Feature Article

February 19, 2009

Can Mobile Broadband Save the Economy?

The economy, and President Obama’s stimulus plan, have been discussed at length, at large, as well as right here on MobilityTechzone. That said, there is little impacting the global environment — both business and personal lives — the way the economy is, which is why, amid the plethora of news emanating from Barcelona this week, the economy remained a focal point.
In addition to putting on the 2009 Mobile World Congress event, which attracted more than 47,000 attendees from 189 countries, one of the week’s highlights was the GSMA Leadership Summit, which brought together 400 decision makers from across the globe, who collectively agreed that mobile broadband, in particular, has the ability — perhaps even the obligation — to act as an independent stimulant for the global economy. In an effort to propagate that role globally, participants in the Summit encouraged the increased rollout of mobile broadband services in an effort to facilitate economic growth.
Though governments can play a role in, the mobile communications space is predominantly led by the private sector and, as such, the Summit collectively sought the encourage governments to adopt policies that would drive investment in that space, which includes ensuring appropriate regulation is enacted to create stability, which, in turn, would allow for increased spending on both infrastructure and services.
Wireless spectrum is also an issue, particularly with regards to global communications. One of the conclusions the Summit reached was that it would benefit the global community if governments were to allocate like spectrum for mobile broadband services, allowing for cross-border compatibility. In addition to helping manufacturers achieve economies of scale, this would lower prices for end-users, but has the potential to increase network usage internationally — driving service provider revenue.
“For mobile broadband to be a mass market service worldwide and powerful engine of economic growth, the mobile industry needs both a stable regulatory climate and access to the right spectrum on the right terms,” said Rob Conway, CEO and Member of the Board of the GSMA.  “Wherever possible, governments need to allocate the same chunks of spectrum as other countries in their region, enabling equipment manufacturers to gain economies of scale by producing mobile broadband handsets, computers and other devices that will work in many different markets."

In addition, simple releasing new spectrum for mobile broadband can provide an economic boost. For instance, according to Professor Leonard Waverman and consultancy LECG,   $211 billion could be added to China’s GDP by the release of new spectrum for mobile broadband services in 2009. 
“The rolling out and operation of 3G networks in China will create 300,000 job opportunities directly and indirectly,” said Wang Jianzhou, Chairman and CEO of China Mobile.
A similar act in India could increase that country’s GDP by $95 billion. This growth is a result of a combination of new jobs, new development to support the mobile industry, and a resulting increase in consumer and business spend.
Similiarly, the digital transition — which has now been pushed back to June 12 in the U.S. — should provide an opportunity to drive the mobile broadband space. 
The GSMA says that, “Of the 400MHz of low-frequency spectrum freed up by the switch-off of analog television, 100MHz should be used to enable the roll out of cost-effective mobile broadband networks.”
Choosing the right spectrum is crucial to driving cost efficiencies and supporting economic growth — a mobile broadband network in the 700MHz spectrum, for instance, can be 70% less expensive than the same network in the 2100MHz spectrum that underpins many of today’s 3G networks. 
But above that, with today’s mobile broadband technology — and technologies still in testing and development — mobile broadband should be significantly less expensive to deploy in rural and otherwise underserved areas than running fiber.
Specifically, The World Bank estimates that connecting an individual to a mobile network can cost 10 percent of the cost of providing a new fixed-line connection.
Vendors and service providers alike recognize the value in being able to cost effectively deliver services to not only areas without existing broadband, but also to supplement wireline service in other areas, as usage increases. That is borne out by the many WiMAX- and LTE related announcements made this week.
In the past year, the U.S. has proven without doubt the impact a substantial investment in mobile broadband can have. The more than 15,000 applications available through Apple’s App Store are testament to the development that results from new mobile broadband capabilities — and applications for the latest BlackBerry and Android-based devices are on their way.
What this means is that a confluence of network operators, device manufacturers, and developers can help stimulate the economy. But, in this case, it’s not a question of the chicken or the egg — the networks have to come first
Indeed, recent developments are evidence enough that, as Ray Kinsella learned in Field of Dreams, “If you build it, he will come.”
 “If the mobile industry can continue to grow and develop at the rate it has over the past 15 years, it could act as one of the few locomotives which can help pull our economies out of the current slump,” said Alexander Izosimov, Chairman of the GSMA and CEO of VimpelCom.
If the networks are built out effectively, services and applications, as well as subscribers, will come. That’s a good thing for the global economy.

Erik Linask is Group Managing Editor of MobilityTechzone, which brings news and compelling feature articles, podcasts, and videos to nearly 3,000,000 visitors each month. To see more of his articles, please visit his columnist page.

Edited by Erik Linask

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