Scaling Mobile for Development: A developing world opportunity

Scaling Mobile for Development
A developing world opportunity

GSMA Mobile for Development Intelligence
With support from the Rockefeller Foundation

Interim report
April 2013

with support from

Overview
The mobile phone holds the power of ubiquity. Across the developing world, around 40% of people now actively
subscribe to mobile services. Including those with access to a mobile despite not owning one would push the
connected population to well over 50%. However, while access to core services such as banking, electricity and
sanitation is near universal in developed regions such as Europe and the United States, it is enjoyed by below 50%
in several developing regions.

This confluence underlines the opportunity held by Mobile for Development, which seeks to draw investment and
partnership to scale mobile-enabled services that can help to facilitate service delivery in the absence of traditional
modes of infrastructure that would otherwise do this. Indeed, Mobile for Development is a growing sector, with
well over 1,000 live services now tracked by the GSMA across the developing world in verticals such as
money, health, education and entrepreneurship. The problem is that while the sector has enjoyed continued
growth in the number of services over the last 5-7 years, scale and sustainability have generally not been achieved.

This work is designed to inform and add insight to help address this challenge. It has been developed by Mobile for
Development Intelligence with support from the Rockefeller Foundation. Our collaboration involves a research
process and production of an interim and final report in April and May 2013 respectively, with a series of
stakeholder workshops also held to drive thought leadership in this area. This being the interim report, we
overview and provide analysis on the barriers to scalability, while at the final report stage we will provide further
analysis and communicate recommendations to stakeholders on how these can be overcome.
with support from

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About us

Mobile for Development Intelligence is a freely available, online platform of mobile market and impact data, analysis
and access to an active community of practice in Mobile for Development. We believe that open access to high quality
data will improve business decision making, increase total investment from both the commercial mobile industry and
the development sector and accelerate economic, environmental and social impact from mobile solutions.

For more information, visit www.mobiledevelopmentintelligence.com

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Correspondence
For more information, please forward direct correspondence to:

Tim Hatt thatt@gsma.com
Corina Gardner cgardner@gsma.com
Adam Wills awills@gsma.com
Martin Harris mharris@gsma.com

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1. Market landscape: current and outlook 6
2. Impact of mobile on development sectors 35
3. Platforms, multiplicity, scalability and re-use 63
4. User-centric innovation 88
5. Appendix 111

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1. Market landscape: current and outlook
2. Impact of mobile on development sectors
3. Platforms, multiplicity, scalability and re-use
4. User-centric innovation
5. Appendix

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What you need to know
Key findings Key implications
Developing world is becoming connected at a rapid pace: nearly Harness the scale: while growth in the number of people using a
40% of people in the developing world now subscribe to mobile mobile will moderate over the next 5 years, we still expect 130
services, with subscribers having grown at over 10% a year since million new mobile services subscribers every year to 2017. This
2007. Taking into account people who have access to a mobile, means an increasing total addressable mobile for development
despite not owning one, would push the connected population to market, uniquely positioned to use the mobile as an alternative to
well over 50% traditional modes of service delivery
Bridging the coverage gap is multi pronged: to bridge the gap will
require both further network roll-out and alternative
Network coverage is key: despite the rise in penetration, there is
solutions, such as by using green power for rural base stations.
still a wide gap in coverage between urban and rural areas, with
There is also a role for GSMA in lobbying for benign regulatory
mobile penetration in urban areas up to double that of the rural
environments, and community power, which can be used both to
population
aid mobile connectivity and access to utilities such as water and
electricity
Smartphones have grown, but are not the engines of growth:
Featurephones and smartphones blur: it is increasingly important
smartphones have grown to the point where we estimate just
to consider the convergence in price and functionality between
under 10% of people own one in the developing world, compared
higher end featurephones and lower end smartphones. M4D
to virtually no take-up in 2007. This is dominated by low cost
service providers should be aware that as smartphone penetration
Android devices, which have steadily declined in price to below
rises, while this opens a more personalised experience, it carries
$100. We expect growth to continue over the next 5 years, but
trade-offs, such as lower build quality and battery life
mainly for mid and higher income segments
Mobile data is the common denominator: more people, including
Democratising data: mobile operators and internet players are
those at the low income end, will gain access to mobile data, either
developing more innovative ways to get data into the hands of
on featurephones or smartphones. M4D services can tap into a
lower income segments, such as through hybrid data plans or even
range of handsets and through a range of mediums (e.g. pre- 7
zero-cost mobile internet browsing

Mobile: the closest to ubiquity
• On an ownership basis, the mobile phone is the most widely owned communication device in the
developing world
• The PC is owned by a much smaller share of people, with tablets smaller still
• Access to a PC will be greater than ownership given device sharing, but the same is true of mobile, so the
gap is unlikely to change
Penetration of population (developing world)
50%

