World Dialogue on Regulation

Closing market and access gaps which limit access to mobile telephony and signal coverage across the Latin American region (and elsewhere) increasingly is being posited as an undertaking well-suited to benefit from public-private partnerships. But clearly, the public and private sectors will come at the entrenched issues from different perspectives and with different proposals for remedies.

The GSM Association study, "Social Impact of Mobile Telephony in Latin America" thus was undertaken to: measure the social and economic impact that mobile telephony service has had on rural communities; and make proposals that assure sustained mobile coverage growth. For the study, a random sample of 800 mobile phone users in Argentina, Brazil, Colombia and Mexico were interviewed about their perceptions and use of mobile telephony. The actual survey questions and ranking/scoring methods are not included in the study report.

The study raises some important questions around social use such as perceptions on affordability, reduced travel, and the importance of different uses of mobile telephony, however, it is questionable as to whether 800 respondents is an adequate sample across the four countries. The LIRNEasia “Telecom Use on a Shoestring” surveys and the Regional Dialogue on the Information Society (Diálogo Regional sobre Sociedad de la Información – DIRSI) being undertaken in 2006-2007 use around 1000 as a minimum number for each country sample. Further, including potential users (who are still excluded from access) in the sample could reveal information useful for policymaking and project planning. Given the marketing budgets available to mobile telecom operators, it is difficult not to be just a little cynical about this exercise to get to know their consumer base better.

The study’s findings, if accurate, have significant policy implications. Among others, findings indicate that advantages offered by mobile and its inherent mobility mean that extending the mobile network is a better means of connectivity than public access solutions; there is no gender difference in use of mobile telephony; there is unsatisfied demand to increase contact with connections in the same community; there is a high incidence of mobile contact between students and teachers or their educational institution; perception of risk is reduced in emergencies and disasters with mobile services being used to solicit information or assistance. For economic activities, perceptions of positive impacts were also documented in terms of improving services, having better access to information and maintaining and developing new contacts.

In terms of limitations, there are the predictable findings that basic infrastructure simply does not reach far enough to cover all rural communities in Latin America, signals that do reach users outside of urban areas are often of decreased quality, and rural users have lower incomes and higher communication costs. Also, the study found that rural users lacked sophistication in their use of advanced mobile telephony functions (such as SMS and voice and data mail). Clearly advanced multiple mobile services will require some form of introduction and education for their full adoption.

This brings us to the second objective of the study – proposals for closing breaches from the operators' perspective, albeit in partnership with the public sector. “This collaboration can manifest itself in different policies that allow telecommunications operators to obtain economic incentives for network development” (p. 64). The industry self-presentation in terms of investment in LA mobile services is more clearly elaborated in the GSM Association / AHCIET's December 2005 study, “The Economic Impact of Mobile Services in Latin America.” This earlier study analyses the sector in terms of comparative investment in telecom by fixed versus mobile operators, and by private sector versus public sector, and also considers other performance factors, productivity gains and government tax revenues from the sector. The study asserts that mobile operators of Latin America have:

• Invested nearly $16 billion between 2002-2004;
• Invested significantly more in their networks than mobile operators in other regions of the world. Over the past five years they invested 28% of revenues compared to 13 to 18% in the EU or US;
• Invested significantly more, as a % of revenue, than the fixed operators of the region. In other parts of the world the investment levels are about the same;
• Invest 2.5% of total capital investment in the region, more than twice the amount they generate in terms of end user revenues (1.14% of GDP) (Economic Impact study: p. 5).

As shown in the recent World Bank / Regulatel New Models for Universal Access in Latin America report, universal access funds are indeed slow to be spent in the region.*

The recommendations from the GSM Association are centred around making the sector more attractive to deploy roll-out and attract investment, and envision regulation that protects these investments and footholds in the sector. Initiatives focussed on decreasing the cost of entrance to the service of lower income individuals, monitoring of infrastructure roll-out in rural areas, incorporation of local civil society and programs to increase knowledge about and take-up of new services will all contribute towards maximising mobile penetration.

An important note here is that the four countries chosen for analysis in the Social Impact study (Argentina, Brazil, Colombia and Mexico) all have significant market gaps.* This means that there is a strong likelihood that a good effort in extending the network can be achieved via solutions to make the market more attractive and viable. Further, as pointed out in another recent study (Smart Subsidies: Getting the conditions right [2006] Harsha de Silva & Ratna Kaji Tuladhar), experts have argued that it may be strategically important to first address market gaps and allow them time to take sufficiently in advance of, for example, offering subsidies to mitigate access gaps. For other rural and remote Latin American regions still mainly plagued by pernicious access gaps, more creative and commited solutions will need to be embarked upon to fully extend the network in the region. 

* WDR comments on the 2006 World Bank / Regulatel New Models for Universal Access in Latin America, include from the report: a table showing the (lack of) dispersion of universal access funds across the region; and a figure depicting different countries' mobile market and access gaps.

GSM Association - Latin America

Social Impact of Mobile Telephony in Latin America (pdf 1.52 MB)

Impacto Social de la Telefonia Movil en America Latina (pdf 1.12 MB)

The Economic Impact of Mobile Services in Latin America (1.72 MB)

El Impacto económico de los servicios móviles en América Latina (pdf 1.32 MB)

See also:

Sebastian Ureta's "Variations on the expenditure in communications in developing countries" study which considers expenditures on communication in relation to other household expenses and also as household incomes increase, yielding a much more definitive picture.

The LIRNEasia "Telecom Use on a Shoestring" household surveys investigate mobile use of the financially-constrained (a programme which is being expanded this year to cover surveys in six countries). This project area forms part of the LIRNEasia Measuring ICT Sector & Regulatory Performance initiative.

(2005) version: Telecom use on a Shoestring: a Study of Financially Constrained People in South Asia.

Towards an African E-Index: Understanding supply and demand by measuring ICT access and usage

Research ICT Africa report:
Towards an African e-Index: Household and Individual ICT Access across 10 African Countries

SME E-access and E-usage Index Survey

Research ICT Africa report:
Towards An African e-Index: SME e-Access and Usage in 14 African Countries