Towards

Universal Access

About Nokia
Nokia is a world leader in mobile communications, driving the growth and sustainability of the broader
mobility industry. Nokia connects people to each other and the information that matters to them with
easy-to-use and innovative products like mobile phones, devices and solutions for imaging, games, media
and businesses. Nokia provides equipment, solutions and services for network operators and corporations.

Connecting rural communities

via mobile communications

Nokia Corporation
PO Box 300
Fi-00045 Nokia Group
Finland
Phone: +358 (0)7180 08000
www.nokia.com

Copyright 2006 Nokia. All rights reserved. Nokia and Nokia Connecting People are registered trademarks of Nokia Corporation.

This brochure is printed on environmentally friendly paper.

Nokia is about
connecting people

Mobile communications devices are used all over

the world by more than two and a half billion people,
a figure which increases by over a million new
subscribers every day.
As a market leader, our vision at Nokia is a world
where the remaining four billion people are also
connected. We believe that individuals, communities
and nations worldwide can and should have
affordable access to all the social and economic
benefits that mobile technology can confer.

This booklet is about that

vision and how, working
together, we can make it real.

Contents

1. A shared vision
Introduction by Olli-Pekka Kallasvuo
President and Chief Executive Officer, Nokia

2. Towards universal access

3. The rural challenge

4. Mobility is the way forward

11

5. The benefits of mobile technology in action

Entrepreneurial activity
Healthcare
Education
Financial transactions

15

6. Affordable connectivity

24

7. Making it happen

29

8. Embracing the benefits of universal access

34

1. A shared vision
Our vision is of a world where everyone can be connected to anyone or to
anything. A world of connected societies that enables people to fulfill their
potential and realize their aspirations. We regard universal access as much
more than an industry goal for us it is a responsibility.

In September 2000, the United Nations Millennium

Development declaration set an ambitious
target: That by 2015, 50 percent of the worlds
population should have access to Information and
Communication Technology (ICT) tools and services.
Much has been achieved since then. Thanks to
technological advances in mobile communications,
developing countries can avoid making investments
in expensive fixed-line networks. Mobile networks
could provide consumers in these countries with a
sufficiently low total cost of ownership (TCO) to justify
the required investment. Affordable voice and data
services are increasingly available to people who live
and work in the most isolated parts of the world. We
are proud to have played our part in this progress.

But more remains to be done. Nokia is committed

to making universal access a reality. This goal goes
beyond industry leading, innovative products and
solutions. It means working closely with other
private-sector companies, the public sector and civil
society to promote the spread of mobile technology
in emerging markets.

Our vision is of connected societies that enable

people to fulfill their potential and realize their
aspirations. Societies where digital inclusion
promotes sustainable economic growth and
enhances public welfare. Where social cohesion,
cultural identity, free markets, and peace and stability
flourish and grow.
This document outlines what is needed to turn our
vision into reality. At Nokia, we regard universal
access as much more than a goal. For us it is a
fundamental responsibility.

Olli-Pekka Kallasvuo
President and Chief Executive Officer
Nokia

2. Towards universal access

Experience and recent studies clearly demonstrate that universal access to
Information and Communication Technologies (ICTs) boosts the economic and
social development of nations. When people can obtain information affordably
and reliably for productive use, improved business development and social
welfare soon follow.

Universal access to ICTs can be defined as the ability

of every individual to connect to people, information
and services, regardless of their location or income.
This is a key element in the vision of a truly inclusive
information society. Using access devices such as
computers, mobile phones, telephones, televisions
and radios, connected people can create, accumulate
and disseminate knowledge. Their professional
and social contacts improve, they interact with
commercial and public-sector organizations more
easily, and they become more productive.