39%
40% 36%
33%
30% Mobile
30% 27%
24% Smartphone

20% PC

Tablet
10% 8%
5%5% 5%
2%3% 3%4%
1%2%0% 2%3% 1% 1% 2%
0% 0%
0%
2007 2008 2009 2010 2011 2012
Note: mobile is proportion of people that subscribe to mobile services
Source: GSMA-MDI estimates based on GSMA Wireless Intelligence, Strategy Analytics, Telegeography 8

Access to services
• While access to basic services such as electricity and sanitation is near universal in most developed
markets, it remains a minority in developing regions
• Mobile access – either through direct ownership or having access to a mobile in the household – is more
widespread, positioning it as a unique catalyst helping to increase access to these services

Western Europe Sub Saharan Africa*
100% >90% >90% >90% 100%
83%
80% 80% 65-70% Don’t own, but have access to
mobile in household (indicative)

60% 60% 15-20% Ownership

40% 40%

49%
20% 20%
26% 33% 31%

0% 0%
Mobile Financial Electricity Sanitation Mobile Financial Electricity Sanitation
services services

*Mobile and financial services includes select countries
Source: GSMA Wireless Intelligence, GSMA Mobile Money program, IEA, World Bank, GSMA-MDI Analysis 9

High growth economies, even higher in mobile
• There are now around 6 billion people living in the developing world, six times that of the developed
• Incomes remain much lower, but have grown at 5% a year over the last 4 years
• Mobile adoption has grown even faster, but still over half the developing world population is yet to own a
mobile, leaving a large opportunity for the mobile industry, and in turn presenting social and economic
opportunities in connecting low income segments (e.g. Mobile for Development sector)

Population GDP/capita ($) Growth, 2007-11*
7 60 15%
12.8%
5.9
6 50
41.8 10%
5
Thousand/year

40
4 4.9%
Billion

30 5% 3.2%
3
20
2 0%
1.1
1 10 4.1 -0.3%

0 0 -5%
Developing Developed Developing Developed Developing Developed
GDP/capita Mobile ownership

*Compound Annual Growth Rate. Population and GDP/capita are for 2011
Source: GSMA Wireless Intelligence, IMF, GSMA-MDI Analysis 10

Growth will come from the developing world
• Growth in active mobile subscribers in Active mobile subscriber growth
the developing world has been very 25%
strong the last 5 years at over 10% 20% 16%
15% 13% 12%
11%
10% 8% 8%
6% 5% 4% 3%
4% 4% 3%
5% 2% 2% 1% 1% 1% 1% 1%
0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Developed Developing
• Even though we expect growth to slow Humans that subscribe to mobile services
to 2017, this still translates into around 4
130 million new people subscribing to 2.8 2.9 3.0
3 2.5 2.7
mobile services every year in the 2.1 2.3
Billion

developing world 1.7 1.9
2 1.5
• By contrast, most mature markets have 0.8 0.8 0.8 0.9 0.9 0.9 0.9 0.9 0.9 0.9
1
reached saturation (something which will
happen in developing regions, but not 0
for several years) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Developed Developing

Source: GSMA Wireless Intelligence, GSMA-MDI Analysis
11

Penetration
• We draw an important distinction Developing world
between total penetration and active 140%
120% 110% Difference due
subscriber penetration 104% 107% to:
100% 94% 99%
86% - multi SIM
80%
80% 70% ownership
• Total penetration reflects all SIM cards 51%
60% - Inactive SIMs
60% 47%
(for mobiles, tablets etc), but also counts 41% 41% 43% 45% 46% - Other
40% 30% 33% 36% 39% connected
multi-SIM owners (common in the 24% 27%
devices (e.g.
20%
developing world to save money on calls) tablets,
0% dongles)
and some people who are registered but
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
are only very infrequent users of their
phone Developed world
Difference between
134%
140% 126% 129% 131% 132% developing and
118% 122%
• Active subscriber penetration reflects our 120% 108% 112% developed world
98% 104% due to:
estimate for the number of people who 100%
76% 77% 78% 78% 79% 79% 79% - Maturity of
80% 69% 72% 74% 75%
actively subscribe to mobile services market
60% - Ownership
40% barriers (e.g.
• This is a more representative measure in 20% income levels,
cultural factors)
market sizing Mobile for Development 0%
- Access vs.
– Reflects potential human user base of a 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 outright
service Total connections Active subscribers ownership

– Overlay population with access to a
mobile (relevant for some sectors such as Source: GSMA Wireless Intelligence, GSMA-MDI Analysis
mobile learning) 12

