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?

Holy ringtones

Saudi Arabia has a split personality when it comes to mobile phones. On the one hand, nearly everyone has one - ownership has shot up from 61.4% in 2005 to 96.8% this year. On the other hand, not everyone is happy with how they are used. A Saudi court, we’ve learned, recently banned the use of Qur’anic verses on mobile phones for recreational purposes, such as ringtones. 

A recent poll by the Saudi Gazette showed that Saudis themselves are split by the ruling. Some agree that a phone can go off in disrespectful places - such as a bathroom - and thus the ban is a good idea. Others say the holy ringtones should be allowed if owners remain careful about where they take their phones.

How about allowing the ringtones but instructing the faithful to switch their phones to  silent when entering a less than holy spot?

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 Internet access, mired by politics

It was only a few weeks ago when things were looking up, with talks being held to discuss how to get up to 80% of the continent’s people connected to the Net. But then politics got involved…

A story in South Africa’s Business Day newspaper reports that the government might block Eassy, one of the several pipeline projects, because of its “commercial nature”. As the story runs:

The 10000km Eassy cable will be 27% owned by Telkom, Neotel and MTN, and is designed to provide desperately needed cheap bandwidth to 21 African countries. But SA’s communications department has taken umbrage at what it sees as the commercial nature of the enterprise, and intends to withhold landing rights.

Instead, the government will use taxpayers’ money to roll out two rival cables heading east and west, jointly known as the Nepad Broadband Infrastructure Network.

Unfortunately, the government misses the point. Consumers everywhere want cheap, reliable Internet access. Until the market is opened up to competition, that won’t come. And we know all to well what relying on a state-run telco does for access costs.

Digital divide: the cost of access

There’s a few strands to the debate about a digital divide, primarily looking at whether people have access to computers or not. But even for those that do, another obstacle awaits: the cost of Internet access.

Tucked away in this article on TreeHugger about bandwidth is a comment about the access costs in Kazakhstan–an astonishing US$3,355 a month for basic DSL broadband (excluding modem). As this article in ars technica explains:

An unlimited dial-up plan costs about €82 ($111) in a country where the average monthly wage is €292 ($399). As for DSL, an unlimited 1.5Mbps connection costs €2,458 ($3,355) a month, and doesn’t even included the required ADSL modem. Want a 6Mbps cable connection? It’ll cost you, to the tune of €16,144 ($22,032) a month. As the OSCE report drily notes, this is more than a thousand times the price of such a connection in Western Europe.

By contrast, there is a promotion by one provider in the UK at the moment, promoting a 2mb broadband package for just £4.50 a month. Digital divide indeed.

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?

Texting the faithful

The craze for phones is just as strong in the Middle East as anywhere else. According to EIU forecasts, phones will outnumber people in Saudi Arabia by 2009. Camera phones are still banned but enterprising phone companies have found new ways to tempt people into upgrading their handsets.

A local company, Saudi Television Manufacturing Company, has launched what it calls a “Saudi Mobile” which has prayer-time settings and a qibla, or direction of prayer, indication, using GPRS technology. To complete the package, a UK-based firm, My Adha, offers a “digital muezzin” service which prompts the faithful to pray by text. Who says a new phone is a frivolous purchase?

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?