GSMA Mobile Economy 2013

The GSMA represents the interests of mobile operators
worldwide. Spanning more than 220 countries,
the GSMA unites nearly 800 of the world’s mobile
operators with more than 230 companies in the
broader mobile ecosystem , including handset makers,
software companies, equipment providers and Internet
companies, as well as organisations in industry sectors
such as financial services, healthcare, media, transport
and utilities. The GSMA also produces industry-leading
events such as the Mobile World Congress and Mobile
Asia Expo.
For more information,
please visit the GSMA corporate website
at www.gsma.com
or Mobile World Live, the online portal for the
mobile communications industry,
at www.mobileworldlive.com

A.T. Kearney is a global team of forward-thinking,
collaborative partners that delivers immediate,
meaningful results and long-term transformative
advantage to clients. Since 1926, we have been
trusted advisors on CEO-agenda issues to the
world’s leading organisations across all major
industries and sectors. A.T. Kearney’s offices are
located in major business centres in 39 countries.
The firm’s telecoms practice works with the senior
management teams of fixed line, mobile, cable and
satellite operators as well as vendors on their most
important strategic and operational challenges.
A.T. Kearney
Lansdowne House, Berkeley Square
London W1J 6ER
United Kingdom
www.atkearney.com

CONTENTS
1

Executive Summary

2 Global Market Introduction
2.1 Mobile Proliferation Around the World
2.2 Regional Differences in Growth
2.3 Data is the Driving Force of Growth

3 A Vibrant and Evolving Industry
3.1 Mobile Network Operators
3.1.1 Developing a Strong Value Proposition outside of Non-core Services and Products
3.1.2 Developing Collaboration Models with Other Ecosystem Players
3.1.3 Mobile Operators Co-operating to Develop Common Standards
3.2 Original Equipment Manufacturers
3.3 Infrastructure Development
3.4 Content
3.5 OS Platforms

4 The Mobile Ecosystem’s Substantial
Socio-Economic Contribution
4.1 Mobile Operators Make a Significant Contribution to Global GDP
4.2 The Mobile Ecosystem Benefits the Global Economy
4.3 The Mobile Sector’s Contribution to Employment
4.4 The Mobile Sector’s Contribution to Public Funding
4.5 The Mobile Sector’s Contribution to Productivity Improvement

5 An Industry Supporting and Protecting Citizens
5.1 Protecting and Empowering our Society
5.2 Delivering Trusted Services
5.3 Aiding Disaster Management
5.4 Protecting the Environment

6 Global Enablers to Spur Further Investment
and Growth in the Mobile Industry
6.1 Spectrum Measures to Grow the Mobile Industry
6.2 Avoiding Unnecessary Restrictions on Network Management
6.3 Enabling Effective Competition through Market Consolidation
6.4 Supporting Innovation with a Common Position on IPR
6.5 The Importance of Best Practice Taxation

7 Glossary
8 Appendix – Definition of Regions
9 Appendix – Report Methodology

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THE MOBILE ECONOMY 2013

Executive Summary
Almost half the population of the earth now uses mobile communications.
A billion mobile subscribers were added in the last 4 years to leave the total standing
at 3.2 billion. There are still many adults and young people who would appreciate
the social and economic benefits of mobile technology but are unable to access it,
highlighting a huge opportunity for future growth and a challenge to all players in the
industry ecosystem to expand the scope of products and services to tap this demand.
Given the strong growth trajectory and pace of innovation, we are confident that
the next few years will see continued growth with a further 700 million subscribers
expected to be added by 2017 and the 4 billion mark to be passed in 2018.

Total Subscribers

CAGR 2012-2017

Bn

4.2%
CAGR 2008-2012

8.3%
2.335

2.556

2.789

3.014

3.212

3.402 3.564

1.1%

3.940
3.705 3.829

POPULATION
CAGR 2012-2017

Other Countries
Middle East
CIS
North America
Latin America
Africa
Europe

Source: GSMA Wireless Intelligence

2

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific


This growth is mirrored by strong mobile connections growth, to almost 7 billion
connections in 2012, as many consumers have multiple devices or use multiple SIMs to
access the best tariffs, while firms in many industry sectors roll out M2M applications to
boost their own productivity and tap into new markets. Despite challenging economic
headwinds in many regions, the market is expected to grow even more strongly on the
dimension of connections over the next five years, with 3 billion additional connections
expected to be added between 2012 and 2017, a growth rate of 7.6% p.a.

Total SIM-Enabled
Connections

CAGR 2012-2017

7.6%

Bn, including M2M connections

CAGR 2008-2012

13.7%
4.050

4.705

5.474

6.176 6.766

7.424

8.053

8.643

9.204 9.741

Other Countries
Middle East
CIS
North America
Latin America
Africa
Europe

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Asia Pacific

0%

1%

2%

2%

3%

4%

6%

8%

10%

13%

% M2M connections

Source: A.T. Kearney, GSMA Wireless Intelligence, Machina Research

3


Underpinning growth in the headline numbers is a diverse
set of market conditions:
• Emerging markets are the major engines of mobile connection
and subscriber growth – in particular Asia Pacific will add nearly
half of all new connections between now and 2017 (1.4 billion)
and will remain at just under 50% of both global connections and
subscribers. Latin America and Africa combined will add the next
20%, representing 595 million new connections.
• Developed markets’ connection and subscriber growth is
slowing, but M2M is set to grow – subscriber numbers are forecast
to grow at just 1% p.a. between now and 2017 in Europe and North
America due to market maturity. However, total connections
will grow at 9% and 10% p.a. respectively – faster than in
emerging markets – due to strong M2M connections growth (1.2
billion connected devices by 2017 according to GSMA Wireless
Intelligence).
Mobile is a vibrant and evolving industry at the heart of
everyday life for a growing proportion of the world’s population.
Network operators are continuing to develop strong value
propositions to deliver new and innovative services to users. As
technology continues to evolve, so the mobile ecosystem has built
new business models to deliver new services in communications
and adjacent services. Mobile remains a vibrant and evolving
industry constantly finding new ways to inter-connect the
user’s world in spheres such as automotive, utilities, health and
education, and new ways to manage financial transactions.

Connected living has become a reality for hundreds of millions of
people who cannot imagine life before the smartphone and the
mobile broadband connection.
Consequently, mobile data continues to drive rapid traffic
growth for mobile operators with all regions showing impressive
data volume growth rates as more and more people connect to the
internet via mobile. In emerging markets, growth will be driven
by the increased penetration of smartphones, while in developed
markets it will be driven by both greater smartphone adoption
and increased download speeds made possible by new technology
such as 4G. In fact total traffic volumes in 2012 alone exceed all the
previous years combined and globally data is projected to grow by
66% p.a. through 2017 to 11.2 Exabytes per month – equivalent to
more than 5 billion hours of HD video1.
The mobile internet is at the heart of a dynamic ecosystem of
innovation reaching beyond operators. Device manufacturers,
including the operating system (OS) developers, are driving
innovation through the race to differentiate themselves and
make smartphones faster, lighter and more intuitive to use.
Network infrastructure vendors are responding to the demand
for efficiencies as they seek to support the network demands of
tomorrow at lower price points. Content providers are harnessing
new hardware and software innovations and the growth of
developer communities to deliver their own innovative services
and products to the consumer over mobile access.

MNO REVENUES

CAGR 2012-2017

US$ Bn

CAGR 2008-2012

4.2%
851

889

958

2.3%
1,107 1,124
1,034 1,062 1,085
984 1,002

Other Countries
CIS
Africa
Middle East
Latin America
North America
Europe

Source: A.T. Kearney, EIU, Gartner, GSMA Wireless Intelligence, IDC, Wireless Matrix

1.

4

Based on one hour of HD video using 2GB of data.

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific


Given this dynamism, it is no surprise that the mobile industry
makes a substantial economic contribution, with mobile
operators alone expected to contribute 1.4% to global GDP in 2012
and their revenues expected to grow at a robust 2.3% p.a. to reach
US$1.1 trillion by 2017. When the rest of the mobile ecosystem is
included, total revenues are forecast by A.T. Kearney to reach US$2
trillion in 2017, which represents an annual growth rate of 4.7%.
In support of the growth in capacity and the level of innovation,
the mobile ecosystem will increase its level of annual capital
expenditure by just under 4% per annum from 2012 to 2017 to
US$238 billion.
Mobile infrastructure is now as important to a country’s
economy as its energy grid or transportation network – it is a
key enabling infrastructure that drives and supports growth in the
wider economy. The high level of investment is needed to continue
the development of this infrastructure so that capacity can be built
to meet the ever growing demand and so that new services can be
launched which bring greater benefits to the wider economy.
The growth in revenues for network operators lags growth in
usage because of continued price declines. Average Revenue
Per User (APRU) rates have declined across every region
globally, by 8% p.a. from US$19 to US$14 per month, with

the biggest reductions seen in Africa (-10% p.a.) and Europe
(-7% p.a.), indicating that average mobile tariff prices have
been decreasing due to price pressures, the growth of
multi-SIM users (with a second SIM on a lower tariff) and the
fact that many new users are able to gain access at lower
price points. If ARPS (Average Revenue per Subscriber) is
considered, the downward trend is less pronounced (at -4%
p.a.), as this measure strips out the effects of multi-SIM and
M2M. The positive aspect here is increasing value for money
for consumers, but the worrying outlook is the margin
pressure on network operators at a time when investment
needs are growing and many of them are also diverting a
substantial portion of their revenues towards subsidising the
purchase of popular smartphones to promote adoption.
The mobile industry has always made a significant contribution
to public funding. By 2017, its contribution to public funding

is projected to be US$550 billion – as a result of spectrum
fees as well as direct and indirect taxes. It is important that
this level of financial commitment should be structured in a
fair and predictable manner, in order to protect growth and
employment – for instance the industry already supports
8.5 million jobs today and growth is expected in emerging
markets to create an additional 1.3 million jobs by 2017.
The mobile industry is working to support and protect citizens.

From empowering women or protecting the vulnerable
to helping responses to natural and man-made disasters,
mobile phones have significant potential to change the
lives of millions. But with any new technology comes new

risks and the whole mobile ecosystem is collaborating to
reduce risks to users such as handset theft, mobile fraud and
breach of privacy. Mobile operators are also playing their
part to work to reduce their impact on the environment
and have the potential to make a net positive impact on
greenhouse gas emissions – with the potential to enable
emission savings in 2020 more than 11 times greater than
their own anticipated mobile network emissions. Across all
of these areas, the GSMA is leading the drive to implement
innovative new services and implement robust protective
measures through the sharing of best practices and by
encouraging inter and intra-industry co-operation.
In preparing these forecasts for the years to 2017, we have
made a series of assumptions about the environment in which
the mobile ecosystem operates. A transparent, consultative and
predictable regulatory environment is essential for securing
investment that the mobile industry requires to deliver

a stable infrastructure for commerce, new technologies
and innovations to the consumer. Without confidence in
future regulation - from spectrum licencing through to
competition, taxation and intellectual property laws - it may
not be possible to raise the investment required to develop
and implement the next generations of mobile technology.
A competitive industry is a vibrant and innovative industry.

A trade-off exists between increased competition and the
leveraging of economies of scale to reduce duplication
of infrastructure – consolidation being a natural next
step in maturing industries that require high levels of
capital investment. Finding the right regulatory balance
and allowing increased cross-border consolidation
within fragmented markets is key to the future healthy
development of the mobile industry.
Planning for future growth cannot be delayed. New
technologies and coding algorithms will be able to squeeze
ever greater capacity out of existing mobile spectrum – the
fundamental building block of any mobile network – but
this limited resource cannot be relied on to support future
growth indefinitely. Additional spectrum – such as that
presented by the Digital Dividend – needs to be released
to mobile and carefully managed, with its usage planned
up to 10 years in advance to ensure that sufficient capacity
is available and deployed efficiently to meet future
demands. With a policy environment supporting the
ecosystem and spurring continued innovation and
investment, prospects for the industry, its consumers
and the wider economy remain strong.

5

GLOBAL
MARKET
Global Connections

6.8bn

9.7bn

7.6%

2012 2017 CAGR

Mobile Broadband Growth

1.6bn
CONNECTIONS

26%

5.1bn

CAGR

CONNECTIONS

2012 2017

Global Subscribers
2012

3.2bn

4.2%
3.9bn CAGR

Subscribers in 2012

2017

Subscribers in 2017

POPULATION

SUBSCRIBERS

Subscribers are growing 4 times
faster than global population

LTE Growth

2012

62 Million

2017

920 Million

LTE/4G networks will
account for 1 in 5
Mobile Broadband
subscriptions by 2017
(versus 1 in 25 in 2012)

Voice Minutes

5.8m 9.5m

2008

2012

SMS Messages

13%
CAGR

7.5tn

2.8tn
2008

28%
CAGR

2012

Mobile Data Volumes

66%

CAGR

2012
2017

0.9 EXABYTES
PER MONTH

11.2 EXABYTES
per month

2012 has seen more
mobile traffic than all
the preceding years
combined

1 Exabyte = 1bn Gigabytes

Minutes per day

25

16

14

12

11

10

9

9

3

MUSIC

GAMES

MAKING CALLS

EMAILS

SMS

VIDEO

BOOKS

PHOTOGRAPHY

46m

Active monthly
mobile users

17
SOCIAL

30m

Active monthly
mobile users

120m

Active monthly
mobile users

Linkedin

Foursquare

Active monthly
mobile users

The advent of the smartphone,
combined with the widespread
deployment of mobile broadband
networks, has led to an explosion of
mobile data services

INTERNET

680m

Twitter

Facebook

Explosion of Mobile Data Services and Social Media

Source: A.T. Kearney, Cisco 2013 Mobile VNI Study, GSMA Intelligence


Global Market
Introduction
Key Points

CONNECTIONS

The global market has grown by 13.7% since 2008
with nearly 7 billion total connections and an
additional 2 billion connections projected to be
added by 2017.

SUBSCRIBERS

3.2 billion people of the 7 billion on earth benefit
from having a mobile phone. A further 700 million
subscribers are expected by 2017, but this still leaves
a huge potential for further growth.

ASIA PACIFIC
MOBILE DATA
PENETRATION

8

In absolute terms Asia Pacific will add nearly half
of all new connections between now and 2017,
while 22% will be from Europe and North America
combined.
Data continues to be a major area of growth for
mobile operators with all regions showing impressive
growth rates. In fact, total traffic volume in 2012
alone was higher than previous years combined
and globally data is projected to grow by 66% p.a.
through 2017.
Data growth is driven by the increased penetration
of smartphones, in particular in emerging markets –
and by increased data consumption per subscriber
due to the faster download speeds and the uptake of
data-hungry applications like video made possible by
new technology such as 4G.


2.1

Mobile Proliferation
around the World
Global Connections
In 2012, the global mobile market grew strongly to nearly 7 billion
connections, representing a growth rate of 13.7% p.a. since 2008
(see Figure 1). The number of individual subscribers increased
by 38% in the four years from the end of 2008 and the number
of connections grew by 67% over the same period (an increasing
number of people have multiple connections, e.g. for work and
personal use or for phone and tablet). As the global market
continues to grow, 2013 is expected to be a landmark year, with
for the first time more SIMs active than people alive.
Despite challenging economic headwinds, the global mobile
market is expected to continue to grow over the next five

years, with annual growth in the number of connections of
7.6% expected between 2012 and 2017. This is slower than the
growth rate of 13.7% over the period 2008 to 2012, which is to be
expected given subscriber market saturation in some countries.
In absolute terms, however, this still represents 3 billion new
connections, 10% more than was added between 2008 and 2012.
As a result of this growth, global SIM penetration is forecast to
reach 129% by 2017 from the current 94%, breaking the 100%
mark during 2013, while subscriber penetration should increase
from 45% to 52% in the same period. However, as we explore later
in this chapter, the dynamics differ significantly by region (see
Figures 4 and 6).

Global Connections

CAGR 2012-2017


7.6%

9.741

2017

2016

2014

2012

2011

5.474

2010

2009

2008

4.050

4.705

6.176 6.766

7.424 8.053

2013

13.7%

8.643 9.204

2015

CAGR 2008-2012

Source: GSMA Wireless Intelligence, Machina Research, A.T. Kearney Analysis

Figure 1

9


Global Connections
by Technology
2G

2008

25+1M
4743+10M 74

53%

90
10+M+

BY 2017 3G AND 4G SHARE IS
FORECAST TO INCREASE TO

3G

2G

2012
3G

2G

4G

2017
3G

10


The headline growth in number of connections hides an important shift taking place in
the types of connections that make up the total. In terms of numbers of connections,
2G technology – which provides digital quality voice, messaging and low bandwidth
data connections – still accounts for the majority of global connections in 2012, 5 billion
of the 6.8 billion total. However, the growth in connections will be driven by increased
uptake of 3G and 4G connections, which are forecast to increase from 26% to 53% of
global connections over the period 2012 to 2017 (see Figure 2).
Globally, 3G connections have approximately quadrupled since
2008 to a total of 1.7 billion. This growth is set to continue to
4.2 billion connections in 2017, representing a growth rate of
20% p.a. Part of this growth will be driven by the growth in
M2M connections, which have been doubling every year since
2008 and are expected to rise from 0.2 billion connections in
2012 to 1.3 billion by 2017 – the majority of the increase being
3G connections (67%). However, overall 3G growth will in turn
be impacted by the roll-out of 4G technology, which in 2012
represented just 1% of total global connections yet is projected to
represent 10% of global connections by 2017, as the technology
becomes more widely available across developed markets and
consumers upgrade to 4G-enabled phones. Global penetration
of mobile broadband is accelerating, with penetration growing
by 6 then 7 percentage points in the last two years to 22%,
representing 1.6 billion MBB connections and underscoring the
increasing importance of mobile infrastructure in the way we
access the internet2.

rapidly growing connections in the developing regions and by
growth of 2G M2M connections of just over 200 million. Despite
the decline of 2G, this generation will still represent a significant
share of global connections in 2017 (47%). Two major factors
underlie this: inertia in the handset and equipment base and new
2G connections in the developing world. A majority of world’s
handsets are still “feature phones”. Less than one in four handsets
shipped in 2012 is a smartphone3, while LTE-enabled phones
represent less than 4%. Given the significant renewal cycles the
handsets have, especially in the poorer countries, the dominance
of the phones which don’t support newer generations slows down
advancement of both 3G and 4G.
Rapid expansion of mobile connectivity in the developing world,
where the industry tends to rely more on 2G technologies for
coverage, offers another explanation for the “stickiness” of 2G.
For example, while the 2G connections are expected to fall by a
substantial 47% by 2017 in the developed world, the decline in
the developing world is only 8%. At the same time, African 2G
connections are projected to increase 5% due to more people
being connected in the poorest and least developed regions.

This contrasts with 2G connections which are expected to decline
in absolute terms to around 4.6 billion by 2017 as accelerating
upgrades of 2G to newer technologies are partially offset by

Global Connections
by Technology
Bn, including M2M

4.050

4.705

5.474

6.176

6.766

7.424

8.053

8.643

9.204 9.741

4g

3g

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2g

64%
20%

-1%
CAGR 2012-2017


Figure 2
2. A.T. Kearney analysis based on GSMA Wireless Intelligence and ABI Research data. 2012/2013.
3. IDC sees 2012 global handset shipments up 4%. Total Telecom. June 2012.

11


POPULATION
CAGR 2012-2017

1.1%

Total
Subscribers
Bn

CAGR 2012-2017

4.2%


Figure 3

12

3.9

2017

3.8

2016

3.6

2014

3.2

3.4

2013

2011

2.8

2010

2009

2008

2.3

2.6

3.0

2012

8.3%

3.7

2015

CAGR 2008-2012


Global Subscribers

Growth in the number of unique individual subscribers
is similarly strong, only slowing slightly as subscriber
penetration rises (see Figure 3.) Nearly one billion subscribers
were added in the four years to 2012, and by the end of that
year, there were were 3.2 billion mobile subscribers, or nearly
half the world’s population. This is a significant achievement,
but also demonstrates the opportunity to bring the social
and economic benefits of mobile technology to the rest
of the world.

4 BILLION
A further 700 million subscribers are expected by 2017,
bringing the total number of subscriberS to almost
4 billion, or 80% of the global adult population.

The forecast rate of subscriber growth of 4.2% p.a. is almost four times the rate
of global population growth, which is forecast to be 1.1% per year in 2012 to 20174.
Looking to the future, the milestone 4 billion mark is expected to be broken at some
point in 2018.
The gap between subscribers and connections growth is explained by adoption
of multiple SIM devices per person and rapid growth of M2M, especially in the
developed world. This is indicated by SIM-per-subscriber ratio which is forecast
to grow from 2.1 in 2012 to 2.5 in 2017 globally. North America, which sees the
one of the fastest multi-device, has 2.8 SIM cards per subscriber, higher than
any other region5.

4. Economist Intelligence Unit, 2013
5. Based on primary research in 39 countries by GSMA Wireless Intelligence during 2012.

13


2.2

Regional Differences
in Growth

Previous GSMA reports on the mobile industry have
highlighted the diversity that exists even within a
geographically or politically homogenous region.
This report offers a global perspective, with further
detail at the regional level.

50%
14

In both connections and
subscribers, Asia Pacific
currently represents just under
50% of the global total and
this share will remain constant
through 2017.


Connections and Subscribers
Growth
The global view of mobile growth identifies a number of regional themes. Emerging
markets are the major engines of mobile growth – Asia Pacific in particular. The region
generated an impressive 57% of all new connections between 2008 and 2012 to stand at
3.3 billion and is projected to grow at 7% p.a. between 2012 and 2017 adding 1.4 billion
new connections (see Figure 4).
Africa and Latin America have also been a key source of mobile industry growth,
accounting for the next 20% of connections growth between 2008 and 2012. This
growth is set to continue with combined connections growth rate of 7% - 8% p.a. over
the next 5 years to 2017, representing 0.6 billion new connections by 2017.

Total SIM-Enabled
Connections

CAGR 2012-2017

7.6%


CAGR 2008-2012

13.7%
4.1

4.7

5.5

6.2

6.8

7.4

8.1

8.6

9.2

9.7
Other Countries
Middle East
CIS
North America
Latin America
Africa
Europe

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Asia Pacific

0%

1%

2%

2%

3%

4%

6%

8%

10%

13%

% M2M connections


Figure 4

15


This strong growth across the emerging
markets has been enabled by a number of
factors, including:
• Falling prices and rising disposable income – enabling more people to own and use mobile technology
– along with the creation of business models such as pay-as-you-go plans, micro-top-up and the
availability of low cost handsets
• The lack of economically viable alternatives (i.e. fixed line communications) in a number of emerging
markets, especially in Africa
• Mobile operators leading the way in developing and implementing new technologies with significant
investment in building infrastructure to serve rural communities

Total Subscribers

CAGR 2012-2017

Bn

4.2%
CAGR 2008-2012

8.3%
2.335

2.556

2.789

3.014

3.212

3.402 3.564

1.1%

3.940
3.705 3.829

POPULATION
CAGR 2012-2017

Other Countries
Middle East
CIS
North America
Latin America
Africa
Europe


Figure 5

16

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific


10% P.A. GROWTH IN
CONNECTIONS
IN NORTH AMERICA
In developed markets, both Europe and North America will see strong M2M growth with a projected 42% of
the market in 2017 representing 657m connections, which enable overall connections growth rates of 9% and
10% p.a. respectively to be sustained from 2012 to 2017, higher than the emerging markets growth rates.
When subscriber growth rates are compared side-by-side to connections growth rates, it becomes clear that
the nature of growth in developed world is different to that of the developing. Europe and Africa have similar
rates of connections additions: 9% and 8% respectively. However, relatively low subscriber growth in Europe
(1% p.a.) suggests that most of connections come from the number of SIM cards per subscriber, rather than
an increase in the number of subscribers. Africa, however, is on the other end of the spectrum – most of its
8% connections growth comes directly from subscriber additions. Other developed countries show a trend
similar to Europe, in particular North America (10% connections growth vs. 1% subscriber growth), while
developing markets still see connections and subscribers grow strongly: for instance, Asia Pacific (7% vs. 5%)
and Middle East (6% vs. 4%).