Regional view: soaring growth in India, Africa
• There is considerable variation in Active mobile subscriber penetration
100%
mobile penetration within the 74%
80% 68%
developing world, although 58% 60%
52%
60% 50% 48%
penetration has risen fairly evenly over 38% 42% 43% 41% 40%
33%
40% 25% 29% 29%
the last 5 years 13% 17%
20%
• Central/Eastern Europe is nearing
0%
maturity in penetration terms, while Central Latam East Middle East South Asia Africa
most other regions still have significant /Eastern Asia/Pacific
headroom Europe
2007 2012 2017 (f)

Active subscriber growth (5 year CAGR)
19%
• South Asia (e.g. India, Bangladesh, Sri 20%
16%
Lanka) and Africa are the highest 15% 11%
growth regions at close to 20% over 10%
10% 8% 9%
7%
the last 5 years, and we expect these 4% 4% 4%
5% 3%
regions to continue as growth leaders 2%
over the next 5 years, albeit at a slower 0%
pace Central Latam East Middle East South Asia Africa
/Eastern Asia/Pacific
Europe
2007-12 2012-17 (f)

Note: developing world only
Source: GSMA Wireless Intelligence, GSMA-MDI Analysis 13

Rise in the developing world
Mobile penetration
2007 2012 2017

Note: penetration is of active mobile subscribers (e.g. those who subscribe to mobile services)
Source: GSMA Wireless Intelligence, GSMA-MDI Analysis, Google Fusion 14

Urban/rural divide
• Large coverage gap Active subscriber penetration
– Cost of network roll out 100%
– Return on investment to mobile 80%
operator 62% 63%
60% Urban
40%
• Shared access brings several 40% 30% 32% Rural
20%
implications 20%
– Augments the M4D reachable audience
0%
– Latent demand for mobile ownership
South Africa Ghana India
– Virtual SIM technology (e.g. Movirtu)
• Multiple log ins on one phone, each
with a separate tariff (e.g. for Active subscriber penetration, South Africa
women who could not otherwise 100%
14% No access to phone
own a phone) 22%
• Mobile as a utility (for now) 80%
25%
Access to shared
– Design of M4D services (personalised 60% 39% phone in household
nature)
40% 50% Own basic or
– This form of access likely to continue in
rural markets in particular 20% 38% feature phone
12% Own smartphone
0% 1%
Urban Rural

Source: GSMA Wireless Intelligence, AMPS, Ghana Statistical Service, GSMA-MDI Analysis
15

Income divide
• We show here one estimate based on Active subscriber penetration, South Africa
data from South Africa

100%
• If these figures are accurate and 9%
22%
indicative of other countries, there are 29% No access to phone
80% 20%
interesting implications that arise

60% 37% Access to shared
• Little difference in penetration 34% phone in household
between incomes of below $850/year
up to $11,000 year ($2-$30/day) 40%
71% Own phone

20% 38% 41%
• Implies mobile seen more as utility
than luxury, even for those with little
disposable income 0%
Less than $850 $850 to More than
$11,000 $11,000
Annual household income (pre tax)

Source: AMPS, GSMA-MDI Analysis
16

User behaviours – what do people do on their phone?
Calls and texts (per month)
• In Africa, call minutes are generally 400
350 322
higher than texts (e.g. around 3-4 303
300
minutes per day vs. 1-2 SMS) 228
250 Call minutes made
200 and received
• There is also the use of other functions 150 120 116
SMS
100 67
using a mobile
50 20 13 19
– P2P money transfers
0
– Cash ins and outs using a mobile South Kenya Tanzania India Thailand Malaysia
account Africa

Other mobile transactions (per month)
• Text-based communication should be 10
seen beyond just SMS
8 P2P money transfers
– Social networking – e.g. 5% of African
population uses Facebook, but this 6
Airtime top ups using
goes up to 30% among those who use
4 mobile money
the internet
2.3 2.0 1.9 Cash outs using
– As people get even low end phones 2 0.8 mobile money
with basic data access, social networks 0.2 0.1
likely to become more popular mode of 0
communication on mobile East Africa Asia Pacific
Note: SMS data for India, Thailand, Malaysia not available for this report
Source: GSMA Wireless Intellignce, GSMA Mobile Money for the Unbanked 2011 Global
Mobile Money Adoption Survey, Internet World Stats 17

Prepaid and contract plans

Prepaid Contract

Term None Commit to minimum (e.g. 18, 24 months)

Minimum = contracted months x monthly tariff
Customer spend Limited by size of top up (often $5 or under)
Maximum = minimum + overage + other (e.g.
roaming)

Low income
Logistical (e.g. proximity to an airtime vendor) Lack of identity documents
Barriers to acquisition
SIM registration provides identity barrier Poor credit history
Lack of credit history

Lower customer lifetime value on airtime fees;
Higher customer lifetime value on airtime fees;
less willing to subsidise handsets
Mobile operator view more willing to subsidise handsets
Limited ownership of customer
Better knowledge/relationship of end users
Lower data/VAS uptake