...in cooperation with the private sector,

make available the benefits of new
technologies especially information and
communications technologies
UN Millennium Development
Goal 8, Target 18

Yet universal access remains a goal rather than

reality. Widely differing social and economic
conditions have given rise to the concept of a digital
divide, between those with access to ICTs and those
without it.
The digital divide is based on the idea that ICTs
are in principle affordable only to higher-income
groups of the population and have a significant
impact on productivity and thus income. The divide
arises because these technologies increase income
disparities by making the rich even richer, creating
two classes: the haves and the have nots.
The digital divide is continuously at the top of the
agenda of any organization concerned about socioeconomic development. A clear consensus has been
in place for some time that bridging the digital divide
will go a long way towards boosting development.
More recently, the discussion has moved to how to
build that bridge. This booklet focuses on meeting
that challenge in rural areas of the developing world.

3. The rural challenge

The real challenge in bridging the digital divide and making
universal access a reality lies in connecting rural areas, where
half of the worlds population lives.

In developing countries, rural areas are often remote

and poorly connected, lacking basic infrastructure
such as roads. The population is typically poor and
sparsely distributed, and agriculture is usually the
dominant form of economic activity. Most enterprises
are very small, with fewer than five employees.
Literacy levels tend to be very low, there is a shortage
of skilled labor, and the availability of services such as
clean drinking water, electricity, education, healthcare,
law enforcement and waste management is poor.
Public transportation is also limited or non-existent.
Around three billion people, approximately half the
worlds population, live and work in rural areas.
They do not always enjoy the benefits of affordable
access to people, information and services. Access to
Information and Communication Technologies (ICTs)
is critical to their economic progress.

In his book, The Fortune at the Bottom of the

Pyramid, business professor C.K. Prahalad challenges
business leaders to regard the worlds poor as
resilient entrepreneurs and value-conscious
consumers. He argues for a better approach to help
the poor, an approach that involves partnering with
them to innovate and achieve sustainable win-win
scenarios where the poor are actively engaged and,
at the same time, the companies providing products
and services to them are profitable.

Thus a better understanding of local needs, and the

involvement of local people, is required to maximize
the effectiveness of the delivery of ICTs to rural areas.
The key challenges of making rural connectivity a
reality are lower income levels and the geographical
dispersion of the population. The challenge of lower
income levels does not differ between urban and
rural areas, except perhaps in magnitude, since
rural incomes tend to be lower than urban ones.
A geographically dispersed population defines
rural areas, and is an issue which any move towards
universal access needs to address. Discovering the
most effective way to connect rural areas requires
identification of the best ICT solution to achieve
this goal.

4. Mobility is the way forward

Mobile technology offers the best way to provide universal access in rural areas of
developing countries. With millions of people out of reach of the expensive copper
wires and fiber cables that carry voice and data over fixed networks, mobile technology
offers a highly effective method of reaching geographically dispersed populations.

Mobile phones provide numerous advantages

for the most effective use of Information and
Communication Technology (ICT). For many people
in developing countries, the combination of low total
cost of ownership (TCO), micro-prepaid top-ups and
micro-credit schemes makes mobile phones more
affordable than alternative access tools.
Unlike PCs, mobile phones are not bulky, do not
require a reliable or permanent electricity supply,
and can be used by people who are unable to read or
write. The convergence of technologies means that a
single mobile device can now act as much more than
a phone. It can also be a radio, music player, camera,
calculator, and Messaging and Internet access device.

With penetration rates higher than those for PCs

(see Figure 1), mobile phones offer many users
their first experience of features such as Web
browsers and email.

Cumulative growth

Million
1400
1200
1000

Mobile phones in
New Growth Markets
5 times more mobile
handsets than PCs in the
new growth markets

Installed base of PC in
New Growth Markets

800
600
400
200
0

1999

2001

2003

2005

Sources: Informa Telecoms & Media andGartner Dataquest: PC Installed Base

WorldwideForecast, 2002-2010,George Shiffler

10

Figure 1: Mobile technology is the best way to bridge the digital divide

11

Mobility for a better world

Beneficial connections

As the rate of mobile-phone penetration continues

to grow around the world, it also contributes to the
socio-economic development of emerging markets,
sometimes in unexpected sectors.

At an individual level, there are numerous examples

of the income-generation potential of mobile
phones. These include being within reach, avoiding
travel, gaining access to information, using the
mobile phone itself as a business, and performing
financial transactions.

