Thursday, December 25, 2008

Will 2009 Be the Year for Mobile Broadband?

Craig Warren Smith, PhD
Digital Divide Institute

Just as 2008 was the big year of the big push in cell phone penetration, 2009 will be the year in which mobile phone users upgrade to broadband. Well, that’s what the “mobile supply chains” hope for, at least. It is the one bright light in Southeast Asia’s economy. But the industry’s marketers and financiers are nervous. So far, they have not yet generated the “killer applications” (killer apps) that will cause billions of low-income cell phone users to upgrade to fast internet. Less then a decade ago, in Europe, a “telecoms bust” occurred sending telecom markets into the doldrums for years when cell phone users found no need to access internet through their cell phones. It will happen again unless the marketers join forces with government and academia to generate killer apps that are meaningful to mass of low-income citizens.

This time stakes are must higher – both for the commercial sector and for society itself – that this new Big Push in broadband will succeed.

According to Goldman Sachs, $2.4 trillion has been spent within emerging markets in preparation for this year’s effort to achieve a massive leapfrogging into high speed internet via cell phones. While the handset sales are declining among the affluent parts of the economy, mobile penetration in the low-income sector of emerging markets remains recession proof.

Recognizing this, some of the world’s most successful companies – Google, Facebook, Microsoft, HP, Intel – have reshaped their products and services to piggyback on handset makers and telco operators. They hope to meet the needs of the “next billion” consumers including those who earn just US$1,000 per month. In Thailand, most of the wireless carriers are blitzing the media with promotions for embrace smart phones, embedded with Third Generation of “3G” fast internet. A bevy of industries from advertising, consumers products, and banking are waiting to turn mobile broadband into new revenue streams. It is perhaps the only bright light in the new global economy.

For the public at large, the stakes are even higher. Facing an inevitable recession, the new Thai government can help its citizens inexpensively by entering into public-private partnerships with these commercial supply chains and rethinking telecommunications regulations to enhance the public benefit that emerges from mobile broadband. They can activate a trend that the world bank calls “m-development” in which mobile technologies are used to bring interactive education to the uneducated, achieve massive small business growth among the poor, strengthen democracy, fight global warming. (See The list goes on and on. In fact, the government, academia, civil society and the business sector itself should make sure that the killer aps that drive mobile broadband actually help Thai citizens, not harm them with addictions and frivolous entertainment. Achieving these beneficial applications is one of the aims of the Institute for Meaningful Technologies, a joint venture between Chulalongkorn’s Center for Ethics of Science and Technology and Digital Divide Institute, which will be launched this year, with the prime sponsorship of Nokia Siemens Network in Thailand.

Here are two mobile broadband killer apps that could be shaped through public/private partnerships to benefit low-income citizens:

Mobile Banking: Mobile banking is already take off rapidly in low-income sectors where it meets pent-up demand; it could accelerate more quickly and more meaningfully with broadband. Most citizens in developing countries (and an estimated 65% of Thais) are unbanked. Those of us with bank accounts take them for granted. But the unbanked are stuck in an informal economy that often keeps them trapped in poverty. They are unable to get credit at reasonable rates; they must pay more for transferring remittances from family members who want to send money home; they are unlikely to be savers, and they lack any access to good financial planning and advice. Though the virtues of microcredit are much appreciated, only 100 million microcredit borrowers exist worldwide and most of them are run at a deficit. But a billion low-income cell phone users could easily get the benefits of banking in just five years, according to the World Resources Institute’s Allen Hammond. For banks that coax users to mobile banking, transaction costs drop from 33 baht per customer (when a bank branch is used) to less then one baht per customer when the transaction occurs over the mobile phone. Already companies like Wizzit, in South Africa, and GCash, in the Philippines, have started programs that allow customers to use their phones to store cash credits transferred from another phone or purchased through a post office, phone-kiosk operator or other licensed operator.

There are a lot of hurdles that stand in the way of mobile banking, such as the creation of secure, non-fraudulent payment systems which could be achieved through close coordination between telecom operators, banks, and governmental central banks. But the more significant need is that villages need a “point of presence” to help the unbanked become comfortable with mobile banking and to adopt new attitudes and skills that lead them towards accumulating savings, responsible use of credit, and small business skills. Government should rethink their total economic development strategies in light of mobile banking and the introduction of broadband into mobile banking systems.

Spiritual Computing: The second killer ap may surprise you: It is spiritual computing. It refers to mobile applications support the spiritual and religious values and rituals of users. Last year, Deputy Prime Minister Paiboon, one of the most respected Thai elders and proponents of local governance in Thailand, advocated the use of mobile technologies to further Buddhist observances and mindfulness. (See which refers to the use of new technology to deliberately strengthen spiritual and religious values that are very much tied to economic survival and well-being among low-income citizens. In Indonesia, one of Asia’s hottest technology markets for low-income citizens, Bakrie Telco quickly added four million users in the crowded Indonesian market by incorporating Arabic chanting and five times a day prayer alerts into the company’s cell phones for low income users. Users get messages and slogans sent to them every day to support 24/7 observance of ethical principles. In Europe, Ramadan web sites are flourishing in which users share the experience of the fasting month through social networking.

There are lots of other potential killer aps too. They online gaming and multimedia applications that bridge the gap between education and entertainment. Since the next billion users have less formal education, they don’t have the cognitive skills that allow them to benefit fully from text-based communications. Through multimedia applications being developed in laboratories at Stanford University and Massachusetts Institute for Technology, adults can easily and enjoyably learn literacy, or rapidly enhance their English language skills. As Thailand and other Southeast Asian economies build their hospitality industries, lack of English skills it a major detriment to wealth and employment. All this could change if mobile broadband would be meaningfully embraced by the countries’ leaders. It is time for leaders of business, government and academia to roll up their sleeves and find ways to share the risks and rewards of bringing low income users step by step into broadband.

In Thailand, the government’s ICT Ministry and most of the telecommunications operators are finally aligned on this top playing catch-up by finally embracing 3G, or “third generation” fast internet.

Killer Applications and Wireless Networks

Portable devices are incorporated with more and more functionalities, such as photo/video camera, video phone, SMS, PDA, music player, video player, Bluetooth and Wireless LAN. Communication Networks for cell phones evolve around the need for increased bandwidth and better support for internet connections. The Killer Application for these platforms has to be compelling enough that users crave ownership of the latest devices and subscribe to these services, thus driving the future development of mobile networks and Internet.

Examples of current for-profit services provided by network operators:

* Google Maps on iPhone 3G with GPS
* News and Weather SMS Subscription services
* Email, Skype, Live! Messenger (SMS forwarding).
* Electronic Banking and Money Management
* Movie Showtimes and Ticketing
* In Japan, cellular subscribers can "call" vending machines to purchase something and have the item billed to their accounts.