17


SIM Penetration and Models
The consequence of this continued strong growth is that SIM penetration (measured
as connections divided by total population) is rising rapidly in all regions and by 2017
is expected to be well in excess of 100% in all major regions except Africa (which will
reach 97%). In fact in Europe SIM penetration will be over 200%, with North American
and CIS greater than 185% and Latin America, Middle East and Asia Pacific greater than
115%. This is in contrast to 2008 when Europe and CIS were the only two regions to
exceed the 100% barrier at 124% and 108% respectively (see Figure 6).

North
America

CIS

Latin
America

Middle
East

Asia
Pacific

Africa

77%
53%
27%

73%
41%

87%
47%

Europe

97%

119%

136%
73%

110%

155%
118%

145%
107%

80%

100%

2008 2012 2017

186%

196%
124%
87%

124%
142%

214%

SIM Penetration by Region

Other

Source: A.T. Kearney, GSMA Wireless Intelligence

Figure 6

The common trend towards increasing penetration hides a wide variation between regions. Current penetration rates range
from 132% in Europe – with individual countries reaching as high as 182% in Finland – to 72% in Africa, where penetration in
Eritrea is only 5%. North America leads the way in penetration of 4G technologies at 10% of connections, although Europe
leads in penetration of 3G technologies at 66%. This is in sharp contrast to the emerging markets which show a significant
potential for growth in these technologies – and hence data consumption – with 3G penetration rates currently standing at
17% of connections in Asia Pacific and 8% in Africa.

18


Commercial models
differ between
markets and regions.
In developed economies, mobile subscriptions tend to be on contract (post-paid) as opposed to pre-paid. For example,
in North America 75% of connections are post-paid, while in Europe the proportion is 50%, reaching 75% in NorthWestern Europe as compared to 40% in South-Eastern European states (see Figure 7). At the same time, other regions
are largely pre-paid: 18% of connections are post-paid in Asia Pacific, 20% in Latin America, 13% in CIS and only 4% in
Africa. This is partly a historic factor in the development of markets where early adopting countries required contracts
but later adopting markets used pre-paid as a quicker way to launch and get customers connected. As markets mature,
consumer expectations are harder to shift. In some countries the pre-paid model is more accessible to populations of
people who do not possess the prerequisite bank account and identity documentation required to enter into a contract.

1007510050+ 10022+ 10020+ 10018+ 10013+ 1009+ 1004+ +

Contract / Prepaid
Connections Split
% 2012

25%

50%

78%

80%

82%

87%

91%

GLOBAL Split

77%
PRE-PAID

96%

75%

50%

CONTRACT

4%

AFRICA

9%

OTHER

13%

CIS

18%

APAC

20%

LAT AM

ME

EUROPE

NA

22%

23%

Source: A.T. Kearney, GSMA Wireless Intelligence

Figure 7

19


2.3

Data is the Driving
Force of Growth
Data continues to be a major area of growth for mobile operators. As Cisco
reported in their recent Visual Networking Index (VNI) study6, the volume of
mobile broadband (MBB) traffic has been doubling every year, reaching
1,577 Petabytes per month7 in 2013 (the equivalent of 500 billion .mp3 files
or 800 million hours of streaming HD video8) and is forecast to reach 11,156
Petabytes by 2017 (see Figure 8). The rate of growth is underlined by the fact
that total traffic volumes in 2012 were as high as all prior years combined.
Furthermore, this growth hasn’t been isolated to one area – all regions have
been showing impressive growth rates. In absolute terms, however, Asia
Pacific is the clear leader and is forecast to account for 47% of traffic by 2017.

Mobile Data Traffic
by Application

11,156

PB per month

DATA

7,439

66%

CAGR 2012-2017

100 100 100
62 34 75
100 100 100
34 89 55

CAGR
2012-2017

VOIP
GAMING
M2M
FILE SHARING

34%

62%

VOIP

89%

4,700
2,797

Figure 8

6. Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast for 2012 to 2017. Cisco. 2013.
7. Equal to 1.6 billion Gigabytes
8. Assuming .mp3 files are 3 Megabytes each, and an hour of HD video uses 2 Gigabytes of data

2017

2016

2015

2014

2011

M2M

FILE SHARING

75%

DATA

Source: Cisco VNI, 2013, A.T. Kearney Analysis

20

34%

55%

885
2013

496

1,577

2012

279
2010

78%

VIDEO

GAMING

VIDEO


The key driver of data consumption
growth today is video content.
From 852 Petabytes per month in 2013 it is projected to grow to
7,363 Petabytes per month in 2017 – representing growth in its
share of all traffic from 54% to 66% – fuelled primarily by the
increased penetration of 3G and 4G technologies and in particular
4G’s ability to stream high definition video. The next highest
volume of traffic in absolute terms is generated by data services
such as web browsing and sending emails, growing from 490
Petabytes per month in 2013 to 2,577 Petabytes in 2017, also
driven by the increased penetration of smartphones. In 2012, 4G
already accounts for 14% of traffic (while it represents only about
1% of connections) and by 2017 the share is forecast to increase to
45%, vs. a 10% connections share.

In response to growing data traffic, mobile operators will increase
efforts to offload it to fixed-line infrastructure through WiFi, for
example. Cisco’s VNI study estimates that the share of offloaded
traffic will increase from 33% in 2012 to 46% in 2017. This means
that the total data traffic generated by mobile devices (mobile
plus offloaded data) will be over 20,000 PB in 2017. At the lowvolume end of the scale, Machine to Machine (M2M) data traffic
will only represent 5% of all traffic by 2017, but is forecast to grow
at almost 90% p.a., driven by a wide range of applications from
smart utility meters to in-car telematics services. By 2017 this will
have led to a volume increase by a factor of 10 – breaking the
mark of 500 Terabytes per month in 2017.

Mobile Data Traffic
by Region

CAGR 2012-2017

74%

Middle East

CAGR
2012-2016

11,156

66%

Middle East
Africa
Latin America
CIS

7,439

Europe
North America

4,700

78%
2,797

Asia Pacific

Latin America

54%

79%

Africa

57%
CIS

56%

North America

2017

2016

2015

76%

2014

2013

67%

Europe

885 1,577
2012

496
2011

2010

297

100 100 100
79 57 56
100 100 100 100
74 67 54 76

PB per month

Asia Pacific

Source: Cisco VNI, 2013, A.T. Kearney Analysis

Figure 8

21


Number and Speed of
Connections are Enabling
the Growth of Data
The growth in data traffic is supported by an increasing number of mobile
broadband (MBB) connections, which have grown 7 fold since 2008 – from just
over 0.2 billion to 1.6 billion – and which are expected to grow at 26% p.a. until
breaking the 5 billion mark in 2017. In fact, not only is the number of connections
growing, but the absolute number of new connections is increasing also: 528
million connections were added in 2012, while in 2017 an additional 775 million
new connections are expected.

MBB and LTE1, 2
Connections
Mn, including M2M

CAGR 2012-2017

26%

5,085
4,311

LTE

3,565

CAGR 2008-2012

2,853

65%
2,198
1,603

Figure 9

22

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

218 374

650

1,075

1. “Other MBB” includes the following technologies: CDMA2000 EV-DO, Rev. A, Rev. B, WCDMA HSPA, TD SCDMA, AXGP, WiMAX
2. For M2M it was assumed that all 3G connections is “other MBB” and all 4G is LTE
Source: GSMA Wireless Intelligence, A.T. Kearney Analysis


Increasingly fast connection speeds allow each user to consume more data. The
average mobile Internet connection speed has more than doubled between 2010
and 2012 and it is forecast to increase sevenfold by 2017, reaching almost 4 Mbps9
on average (see Figure 10). This enables many emerging applications of mobile
phones, specifically social networking, video streaming, video calls and games.
The forecast average speed around the world in 2016 would be enough to stream
HD video through the mobile network to users’ phones.

Average Global Connection
Speed
Kbps

2,500kbps
SPEED REQUIRED FOR
HD VIDEO STREAMING

3,898
2,725

+54%

2017

2016

2015

2013

2012

2011

2010

817

1,233

2014

CAGR 2010-2017

315 526
189

4x

1,857

Source: Cisco VNI 2013

Figure 10

9. Megabits per second

23


A recent study of the UK market published by Telefónica confirms the growth of new
applications enabled by MBB. This study highlights the many different functions for
which mobile devices are used (see Figure 11). Voice calls are now fifth in the list of most
used mobile applications, as measured by the average time spent using them per day
(12 minutes). Top of the list is browsing the Internet at 25 minutes per day – more than
twice as much as is spent making calls. Checking social networks, listening to music and
playing games also consume more time than making calls. Time spent SMS messaging
is similar to time checking/writing emails: 10 vs. 11 minutes per day on average.

Time Spent Per Day by UK Smartphone
Users, by Application

128

Minutes Per Day

25
17

16

14

12

11

10

total Minutes
Per Day

9

9
taking photographs

reading books

watching tv/films

text messaging

checking/writing emails

making calls

playing games

listening to music

checking social networks

browsing the internet

3

Source: O2

Figure 11

In the emerging markets a similar trend
exists. A 2011 study by Nielsen Informate
Mobile Insights10 found that smartphone
users in India are spending more than
twice as much time viewing content on
their mobiles as making voice calls. Indian
smartphone users spend on average
2.5 hours per day using their mobiles

and about three quarters of that time
is spent on social media sites, playing
games, accessing entertainment and other
forms of online browsing. The younger
generation – ages 15 to 24 – also spend
on average an additional one hour on top
of this, mostly surfing the web.

10. Indian smartphone Users Now Spend More Time on Content Than Voice and SMS: Nielsen and Informate form Strategic Alliance for
Insights on India’s Emerging smartphone Consumers. Nielsen Informate Mobile Insights. 2011.

24

This trend underscores the growing
importance of mobile technologies. Mobile
phones had a narrow specialised use a
decade ago, while now they perform
functions of mobile TV, digital watch,
gaming console, organiser, music player
and many others, further integrating
mobile with everyday life.


In Parallel, Traditional Usage is still
showing Robust Growth
Both voice Minutes of Use (MoU) and SMS show strong – although slowing – growth (see Figure 12). MoU grew on average 13% per year
in 2008-2012 but only grew 4% in 2012. SMS grew an impressive 28% p.a. in the same period, while the growth in 2012 is estimated at
8%. The slowdown in growth is largely attributed to increasing usage of VoIP, Instant Messaging and Social Networking. Both VoIP and
Instant Messaging decrease cost of communication, especially on “unlimited” data plans and with international calls and messages. At
the same time they add more features, such as video calling, conference calls and chats and easy exchange of images, video and other
media attachments. Social networks decrease demand for personal messages, partially replacing them with “status updates” which
reach all friends or colleagues at once. Nevertheless, new subscribers and increasing consumption of SMS and minutes per person in the
developing world as a result of falling prices of handsets and mobile services support robust growth of traditional usage.

Global Minutes of Use
Tn Minutes

+13%
5.8

9.2

Global SMS Sent

9.5

8.6

7.4

Bn SMS

+28%

7,462
6,061

6,910

4,310

2012

2011

2010

2009

2008

2012

2011

2010

2009

2008

2,824

Source: ITU, IDC. Forrester. A.T. Kearney Analysis

Figure 12

Potential for Future
Growth
The mobile industry has shown solid growth in recent years, with both total
connections and subscriber numbers growing strongly. The headline hides a
number of regional trends – with the growth of data highlighting new types of
industry growth in the developed markets and increased SIM and subscriber
penetration in the emerging markets. With 3.2 billion people of the 7 billion on
earth enjoying the social and economic benefits of access to a mobile phone and
a further 700 million subscribers expected by 2017, there is still a huge potential
for further strong growth in the mobile industry to 2017 and beyond.

3.2Bn

of the 7 billion on earth enjoying
the social and economic benefits
of access to a mobile phone

25

A VIBRANT AND
EVOLVING INDUSTRY
M2M Connections

mAutomotive
85,000 Lives lost annually
in road traffic accidents

215m
2012

1.2bn
2017

41.6%
CAGR

Healthcare Spend
OECD Countries

35,000
1 IN 9 LIVES SAVED OR

LIVES SAVED BY 2017 THROUGH
IN-CAR EMERGENCY CALLING SERVICES

Smart Cities

$6.9tr

in 2017, Mobile Healthcare
can help cut healthcare costs
in OECD countries by over

$400bn

Source: PwC research

27m

C02 tonnes

Smart metering in major cities can
reduce carbon emissions by 27m tonnes,
the carbon offsetting equivalent of 1.2bn trees

1,2bn

Future Communications
INDUSTRY SNAPSHOT

9.6tn

STRONG RCS ECOSYSTEM

28.2tn

9.6 trillion
messages
sent in 2012

$1.6bn

31 OPERATORS LAUNCHED
OR COMMITTED TO LAUNCH

28.2 trillion
messages
forecast for
2017

8 HANDSET VENDORS
OFFERING PRODUCTS
19 SUPPLIERS OF
HOSTED SOLUTIONS

Mobile operators around the world are
expected to take in a cumulative $1.6
billion over the 5 years from 2012 to 2016
from RCS service fees

5 LEADING INFRASTRUCTURE
VENDORS WITH FULL SOLUTIONS

JOYN SERVICES ARE HERE - NOW

NEW PRODUCTS & SERVICES ON THE RCS PLATFORM
Enables users to
share instant messages

RCS APIs already exist
to make development easier for:
ENTERPRISE USERS

Enables users to share ﬁles
such as photos
with their contacts

GROUP COLLABORATION IN THE WORKPLACE
GAMERS

MULTIPLAYER GAMING POWERED BY JOYN

Enables users to share
pictures and video
whilst speaking

HOME USERS

FIXED LINE ACCESS AND SMART TV SET-TOP BOXES

Works on any
device, on any
network

Mobile Commerce
NFC IS A WIRELESS TECHNOLOGY THAT CAN:
Replace paper tickets
on transport systems

CUSTOMER CARE CENTRES

VIDEO ENHANCED CALLS

100k+ 600k+
Number of contactless
enabled PoS in the UK

Replace cash and credit cards
to purchase goods and services
Replace vouchers and coupons

Replace traditional keys to hotel rooms,
offices and homes

Number of contactless
enabled PoS in China

$1.3 trillion
Total value of global mobile payments predicted by 2017

POTENTIAL IS GROWING
Proportion of all
smartphones
NFC enabled by 2015

Proportion of spending
put through Visa
in Europe in 2020
via a mobile device

Proportion of new
Point of Sale (PoS)
terminals shipped in
2016 that will be
contactless

Number of SIM-based
NFC handsets that will
be sold by 2016

Value of transactions
these handsets will
support by 2016

Number of NFC
tickets delivered
to mobile devices
worldwide by 2014

Number of NFC
smartphones, tablets
and eReaders that
will be sold in 2013

It has been estimated that BY
2017 global annual smart grid
spending will reach

US$65Bn

smart metering in major cities can
reduce carbon EMISSIONS by 27M tonnes
or EQUIVALENT OF 1.2Bn trees OFFSET


3

A Vibrant and
Evolving Industry
The last 20 years have seen huge growth in mobile usage across the globe and in that time the mobile industry has
succeeded in addressing all segments serving almost half of the world’s population. The younger generation in particular
struggles to imagine how life was lived pre-mobile. The idea that meetings were arranged beforehand and plans were
kept is hard for them to grasp. Meanwhile grandparents are learning to use video conferencing to communicate with their
grandchildren. This is a true measure of just how much we think differently in the mobile age – and with the rise of the
smartphone now changing not just the way we access the Internet, take pictures and navigate, the mobile phone and in
particular the smartphone has put power in the hands of the user, the consumer and the citizen like never before.
Even the financial downturn in the developed world has spurred mobile industry players to find new ways to adapt and
innovate. As technology continues to evolve, the mobile ecosystem continues to build new business models to deliver new
services. From inter-connecting the user’s world in spheres such as automotive, utilities, health and education, through to
finding new ways to transact and bank, from the rise of mobile app development communities to the race to make phones
faster, lighter and more innovative, this chapter focuses on highlighting the vibrancy and evolution of the mobile industry
via a discussion of new products and services and the related ecosystem collaboration.

Key Points

EVOLUTION
INNOVATION
DIFFERENTIATION
COLLABORATION

Mobile is a vibrant and evolving industry that is driving
the mobile phone’s continued status as the ‘centre’
of everyday life for a growing section of the world’s
population.
Mobile network operators are developing a strong value
proposition outside of non-core services and products
and collaborating with the wider ecosystem to deliver
new and innovative services to users.
Other parts of the ecosystem are also dynamic
and evolving – OEMs and OS players are driving
innovation through the race to differentiate themselves,
infrastructure stakeholders are driving new efficiencies in
the race to support the demand of tomorrow and content
providers are harnessing the new hardware and software
innovations to deliver their own innovative services and
products to the consumer.
Mobile operators are developing new collaboration
models – both with other parts of the mobile ecosystem
and with each other – to seek out win-win opportunities
to deliver innovation for the customer.

29


3.1

Mobile Network
Operators
As one of the key drivers of this vibrant and evolving industry, mobile operators are working
to continually expand their product portfolio by delivering new products and services to the
consumer. They are moving beyond their traditional core voice, SMS and data propositions to
embrace new technologies and new business models and are investing in content to leverage
their network assets and commercial presence in support of innovation. Mobile operators are
also opening up network assets to developers to enrich the content and services provided to
users and are working to allow users to access a growing range of other everyday devices via
their phone in real-time.
Mobile operators have also worked collectively for the benefit of the entire ecosystem to agree
common standards on which the whole ecosystem can build and innovate more effectively and
to ensure collaboration both within the industry, with other industries and with governments and
regulators. This section looks at all the ways in which mobile operators are contributing to an
improved user experience.

3.1.1

Developing a Strong Value
Proposition Outside of Non-core
Services and Products
The past few years have seen a number of new products and services emerging across
the mobile ecosystem that go beyond the traditional segments of the communications
value chain, with an emphasis on building connections between the many devices we
have come to use daily in the 21st century. The following sections highlight a number
of these opportunities and the role that mobile operators are playing in their growth.

30


Connected Living

Utilities
Providing a growing population with gas, electricity, water and other essential utilities is
a growing challenge across the globe. While access to fundamental infrastructure may
be the most important issue in some remote or emerging markets, in developed markets
in particular the challenge is how to meet increasing demand for these services in a
more efficient and effective way. In this situation, the effective management of limited
resources is key both for the benefit of the consumer and for the utilities themselves.

smart meter
penetration
(usa)

23+77+M 7+93+M 2+98+M
14+86+M 4+96+M

% of electric customers
with smart meters

2007

2008

2009

2010

2011

Smart meter deployments continue
to rise. US Energy Information
Administration. November 2012

Figure 13

Smart Grids – electrical grids which incorporate information and communications technology – are
an important development which will lead to greater energy efficiency. In the first instance they
will automate meter-reading, improving the accuracy and granularity of information which enables
consumers to make more informed decisions around energy usage. In the longer term, smart
grids will also enable dynamic pricing which will incentivise more efficient consumption by the
consumer and enable power generators to manage generating capacity more efficiently. Mobile
communications will be an important component of this smart technology and mobile operators, in
partnership with the GSMA, are working with the wider ecosystem to understand the needs of the
utilities sector, to demonstrate how the mobile network can support smart utilities and drive adoption
rates11. Challenges that must be overcome include ensuring consistent standards and best practices
for the development of smart technologies and the need – especially in liberalised telecom and
energy markets – to maintain co-ordination between the many stakeholders in both development
and investment12.
Given the significant benefits of smart metering technology, penetration is expected to considerably
increase over the coming years. For example, the installed base of smart meters – a component
part and first step of the ‘smart grid’ – represented 18% of all meters in Europe at the end of 2011.
This is estimated to increase to 56% by 2017 due to large-scale rollouts in the UK, France and Spain13
achieving 100% coverage by 202214. In the United States, smart meter penetration was already
approaching 25% of electricity customers in 2011 (see Figure 13). In addition, with world demand
for primary energy projected by the International Energy Agency (IEA)15 to increase by one third
between 2010 and 2035, technologies such as the smart grid will be required to meet the challenge
of delivering more energy to more consumers at a lower cost. This requirement will continue to
drive the penetration of smart technologies such as smart meters and must be accompanied by
investment both in the development of technology and in infrastructure. It has been estimated that
global annual smart grid spending will reach US$65 billion by 201716 and with a wealth of experience
in implementing extensive, complex networks, the mobile industry is well placed to be a key player
in the secure two-way communication required between utilities and consumers/appliances that
will ultimately bring benefits to the consumer in both efficiency and control of usage. In fact, many
current pilots of smart technology are being run by or with the involvement of mobile operators.
For example, the Jeju Island Smart Grid Test Bed in South Korea aims to demonstrate how mobile
communication networks can support demand for new smart grid and transportation related
technologies to deliver an estimated 50,000 new jobs annually and generate revenue of 74 trillion
won (US$64 billion) in South Korea by 203017.
Providing energy to a growing population will require strong co-operation between the mobile
and utilities industries, along with technology providers, governments and regulators. Encouraging
progress is being made in many geographies to roll out parts of the required infrastructure and
successful pilots are demonstrating and collecting best practices for how smart grids can be
successfully implemented. However, given the anticipated future growth in the demand for energy,
significant investment is required in order to successfully deliver the benefits of smart grids to the
consumer and to the larger economy.

11.
12.
13.
14.
15.
16.
17.

mUtilities. GSMA. January 2013.
The Smart Meter Mandate. A.T. Kearney. 2010.
Smart Metering in Europe. Berg Insight. November 2012.
Aided by a EU directive calling for 100% coverage by 2022 – Official Journal of the EU. July 2009.
World Energy Outlook 2011 Factsheet. IEA. 2011.
Annual Smart Grid Spending to Reach $65 Billion by 2017. ABIreseach. May 2012.
South Korea: Jeju Island Smart Grid Test-Bed. GSMA. September 2012.

31


Connected Living
Connected Living

Automotive and Transport
In recent years cars have changed from the mere mechanical to complex computerenabled machines, with connectivity within the car putting more information and control
at the driver’s fingertips. Subsequently, there has also been an increase in the number
of cars which are externally connected – that is, cars which receive information such
as traffic updates or global positioning data and transmit information such as engine
performance or driver location in the event of a crash.
As the worldwide penetration of such ‘connected
car systems’ grows – and with penetration
forecast to increase globally from around 11%
in 2012 to 60% in 2017 (and more than 80%
in the United States and Western Europe)18 –
opportunities exist for mobile technology to
revolutionise the way we use cars. New and
innovative uses of connected car systems have
the potential to save lives, significantly improve
the driving experience through access to realtime information, provide a step-change in in-car
entertainment and to allow remote monitoring
of performance and location as part of more
effective preventative maintenance measures,
supply chain delivery networks and public
transport user information.
One such opportunity is to improve the response
time of emergency services in the event of an
accident. For example, it is estimated that 2,500
lives per year could be saved in Europe if all cars
were fitted with a system that alerted emergency
services immediately to a crash19 – the time it
takes for first responders to reach the site being
a critical determining factor in the rate of survival
and recovery from injuries. With ‘eCall’, an
initiative by the European Commission that was
backed by the European Parliament in July 2012,
all new cars in Europe would be required to have
mobile connectivity from 201520, which would
reduce emergency response times to vehicles
with the technology by an estimated 50% in the
countryside and 60% in urban areas21 (see Figure
14). Systems could also be configured to alert
police to theft and track the location of a stolen
vehicle.
Other innovations include providing drivers
with access to real-time congestion, road works,
accident, toll, petrol station location and parking
availability information. In addition to increased
convenience, the time and fuel saved has real
economic and environmental benefits. Mobile
technology can also lower safe drivers’ insurance
costs by allowing for more accurate profiling and
facilitating Pay As You Drive (PAYD) insurance
services. It also provides the ability to monitor
technical performance remotely for the early
32

identification of potential issues. For businesses,
it means being able to identify where their
fleet of trucks is and when deliveries will arrive,
allowing for real-time, in-transit redirection and
calculation of optimal routes, which results in
more efficient logistics.
Many players in the mobile ecosystem have
already been working to develop solutions
in these areas. Mobile application (‘app’)
developers, for example, have created a wide
range of apps, such as iGasUp for the iPhone,
which in the United States allows a user to
display the nearest 10 or cheapest 10 gas stations,
filtered by available gasoline types, out of around
110,000 gas stations that are registered. The app
then connects to the Oil Price Information Service
(OPIS) to display real-time gasoline prices as well
as location and driving distance to each station22.
Similarly, car manufacturers are creating mobile
apps to improve the driving experience, such as
Audi’s ‘Roadside Assistance’ app. This allows the
driver to key in their car’s identification number
and then the app uses GPS to locate the car and
allows the user to explain the problem. The app
then connects to an Audi ‘Roadside Assistance
Dispatcher’ and displays information about the
roadside assistance provider that is en route
including estimated time of arrival23.
In order to advance the connected car agenda the
GSMA has set up the Connected Car Forum (CCF)
to enable dialogue between mobile operators
(of which there are currently 20 participants)24
and vehicle manufacturers (of which there
are currently 16)25. By working together,
manufacturers and mobile operators can share
information and enable industry competition,
resolve barriers to connected car deployment
and accelerate the adoption of telematics and
infotainment services. The CCF has set targets for
connectivity solutions to be embedded at over
20% for global vehicles sales and over 50% for
cars to be connected (embedded or otherwise)
by 2015 – as outlined in their Mission Statement26
– and hopes to have ‘every car to be connected in
multiple manners by 2025’27.