Each country, each culture, uses mobile technology

in unique ways to improve the lives of its citizens;
but improved productivity at a national level is a
common factor. A study by the London Business
School concluded that an increase of 10 mobile
phones per 100 people translates into an impressive
0.6-percentage-point growth in GDP. Moreover,
this represents only the direct impact. Wireless
Unbound, a white paper produced by McKinsey &
Company in cooperation with the GSM Association,
in 2006, found that the indirect impact is at least
three times as great.
The indirect impact (see Figure 2) includes hardware,
software, and handset vendors, as well as the surplus
enjoyed by consumers such as improved productivity.
Thus the total impact can potentially be as large
as eight percent of GDP. In developing countries,
where mobile phones often provide the main
communications networks, the growth dividend can
be twice as large as it is in developed countries.

So for individuals, greater access to mobile

technology has life-changing potential. For societies,
the impact of greater access has significant
implications for socio-economic development.
In the next chapter, real examples from four sectors
are presented: entrepreneurial activity, healthcare,
education, and financial transactions.

7.5

Surplus for
end users*

The Economist, March 12, 2005

3.7
4.9

Indirect impact from

other wireless sectors

Affordable and easy-to-use handsets

1.8
2.1

Direct impact from

operators

Penetration, %

Low entry cost and total
cost of ownership

2.1
0.6~1.2**

2.0

0.3
0.4

1.1
Philippines

China

India

~3.8

~4.5

3.2-4.5

41

28

* Rough low-bound estimate using historical ARPU, inflation adjusted

** Upper limit of Indias end-user surplus range is estimated assuming India

Simple and user-friendly
interface

No need for a permanent
power supply

Low social-entry barriers

Cost-effective infrastructure

Widely available and
scalable technology

follows Chinas ARPU vs. penetration pattern

Sources: ITU; EMC; global insight; IMF; Gartner; company annual reports; McKinsey team analysis

Figure 2: Economic impact of wireless as percentage of GDP

in three Asian countries, 2005

12

Why mobile?

1.9

Total value as multiple

of direct impact

Encouraging the spread of mobile phones

is the most sensible and effective response
to the digital divide

Commonly perceived
wireless value

Source: Wireless Unbound, McKinsey&Company, 2006

Low installation costs and
short pay-back period

Less prone to vandalism,
theft and natural disasters

13

Efficient method of overcoming
geographic barriers

5. The benefits of mobile

technology in action
Mobile technology brings socio-economic benefits. We look into
four of the main benefit areas in this chapter: Entrepreneurial
activity, Healthcare, Education and Financial transactions.

14

15

The benefits of mobility:

Entrepreneurial activity

Running our Village Phone, Ive saved

enough money to buy a cow and support
my family. Local farmers can now call the
markets to ensure they get the best prices
for their crops. Now our village can stay
in touch with the rest of the world

Often the first sector to be spurred into action by mobile technology is native
industry, with thousands of individuals becoming self-employed as soon as
they own a mobile phone. Mobility not only inspires creative, profitable new
business ideas, it also provides new opportunities for existing businesses.

The fishermans friend

Mohammed Koya is a fishing-boat
captain in India with two boats
and canoes. His mobile phone is a
powerful business tool. Theres
more to fishing than landing your
catch, he explains. You have to
sell it at the best price. That means
being in the right place at the right
time. Even when Im 25 kilometers
out at sea, I just pick up the phone,
check out the going rates and fix
the deal. I even ask the agent to
get the catch from the boat so I can
continue fishing.

16

Staying within reach

New business initiatives

For small-business owners in developing countries,

better access to customers, suppliers, skills and
finance is a huge benefit. Even those who do not
have an office or storefront can put up a simple sign
by the side of the road, announcing their services
and contact numbers.

The spread of mobile technology has inspired an

entrepreneurial spirit in developing countries, leading
to the creation of new types of businesses.
Illiterate people can pay a small fee to phone owners
who key-in and send text messages on their behalf.
Airtime brokers transfer their customers credit to
distant locations. And new business initiatives can be
found beyond the realm of mobile services, such as
the business of recharging handsets in areas without
a reliable electricity supply.

