Global, Global Geopolitics, Headlines

COMMUNICATIONS: The South Picks Up the Mobile Phone

Gustavo Capdevila

GENEVA, Oct 13 2003 (IPS) - Every call made via mobile telephone in the developing world is encouraging for the information and communications technologies industry, headquartered in rich countries and floundering for more than three years.

The expansion of cellular phone services in the nations of the developing South, home to more than 500 million subscribers, has been practically the only good news recently for information and communications technology (ICT) firms.

In late 2002, the number of mobile telephone subscribers worldwide reached 1.155 billion, for the first time surpassing the number of fixed-line telephone subscribers, which numbered 1.129 billion.

However, more significant is that 46 percent of mobile phone subscribers live in developing countries, said Hamadoun Touré, director of the telecoms development bureau at the International Telecommunication Union (ITU).

"If you look at the trend of the markets and if you look at all the problems the industry has had, there is a real hope that the take-off will be coming from the developing world… if we do it right," said Touré.

The fragility of the ICT industry is evident this week in the exhibition halls of Telecom World 2003, an exposition of the sector’s technological advances, held here every four years in Geneva.

The industry’s troubles began in the first half of 2000, when stock market shares of high tech companies plummeted. On top of that came the financial scandals and bankruptcies of industry giants like WorldCom and Global Crossing.

The Sep. 11, 2001 terrorist attacks in the United States, the outbreak of SARS (Severe Acute Respiratory Syndrome), and the U.S.-led invasion of Iraq also contributed to the industry’s recession, according to calculations by experts at the ITU.

The effects began to be felt in 2001 with the slowdown in growth rates of new telephone subscriptions, an indicator that declined even further in 2002.

Nor are the figures for mobile phone services as satisfactory as the ITU experts present them. The number of new subscribers worldwide has been on the decline since 2001. It is the first time the growth rate has decreased since the cellular phone network was launched two decades ago.

Some ICT industry analysts attribute the trend reversal to supposed market saturation in rich countries. In 2002, the growth of fixed lines decreased in the industrialised North.

The reduction is attributed in part to the replacement of fixed lines for mobile phones, and to the decline in demand for second telephones as a result of the increased availability of broadband connections, which permit greater and faster traffic of data and communications via Internet.

But the expansion rate of Internet users has also slowed. After reaching 44 percent growth in 2000, it decreased to 26 percent in 2001 and 16 percent in 2002.

The stagnation of Internet connectivity in industrialised countries is due to the lack of interest of those who have not contracted the service.

In contrast, the developing world continues to suffer problems related to connection access and availability of resources, as well as the general population’s lack of practical knowledge of how to use the Internet.

Despite the bad news, the ICT industry remains profitable. Total revenues grew an average of 5.5 percent annually from 1999 to 2003 – "respectable for an industry in crisis," said Tim Kelly, head of the ITU strategy and policy unit.

ITU secretary-general Yoshio Utsumi said he thinks the industry is at a turning point and is attempting to understand what mistakes it made.

Today, the ICT industry faces intense competition, an erosion of prices, excess capacity and "is seeking a new direction," said Utsumi.

The Telecom World 2003 is somewhat of a showcase of these challenges.

Utsumi admitted that there are fewer exhibitors this year than there were in 1999. Among the "deserters" are some of the leading telecoms companies, such as Alcatel, Nokia and Ericsson.

The sector’s path for the next few years has been outlined by the ITU, an organisation with 189 member states and 650 representatives of the ICT industry, as well as other private operators and radio and television broadcasters.

The ITU chief says it is essential to identify the countries and technologies that can stimulate the industry’s growth. Among the technologies he mentioned broadband and wireless communications.

But ITU telecoms development expert Touré stressed the opportunities that emerging markets pose for the recovery of the ICT industry.

China, for example, is home to the world’s largest mobile phone market. This year, five million new subscribers have been added to the service each month.

"In August alone in Russia there were 1.6 new mobile subscribers," Touré said.

"Africa has had the highest mobile service growth of any region over the past five years," he added.

As of August 2001, Nigeria, Africa’s most populous nation, with 124 million inhabitants, had one of the lowest phone-per-person rates in the world.

But when the 15 government-issued licences for providing mobile telephony took effect, the figures changed dramatically.

By December 2001, Nigeria had approximately 400,000 mobile phone subscribers, catching up to the 540,000 fixed-line telephones that had been installed in that country over the past 40 years.

"In Gabon, the number of mobile subscribers is eight times the fixed-line subscribers. Cambodia was the first country in the world where, in 1999, mobile subscribers surpassed the fixed-line subscribers," he said.