Figure 14

Vehicle Crashes
voice

data

Mobile Operator
voice

data

Emergency Services
Answering Point

voice

data

Emergency
Responders
18. By 2017 60% of New Cars Shipping Globally Will
Feature Connected Car Solutions. ABI Research. July
2012.
19. Motion for a European Parliament Resolution.
2012. (http://www.europarl.europa.eu/sides/
getDoc.do?type=REPORT&reference=A7-20120205&language=EN)
20. EU plan for cars to call an ambulance after crashes.
BBC. July 2012.
21. eCall. European Commission. January 2012.
22. iGasUp. January 2013.
23. Roadside Assistance App. Audi. January 2013.
24. AT&T, Bell Canada, China Mobile, China Telecom,
China Unicom, Deutsche Telecom, KDDI, KPN, KT, NTT
Docomo, Orange, Rogers, Softbank, Telecom Italia,
Telefónica, Telenor, Telstra, Turkcell, Verizon Wireless
and Vodafone
25. Audi, BMW, Chrysler, Fiat, Ford, GM, Honda, Hyundai,
Jaguar Land Rover, Mazda, Nissan, Peugeot, Renault,
Toyota, Volvo and VW
26. GSMA Connected Car Forum Mission. GSMA. 2012.
27. GSMA Connected Car Forum. GSMA. 2012.


Connected Living

Health
It is estimated that 84% of the world’s population consumes just 11% of the world’s
healthcare spending, yet suffers from nearly 95% of the diseases28, with most of these
people living in developing countries where 99% of the world’s population growth
between 2004 and 2050 is expected29 and where large numbers of people do not have
access to adequate healthcare. On the other hand, in developed countries populations
are aging, putting an ever-increasing burden on healthcare services.

As a result of these factors, the challenge to ensure quality
healthcare provision is great across both developed and
emerging economies, with demand for healthcare resources often
outstripping governments’ abilities to provide such services. In
this context, a technology that can both cut the costs and expand
the reach of preventative, curative and palliative healthcare is an
essential investment for governments and providers that will save
the lives of millions, improve the health of countless more and
have far-reaching effects on social and economic wellbeing.
Given the penetration levels of mobile in developed and emerging
markets and in both metropolitan and more remote areas, mobile
devices provide one of the most effective conduits for the delivery
of innovative health solutions. There are many possibilities, from
measures that support preventative healthcare such as remote
monitoring of the health of those at risk, to improvements in
curative services such as earlier identification of diseases. From
enabling improved quality of life for the elderly and infirm by
enabling them to be treated and monitored from home, reducing
the cost of healthcare for governments and insurers/individuals
through prevention, to the requirement for fewer hospital
beds and more efficient use of doctors’ time, the use of mobile
networks is already saving lives and improving patient outcomes
and has the potential to have an even greater impact. The mobile
health market is projected to be worth between US$30 billion and
US$60 billion by 201530. However, care must be taken in the way
Mobile Health research is commissioned and researched if these
opportunities are to be fully realised – research carried out by A.T.
Kearney for the GSMA entitled ‘Improving the Evidence for Mobile
Health’ showed that existing articles and research on mobile
health were most often not focussed on these topics that drive
adoption and that the majority of such articles did not currently
reach the standards required by insurers and governments.

28.
29.
30.
31.
32.

$400 billion

The amount saved in 2017 from the annual
healthcare bill in developed countries as a
result of mobile healthcare solutions

Other parts of the mobile ecosystem are developing innovative
health services using mobile technology. For example, in 2011
a company called VESAG launched a Mobile-based Personal
Emergency Response System (MPERS) that uses the mobile
network to monitor a patient’s health and summon help in an
emergency. Functionality built into a watch can remind the
wearer to take medicines and interfaces wirelessly with other
VESAG products including blood pressure, haemoglobin and
heart rate monitors. In all, 17 health parameters can be monitored,
which can then be reviewed by a doctor and preventative action
recommended. The watch is connected to a mobile network
and allows the user to speak with emergency responders or a
helpdesk at a single press of a button. It can even detect a fall
and automatically contact the helpdesk and can give the patient’s
location via GPS. The watch is now available in at least 18 countries
including Brazil, Russia, India, China, USA, Lebanon, Jamaica and
Dubai31. Other opportunities also exist, for example in the field of
maternal health. With the World Health Organisation estimating
that almost 300,000 women die each year due to pregnancy or
pregnancy-related complications, mobile technology can be used
to educate and inform mothers and those who deliver children,
especially in many developing countries where the majority of
births are performed without a health professional present.
Mobile technology is extending the reach of healthcare to remote
and underserved parts of emerging economies and is promising
significant improvements in healthcare for developed countries
– primarily by changing the way we communicate with the
healthcare ecosystem and the way we monitor our own bodies.
All sections of the ecosystem are working together to gather best
practices, reduce barriers to adoption and drive innovation in
mobile health technologies and services. 32

Improving the evidence for mobile health. A.T. Kearney. March 2012.
World Population to 2300. United Nations. 2004.
Improving the evidence for mobile health. A.T. Kearney. March 2012.
VESAG. January 2013.
mHealth. GSMA. January 2013.

33


Connected Living
Connected Living

Education
Given the rapid pace of technological change over the last decade many parents
and teachers have found it challenging to keep up to date with new technologies
and fully exploit the exciting educational opportunities that these new
technologies represent. Mobile connectivity in learning offers the opportunity to
tailor content to a student’s ability and deliver it in a more ‘digestible’ format than
traditional educational approaches.
The reach of mobile broadband offers opportunities to extend
and improve education in remote areas of developing countries,
or in the aftermath of natural disasters. For example, after the
2011 Japanese earthquake, a partnership between an educational
services provider, a mobile learning platform provider and a global
Information and Communications Technology (ICT) solutions firm
allowed school children in Ishinomaki – one of the most affected
parts of Japan, where many students had lost both their home and
their school – to study via mobile tablet for their high school entry
examinations. The students were able to work at their own pace,
connect via WiFi or 3G and almost all of the 120 students involved
passed their entrance examinations despite the challenges they
had faced. By April 2013 the system will be used by at least 5% of
domestic Japanese educational institutions and a roll out in Asia,
Africa and Central/South America is planned33.
There are many other examples around the world of the growing
use of mobile networks in education – either to extend the reach
of high quality education, or to improve the learning experience,
or both. For example, in Kenya the mobile operator Safaricom
is developing an mEducation proposition whereby any of the
country’s 7,000 state secondary schools will be able to access
online educational content recorded at the Starehe Boys Centre
School. Interactive whiteboards are being provided for classroom
use and the content will also be available via mobile tablets34. In a
different approach focussed more on improving the engagement
and interaction with the student, SK Telecom has created a
self-directed learning solution for students in South Korea called
T Smart. This tool is accessible online and via mobile tablet,
combining online educational content with an online community
that the student can contact for help and the ability for parents
to monitor their child’s learning progress35. A similar range of
platforms and tools have been designed by Chinese ICT giant
Huawei36.

34

33. Bringing mobile learning to students in the Japanese tsunami disaster area. GSMA. June 2012.
34. Safaricom brings e-learning to Kenya. The East African. July 2012.
35. Press Release: SK Telecom Debuts T Smart Learning in the Global Market; Unveils Innovative Mobile
Learning Platform at ISTE 2011. eschoolnews.com. June 2011.
36. eClass Remote Interactive Teaching Platform. Huawei. February 2013.
37. Transforming learning through mEducation. GSMA. April 2012.
38. mEducation. GSMA. January 2013.

Another development that yields very significant potential to
make education more interactive when combined with mobile
technology is Augmented Reality (AR). By embedding markers in
a textbook and viewing it through an AR-enabled device, the page
can come to life with computer-generated images – for example a
student learning about the Roman Empire could see marble busts,
a soldier’s helmet or a model of the Palatine Hill come to life on
the page and rotate them on the screen while reading about them.
The mobile industry has a great potential to improve and extend
the education of millions of people around the world. However,
the global education authority landscape is understandably very
fragmented and with the mobile education market projected
to grow to US$70 billion by 2020 according to the GSMA’s
‘Transforming Learning Through mEducation’ report37, it is
important that the mobile ecosystem works together to share best
practices, to maximise the potential impact of this technology
on current educational processes and the lives of students.
The GSMA and its members have been working through its
mEducation programme to do just this, as well as to understand
the opportunities that exist, the approaches that will be required
to grow this sector over the coming years and to address potential
barriers to adoption38.

180 million

The number of children in developing
countries that will have the opportunity to
stay in school between now and 2017 due
to mEducation


Connected Living

Smart Cities
Similar to the way automotive and utilities companies benefit from an accurate two-way,
real-time exchange of data with consumers and their devices, a municipal or national
government can benefit from a more connected relationship with its citizens in order to
provide services and information in a more efficient way. A ‘Smart City’ makes extensive
use of information and communications technologies, including mobile networks, to
improve the quality of life of its citizens in a sustainable way. A smart city combines
and shares disparate data sets captured by intelligently-connected infrastructure,
people and vehicles, to generate new insights and provide ubiquitous services that
enable citizens to access information about city services, move around easily, improve
the efficiency of city operations, enhance security, fuel economic activity and increase
resilience to natural disasters.
For example, by placing sensors on parking spaces and connecting
these sensors to a central database, innovative mobile services
can be built that would show drivers how many parking spaces
are available on each city block, or show the location of parking
garages and whether there is space available. Streetline is an
example of a company that is already implementing such a service
with their ‘Parker’ app which has already launched in over 30 cities
and universities, including the cities of New York and Los Angeles,
in partnership with local government39.
A number of Smart Cities have already been set up to demonstrate
the concept, test technology and gather best practice learnings.
For example, Busan Green U-city in South Korea was set up in
partnership with the local government, Cisco and KT – South
Korea’s largest mobile operator – with the aim of delivering
smart services and testing smart technology. Built using cloudbased services and integrated into the city’s major infrastructure,
smart services will be delivered in areas such as education,
transportation, environment, disaster prevention, health and
tourism. The 5 year old programme has received US$320 million
total investment and is just one of a number of such Smart City
pilots globally. 40 41
The mobile network and ecosystem with infrastructure already
in place is the ideal tool to facilitate the network of information
sharing and communication required to operate a smart city. In
Busan the mobile operator KT is itself responsible for running the
U-city programme and with the growth of smart cities the whole
mobile ecosystem can play a large role in an industry expected to
be worth US$39 billion by 201642.

39. Parker app. Streetline. January 2013.
40. u-City. City of Busan. January 2013.
41. Busan Green u-City – A successful example of a Smart City in South Korea. GSMA.
Augusta 2012.
42. Smart City Technologies Will Grow Fivefold to Exceed $39 Billion in 2016. ABI Research.
July 2011.

$39Bn

Smart cities
industry worth
US$39 billion
by 2016

To help drive forward investment and implementation of Smart
City technology and build consensus on issues such as data
privacy and the need for common standards, a wide range of
stakeholders need to come together and co-operate. Smart Cities
hold incredible potential for changing the way we live in and run
our cities. Through initiatives such as the GSMA’s Smart Cities
Demonstrator, events such as the 2012 Smart City Expo World
Congress in Barcelona (which was supported by mobile operators,
stakeholders from across the mobile ecosystem, governments,
industry bodies, automotive manufacturers and utilities providers)
and through the continued co-operation of stakeholders in
rolling out pilots and sharing knowledge learned, the wide-scale
implementation of Smart Cities is closer to becoming a reality.

35


Mobile Commerce
and NFC
Mobile devices that enable tap-and-go payments through Near Field
Communication (NFC) technology are starting to achieve widespread
penetration, with almost one in four smartphones shipped in 201243
estimated to be NFC-enabled and with strong potential for future
growth as pilots begin to transition to wider rollouts. NFC technology
has the potential to transform not only the way we buy ‘over the
counter’, but also to revolutionise ticketing – from public transport
where NFC technologies have already seen some penetration, to
ticketing at music events. In Japan a similar technology to NFC – a
proprietary Sony technology called FeliCa – has been around since
2004. NFC m-payment technology has been available in Europe since
early 2011 and by 2017 it is estimated that 25% of US and Western
European mobile phone users will pay for goods in-store using their
NFC-enabled mobile phone. This is in contrast to less than 2% in 201244.

43. Forrester, Gartner. August 2012.
44. Press Release: More than 1 in 4 Mobile Users in the US and
Western Europe will pay in-store using NFC by 2017. Juniper
Research. May 2012.

36


The complexity of the ecosystem and the number of
stakeholders involved led to modest initial progress in the roll
out of NFC technology. However, the momentum for SIM-based
mobile NFC services is now growing strongly, driven by payment
pilots supported by mobile operators and financial institutions
and enabled by an increasing number of NFC-enabled phones.
ABI Research estimates 200 million NFC-enabled handsets have
been sold globally and that 1.55 billion will ship annually by the
year 201745. NFC as a payment method is now becoming better
known to the consumer due to these successful pilots and a
report by Juniper Research in May 2012 found that worldwide
NFC mobile payments are expected to exceed US$180 billion
globally in 201746.
Some of these pilots have been rolled out on a city-wide scale,
such as Isis, a widely-promoted joint venture between 3 mobile
operators (AT&T, T-Mobile and Verizon) in the United States.
In Austin, Texas and Salt Lake City, Utah, the technology is
based around a mobile wallet with which users can buy goods
or services after loading their existing credit or debit cards.
As of October 2012, customers were able to choose from 9
Isis-compatible handsets, with the range set to expand47.
Another of the many pilots includes Telecom Italia’s roll out
of an NFC-payment trial in Milan’s city centre, with trams for
example already accepting payment via their NFC system as
well as around 1,000 point of sale terminals in shops around the
city centre now also accepting payment48. Other NFC payment
systems have been introduced in countries including the UK,
Turkey and South Korea.

The opportunities are considerable. Consumers benefit
significantly from an integrated and straightforward consumer
experience, built around the simplicity and speed of touchand-go NFC payments. In addition, they will be able to review
their spending and budget more effectively using their collated
transactional data and could benefit from a more personalised
customer experience with relevant advertising and the
functionality of an integrated voucher and loyalty programme.
Retailers would also benefit from the increased speed of
customer payment while for mobile operators it is a platform
for new revenue streams and would secure mobile’s place at the
heart of everyday transacting.
Before wide-scale service rollout can be achieved, there are
a number of challenges that need to be overcome, requiring
cooperation from across the mobile ecosystem and also financial
services regulators. To address user privacy concerns and provide
a seamless customer experience, mobile operators will need to
work together to ensure the interoperability of the technologies
developed. To this end the GSMA has published handset and SIM
industry specifications to enable the development and global
deployment of interoperable NFC services49.
NFC-based commerce has the potential to benefit consumers,
retailers and mobile operators alike. While progress has initially
been modest to agree standards, with the promotion of NFC
technology by handset manufacturers and roll out pilots, the
technology’s long-term future is gaining industry confidence.
René Schuster, CEO of Telefónica Germany, said earlier this year
that eventually “…children will only know from history books
what a wallet and hard cash are”50. As the GSMA discuss in their
white paper on NFC in Retail (Oct 2012), for the technology to
achieve successful widespread adoption in the near future there
must also be cooperation between mobile operators and retailers
– such a change to the way consumers interact with retailers will
inevitably lead to concerns about ownership of the relationship
with the consumer. The more the mobile industry can do to work
with retailers to develop win-win solutions to the implementation
of NFC as a payment method, the more willing retailers will be to
partner with mobile operators to roll out these new technologies
on a wider scale51.

The number of NFC-ready point of sales
terminals in service worldwide is set to
expand from over 4 million in 2012 to

43.4 million
in 2017

45. NFC will Come Out of the Trial Phase in 2013 as 285 Million Enabled Devices are Expected to be
Shipped. ABI Research. November 2012.
46. Press Release: More than 1 in 4 Mobile Users in the US and Western Europe will pay in-store using
NFC by 2017. Juniper Research. May 2012.
47. Pay with Isis. Isis. January 2013.
48. Telecom Italia: NFC cell phone payments trial starting in Milan. Telecom Italia. October 2012.
49. Technical Papers. GSMA. January 2013.
50. Telefónica O2 to begin beta testing NFC payments in Germany. NFC World. January 2013.
51. GSMA white paper – NFC in Retail. GSMA. October 2012.

37


Globally, more than 2.5 billion adults do not have
access to a formal bank account, the majority of
whom live in developing economies according
to the World Bank52. This means around 48%
of the world’s adult population is not able
to access basic financial services in order to
save, borrow or transact53. The prohibitively
high cost of a traditional physical bank branch
and the lack of other basic infrastructure
such as Point of Sale (PoS) terminals has until
recently made the provision of such services
impossible to a significant section of the world’s
population. However, with the rapid growth of
mobile technology in emerging markets, new
technologies are enabling access to banking via
a non-traditional route for a growing number
of people and in the process driving social
development and economic growth.

52. Measuring Financial Inclusion. The World Bank. April 2012.
53. Adult population defined as aged15 or older. Source: World Demographics Profile
2012. Index Mundi. 2012.

38

48+52+M

Mobile
Money
for the
Unbanked

48%

of the world’s adult
population is not
able to access basic
financial services
in order to save,
borrow or transact.


The same World Bank report states that 16% of adults and
31% of those with a formal bank account in Sub-Saharan
Africa have reported using a mobile phone to pay bills or
send/receive money in the last 12 months54. This has been
one of the success stories of mobile money and part of
the growth that saw a small number of initial programmes
deployed 4 years ago rise to around 150 live deployments
globally today, a number which is growing quickly with an
additional 110 deployments currently planned55. With mobile
connections set to grow by 35% between 2012 and 201756
in developing economies and significantly higher mobile
penetration rates than banking penetration rates in these
economies57, the mobile industry is uniquely placed
to deliver growth in mobile money services to the
world’s ‘unbanked’.

However, mobile money hasn’t grown as fast as some had
predicted. While Safaricom’s well known mPesa service
has been very successful with 14.7 million active users in
Kenya as of March 2012 (approximately 35% of the country’s
population)58, many other services have not yet seen
such a high level of success. In 2012, GSMA counted six
mobile money services that have more than 1 million active
customers globally, three of which crossed the “1 million
active” barrier during 2012.
The GSMA recognises additional work needs to be done to
accelerate the growth of mobile money and has identified
challenges in four key areas that need to be overcome to
more effectively reach the unbanked.

What will it take to go faster?
Operational
challenges

Lack of enabling
regulation

A need for further
learning

• Driving usage

• Burdensome customer
registration rules

• Lack of best practices
in some aspects of mobile
money

• Building, managing and
incentivising agent
networks
• Attracting new customers

• Limits on types of firms
that can provide financial
services
• Regulations around mobile
money agents

• Adequate financial
investment and resources
are required

Under-investment
• Demonstrating viability at
a time of risk-avoidance
• Setting expectations
around the investment and
time required to make
Mobile Money grow and
become profitable

Source: Mobile Money for the Unbanked Annual Report 2012. GSMA. October 2012.

When such services do take off, enabled by appropriate regulation or partnerships
with financial services organisations and supported by best practices and common
standards, the potential for growth is significant. To support this potential and drive
growth, the Mobile Money for the Unbanked programme is conducting research
and building a library of best practices, with support from the Bill & Melinda Gates
Foundation, The MasterCard Foundation and the Omidyar Network. By learning from
existing deployments and facilitating the discussion, Mobile Money for the Unbanked is
working to help build scale in the industry to realise the potential social and economic
benefits of bringing financial services to the unbanked.

54.
55.
56.
57.
58.

Measuring Financial Inclusion. The World Bank. April 2012.
Mobile Money for the Unbanked. GSMA. January 2013.
GSMA Wireless Intelligence. January 2013.
Financial Inclusion. The World Bank. January 2013.
Timeline. Safaricom. March 2012.

39


3.1.2

Developing Collaboration
Models with Other
Ecosystem Players
The rise of smartphones, the mobile Internet and above all the introduction of mobile
apps have all driven a fundamental change in the relationship between the consumer
and the mobile operator. As discussed in chapter 1, traditional voice calls and SMS
represent only a small part of consumers’ mobile phone usage habits. This change has
created opportunities for mobile operators to find and develop innovative content
through the support of start-up companies, or for mobile operators to support and
work more closely with existing content developers. This section explores how mobile
operators are now playing a much more active role within the ecosystem by enabling a
wider and richer set of applications to be launched – both via their own innovation and
through collaboration with other ecosystem players.

Investing in Innovation
Before the advent of the smartphone, mobile devices were self-contained devices with feature innovation largely
driven by handset providers and customer relationships primarily owned by operators. The new reality of the
mobile world is that innovation is now just as likely to come from ‘value added’ services that are designed to
operate on a smartphone and normally utilise the phone’s mobile broadband connection – sometimes called Over
The Top (OTT) services – as from hardware or operating system advances. Mobile operators are uniquely placed
to bring their network assets and customer understanding to the table to enrich such content and services in a
way that stand-alone developers often can’t – and many mobile operators are now investing in such services and
bringing their network assets to bear to deliver innovative new products and services to consumers.
For example, when Orange in France withdrew its own music platform WorMee to take a stake in and partner
with online music streaming site Deezer.com in July 2010, offering a premium mobile access level as part of its
packages to new subscribers, the number of new paying subscribers on Deezer jumped from 6,000 per month to
100,000 per month and as of October 2012 Deezer is estimated to have 2 million paying subscribers (see Figure
15). By leveraging their own customer base and integrated billing platform, Orange was able to break down the
barrier of consumers’ reticence to pay for such services and by investing in Deezer and demonstrating that it has a
future, Orange has been able to open new doors for Deezer and support development of improved services. Other
mobile operators who are now also partnering with Deezer include businesses from the France Telecom, Deutsche
Telekom, Telenor and Millicom groups across four continents59.

59. Deezer: Profitability Down the Line? INA Global. August 2011.

40


growth in
new paying
subscribers
by
partnering
with a
mobile
operator
# of new
paying
subscribers
per month

100,000

x17
6,000
before partnership
with Orange

after partnership
with Orange

Source: Deezer: Profitability Down the Line? INA
Global. August 2011

Figure 15

The importance of Over The Top services as part of the overall
value chain will continue to grow. By investing in innovation
and partnering with the wider ecosystem, mobile operators can
bring their assets, scale, technical expertise and operational
experience to bear to support the growth of innovative
companies – creating jobs and contributing to economic
growth – and to deliver new products, services and choice to the
consumer.
Similarly, France Telecom recently invested US$20 million in a mobile
security company called Lookout, a provider of security software for
mobile phones. France Telecom plans to preload Lookout’s software on all
its phones and considers this investment as a major strategic move into
a new area of mobile security, addressing the privacy and security issues
which are becoming more prominent with proliferation of smartphones.
The service is expected to appeal both to businesses (especially ones
dealing with confidential information) and consumers60.
Another approach being taken by mobile operators is to set up their own
Venture Capital (VC) funds to invest in start-ups. SK Telecom in South
Korea for example has set up a VC fund in California with US$100 million
to invest in both seed and early stage revenue-generating ventures that
can leverage SK Telecom’s assets and expertise to develop innovative new
products and services61. Similarly Telefónica Digital – a global business
division of Telefónica that looks to create new business opportunities62 –
has set up the ‘Amérigo’ network of VC funds in Spain, Brazil, Chile and
Colombia, with a combined value of US$378 million to invest in innovative
mobile ecosystem start-ups that are looking to expand, complementing
its existing ‘Wayra’ incubators that have supported seed stage startups since April 201163. T-Mobile Ventures, Vodafone and AT&T also have
investment initiatives in place to drive growth in technology and content
development. T-Mobile Ventures, for instance, operates funds with assets
under management of over €720 million in 2011, geared towards investing
in start-up companies that present synergies with Deutsche Telekom’s
various business units. Its ‘Connected Life and Work Fund’ invests in
Internet and media start-ups that develop products and services related
to accessing online content through a variety of convergent technologies,
products and services64. T-Mobile Venture’s 15 year track record is one of
the largest and most successful corporate venture capital companies in
the world with over 170 successful investments such as BelAir Networks,
CoreOptics, Danger, Demandware, Flarion Technologies, Jahjah and Starent
Networks65. In Japan, NTT DoCoMo – one of the country’s largest mobile
operators – announced in February 2013 the formation of a 10 billion Yen
(US$109 million) venture capital fund to identify and fund new businesses
related to mobile66.