Similarly, mobile communications make workers

more accessible. Those who take informal
employment (often seasonal jobs) and have a
phone are easy to reach when work is available.
Their numbers are saved in employers contact lists,
bringing continuing value to both parties.

As businesses in rural areas flourish and incomes

increase, tax revenues rise in turn. Thus economic
growth in developing countries can be driven by
the private sector rather than financial aid.

Josephine Namala,
Village Phone Operator, Uganda

The Village Phone brings mobile

communications to rural areas
Nokia and Grameen Foundation, together with
local micro-finance sector and local operators, set
up the Village Phone project to help create new
small businesses and affordable access in African
villages.The Village Phone concept is based on the
pioneering work of the Nobel Peace Prize winners,
Grameen Bank and Professor Muhammad Yunus
of Bangladesh.
Village Phone operators provide low-cost
communications services through mobile phones
in rural villages. A microfinance loan allows each
Village Phone operator to purchase a business kit.
This comprises a Nokia handset, a SIM card preloaded
with prepaid airtime credit, a charging solution, an
external antenna set (including a booster antenna,
a coupler and a cable), and marketing materials.

The Village Phone operator rents the use of the

mobile phone on a per-call basis at affordable prices
to customers in their community. In Rwanda and
Uganda, thousands of new Village Phone businesses
have been created since 2003, and the numbers
continue to grow.
Village Phone operators typically repay their loan
within six months, using revenue from operating
the Village Phone. Extra income earned from their
business can, for example, secure their childrens
education and buy a house for their family.
The Village Phone project is an excellent example
of todays collaborative efforts to make universal
access a reality.

Mobile technology means better

business for Bangladeshi farmers
Like most people living below the
poverty line (half the Bangladeshi
population lives on less than one US
dollar a day), Jahid Hussein makes a
meager living from half a hectare of
land. With just a few calls, Mr Hussein
ensures that he receives the best
price for his seasonal jute seeds.
Just after dawn, Mr Hussein knocks
on the door of his villages mobile
phone operator and makes calls to
different markets in the district. The
calls cost me 12 taka [0.18 US dollars]
but I have to find out the price in
each market to know if it is the best
time to sell my jute seeds, he says.
A few minutes later another farmer,
Munshi Habibur Rahman, arrives to
make a call. He wants to know if he
should pick his crop of aubergines
today to sell at the market tomorrow.
Gone are the days when we went
to the market blindfold, to sell our
crops at a price dictated by the
commission agents, he says. Now
I have the choice of selling my crops
at whichever market gives me the
best price.

17

The benefits of mobility: Healthcare

The spread of mobile communications in developing countries can make a big
difference to the way people in rural areas receive healthcare information and
access healthcare professionals. Medical attention is more likely to be delivered
where and when it is needed. In turn, a healthier population is better able to
participate in business activities, leading to sustainable economic growth.

A good prognosis
At a fundamental level, simple connectivity between
healthcare workers enables them to deliver health
services more efficiently and with higher quality.
Connecting patients in rural areas with healthcare
professionals such as doctors, nurses and
pharmacists, presents great new possibilities
in public healthcare.

The healthy influence of

a text message
In South Africa, text messages are used as a costeffective way to remind patients suffering from
illnesses such as tuberculosis or HIV/AIDS to take
their medication at the right time. This not only helps
patients stick to their prescribed treatment, it also
saves valuable hours, enabling healthcare workers to
spend their time more productively. Also, HIV-positive
individuals can let healthcare workers know about
any side effects caused by anti-retroviral drugs.

18

Patients can be sent appointment reminders by

text message, a simple procedure that contributes
to a significant reduction in the number of missed
appointments at hospitals and surgeries. This
benefits patients directly in terms of the practical
improvements in healthcare delivery, and indirectly
in terms of monetary savings, freeing more resources
to be spent on patient care.

Using text messages to deliver

test results in rural areas

A better start in life

In Transkei, an impoverished rural area in the Eastern

Cape region of South Africa, tuberculosis patients
access to treatment has been accelerated thanks to
an innovative scheme that delivers their test results
to local healthcare professionals via text message.

