Across the developing world, around 40% of people now actively subscribe to mobile services, with well over 50% having access to a mobile, if not direct ownership. Mobile access in these regions has outpaced the rate at which much of the population is gaining access to basic services such as electricity, sanitation and banking. As such, there has been increased focus on the invaluable role mobile can play in improving social, economic and environmental development in emerging markets and there are now over 1,000 live, mobile-enabled products and services in the developing world across several verticals, including financial services, health and entrepreneurship.
These ‘mobile for development’ (M4D) services have often been viewed as coming within the scope of the development community and/or mobile industry company CSR departments. Increasingly though, MNOs are incorporating these services as important components of their value-added services (VAS) portfolios in developing markets. This functions firstly as a contributing driver of future growth: as subscribers increasingly derive value from mobile, they find more ways to use it to support their lives. Secondly and more importantly, operators are seeing M4D VAS as enablers to forging positive, sticky relationships with previously unconnected, low-income subscribers. As the use of mobile data rises over the next three to five years, capturing the loyalty of these subscribers now will be key to solidifying the operators’ place in the data value chain in the future.
Scaling Mobile for Development, the latest GSMA Intelligence Mobile for Development Intelligence report, surveys the barriers to and opportunities for achieving commercial success and social impact through mobile. Key insights include:
General mobile market trends
- Network coverage is key: despite the rise in penetration, there is still a wide gap in coverage between urban and rural areas, with mobile penetration in urban areas up to double that of the rural population.
- Smartphones have grown, but are not the engines of growth:smartphones have grown to the point where we estimate just under 10% of people own one in the developing world, compared to virtually no take-up in 2007. This is dominated by low-cost Android devices (with Apple’s share very low relative to its presence in Europe and the US, and others such as BlackBerry more confined to specific countries) with several models now below $100. We expect growth to continue over the next five years, but mainly for mid- and higher-income segments.
- Democratising data: the real story is mobile data. Mobile can be and is being used as a gateway to the internet for many in the developing world. Mobile operators and internet players know this and are developing more innovative ways to get data into the hands of lower income segments on smartphones and feature phones, such as through hybrid data plans or even zero-cost mobile internet browsing. The recent internet.org collaboration between Facebook and partners, aiming to bring the next five billion online, is one demonstration of this.
Trends in Mobile for Development VAS
- Emergence of new business models: as new sectors in the M4D space have emerged since 2009, so too have new business models. Donor funding remains the most common model in mHealth, but others drawing revenue from consumers or business (e.g. using B2C, B2B and B2B2C) are used in the money, learning and entrepreneurship sectors in particular.
- Barriers to scaling VAS are multi-faceted: scale is driven by a number of factors related both to an organisation and the wider sector. Across the M4D sector, the most important are the presence of defined value chains, sustainable business models and market visibility.
- SMS remains dominant, but new technologies are emerging: 67% of M4D services use SMS as an access medium, its popularity having increased since 2009. However, the use of the mobile web and apps is on the rise as phone functionality develops on both smartphones and feature phones.
- The important distinctions between platforms, frameworks and bespoke services: Platforms (e.g. Linux, iOS, Android) are generic and can accommodate a range of applications or services. Frameworks (e.g. Fundamo, Frontline SMS) are less generic than platforms, but provide many re-usable tools for others to use in M4D services. Bespoke M4D services are the least generic and are generally designed for one sector in one country.
- Mobile money stands out: the mobile money sector has the most defined value chain, including a layer for vendors (e.g. Fundamo, Comviva) providing the underlying frameworks the services are built on.
- Entrepreneurial success = skills + acumen. Entrepreneurs are developing innovative VAS, but often lack the business acumen needed to secure the confidence of investors – including mobile operators – and to scale the product. New ways of supporting innovation are needed to bridge this gap.