GSMA recently released their latest report on The Mobile Economy for 2016. It’s a massive report with a plethora of valuable information. However, the fact is that while the information is valuable, it’s still a massive and time-consuming read. So we decided to read it for you. Here’re the biggest things we learned from the report.
A good place to start would be some stats that paints us a broad outline of the industry’s magnitude. According to the report, 2015 has been a year of increasing growth. 7.6 billion Mobile connections representing 4.7 billion unique subscribers have propelled revenues. Operators have raked in revenues over 1 Trillion USD.
All that’s well and good, but how many have de facto access to the benefits of the industry you might wonder.
The global subscriber penetration is 63%. Regional numbers vary from 43% in Sub-Saharan Africa, 62% in the Asia Pacific region and 85% in Europe.
It is projected that the Global subscriber penetration will, in fact, reach 72% by 2020. Also by this year, subscribers in Europe will only increase from 85%-88%. Over 90% of the 1 billion new subscribers expected by 2020, will come from the developing markets. This projection is despite factors like low-income rates, unequal distribution of infrastructure and even political and social instability.
Staggering stats of this nature are seen across the board as the developing markets soar rapidly in reaching heights only known to the European and American regions. Developed markets, in turn, are to have issues of a different sort like disruption, heavy competition and sometimes parasitic regulations.
This isn’t to say that the rate of growth hasn’t experienced a slowing down all round. For developing markets, annual connections will grow at 4.3% which is more than a step lower to the 7.7% of growth achieved in the last 5 years. On the developed side of the world, the growth will crawl at 2.0%.
Connectivity alone will no longer cut it. 4G has been “a major highlight.” In the latter part of 2015, over 1 billion 4G connections have been reported across 151 countries. At this period, mobile broadband connections of both 3G and 4G nature made up for almost 50% of all connections. It is expected that this will spike to 70% by 2020.
Fuelling this expansion are factors like affordability of smartphones, deeper network coverage and to some extent operator handset subsidies.
Once again the trend is that in developed markets broadband makes up for over 80% of connections and is to rise to 92% in the next 5 years. Only 40% of the connections in the developing markets are broadband and by 2020 the number will expand to include a third of all connections. These numbers aren’t too far away from home since in there’s been an almost 30% higher interest in broadband connections. By 2015’s final quarter Sri Lanka 39% of all mobile connections were of the mobile broadband kind. It is also predicted that in terms of 4G connections, the developing world will overtake the developed one by the end of the year.
Much of this accelerated growth has to do with spectrum allocation. In Europe, many countries including 24 of the UE28 have moved on to digital broadcasting and auctioned off the 800MHz digital dividend spectrum. 4G has become a standard transition in Asia once the APT700 band plan has been adopted in many Asia-Pacific states.
Sub-Saharan Africa, however, is still lagging behind with issues like the lack of relevant spectrum.
Another key factor for increased dispersing of 3G and 4G connections is the availability and accessibility of smartphones. Smartphone connections are to hit 2.6 billion by the end of this decade, again with 90% of this growth spurting from the developing sphere. India alone is predicted to add over half a billion smartphone connections.
Smartphone proliferation is supported by the increasing production houses like Xiamoi, Huawei Gionee and OnePlus from China and MicroMax in India. Catering to a wider, price-conscious customer base, these manufacturers as at the third quarter of 2015 have shown progress.
With Great Internet comes Greater responsibility.
Faster, the better internet has seen to the rise of data-intensive applications in use. Like video streaming, which has resulted in “an explosion” of data traffic. Data usage it to grow at a compound annual rate of 49% approaching 40EB per month in 2020. It’s also predicted that by this time, the average North American subscriber would need 22GBs and 12GBs of mobile data to make it through the month.
This is also reflected in the significant growth experienced by messaging applications like WhatsApp, which went from 200 Million users in April 2013 to 900 Million in September last year. Facebook Messenger and WeChat according to app analytics firm App Annie have also swelled.
Accordingly, mobile service operators have converged with this trend and are now offering video streaming and IP messaging as part of their data plans. Vodafone in Europe, for instance, offers Netflix and Spotify Premium at no extra charge. Verizon and AT&T have resorted to providing access to video content. This convergence according to the report is a means of staying relevant in the market which has although reached 1 trillion USD in revenue, has done so at a markedly slow pace.
Where is the yellow brick road of mobile evolution leading us?
