Towards universal global mobile phone coverage

The global expansion of mobile telephony between 2003 and 2008 has brought unprecedented access to communications for consumers and businesses worldwide.

Most of the growth has taken place in the developing world and this trend is set to continue, with mobile phone usage expected to reach near universal levels of connectivity by 2015-2020.

Key points

  • Mobile telephony, which in 2000 was available primarily in developed economies, has achieved the status of a universal technology with 4.0 billion subscribers in 2008, from 1.4 billion in 2003. Mobile phones have by far overtaken fixed line telephones, which stood at 1.3 billion in 2008;
  • In 2008, more than two thirds of mobile phone users lived in the developing world. Eastern Europe and Latin America have reached mobile phone penetration levels similar to that of Western Europe and North America, while Asia Pacific and the Middle East and Africa still have large potential for expansion;
  • The expansion of the mobile market has benefited consumers who enjoy improved communications and connectivity for lower costs, and greater access to public and business services. Mobile costs remain high for consumers in some emerging economies, especially in sub-Saharan Africa;
  • Mobile telephony has brought dramatic improvements to business environments, especially in developing countries with poor fixed telephone infrastructure. Mobile phones increase transparency and availability of market data, boost productivity and facilitate trade;
  • Mobile telephony is set to expand further, primarily in Asia pacific and the Middle East and Africa. Most new mobile customers are likely to come from rural areas in developing countries. This creates opportunities for businesses to provide services to remote and previously inaccessible consumers.

World mobile coverage

The global spread of mobile phones has been spectacular. No other technology has narrowed the gap between the developed and the developing world so rapidly:

  • The world’s total number of mobile phone subscriptions rose from 1.4 billion in 2003 to 4.0 billion in 2008. The number of subscriptions per 100 people rose globally from ¬24.4 to 60.3 over the same period, and is expected to rise to 86.5 by 2015. From a luxury product used primarily in developed economies, mobile telephony has become universally available;
  • Most of the increase came from developing countries. The dominance of emerging economies in the mobile telephony market can be seen in the fact that in 2008, the BRIC countries (Brazil, Russia, India and China) made up four out of the top five countries in terms of mobile subscription numbers. China had the largest number of mobile subscriptions at 634 million, followed by India and the USA;
  • The gap between rich and poor countries in terms of mobile technology has been closing more quickly than other forms of information and communication technology. In Africa and the Middle East there were 43.3 mobile subscribers per 100 inhabitants in 2008, compared with 117.1 per 100 in Western Europe. However, the region had only 9.4 internet users per 100 inhabitants in the same year, compared with 60.4 per 100 in Western Europe.

One reason for the rapid expansion of mobile phones is their advantages over fixed telephone lines:

  • In much of the developing world, fixed telephone infrastructure is poor. In 2008, India had only 3.3 fixed telephone lines per 100 and Nigeria 0.9 lines per 100 inhabitants. Fixed telephone infrastructure is costly to set up, while wireless technology is cheaper to deploy;
  • In the developed world, fixed telephony is in decline as consumers adopt mobile phones as their main communication medium. Between 2003 and 2008 the number of fixed telephone lines declined by 17.7% in the USA and 5.7% in Western Europe;
  • Fixed telephone services in much of the developing world continued to be controlled by monopolies, which were slow to respond to consumer demand. In contrast, according to the World Bank, 90.0% of the mobile telephony market in developing countries was open to competition in 2007, and the sector was able to offer services that compensated for poor national telecom infrastructures.

The 2009 global economic crisis has affected the mobile telephony market but did not stop its growth:

  • Market data indicates that global shipments of mobile handsets declined sharply in the first half of 2009 year-on-year. Shipments improved in the third quarter of 2009 but remained 6.0% below the previous year. Yet according to UNCTAD, the number of mobile phone subscriptions has continued to grow during the recession.
Mobile phone subscriptions by region: 2003-2008
million subscriptions

Source: Euromonitor International from International Telecommunications Union/World Bank/Trade Sources. Note: Australasia’s level of subscriptions was too small to be shown in the chart.

