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Top 3 Reasons Why Emerging Markets Will Adopt Mobile Broadband

July 3, 2013 - 3 Comments

Howard Baldwin - Photograph

By Howard Baldwin, Contributing Columnist

Changing global demographics are going to boost mobile broadband adoption significantly, according to a recent presentation by Wally Swain, senior vice president of the network research group at Yankee Group. Swain not only leads the emerging markets team, he has a front-row seat to emerging markets from his office in Bogotá, Colombia.

In his presentation, entitled “Fixed and Mobile Broadband Compete and Cooperate in Emerging Markets,” Swain revealed some intriguing insights about where mobile broadband is headed: nowhere but up.

In established markets, he noted, operators tend to offer mobile broadband as a complement to fixed broadband. That begs the question regarding emerging markets – because there are smaller installations of fixed broadband, will mobile broadband become a substitute for fixed broadband? Swain believes that mobile will be favored in emerging markets because of three issues:

Demographics. “Younger people with lower salaries are more likely to have mobile broadband,” said Swain, citing Yankee Group research in the U.S. and Ofcom Communications Research in the UK (see graphic). The younger the respondent, the more likely they were to have mobile broadband. The poorer the respondent (represented by the bar labeled “DE”), the more likely they were to have mobile broadband. Those who rented their home were more likely to have mobile broadband.

All these characteristics are found in greater numbers in emerging markets, Swain argued. “Think about the demographics of emerging markets: they’re more likely to have consumers who are younger, more people at the bottom of the pyramid, and a lower level of home ownership.”


Service. Among those demographic characteristics, Swain added, there is less formal employment, and a lower level of usage of credit cards. That translates to a greater uptake in prepaid contracts. In contrast to ongoing contracts related to fixed broadband, prepaid contracts represent a big boon to lower socioeconomic populations.

On the subscriber side, they don’t have to wait for a telecom operator to install a fixed broadband line to their residence. On the operator side, they’re likely to boost offers for mobile wireless service through prepaid phones. “It costs telecom companies a lot to install broadband, which is why they want an ongoing contract” to support those costs, he says.

Rural Coverage. Operators can’t justify the cost of installing fixed broadband in rural areas. “Fixed broadband won’t work because subscriber density is too low,” says Swain. He sees the solution as increased government support. “There’s a strong impetus by governments to increase broadband penetration in rural areas. We’re seeing incentives to deal with what’s considered most difficult part of rolling out broadband into the hinterlands,” he adds.

Some governments are offering spectrum to operators at reduced rates, with the caveat that they must install better backhaul in rural areas in order to ultimately support mobile broadband.

There are still challenges to overcome. Much of what subscribers are consuming on mobile devices, no matter what their demographic category, is video – sports highlights, movie previews, YouTube clips. Video still isn’t highly viable over mobile broadband.

But global demographic trends point to one safe bet: telecom service providers are going to boost their efforts to serve mobile broadband demand among emerging markets.

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  1. @Tom, thank you for taking the time to share your perspective. Understood, regarding the employment prospects for some segments of the American youth. I have family in the UK and they tell me that it's hard for many young adults to get their first full-time job. Perhaps marketable skills are much more important than geography, within today's global networked economy.

    • Thanks David, Interesting about your relatives in UK. What I find fascinating in the developed economies is that the problem is affordable backhaul (serving cell sites of any size) is the big challenge. We hear about one planned fiber rollout after another, be it (now-cancelled) FiOS in America, NBN in AUS or whatever the latest one is planned in the UK. Even 'Corning lover' the ITU is reporting that people don't want a wire, cable, fiber, etc to their house or even business. They want wireless access. But even fiber is too expensive for more than 30% of the network footprint (Ivan Seidenberg, VZ, interviewed on Charlie Rose TV show 2011). With 4G as the coming wave it will be small cells that dominate and while the *distribution points* for those small cells will need powerful backhaul (multi-Gbps)and those will be measured in kms, the small cell backhaul market is something *high school students* can build, deploy and manage. In fact our firm launched the first and only STEM program that teaches students how to build 1Gbps wireless (continuous wave) laser-based small cell backhaul systems and deploy them to make excellent income. Laser needs no wireless spectrum licensing and no delays or million-dollar trenches that fiber requires. Talk about prospects, they can buy the parts off the shelf, deploy in the most developed economies, where the market is defined as 80% of US businesses are less than 1 mile from the POP and *don't have broadband*. This is a market with $2 trillion in the bank looking for a compelling reason to spend it...which they haven't and where they *know* the value of broadband access but can't afford a fiber trench. It's called the Lasercomm STEM(TM) program and launched last year in NY public high schools. Welcome working with Cisco to roll it out in more. Cheers

  2. Great blog article. I think it's good to watch emerging markets but it's often at the expense of watching developed markets. The statistics regarding the young being economically restricted in emerging markets is just as true in the United States for example. 50% of all high school students aren't even applying for their driver's licenses. And while they have more disposable income versus the rest of the world, less and less does schooling almost of any kind translate into their viability in the job market -- meaning they're facing many of the same challenges as the youth in emerging markets. Lower the cost of capacity in the US and EU and the cash the young (and others) do have will have a greater chance of flowing towards the network. And while that might sound opportunistic, these young are educating themselves via broadband, following the more Markovian approach of self education by following their interests. So making it less expensive for them to be online will also provide all the benefits that will come from their own unrestricted online inquiry -- read: being viable wage earners. Cheers.