Economic benefits and implications in investing and deploying new technologies Bridging Digital Divi

1
Economic benefits and implications in investing
and deploying new technologies -Bridging
Digital Divide with Mobility

• Dr. Walid Moneimne
• SVP, Nokia Networks

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Contents

• The Scenery
• Global Trends
• Economic impacts of Wireless Networks Industry
• Case example India
• Total Cost of Ownership
• Conclusions

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The Scenery

• In cooperation with the private sector, make
  available the benefits of new technologiesespecia
  lly information and communications technologies
  UN Millenium Goal 8, Target 18
• Increase of 10 mobile phones per 100 people
  boosts GDP growth by 0.6 percentage
  pointsVodafone / London Business School Study
• Encouraging the spread of mobile
  communications is the most sensible and effective
  response to the digital divideThe Economist
• Cellphones are a better way than laptops to
  bring computing to the masses in developing
  nations because everyone is going to have a
  cellphoneBill Gates Craig Mundie, Microsoft
• Mobile phones can boost development in poor
  countries if governments let themThe
  Economist

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Key trends in the Mobility EnvironmentTowards
the 3 billion milestone
3 billion in 2008
Mobile phone subscriptions globally, millions
3 200
3 000
2 800
2 600
2 billion in 09/2005
2 400
2 200
2 000
Current global penetration 33
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
- 97
- 98
- 99
- 00
- 01
- 02
- 03
- 04
- 05
- 08e
Source Informa TelecomsMedia, January 2006, and
Nokia estimate
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Digital Network Technology Evolution
2G
2.5G
3G phase 1
Evolved 3G
HSUPA
HSDPA
WCDMA
EDGE Evolution
EDGE
GPRS
GSM
2003/2004
2005
2000/2001
2007
Customer Confidential
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Evolution is Driven by Cost Efficiency
WCDMA Provides Lowest Cost Per Erlang Cost
efficiency due to high capacity
20,000
18,000
16,000
14,000
3G investments up to date 125 B in Technology
125 B in Networks
12,000
Cost per Erlang of capacity ()
10,000
8,000
6,000
4,000
2,000
0
2000
2001
2002
2003
2004E
2005E
2006E
2007E
Source Credit Suisse First Boston, May 2004
GSM
WCDMA
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Mobility is significantly reducing the Digital
Divide in the New Growth Markets
Source Building Digital Bridges with Emerging
Technologies, ITU, September 2004
8
Significant economical benefit from ICT
investments
Studies on digital divide indicate strong
correlation between GDP and connectivity
One point increase in Infodensity index increases
GDP per capita 124 164 USD GDP raising effect
is higher at lower Infodensity level
Source Monitoring the Digital Divide and
beyond, Orbicom, 2003
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Economic impacts of wireless networks
Network build
-
up
Network build
-
up
Direct
Direct
Service provision
Service provision
impact
impact
Other
Other
HW/SW suppliers
HW/SW suppliers
Overall economic Impacts of wireless
Overall
Client device providers
Client device providers
Indirect
economic
impact
impact of
Content providers
Content providers
wireless
Other
Other
Enterprise
Enterprise
Economic
Economic
value for
value for
users
users
Consumer
Consumer
Source GSMA
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Example IndiaFavorable government policies have
tremendous impacts on industry and GDP growth

• the industry generates a GDP contribution of R313
  billion per year 1. This is already 1.0 of
  Indian GDP in 2004. Today number is higher
• 3.6 million jobs in India depend on the mobile
  services industry. The industry itself employs
  only 171,000 staff. But it buys in support
  services which generate another 912,000 jobs
  while the taxes, interest payments and profits
  generated by the industry support a further
  720,000 jobs. Finally the employees in these jobs
  spend their money within the Indian economy and
  this expenditure supports a further 1.8 million
  jobs
• the Government receives R145 billion in
  revenues as a result of the industry and the
  employment which it generates. (0,5 GDP). This
  revenues comes from a variety of sources - from
  industry specific spectrum and license fees
  together with import duties on mobile equipment
  from sales taxes on mobile terminals and service
  taxes on use of mobile services and from income
  tax and contributions to the Provident fund by
  employees and employers.

• HOWEVER,
• India still has very high industry specific
  taxation in the form of spectrum, license fees
  and import duties
• Heavy cross subsidy from mobile to fixed
• Promotion of site sharing would have a positive
  impact on rural connectivity

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Affordability drives Mobile Growth and GDP
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Total Cost of Ownership
Vendors
Operators
Civil Society
Governments Regulators
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Role of the Governments Regulators

• Open Telecom market is key in driving favorable
  growth
• Capacity and competence - not copy paste
  regulation

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Role of the Governments Regulators

• Open Telecom market is key in driving favorable
  growth
• Capacity and competence - not copy paste
  regulation

• Governments
• Establish a National Telecoms Act
• Create an efficient National Regulatory Authority
• Maintain a National, strategic telecoms plan
• Lowering of all Affordability Barriers

• Regulators
• Independent, resourced and skilled with powers to
  act
• Clear policy objectives and targets
• Transparent policies with regular stakeholder
  dialogues
• Stable and predictable regulatory environment

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Conclusions

• Mobile telephony is a major catalyst of economic
  and social development and is playing a central
  role in bridging the digital divide
• Affordability drives mobile penetration and
  teledensity and thus increases GDP and economic
  impact of Mobility in the society
• Reducing regulatory risk will reduce investment
  risks and Total Cost of Ownership
• The enormous growth opportunity will not happen
  on its own