Simon Beresford-Wylie is the CEO of Nokia Siemens Networks. Mr Beresford-Wylie, before becoming CEO of Nokia Siemens Networks, was Nokia’s Executive Vice President and General Manager for Networks. Mr Beresford-Wylie held several positions in Nokia Asia and Europe before his appointment to head Nokia’s infrastructure business group. Before joining Nokia, Mr Beresford-Wylie was CEO of Indian mobile operator Modi Telstra (Pte. Ltd). Prior to that, Mr Beresford-Wylie held various management positions within Telstra’s Corporate and Government Business Unit. Before entering the private sector, Mr Beresford-Wylie worked for Australian government agencies responsible for taxation and for industry policy. Simon Beresford-Wylie holds degrees in economic geography and history from the Australian National University, and is a graduate of the Executive Development Programme of Stanford University/National University of Singapore.
Over five billion people will have mobile phones by 2015. Most of the new subscribers will be in developing regions and 80 per cent will be low-income subscribers spending only US$3 per month for all their communication needs. Internet usage is also accelerating. Mobile broadband is the most efficient way to provide affordable voice and Internet connectivity in emerging markets. The challenge will be to create workable business models, regulations and solutions to practical barriers such as access to electricity in emerging markets.
In the time it takes you to read this article, we estimate that about 3,200 new people across the globe will be enjoying the benefits of connectivity: access to family, to friends, to education, to vital business information. This equates to more than five billion people connected by 2015, which is a dizzying growth rate by any standards. And all the more so in the emerging markets of Asia, Africa and Latin America where the majority of this growth will take place. This growth is, of course, a huge opportunity for the telecommunications industry, but it is an opportunity that comes with an important responsibility. We need to ensure that the incredibly fast growth in emerging markets is managed carefully and responsibly with the real needs of people being recognized and addressed. A deep knowledge of markets and an ability to think and act flexibly are required, because the needs and challenges that people have are often region or country specific. Creating innovative, tailored solutions means that operators connecting people have the ability to adopt relevant, workable business models enabling them to manage the change and capture the potential. It is easy to reflect on the growth of mobile connectivity in developed areas as a period of extraordinary technological change that has given birth to a new and dynamic industry. But another view shows an industry that is merely a complement to the wireline world that has been in development since the first telegraph. That view shows a long sequence of significant steps: telegraph, telephone, radio, fax, dial-up Internet, email, mobile, ADSL, 3G and beyond. For many people in emerging markets, their experience with connectivity began about 160 years after this 180-year development period began when many of their societies ‘jumped’ straight into the stage that made the most sense: mobile telephony. It seems likely that the next phases of this development process will be similarly accelerated. The first owners of mobile phones had to wait 20 years before the brick with a battery in a backpack they first used turned into a device the size and weight of a bar of chocolate that can play music, take photos and show them how to find their way home. But now wireless broadband has arrived and new consumers in emerging markets - without copper wire or PCs - understand its power and demand access. The services they use at first will be voice and text, but richer, multimedia services will follow. By mid-2008 China and India accounted for roughly 600 and 280 million mobile phone subscribers respectively and the growth rate in each dwarfs anything witnessed elsewhere. By 2015 when there will be over five billion people connected, through mobile, wireless broadband or fixed broadband communication services, 80 per cent of new connections will be in the world’s emerging markets and, therefore, primarily from lower income segments. In parallel to this development is the Internet phenomenon. Global Internet usage has grown from 50 million users in 2000 to an estimated 1.4 billion Internet users in June 2008, and that growth continues to accelerate. This growth is predominantly in new markets. There has been a massive 1,300 per cent growth in Internet traffic in the last seven years. The Asia Pacific region, for example, has the highest number of Internet users. The Middle East and Africa has had the highest Internet user growth at well over 900 per cent in seven years - although they have yet to make their presence felt in the content world; half of the world’s Internet pages originate in the US, while Africa accounts for just one per cent. While this growth looks incredible, the industry has long expected and, geared up for, this era of unprecedented transformation. And what we have been preparing for is the collision between these two growth paths. A truly connected world in which broadband will be everywhere, whether it be wireline or wireless. In this new world, applications will come predominantly from the Internet, and the Internet will have a profound impact on communications and people’s lives. In emerging markets, wireless broadband is the most efficient way, perhaps the only meaningful way in many places, to quickly narrow the digital divide and give everybody the benefits of useful connectivity. The industry’s biggest challenge in this revolution is to provide useful connectivity at an affordable price to improve the lives of people. In many emerging markets, daily income is about US$2 to US$3 a day and monthly income comes to about US$60. Our research shows that in new growth markets an average