60. France Telecom Invests Up To $20M In Lookout, Preloads Its Mobile Security Solutions On To Android Handsets. Techcrunch.com. December 2012.
61. SKVC. SK Telecom. January 2013.
62. About us. Telefónica Digital. January 2013.
63. Why Telefónica Is Acing It With A New $378M LatAm Fund And A Growing Incubator Network. Techcrunch.com. September 2012.
64. www.T-venture.de
65. Crunchbase.com T-Venture Company Profile: http://www.crunchbase.com/financial-organization/t-venture
66. DOCOMO to Establish Venture Fund and Incubation Program. NTT DoCoMo. February 2013.

41


Delivering Exceptional Experiences
through Network APIs
Mobile operators have many network assets that can be used by other players in
the mobile ecosystem, such as app developers, to create innovative new products
and services for the consumer. For example, access to operator billing platforms can
enable developers to offer the benefits of trusted operator services more easily to their
customers. In order to make these and other assets available to external developers –
who may range from large trusted partners through to individual developers– mobile
operators need to develop network Application Programming Interfaces (APIs) that
allow a developer to access and use the mobile operator’s network assets via a set of
defined functions, while still ensuring data security and protecting users’ privacy.
The potential to deliver value to the consumer and the wider
ecosystem – by allowing access to existing network assets via
APIs – is not a new concept, as outlined in a 2012 white paper by
Oracle67. Many of the major online players follow this route. For
example, in January 2012 Netflix saw almost 41.7 billion API calls
(requests via the API to execute an operation – such as to request
data), up from 0.6 billion two years previously68. Similarly, eBay
saw 1 billion per day in Q1 201269. With the potential revenue for
communications service providers70 that could be enabled by APIs
estimated to be US$115 billion per year by 201571, more and more
mobile operators are now focusing on this area.
To address this opportunity, the OneAPI programme is a global
GSMA initiative to provide application programming interfaces
(APIs) that enable applications to exploit mobile network
capabilities, such as messaging, authentication, payments and
location-finding with a cross-operator reach. For example, a
messaging network API could be used to enable an app to send
an SMS message to another device, while a payment network
API could be used to add an in-app purchase to the user’s mobile
phone bill.
Major operators, such as AT&T, Deutsche Telekom, Orange,
Telefonica and Vodafone, Rogers, Bell Canada and TELUS, are
working with the OneAPI initiative to expose network APIs
through their developer programmes.
OneAPI will significantly reduce the time it takes to develop apps
that make use of mobile networks’ capabilities. One of the OneAPI
initiative’s core objectives is to enable network-enhanced apps to
be rolled out worldwide without modification. Moreover, OneAPI
is designed to enable developers to access network APIs using
open and standardised web technologies, which allow developers
to easily integrate them in apps implemented with all kinds of
software technologies for all kinds of platforms, like iOS, Android,

67.
68.
69.
70.
71.

42

BlackBerry, Windows and Windows Phone as well WebApps
running in the browsers on all these platforms and the native
HTML5 platforms from FirefoxOS, Tizen and Ubuntu.
This approach ensures that larger operators can customise the
services available on their own platforms, while still allowing
mass market reach, and enables smaller operators, who haven’t
invested in their own APIs, to expose their network capabilities to
developers.
As part of the OneAPI programme, the GSMA, together with
leading technology provider Apigee and associated operators, has
developed the OneAPI Exchange to facilitate operators to federate
between their exposed APIs in order to provide cross-operator
reach to developers. The OneAPI Exchange does not require
mobile operators to discard APIs they are already providing. The
new flexible solution architecture gives operators the choice to
provide developers with either a standardised API interface or
their own proprietary API interface. Using a federated approach,
the new GSMA OneAPI Exchange ensures that apps using an
operator’s proprietary API interface will still have the reach across
all operators integrated to the Exchange regardless of whether
they expose standardized API or custom APIs on their own.
The OneAPI Exchange forms part of the wider OneAPI
programme, which includes the OneAPI Gateway platform. The
Gateway was commercially launched in 2012, in partnership with
leading Canadian operators Bell Mobility, Rogers and TELUS and
is operated by Transaction Network Services (TNS) and Aepona.
Since its launch, the OneAPI Gateway has delivered access to apps
that use network APIs to 93 per cent of Canadian consumers.
The Gateway will be integrated into the global OneAPI Exchange
solution.

Making Money Through Service Exposure and The New Business Models It Enables - Page 6. Oracle. June 2012.
Netflix API Presentation to Paypal Daniel Jacobson. Netflix. May 2012.
Founder of ProgrammableWeb. Musser, John. 2012.
Extends beyond mobile operators but does not include the wider ecosystem.
Making Money Through Service Exposure and The New Business Models It Enables - Page 6. Oracle. June 2012.


3.1.3

Mobile Operators
Co-operating to Develop
Common Standards
Mobile Operators are working with new partners from outside
of the telecoms ecosystem as described in the previous section,
to offer greater value through the exposure of mobility to new
areas for the global customer base. Mobile operators and their
industry partners – especially network equipment manufacturers
and device vendors – co-operate in a range of alliances and
forums to define common technical standards that are then
adopted by the industry as a whole. For example, in NFC mobile
payments, Isis has been developed collectively by operators,
handset manufacturers and NFC terminal vendors, whilst the
GSMA Connected Car Forum has been established to advance
the development of mobile technologies in the connected
automotive sector, involving operators, chipset makers and
major automotive companies.
However, over the last few years there have been two key
areas where mobile operators have worked within the GSMA
to define industry-changing standards that will underpin the
next generation of mobile communication services through
the extension of the principles behind the success of mobile
telecoms to date. Voice over Long Term Evolution (VoLTE)
and Rich Communication Services (RCS) are both IP-based
standards, where the GSMA has taken a lead role, developing
these next generation technologies to ensure consistency of
design and implementation that will ensure that the principles
behind voice and SMS services today will extend into the
future. These principles are based on interoperability and
interconnectivity, to allow a single standard to be used by
all operators.

43


COMMON STANDARDS

Setting VoLTE as the
Standard
With increasing demands for bandwidth from mobile subscribers, mobile operators
have been deploying ever greater speeds of data connections, through the launch of
networks supporting HSPA, HSPA+ and most recently, LTE (Long Term Evolution).
Until the advent of LTE, voice and SMS were operated on a traditional ‘circuit switched’
network, whilst data traffic is delivered via a physically and functionally separate
‘packet switched’ network. However, 3GPP, the Standards body that defined LTE, chose
to exclude circuit switch services from the definition of LTE and so a new model for
delivering voice and SMS was required.

Initially, a number of competing technologies appeared to fill the
gap that had been created. Having multiple options for making
a voice call would not have been an acceptable end point for
the industry, since the fundamental principle of interoperability
would no longer be in place. Interoperability is key to enabling the
industry to generate the huge economies of scale that keep costs
and prices low. If multiple standards had been allowed to pervade,
then anytime a voice call was made between networks supporting
different standards, the call would either fail or an additional piece
of equipment to interwork between the differing implementations
would be needed. Multiple standards would oblige every operator
to acquire and operate interworking functions and would also
increase the Research and Development costs of equipment
vendors since they would need to develop multiple standards to
address the full market. As a result, a single option was selected –
this option was GSMA’s Voice over LTE (VoLTE).
To develop VoLTE, the GSMA took on the work of the One Voice
Initiative – made up of a small number of mobile operators,
network equipment vendors and handset manufacturers – who
had defined a specific implementation for voice calls using IP
Multimedia Subsystem (IMS) as its basis and for delivery of voice
over LTE radio networks. The VoLTE initiative quickly defined an
implementation that was backed by many major industry players
and then adopted to promote the same principles that the current
GSM world benefits from – all customers using a single technology
that works across all networks and devices, thus reducing
complexity in both the infrastructure and interconnect ecosystems.

72. A computer program that encodes or decodes a digital data stream.

44

Voice over LTE establishes voice calls using the data path of an
LTE network. However, the signalling and voice paths of a VoLTE
call are explicitly identified in the LTE network to allow them to be
handled with the appropriate levels of Quality of Service to deliver
a service that is better than today’s voice calling. Voice calls rely on
low delay and high levels of reliability for call establishment and
so VoLTE call signalling and voice paths are allocated high quality
levels both within a mobile network and across an interconnect to
another network. In addition, VoLTE calls can use higher quality
voice codecs72 and even have high quality video included within
them – all enabled by the high bandwidths that LTE supports.
The world’s first VoLTE services were launched in South Korea and
the USA in August 2012 and a number of other markets expecting
deployments over the coming months. Some networks have found
it necessary to deploy an ‘interim’ solution whereby voice calls
are pushed back on to 2G and 3G networks, but these do not offer
the enhanced quality of service of VoLTE and also do not enable
the simplification of network infrastructure that having all voice
and data service over LTE can offer in the long term. The roll out
of VoLTE may take time to cover all markets, but the long term
benefits of a consistent approach to voice over next generation LTE
networks will benefit the whole ecosystem – and the consumer.


COMMON STANDARDS

Building a Common
Platform with RCS
Whilst voice calls and SMS remain the dominant means of mobile communication,
many users communicate primarily through Facebook or other social media
providers. Alternatively they may use Over The Top (OTT) chat providers such as
WhatsApp or the chat functionality built into their phone’s software. However, each
of these new communication methods is a closed network – that is, the contact
on the other end must have the same software installed, the same operating
system, or be registered on the same website. Whilst many of these services have
huge customer bases, they do not enable the ‘call anyone’ or ‘text anyone’ service
experience that exists in the mobile ecosystem.

In response to this, the GSMA and its member operators have
worked together to develop a Rich Communication Service –
branded ‘joyn’ – to sit alongside VoLTE. RCS will allow the user
to communicate via instant messages, chat and group chat, in
addition to voice calls using VoLTE. It will also have the benefit of
showing social presence information – in other words the user’s
status such as ‘online’ or ‘away’ – and will facilitate the sharing
of live video and files. The major differentiator of this service
compared to an ‘Over The Top’ (OTT) service is the extended
reach of the mobile operator community’s customer base. There
is no need to sign up to a specific app or webpage – the service
will be integrated into the handset and will work regardless of
what network the user is on, allowing them to contact anyone on
any other network in the world. RCS also extends into personal
computers, tablets and in the future to other consumer devices to
allow a fully connected and integrated communications service.
RCS applications have already been created by third party
developers for iOS, Android and Windows operating systems
amongst others and it is starting to become available on many

devices straight out of the box. With the technology being
interoperable over any network with all contacts that have a
RCS-enabled phone, this also means that once phones have RCS
installed as part of their standard functionality the user will be
able to reach a greater list of contacts with RCS than current chat
and instant messaging applications – delivering a more integrated
and consistent rich communications experience.
Once RCS-enabled phones reach a critical mass in the market and
more RCS services are launched, it should become the natural
rich communications choice for the consumer. In fact, commercial
implementations have already been launched in Spain, Germany,
Korea and USA and launches have been committed to in a number
of other markets as the momentum for RCS continues to build.
RCS is a good example of mobile operators working together in
a collaborative way to address changes in user behaviour, create
new products and services based on agreed standards and ensure
maximum portability and innovation by the wider ecosystem –
thereby enhancing the value proposition for consumers.

45


3.2

Original Equipment
Manufacturers
Before the rise of smartphones, the mobile device manufacturers were the
primary drivers of software and content innovation, as well as new hardware
development. However, with the rise of mobile Operating Systems (OS) such as
Android, Windows 8 and iOS, finding ways to differentiate themselves in terms
of form factor and hardware functionality has become a growing challenge for
Original Equipment Manufacturers (OEMs).

This is perhaps one of the reasons why tensions have been running
high over the last few years in regard to patents, as form factors
converged. Since the introduction of Apple’s iPhone in 2007 and
the subsequent convergence of form factors for devices, there has
been a drive to innovate, differentiate and develop new products
such as tablets, mini-tablets (typically a 7 inch screen) and
‘phablets’ (typically a 5 inch screen aimed originally at the Asian
market) of which consumers are key beneficiaries.
Much of this innovation has come in the form of new technology
and functionality. For example Apple improved their display
with the introduction of the ‘retina display’, Nokia are offering
PureView – a technology that guarantees blur-free photos – and
Samsung have created camera functionality called ‘Best Photo’
that lets the user take 8 photos at once and choose the best
one. Innovations have also been seen in the user interface, with
Samsung for example developing a technology called ‘Smart Stay’
in some of their phones that can determine if the user is looking at
the phone and if so prevent the phone going into standby mode.
Another new piece of functionality that has been developed allows
the user to call a contact that is displayed on their screen simply
by lifting the phone to their ear – with the movement detected by
an internal gyroscope. Other examples of innovation in the wider
market include phones that can be rolled up (the Samsung ‘Youm’
screen which is still in development) and augmented reality tools
that turn the phone’s camera into a display providing information
about the city around the user (Nokia City Lens).

46

Another development has been the inclusion of NFC technology in
most new phones, as discussed in an earlier section. Samsung for
example has developed their ‘S Beam’ technology, which allows
two Samsung users to transfer contacts, documents and photos by
placing their devices back to back.
Form factor innovation has also been seen in the tablet market.
Most tablets have followed a similar design to the smartphones,
but a gap in the market between the smartphone and tablet
for mini-tablets and ‘phablets’ has been exploited by a number
of OEMs such as Samsung’s Galaxy (‘phablets’), Google (minitablet) and Amazon (mini-tablet). This drove Apple to respond
with the introduction of the iPad mini (a mini-tablet). This new
market has provided a greater level of choice to consumers and
new opportunities for innovation – such as Samsung’s ‘S Pen’
on the Galaxy Note, allowing a user to sketch and take notes
on their ‘phablet’. OEMs have focussed on form factor and
hardware-enabled innovation as a key battleground in the fight to
differentiate themselves and protect or grow market share while
preserving price points.


3.3

Infrastructure
Development
Just as devices have seen constant innovation recently, so too has the mobile
infrastructure that supports them. With the continued growth of the mobile Internet,
expanding smartphone penetration rates and the roll out of ever faster networks, data
consumption is rising exponentially. This will be driven in large part by the full roll out
of 4G LTE, given its ability to facilitate the fast downloading of high quality video.
Mobile network infrastructure is being upgraded to support 4G LTE technologies
and volumes and this will required significant capital investment. The scale of this
investment is highlighted by IHS, who projected in January 2012 that global capital
spending that year on LTE technology would be US$8.7 billion, rising to US$24 billion
in 2013 and to US$36 billion by 201573.
Although mobile networks may sometimes be viewed as a
substitute to fixed, in fact a large part of a 4G mobile network
infrastructure is made up of fibre in the ground linking the tower
sites to the core network. Where this infrastructure does not
already exist, mobile operators are building out fibre networks
extensively. This is even true in many developed countries where
mobile operators have sufficient traffic demands, especially from
the explosion of data traffic, to justify building their own fibre
networks.
One result of the significant costs of investing in new technology
is a similarly focussed drive for efficiency. As well as upgrading
their networks for 4G LTE, mobile network infrastructure players
are finding new ways to increase network coverage and improve
network speeds for their customers. In the United States for
example, mobile operator Sprint is implementing its ‘Network
Vision’ programme – investing between US$4 billion and US$5
billion to consolidate its various networks and update its network
technologies in a single, more efficient network74. Similarly, mobile
infrastructure giant Ericsson is preparing for the continued growth

of mobile data consumption by improving the way its equipment
uses spectrum. The company recently announced plans to enable
the refarming of existing GSM spectrum for use with 3G and 4G
services, without affecting the quality of voice calls, to enable
their network to better support the anticipated increase in HD
video and music consumption75. Operators in many markets are
also cooperating with each other to build shared networks as
well as with vendors to explore more efficient operating models.
Consequently A.T. Kearney estimates that total network cost per
GB (including the capital investment) will decline by at least 10%
p.a. in the years ahead. Mobile infrastructure is the foundation on
which the whole mobile ecosystem is built. It has to scale, remain
up to date and become more efficient in order to withstand both
the growth in usage and on-going pressure to reduce costs and
innovate in service quality.

73. LTE Expected to Dominate Wireless Infrastructure Spending by 2013. IHS. January 2012.
74. Sprint Network Vision Information Center. Sprint. January 2013.
75. Ericsson’s must-sees at MWC 2013. Ericsson. February 2013.

47


3.4

Content
Smartphones are increasingly taking their place at the centre of people’s lives. They
enable us to access content at any time from almost anywhere – something many now
take for granted. Once a user starts using a smartphone the act of accidentally leaving
it at home can leave them feeling lost! The smartphone has also changed the way
we interact with the Internet, with Facebook recently announcing that they have 680
million active mobile users as of 31st December 201276, out of more than a billion active
monthly users. Increasingly consumers are using their mobile as their primary device
with which to access the Internet, in particular for communication and entertainment
services due to the ‘always on’ nature of mobile phones.
To cater for this explosion in mobile Internet use, app developers have created a multitude of apps that allow the user to do everything
from monitoring their stocks, learning the name of the song playing on the radio, to launching cartoon birds at cartoon pigs. App stores
supported by business models, tools and communities to encourage developers have been created by a number of different players in
the mobile ecosystem including OS giants Apple and Google. These developer communities have enriched the mobile experience for
consumers through their development of apps in a ‘natural selection’ environment where popular apps flourish and unpopular ones are
pushed down in the rankings.

As new technology is developed, so new content is developed to take advantage:
• With more and more mobiles now NFC-enabled, app developers are creating applications that let the user share contacts, photos
and files in a contactless way with friends. Others are creating ‘mobile wallets’, which allow the user to store their bank and loyalty
cards in a virtual wallet, for use via NFC or Quick Response (QR) codes – a type of matrix barcode.
• With the introduction of gyroscopes (which measure the phone’s orientation) and accelerometers (which measure the acceleration
of the phone’s movement), developers have been able to create much more innovative and intuitive games, where the phone can for
example be swung like a golf club or tilted to fly a ‘flight simulator’ aircraft.
• The introduction of cloud-based systems has allowed for the development of applications that access remotely stored data – such as
the iPhone which allows the user to download and play songs bought on iTunes previously via their ‘iCloud’ technology.
• The introduction of faster 3G and 4G networks have allowed developers to create applications that stream radio and TV, such as
tvcatchup.com’s app which lets the user watch a wide range of UK Freeview TV channels live on BlackBerry, Android, iPhone
and Windows 8.
The role of smartphones at the centre of people’s lives may currently only apply to approximately one in seven of the world’s population,
but this number will surely grow significantly as emerging economies grow and new cheaper smartphones are developed. Analysis from
Business Wire estimates that although it took 16 years for the number of smartphones to reach 1 billion, the second billion will be reached
in just three years by 201577. Smartphones continue to represent a growing route of access to the Internet and services are increasingly
being tailored for mobile as the primary platform. With the growth of application development continuing apace and the promise of RCS
as a foundation for further development which can leverage mobile operators’ network assets, the degree of innovation and choice for
the consumer will surely continue to grow.

76. Facebook.com. December 2012.
77. Strategy Analytics: Worldwide smartphone Population Tops 1 Billion in Q3 2012. Business Wire. October 2012.

48


3.5

OS Platforms
The rise in the importance of Operating System (OS) platforms over the last few
years has been driven by the growth of the smartphone, with consumers looking for
innovative and intuitive interfaces and technologies but also a wide range of mobile
applications to increase the scope of what the device can do for the user. With
penetration rates of smartphones expected to grow strongly, the OS has cemented itself
as one of the key purchase decision factors for consumers.

This growth has also seen healthy and dynamic competition as the
key players in the market push to maintain and grow their market
share. The last couple of years have seen a consolidation at the top
to four main players – generally agreed to be Google’s ‘Android’,
Apple’s ‘iOS’, Microsoft’s ‘Windows Phone 8’ and BlackBerry’s
‘BlackBerry 10’. As the recent launch of the latter has shown,
where 70,000 apps were ready on day one78, a healthy developer
community and a wide range of apps is now a fundamental
requirement for any OS. With a number of OS to choose from,
this has only driven the scale and the quality of the application
development for the top OS players – delivering more choice and
innovation to the consumer.
In terms of market share, International Data Corporation’s (IDC)
Worldwide Quarterly Mobile Phone Tracker report from Q3 2012
shows that Android significantly increased its market share of
shipments, from 57.7% in Q3 2011 to 75.0% in Q3 2012, as it has
done every year since its launch in 2008. In Q3 2012 Android
shipped 136 million units representing an impressive three out of
every four smartphones. Apple’s iOS on the other hand, saw only
a slight improvement on its market share over the same period
from 13.8% to 14.9%, although this hides absolute growth from 17.1
million units to 26.9 million units over the period. Given Apple’s
focus on the high end segment, its revenue market share is higher
at 35% as of the end of 201279.
Microsoft is striving to establish its OS as the third competitor
in this key market. However, despite shipping more than double
the number in Q3 2012 than it shipped Q3 2011, it currently has
just 2% market share globally (based on Q3 2012 shipments of
3.6 million). This may be changing with the release of Windows
Phone 8 in October 2012, which was quickly followed by Windows

Phone 8 supported handsets from Samsung, Nokia, Huawei and
HTC. It remains to be seen whether consumers will propel it into
the league of Android and iOS. An equally important story in the
OS space has been the decline of BlackBerry and Symbian. The
former is pinning its hopes on the new BlackBerry 10 platform
– which has just been released to positive reviews – to reverse
its declining market share, which has halved to 4.3%. Innovative
new features such as an ability to split work and leisure modes of
the OS on the same phone have been developed to try to attract
customers back to the company. Symbian is in sharp decline with
many key supporters such as Nokia switching their primary focus
to other platforms80. The fact that Symbian was the number one
smartphone operating system until Q4 201081 underlines the
dynamic and changing nature of this market.
The operating system market has historically been dynamic,
with a key role played by extensive developer communities. If
the past is any measure, then the future will see the mobile OS
impacted itself by future advances in applications, data storage
and hardware. To pick just one example: while technologies
such as HTML5 are still at an early stage of development, if OSindependent web-based apps were to reach a par with native
apps at some point in the future, then the OS may cease to be as
fundamental to the interface between the user and the developer.
The promise for consumers is of continued competition and
innovation by different parts of the ecosystem, driving new
technologies and greater choice. Major OS companies are
continuing to develop new services and offerings in order to
maintain and grow their market share in what remains a very
competitive market.

78. BlackBerry Z10 Selling In “Large Numbers”, Says BlackBerry — Some U.K. Retailers Sold Out Over The Weekend. Techcrunch.com. February 2013.
79. Apple/Enders Analysis. 2012.
80. Android Marks Fourth Anniversary Since Launch with 75.0% Market Share in Third Quarter, According to IDC. IDC. November 2012.
81. Google’s Android becomes the world’s leading smart phone platform. Canalys. January 2011.

