Nokia Siemens Networks

Affordable access: The first step to mass internet use in emerging markets

Internet access remains the preserve of the few in many emerging markets. Yet accessing the internet on a daily basis could become as common in these markets as it is elsewhere, provided that the right conditions are in place.

The internet promises untold benefits for billions of potential users in emerging markets. A recent World Bank Group reports says that for every 10 percentage-point increase in high speed Internet connections, there is an increase in economic growth of 1.3 percentage points. The report also identifies the mobile platform as the single most powerful way to reach and deliver public and private services to hundreds of millions of people in remote and rural areas across the developing world.

The internet can change the lives of people as much as the rapid spread of mobile voice communications is doing today, but first people must be able to reach the internet at a price level and with a tariff structure that matches their spending power. Only then will they see the benefits for themselves and invest time and money in developing their online skills.

There is an enormous opportunity here for businesses that successfully deploy affordable access to the mass populations of emerging markets. We are already seeing signs of the pent up demand. An April 2009 report from Pyramid Research predicts that mobile broadband adoption in Africa and the Middle East will grow faster than the global average over the next five years, with the subscriber total increasing at a CAGR of 33 percent to reach 32.2 million by 2014.

Yet success will take innovation – new technologies, novel business models, fair and consistent regulation and fresh marketing concepts.

From shared access to personal access

Shared access is already a well-proven and popular business with internet cafés catering for millions of users. By leveraging mobile technologies to provide personal access to the internet, we will see huge growth. The sheer volume of users will be profitable for communication service providers (CSPs) despite the lesser revenues that lower income users will generate. According to analysts Informa and Yankee group, 2009 will see the number of mobile broadband customers overtake fixed-line broadband users globally.

On the technology side, the latest low-power, flexible base station site and backhaul solutions are helping CSPs to build mobile network coverage with significantly lower capital and operational costs than has been possible before. Costs can be cut further by allowing the use of frequency bands that can provide highly cost-effective coverage.

New practices, such as network infrastructure sharing, also have a vital role to play. "Sharing is key to promoting ICT access at affordable prices in rural areas. Operators will automatically receive subsidies for the deployment and management of towers … as long as operators share the towers with three other operators or service providers," Nirpendra Misra, Chairman of the Telecommunication Regulatory Authority (TRAI), India, said recently.

On the business side, involving local communities and enthusiastic entrepreneurs in the running of rural mobile networks can bring down costs even further through better site security and by the outsourcing of much of network operations. Innovative funding arrangements could help CSPs to make the most of capital-intensive renewable energy developments.

Matching supply and demand

Ultimately, the success of any strategy for providing widespread internet access in emerging markets will depend on matching the services that are provided with the needs of consumers, both in terms of cost and in terms of providing the right information that people can use to improve their lives.

Nokia Siemens Networks is well placed to support CSPs as they address these opportunities. Our cost efficient Smart site solutions, for example, bring innovation to all aspects of the site, including site planning and design, base station and transmission equipment and the power system, especially considering the demanding situation in emerging markets. The result is a cost of network ownership for the CSP, which is in many cases market leading over a period of five years. Such a competitive total cost of ownership provides a strong technological basis for affordable access.

Supporting such advanced technologies is our consulting capability that helps meet the specific challenges of each CSP and focuses on creating the most cost-effective end-to-end solutions for shared and personal access. This capability is built on our extensive industry experience, especially on the circumstances and the demand in emerging markets, an area that we have been committed to for more than six years.

All the right conditions are in place today and there are already signs that the next wave of consumers will soon be joining the internet age. This will deliver enormous benefits and opportunities for them, for their communities and for the businesses that serve them.

Affordable access: The first step to mass internet use in emerging markets