Africa, Middle East, Latam, parts of Asia (e.g. North America, Western Europe, parts of Asia
Is the dominant structure in
China, India) (e.g. South Korea, Taiwan)
Source: GSMA-MDI Analysis
18

How do the mobile operators think about different markets?
Contract share of base

Digital pioneers

Connected players

Note: sphere size based on population
Fast growers

Discoverers Smartphone penetration
Challenges Strategic focus
Digital pioneers and
connected players • Intelligent networks • Service innovation
E. Asia, N. • Monetising network investment • 4G roll out • Revenue diversification
America, Nordics, Australasia, • Data explosion and network capacity
W. Europe • Stagnation of traditional revenue

Fast growers
Middle East, Latam, SE • 3G network roll outs
• Growth of users generally
Asia, E. • Low cost internet ecosystems
• Data take-up from low ARPU
Europe, Russia, China, • Strengthening customer engagement
• Low post-paid penetration
S. Africa
Discoverers
• Network deployment and coverage • Cost effective network coverage
Africa, S. Asia • Profitability with very low ARPU customers • Service innovation addressing local needs
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Source: GSMA, MDI Analysis

High growth, low spend
• Growth of the mobile sector in many Mobile vs. economic growth
developing countries is higher than in 20% 16%
14%
mature markets given their high 15% 11% 11%
9% Mobile
economic growth and continued rise in 10% 7%
4% 5% revenue
mobile penetration 5% 3% 2% 2%
1% 0%
0% Real GDP
-5%
-4%
-10%
Brazil China India Kenya US UK Italy

Mobile ARPU, $
• However, people spend much less on
60 10%
mobile in developing markets, as the 48
50 8%
vast majority of users are
40 32
prepay, making airtime costs a higher 6%
30 24
share of income (e.g. 2-3% on 4%
20 13
average, more for markets such as 10
5 2%
10 3
Kenya, compared to around 1% in
0 0%
developed markets)
Brazil China India Kenya US UK Italy
ARPU Share of income
• This ratio would be even higher among
the base of pyramid users Note: Figures are for 2011. ARPU is per month in US $
Source: GSMA Wireless Intelligence, IMF 20

Healthier competition helps prices
Mobile operator competition (HHI)

• There is a higher concentration of market share Rwanda
in developing relative to developed markets
Mexico
China
• However, this has mitigated in many
developing markets over the last few years Kenya
(the opposite has occurred in some notable South Africa
developed markets such as the US and UK)
Ghana
UK
• Lower concentration generally translates into a
HHI = sum of squared
more competitive marketplace, particularly by Indonesia subscriber market share
reducing prices Germany The greater the value, the
greater the concentration of
Brazil
• In combination with several other factors (e.g. market share (generally less
US competitive)
increased network coverage, lower handset
prices), this has helped drive an increase in India
mobile penetration in the developing world
0 2,000 4,000 6,000 8,000 10,000

• Key for governments to understand this 2007 2011
virtuous circle to promote healthy competition
Source: GSMA Wireless Intelligence, GSMA-MDI Analysis
21

Smartphones and featurephones
• We estimate still less than 10% of 100% Subscribe to mobile services (penetration of population)
people have a smartphone in the 80% 68%
77%
developing world (nearing 50% in 52%
60%
US/Europe) 43% 42% Smartphone
33% 29%
40%
Basic/feature
20%
• Smartphone penetration will phone
rise, but less for low income 0%
segments Central Latam Middle East Asia Africa South Asia US
/Eastern East /Pacific /Europe
Europe
• Regional variation, especially for
smartphones Subscribe to mobile services
1,000
840
– Higher in Latam
800
– Lower in Africa (where the
smartphone may serve more of a 600 496
Million

Smartphone
community role (e.g. community 312 355
400
health worker, agricultural co- 202 Basic/feature
op’s) for the time being 200 124 phone

0
• By sheer size, East Asia Central /Eastern Europe
Latam Middle East Asia/Pacific Africa
East South Asia
(dominated by China), Africa and
South Asian regions have the
most mobile subscribers Note: figures are estimated for 2012
Source: GSMA-MDI estimates based on GSMA Wireless Intelligence, Strategy Analytics 22

Outlook
Mobile in the developing world
47%
5 50%
39%
4 40%

Penetration
3.0
3 24% 2.3 30%
Billion

2 1.3 20%
1 10%
0 0%
2007 2012 2017
Active subscribers Penetration

Key influencing factors
Investment
1. Networks and coverage Coverage expansion (urban to
rural) Mobile penetration will continue to
inexorably rise, but…
Handset range
2. Handset utility and Handset price
access to data The shape and dynamics are more
Innovation in access to data fluid, particularly in terms of the
Subsidies impact on lives of the base of pyramid
versus the mass market
3. Income growth GDP growth
Growth in GDP per capita Source: GSMA-MDI Analysis
23

