Biomobility

E-inclusion is the new buzz word in the world of global internet policy. Governments are especially keen for all their citizens - young, old, literate or not - to be online. This fact is highlighted in the latest EIU’s E-readiness rankings which were released last week. While a few top-ranked companies exchanged places - the US ranked first, taking over from Denmark - the gap between wired and non-wired countries remained stark. India, for all its high-powered growth, ranked 54th out of 70. The Philippines, China, Egypt, Columbia, Russia, Nigeria, and Ukraine, to name a few, all ranked lower.

But how to get someone online who a) can’t read or b) can’t afford a computer? A new project from the Department of Rural Development in the state of Andhra Pradesh is providing some answers. Using readily available technology, it allows government departments to issue payments to citizens with specially-equipped mobile phones. These phones are loaded with applications which, in turn, communicate with biometric smartcards via RFID to validate a customer’s details. So, a illiterate farmer is notified by a special ring tone that  his monthly government stipend has arrived. He then takes the phone and card to a bank or shop to get his money, where his fingerprint is checked against his card. 

The programme will soon be extended to allow users to make other transactions such as housing payments or small loans repayments. To make this really take off, though, the technology should probably move to eye-scans, thereby avoiding all the business of a biometric card which can be lost or stolen. But these kinds of schemes will surely be an interim solution. Full internet access, whether by phone or PC, is becoming as basic to economic development as water.

The Intel Factor

  The 350-page Information Economy Report landed on our desks this afternoon, courtesy of UNCTAD. Packed with data, tables and text, this is the latest in a series of worthy tomes which urges the ICT industry - and governments - to do more for the developing world.

Buried in all the facts and figures, however, are some interesting case studies. Take Costa Rica, for example. In 1985, 60% of its exports were perishable products and 3% were electronic products. By 2005, the share of perishable goods had dropped to 24% and electronics had jumped to 30%. The main reason? Intel had decided to make the country one of its main production sites.

In 2005, the direct and indirect effects of Intel accounted for 25% of GDP of the entire manufacturing industry and Intel now accounts for 20% of total exports. It’s also doing good things for wages. A study by the International Labour Organisation last year found that Intel pays its workers an average monthly wage of US$836 while employees in the general manufacturing sector earn an average of $491. 

Good stuff, Intel.

Orascom invades North Korea

Take a  look at this photo. It’s a from an official North Korean site and if you look closely, you’ll see that no one in this photo is using a mobile phone. That’s because no one in North Korea has one. Not yet, anyway. The North Koreans may be lacking in the basics, like food and fuel, but it appears that they will soon be able to buy a mobile - and a 3G phone to boot.

According to an announcement today from Orascom Telecom, the Egyptian group has been granted the first license to provide mobile services in the Democratic People’s Republic of Korea. The license is for providing a service using WCDMA (3G) technology.

Although not exactly. This access was, in fact, given to a new JV company, CHEO Technology, which is 75% controlled by Orascom and 25% owned by the state-owned Korea Post and Telecommunications Corp. The terms of the license will allow CHEO to offer services throughout the country. The duration of the license is 25 years with an exclusivity period of just four years.

Still, Orascom says it will spend up to US$400m in network infrastructure and fees over the first three years in order to build a network which will offer voice, data and value added services at “accessible prices to the Korean people”.  Given that North Korea’s GDP per capita in US$1400 a person, those are going to have to be mighty low prices.

In case you were wondering, there are 23m North Koreans. While Orascom is no stranger to difficult markets - it has operations in Algeria, Pakistan, and Bangladesh - it pulled out of a license battle in Iraq at the end of last year. Now we know why.

The Big Divide - phones vs the web

The chart above, courtesy of the ITU, shows mobile penetration rates worldwide and for developed and developing regions, between 1994 and 2006. The divide between rich and poor countries is measurably narrowing, which is good news for emerging economies. Take a look at the same data for internet penetration:

The difference is telling. By the end of 2006, just over 10 percent of the world’s population in developing countries were using the Internet, compared to close to 60 percent in the developed world.

Could the key be cheap smart phones with web access?

Y’ello in Africa

Three miles south of Johannesburg’s wealthiest neighbourhoods is the township of Alexandra, one of the city’s poorest communities. The disparity between the two is huge. But, as you can see above, good things are happening. This is a  Y’ello Zone , part of the  MTNaccess project, a nationwide scheme to bring broadband and computing to low-income townships and providing a platform for entrepreneurship. Backed by MTN and the GSM Assocation’s development fund, the Alexandra site just one of seven such pilot projects and hopefully, a sign of better things to come.

But elsewhere in Africa, things are going in exactly the opposite direction. Gabriel Solomon, a director at the GSM Association, recently told Total Telecom Magazine that the new Benin government has suspended the mobile networks of MTN and Atlantique Telecom after they refused to pay US$50m in a one-off fee for a new contract, replacing the one they had paid two years earlier to a previous government. This was a 500% rise from the earlier payment and clearly extortion. 