Benefits for consumers and businesses

Mobile phones have become integral to the everyday life of consumers and businesses:

  • Consumers have benefited from better access to communications and falling costs. With the growth of the mobile telephony market and competition, the price of handsets and calls has reduced drastically between 2000 and 2008;
  • Mobile phones help to bridge regional divides between urban centres and rural peripheries, by providing consumers in remote areas with reliable access to information and vital services;
  • Nevertheless, many consumers in developing countries still cannot afford a mobile phone as the costs are high relative to their income. In 2008 mobile phone costs equalled 20.3% of per capita GNI in Cameroon, and 36.8% in Uganda, compared with 1.8% of GNI per capita in China according to the International Telecommunications Union (ITU);
  • The spread of mobile telephony greatly improves the business environment, especially in developing countries where fixed telephone infrastructure is inadequate. Efficient and reliable communication is key to improve access to market data, facilitate trade, lower the costs of doing business and save time;
  • The accumulative impact of mobile telephony helps to boost economic growth, especially in developing countries. The World Bank estimated in 2009 that for every 10 percentage points increase in mobile telephony subscription levels, economic growth increased by 0.8 percentage points in developing countries and by 0.6 percentage points in developed economies.

Mobile phones emerging markets

  • China and India, which had the largest numbers of mobile phone subscribers worldwide in 2008, are far from exhausting their potential as mobile phones have remained largely an urban phenomenon. In 2008 China had a penetration rate of 48.0 mobile subscriptions per 100 inhabitants and India a rate of 30.1 per 100;
Mobile phone subscriptions in millions and per 100 inhabitants in major markets: 2008
Million / per 100

Source: Euromonitor International from International Telecommunications Union/World Bank/Trade Sources.

  • Asia Pacific was the world’s largest market for mobile telephony in 2008, with 44.3% of global mobile subscriptions. Other countries with large populations and low mobile penetration include Vietnam, Pakistan and Bangladesh;
  • The Middle East and Africa saw the fastest growth of mobile phones between 2003 and 2008 of world regions yet the area remains the least developed, with 43.3 subscribers per 100 inhabitants in 2008. Mobile telephony is immensely attractive in sub-Saharan Africa because of the poor state of telecom and transport infrastructure. The development of low-cost handsets has been key to the rapid growth of mobile usage in Africa, and these models are set to remain the most popular in the region.
  • Russia, the world’s fourth largest market in terms of mobile subscriptions in 2008, had a penetration rate of 132.0 per 100, higher than in many developed countries. Other Eastern European economies such as Poland and the Czech Republic had similarly high penetration rates;
  • Brazil, the world’s fifth largest market in terms of subscriptions, reached a penetration rate of 78.5 per 100 in 2008, not far behind North America (86.5). The growth of mobile phone subscriptions is set to slow in emerging markets which have reached widespread mobile usage. Yet considerable opportunities exist for retailers and marketers to promote advanced models of handsets and to offer new mobile internet services to high-income consumers.

Prospects

With global access to mobile phones set to reach near-universal levels by 2015-2020, improved connectivity will create new opportunities for consumers and businesses:

  • The growth of mobile telephony is set to continue although at a slower rate, as a result of the 2009 global recession and market saturation in regions such as Western Europe, North America and Eastern Europe. Due to the economic crisis, consumers may prefer pay-as-you-go mobile telephones to fixed telephone lines or mobile packages with monthly rental costs;
  • Mobile phones are expected to reach near-universal penetration levels in major markets by 2020. The overwhelming share of growth between 2008 and 2020 will come from the developing world;
  • Once universal coverage is achieved, the mobile telephony market is expected to become more focussed on expanding services for mobile users. Experts expect mobile phones to become the primary device for accessing the internet by 2020;
  • The World Bank expects that virtually all new mobile customers will come from rural sectors in developing countries. The expansion creates huge opportunities for businesses providing services that will be able to reach millions of new low-income consumers. These services could include market information, financial services, education and health services that had largely been unavailable in those areas due to the lack of connectivity.