November 26, 2016

India to Have More Than 670 Million Mobile Broadband Connections by 2020

According to a new report published by the GSMA, India is the second largest mobile market in the world with 616 million unique users, almost half of the country's population, subscribed to mobile services at the end of June 2016. The report, The Mobile Economy India 2016, further says: "Improving affordability, falling device prices and better network coverage aided by operator investment will help deliver over 330 million new unique subscribers by 2020, taking the penetration rate to 68%."

The report is segmented into four chapters: India mobile market overview; Economic contribution of the mobile industry; Digital India: delivered through mobile broadband; and Reforming to accelerate mobile broadband adoption.

Infographic: GSMA
In addition to the information above regarding India's mobile market, the report explains that India is "seeing an ongoing technology shift to mobile broadband services." Moreover, "With a gradual reduction in data tariffs and growing availability of affordable smartphones for consumers, the mobile broadband connection base is forecast to reach more than 670 million by 2020. By this date, almost half of the total connections will run over mobile broadband networks. There is also an accelerating move to 4G, with the 4G connection base forecast to grow rapidly, from just 3 million at the end of 2015 to 280 million by 2020."

Infographic: GSMA
Regarding the mobile industry's contribution to India's economy, "the mobile industry was responsible for 6.5% of India’s GDP" in 2015, "a contribution that amounts to more than INR9 lakh crore ($140 billion) of economic value added." In addition, "Mobile operators and the ecosystem provided direct employment to approximately 2.2 million people in India across both the organized and unorganized sectors, while approximately 1.8 million jobs were indirectly supported. The mobile ecosystem also makes a highly significant contribution to the funding of the Indian public sector, with approximately INR1.4 lakh crore ($21 billion) in 2015."

The chapter titled "Building Digital India through mobile broadband" begins by noting: "The Indian government’s Digital India initiative was launched in 2015 and aims to utilize the potential of digital technologies to address some of the significant socioeconomic challenges in the country." The report continues to explain that "the initiative looks to empower 1 billion subscribers by providing internet access to all."

Furthermore, "Digital India has three key focus areas and nine pillars. Digital India will be delivered over mobile broadband, given the lack of alternative (fixed line) infrastructure, high levels of mobile ownership in the country and ongoing significant investment by operators to further build out networks and bring affordable services to the country's population."

Regarding the report's final chapter on how policy and regulatory reform can help boost mobile broadband, "Review and reform in three key areas would accelerate mobile broadband access and adoption across the country:
  • India will benefit by adapting regulation to the realities of the new digital ecosystem. Obligations tied to a specific technology, rather than the service provided, distort the market, preventing operators from competing equally with other digital market players.
  • Mobile operators in India carry significant debt as a result of the high prices for spectrum, administrative fees and levies. Reductions of these costs would free resources and foster an atmosphere conducive to investment, which is needed to keep pace with network expansion and improvements to achieve the goals of Digital India.
  • To cater for rising mobile broadband adoption, India should commit to the spectrum bands supported at WRC-15. More importantly, India needs to allocate the 470–698 MHz band for IMT in order to boost mobile broadband and the broader digital economy."
Similar to China over the past few years, Indians will quickly gain access to information and value-added services via smartphones and tablets as a result of an expanding mobile broadband infrastructure. With a growing mobile industry, coupled with policy and regulatory reform, India could become an important market for mobile network operators, cloud storage providers, manufacturers of mobile devices and related network components, and developers of localized software optimized for mobile devices. While my colleagues and I are not actively engaged in the Indian market as of the date of this post, it is a matter of when, not if, we begin doing business in the world's second largest mobile market.

What are your thoughts about the GSMA report? Do you have any recommendations about doing business in India?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

November 18, 2016

The Coming of Age of the Chinese Consumer

"The Chinese consumer has finally come of age. The traditional drivers of China's economy, investment and exports, are struggling, but the country's consumers keep spending." The preceding sentences are the beginning of a whitepaper, The Chinese Consumer in 2030, published by The Economist Intelligence Unit (The EIU) in English and 简体中文. The introductory paragraph continues to explain that "private consumption is now the main driver of economic growth in China, and The EIU expects it will grow in real terms by 5.5% a year on average in 2016-30 – boosting its share of the overall economy to nearly 50%. The incremental growth we expect in private consumption in China over the next 15 years is more than current level of consumer expenditure in the EU."