In Peru, the growth of mobile-phone

coverage has inspired the creation
of a real-time information exchange
between far-flung health centers,
medical experts and hospitals.

In the pilot project, motorcycles are used to deliver

sputum samples daily. These trips take between
one and four hours, depending on the quality of the
roads. The samples are rapidly tested and the results
are entered into a computer software application,
which automatically sends the results via text
message to a mobile phone carried by a doctor or
nurse in the rural clinic.
This has reduced the time it takes to deliver laboratory
results from weeks to just a few hours. In the first
three months of the project, the number of samples
referred for tuberculosis testing by six clinics increased
by 333 percent compared with the three-month period
before the project began. And because the clinics can
get results faster, they can treat more people.

A Pathfinder International program

enabled Voxiva, a global provider of
practical information solutions for
healthcare systems, to work with the
Peruvian Ministry of Health and the
Regional Health Directorate of Ucayali
to develop Nacer, a mother-andchild health solution. Nacer provides
patient-monitoring facilities, patient
referrals, follow-up care, critical-supply
tracking and disease surveillance.
The benefits are clear: Better levels
of healthcare, improved co-ordination
between healthcare professionals,
a reduction in supply shortages,
and more information to improve
the decision-making process and
medical experts responsiveness.

19

The benefits of mobility: Education

Mobile technology opens up amazing new opportunities in teaching
and learning. It offers learning opportunities unrestricted by location
or time, enabling people to learn anywhere, whenever they choose.
For students and teachers alike in the developing world,
the implications are enormous.

Learning goes mobile

Constantly evolving technologies present education
professionals with exciting possibilities to utilize
mobile phones in their work. When mobile phones
are perceived as multimedia computers rather than
just communication devices, new perspectives open
up for the design and development of how they could
be used in formal and informal learning. Support for
informal learning means that knowledge sharing can
become embedded in everyday life, and everyone has
the potential to become a content creator.
Rather than delivering learning content in a
linear fashion, educators can work with pieces of
multimedia content. For example, RoadForum, an
audio-based application, enables mobile-phone
users to share news, tips and technical hints
with colleagues. Previously, this sort of internal
communication would have been delivered more
formally, via media such as handbooks or an
organizations intranet.

20

Bringing excitement to rural

classrooms
Bridgeit is an innovative, award-winning education
initiative that delivers interactive, multimedia
learning materials and enhanced teaching skills
into the classrooms in remote areas. Known as
text2teach in the Philippines, the program runs
in more than 200 schools, enabling some 120,000
students to improve their learning opportunities.
Bridgeit combines existing mobile products and
satellite technologies to deliver digital, multimedia
materials to teachers and students who otherwise
would not have access to them. Teachers use mobile
phones to access a library of educational videos,
which are then downloaded via satellite to a digital
video recorder connected to a classroom television.
Teachers can play the video, introduce activities and
lead discussions.

MobilED: Education on the move

Bridgeit provides teachers with educational resources

focusing on space, ecology, geology and human
anatomy, all of which are fully integrated into the
Philippines formal science curriculum.
This makes a big difference, and the results speak
for themselves. An evaluation study by the Philippines
National Institute for Science and Mathematics
Education Development (NISMED) stated that the
Bridgeit model raised students performance and
improved test scores significantly. As well as
generating more positive attitudes towards science
and technology, the program increased teachers
competence in using technology as part
of their teaching.
The program is an excellent example of how crosssector collaboration can deliver socio-economic
benefits. This unique collaboration includes Nokia,
the Ayala Foundation, Globe Telecom, the Philippine
Department of Education, PMSI (Dream Satellite
TV), SEAMEO Innotech, Pearson, the International
Youth Foundation (IYF) and the United Nations
Development Programme (UNDP).