Despite this kind of despotic behaviour, mobile tariffs in Africa in 2006 were, on average, on a par with other regions, according to the ITU. Just under US$25/month for 100 minutes. When broadband price comparisons look the same, things will really be looking up for Africa.

Africa’s grand internet access plans

Ministers, regulators and others are meeting for a big powwow in Nairobi this week to discuss how to connect up to 80% of the African continent to the ‘net.

It all sounds very promising:

The meeting, dubbed Connecting Rural Communities Africa Forum 2007 is organised by the CTO with telecoms market regulator Communications Commission of Kenya as the host. It will discuss research findings, policy options, regulatory strategies, business models, financing and investment, available technology and public-private-people-partnerships that can improve rural connectivity in Africa.

But, unfortunately, while hosting more talks is fine, urgent action is more necessary. Africa’s connectivity is dire: less than 4% of the populace has internet access, according to Internet World Stats. Problems range from telco monopolies blocking competition to major infrastructure and skills shortfalls, not to mention widespread power shortages.

That said, there are signs of life surrounding the various cable projects running down the east and west coasts of Africa.  And even the troubled EASSy project recently received a fillip. All this will help improve things. But talk of connecting 80% of the continent remains, for now, just talk.

M-Health?

 M-banking, m-commerce and now m-health? In Africa, this notion is turning into a reality thanks to MTN, Africa’s largest telecom group. Based in South Africa, MTN has become the first mobile operator in the Phones-for-Health initiative, a public-private partnership to help address HIV/AIDS and other health issues in Africa.

The company is subsidising the distribution of handsets and providing network support to enable health workers across the continent to order medicines, download treatment guidlines and interact with a health authorities. Laudatory behavour, to be sure, but with operating margins a healthy 31%, the company can afford to be generous.

Still, this isn’t just altruism on MTN’s part. More than 60% of Africa’s population now lives in areas with mobile phone coverage and that figure should rise to 85% by 2010. As more phones are distributed and more uses found for its networks, the more the MTN’s sales and profits will benefit. Enlightened self-interest anybody?

A Wizard called Wizzit

 With all due respect to Harry Potter, wizardry isn’t always found at Hogwarts School of Witchcraft. Take a look at South Africa’s newest bank, Wizzit.  A virtual bank launched  in 2005 by a group of local entrepreneurs, it has no branches of its own. Its customers use their mobile phones to transfer money, purchase pre-paid electricity vouchers, buy airtime for a pre-paid mobile phone and a host of other services.

As a recent GTF story explains, the bank appeals to the 40 % of the local population who don’t have a bank account or those low-income workers with accounts who can spend an hour getting to a bank, an hour in a queue and an hour going home just to make a deposit or withdrawal. Thanks to the wizardry of the mobile phone, Wizzit customers can now do all this by text message and for substantially less than traditional banks charge.

Not a topic worthy of a blockbuster movie, perhaps, but surely just as magical.

Two steps forward, one step back

 In 1993, only 16 African countries had mobile networks and none of them had any competition. Today, all 55 countries have mobile networks, and 44 of them are operating in competitive markets.

According to the World Economic Forum’s 2007 Africa Competitiveness Report, nearly half of Africa’s telecom service providers have at least some private-sector ownership, with 25 fixed-line operators wholly or partially privatised over the past ten years or so. That’s the good news. Here’s the bad: Africa still  has the greatest number of monopoly service providers of any region worldwide.

Some progress in Kenya, though. After years of dithering, it now looks like the government intends to sell a 40% stake of fixed-line monopoly holder Telkom Kenya, most likely to a consortium led by British Telecom. If BT succeeds, it will need to re-brand Telkom, long synonymous with inefficiency and corruption. How else to explain the fact that the country now has over 9m mobile phone owners and less than 300,000 people with a fixed line service?

Happy days are here again

The supreme buddha of the global telecom analyst community must surely be Paul Budde. His Oz-based website, while a bit of a dog’s breakfast to look at, is full of great wisdom on all things telecom. This week, for example Budde has written that around the world, “the telecoms industry is reaching new heights.”

I had a look and it’s true, ATT’s first quarter EPS was up 21.6% and Verizon’s was up a cheerful 17.4%. On the other side of the pond, BT’s numbers are also bright and, of course, its hard to keep track of the money pouring into Middle East, Asian and even African operators. In Europe, however, DT is still struggling, Vodafone’s numbers - well you don’t want to look. France Telecom is making money but its debt levels are still sky-high and its margins halved last year.

Budde says the divide is between companies that are launching into web-based services and those peddling proprietary-based broadband offerings. While IPTV is struggling in most parts of the world, he points out, web-based video is taking off in just about every country with a PC. Budde reckons that web-based video services (think YouTube) are already taking up more than one third of all global broadband capacity.

Telcos who want to see healthy profits again need to sit at the feet of Paul Budde and contemplate breaking down the walls around their proprietary gardens.