Sunday 21 July 2019

More than half of the world won't be part of the 5G conversation

Rio
Rio

Mark Roden

The promise of 5G mobile phone networks has created quite the buzz lately. While it is exciting and well deserved, the truth is that it won't be available for four billion of the world's population - these people can only dream of the economic benefits that will go along with having 5G.

Think about that for a minute. It is likely that more than half of the world's population won't have access to the economic opportunities that 5G will place at the fingertips of those living in the developed world.

Talking about 5G is fine at Mobile World Congress (MWC) with its 'Davos- like' richesse, but we need to begin to have conversations about how we can enable the 1.7 billion financially excluded people around the world who are at most accessing a 3G connection currently - and who by and large are excluded from all that the digital world has to offer.

Everyone is talking about being 5G device-ready, but my question is are we ready as a society? Many migrant workers are largely unbanked and rely on platforms such as the one that we operate at Ding to send small remittances in the form of international top-ups (ITU) to their families back home.

In emerging market countries like Guatemala, the majority of mobile phones are prepaid and 70pc of these have no credit (airtime) at any one time which means the user cannot make calls or access the internet.

We recently completed research to gain a better understanding of migrant value transfer behaviours such as remittance and ITU. Our study revealed that remittances typically increase the income of the receiver by 30pc to 100pc.

It also showed that up to 90pc of remittances, including top-ups, are used for consumptions such as utilities, education, communications and transportation.

Once families can afford basic needs they are able to utilise the little left over to purchase some network service.

According to the UN, 80pc of adults have mobile phone subscriptions and with migrant flows surging, staying connected with family members overseas ultimately becomes a basic human need.

However, two billion people live in countries where 1GB of data is still unaffordable, costing over 10pc of their monthly income.

Many emerging market countries also lack the necessary infrastructure to provide 5G and the UN estimates that 2.5 billion are living with weak electrical connections and power outages.

This lack of infrastructure and the limited availability of cellular stations provides challenges to mobile users, including the inability to charge phones and travelling great distances to reach a cellular signal strong enough to simply make a phone call.

In the past some technology has been easily adoptable in emerging markets, allowing them to "leap-frog" or bypass older technology altogether.

For instance, millions of people have leapfrogged directly to mobile phones without ever having a fixed landline in their home. In the case of 5G that just will not be possible.

The excessive cost of infrastructure will prohibit the implementation for years to come in these markets.

And this is not to mention that our research showed that 28pc of respondents don't even know what the technology is and how it could benefit them outside of simply making phone calls.

The study also revealed that 84pc of migrants fear that the delivery of 5G to their home country will lag far behind the developed world and over a third of those surveyed have yet to experience even 4G technology.

This is evident in sub-Saharan Africa where there is no sign of 5G and many people still only access 2G technology.

GSMA reports that 3G will only emerge as the dominant technology in sub-Saharan Africa over the next few years, accounting for 60pc of the connections by 2025.

Investment in 4G is happening but it will only help drive 4G connections from 4pc to 25pc by 2025.

No sign of 5G on this horizon.

Smartphone ownership will also drive 5G in emerging markets. Today, India has the lowest smartphone usage at only 24pc, while Brazil tied South Africa with the highest percentage of users, with 60pc owning smartphones.

While LTE may be on its way out in the developed world, emerging markets will be slow to adopt this "aging" technology due to many factors including the users' inability to pay for such services.

Undoubtedly, affordability remains a key issue for users in emerging markets receiving top-up and remittances.

In terms of priorities, we asked our users what was important to them when choosing a network. Some 60pc said they feel that quality of connection is the key driver, followed by price, and customer services.

5G will be a game changer in ways that are yet to be imagined. According to the President of Qualcomm - who was speaking at MWC - the roll-out will likely begin this year but will more certainly ramp up over the next five to 10 years in the developed world.

The fact is that it will benefit only a small percentage of the population and will serve to once again extend the growing social and technological divide in society.

In a world where migration is a reality and a necessity, Ding is starting with what families in emerging markets have today, a basic phone.

Let's begin by getting value directly to this user and seeing them joining the digital economy. 5G will just have to wait for the majority of the world's population.

Mark Roden is founder of Irish-based global phone credit company Ding

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