We’ve moved on from feature phones and voice calls, SMS and multimedia messaging are no longer composite of the mobile experience. There is, however, a rural and under-developed populous still almost a decade behind. The smartphone era of social media, app economy and IP messaging is where developed markets are currently at. This report, however, suggests that the hyper-connected future is on the horizon. The era of big data, the internet of things and sharing economy is soon to be the way of life as developed markets are entering this stage.
By the end of 2016, apps and app-related products are to account for 140 Billion USD. Generating a market of their own, Apple, Alphabet, Facebook and Alibaba are among 2016’s biggest players in the app market. The rise of these companies, however, shouldn’t be taken to mean a value-transfer, since many of them still rely on mobile broadband networks and smartphones as access points for their users.
Although 1.3 million app developers making up for 23% of the global occupation was based in the EU28, China and India have also broken into the scene. The combination of innovation and technical prowess has organically led to digitization is slowly engulfing other industries as well.
Big players in the mobile operator industry like Orange, AT&T, Deutsche Telekom and Safaricom have started foundries and funding for start-ups to support the vibrant ecosystem. Yet another strategy to deal with disruption has been convergence. The rationale for jumping aboard the bandwagon according to the report is to the “pursuit of scale and the goal of offering enhanced customer experience.”
What is the GSMA doing in light of these developments?
To make optimum use of the mobile market in all its splendor, the GSMA is backing a solution to the age-old issue of authentication. Mobile Connect is a mechanism that hopes to do away with passwords and long sign-up procedures. Instead, it hopes to use the user’s mobile number and a unique PIN number that is valid across several virtual platforms. Mobile Connect isn’t an unfamiliar name to this part of the world, for more on its local advent click here.
The industry directly employed 17 million people last year. A large majority of jobs available in the mobile ecosystem were in the content, applications and mobile service sectors. However, the Asian region is currently not fully digitally engaged due to issues like the lack of locally made, relevant content. Also problematic is the rampant illiteracy and lack of basic skills when it comes to handling a mobile device. In Latin America, the predominant trouble is with the infrastructure. While some countries like Brazil, Chile, Mexico, and Peru have more than 90% coverage, countries like Cuba has no mobile broadband within its borders. The report calls for a joint effort on the part of governments in the region to rectify this disparity.
With Chinese-based vendors like Xinwei Telecom which churns out smartphones in the sub-20 USD range in the market, affordability in the industry is seldom an issue in most parts of the globe. In Sub-Saharan Africa, however, this isn’t the only price issue. Taxes for mobile services are at a suffocating 20% on average in the region.
What Does the Industry need to do to keep getting better?
The short answer would be better regulations. Legal and ethical parameters are often restricting for two reasons according to the report. Firstly because of discriminatory regulations and secondly because of static regulations at play in a dynamic market.
Different sectors of the digital economy have separate ways of being regulated, however, this might bear inequitable results. For instance internet companies like Facebook as the report, sites are in direct competition with the likes of Bharti Airtel. Internet companies are subject to general anti-trust rules and consumer protection regulations while the telecoms are subject to more intrusive and industry-specific compliances. Both procedural and regulatory discrimination can not only artificially affect competition, but harm customer welfare as well.
More elastic rules when it comes to the ever-morphing, innovation-driven market, according to the report, are also in order. The smooth running of the mobile industry which pumped in a whopping 430 million USD into public funding via taxes and other service charges, can only be good news. Culturing the mobile ecosystem at a domestic level opens up an industry which directly and indirectly employed 32 million people. With a Gross National Income of 3000 USD, Sri Lanka’s own mobile industry is among those tapping into the global phenomenon.
In a Nutshell
The industry has continued to grow through 2015 as all the stats suggest. However, this growth is gradually slowing as reflected in the sluggish pace of subscriber growth, particularly in the European markets. Any dramatic increase in rates by the end of the decade will most likely be credited to developing markets. Despite the heavy congestion in the saturated developed markets and the struggle of including low-income groups in the digital revolution among the developing markets, by 2020, the global subscriber rate will rise to 5.6 billion. In other words, by the end of the decade over 70% of the world will have mobile connections.
Expected to churn out more than 3 million new jobs in the next 5 years, the mobile ecosystem will have created more than 20 million employment opportunities. As the age of mobile money and Machine to Machine, services is dawning upon the world, the industry is to be a mammoth 3.7 Trillion USD of economic value at the turn of the decade.