Working with universities to engage

the local community
By working with universities to train local students,
stakeholders in the mobile communications industry
can help them learn new skills such as software
programming and network maintenance. When
these new skills are applied in the workplace,
local communities can benefit from greater
economic growth.
Nokia works with governments, UN agencies, aid
agencies and other national and supranational
bodies to help promote capacity building in
developing countries. One of the most effective
ways to engage with the local community has been
cooperation with universities. Significant programs,
such as exchanges, currently involve more than
100 universities, for example in Pakistan, South
Africa and Ethiopia. This cooperation stimulates the
development of education and competence across
the mobile ecosystem, for example by developing
skills in the Symbian operating system and Java
technology to build mobile applications and services.
In other cases, important locally generated research
and development results have been achieved.

MobilED, a project developed by Media

Lab Helsinki, the Meraka Institute and
national governments, integrates
research-based concepts about using
mobile technologies in teaching and
learning with real learning programs.
The project aims to explore and
comprehend the cultural, social and
organizational context of young
peoples use of mobile phones in and
out of school in South Africa, India,
Brazil and Finland.
MobilED encompasses the design,
development and piloting of
prototype applications where
multimedia and language
technologies (voice, text, and images)
are used via mobile phones as tools
in the learning process. The project
explores how groups of young people
in and out of school environments
use mobile devices in their everyday
acquisition of knowledge and
problem-solving situations.
Based on this research, new models
and scenarios of how mobile phones
could be used for teaching, learning
and empowering students within
and outside the school context are
being developed. The aim of MobilED
is to enable all members of society,
especially those in the developing
world, to become active participants
in the information society by being
contributors rather than passive
recipients of information.

21

The benefits of mobility: Financial transactions

Mobile banking made easy

In developing countries, mobile commerce extends financial services to people

without easy access to a bank. These markets, which have no complicated
banking legacy, are setting the pace in m-commerce. If any type of transaction
can be conducted by a mobile phone, it will be.

Airtime: A new currency

In many developing countries where mobilephone networks have been established, airtime
has emerged as a new type of currency. Operator
services that allow Over-the-Air (OTA) transfers
of airtime enable users to send and receive
a common currency.
In sub-Saharan Africa, basic financial transactions
involving airtime constitute a major part of mobile
phone usage. Subscribers can send airtime credit to
family and friends in faraway locations. Many stores
will accept airtime as a form of payment, or provide
customers with the equivalent in cash.
For people who previously had no bank account
or live far from a bank, this radical innovation
represents a convenient new way to conduct financial
transactions. Many people once considered to be
unbankable now have access to banking services
that are secure, trustworthy and easy to use.

22

As well as being a convenient payment method,

this also increases security. Companies no longer
need to transport large amounts of cash to and from
remote areas, where they could expose themselves to
different risks.

Small denominations, many

transactions
The most popular m-commerce services are in the
Philippines, where more than 3.5 million users make
financial transactions via their mobile phone. These
services include the transfer of cash and airtime
credit between users in denominations as small as
0.04 US dollars. In the Philippines, operators sell
airtime in bulk to distributors, who sell it to subdistributors for re-sale to customers in amounts
of less than 0.50 US dollars.
This ability to conduct small-denomination
transactions is important in markets where customers
are used to sachet purchasing, where goods are
bought in small quantities due to a shortage of cash.
In developing countries, mobile banking is generally
a low-margin business based around a high volume
of transactions.

A win-win scenario
As well as benefiting people who live in remote
areas without access to a traditional bank or who
are not accepted as customers of the traditional
banks, m-banking offers opportunities for
stakeholders including banks, operators, retailers
and vendors such as SIM card manufacturers and
handset manufacturers.
Banks receive revenue from a previously unbanked
market via interest gained on deposited cash, and
can combat the threat of money laundering by
monitoring the levels and frequency of customers
transactions. Network operators gain revenue from
text message charges and greater average revenue
per user (ARPU). They can also improve customer
retention through enhanced customer satisfaction.
Vendors can benefit from increased sales of SIM cards
and handsets as more people join the m-banking
revolution. And for customers, m-banking offers new,
more convenient ways to make financial transactions,
and can act as an incentive to start saving.