Networks and coverage: roll out so far
• 2G coverage is generally much more widespread than 3G in
developing markets (average 2G coverage is around 95% of
population, with 3G often below 70%) Network coverage, Kenya (Safaricom)
• 3G coverage is growing, but there remains a sizeable urban-
rural coverage gap due to roll out costs

3G network coverage
100%
3G coverage (population)

80%

60% Would rely on
network
expansion to
40% rural areas

20% India

0%
0% 20% 40% 60% 80% 100%
Population living in urban area Source: Safaricom , GSMA Wireless Intelligence, GSMA-MDI analysis
24

Networks and coverage: roll out to come
• Coverage will continue to increase, especially for 3G Network coverage - APAC

• But what does this really mean? 100%
90% 90%
85%
• Handsets can access data on 2G networks (via 80%
GPRS), but the capacity (e.g. number of people using
data) is less than 3G 60%
60%
50%
• For the Base of Pyramid and other lower income
segments, 2G coverage is sufficient to enable further 40%
rises in mobile penetration and even data use
20%
• 3G coverage is a leading factor for higher intensity
smartphone penetration (e.g. watching video) – in 2%
0%
other words, what people do on a phone, not
supporting whether they can own a phone 2G 3G 4G LTE
2011 2017 (f)

Source: Ericsson, GSMA-MDI Analysis
25

Networks and coverage: challenging economics in the pipeline?
Network costs of data traffic
• Mobile networks transfer data over radio
spectrum, while fixed broadband networks
transfer data via copper or fibre optic
• This means the data economics are more

Network cost per month
challenging using mobile
• Currently, this is not a problem because most
people in developing markets use
featurephones, which use less data than
smartphones, and much less than a home Average mobile
Average home
broadband connection data usage
broadband usage
• However, as more people use data that
networks have to absorb, the cost of data to
consumers may rise, with more stringent
usage caps also a possibility
• Usage caps are more likely to impact mid and
high end users, with price rises impacting 0 1 2 3 4 5 6 7 8 9 1011121314151617181920
mid and lower income segments Data traffic (GB)

Mobile Fixed broadband

Source: Enders Analysis, GSMA-MDI analysis
26

Networks and coverage: Green Power and alternatives
• Lack of reliable coverage in rural areas is Network sites on the electricity grid
partly because many network sites are off
the electricity grid Kenya 90%
10%

• For these areas, mobile operators can On grid
Tanzania 69%
either power sites using a diesel generator 31%
Off grid
or alternative means
Uganda 59%
41%
• Green Power increasingly used in sub
Saharan Africa (e.g. Kenya)
– Requires capex commitment from the Power solution for off grid sites
MNO, but is a cheaper power source than
diesel in the long run (ROI 2-3years) 28%
Kenya 60%
– Number of green sites steadily increasing 12% 24x7 DG
– Infill solution to increase rural coverage
31% DG-battery hybrid
Tanzania 65%
4%
• Smaller, but more limited, infill possibilities Green Power
include IP-based connections (e.g. Range 40%
Uganda 58%
Networks) 3%

Note: DG = diesel generator. Data as of September 2012
Source: GSMA Green Power for Mobile, Range Networks, GSMA-MDI Analysis
27

Networks and coverage: utility access through mobile
Potential impact on mobile ARPU for off-grid customers is 14%+

2. CPM from retail distribution network
• Leveraging extensive rural sales dealer/ retail network for distribution or sale of
1. Power from BTS infrastructure charging/ lighting devices through commercial partnerships
• (i) Outsource power solution to ESCo who sells • Examples: Fenix International and MTN Uganda, Nokero, Azuri Technologies
community energy services or
• (ii) Sell power from over-capacity of BTS power
equipment
• Examples: OMC Power, Desi Power, Applied
Solar Technologies (AST)

3. Power with payment technology
• Opportunity for micro e-payments: high
volumes of small payments for off-grid domestic
and small business energy
• Examples: m-Kopa, Mobisol

Source: Digicell, GSMA Mobile Enabled Community Services
28

Handsets and data: featurephones and Android
• Smartphones are still less than a third of handset Handset sales share
sales in most emerging markets, with 100%
Featurephone
featurephones (e.g. Nokia, Samsung models) 80%
29%
dominant Other
67%
60% 78% smartphone
24% BlackBerry
40%
• Android is by far the largest smartphone platform; iPhone
it now takes a quarter of all handset sales in Latin 20% 43%
America and nearly 15% in the Middle East and 24% Android
14%
0%
Africa
US MEA Latam

• Android has particular advantages for developers Handset ASP ($, wholesale)
compared to other platforms 700 605
600
– Lower cost devices in the ecosystem 500
– Larger audience 400 337 312
266 226 223
300 215
– Open source (more flexible) 200
65
100
0
• Convergence: Android with featurephones

