce •Teacher training workers •Weather organisations•Social payments and support •Health worker monitoring on base stations •Classroom tools training and and resources capacity building •Agricultural supply •Medical supply chain management chain optimisation tools •Drug verification •Specialised medical devices Source: GSMA-MDI Analysis 41
  42. 42. Device Delivery technology •Basic telephony services, with voice delivered over aBasic phone •Offers basic voice services (telephony/voice mail), SMS and USSD based services. Voice mobile network •Interactive voice response, allows a computer to Feature •Basic phone features plus… •Internet enabled, supports transmission of picture IVR interact with humans through & voice recognition navigation and DTMF tones via keypad phone messages downloading music, built-in camera •Short Messaging Service, allows exchange of short •Feature phone features plus… SMS text messages between mobile phone devicesSmart phone •graphical interfaces and touchscreen capability, built-in Wi-Fi, and GPS (global positioning system) •Unstructured Supplementary Service Data. A synchronous message service creating a real-time USSD M2P connection allowing a two-way exchange of data, mostly through menu structures PC/laptop •Personal desktop computer, or laptop. Typically running Windows, or maybe Linux OS. •Computer or handset based service that generates Text-to-Speech speech using text input •Smart phone features plus… Tablet •Larger screen, increased computing power, front and rear facing cameras, extra ports (e.g., USB) •A system of interlinked hypertext documents Web accessed via the Internet; also accessible via enabled mobile devices •A “catch all” for devices not included in the above Other •E.g., modems, Personal digital assistance (PDA), etc. •a software application designed to run on mobile Apps devices. (typically smartphones, and tablet computers) •Wireless Application Protocol for accessing WAP information over mobile network. WAP browsers typically found on older feature phones. Source: GSMA-MDI Analysis 42
  43. 43. Spotlight: device and delivery technology Phone type Basic Feature Smart Examples Voice Interactive Voice Response (IVR) BBC WST Janala (Bangladesh)Popular access technologies SMS Manobi Agriculture (Senegal) Messaging USSD HIV-911 (South Africa) MMS Tata Telecom m-Krishi (India) WAP mDhil (India) Browsing Web Kantoo English (Chile) Embedded Nokia Life Tools (India, Indonesia) Apps Java (J2ME) Esoko (Africa) Android Infonet Biovision (Kenya) Source: GSMA-MDI Analysis 43
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