UMTS 2000 daily - 12th October 2000, Barcelona, Spain.  Re-produced with kind permission from Mobile Communications International.

by Alan Hadden, President, GSA

Many are looking to wireless technologies to bridge the 'digital divide'

At its Okinawa summit in July 2000, the G8 group of countries established the Digital Opportunity Task Force - DOTForce - to identify how the seven leading industrial nations and Russia can help developing nations take advantage of information technology and the Internet. The Global mobile Suppliers Association believes that third generation mobile technology has a major role to play in closing the 'digital divide'.

According to the International Telecommunication Union, across sub-Saharan Africa there are currently only two fixed telephones for every 100 people, India has 2.6 while the Asia Pacific region as a whole has just 6.6 telephone lines per hundred population. By contrast, the European Union averages 53.8 and the United States 64.4. While 'unbundling' the local loop is currently the pre-occupation of European regulators seeking to increase competition, the characteristic that unites many developing nations is that they do not yet have enough local loop to unbundle.

DOTForce's priority should therefore be to help developing nations create the conditions conducive to accelerating the roll out of their telecommunications infrastructures. A big advantage developing nations have today is that they have the opportunity to leapfrog the laborious process of laying copper; with wireless technologies they can roll out far more than a basic telecommunications infrastructure and more quickly than was ever possible in the days of fixed local loops.

In the majority of developing countries, the foundation stones are already being laid in the form of GSM networks. In Africa, 51 networks were on air at the end of June 2000, while 113 were in service across Asia.

The success of GSM has been due in no small part to its status as an open standard available to any country. This market opportunity has attracted numerous equipment suppliers to the technology that, in turn, has allowed operators to benefit from competitive procurement and 'off the-shelf' availability. In a global market for GSM infrastructure and terminals, economies of scale have driven down prices and underpinned further growth in a virtuous cycle. Its unique international roaming capability has also created an additional valuable revenue stream that has been a significant factor in GSM's adoption in developing nations.

The evolution of GSM networks through HSCSD and GPRS to WCDMA-based 3G technologies could rapidly add a new dimension to the economies of the world's developing nations. With Japan already committed to WCDMA and likely Korean operators also expressing a preference for the GSM-derived 3G standard, even greater economies of scale will improve the 'affordability' of this new technology in the developing world.

The agreement reached on 3G spectrum allocations at this year's World Radio Communications Conference in Turkey could also have positive repercussions for developing nations. The addition of the 806-960 MHz band currently used by GSM 900 opens the way for the economic extension of 3G services to less densely populated regions in the future.

Some sections of the media have glibly summarised DOTForce's mission as being to increase the penetration of personal computers in developing nations. However, in endeavouring to spread the economic benefits of the information society, the industrialised nations should not assume that the western model of the Internet will be equally appropriate to the developing nations. In countries where electricity supply may be in need of as much development as the telecommunications infrastructure, the PC may well be irrelevant.

Yet the phenomenal success of i-mode in Japan clearly demonstrates that mobile terminals can become the primary means of accessing the Internet. Even in industrialised countries it is now generally accepted that mobile access to the Internet will overtake PC and fixed access within a couple of years. As this happens, competition between suppliers and economies of scale will drive down mobile terminal costs worldwide. In the less well-developed economies, the types of services that will add value to the lives of customers will inevitably be different to those in the West at least initially. However, the Japanese experience shows that relevant services can be created for use with relatively inexpensive, compact, energy efficient mobile terminals.

So what are the essential ingredients for developing nations to exploit 3G?

Firstly, governments should recognise that the economic benefit from introducing mobile communications should not be measured solely n terms of the industry's ability to generate tax revenues or licence fees. Improving the flow of information about the availability of all goods and services in the economy stimulates economic activity generally. Supplementing traditional voice services with access to the Internet moves the flow of information on to a whole new plane.

Telecommunications deregulation in Europe, North America and elsewhere has demonstrated that the private sector is willing to invest in the national infrastructure given the right environment. In the last 20 years many major international operators have emerged which are actively looking to extend their investments around the world. All nations compete for inward investment.

An ambitious yet enlightened telecommunications policy could be rewarded with disproportionately larger benefit to the economy as a whole compared with a more restrictive policy in a richer country elsewhere. DOTForce can help developing nations create telecommunications policies and regulatory environments to maximise the size of their local markets and thereby maximise their appeal to inward investors.

Secondly, while G8 governments may not see it as their role to provide direct financial aid to fund network roll-out, they do have the capacity to encourage their internationally-oriented operators and infrastructure suppliers to invest in developing nations through their domestic corporation tax policies. Although treasuries are traditionally loath to relinquish revenues, a longer-term perspective from G8 governments could reap dividends in the future through increased economic growth globally.

Wireless technologies have enormous potential for closing the digital divide between rich and poor nations. 3G technologies in particular offer a unique opportunity to help developing nations catch up by leapfrogging traditional fixed networks. GSM suppliers are in a position to help DOTForce make the benefits of the information society more widely available.

Further information about the GSA