Android
Note: ASP (Average Selling Price) and sales share for Q3 2012
Source: Strategy Analytics, company websites, GSMA-MDI Analysis 29

Handsets and data: smartphones blurring with featurephones

• There is now a convergence between
smartphones at the low end and featurephones iPhone 4S X100 (China) Nokia Asha 305
at the high end on price and functionality (smartphone) (smartphone) (featurephone)

• Important implications: OS iOS 5 Android 2.3 Series 40

– As prices fall, smartphones open to wider
audience, with potential for richer experience Screen Touch Touch Touch

– However, cheaper smartphones may compromise
on quality (e.g. build, battery power – Price ($,
>$500 $99 $60-90
problematic for rural areas) wholesale)

– In time, smartphone adoption will rise even
among lower income segments Camera (MP) 8 5 2

– Over short to medium term, featurephones likely
to remain the dominant handset type in most Processing
1,000 650 1,000
developing countries power (MHz)
• Reliable phones for voice calls and SMS
• Potential for enhanced experience using data
Note: prices indicative, as of January 2013
Source: Strategy Analytics, company websites, GSMA-MDI Analysis 30

Handsets and data: the subsidy divide
• The developing world accounts for a Global share of handset subsidies
majority of handset sales but a minority
of subsidy (portion of handset cost paid 100%
for by mobile operator)
80%
• This is because most people using a
mobile phone in the developing world do 60% 54%
so on a prepaid plan (which operators
43%
generally do not subsidise) 40%

22%
• The economics governing customer 20%
18%
13% 12% 13% 12%
lifetime value mean that this is unlikely 7%
3% 3%
to change over the next 2-3 years 0%
0%
North Western Asia Pacific Central and Central and Africa Middle
• This means that the mobile community America Europe Latin America Eastern East
Europe
(operators and others) are looking at
Handset sales Handset subsidy
new ways of enhancing the experience of
lower income users, such as through
innovative access to data

Note: data is for 2011
Source: Strategy Analytics, GSMA-MDI Analysis 31

Handsets and data: democratising data
Internet (OTT) players

• Google • Google Free Zone
• Opera Mini • Free internet access for Google search, Gmail, Google+.
Further browsing is charged
• Mozilla
• Trials in Philippines, South Africa, Indonesia from November
2012, full roll-out pending success of trials
Likelihood of using

Target audience Smart
phone
• Facebook Zero, Wikipedia Zero
data

Bubble size = penetration • Free access to these sites on mobile internet
Feature
phone
• Key implications:
Handset cost • Designed for basic and featurephones (e.g. majority of mobile
users in emerging markets)
Mobile operators • Data into the hands of lower income groups
• Content creation (see slide 31, ‘Implications for user
• Hybrid data plans engagement’)
- Prepay element: customer caps spend on data each
month
- Contract element: commitment term
- Avoids barriers to contract (e.g. proof of identity)
- Operators more willing to subsidise handsets
(featurephones or smartphones)

Source: Google, Opera Software, Facebook, Wikipedia, mobile operator websites, GSMA-MDI Analysis
32

Income growth
• The last 5 years have brought about 10% 9%
8% Income per capita growth (CAGR)
significant growth in the income per 5%5% 5%
4% 4%4%
capita in many emerging 5% 3% 3%
2% 2%
markets, while this has broadly 1% 2%

stagnated in developed countries 0%
0%
• We must caution the likely skew from -1%
higher income groups -5%

2007-12 2012-17 (f)

Base of Pyramid (under $2/day)
• The proportion of the population in the 100%
BoP has been falling (and will likely 77% 73% 76% 74%
80% 71% 69%
have continued falling since
2008), although there is significant 60% 52%
39%
regional variation 40% 33%
22%
• To the extent this decline 20%
17% 12%
continues, combined with declines in
0%
the cost of mobile ownership, this will
Latam East Asia/Pacific South Asia Africa
be an additional driver for mobile 2002 2006 2008
penetration and, in middle income
groups, upgrades to smartphones
Source: IMF (income per capita), World Bank (Base of Pyramid), GSMA-MDI Analysis
33

Implications for user engagement
Content creation on mobile Mobile
• As mobile penetration rises, we expect growth in ownership
user generated content to follow

• This is already being seen with mobile activity on
Wikipedia…
Growth in content
– Orange Kenya: 87% growth in mobile Wikipedia creation on mobile
page views in 4 months to October 2012, following
launch of Wikipedia Zero (growth for rest of Kenya
of -7%) Time
– Orange Niger: 77% growth on the same basis (6%
growth for the rest of Niger)
Growth in Opera Mini use in Africa
250% 216%
• …and Twitter 184%
200%
– 57% of tweets from Africa come from a mobile
150% Users
– Local content is key: 68% of twitter users get news
99%
through the platform, 22% search for jobs 100% 83% 83% Data usage
47% 41% 35%
50% 32% 30%
• …and high growth in use of the mobile version of
0%
the Opera Mini browser in Africa (mainly
featurephones) Ethiopia Ghana Kenya Nigeria South
Africa