The report's Executive Summary presents the following key takeaways:
  • Nearly 35% of the population, or around 480m consumers, will meet EIU's "definitions of upper middle-income and high-income by 2030. That represents a sharp increase on the 10% (132m) at present. The emergence of this large population, with a personal disposable income of at least US$10,000, will alter the consumer landscape in China;
  • Income will become more dispersed, rather than concentrated in first-tier cities on the eastern coast. Major interior cities, such as Changsha, Chengdu, Chongqing and Wuhan are set to see sizable leaps, with each having at least 2m high-income consumers by 2030. Nevertheless, smaller cities and those undergoing industrial restructuring risk being left behind, suggesting that high levels of income inequality will persist; and
  • Rising discretionary income will drive changes in consumer tastes and preferences. Around 30% of the spending by the average Chinese consumer is still allocated to food, compared with only 15% in South Korea. As income levels rise, consumers will look to upgrade consumption habits and switch to more expensive and premium brands. We pinpoint how this will play out in the automotive, tourism and financial services sectors."
The authors of the report are correct to note that "understanding these trends and the scope for regional divergence in China will be critical for consumer goods firms. Access to robust data and local knowledge will be essential. There are also challenges to navigate. China's economic trajectory has become more uncertain, and firms will need to monitor risks accordingly in order to stay ahead of the curve."

Regarding the segmentation of the middle class, the report says: "Individuals moving into the lower middle-income bracket will have greater room for discretionary spending on goods and services. Those entering the upper middle-income segment will be looking to upgrade their spending towards branded and premium products."

Doing business in China over the past few years, I have witnessed the tremendous rise, both in population and purchasing power, of the Chinese middle class. And I can attest to The EIU's report that the middle class are purchasing more vehicles (low, booking more vacations abroad (i.e., destinations outside of mainland China), and financial services including insurance and wealth management.

While the topic of information and communication technology is not covered in The EIU report, I am confident that a growing middle class in China will continue the drive to purchase technology products and services. Despite the deceleration to China's economy during the past few years, spending on mobile technology hardware and services remain strong. Lower middle-income consumers are replacing their feature phones with basic smartphones and upgrading their service plans with mobile network operators to access high speed mobile broadband. Those individuals in upper middle-income bracket are upgrading to high-end smartphones. The growing adoption of smartphones in China presents an opportunity to develop value-added services and content optimized for mobile devices.

The report's final sentence says: "In the future ... meeting the needs of a booming and more demanding middle-class group of consumers will be fundamental to [China's] economic sustainability." Do you agree? What are your thoughts about The EIU report?

UPDATE: The EIU held a webinar on Nov. 30, 2016 discussing its whitepaper in greater detail. You can watch a recording of the webinar through this link and download the slides here.

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

November 15, 2016

Insights into GSMA's Inaugural 'Global Mobile Trends' Report

On Oct. 6, 2016, the GSMA launched its inaugural Global Mobile Trends report, which offers "a vast wealth of data and insight on the state of the mobile ecosystem today and mapping out its future development," according to the London, England-based organization's press release. "This flagship report, produced by GSMA Intelligence, the research arm of the GSMA, compiles data on mobile subscriber growth trends, mobile internet adoption, devices, and industry financials from both a global and regional perspective."

The 2016 edition of the Global Mobile Trends report is organized into five sections: Megatrends; Consumer Insights; Industry Performance and Mobile Ecosystem Dynamics; Future View and Regional View.

Asia becoming the growth engine of the mobile ecosystem is one key point found within the "Megatrends" section. In its press release, the organization explains that "more than one billion additional people worldwide will be connected to mobile networks by 2020. Approximately a third of these new users will come from India (337 million), underlining the country's increasing position as the world's most significant mobile growth market, overtaking China."

Furthermore, "China is forecast to add more than 200 million subscribers and there will also be major net subscriber contributions from Indonesia, Pakistan, Bangladesh and Myanmar. In total, these six Asian markets will account for approximately 60 percent of the 1.1 billion new subscribers added globally by the end of the decade." Whether a company is focused on developing hardware or software for the mobile ecosystem, it must consider how to penetrate the rapidly growing Asian market.

The report provides a clear illustration how "the internet is mobile, and mobile is the internet." Over the past 10-15 years, I have witnessed how the increasing adoption of mobile phones (and smartphones specifically) over the past few years has empowered people in developed and emerging markets alike to access the internet. During my travels to emerging markets in recent years, I have come to appreciate how the mobile phone serves as the only access point for millions of people to reach the internet. Therefore, I am not surprised by the report's claim that "mobile internet penetration reached 44% by the end of 2015" and "by 2020 we expect it to be 60%, with smartphones the only access point for many in emerging markets. For an entire generation, the internet is now inextricably linked with mobile and vice versa."

Encouragingly, "Income will become less of a barrier to smartphone ownership." The report further elaborates that "the main sources of future growth in smartphone adoption will be India and a number of other emerging markets (such as Nigeria and Indonesia). This will be driven by continued falls in device costs and rising incomes. Several low-income countries (e.g. GDP/capita below $10,000) will have smartphone adoption rates of 60–70% by 2020, similar to most advanced regions."