The MTN Banking service from MTN

South Africa and Standard Bank
extends banking services to people
who in many cases have never held
a bank account before. Customers do
not need to visit a bank or complete
any forms: all that is required is an
MTN SIM card, which contains the
m-banking registration software.
They then provide authenticated
PIN numbers or voice verification to
conduct transactions.
This m-banking service enables
customers to transfer money to other
accounts, make personal payments
and pay bills. There is no monthly fee,
no charge for transactions or balance
updates sent via text message, and
no minimum balance necessary, all
of which avoids creating barriers for
lower-income consumers.

23

6. Affordable
connectivity
Access to appropriate technology
brings significant socio-economic
benefits, and mobile technology is
the most effective way to cater for
lower-income segments in rural areas.
There are now therefore two key
questions to be asked: What do rural
consumers need? And how can it be
made affordable?
Connectivity: Delivering
the right solutions
From lower-income consumers perspective,
connectivity means access to a handset and a
service. Each must possess three key attributes.

Handsets

Services

Ease of use For millions of people in developing

countries, their first mobile phone is also their first
phone of any kind, so ease of use is absolutely
essential. As part of its promise to provide an
optimized user experience through very human
technology, Nokia offers extremely easy-to-use
entry-level handsets. These are based on an intuitive
user interface and extensive local language support.
To tackle illiteracy issues, these handsets include
features such as an icon-based phone book, which
enables users to select different on-screen images
to represent different people in their contacts list,
and a speaking clock, which announces the time
in the local language.

Voice and text For lower-income consumers

who have previously had no access to Information
and Communication Technologies (ICTs), the ability
to access voice and text services (and take advantage
of all the accompanying benefits) is itself of huge
significance. Data access such as Internet browsing
may play an important role at a later stage.

Quality The idea that lower-income consumers

accept lower quality from lower-priced products is
a misconception. Arguably, quite the contrary is the
case. For these consumers, investing in a handset
could mean spending several months income
or even getting into debt. Many cannot afford to
buy a replacement handset if their existing device
malfunctions, so reliability and durability are essential.
Attractiveness Besides the importance of its
intrinsic utility, the handset can still represent an
aspirational product for lower-income consumers,
so it is important that such a significant investment
makes them feel satisfied. This is where an attractive
design, personalization capabilities (such as screen
icons and ringtones), as well as additional features
like a flashlight, play a major role.

24

Wide coverage Good network coverage is of

utmost importance, as consumers expect to be
able to use their mobile phones wherever they
are. While it is estimated that 75-80 percent of
the global population already lives within mobile
coverage, this is not evenly distributed and there
are significant variations between countries.
Nokia offers operators the right solutions based
on industry-best technologies for expanding their
network coverage and capacity while building
a sustainable business.
CPP/Prepaid CPP is fundamental to the successful
expansion of mobile communications. If consumers
have to pay to receive calls, they are much less likely
to turn on their phones. Prepaid services represent
an effective payment method for mobile-phone users
in developing countries for two reasons. First, many
are unable to enter formal agreements with network
operators; second, cost control is an essential
consideration for these consumers. Prepaid services
deliver the ultimate level of cost control.

A deep insight into consumer

preferences
Nokia is constantly learning more
about what consumers need through
market research aimed at identifying
what really brings them value. In
the most comprehensive mobility
industry research to date, Nokia
recently commissioned 77,000
interviews with consumers in 21
countries across the globe to gain a
unique range of insights into their
opinions and behavior. Initiatives like
this provide a deep understanding of
consumers and their needs.

25

Affordability: Offering
the right price
Affordability has two dimensions: Cost how much
you pay; and cash how the payments are made over
time. It is important to treat the issues separately,
because the solutions to tackle each one are different.

Total cost of ownership

From a consumer point of view, cost has only one
meaning: How much of their income they will need
to spend to be connected. Market research shows that
lower-income consumers are prepared to spend five
to ten percent of their disposable income on mobility.
So the total cost of ownership (TCO), which comprises
service fees, taxes and handset prices (see Figure 3),
must be within those boundaries.
TCO is the ultimate driver of mobile-phone
penetration. Its true extent and influence are
examined and analyzed in Tax and the Digital
Divide, an independent report commissioned in
2005 by the GSM Association (GSMA). According to the
economic models prepared for this study, the lower
the TCO, the higher the penetration. The same relation
is valid for the service price, as it represents on
average over 70 percent of TCO: the lower the service
price, the higher the penetration.
However, this significance does not apply to the
handset price, which represents on average less than
15 percent of TCO. Although lower handset prices do
help to reduce the amount of black-market sales,
they do not necessarily increase penetration rates,
which are strongly influenced by the service price
and taxation.