Note: Opera Mini figures are for the 12 months to March 2012
Source: Opera Software, Wikimedia, Portland Communications, GSMA-MDI Analysis 34

1. Market landscape: current and outlook
2. Impact of mobile on development sectors
3. Platforms, multiplicity, scalability and re-use
4. User-centric innovation
5. Appendix

35

What you need to know
Key findings Key implications
M4D is growing: there are now over 800 live mobile-enabled
products and services in the developing world, with growth having The need for scale: while the number of M4D services continues to
accelerated over the last 3 years. There are also interesting rise, there remains a general lack of scale achieved (with some
geographic distributions: mobile money in exceptions, such as in the mobile money sector). The drive for
Africa, learning/education in Asia, with health and agriculture more impact must be balanced by the need for scale
balanced
Emergence of new business models: as new sectors in the M4D
Diversification likely to continue: while some sectors have
space have emerged since 2009, so too have new business models.
established clearly defined business models that are unlikely to
Donor funding remains the most common model in mHealth, but
change (e.g. mobile money, where mobile operators make money
others drawing revenue from consumers or business (e.g. using
on transaction volume), others are still evolving (e.g. an increasing
B2C, B2B and B2B2C) are used in the money, learning and
focus on B2B in the mobile entrepreneurship sector)
entrepreneurship sectors in particular
Balance basic functionality with growing data adoption: SMS likely
SMS remains dominant, but new technologies are emerging: 67% to remain a ubiquitous delivery medium given its ease of use, but
of M4D services use SMS as an access medium, its popularity M4D services designed to run via the mobile internet, through
having increased since 2009. USSD also remains popular, with the apps, or be hosted in the cloud are likely to increase, particularly in
use of the mobile web and apps on the rise sectors focused on interactive content and P2P (e.g. mLearning and
entrepreneurship)

36

Evolution
• Strong growth in the number of M4D services launched over the last 3 years

• Crucial to consider scale of each sector, not just the number of services or projects

Timeline of launches
250 1000

200 800

Cumulative launches
Launches per year

Entrepreneur
150 600
Learning
100 400 Agriculture
Health
50 200
Money

0 0
Pre 2005 2005 2006 2007 2008 2009 2010 2011
Note: figures based only on mobile-enabled products and services in developing world tracked by GSMA (including those merged/closed)
Excludes services in pipeline with an impending launch
Source: GSMA-MDI Analysis 37

Mobile for Development landscape
• We show below the geographical distribution of live M4D services in the developing world tracked by the
GSMA

• Mobile money has a concentration in Africa, learning and education in Asia, while health and agriculture
are more evenly split between these two regions

Live deployments
600

500

400 Central/Eastern Europe
Oceania
300
Africa
200 Latam
Asia
100

0
Money Health Agriculture Learning Entrepreneurship
Note: figures based only on mobile-enabled products and services in developing world tracked by GSMA
As of September 2012; excludes services in pipeline with an impending launch

Definitions for analysis and methodology
Our work so far…
Current GSMA resources Further research & definitions Analysis & initial findings

Over 800
M4D Findings
Augmenting research Analysis
services
tracked

Business model Device Delivery technology Enablers
•Where will the service •What type of device is the •What mobile delivery •What kind of products and
generate revenue from? service aimed at? technology will the service services are being offered?
utilise?
•Consumer •Basic phone (e.g., •Interactive content
•Donor •Feature phone (e.g., •Native Voice •Push content
•Business •Smart phone (e.g., •IVR •Payments
•Open Source •PC/ laptop •SMS •Peer to Peer
•Government •Tablet •USSD •Data Collection
•Advertising •Other •Text-to-Audio •Call Centre
•Web •Inventory management
•Apps
•WAP


Business model Product/service type
Consumer • Rolled out as a value added service (VAS) by an MNO

(MNO led)
• While it may not earn revenue from customer directly, VAS designed to
drive new customer uptake/ reduce customer churn.
Call Centre •Simple voice call to a trained human content provider

Consumer •Revenue generated directly by end user Interactive •Content based services that users can access by querying a
central database
(non MNO led) •e.g. subscription, one off mobile money payment
content •May be delivered via IVR, SMS, USSD, app, WAP, etc.

