Alcatel-Lucent Bell Labs, WEF-TIGAC Study: Increased Mobile Access can Accelerate GDP Growth in Developing Countries

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Alcatel-Lucent Bell Labs, WEF-TIGAC Study: Increased Mobile Access can Accelerate GDP Growth in Developing Countries

By Peter Bernstein

Alcatel-Lucent Bell Labs on June 13 released a comprehensive white paper developed with support of the World Economic Forum’s Telecommunications Industry Global Agenda Council (WEF-TIGAC) entitled, Putting Broadband in the Palm of People's Hands. It is a fascinating read.

The report provides the supporting data on ALU’s initiatives in the area of helping developing countries deploy ubiquitous mobile networks that are environmentally friendly (while being energy efficient) which can act as economic and social accelerators with significant multiplier effects. ALU featured highlights of the study in its online publication Enriching Communications in a February 7 article, “Accelerating the Mobile Impact,” and an April 11 article, “Bringing Mobile Networking to the Masses,” emphasizing its partnerships and commitments to making promise reality.  

The paper provides rich food for thought on the impact widespread mobile access can have on economic and social growth in developing countries globally, and takes an in-depth look at Bangladesh, Kenya and Venezuela. A model created by Bell Labs as part of the study, being tested and validated (see below) with work already being done, revealed that the right combination of actions and investment can accelerate the economic impact of broad mobile network service and applications access by as much as 36 percent, measured in GDP.  

For years, previous work by the World Bank — that concluded each 10 percent increase in mobile penetration leads to a 1 percent increase in Gross Domestic Product (GDP) in poorer developing economies — has been the benchmark for calculations about telecom infrastructure investment. The Bell Labs study and model breaks new ground in showing that the potential exists to grow the benefits more quickly. This related not only as measured in terms of GDP but also HDI (Human Development Index – a measure of quality of life based on life expectancy, education and standard of living). 

For example, the modeling showed the right mix of applications with increasing mobile penetration in Kenya could lead to a 2.7 percent increase in GDP and 1 percent HDI improvement. This translated into 443,000 more children being educated and increasing life expectancy by 15 months.

Context and recommendations

The Enriching Communications articles put this in some granular context on the fact that about 59 percent of the world’s population uses mobile phones (with over 5 billion devices in service) as it relates to things like number of people with bank accounts and other metrics in developing countries. The bottom line is that nearly 3 billion people are yet to have mobile communications access, meaning they likely have no communications access at all. 

The report outlines three key issues that have the greatest potential impact for socio-economic growth in developing countries as driven by ubiquitous mobile network coverage:

1)      Rethinking infrastructure: Urban network overload is approaching, and history says resources will be diverted away from improving rural access and put into urban network modernization, sacrificing the benefits of ubiquitous coverage. It states that to achieve geographic ubiquity quickly will involve new business models that can enable access at affordable costs and with environmentally responsible technologies. The latter is critical. In rural areas clean and efficient power generation will be required and all mobile technology power consumption will also need to be improved.

2)      Scaling relevant applications: The impact of having the right applications aimed at the right targets cannot be underestimated as key accelerants for both economic and social growth. It says that a range of applications relevant to target audiences will help increase the perceived value and desirability of mobile devices. Examples of “clever” targeted services already being used include:

  • In India, fishermen use mobile phones to find the best markets for their catch
  • In Sri Lanka and Uganda, mobile services let farmers check market prices and text in offers
  • In Kenya and Cambodia, villagers receive and make payments through their mobile phones
  • In Bangladesh, a mobile service helps people learn English
  • In Ghana and Nigeria, a mobile service protects people from fake medicine

In particular, ownership of mobile devices by women can improve literacy and language skills and combat domestic violence in rural areas. The study says 300 million fewer women than men have mobile phone subscriptions in developing countries, and closing that gap is an important objective to creating multiplier effects.

3)      Delivering affordable solutions: Not surprisingly, affordability was cited as the key requirement to achieving market penetration. If you build it they won’t come if they cannot afford it. 

The study suggests total mobile communication costs should be less than 5 percent of household budgets. It goes on to say that a variety of stakeholders — phone manufacturers, content creators, wealthier consumers (prone to upgrading phones and services often, and government agencies —   “can all play a part in getting affordable hardware and connectivity into the hands of the poor.”

In announcing the availability of the full study, Rajeev Singh-Molares, President, Asia Pacific, Alcatel-Lucent, and Vice-Chairman of the WEF GAC working group that conducted the study stated that, “Mobility is about so much more than mobile phones. It gives people access to services, information and markets that were previously unavailable to them. In short, it’s about inclusion and giving people the ability to do more.”

He added, “Today we have a huge opportunity to create a framework for sustainable and reliable socioeconomic growth that will improve the people’s lives, no matter where they live.”

While much is made of the lack of all utility infrastructure holding back low and middle-low income economies from reaching inflection points where they are poised to take off, in many respects solving the communications coverage problem is seen as if not more critical than the provision of reliable electricity or even running water. It is a pump primer because of the activity it can enable.  

ALU is clearly hard at work doing its part to bring broadband to the masses in the developing world. In fact, for additional insights on what they are up to, check out the recent videos from the World Economic Forum May 2011 meeting in Davos, Switzerland. As recent events have demonstrated, the power of connectivity and community when unleashed can create extraordinary results.  

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.

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