49

SOCIO ECONOMIC
CONTRIBUTION
Ecosystem Revenue Growth

$1.2tn

$1.6tn

2008

2012

5%

$2.0tn
2017

CAGR

Ecosystem Capex Investment

3.7%

3.1%

0.2%

TECHNOLOGY

SOFTWARE

MEDICAL

4.2%

4.6%

6.6%

8%

8.3%

Mobile is one of the most
capital intensive industries

11.2%

11.3%

15%

15.2%

2017
15.2%

PHARMA

AUTOMOBILES

HOTELS

INTERNET

STEEL

OILS & GAS

MINING

MOBILE

Capital Expenditure across a Selection of Industries

MARINE

2012

ELECTRICITY

$199bn

3.7%
$238bn CAGR

Ecosystem Contribution
to Public Funding

Ecosystem Jobs
Created

$490m

$550m

2012

2017

Mobile will contribute

$2.5tn

1,300,000
Adding 1.3m jobs in the next 5 years

to public funding over the 5 years 2013-2017

1.735

1.381

2.386

Ecosystem Contribution to Global GDP

2017

2012
2008

6.6% $10.5tn
CAGR
Mobile will
contribute

2012–2017

to global GDP
over the 5 years
2013-2017

Global Average Revenue per Subscriber

$

2008

$30.3
PER MONTH

$

2012

$25.9
PER MONTH

Increasing
value for
money for
consumers

ARPS, average revenue per subscriber strips out the effects of multi-SIM ownership and M2M
Source: A.T. Kearney, GSMA Intelligence


4

The Mobile Ecosystem’s
Substantial SocioEconomic Contribution
The previous chapter highlighted emerging trends and growth areas in the mobile
industry and how service and product offerings are evolving to meet the changing
needs and expectations of consumers. In this chapter we focus in more detail
on quantifying the socio-economic contribution that the mobile industry makes
to regional economies as well as the role the industry plays in creating a global
mobile economy.

Key Points

GDP CONTRIBUTION
ECOSYSTEM REVENUES
PUBLIC FUNDING
EMPLOYMENT

52

Mobile operators contribute 1.4% to global GDP
directly via their revenues, which are expected to
grow at a robust 2.3% through 2017.
Including the whole mobile ecosystem, revenues
are expected to grow at 4.9% through 2017 to
almost US$ 2 trillion.
The mobile industry makes a significant
contribution to public funding. By 2017, its
contribution is projected to be US$550 million –
primarily as a result of spectrum fees as well as
direct and indirect taxes.
The mobile industry also supports millions
of jobs – projected to grow to 9.8 million
jobs worldwide by 2017, driven largely by
the continued growth of mobile in emerging
markets.


4 .1

Mobile Operators Make a Significant
Contribution to Global GDP
Global Revenues
The mobile industry is a major contributor to the world economy. In
2012, revenues of mobile operators contributed US$1 trillion or 1.4%
of world’s GDP. In some regions the impact of mobile operators is
even more significant, such as in Africa, where mobile operators
generated 3.1% of GDP. Most of the growth comes from Asia Pacific,
which is forecast to grow at 4% p.a. to 2017, adding US$80 billion,
or 23%, to its revenue of US$ 350 billion. While Asia Pacific is a
clear leader in terms of absolute growth, Africa shows the highest
rate of increase and will increase annual mobile operator revenue
by 25% in the 2012 to 2017 to US$ 70 billion. Globally, operator
revenues have been growing by 4% from 2008 to 2012 and are
expected to continue this trend, albeit at a lower rate of 2.3% p.a.
through 2017 (see Figure 16).

The roll out of 4G technology offers the potential for operators
to enhance the services they provide and potentially increase
revenues. In some countries where 4G has already launched,
significant Average Revenue Per User (ARPU) uplifts have been
achieved, reflecting consumer demand and willingness to pay. This
is mostly seen in North America, Scandinavia, Korea and Japan. In
Europe it is still too early to judge consumer reaction to the new
services but it is certainly true that operators are positioning 4G
as a premium service. In Switzerland, for example, Swisscom have
launched tiered pricing based on speed of access with download
speeds ranging from 0.1Mbps up to 100Mbps, rather than the
typical pricing of data services using monthly volume of traffic
bundles.

One of the reasons for the slowdown is the decline of revenues in
Europe. Heavy regulation of Mobile Termination Rates (MTRs), as
well as the Eurozone Crisis, resulted in a decrease over the 2008
to 2012 period from US$248 billion to US$216 billion. The mobile
operator market in Europe is expected to decrease further by 2 %
p.a. to 2017 due to competition and regulation. This trend, together
with the growth in traffic, show the increasing value to consumers,
who are using mobile services more while spending less.

In developed markets such as North America and Europe where
market penetration is high for mobile devices, future revenues will
be driven by higher rates of smartphone adoption, growth in M2M,
new applications and multi-device connections. Faster connection
speeds in developed markets are also driving up usage of data as
well as adoption of second devices, such as tablets.

MNO REVENUES1

CAGR 2012-2017

US$ Bn

CAGR 2008-2012

4.2%
851

889

958

2.3%
1,107 1,124
1,034 1,062 1,085
984 1,002

Other Countries
CIS
Africa
Middle East
Latin America
North America
Europe

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific

1. Excluding revenues from mHealth and mFinance, which are included in Ecosystem revenues
Source: EIU, Wireless Matrix, IDC, Gartner, A.T. Kearney Analysis

Figure 16

53


Increasing
Accessibility of
Mobile Services
Despite the growth in usage of voice and SMS and increasing numbers of data
subscriptions, ARPU rates have declined across every region globally. The overall global
ARPU rate has fallen by 7.6% p.a. from US$19 to US$14 per month, with the highest
reductions in 2010-2012 seen in Africa (-10% p.a.) and Europe (-7% p.a.) (see Figure 17).
The falling ARPU rates indicate that average mobile tariff prices have been decreasing. In
some cases this could reflect price decreases but it is also being driven by the growth of
multi-SIM in developed markets, where a user’s second SIM is on a lower tariff, perhaps
for personal use or data use only. In developing countries it is also a consequence of the
market opening up to lower income segments which have a lower ARPU.

GLOBAL ARPU

ARPU by region

US$ Per Month

US$ Per Month
2008

19.3

17.4

15.7

15.0

2008
2010

2011

2012

Source: GSMA Wireless Intelligence, Merrill Lynch, A.T. Kearney Analysis

54

2012

CAGR 2008-12

10.8

8.8

7.9

-10%

9.8

8.1

8.6

8.7

8.8

-2%

11.8

11.1

9.7

9.3

9.1

-6%

Latin America

13.7

12.0

11.9

11.5

11.4

-5%

Middle East

16.3

16.9

16.2

16.0

15.7

-1%
-7%

Europe

2009

Figure 17

2011

10.6

Asia Pacific

14.1

2010

12.2

CIS

-7.6%

2009

Africa

31.7

29.4

27.1

27.0

23.2

North America

52.8

51.3

49.9

49.9

49.8

-1%

Others

20.4

14.4

13.0

12.1

10.6

-15%


Average revenue per subscriber (ARPS), which excludes multi-SIM and M2M effects, shows a slower decline (see Figure 18). However,
in most regions, except for North America and Middle East, it is still less than in 2008. In North America and Middle East strong
consumption growth – most notably data – outweighed declines in prices with ARPS growing 1% and 2% p.a. respectively in these
regions. Global ARPS fell with a rate of 3.8% p.a. in 2008-2012; here too the largest ARPS declines are in Europe (-5% p.a.) and Africa
(-6% p.a.).
Fierce competition in developed markets, along with increased regulation, has resulted in reduced prices for consumers. While this
increases accessibility to mobile services for consumers, mobile operators need to find ways to successfully monetise their investments
in 4G, otherwise consumers will lose in the long run with investors less likely to repeat for future technologies the significant investment
that is committed to delivering 4G services.

GLOBAL ARPS

ARPS by region

US$ Per Month

US$ Per Month
2008

30.3

28.9

27.1

2009
2010

2011

2012

CAGR 2008-12

15.4

14.8

-6%

15.8

13.7

14.7

13.5

14.3

-2%

20.8

21.2

21.2

20.8

19.7

-1%

Latin America

26.7

24.0

24.9

23.9

24.1

-3%

Middle East

24.7

27.3

27.6

26.5

26.7

2%

53.5

51.1

50.6

47.1

44.1

-5%

North America

2008

2012

16.2

Asia Pacific

25.9

2011

15.8

Europe

28.5

2010

18.6

CIS

-3.8%

2009

Africa

62.0

61.9

62.8

63.4

64.8

1%

Others

19.4

13.7

13.4

13.0

12.5

-10%

Source: GSMA Wireless Intelligence, Merrill Lynch, A.T. Kearney Analysis

Figure 18

One of the emerging trends, especially pronounced in developed markets, is increasing post-paid Subscriber Acquisition & Retention
Costs (SAC/SRC). With the increasing penetration of smartphones and their rising cost, the contract subsidies paid by operators are
increasing. A.T. Kearney estimates that for a typical Western European operator’s postpaid business, total SAC/SRC (which includes
handset subsidies and commissions) increased by 5pp of revenue between 2009 and 201282. While the picture for post-paid SAC in other
regions is likely to be similar, this trend itself is less relevant for largely pre-paid regions, such as Africa or Asia Pacific, where the volume
of contract additions is relatively small compared to pre-paid. In fact, the overall Global SAC trend is estimated to be flat at slightly over
15% of total revenues from 2009 to 201283, as rising post-paid SAC is being balanced out by reductions in pre-paid acquisition costs as
operators scale back their willingness to subsidise devices and move to lower cost distribution channels. Continued focus on the balance
of usage pricing and upfront spend on the device is likely to be a key success factors for operators in all markets, as is the emphasis on
the cost of distribution and the effectiveness of sales and service channels in finding and retaining customers.

82. A.T. Kearney sanitised estimates based on Global Competitive Benchmarking results.
83. A.T. Kearney analysis based on Wireless Intelligence and published operator data.

55


4.2

The Mobile
Ecosystem Benefits
the Global Economy
Mobile Ecosystem Impact

Overall, the whole mobile ecosystem’s revenue was
US$1,551 billion in 2012, equivalent to 2.2%
of global GDP.
Mobile operators are part of a larger mobile ecosystem which
also includes handset suppliers, infrastructure companies,
distributors and content providers. These sectors together deliver
mobile communication services and products to consumers
and businesses84. The ecosystem revenues include the value

retained within the mobile value chain – for example only mobile
specialist mark-up on mCommerce transaction is included – rather
than the total value of transactions. Mobile operators made up
approximately 65% of the entire value chain’s revenues in 2012,
which is an absolute increase of US$151 billion since 2008.

84. The ecosystem revenues include the value retained within the mobile value chain – for example only mobile specialist mark-up on mCommerce
transaction is included – rather than the total value of transactions.

56


Overall, the whole mobile ecosystem’s revenue was US$1,551
billion in 2012, equivalent to 2.2% of global GDP (see Figure 19).
The proportional contribution of mobile operators to global GDP
has been stable over the last few years and is forecast to remain
on the same level through to 2017 – reflecting the fact that a
fast-growing sector in terms of connections and traffic delivered is
facing continued price pressure.
The forecast growth of the ecosystem, 4.7% p.a., is higher than
the growth of the mobile operators themselves in the same
period (2.3% p.a.). This shows how mobile operators, operating
in a maturing industry themselves, continue to prime innovation
and dynamic growth in the wider sector. The overall ecosystem
excluding operators is forecast to grow by 9% p.a. to 2017 with
the most growth coming from sale of handsets (especially in the
developing markets), mCommerce and content creation, which
includes applications and videos.
The overall growth hides some important shifts that are taking
place on the regional level. For instance, the current economic
situation and requirement for cost savings may shift many
industries to Asia Pacific. Handsets manufacturers as well as
infrastructure companies are beginning to relocate production and
R&D centres to developing markets. Good balances of skilled and
low cost labour make Asia Pacific an ideal choice. The best known

example is probably Foxconn, a Taiwanese manufacturer which
owns the largest factory in the world and manufactures mobile
devices for Apple. However, other companies from the developed
world have production in Asia Pacific, including Nokia and
Ericsson. This fact, coupled with the success of Asian companies in
recent years – most notably Samsung and Huawei – is increasingly
transforming Asia Pacific from a consumer of mobile services
to a major supplier to the industry. More than a third of mobile
ecosystem revenue comes from Asia Pacific – US$ 578 billion –
and the projected growth is one of the highest in the world at 6%
p.a.
Asia Pacific currently contributes 37% of global mobile ecosystem
revenues, while Europe and North America contribute 20% each.
In Europe the mobile ecosystem is projected to grow by 1% in
revenue terms through 2017, slowed down by negative growth in
operators’ revenues. The slowdown in Europe, however, is more
than compensated by the fast growth in developing markets.
Africa and Asia Pacific are showing the fastest growth – 7% and
6% p.a. respectively – which represents US$240 billion of revenue
added between 2012 and 2017. This growth will help the global
ecosystem reach almost US$ 2 trillion in revenue by 2017.

MOBILE ECOSYSTEM REVENUES INCL. MNOs
US$ Bn

CAGR 2012-2017

4.7%

CAGR 2008-2012

5.8%
1,236

1,285

1,551
1,404 1,496

1,918
1,757 1,858
1,661

1,951

Other Countries
CIS
Africa
Middle East
Latin America
Europe
North America

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific

Source: Wireless Matric, IDC, Pyramid, Gartner, A.T. Kearney Analysis

Figure 19

57


Mobile Ecosystem
Capex Investment
The mobile ecosystem and especially mobile operators make significant investments
in the economy. In fact, mobile is one of the most capital intensive industries, only
slightly behind Electricity and Marine (see Figure 20). In 2012 alone, the global mobile
ecosystem invested US$200 billion, or 35% more, than the global mining industry. To
put this into perspective, US$200 billion is enough to host fourteen London Olympics –
each year.

capital expenditure across a selection of industries

Capex as a % of Revenues, 2012
Electricity

15.2%

Marine

15.2%

Mobile

15.0%

Metals & Mining

11.3%

Oil & Gas

11.2%
8.3%

Steel

8.0%

Internet
6.6%

Hotels
4.6%

Automobiles

4.2%

Pharma

3.7%

Technology

3.1%

Software
Medical Equipment

0.2%

1. Weighted Average CAPEX / Sales. Selection of 100 companies by sector.
Source: Confidential Operator data; Bloomberg; A.T. Kearney Analysis

Figure 20

The mobile ecosystem continues to invest heavily in the capital
base, with estimated capex growth of 3.7% from 2012 to 2017
globally (see Figure 21). Additional spectrum requirements for LTE,
4G and other Next Generation Networks (NGN) will continue to
drive investment need in fixed and mobile networks85.
In 2009 and 2010 investment slowed down because of the global
economic crisis, as mobile ecosystem players were holding onto
much needed cash. However, the industry rebounded quickly from
the downturn and investments continued to grow through 2012.
Going forward, we expect mobile ecosystem capex to grow
at almost 4% globally. This growth comes largely from mobile
operators, which represent US$164 billion (80%) of the almost

85. CapEx - quo vadis? Managing network ROIC. Delta Partners. May 2012.

58

US$200 billion invested in 2012 and whose investment is growing
at 3% p.a. This increase in investment comes from three types
of mobile operator capex: maintenance, capacity extension and
new services. As the reach of mobile networks grows and they
expand to cover an ever-greater proportion of the world’s land
mass, so the number of connections grows and the capex required
to maintain this growing network infrastructure increases. At the
same time, as we touched upon in chapter 1, the amount of data
that mobile networks must support is growing exponentially,
requiring capex investment to increase capacity – especially in
radio and backhaul networks. With 4G expected to be rolled out in
many markets in the coming years, significant services capex will
be required too.


MNOs capex

CAGR 2012-2017

US$ Bn

CAGR 2008-2012

3.0%

0.4%
161

155

149

158

164

168

178

182

186

189

Other Countries
CIS
Africa
Middle East
Latin America
Europe
North America

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific

MOBILE ECOSYSTEM capex INCL. MNOs

US$ Bn

CAGR 2012-2017
CAGR 2008-2012

3.7%

1.5%
187

172

175

189

199

207

220

227

234

238

Other Countries
CIS
Africa
Middle East
Latin America
Europe
North America

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific

Source: Wireless Matrix, A.T. Kearney Analysis
Source: Wireless Matrix, Capital IQ, A.T. Kearney Analysis

Figure 21

Asia Pacific is set to experience high levels of mobile ecosystem capex investment growth of about 5% p.a. between 2008 and 2017, investing a higher share of revenue than any other region. Greater capex investment is driven by higher projected mobile operator growth
rates and the investment required to support strong smartphone adoption in the region. A recent forecast by ABI Research expects about
62% of the mobile capex in Asia Pacific to be invested in core network upgrades, improving in-building wireless coverage for mobile and
rolling out LTE networks. While 10 of the 110 operators in Asia Pacific already have LTE networks set up, an additional 58 operators are
planning to roll out LTE service in the near future86.

86. APAC Mobile Capex to Hit US$53.3B in 2012. ZDnet.com. April 2012.

59


4.3

The Mobile Sector’s
Contribution to Employment
million mobile applications have been developed for smartphone
and tablet users and this number continues to grow each day,
creating jobs in programming, marketing and support roles.
According to a 2012 study by TechNet, the “app economy” is
responsible for creating over 466,000 jobs in the US alone since
2007 (when the iPhone was first introduced to the market). This
includes jobs at companies that are pure app developers such
as Zynga, which develops game apps for Facebook, as well as a
proportion of staff at larger companies such as Amazon and eBay,
social networking companies, financial services firms, etc. The
same study estimates that the app economy generated nearly
US$20 billion in revenue in 201187.

The mobile ecosystem also plays an important role in providing
employment. In 2012, almost 9 million people were employed
directly in the mobile ecosystem, which was an 18% increase from
7.4 million employees in 2008 (see Figure 22) and 1.3 million new
jobs are forecast to be created by 2017. However, not all regions
are contributing equally to this growth. While employment related
to the mobile ecosystem is growing in Asia Pacific at 5% p.a. from
2008 to 2017, the number of jobs in Europe is decreasing over the
same time period as operators and manufacturers look to lower
cost locations in response to economic pressures.
In developed economies, one of the fastest growing employment
sectors in the mobile industry is the development and marketing
of online content, including smartphone applications, games,
mobile TV and ringtones. In addition, advertising and distribution
of online content is a growing segment and will continue to
generate jobs as operators seek new ways to further monetise
online content such as apps and social networking sites.

Many operators also provide support and investment in the local
communities where they operate. Earlier this year Telefónica
Digital made an investment in a start-up called Taskhub – an
online marketplace that enables people to bid for small jobs
posted in their local area, each with a proposed payment
amount. Telefónica plans to market Taskhub directly, as well as
to encourage local governments and councils to use the site in
markets where Telefónica is present88.

The US is a good example of a market which has seen very strong
growth in jobs related to mobile content development. Since the
introduction of the iPhone, iPad and Android platforms, over a

MOBILE ECOSYSTEM EMPLOYMENT CONTRIBUTION
‘000 Jobs

CAGR 2012-2017
CAGR 2008-2012

3.1%

4.3%

10,003 10,183 10,255
9,446 9,766
8,815
8,234 8,405
7,446 7,881

Other Countries
CIS
Africa1
Middle East
Latin America
Europe
North America

1. Forecast increase in productivity in Africa leads to fewer people being employed in the mobile Industry
Source: Wireless Matrix, Capital IQ, A.T. Kearney Analysis

Figure 22

87. Where the Jobs Are: The App Economy. TechNet. February 2012.
88. Telefonica Digital Makes First Big Wayra Investment. Total Telecom. January 2013.

60

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific


Ecosystem Jobs

In developing regions such as Africa,
the rise of distribution channels has
driven most of the job growth in the
past as distribution channels are highly
labour-intensive with relatively low
productivity. A.T. Kearney estimates
that one in three mobile ecosystem jobs
today is in Africa. In the years leading
up to 2017 we expect productivity in
Africa distribution to increase and begin
to converge with the more developed
regions. This will result in the number
of people employed in the mobile
ecosystem in Africa to remain at 2012
levels as productivity growth offsets the
effect of customer growth. However,
this masks a shift from basic distribution
roles to higher value-adding (and likely
higher-paid) jobs in other sectors. For
instance, many online companies are
investing in Africa-specific content and
applications development like Deezer,
the online music streaming service,
expanding into ten African countries89.
89. Orange’s music streaming service Deezer enters
Africa’s burgeoning music platform market – TV
programmes to follow? Balancing Act. June 2012.

61


4.4

Contribution to
Public Funding
The Mobile Ecosystem’s Contribution
through Tax and Regulatory Fees
The mobile ecosystem makes a major contribution to public funding via a
number of routes including VAT, sales tax, import duties, corporate taxes on
the profit of companies in the sector, social security and income taxes levied
on employees, property taxes and a variety of regulatory fees including
spectrum fees. We estimate that the mobile ecosystem’s contribution to
public funding in 2012 amounted to approximately US$490 billion globally –
a 30% increase compared to 2008 (see Figure 23). As the mobile ecosystem
revenues grow, the contribution to public finding is expected to increase
at the rate of 2% p.a. to 2017, with a projected cumulative contribution of
US$2.6 trillion between 2013 and 2017. The contribution governments get
from the mobile ecosystem is a safe and stable source of income. Even
during the economic crisis in 2008-2009 the tax paid by the ecosystem
continued to grow at a rate of 7% p.a.

62


CONTRIBUTION of MOBILE ECOSYSTEM to
public funding
US$ Bn
CAGR 2012-2017

+2%

CAGR 2008-2012

+7%
371

399

443

463

490

494

506

513

534

550

Other Countries
CIS
Africa
Middle East
Latin America
Europe
North America

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Asia Pacific

Source: Risks and safety on the internet: the perspective of European children: full findings and policy implications from the EU Kids Online survey of 9-16 year
olds and their parents in 25 countries. Sonia Livingstone, Leslie Haddon, Anke Gorzig and Kjartan Olafsson. LSE Research Online. 2011

Figure 23

A large contribution to public funding comes from so called
indirect taxes (60% in Asia Pacific and 70% in Europe) such
as VAT tax, sales tax and import duties amongst others.
Other sources of tax revenue include Corporation Profit
taxes, Social Security (or payroll) tax (paid by employers
and employees), income tax on employees’ salaries and
regulatory fees. Regulatory fees include license fees,
spectrum fees90 and universal service funds. In order to
provide 4G and LTE service globally, mobile operators are
currently investing in spectrum fees, often via auctions. The
GSMA has called for a reduction in the sector’s tax burden
in emerging markets to stimulate growth, as discussed in
chapter 5.

Spectrum auctions have raised a significant amount
of revenue for governments in recent years as mobile
operators invest in improving the speed and capacity of
their networks. In 2011, Spain raised €1.65 billion, while
France raised €3.5 billion in license fees from auctions of 4G
spectrum. In 2012 the Netherlands brought in €3.8 billion,
which was higher than projected by the Dutch government.
In the developing world, India raised US$14.6 billion in
its 2010 spectrum sale. Thailand, more recently, has seen
US$1.4 billion paid in a 2012 3G auction and Brazil auctioned
450MHz of LTE spectrum for US$1.2 billion in the same year.

90. In this report the methodology of how Spectrum Fees are included in Contribution to Public Funding figures has been amended versus the approach taken in the GSMA’s Mobile Observatory series. The fees are now
amortised over a period of ten years, which reflects the ongoing value and eliminates spikes due to auction approaches.

63


4.5

Contribution
to Productivity
Improvement
As described in Chapter 2, there are many
examples of innovations in mobile technology
that are transforming other industry sectors
such as education, retail and entertainment.
One of these rapidly growing areas has been
mobile health, which is aimed at reducing
healthcare delivery cost while improving the
patient experience and outcomes.
In particular, a high impact area has been
remote monitoring using mobile devices for
patients with chronic diseases such as diabetes
or congestive heart failure. As per the VESAG
mobile-based personal emergency response
system (MPERS) described in chapter 3,
mobile devices have the capability to alert
physicians in real time if their patient’s condition
is deteriorating. Routine monitoring which
transmits patient data to physicians keeps
patients out of doctors’ offices for basic testing
and results in a more practical and lower cost
way to care for many patients. A recent study
by the Brookings Institution has found that
patient monitoring technology has the potential
to save US$197 billion in the US healthcare
system over the next 25 years91.

91. How Mobile Devices are Transforming Healthcare. Brookings Institution. May 2012.

64


US$197Bn

A recent study by the Brookings
Institution has found that patient
monitoring technology has the
potential to save US$197 billion
over the next 25 years in the
United States.

