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MOBILE MONEY FOR THE UNBANKED SMARTPHONES & MOBILE MONEY: THE NEXT GENERATION OF DIGITAL FINANCIAL INCLUSION
The Rise of
Smartphones in
Emerging Markets
C onverging trends hold great promise for the next generation of digital financial inclusion efforts based on smartphones. Devices
are getting cheaper, global alliances are advocating for affordable data access, and mobile operators are investing to develop
necessary network capacity and pricing models to manage the inevitable transition from feature phones to smartphones.
The ‘next billion’ emerging market consumers are increasingly the focus of the latest innovations affecting the telecommunications
industry. This was evident at Mobile World Congress 2014, where new low-cost handsets made headlines: the $40 Nokia 220 is today’s
most affordable internet-ready device in the company’s portfolio and Mozilla announced that it would launch the $25 ZTE Open C, the
cheapest smartphone in the world.
Additionally, international initiatives are working to overcome two major barriers to providing internet access to the remaining five billion
people: infrastructure and affordability. The GSMA’s own Digital Inclusion programme seeks to enable conditions to connect an additional
one billion people to the mobile internet by 2020. Facebook’s Internet.org aims to cut drastically the cost of delivering basic internet ser-
vices on mobile phones, particularly in developing countries. The Alliance for Affordable Internet, of which the GSMA is a member, builds
multi-stakeholder coalitions across developing regions to advance affordable access to Internet in developing countries. 1
In parallel, the mobile industry is investing to develop capacity on 3G and 4G networks 2 , and is introducing innovative pricing models better
suited to the economic realities of a low-income consumer base. ‘Sachet’ data tariffs, for example, allow for prepaid users to consume data
on a ‘pay as you go’ basis and have become increasingly popular in Asia and Latin America. 3 Due to the competitive intensity in the mobile
broadband sector in Latin America, service tariffs have dropped 52% for smartphones in the last three years, increasing service affordability. 4
The concept of ‘zero rating’ mobile content is also drawing industry attention. Facebook is strongly promoting the concept, entering into
partnerships with several operators in emerging markets to offer free mobile Facebook services. A variant of the zero rating model—
sponsored internet—has the content provider, instead of the end-user, pay for connectivity. For example, mobile operators in Brazil
recently announced that clients of Banco Bradesco can access its internet banking service from their mobile phones without incurring
carrier data charges or having to use their monthly data allowance. 5
These factors are accelerating the pace of smartphone adoption among consumers in developing countries. GSMA estimates that global
6
smartphone penetration as a percentage of population is expected to rise from 19% in 2012 to 32% in 2017. In Sub-Saharan Africa, smart-
phone penetration is expected to grow five-fold from 4% to 20% over that same period. In Latin America, GSMA forecasts smartphone
7
8
penetration will rise at a slightly stronger rate than the global average, from 20% at the end of 2013 to 44% by 2017. Strikingly, six in 10
global 4G-LTE connections are predicted to come from developing regions by 2020. 9
1. Launched in October 2013, A4AI’s primary focus is to support the achievement of the UN Broadband Commission’s Broadband Target of entry-level broadband services priced at less than five per cent of average monthly income
2. For the 2013-2020 period, operator capex is forecast to exceed US$ 1.7 trillion, with capex forecast to grow at a compound annual growth rate of 4.7% per annum (GSMA, The Mobile Economy 2014)
3. “Tailoring mobile internet tariffs for prepaid users—a balancing act,” GSMA Intelligence, December 2013
4. GSMA Mobile Economy Report for Latin America 2013
5. “Vivo on sponsored internet,” BNamericas, April 10, 2014
6. GSMA Scaling Mobile Report 2013
7. GSMA Mobile Economy Africa 2013 Report
8. GSMA Mobile Economy Report for Latin America 2013
9. Infographic: Global 4G-LTE connections forecast: 2010 to 2020, GSMA Intelligence
4
The Rise of
Smartphones in
Emerging Markets
C onverging trends hold great promise for the next generation of digital financial inclusion efforts based on smartphones. Devices
are getting cheaper, global alliances are advocating for affordable data access, and mobile operators are investing to develop
necessary network capacity and pricing models to manage the inevitable transition from feature phones to smartphones.
The ‘next billion’ emerging market consumers are increasingly the focus of the latest innovations affecting the telecommunications
industry. This was evident at Mobile World Congress 2014, where new low-cost handsets made headlines: the $40 Nokia 220 is today’s
most affordable internet-ready device in the company’s portfolio and Mozilla announced that it would launch the $25 ZTE Open C, the
cheapest smartphone in the world.
Additionally, international initiatives are working to overcome two major barriers to providing internet access to the remaining five billion
people: infrastructure and affordability. The GSMA’s own Digital Inclusion programme seeks to enable conditions to connect an additional
one billion people to the mobile internet by 2020. Facebook’s Internet.org aims to cut drastically the cost of delivering basic internet ser-
vices on mobile phones, particularly in developing countries. The Alliance for Affordable Internet, of which the GSMA is a member, builds
multi-stakeholder coalitions across developing regions to advance affordable access to Internet in developing countries. 1
In parallel, the mobile industry is investing to develop capacity on 3G and 4G networks 2 , and is introducing innovative pricing models better
suited to the economic realities of a low-income consumer base. ‘Sachet’ data tariffs, for example, allow for prepaid users to consume data
on a ‘pay as you go’ basis and have become increasingly popular in Asia and Latin America. 3 Due to the competitive intensity in the mobile
broadband sector in Latin America, service tariffs have dropped 52% for smartphones in the last three years, increasing service affordability. 4
The concept of ‘zero rating’ mobile content is also drawing industry attention. Facebook is strongly promoting the concept, entering into
partnerships with several operators in emerging markets to offer free mobile Facebook services. A variant of the zero rating model—
sponsored internet—has the content provider, instead of the end-user, pay for connectivity. For example, mobile operators in Brazil
recently announced that clients of Banco Bradesco can access its internet banking service from their mobile phones without incurring
carrier data charges or having to use their monthly data allowance. 5
These factors are accelerating the pace of smartphone adoption among consumers in developing countries. GSMA estimates that global
6
smartphone penetration as a percentage of population is expected to rise from 19% in 2012 to 32% in 2017. In Sub-Saharan Africa, smart-
phone penetration is expected to grow five-fold from 4% to 20% over that same period. In Latin America, GSMA forecasts smartphone
7
8
penetration will rise at a slightly stronger rate than the global average, from 20% at the end of 2013 to 44% by 2017. Strikingly, six in 10
global 4G-LTE connections are predicted to come from developing regions by 2020. 9
1. Launched in October 2013, A4AI’s primary focus is to support the achievement of the UN Broadband Commission’s Broadband Target of entry-level broadband services priced at less than five per cent of average monthly income
2. For the 2013-2020 period, operator capex is forecast to exceed US$ 1.7 trillion, with capex forecast to grow at a compound annual growth rate of 4.7% per annum (GSMA, The Mobile Economy 2014)
3. “Tailoring mobile internet tariffs for prepaid users—a balancing act,” GSMA Intelligence, December 2013
4. GSMA Mobile Economy Report for Latin America 2013
5. “Vivo on sponsored internet,” BNamericas, April 10, 2014
6. GSMA Scaling Mobile Report 2013
7. GSMA Mobile Economy Africa 2013 Report
8. GSMA Mobile Economy Report for Latin America 2013
9. Infographic: Global 4G-LTE connections forecast: 2010 to 2020, GSMA Intelligence
4
