Mobile Networks to Cover 90% of the World's Population by 2010

location based services

ASIA Singapore : Mobile networks will provide coverage to 90% of the world’s population by 2010, compared with 80% today, despite the misplaced policies of many governments, who continue to subsidize the rollout of fixed-networks, according to a study commissioned by the GSM Association, the global trade association for mobile operators.

The study, covering 92 developing countries, examined the collection and use by governments of universal service fund levies. It found that governments had collected more than $6 billion from the telecoms industry, of which $2 billion has come from mobile operators. Of the $1.5 billion that has been distributed so far, just 5% ($75 million) has been used to extend mobile coverage, despite the distinct cost advantages of mobile technologies. The World Bank has estimated that the capital cost of providing mobile coverage to an individual is one-tenth of the cost of installing a fixed-line connection.

Universal service funds are typically designed to provide governments with the resources to extend basic telecommunication facilities to the least privileged in society and to those living in the most remote areas. Despite the critical role telecoms plays in developing markets, the study by Intelecon Research found that governments have yet to allocate $4.4 billion of the $6 billion collected by these funds.

If governments allocated the unspent $4.4 billion to extending mobile networks, an additional 450 million people in rural areas of the developing world would have mobile coverage, the study concluded.

“While extending coverage is important, governments should also focus on connecting the 2.7 billion people who already have coverage, but are not connected, by removing mobile-specific taxes and regulations that make mobile ownership more expensive than it needs to be.” said Tom Phillips, Chief Government and Regulatory Affairs Officer of the GSMA. “While the mobile industry is reducing costs for its customers through shared access initiatives and the development of low-cost handsets, many governments are increasing the burden of regulation.”

Intelecon found that 32 of the 92 countries in the survey have set up universal service funds, levying fees, ranging from 1% to 6% of operators’ revenues. Malaysia, for example, takes 6% of operators’ revenue, while India, which levies 5%, has built up a fund of almost $2 billion that is earmarked entirely for extending fixed networks. Brazil levies 1%, but has yet to spend any of the $1.7 billion it has collected.