In emerging markets, mobile technology can have an
especially strong impact on productivity. In Brazil, for
example, operator Vivo in partnership with ZTE and
Qualcomm introduced 3G technology to aid fishermen92.
The fishermen use 3G-enabled devices with pre-installed
customised software to find buyers, access weather
information and get updates on market prices. This
drastically increases their productivity, helping in such
decisions as whether to go to sea on a particular day,
what price to ask and where to look for customers.
Moreover, the access to mobile Internet and weather
forecasts helps with navigation and safety.
Similarly, in Africa mobile technologies have been shown to aid in labour
productivity. A paper by the United Nations Development Programme93 has
shown that mobile technologies help African farmers by facilitating information
flows and thereby increasing productivity. In many African countries, farmers are
updated about commodities prices through SMS and voicemail – virtually the only
medium (potentially together with radio) through which people in rural areas can
be reached regularly and in a short timeframe. The developments in commodities
prices help farmers make good economic decisions. Furthermore, some countries
allow trade in agricultural products on commodities exchanges through SMS and
voice messages. Together with mobile money, which is relatively widespread in
some parts of Africa, this further helps farmers to sell their product or buy inputs
at fair prices. In addition, in countries like Tanzania, Kenya and Ghana, SMS and
voice information services have been established which help educate farmers on
the best practices of growing their crops.
In the developed world, a growing area is the usage of apps in professional
services firms. The rise of various application platforms on iPhone, Android and
BlackBerry has seen a significant boom in the development of various app tools
and resources to make professionals more efficient and productive, such as travel
apps, expense organising tools and various communication and productivity apps.
Arnold Block Leibler, a commercial law firm based in Sydney, Australia, deployed
BigHand Mobile digital dictation software on 100 of their attorneys’ BlackBerry
devices when they updated their outdated tape-based recording system94. The
application allows attorneys to dictate directly into their BlackBerries and sends a
digital audio file to administrative support staff to transcribe into text. As a result,
lawyers have additional capacity and flexibility to work outside of the office.

92. Brazil Mobile Observatory. GSMA. 2012.
93. The Importance of ICTs in the Provision of Information for Improving Agricultural Productivity and Rural Incomes in Africa. UNDP. January 2012.
94. Case Study: Arnold Bloch Leibler Lawyers and Advisors. BigHand Mobile. 2009.

65

Trust, transparency
& openness
Privacy
Protect mobile
users’ privacy through
transparency,
choice and control

Security

Children
& adolescents

Education

PRIVACY
Data
minimisation

User rights

User choice
and transparency

The majority
of people agree
to mobile internet
privacy statements
without reading
them...because they
are “too long”

89%

of mobile
users want to know when their
personal information is being
shared by an app on their
phone and to be able to turn
this off or on

33.6kW/GB
ENERGY PER GB OF DATA:

201 1

19.1kW/GB

2009

Environment and green power:

2011 2009

25.5 kW/CONNECTION
ENERGY USE PER CONNECTION

23.4kW/CON

Renewable energy sites

36,000

Green house gas
savings from these
sites is 1.67 million
tonnes per year and
the total investment
for these sites is
estimated at
LIVE AND PLANNED
RENEWABLE ENERGY SITES $1.06 billion

Spam

Source: Cloudmark, GSMA

AUTOMOBILE LISTING SPAM

DATING / ROMANCE SPAM

SMS SERVICE SPAM

POLITICAL SPAM

DEBT CONSOLIDATION SPAM

CASH ADVANCE / PAYDAY LOAN

PRODUCT PROMOTION SPAM

PPI COMPENSATION SCAMS

SURVEY SCAMS

From the 300 million subscribers covered by Spam
Reporting Service, the service captured statistics
showing spammers changed their pitches over
52,000 times with over 5,000 unique URLs and
over 5,800 different phone numbers to carry out
attacks in December 2012

BANK / ACCOUNT PHISHING

In October 2012,
Bank Phishing accounted
for 34% of all SMS Spam


5

An Industry
Supporting and
Protecting Citizens
In the previous chapter we discussed the contribution of the mobile industry and
the wider ecosystem to economic development, job creation and public funding
across the globe. This chapter focuses on some of the many ways in which the
mobile industry is supporting and protecting citizens. Mobile operators are taking
an increasingly active role in working with governments, NGOs and other players in
the mobile ecosystem to increase the safety and security of all citizens in a number
of ways. From keeping vulnerable segments of society safe, to supporting disaster
management, mobile technology is empowering the vulnerable with information
they can use to protect themselves and expand their horizons. Furthermore, by
taking steps such as discouraging handset theft, preventing mobile fraud, limiting
the proliferation of spam and ensuring the security of sensitive personal information,
mobile operators are working to ensure that mobile devices remain a safe as well as
indispensable part of everyday life.

Key Points

PROTECTION
CO-OPERATION
PRIVACY
ENVIRONMENT
68

Mobile technology has the power to support and
protect the citizen in a wide variety of ways – from
empowering the underprivileged to protecting the
environment and helping in disaster response.
Supporting and protecting citizens is a responsibility
for the whole mobile ecosystem and the GSMA
is leading the drive to implement innovative new
services and implement robust protective measures
through the sharing of best practices and by
encouraging inter- and intra-industry co-operation.
As with any technology, there are also risks – in
particular around privacy, handset theft and
fraud – which the mobile industry is working with
stakeholders to minimise.
Mobile operators are also playing their part to work
to reduce their impact on the environment with
every tonne of CO2 emitted by operator networks
outweighed by 11 tonnes of emission savings in the
wider economy thanks to wireless technology.


5.1

Protecting and
Empowering our
Society

The mobile industry
continues to make a
growing contribution to
socio-economic wellbeing.
But some of the most
life-changing impacts
are on an individual level,
with mobile technology
helping to improve and
extend education, support
the elderly, empower
women and help when
disasters occur. This
section discusses some of
these impacts, as well as
steps that are being taken
to mitigate some of the
inevitable risks that the new
technology brings.

69


Empowering Women
With greater reach than fixed line telecommunications in developing countries, mobile
phones represent a key tool in efforts around the world to promote equality and drive
empowerment through access to information and education.

In order to support the goals of enabling women’s access to
mobile products and drive the creation of service offerings that
could change the lives of millions of women in low and middleincome markets, the GSMA has developed the GSMA mWomen
Programme, launched by the then U.S. Secretary of State Hillary
Clinton in October 2010 in partnership with USAID, AusAID, the
GSMA and Visa Inc. The programme aims to highlight underserved
women as a market segment in which the industry should invest
through knowledge sharing, seminars and research on the
needs of women in emerging markets. It is a good example of
how by working together mobile operators, non-governmental
organisations, governments and other industries can deliver
improvements that could improve the lives and future prospects of
millions95.
An example of the impact the programme can have is illustrated
by the inaugural mWomen Global Mobile Award for Best Mobile
Product or Service for Women in Emerging Markets, which was
awarded by the GSMA mWomen Global Champion, Cherie Blair,
at the 2012 Global Mobile Awards. The winner was a joint entry
between Etisalat, Qualcomm, D-Tree International and Great
Connection Inc. to create a suite of services (the Etisalat Mobile
Baby) designed to reduce instances of death resulting from
pregnancy in emerging markets. The tool allows for the remote
monitoring of pregnancies by ultrasound and education about
warning signs, which enables emergencies to be acted on more
quickly. It also supports communication to a medical facility of the
needs of the mother on arrival96.

95. GSMA mWomen Programme. GSMA. January 2013.
96. Etisalat Mobile Baby Wins mWomen Global Mobile Award. GSMA. March 2012.

70

In addition, mobile operators and other parts of the mobile
ecosystem are also finding innovative ways to bring about positive
change at large scale with commercial viability. For example,
Iraqi operator Asiacell, part of Qtel Group, performed consumer
insights research on the needs of women, who at the time in 2011
comprised 20% of its subscriber base. The result was the Almas
line of products, including tariffs suiting women’s off-peak usage
of the network and a free service blocking potential harassers
from calling. Today women comprise 40% of Asiacell’s subscriber
base and 1.8 million women in Iraq have been connected to
friends and family and have the tools to become more socially and
financially independent. Similarly, Indosat in Indonesia, also part
of Qtel Group, used consumer insights to design Hebat Keluarga,
featuring an affordable friends-and-family tariff, an application to
locate family members and an extended SIM card validity period.
One year after launch, the package has attracted 2 million female
customers to the brand.
The reach of mobile phones in remote and emerging markets in
particular makes them a unique channel for advancing education
and empowering women to protect themselves and improve
gender equality. The mobile industry is supporting mobile
technology as a vehicle for empowerment and will continue to do
so through publicity, new business models and the development of
new services.


Empowering the
Elderly

The mobile phone is increasingly
proving to be a lifeline that allows
the elderly to keep in touch with
their families and to aid them in an
emergency. For example, the charity
Age UK has recently launched a
‘no frills’ mobile phone to help the
elderly keep in contact and enable
their use of mobiles, which allows
eight contacts’ names to be printed
on the front of the phone to allow
easy calling without having to
navigate a series of menus97. To aid
in emergencies many mobile-based
services have been developed that
allow the user to send a warning
message and connect a voice call
to a friend or relative, simply by
pressing an emergency button on a
device they carry – enabling them
to receive assistance and attention
within minutes should they suffer a
fall, rather than hours or even longer
if they are not able to raise an alarm.

97. Mobile Phones. Age UK. January 2013.

71


Protecting
Children
Across the globe, access to mobile
phones amongst children and
youth has increased significantly.
The increased adoption of
smartphones particularly by the
young has brought many benefits
and opened up access to new
services and products.

72

80%

the number of people aged between
12 and 19 in Switzerland with
smartphones has doubled to 80%
between 2010 and 2012

A study by the London School of Economics
in 2011 found that 41% of all European
children between the age of 9 and 16 have
experienced one or more risk factors

41%


For example, the number of people aged between 12 and 19 in Switzerland with smartphones has doubled to 80% between 2010 and
201298 and in the United States the percentage of 13 to 17 year olds with a smartphone increased dramatically from 36% to 58% in a single
year between July 2011 and July 201299. Research in Europe in 2011 showed that on average 34% of children who access the Internet do
so via mobile phones, increasing to 50% or more in eight countries (see Figure 24). With children increasingly accessing the Internet via
mobile phones, there are great opportunities for improving learning through new educational models, for socialising and for accessing
entertainment. However, increased access to the Internet increases a child’s risk of exposure to some of the negative aspects of the
Internet. A study by the London School of Economics in 2011 found that 41% of all European children between the age of 9 and 16 have
experienced one or more risk factors online including sexual images, unwanted messages or cyber-bulling and 12% of all children were
“truly bothered” by these experiences.

European Children accessing the internet
via mobile or handheld device, by country

78

20

30

13

16

19

AUSTRIA

CYPRUS

GERMANY

IRELAND

NORWAY

SLOVENIA

LITHUANIA

15

8

4

SWEDEN

CZECH REPUBLIC

DENMARK

9

BULGARIA

6

5

POLAND

HUNGARY

7

23

22

17

ESTONIA

ROMANIA

7

12

FINLAND

2

NETHERLANDS

2

15

PORTUGAL

3

13

BELGIUM

4

13

FRANCE

3

TURKEY

31

ITALY

ALL

12

9

SPAIN

8

25 25

44 45

59

26
12

GREECE

34

38 39 39 39
33 35 36

56
53 55
50 50 52
48

UNITED KINGDOM

%, base: European children who use the internet

Source: Risks and safety on the internet: the perspective of European children: full findings and policy implications from the EU Kids Online survey of 9-16 year
olds and their parents in 25 countries. Sonia Livingstone, Leslie Haddon, Anke Gorzig and Kjartan Olafsson. LSE Research Online. 2011

Figure 24

Research conducted by the GSMA in 2011100 in India, Paraguay,
Egypt and Japan indicates that nearly 70% of parents worry about
their children’s privacy and safety when using mobile phones.
With mobile usage for children aged 8 to 18 in these countries
measured at almost 70% – and 40% of all children in these
countries accessing the Internet from mobile phones – the issues
of bullying and inappropriate content are of global concern.
To help protect children from the risks that come with increased
access to the Internet, mobile operators are working closely with
governments and NGOs to ensure that both children and their
parents are aware of the risks and to empower them to take
appropriate action when required. For example, the GSMA leads
initiatives such as The Mobile Alliance Against Child Sexual Abuse
Content, which aims to prevent the use of mobile networks by
those involved in the distribution of child sexual abuse images
and which encourages governments along with all sections of the
mobile ecosystem to share information and work together to help
prevent the proliferation of child sexual abuse content globally101.

Similarly, since 2008 Telenor Norway has worked together with
the Red Cross and The Norwegian Media Authority and Kids
and Media (a charity working to protect children in their use of
digital media) to develop a number of approaches to reduce
risks to children. Since the implementation of these approaches
surveys have shown a drop of 10% in the number of 10 to 15 year
olds in Norway that have been bullied via mobile phones or the
Internet. They developed a ‘Use your head’ campaign to offer
advice and increase awareness of online bullying through visits
to schools, with more than 70,000 children and 12,000 parents
participating since 2008 and created a free service that allowed
parents to block messages to their children’s phones from certain
numbers. In addition, Telenor have developed a capability to block
access via mobile to a list of websites determined by national law
enforcement agencies or Interpol to contain sexual abuse images
of children. This initiative has now been implemented by Telenor in
seven countries102.

98. smartphone penetration among swiss youth grows to 80%. Telecompaper.com. October 2012.
99. Young Adults and Teens Lead Growth Among Smartphone Owners. Nielsen. September 2012.
100. Children’s use of mobile phones - An international comparison 2011. GSMA. 2011.
101. Obstructing the Use of the Mobile Environment by Individuals or Organisations Wishing to Consume or Profit from Child Sexual Abuse Content. GSMA. January 2013.
102. Safe Online Surfing. Telenor. January 2013.

73


5.2

Delivering Trusted
Services
In addition to protecting and empowering society, mobile connectivity has emerged as
an important new enabler to help deliver trusted services to consumers. But the growth
of mobile, like any new technology, has led to new risks for the consumer including
handset theft, fraud, spam and concerns around privacy. In this section we explore these
risks in more detail and discuss how the mobile ecosystem is working together with
other industries and organisations to help mitigate these risks.

Tackling Fraud
Alongside the huge potential of mobile to deliver innovative services comes certain
risks. One of these is fraud. With the ever-growing complexity of the mobile ecosystem
there are many evolving types of mobile fraud and mobile operators must proactively
take steps to protect consumers and deter crime.
Among the types of fraud more commonly experienced is ‘phishing’, where an email
is received asking for personal details or asking the receiver to follow a link then enter
their details and ‘smishing’, which is essentially the same fraud but with the initial
communication via an SMS message. ‘Phishing’ has been around as a computer-based
fraud since before the age of the smartphone and it was an easily transferable approach
for those that wish to defraud using the mobile channel. In October 2012, Bank Phishing
accounted for 34% of all SMS Spam according to the GSMA (see Figure 25).

74


TOP SMS SPAM, OCTOBER 2012
0%

10%

20%

30%

40%

Bank / Account Phishing
Survey Scam
PPI Compensation Scam
Product Promotion Spam
Cash Advance / Payday Loan
Debt Consolidation Spam
Political Spam
SMS Service Spam
Dating / Romance Spam
Automobile Listing Spam

Source: Cloudmark / GSMA

Figure 25

SMS fraud has become a problem all over the world as scammers
are looking for new ways to replace their declining revenue from
email. Scammers change their messaging frequently in an attempt
to bypass filters and to keep their pitch ‘fresh’ in order to hook
more victims. Scammers also closely analyse which messages
garner the highest response rate from recipients and tweak future
messaging accordingly. The GSMA has developed a unique service
that allows operators to get real time intelligence on spam directly
from their subscribers. The suspicious messages and originating
phone numbers are forwarded to a shortcode ‘7726’ which spells
SPAM on the device keypad. The GSMA Spam Reporting Service
(SRS) analyses all reports received and determines a ‘fingerprint’
for the attack. Operators can use this information to terminate
spammers’ accounts, improve policies, develop investigation
techniques and enhance filtering intelligence as well as consider
revisions to network architecture.
From the 300 million subscribers covered by the SRS, statistics
show spammers changed their pitches over 52,000 times with
over 5,000 unique URLs and over 5,800 different phone numbers
to carry out attacks in December 2012 alone103.
However, computer malware (such as viruses, worms and Trojan
horses) is generally developed specifically for an operating
platform and thus has not yet proliferated on mobiles to the same

degree in the way it has on computers. With recorded instances
of mobile malware rising,104 it has the potential to become a
significant future contributor to mobile fraud threats and exploits.
In December 2012, new Android malware emerged sporting
several characteristics of a botnet. The messages that propagated
this malware promised free Android games such as Need for
Speed, Grand Theft Auto 3, Angry Birds and Max Payne. To install
these malicious games, would-be victims were required to disable
key security measures inherent to the Android OS. Swift action led
to the takedown of the attacker’s command and control server on
December 12th, resulting in an almost total eradication of Android
malware SMS on SRS protected networks in the last week of
December105.
Underlining this growing trend of mobile malware, a recent report
by online security firm McAfee has shown a significant increase in
instances of mobile malware detected by Q3 2012 (see Figure 26).
Operating system developers will need to work more closely with
mobile operators and app developers to ensure that mobile does
not become an attractive opportunity for malware developers
and miscreants. In addition, operators will need to continuously
improve their detection techniques if they are to keep up with the
scammers ever-changing tactics.

103. GSMA Spam Reporting Service Mobile Messaging Threat Report. GSMA. December 2012.
104. Malwarenomics: 2012 Mobile Threat. Lookout Mobile Security. December 2011.
105. GSMA Spam Reporting Service Mobile Messaging Threat Report. GSMA. December 2012.

75


21,400

total mobile
malware samples
recorded in
database - mcafee

Figure 26

76

2012

2011

1,100
2010

2009

2008

2007

2006

2005

2004

100

800
200 350 500 600

1,900

Note: Part of the increase in the numbers detected is down to improved ability to detect malware
Source: McAfee Threat Report: Third Quarter 2012. McAfee Labs. 2012


Mobile operators have responded to fraud by both ensuring that effective technical
safeguards are in place and promoting customer awareness – one of the most effective
weapons in the fight against an ever-changing fraud landscape. Technical and process
safeguards protect the customer’s account, for example by deterring and blocking
attempts to hijack the account or to open a new account in their name.
In the United States, AT&T is conducting research at
their Security Research Centre in New York City to
‘ensure security is an enabler, not a limitation, of mobile
technology’, by looking into emerging mobile threats and
ways to contain them106. As part of this they are looking
into ways that SMS-related attacks and spam, as well as
mobile ‘botnets’ (linked networks of mobiles infected with
malware) can be detected by a mobile network in real-time,
by analysing network performance data107. By identifying a
threat early, the hope is that the mobile operator could then
be able to isolate infected phones to prevent the malware
propagating, stealing users’ information or running up large
bills.
Another step that has been taken to improve customers’
defence against fraud is the GSMA’s ‘Security Accreditation
Scheme’ (SAS). Set up with the support of mobile operators
and leading smart card suppliers, it safeguards the integrity
of smart cards108 and the associated user credentials and
authentication data, reducing risks such as accidental or
intentional cloning during the manufacturing process. 33
supplier sites are currently accredited, covering 23 smart
card suppliers in 18 countries109. This scheme allows all GSM

mobile operators to easily assess whether or not a smart
card supplier’s security meets industry agreed and audited
standards. Suppliers involved in the scheme submit to a
comprehensive security audit of their production facilities
every two years allowing the operator to be sure that the
smart cards they provide to customers have been protected
from interference and potential fraud by rigorous security
standards. In this way, customers have another layer of
protection against the financial and identity consequences
of having their accounts compromised.
However, effectively combating mobile fraud requires
more than just a vigilant customer and a proactive mobile
operator. It is an issue for the whole mobile eco-system and
effective and timely co-ordination across the eco-system is
essential to protect the customer from new types of fraud.

106. Finding Solutions To Growing Mobile Security Complexities. AT&T. September 2012.
107. AT&T Security Research Center. January 2013.
108. Refers to SIM (2G) and USIM (3G) cards.
109. Accredited Smart Card Plants. GSMA. January 2013.

77


Tackling Mobile Theft
Another unfortunate consequence associated with the growth of mobile is device
theft. As the mobile phone increasingly becomes a ubiquitous part of daily life for
people around the world and with handset resale values increasing in both developed
and emerging markets, incidents of mobile theft are unfortunately also rising in
some countries. In addition, as mobiles are increasingly used to execute banking and
other sensitive transactions and with smartphones holding more personal data– for
example identity, contacts and communications – than any other single database, the
importance of approaches to deter theft and reduce its impact increase.
Against this background, mobile operators in a number of markets
have taken an active lead in the effort to fight and deter theft,
by blocking the use of stolen phones from their own networks
and from other networks via the GSMA-maintained International
Mobile Equipment Identity (IMEI) Database for all GSM devices.
Mobile operators can connect to this central register of all mobile
phone handsets to share details of handsets that have been
reported as lost or stolen by customers to their mobile operators.
In this way, mobile operators that have a connection to the IMEI
Database can ensure that stolen handsets from other networks are
blocked from use on their networks and vice versa. In the event
of a reported theft, the mobile operator can suspend the account
to prevent the customer being charged for fraudulently used
services, block the SIM card and then update the IMEI Database to
identify the handset as stolen110.
The IMEI Database has been in use since 1996 and every year more
mobile operators are connecting to it to share their databases of
stolen handsets. In July 2012, thirteen of the main Latin American
mobile operators committed to connect to the GSMA database –
following the example set by Costa Rica where all operators have
done so – and collaborating with regional governments to make
the trafficking and reuse of handsets more difficult across a region
covering more than 500 million mobile connections.
Similarly, in the United States – where it is now estimated that
around 40% of all robberies in large cities involve the theft of a
mobile device111 – AT&T, T-Mobile, Verizon and Sprint committed
in April 2012 to block and build databases of stolen handsets,
having previously only tracked stolen SIM cards. They have
chosen to use the GSMA database as their platform of choice
to share stolen handset data and this has been actively used
by AT&T and T-Mobile since the start of November 2012. Sprint
and Verizon have committed to connectto GSMA’s database to
exchange LTE handset details by the end of November 2013112. In
addition, it was announced in November 2012 that data sharing
by the US operators is to be extended to include Mexican mobile

operators to tackle the illegal trade in stolen handsets between
both jurisdictions113. Mobile ecosystem players have also created
innovative new ways to combat theft. Apple for example has
created the ‘find my iPhone’ tool which allows a phone owner
to track the location of a lost phone via GPS, lock the phone,
erase data remotely and send a message to the phone’s screen –
resulting in a number of successfully traced phones followed by
prosecutions that have been covered by the media, thus creating
another deterrent to theft.
Handset theft also represents a significant challenge for new
services such as Near Field Communication (NFC), which enables
contactless payments to be made via a mobile phone at a retail
counter. Challenges exist both in terms of the added technical
security considerations, but also in terms of consumer confidence
– a key requirement for any technology involved in processing
payment transactions. Steps that are being taken to protect
customers when using mobile phone-based NFC for payments
include the automatic disabling of NFC payment functionality in
phones reported stolen (in addition to the standard approach of
suspending the account and blocking the handset and SIM) and
creating guidelines in partnership with government and banking
industries that require the use of PIN codes for transactions above
a certain value114.
Mobile operators around the world are proactively working
together and with the GSMA, with national governments and
with regulators to help build approaches that can effectively
and efficiently deter handset theft and make mobile customers
safer. The faster that mobile phones can be made unusable once
stolen, the less likely it is that thieves will be tempted to steal
and sell them.

110. IMEI Database. GSMA. January 2013.
111. Chairman Signs New Bilateral Accord to Combat Mobile Phone Theft. FCC. November 2012.
112. U.S. Wireless Industry Announces Steps to Help Deter smartphone Thefts and Protect Consumer Data. CITA - The Wireless Association. April 2012.
113. Chairman Signs New Bilateral Accord to Combat Mobile Phone Theft. FCC. November 2012.
114. Latin American Mobile Operators Commit to Combat Mobile Device Theft. GSMA. July 2012.