Lastly, as a shareholder and executive of ROI3, Inc., a company creating localized content, services, and applications for smartphone and tablet users in Africa, Asia, and Latin America, I am quite pleased to see an important question posed on page 42: "What is local content and why does it matter?" The report correctly says:
In trying to connect the unconnected to the internet, content has for many years been the forgotten ingredient, with efforts prioritized in expanding coverage and lowering the cost of ownership.
These are, of course, fundamental, but so too is the question: is the internet relevant for me? 
The surprising truth is that for many non-users, the answer so far has been no, even if they can access and afford it. 
As such, efforts have shifted among mobile operators and internet companies into designing content and services that appeal on a local level, both in language and in the value proposition.
If you work in the mobile technology industry, I highly recommend reading this comprehensive 121 page report. What information do you find valuable?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

November 4, 2016

Exploring the Recent Progress and Challenges of Tackling Tuberculosis

In the previous post in this blog, I discussed a report published in 2014 by The Economist Intelligence Unit (EIU) that investigates the health challenge posed by tuberculosis (TB) and ways to improve the effectiveness of the global response to it. On Oct. 26, 2016, The EIU announced the publication of an updated report, which evaluates "the progress made in the global response to TB since The EIU’s 2014 study." The 2016 report, Tackling tuberculosis: Recent progress and challenges, first considers "the socioeconomic and political context of tackling TB and then look at policy and progress in the areas of prevention, diagnosis and treatment. Moreover, four country case studies shed light on recent progress and challenges in tackling TB in Ethiopia, Kenya, Nigeria and South Africa."

On the chapter titled "The Political and Socioeconomic Context," the report explains that "the prospects for improving TB prevention, diagnosis and treatment efforts are intrinsically linked to socioeconomic and political factors. For a start, a country's level of development has a strong influence on its response to the disease."

According to Michael Kimerling, director of the technical services division at the Netherlands-based KNCV Tuberculosis Foundation, which works to strengthen health systems in the fight against TB, "As you build up primary health infrastructures, the stronger these become, the better TB can be managed. It's such a classic disease of public health. Development is important for overcoming TB."

A stronger political will to tackle TB is necessary as "the disease continues to receive relatively less attention than other higher-profile diseases, the experts interviewed for this report say." Mario Raviglione, director of the Global TB Program at the WHO, is quoted as saying, "Fundamentally, what needs to be recognized is a lack of political commitment. As we mentioned in [the UK medical journal] The Lancet a few years ago, TB is not a main priority among any of the main UN agencies; it does not have a special UN program, is not in UNICEF's portfolio and is not a special presidential initiative in the US. It does not have strong support from the pharmaceutical industry."

On the topic of policy and progress on prevention, diagnosis and treatment, the report notes the World Health Organization's goal of reducing TB by 90 percent by 2030 "will require new tools that are currently lacking . . . including better prophylaxis, the development of vaccines and new treatment regimens, especially for MDR TB."

With respect to improving diagnostics and prevention, the report asserts that "reliably identifying vulnerable populations that are most likely to go on to develop TB would allow for a more rapid management of the disease and avoid exposing those at lower risk to treatment regimes that involve significant side effects, Dr Raviglione says. He adds that current tests only show whether a person has been exposed, but not whether they are likely to develop full-blown TB. Around one-third of the world's population has latent TB—where they have been infected with mycobacterium tuberculosis but have not developed the active disease —according to the WHO."

The report's conclusion notes: "Two years on from our original report there is evidence of some progress on the global response to TB, including, for example, efforts to shorten treatment regimens. At the same time, however, public-health experts observe that TB retains a relatively low disease profile in terms of R&D, both compared with diseases such as HIV/AIDS and in proportion to the impact of the disease. Major political and socioeconomic challenges remain, notably the lack of universal access to health coverage in many endemic countries, insufficient political will and deficient national TB control plans."

And I agree with the report's final paragraph: "Ultimately, progress will depend on the political will to underpin greater investment in research and the willingness of more countries to commit to both national policy frameworks and cross border partnerships."

Lastly, given the interest of colleagues and I have regarding the development of mobile software solutions to prevent infectious diseases such as TB, I would be reminiscent not to mention how the EIU's 2014 report or 2016 update addresses this topic. Below is an excerpt from the 2014 report:
The Kenyan Ministry of Health, along with Safaricom, one of the country's major mobile-phone companies, and a number of other partners have developed a data management system called TIBU, which means 'cure' in Swahili. Since November 2012, this has allowed the direct entry of details on new TB infections, using tablet computers at the point of diagnosis, into a national database that currently holds details on around 90,000 patients. The information can then be used in a wide variety of ways. At the national level, it enables the monitoring of trends, as well as indicating if any districts are performing poorly and need support. Local clinicians can use it to determine in real time if drug stocks are able to meet local need and to order new medication where required. It allows the treatment of individual patients to be followed even if they migrate to a different part of the country, and sends SMS messages to anyone who does not attend a clinic, reminding them to take prescribed their pills. Finally, TIBU is linked with Kenya’s mobile payments system, M-Pesa, to allow faster dispersal of support payments to those with MDR TB who continue to adhere to treatment.
Do you agree with the findings of the report? What is your recommendation on achieving WHO's goal of reducing the incidence of TB by 90 percent by 2030? What role should mobile technology play in achieving this goal?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.