• Businesses targeted by service to generate revenue Peer to peer •Social networks and posting systems, users create and access
Business • Generally supports internal business processes (e.g. Inventory content
management), or core business services (e.g., recruitment)
content •Wide range of delivery mechanisms, even including voice

•Content pushed out (one way) via voice message or SMS
Advertising • Revenue generated from advertising delivered through service itself Push content •May be “broadcast” or “narrowcast” (customised by location /
user profile)

Data •Create customised surveys and send them to fieldworkers’
Government • Primary funding comes from government
mobiles
collection
Inventory •Supply chain management and stock ordering tools
Open Source • Service based around open source software/framework
• Value derived from external parties adopting service •Product security / validation tools
management

Donor •Primary funding comes from donor organisations, usually in a
lump sum grant Payments •Mobile wallets, payment gateways and a wide range of
payment based services


Spotlight: use cases of mobile by sector
Corporate & NGO
Financial inclusion Health Agriculture Learning Entrepreneurship
use
•Money transfer •Health education •Helplines for advice •Literacy and •Business advice •Prepaid airtime
•Airtime and prepaid and promotion and trading numeracy helplines vending systems
services •Reminders for assistance •Financial literacy •Job posting and •Surveying tools
•Bill payment patients to take •Broadcast and •Technology literacy trading platforms •Fieldworker
•Bank account medicines narrowcast advice •Language learning •Training and skills communications
management •Remote patient and weather development tools
•Workforce training
monitoring and updates •Store / SME •Crisis monitoring
•Micro-credit •Entrepreneurial
diagnosis •Crop insurance and management tools tools
•Micro-savings skills and career
•Healthcare micro- agricultural •Inventory ordering •Supply chain
•Micro-insurance development
payments financial services and management management tools
•Corporate •Job advice and
•Data collection •Fair trade tools •ICT training
payments connection
tools for health compliance tools resources for small
•Mobile commerce •Teacher training
workers •Weather organisations
•Social payments and support
•Health worker monitoring on base
stations •Classroom tools
training and
and resources
capacity building •Agricultural supply
•Medical supply chain management
chain optimisation tools
•Drug verification
•Specialised medical
devices

41

Device Delivery technology
•Basic telephony services, with voice delivered over a
Basic phone •Offers basic voice services (telephony/voice
mail), SMS and USSD based services.
Voice mobile network

•Interactive voice response, allows a computer to
Feature •Basic phone features plus…
•Internet enabled, supports transmission of picture
IVR interact with humans through & voice recognition
navigation and DTMF tones via keypad
phone messages downloading music, built-in camera

•Short Messaging Service, allows exchange of short
•Feature phone features plus… SMS text messages between mobile phone devices
Smart phone •graphical interfaces and touchscreen
capability, built-in Wi-Fi, and GPS (global positioning
system)
•Unstructured Supplementary Service Data. A
synchronous message service creating a real-time
USSD M2P connection allowing a two-way exchange of
data, mostly through menu structures
PC/laptop •Personal desktop computer, or laptop. Typically
running Windows, or maybe Linux OS.

•Computer or handset based service that generates
Text-to-Speech speech using text input
•Smart phone features plus…
Tablet •Larger screen, increased computing power, front
and rear facing cameras, extra ports (e.g., USB) •A system of interlinked hypertext documents
Web accessed via the Internet; also accessible via enabled
mobile devices

•A “catch all” for devices not included in the above
Other •E.g., modems, Personal digital assistance (PDA), etc. •a software application designed to run on mobile
Apps devices. (typically smartphones, and tablet
computers)

•Wireless Application Protocol for accessing
WAP information over mobile network. WAP browsers
typically found on older feature phones.


Spotlight: device and delivery technology
Phone type
Basic Feature Smart
Examples
Voice Interactive Voice Response (IVR) BBC WST Janala (Bangladesh)
Popular access technologies

SMS Manobi Agriculture (Senegal)

Messaging USSD HIV-911 (South Africa)

MMS Tata Telecom m-Krishi (India)

WAP mDhil (India)
Browsing
Web Kantoo English (Chile)

Embedded Nokia Life Tools (India, Indonesia)

Apps Java (J2ME) Esoko (Africa)

Android Infonet Biovision (Kenya)

43

Business model: shifting to consumer revenue
• Just under half of m- Business model of mobile services
services across all sectors 60%
45%
sell a product or service to 42%
40% 36%
consumers
• Donor-based funding 20% 13%
accounts for a similar 10%
5% 1%
share, but this is heavily 0%
skewed by the mHealth Consumer Donor Consumer Business Open sourceGovernment Advertising
sector (non MNO) (MNO)

How m-services are funded
100%
74%
• This has changed over the 80% 66% Launch year
last 3 years, with newer 60% 53%
Pre 2009
projects less reliant on 34%
40%
donor funding and more 25%
2009-12
on a consumer-based 20% 11%
business model 0%
Donor Consumer (non MNO) Non donor/government

Note: services often use more than one funding model, so percentages will add up to more than 100%

Scaling Mobile for Development: A developing world opportunity

Scaling Mobile for Development: A developing world opportunity

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