78


Mobile Services Privacy
The growth of smartphones and the emerging but fragmented mobile ecosystem
has led to mobile app privacy becoming a key concern worldwide. This is an issue
for the whole of the mobile ecosystem to address. Key concerns exist around the
collection without the users’ awareness or consent of device IDs, user behaviour
and location data, access to contact lists and other user generated data.
There have been many reports identifying these issues and
concerns – for example, a 2010 survey by The Wall Street Journal
identified that of 101 popular apps sampled, 47% shared the
phone’s location without the user’s knowledge or consent, and 5%
shared age and gender details115. In addition, several high-profile
examples of mobile applications collecting data without the user’s
awareness or consent have served to keep the topic high on the
public agenda.
Research shows that users want to be able to choose and control
their information and in particular expect to be asked before
private data, such as their location, are shared. Equally, they want
to be able to turn off sharing of data if desired. Yet the complexity
of privacy issues in the mobile space can sometimes make it
difficult to effectively convey options and rights to users, as
Facebook has similarly found in online social media. For example,
November 2012 consumer research in Brazil and Mexico by the
GSMA showed that just over half of all mobile internet users who
have signed up to a website or an app regularly agree to a privacy
statement on their mobile without reading it116.
The global mobile ecosystem is complex and fragmented. It is
characterised by a lack of consistency in how consumer privacy is
treated. This lack of consistency does not aid users in becoming
familiar with the privacy implications of apps or the privacy
choices available to them. Even the law may not be consistent. In
Europe for example, EU ePrivacy rules apply to the cellular location
processed by mobile operators but not to more precise GPS or
WLAN location data. Recognising these challenges, the GSMA
has taken the lead and established a Mobile Privacy Initiative.
Working with members, the GSMA developed a set of Mobile
Privacy Principles outlining how privacy should apply in the mobile
environment. This was quickly followed by the development of a
set of app privacy guidelines which describe how the Principles
could apply at a practical level. These guidelines are being
implemented by a number of European mobile operators, who
also recently agreed and adopted an accountability framework
to ensure the guidelines are implemented effectively. The GSMA
also conducts research to better understand the types and scale of
mobile privacy concerns of consumers.

Privacy and data security are also key for enterprise mobile
customers – business depends on confidentiality, with the potential
for significant monetary and reputational consequences if it is
breached. With employees’ expectations for mobile working being
driven by their personal mobile experiences, increasingly there
is a trend towards a ‘Bring Your Own Device’ (BOYD) approach
whereby employees access their work content via their personal
mobile phone. While this can simplify the employee’s mobile
experience, it creates additional data security and privacy issues for
corporate IT departments, as well as for the employee around their
adherence to appropriate use policies. A 2012 report by Gartner
cited BOYD as the top concern for enterprise mobile security117.
Some device manufacturers have taken steps to try to address this
issue – most recently BlackBerry with the release of their new BB10
operating system that allows an enterprise user to set up separate
work and personal profiles and switch between the two – but this
is an area that is going to become increasingly important as more
businesses and employees switch to a BYOD approach.
Privacy is an issue that affects the whole mobile ecosystem and
therefore requires a coordinated and co-operative response. The
GSMA continues to foster dialogue across the ecosystem and
with policy makers and regulators, and is seeking to create a
forum in which stakeholders from across the mobile ecosystem
are encouraged to come together to discuss concerns related to
mobile privacy. This will help the development of more effective
ways to help users manage their privacy and such efforts and
engagement have been reflected in recent initiatives such as
the US Federal Trade Commission’s report on “Mobile Apps for
Kids: Disclosures Still Not Making the Grade”118, the publication
of “Good Privacy Practices for Developing Mobile Apps” by
the Privacy Commissioners of Canad119 and “Privacy on the Go:
Recommendations for the Mobile Ecosystem”, issued by the
California Attorney General, Kamala Harris120. It is hoped that
the wider mobile ecosystem and international policymakers will
follow the lead of the mobile operators in creating better and more
consistent user privacy experiences121.

115. Your Apps Are Watching You. The Wall Street Journal. December 2010.
116. Privacy Research Latin America. GSMA. December 2012.
117. Gartner Survey Shows BYOD Is Top Concern for Enterprise Mobile Security. Gartner. June 2012.
118. Mobile Apps for Kids: Disclosures Still Not Making the Grade. US Federal Trade Commission. December 2012.
119. Good Privacy Practices for Developing Mobile Apps. The Privacy Commissioners of Canada. October 2012.
120. Privacy on the Go: Recommendations for the Mobile Ecosystem. California Attorney General, Kamala Harris. January 2013.
121. GSMA Announces New Initiative Addressing Mobile App Privacy. GSMA. February 2012.

79


5.3

Aiding Disaster
Management
In 2012, there were 83 reported natural disasters in Asia (the location of nine out of
every ten people affected by disasters from 1950 to 2011) killing 3,100 and affecting 64.5
million people, while causing US$15 billion in economic damage122. Worldwide, the World
Bank estimates that 780,000 people have been killed in disasters over the last ten years,
with more than two billion people affected and costing a minimum of US$960 billion.123
In addition to this, the social impact of such disasters can be immeasurable, from the
immediate threat from the spread of disease through to the impact on education of the
young and the psychological impact of uncertainty about the location and welfare of
loved ones.

However, with the increased adoption of mobile phones
throughout the world and the growth of phones with GPS
positioning capabilities, mobile phones and networks are now an
essential tool for emergency response and disaster management
teams, as well as providing important tools and information to
protect and aid individuals. Given the critical and growing role
of mobile technology in disaster preparedness and response,
the GSMA launched its Disaster Response Programme in 2011
to support mobile operators in coordinating with humanitarian
response agencies, improving technical resilience and supporting
customers.
Even before a disaster occurs, mobile communications are playing
an important role in quickly disseminating information about
imminent and potential threats. This can mitigate the impact by
allowing people to take action to avoid the worst effects. In Sri
Lanka, for example, the mobile operator Dialog Telekom and its
partners launched a Disaster and Emergency Warning Network
(DEWN) in January 2009. The network allows the Sri Lankan
government to send warnings to all Dialog customers’ mobile
phones – in additional to specially developed alarms that can be
fixed in buildings – via a system that was developed on a noncommercial basis in response to the 2004 tsunami124.
The Emergency Operation Centre (EOC) of the Disaster
Management Centre in Sri Lanka has been given access to the

122. Asia 2012 Figures and Trends. naturaldisastersnews.net. January 2013.
123. Natural Disasters. The World Bank. January 2013.
124. Dialog Employs Celltick’s CBC Platform for Mass Alert Warning System. PRWeb.com. June 2009.
125. Disaster and Emergency Warning Network (DEWN). Dialog Telekom PLC. January 2009.
126. Disaster Relief Activities. TeliaSonera. November 2012.

80

system and in the event of an emergency can initially send alerts
to emergency responders as well as sending a public warning to
all those at risk once the threat is confirmed. This message can
be targeted based on the individual’s location to ensure that the
right people receive the information and mass messages are sent
via Cell Broadcasting technology that is not subject to network
congestion and thus ideal for disaster communications125.
In the days and weeks after a natural or man-made disaster,
operators can quickly and flexibly set up a temporary mobile
network which is an essential tool that enables the emergency
response and relief teams to react quickly and get essential help
to those most in need. Network operators can assist individuals
too by reducing tariffs to allow the affected population to
communicate and access vital information, aiding recovery efforts
and improving public safety.
For example, after the January 12th 2011 earthquake in Haiti,
TeliaSonera ensured that all their customers in the country could
communicate globally free of charge between 15 - 29 January
and during the war in Georgia in 2008 they launched a number of
initiatives to provide information to the people of Georgia, such
as ‘WAR facts’ via MMS/SMS. This ‘WAR facts’ service provided
important updates on what was happening to those affected, at
a time when it was very difficult to get information by any other
means126.


With such a large number of people affected, the opportunities
for mobile operators to work with governments and NonGovernmental Organisations to save lives and livelihoods are
significant. For example, Justin Forsyth, the Chief Executive of
Save the Children said recently at London Business School’s
‘Mobile for Good Summit’ that his organisation requires the
support of mobile operators to harness the power of mobile
technology for emergency response. A key enabler of this, as
indicated by research carried out by Jigsaw Consult and funded
by the Vodafone Foundation, is finding new and better methods
of collaboration between humanitarian agencies, mobile
operators and governments127. In the aforementioned Haitian
earthquake for example, there was a co-ordinated effort between
mobile operators, the US State Department, Thomson Reuters,
various NGOs and other ICT players to enable post-disaster
communications and assistance, including amongst other things
the creation of an SMS code for free transmission of text messages
in Haiti. A co-ordinated response such as this can maximise the
potential impact and make a real difference to the lives of those
affected128.

With the people most vulnerable to natural disasters often also
being among the poorest or most remote, the mobile phone
is unique in its potential reach and speed in facilitating the
communication of information that can save lives and aid recovery
efforts on a very significant scale. Many fundraising appeals also
leverage the potential of premium SMS billing and tap into smaller
donations that can amount to a substantial boost to funds (not
just for disaster relief) – for example £66 million was donated
via SMS in the UK in 2012 and this figure is expected to grow to
£150 million by 2015, according to the UK’s phone-paid services
regulator129. This has been supported in part by Vodafone’s
‘JustTextGiving’ collaboration with JustGiving, a UK-based online
website that facilitates charitable giving. The service allows
charities and individuals to easily set up a code with which mobile
phone users can donate money by sending an SMS message, with
mobile operators waiving fees so that 100% of the donation goes
to the charity.

127. Save The Children Research Funded By Vodafone Foundation Identifies Critical Importance Of Mobile Technology In Disaster Zones. Vodafone. December 2012.
128. The Haiti earthquake: breaking new ground in the humanitarian information landscape. Humanitarian Practice Network. October 2010.
129. Charitable donations by premium rate. PhonepayPlus. December 2012.

81


5.4

Protecting the
Environment
Climate change and the impact of greenhouse gases has become an important topic
for all industries. The mobile industry is playing its part to reduce its impact on the
environment and holds the potential to make a net positive impact on issues such as
greenhouse gas emissions.
One step the GSMA has taken to drive more environmentally
friendly approaches in the mobile sector is to set up the ‘Green
Power for Mobile’ programme. Launched several years ago,
this programme is dedicated to delivering on the potential of
renewable energy for mobile networks. So far there are over
36,000 live or planned renewable energy sites – primarily mobile
base stations – that are estimated to save 1.67 million tonnes of
greenhouse gases per year. This is in contrast to the less than
9,000 such sites that existed just three years ago, but admittedly
is still a small proportion of all network sites. To support this
programme, the GSMA has run feasibility studies in 24, mostly
developing, countries and has published over 50 case studies and
reports to share both business and technical knowledge with other
industry stakeholders and promote the growth of sustainable
mobile technologies.
Another step taken by the GSMA has been to encourage mobile
operators to commit to certain targets and then to provide the
support and means both to get there and to measure progress
and performance along the way. The first of these steps was
the release of the ‘Mobile’s Green Manifesto’ report in 2009,
which proposed to reduce greenhouse gas emissions by 40%
per connection from a 2009 level by 2020. Progress against this
has been positive, with emissions per connection being reduced
by between 3% and 5% p.a. on average and energy per unit of
traffic has in fact been reduced by between 20% and 30% p.a. on
average.
The GSMA has launched a Mobile Energy Efficiency (MEE) service
to provide the support and measure progress against these targets
– with which most leading mobile operators are now engaged.
With a target of cutting operator energy costs by over US$2
billion per year, this service allows the mobile operator to assess
their efficiency and benchmark themselves in areas such as CO2
emissions, energy consumption and cost against other operators
in their region. It also offers a follow-on optimisation service that
supports mobile operators to identify a path to meet their targets.

For example, Australian mobile operator Telstra has been
measuring its carbon emissions for over a decade, but in 2010
made significant changes to its technology to try to achieve
mobile energy savings. These included the installation of various
temperature control technologies and upgrading of equipment
for more effective low power operation. As a result, Telstra
achieved A$1.5 million annual energy savings – and significant
improvements in their GSMA MEE benchmarking results130.
Similarly (but separately to the GSMA), the Chinese equipment
manufacturer ZTE announced in November the launch of an
‘Energy Saving Solution’ that is reported to be able to reduce the
power consumption of LTE base stations by up to 40%131. However,
it’s not just major players that are trying to find efficiencies.
A start-up called Eta Devices is currently developing a power
amplifier that could potentially cut base station energy use by half.
To put that in context, the MIT Technology Review which described
the technology in October 2012 explained that it will globally
cost US$36 billion to power mobile phone base stations this year
using nearly 1% of the world’s electricity production132. Therefore,
a reduction by half would have a significant impact not just on
mobile operators’ bottom lines, but on global energy needs.
The full potential of mobile lies not just in reducing its own impact
on the environment. The mobile industry has the potential to
completely negate its own impact and positively reduce the
impact of other industries many times over. Analysis by the GSMA
has shown that by 2020, the overall potential for greenhouse
gas emissions savings enabled by the mobile industry is 11 times
higher than the total emissions of the mobile network sector (see
Figure 27). The potential to impact other industries covers many
areas, but two key areas are increasing the efficiencies of supply
chains through smart logistics and improving the efficiency of
energy supply and demand through Smart Grids, as described in
chapter 2.

130. Telstra achieves A$1.5 million in mobile network energy savings. GSMA. September 2012.
131. ZTE Launches Innovative Energy Saving Solutions for LTE Networks. ZTE. November 2012.
132. Efficiency Breakthrough Promises smartphones that Use Half the Power. MIT Technology Review. October 2012.

82


900

forecast mobile ghg
emmissions vs enabled
ghg emissions savings
Mt CO2e

80

75

70
3
MOBILE ENABLED
NETWORK EMISSIONS
EMISSIONS SAVINGS
2010
2011

18
MOBILE ENABLED
NETWORK EMISSIONS
EMISSIONS SAVINGS
2015
2015

MOBILE ENABLED
NETWORK EMISSIONS
EMISSIONS SAVINGS
2020
2020
POTENTIAL

Figure 27
Note: Includes dematerialisation. Excludes double-counting and rebound effects.
Source: GSMA Analysis. Mobile’s Green Manifesto. GSMA.

The GSMA together with six major handset
manufacturers also launched an initiative
to standardise the power interface used
for charging and connecting handsets.
The benefit of this decision is that once
such universal chargers (based on the
Micro USB standard) are in widespread
use, manufacturers and operators will no
longer need to include a charger with every
new handset sold. The EU has estimated
that discarded phone chargers represent
51,000 tonnes of waste per year and this
initiative has the potential to reduce this
significantly, saving resources and reducing
unnecessary costs.
The examples highlighted in this chapter
help to illustrate the challenges that
the mobile industry faces in serving a
diverse customer base in a complex
global ecosystem - and how each of these
challenges is being overcome. While by
no means exhaustive they demonstrate
the continued commitment of the mobile
industry to changing lives through the
provision of innovative new services in an
environmentally friendly way, ensuring the
safety and security of the vulnerable and
making its promise of ‘connected living’
one that advances the broadest possible
socio-economic agenda.

83


Asia Pacific
can unlock
US$1 trillion in GDP
through spectrum
harmonisation
for mobile broadband
Digital Dividend
Allocation of 700MHz ‘Digital Dividend’ band to mobile
will create new jobs, businesses and government
revenues between 2014-2020.

2.7 MILLION
CREATE 2.7 MILLION JOBS

1.4m
Support 1.4 million
new businesses

$171bn
Increase government
revenues by US$171 billion

Delay

2016

A delay in the release of harmonised spectrum of even
1-2 years, to 2015 or 2016, would mean signiﬁcantly
less job creation and GDP growth.

2015
1 YEAR DELAY 2 YEAR DELAY

84

1 YEAR DELAY = 500000 FEWER JOBS

2 YEAR DELAY = 900000 FEWER JOBS

$110bn $244bn

TOTAL LOSS OF GDP

Asia Paciﬁc countries that do not harmonise will experience frequency
interference up to 100 kilometres on both sides of their borders, greatly
diminishing their own potential gains and those of their neighbours

Non-compliant
countries would
experience

Neighbouring
countries would
also lose up to

5%

3%

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��
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less economic gain

of GDP growth

30%

10%

less job growth

less job growth

30%

11%

less NEW BUSINESS

less NEW BUSINESS

18%

12%

less government
revenue

less government
revenue

Research conducted by The Boston Consulting Group


6

Global Enablers to
Spur Further
Investment and
Growth in the Mobile
Industry
Key Points

GROWTH

Mobile infrastructure is as important to a country’s
economy as the energy grid or transportation
network – it is a key enabling infrastructure that
drives and supports growth in the wider economy

PLANNING

Given the growth trajectory of the mobile industry
– and mobile broadband in particular – planning
for future growth must happen now. Allocating
spectrum released by Digital Dividend to mobile
needs to be a part of this planning.

TRANSPARENCY

86

A transparent, consultative and predictable
regulatory environment – from spectrum licencing
through to competition, taxation and intellectual
property – is essential for securing investment in
the mobile ecosystem required to deliver a stable
infrastructure for commerce and new technologies
and innovations to the consumer.


The mobile telecommunications industry is a key driver of both economic and
social development across the globe. It advances technology, enables new business
models that could not have existed without it and improves the efficiency of existing
ones, creating jobs in the process and providing an important source of funding for
governments. It extends the reach of healthcare, education and finance in developing
countries. In doing so, it connects us all more closely, allows us greater access to
information and the world around us and empowers the vulnerable. The mobile industry
is one of the most transformational industries in the world today, enriching the daily
lives of almost half the world’s population.
The infrastructure on which the mobile industry relies must be
continually developed to support new technologies, services,
features and also to scale to meet the growing demand for both
connections and overall traffic. Mobile network infrastructure is
more than just the technology required to allow the consumer
to make calls or access the Internet, it is now as important to a
country’s economy as the energy grid or transportation network,
a key enabling infrastructure that drives and supports growth
in the wider economy and needs to be viewed and invested in
as such. This is especially true in developing economies without
well-developed fixed networks and where the mobile phone has
become an essential lifeline for individuals, enterprise and their
communities.

Major investment is required to continue the development of
this infrastructure so that capacity can be built to meet the ever
growing demand and so that new services can be launched which
bring greater economic benefits. There are a number of critical
areas of regulatory and public policy covering spectrum, pricing
and competition which need to be addressed to create the right
foundation to attract and nurture this investment. If these areas
are not addressed, then it will not be possible to achieve the
industry’s full potential. This chapter summarises the areas that
should be addressed.

6.1

Spectrum Measures
to Grow the Mobile
Industry
The fundamental building block of any mobile network is radio spectrum. New
technologies and coding algorithms are able to squeeze ever greater capacity out of
this limited resource but they alone are not sufficient. Spectrum needs to be carefully
managed and its usage planned well in advance to ensure that sufficient capacity
is available and deployed efficiently in order to meet future demands. This section
examines the steps governments and regulators need to take to achieve this.

87


Removing the Barriers to Growth

Spectrum Licencing Process
The process of allocating licences to use
given bands of spectrum needs a clear
and predictable governance process with
the goal of ensuring that this limited
resource is put to the best possible use for
the benefit of all. The most common tool
today for implementing this is an auction
process either for new spectrum or existing
spectrum if a licence has expired and is not
renewed. As an industry, there are two key
measures that can be taken to ensure that
the spectrum licencing process enables
growth, rather than acting as a drag or
burden on the industry.
The first measure is to ensure that there is
a transparent, predictable and consultative
regulatory framework in place which
includes a clearly defined approach to
renewals and the conditions for change
of use (the re-allocation of spectrum for
use by other services where this can add
value). This is vital so that companies
investing in infrastructure can plan for
the long term with the certainty that the
capital equipment they deploy to use the
spectrum will have a long useful life span.

It also allows flexibility so that operators
are not bound to continue operating legacy
technologies, which may be less efficient.
Equally, opaque or unexpected regulatory
decisions and changes in rules of
auctions, renewals or refarming can create
uncertainty which dents the confidence
required to invest in an industry where the
payoffs on investments extend over many
years.
The second measure is to ensure that the
spectrum licencing process doesn’t in
fact represent an excessive withdrawal of
investment from the industry. For example,
the recent spectrum auction in the
Netherlands raised €3.8 billion133 – 8 times
the pre-auction estimate of €470 million
– but this significant amount of money is
effectively being redistributed away from
the mobile industry, in a process that is
now occurring more frequently around
the world. As Neelie Kroes, Vice-President
of the European Commission wrote in
January 2013, “The revenues are used to
finance the budget deficit. It is neither
reinvested in the sector, nor in much-

needed infrastructure”134. At a time when
the mobile industry represents a significant
opportunity for future growth – something
much needed in Europe in particular – it
is vital that governments are looking
to maximise investment in the mobile
industry. Payments for spectrum should
be viewed as an opportunity to secure
investment in infrastructure to safeguard
future growth rather than as simply a tax
on the industry to plug budgetary holes
today.
By ensuring that the regulatory framework
is clear, predictable and supported by
industry, the spectrum licencing process
can continue to represent a successful
approach for optimising this scarce
resource, attracting investment and driving
competition. However, governments
must share the determination to support
investment in mobile infrastructure if they
are to realise the significant benefits to the
wider economy that will be delivered by
having networks which provide advanced
services to all who need them.

Spectrum Caps
Spectrum caps, which sought to prevent
anti-competitive behaviour by limiting the
total amount of spectrum a single mobile
operator can hold, were introduced in the
1990s in a number of countries, such as the
United States where a 45 megahertz (MHz)
spectrum cap was implemented across
urban markets in 1994 prior to spectrum
auctions135.
However, as mobile data traffic continues
to grow, operators increasingly require
more spectrum. In light of this, while
spectrum caps can ensure competition via
a predefined minimum number of players,
they can also undermine the continuity of
services that the biggest carriers will be
able to provide to customers when they
reach a predefined limit, by restricting
access to the required additional spectrum.
Furthermore, in a maturing industry
which requires high levels of investment

to support the infrastructure and roll
out of new technologies such as 4G LTE,
consolidation and aggregation of spectrum
rights is inevitable and in fact desirable
– and new ways need to be found of
regulating spectrum allocation to ensure
competition but account for changes in the
competitive landscape.
In line with this, since 2003 the FCC in
the United States has avoided the use
of spectrum caps, in favour of limiting
the spectrum that can be bought in
any particular auction and conducting
individual assessments of any changes
to spectrum holdings – for example due
to mergers136. This has the benefit of not
arbitrarily restricting the growth of mobile
operators and the industry, while still
ensuring that any consolidation or changes
in spectrum rights are in the interests
of a free and competitive industry. This

133. Christmas Present. Neelie Kroes. January 2013.
134. Christmas Present. Neelie Kroes. January 2013.
135. Spectrum cap to make a comeback? RCR Wireless. November 2012.
136. FCC announces wireless spectrum cap to sunset effective January 1, 2003. FCC. November 2001.

88

is also an approach that has been taken
by the European Union and many other
geographies, but some countries such as
the United States are once again discussing
the idea of spectrum caps and there are
others including many in Latin America
where industry growth is currently being
restricted by their policies. As Cintia Garza,
an analyst with market research firm
Maravedis-Rethink explained in a 2012
report, “Latin America has some of the
tightest spectrum caps in the world, at
an average of 50-60MHz of spectrum per
operator in most countries, while operators
in Europe hold an average 92MHz and
Verizon in the US has 96MHz”137.
It should be noted that even if the caps
only apply during auctions, this still
has significant potential to damage
the industry if the caps are set too low.
Operators who would have been willing


to buy spectrum rights are excluded,
which reduces the net revenues earned
for the government and also restricts
the availability of presumably successful
services. This was demonstrated by the
recent re-auction of Indian 2G licences
in November 2012. Although the auction
raised US$1.7 billion, this was reportedly
less than a quarter of what the government
had been expecting with no bids at all
received for important cities such as
Mumbai and Delhi. The Secretary General

of the Cellular Operators Association
of India, Rajan Mathews, commented
“The limited amount of spectrum... was
guaranteed to have a very detrimental
impact on the auction”138.
Just as clear and consistent regulation
is the key to both successful spectrum
auctions and encouraging investment,
so is regulation on spectrum allocation
to enabling continued growth in the
mobile industry. There will always be

regulation and there must be a process
to prevent anti-competitive market
behaviour, but this should not be done
in a way that risks limiting the natural
growth and transformation of the mobile
industry. Spectrum caps are inefficient
– governments lose potential revenue,
operators’ growth is restricted and
consumer choice is limited because they
are forced to choose operators based on
capacity rather than services or prices.