consumer might spend between five per cent and eight per cent of their monthly income for ICT, leaving service providers with a realistic target ARPU (average revenue per user) of about US$3 per month. These three dollars need to cover multiple uses: phone calls, Internet, and entertainment. There are considerable practical obstacles to overcome here. According to the GSMA more than 1.6 billion people live without electricity, and 2.6 billion people do not have access to any reliable power source. Connectivity solutions therefore need independent power sources that are affordable, reliable and easily delivered to the remotest places that might not even be served by roads. These challenges cannot be ignored. The incredible speed of growth poses other dilemmas, which are more ethical in nature and where large, global corporations also have their stake and responsibilities. ICTs have the unparalleled potential to decrease the global CO2 footprint of other industries, through the introduction of new efficiencies or by replacing travel with communication. Conversely, the footprint of the ICT industry will double with the anticipated expansion of connectivity by 2020. This means that when we expand connectivity, it is our responsibility to do it in a sustainable manner - from manufacturing, materials and product design through to end of life. Equally challenging are the areas of regulation and legislation. The responsibilities of global corporations extend far beyond their bottom lines. We must help promote and support policies that safeguard the local environment and guarantee safe and fair working conditions. At the same time, we must help devise a regulatory framework that creates the right conditions for useful connectivity. Clearly, it is not the role of industry to regulate and legislate, but we can and must promote best practice and influence how they are employed. These are all challenging hurdles, but our industry is exceptionally well positioned to improve lives. As our unique Connectivity Scorecard illustrates, establishing connectivity, and applying it usefully in governments, in business and for consumers can be instrumental in economic and social prosperity. So affordability, while critical, is not everything. In order to have services run successfully, the mix of affordability, access, competence and motivation needs to be considered - and that means understanding the consumer. Academics have already shown that investment in ICT by itself does not guarantee increased productivity and profits; changes in behaviour and investment in complementary skills and capital are also required. For businesses and governments, connectivity offers improved productivity. Connectivity brings consumers and society a wider range of choices, not just for entertainment and convenience, but also regarding access to government services and participation in civic life. We commissioned an innovative ‘scorecard’ to measure the contribution of connectivity to economic growth and positive social outcomes, and draw conclusions from the scores of individual countries. Each ranking, from the US at the top of the league of innovation-driven economies to the lowest resource-driven economy, offers opportunities for smart connectivity to improve access to information and communications, stimulate growth and productivity and stimulate economic activity. Smart connectivity requires new business models and innovative solutions to create new growth markets in developing regions. One such solution, bringing affordable voice and Internet connectivity to rural villages for the first time, is the Village Connection. Village Connection with Internet Kiosk provides a holistic solution which brings voice, SMS, and Internet access to rural locations previously not reached by the power of the Internet or mobile communications. It provides access to the Internet’s knowledge base and economic prospects to rural consumers using a shared access model similar to an urban Internet café. With the help of a franchise-based business model that is new in the telecoms sector, Village Connection turns the idea of rural coverage into a genuine business opportunity for an operator. The local village entrepreneur becomes an integral part of the operator’s distribution and marketing network, providing customer service within the village and possibly even running services such as a phone booth or Internet café. The latest example of innovation is the eCommerce solution that we have piloted in partnership with a local mobile operator in China’s Fujian province. eCommerce is an online shopping platform that provides an important link between rural consumers and urban businesses bringing a sustainable Internet business model to rural markets. It provides villagers with easy and affordable access to a wide range of consumer products, while opening up a vast market to urban retailers and product distributors. The pilot has shown that the use of ICT can improve the efficiency of a value chain, in this case a supply chain, and drive revenues of suppliers and entrepreneurial retailers. During the four-month trial, the entrepreneur who offered online shopping to the local community through the Commerce solution was able to generate about the same revenue as he was earning from his existing business, while providing a positive service to the community. Initiatives such as eCommerce and Village Connection are examples of the sort of approach that the industry must take in emerging markets. The gain from each of these small steps might be relatively low, but enough small steps are the equivalent of a leap and their collective impact can be extraordinary. Simply transferring technologies and services that make sense in Europe and North America to Africa and south Asia will not meet local needs and drive business. Usage cases need to be adapted step by step, to offer relevant, localized services and business models that respond to local cultural, economic and societal conditions. Only then will we have a world that is truly and usefully connected.