Accelerating Growth

The Digital Dividend and
Spectrum Harmonization

Spectrum policy also presents a number of opportunities to positively encourage
growth. One of these is the ‘Digital Dividend’. The Digital Dividend is the name given to
the low-frequency part of the spectrum which is freed up as analogue TV broadcasting
is switched off in favour of the much more spectrally efficient digital TV (i.e. more
channels delivered using less actual spectrum). It was first identified in 2007 at the
World Radio-communication Conference139 and with most countries around the world in
the process of switching to digital TV, how to use the spectrum which is made available
is an important decision that needs to be made soon.
Digital Dividend spectrum is ideal for
providing mobile broadband access to
geographically remote areas. Given the
prohibitively high costs of delivering fixed
line broadband to many such remote
areas and the comparatively lower costs
of delivering mobile broadband at these
frequencies, the Digital Dividend is a
unique opportunity to ensure that the
economic and social benefits of broadband
connection can be enjoyed by all – and
not just by those in heavily populated
areas. It is for this reason that the GSMA
has been advocating that Digital Dividend
spectrum should be released to mobile
communications140.
Another area that can positively accelerate
growth in the mobile industry is spectrum
harmonisation – defined by the GSMA as
‘the uniform allocation of radio frequency
bands across entire regions – not just
individual countries’141.

137. 4G Spectrum challenges in Latin America. Maravedis - Rethink. 2012.
138. India 2G telecom auction falls short of target. BBC. November 2012.
139. Digital Dividend Toolkit. GSMA. January 2013.
140. Digital Dividend. GSMA. January 2013.
141. Harmonisation. GSMA. January 2013.
142. iPhone Specifications. Apple. January 2013.

Harmonisation of frequency bands across
countries has a number of benefits.
Reductions in the cost of mobile devices
can be achieved by equipment vendors
since they need to develop fewer models
and can produce them in greater volumes.
An example of the negative consequences
caused by un-harmonised spectrum is the
recent Apple iPad and iPhone 5 launches.
Due to the different frequencies at which
the devices needed to work around the
world, Apple were faced with additional
development costs if multiple devices were
made (as with the iPhone 5) or additional
overall handset costs if just one device
was made that could work at all required
frequencies. With the iPad one device was
created but without the capability to cover
all frequencies – meaning it was effectively
not LTE-enabled in many countries.142
On the network equipment side, taking
an existing product and developing it
to perform the same functions in an

alternative band can take up to two years
due to chipset and radio circuitry design,
which involve lengthy testing cycles, in
particular for frequencies further apart
from existing designs. Another benefit is
the elimination of the interference that
would be experienced at borders if the
same frequencies were used for different
purposes in different countries.
The GSMA and its member operators
are working to ensure that the Digital
Dividend is allocated in part to the mobile
industry to help extend the reach of
mobile in remote areas and to ensure
that governments, regulators and mobile
operators co-ordinate and work towards
the harmonisation of spectrum bands
around the world. These steps will help
accelerate the growth of the mobile
industry and change more people’s lives at
a lower cost of mobile ownership.

89


Accelerating Growth

Economic Effects of
Additional Spectrum
Release
The GSMA has conducted several studies to quantify the potential economic effect of
additional spectrum release. Figure 28 provides a summary of some of the more recent
investigations.
Region/Country

Published Additional Release MHz Assumed Release Year Benefits in 2020 USD

Jobs Created by 2020

China

2013

1200

2014

188 Bn

8.7 m

Asia-Pacific

2012

108

2014

243 Bn

2.7 m

Saudi Arabia

2012

200

2013

14 Bn

0.4 m

Sub-Saharan Africa

2011

250

2014

36 Bn

27 m1

South-East Europe

2012

72

2013-14

0.1 to 0.6 p.p. GDP
growth

not estimated

Figure 28

1. By 2025

Source: GSMA

One of the studies investigated the potential release of 698-806
MHz spectrum band in the Asia Pacific region143. It compared the
benefits of allocation of spectrum to mobile sector as compared
to the next best use – allocation to digital broadcasting. In this
case allocating the spectrum to mobile is estimated to result in an
incremental US$242 billion of GDP in 2020 and 2.7 million more
jobs in 2020 compared to the baseline (see Figure 19). In addition,
it is expected to support 1.4 million new businesses and contribute
an incremental US$52.3 billion to public funding in 2020.
The potential value would come from the increased adoption
of broadband by firms and households – enabled by additional
spectrum and hence better speeds, coverage, service and lower
costs which lead to increased productivity and cost savings. For
example, it is estimated that the small manufacturing sector
in Korea would experience a 3% uplift in productivity between
2014 and 2015, which would directly translate to increased profit
and GDP per person. In addition to productivity and cost effects,
the proliferation of mobile broadband would stimulate business
activity more internet start-ups created and existing businesses
seeing an improved online sales channel with which to reach more
customers at a lower cost.
The importance of harmonisation of spectrum across the
region through coordinated action of Asia Pacific countries is
emphasised in the study. Fragmentation can lead to the loss of the
aforementioned benefits through reduction in economies of scale.
It is estimated that for a single country not harmonising spectrum
allocation to the wider region, the loss of benefits could be as high
as 30%.
The study also highlights the economic benefits of releasing the
spectrum as early as possible. Delaying by one year and allocating
the spectrum in 2015 will lead to an incremental loss of GDP of

US$40 billion and 200-500k potential jobs. Delaying by two years
to 2016 will have an even more adverse effect .
Another GSMA study focused specifically on effects in China144.
Because of the size of population and rapid economic growth
China is witnessing a strong demand for mobile services and
hence for spectrum. In fact it was estimated that demand for
spectrum in China will rise to more than 1,800 MHz, whereas
China currently has only about 700 MHz available for mobile. It
is estimated that if 1200MHz of spectrum were reallocated to the
mobile industry, by 2020 the Chinese economy could be gaining
an additional RMB 1,181Bn (US$188 billion), or 1.7% of GDP. Other
scenarios were also considered, for example allocation of half of
the required spectrum – 600 MHz. In this case the benefits are
estimated at RMB 477 billion (US$76 billion), or 0.7% of GDP. The
study also highlights the potential positive effect on employment:
it is estimated that release of 1200 MHz for mobile broadband
has the potential to create an additional 8.7 million jobs in China
by 2020 (direct and indirect). This number goes down to a still
impressive 3.5 million in case of just a 600MHz release.
Sub-Saharan Africa (SSA) is another region where mobile
broadband (MBB) has special importance and spectrum is an
economic priority. For historical reasons penetration of fixed
broadband is relatively low. In 2012 mobile broadband accounted
for approximately 90% of total broadband connections. However,
the demand for MBB is constrained by the availability of spectrum.
According to the GSMA145, a typical SSA country has 360 MHz
available for MBB, whereas most developed countries have
around 550 MHz. Release of spectrum in this region could result in
additional US$36 billion of GDP in 2020 alone, an increase of GDP
per capita of 2.7% by 2020 and potentially millions of jobs.

143. “The Economic Benefits of Early Harmonisation of the Digital Dividend Spectrum & the Cost of Fragmentation in Asia-Pacific”. GSMA and BCG study. May 2012.
144. “The Socio-economic Impact of Allocating Spectrum for Mobile Broadband Services in China”. GSMA and China Academy of Telecommunication Research of MIIT. January 2013.
145. The Benefits of Releasing Spectrum for Mobile Broadband in Sub-Saharan Africa”. GSMA and Plum. December 2011.

90


Accelerating Growth

Planning for Future
Growth
Given that changes to spectrum policies can take years to
implement, new ways must be developed now to plan for future
growth in spectrum requirements and any plan to satisfy this
demand will need to combine several approaches. These will likely
include reallocating frequencies currently used for other purposes,
such as radio and television, to access new mobile spectrum, or
refarming existing licence conditions to enable more efficient use
of the current mobile spectrum. Another approach is to expand
the current capacity to offload data by vastly increasing the
implementations and usage of WiFi networks in urban areas, or
by using ‘Small cells’ (Femtocells, Picocells and Microcells) – small
radio access points that work on licenced mobile frequencies but
cover very short distances. These often cover the inside of a single
building and research firm Arc Chart estimate there will be five
million shipments of small cells annually by 2017146.

These and other innovative approaches that are developed,
however, require a fair, transparent and appropriate regulatory
approach to ensure that they can be invested in to meet the
challenges ahead. There is a broad consensus confirmed by
all traffic surveys that mobile data consumption will continue
to increase at exponential rates. The GSMA is running a global
‘Spectrum for Mobile Broadband’ campaign to ensure this issue
is addressed. Governments, regulators and other industry groups
need to be working now to identify and secure mobile spectrum
to fulfil future capacity requirements to meet the growing demand
and ensure that future growth is not restricted.

6.2

Avoiding Unnecessary
Restrictions on
Network Management
Net neutrality – the idea that all Internet traffic should be
treated equally – is often raised in relation to mobile and fixed
communications network management regarding the prioritisation
of traffic. One argument is that legislation is necessary to ensure
that all data on the Internet is treated in the same way, but the
reality is that traffic management is a necessary requirement
where capacity constraints exist, as they do - especially in mobile
networks. This is not the same as blocking access to content or
restricting freedom of speech on the Internet.
Mobile operators already have to prioritise between types of data
(i.e. voice vs. data) and types of user (i.e. handset or application
type) in order to ensure the levels of service that consumers
expect. Looking forward, in order to be able to maintain these

service levels mobile operators need to be free to innovate and
create pricing models that are better aligned with the services
that the consumer is both wanting to use and willing to pay for,
as in any business. By creating pricing models that are based for
example on the type of content downloaded, the time of day or
the speed of access and by offering premium services such as
prioritised downloads, mobile operators can more sustainably
provide new services that increase consumer choice.
The mobile industry is a strong supporter of an open Internet, but
the flexibility to manage traffic and innovate on the network and in
customer propositions is required to keep it open and effective.

146. HetNet Market Summary & Forecasts: Macro Cells, Small Cells & Wi-Fi Offload. Arc Chart. October 2012.

91


6.3

Enabling Effective
Competition through
Market Consolidation
Consolidation is an often observed feature of maturing industries that require high levels
of capital investment. As the mobile industry has grown, so has the investment required
– for example, annual capital expenditure across the mobile ecosystem is expected to
reach US$238 billion by 2017, as described in chapter 3. With the prices realised for
each GB of traffic carried in rapid decline, partly due to rapid volume growth and partly
due to intense retail price competition in almost all geographies, operators and their
vendors are constantly seeking network efficiencies.

In this context, it is important for operators to understand the
potential benefits of consolidation, which could enable such
efficiencies to be realised. It is of course equally important that
regulation ensures healthy competition within the industry, but
a balance must be struck that allows for the natural evolution of
the mobile industry – particularly in areas with a high proliferation
of mobile operators such as in Europe. Neelie Kroes, the VicePresident of the European Commission said in the New York
Times “Having a few pan-European operators that are strong
in the cross-border market would not necessarily be bad for
competition”147.
Getting this balance right is key to creating an industry that
is able to reinvest in the services of the future from which the
consumer will benefit. An A.T. Kearney report for ETNO identified
that consolidation in Europe could deliver pre-tax savings of
approximately €5 billion per annum by 2020148 – savings that
could be used to re-invest in the future of the industry.

Ensuring the mobile industry remains competitive is vital if it is
to remain a vibrant and innovative industry. But a trade-off exists
between increased competition and the leveraging of economies
of scale. In some countries, network sharing agreements or joint
ventures are already enabling efficiencies but in many markets
there will need to be a reduction in the number of network
operators – ideally via consolidation or alternatively via exits.
For example, in Cambodia there were at one point eight mobile
operators competing in a market of fewer than 15 million people,
creating a price war that threatened to make it uneconomic to
run a mobile network, especially given the high operating costs
of running a network in a country without a ubiquitous electricity
network. Eventually the operator Mfone became insolvent and its
subscribers were acquired by a competitor, while another operator,
Latelz Co. Ltd., was acquired by a competitor as the market starts
to undergo natural consolidation149.

147. Mergers of European Mobile Carriers Expected to Grow. The New York Times. June 2012.
148. A Future Policy Framework for Growth: Keynote Address at the FT ETNO Summit 2012. A.T. Kearney. October 2012.
149. Frenzied competition and unsustainable price wars delight consumers but thin the ranks of operators, with Thaicom unit Mfone among the casualties. Bangkok Post. February 2013.

92


6.4

Supporting Innovation with
a Common Position on IPR
As a result of a number of high-profile lawsuits in relation to the
so-called “Patent Wars” in the telecommunications industry,
Intellectual Property Rights (IPR) have recently risen in prominence
and garnered the public’s attention. The GSMA has set up an
Intellectual Property Rights Working Group to bring together
the leading IPR experts from major operators and manufacturers
across the globe, to address the industry’s approach to IPR and
ensure the continued health of the operator community, its
suppliers and customers.
The GSMA is also continuing to reach out to the ecosystem in order
to muster support for a common position amongst operators,

manufacturers and regulators aimed at maintaining a balanced
IPR regime within the telecommunications industry, which will
ensure that IPR-related disruption is kept to a minimum for
the benefit of the whole mobile ecosystem. A fair and robust
IPR regime is paramount in order to encourage innovation. The
telecommunications ecosystem must ensure that the IPR regime
affords appropriate compensation to those who invest in the
development of new technology, while safeguarding against the
potential disruptive effects or excessive costs if patent charging is
prohibitively high.

6.5

The Importance of Best
Practice Taxation
As discussed earlier in the report, mobile usage continues to grow
around the world and in particular in developing countries where
it can have a profound socio-economic effect. In order to be able
to reach the poorest, whose lives the mobile phone has the most
potential to change, the cost of mobile technology must remain
low. Mobile operators and the rest of the mobile ecosystem have
worked to deliver this via the development of low-cost handsets
and micro-top-up pricing models, but this effort is negated if
government increases the cost of ownership via heavy taxes on
mobile use or on the investment in mobile infrastructure.
The GSMA supports a best practice tax approach, encouraging
governments not to impose taxes on the mobile industry/
consumer above and beyond the taxation levels for other
commercial enterprises. While to an observer this might initially be
seen as self-interest, it is clearly also in the interests of extending
the mobile franchise to the poorest in society, with all the benefits
this brings to the individual.
Furthermore, it is also in the interest of the governments in
question. By keeping the cost of ownership as low as possible,
an increased number of citizens will be able to benefit from the

mobile phone, which will in turn drive economic development –
generating more tax than would have been collected via taxing
the mobile itself. A recent report by the GSMA in Latin America
showed that an increase in mobile taxation in several countries
had coincided with stalled growth or even contractions in both
mobile penetration and usage in these countries, whereas the
removal of taxes on mobile in other countries (e.g. Ecuador and
Uruguay) had coincided with dramatic increases in both – with
Uruguay for example seeing Minutes of Use per month increase
from around 35 to 130 between 2007 and 2011, with a usage tax
being abolished in 2008150.
The GSMA has long argued that there is a clear link between
the taxation of mobile services and the rate of growth of the
mobile industry in a country. Excessive taxation on mobile
services – in the developing world in particular – is ultimately
counterproductive. It limits the significant impact that mobile
technology can have on the poorest in society, restricts economic
development that could otherwise be achieved for the benefit of
all and ultimately governments lose out on the benefits of growth
which would have outweighed the short-term benefits of tax
receipts.

150. 2012 Latin America Tax Report. GSMA, prepared by Deloitte. December 2012.

93


7 Glossary
2G 2nd Generation Mobile Telecommunications
3G 3rd Generation Mobile Telecommunications
4G 4th Generation Mobile Telecommunications
AR Augmented Reality
ARPU Average Revenue per User
ARPS Average Revenue per Subscriber
Botnet A linked network of devices infected with malware
BYOD Bring Your Own Device – the policy of permitting or
mandating the use of personal mobile phones in the
workplace to access company IT networks
CAGR Compound Annual Growth Rate
Capex Capital Expenditure
CCF GSMA Connected Car Forum
CIS Commonwealth of Independent States
Codec A computer program that encodes or decodes a digital data
stream
DEWN Disaster Emergency Warning Network
EB Exabyte – a unit of measure of data
EEA European Economic Area
EIU Economist Intelligence Unit, a research company
EOC Emergency Operations Centre – Sri Lanka
ETNO European Telecommunications Network Operators’
Association
GB Gigabyte – a unit of measure of data
GDP Gross Domestic Product
GPS Global Positioning System
GSM Global System for Mobile Communications, second
generation standard for networks
HD High Definition

94

HSPA High-Speed Packet Access – a technical standard for mobile
communication based on 3G, but with improved network
speeds
HSPA+ Evolved High-Speed Packet Access – a technical standard
for mobile communication based on 3G and evolved out of
HSPA, but with network speeds that are more comparable
with 4G.
HTML5 Fifth revision of the HTML standard (a next generation
Internet technology)
ICT Information and Communications Technologies
IDC International Data Corporation, a telecommunications
research company
IEA International Energy Agency – an intergovernmental energy
policy organisation
IMEI International Mobile Equipment Identity, a unique identifier
for a mobile phone
IMS IP Multimedia Subsystem
Kbps Kilobits per second – a unit of measure of data transfer
speed
LTE Long Term Evolution, “4th generation” standard for wireless
communications technology
M2M Machine-to-Machine transmission
MB Megabyte – a unit of measure of data
MBB Mobile Broadband
Mbps Megabits per second – a unit of measure of data transfer
speed
MEE Mobile Energy Efficiency – a service provided by the GSMA
to support and measure progress against energy efficiency
targets


7 Glossary
MEF The Mobile Entertainment Forum – the global trade
association for companies that deliver product and services
via mobile

SAS GSMA Security Accreditation Scheme
SIM Subscriber Identity Module

MEP Member of the European Parliament

Small cells Femtocells, Picocells and Microcells – types of low-powered
radio access nodes

MHz Megahertz

Smart card Refers to SIM (2G) and USIM (3G) cards

MMS Multimedia Messaging Service
Mobile Please see Report Methodology Framework section for
ecosystem definition
MoU Minutes of Use
MPERS Mobile-based Personal Emergency Response System
MTR Mobile Termination Rate – charges that a mobile operator
pays for terminating calls on another mobile operator’s
network
NFC Near Field Communication
NGO Non-Governmental Organisation
OEM Original Equipment Manufacturer
Opex Operational Expenditure
OPIS Oil Price Information Service
OS Operating System
OTT Over The Top, or ‘value added’ – a type of mobile service

Smartphone Typically a high-end mobile device with more advanced
computing ability and
Smishing A type of fraud that is based on Phishing but the initial
message is via SMS
SRC Subscriber Retention Cost
SRS Spam Reporting Service
SSA Sub-Saharan Africa
USIM Universal Subscriber Identity Module
VAT Value Added Tax
VC Venture Capital
VNI Visual Networking Index
VoLTE Voice over Long Term Evolution, a standard for delivering
voice calls over LTE networks
WiFi A generally-used synonym for WLAN
WLAN Wireless Local Area Network

PAYD Pay As You Drive
PB Petabyte – a unit of measure of data
Phishing A type of fraud where an email is received, asking for
personal details or asking the receiver to follow a link then
enter their details
PIN Personal Identification Number
QR Quick Response code – a matrix barcode
RCS Rich Communications Suite
SAC Subscriber Acquisition Cost

95


8

Appendix – Definition
of Regions
Africa

Asia Pacific

Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Korea, South, Malaysia, New
Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam

CIS

Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russian Federation,
Tajikistan, Turkmenistan, Ukraine, Uzbekistan

Europe

Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta,
Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland,
United Kingdom

Latin America

Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador,
Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay,
Venezuela

Middle East

Afghanistan, Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria,
Turkey, United Arab Emirates, Yemen

North America

Canada, United States of America

Other Countries

96

Algeria, Angola, Benin, Burkina Faso, Cameroon, Congo, Democratic Republic, Côte d’Ivoire, Egypt,
Ethiopia, Ghana, Kenya, Libya, Madagascar, Mali, Morocco, Mozambique, Nigeria, Senegal, South
Africa, Sudan, Tanzania, Tunisia, Uganda, Zambia, Zimbabwe

Åland Islands, Albania, American Samoa, Andorra, Anguilla, Antigua and Barbuda, Aruba, Bahamas,
Barbados, Belize, Bermuda, Bhutan, Bonaire, Sint Eustatius and Saba, Bosnia and Herzegovina,
Botswana, Brunei Darussalam, Burundi, Cambodia, Cape Verde, Cayman Islands, Central African
Republic, Chad, Cocos (Keeling) Islands, Comoros, Congo, Cook Islands, Croatia, Cuba, Curaçao,
Diego Garcia, Djibouti, Dominica, Equatorial Guinea, Eritrea, Falkland Islands, Faroe Islands,
Fiji, French Guiana, French Polynesia, Gabon, Gambia, Georgia, Gibraltar, Greenland, Grenada,
Guadeloupe, Guam, Guernsey, Guinea, Guinea-Bissau, Guyana, Isle of Man, Jersey, Kiribati, Korea,
North, Kosovo, Laos, Lesotho, Liberia, Macao, Macedonia, Malawi, Maldives, Marshall Islands,
Martinique, Mauritania, Mauritius, Mayotte, Micronesia, Monaco, Montenegro, Montserrat, Myanmar,
Namibia, Nauru, Nepal, New Caledonia, Niger, Niue, Norfolk Island, Northern Mariana Islands,
Palau, Palestinian Territories, Papua New Guinea, Puerto Rico, Réunion, Rwanda, Saint Barthélemy,
Saint Kitts and Nevis, Saint Lucia, Saint Martin, Saint Pierre and Miquelon, Saint Vincent and the
Grenadines, Samoa, San Marino, Sao Tomé and Principe, Serbia, Seychelles, Sierra Leone, Sint
Maarten, Solomon Islands, Somalia, South Sudan, Suriname, Swaziland, Timor-Leste, Togo, Tonga,
Trinidad and Tobago, Turks and Caicos Islands, Tuvalu, Vanuatu, Virgin Islands, British,
Virgin Islands, U.S.


9

Appendix – Report
Methodology
Mobile Ecosystem
The mobile ecosystem considered in this report includes the following companies:
• Mobile operators
• Suppliers of infrastructure and support services, including public and enterprise network equipment
and support services for this infrastructure and ICT infrastructure consultants
• Wireless handset device manufacturers
• Distributors and retailers of wireless handset devices
• Providers for mobile content and service applications, such as mobile internet advertising,
mobile TV, mobile music and ring tones, and wireless and mobile games

Socio-Economic Contribution Indicators
Calculation of economic contribution indicators – namely revenue, capex, employment and public funding – is based on the mix of
primary data obtained from mobile operators for previous joint GSMA and A.T. Kearney studies as well as A.T. Kearney research and
secondary data from such sources as GSMA Wireless Intelligence, ITU, Gartner, Pyramid and IDC. Where new information has become
available that could materially impact the accuracy of forecasts, this has been used and as a result some of the previous estimates made
by the GSMA and A.T. Kearney have been updated.

97


9

Appendix – Report
Methodology
Framework for Calculating the Mobile
Ecosystem’s Value Add
To determine the mobile ecosystem’s supply-side effects on the
economy, the economic direct value add of mobile operators
and wider ecosystem (content and services, distribution, device
manufacturing and network infrastructure) was estimated based
on proxy companies across the value chain in various AP17
countries.
A multiplier was then applied to the direct contribution of the
mobile ecosystem to estimate its impact on other industries.
However, as mobile devices become a daily tenet of the mobileenabled working population’s everyday lives, the potential for
improvement in overall productivity needed to be accounted
for. Thus, the percentage of mobile workers in each country’s

workforce and their average GDP contribution was estimated
(total GDP divided by total workforce) and multiplied by an
estimated productivity gain from mobile usage. The productivity
gain factor used was approximately 4% for developed countries
and 7.6% for emerging countries based on a range of percentages
used in previous studies (5-10%). A lower productivity gain
percentage was used for developed countries based on the fact
that, in emerging countries, mobile phones are often the only form
of communication, and thus without mobile phones workers in
the developing world would be significantly worse off than their
counterparts in developed countries who typically have access to
fixed line access in the office, at home and outside the home.

Connection and Subscriber Forecasts
The report has relied extensively on forecasts of customer numbers prepared by GSMA Wireless Intelligence
– their methodology is described in detail at wirelessintelligence.com

98

GSMA Mobile Economy 2013

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