26

For operators to offer an affordable service to

consumers, they need to embrace the right business
models for the low-ARPU market. The whole cost
structure, including all the operators costs, from
building further network coverage to marketing and
acquiring new customers, needs to be considered.
Operators can only offer long-term, affordable services
to customers when their businesses are profitable.

Operators can do much to reduce their cost of

network ownership and operation. There are several
technologies that make building coverage more
affordable, such as shelterless base-station sites
that require no air conditioning, and the Nokia
Smart Radio Concept that uses 50 percent fewer
base-station sites to provide coverage. Furthermore,
industry standard technologies such as Adaptive
Multirate Codec (AMR) and Single Antenna Interference
Cancellation (SAIC) reduce the investment needed in
network infrastructure by increasing individual basestation cell size by about 30 percent as well as adding
capacity and quality benefits.
As an example of innovative business models, the
Nokia Connect Market Expansion Toolkit allows
operators to develop diverse service offerings at
different prices, meeting the needs of lower-spending
customers in a profitable way.
This new, more affordable service offering encourages
lower-spending customers to make their calls outside
peak hours, resulting in a more efficient use of
resources. Lower-spending users can now afford to
use mobile services, possibly for the first time.

Opting for managed services, whereby strategic

partner companies deal with aspects of
implementation, operation, maintenance and
management, is another way in which operators can
reduce costs, and therefore service charges, while
extending their networks and services.

The cash barrier

Lower-income consumers tend to have a less
structured cash flow than their middle-income
counterparts, who usually have a salary or other
predicable cash inflow: There is at least one point in
the month when they have a significant amount of
cash in hand (see Figure 4). By contrast, lower-income
consumers spend as they earn. These consumers
might be willing and able to spend five US dollars per
month in getting connected, but might never have
this amount of cash at hand at any point in time.
There are innovative ways to make it easier for lowerincome consumers to enter the mobility market.
For example, microfinancing of handsets gives
entrepreneurial individuals a way to turn a mobile
phone into a profit-making service.

Financing repayments are made from revenues

generated from local marketing of the telephone
service.
Most new mobile users in developing countries are
prepaid customers. Consequently, operators need a
prepaid process that makes mobile phone use more
affordable. Lower-income consumers need low-value
prepaid recharges of 0.50 US dollars or less, with
the opportunity to buy them anywhere. According
to a 2005 Morgan Stanley report, the availability of
prepaid micro-payments was a key factor in driving
mobile-phone penetration in the Philippines from
less than 30 percent to 40 percent.
Electronic prepaid recharging solutions based on
text messaging (Nokia Connect eRefill) meet both
these needs. By replacing paper vouchers with
text messages, operators can reduce the cost of
the prepaid process by up to 70 percent, making
it possible to offer small denomination prepaid
recharges profitably. On top of that, balance control
features, such as Nokia Prepaid Tracker, which
displays the balance after each outgoing call or text
message, play an important role for prepaid users.

Cash at hand

Services
71%

Handset
14%
Tax
15%

Source: Tax and the Digital Divide, GSMA, 2005

Figure 3: Total cost of ownership over the life of the

phone and subscription

Mid income

Low income

Figure 4: Lower-income and middle-income consumers cash flow

Time

The importance of choosing

the right technology
When considering end-user TCO, the
choice of technology plays a key role
in providing a positive return on
investment to service providers at
each stage of their business evolution.
The only technology that offers
benefits attributable to economies
of scale (such as more affordable
network equipment and handsets),
global roaming and a wide choice
of handsets and applications
is the Global System for Mobile
communications (GSM). GSMs
position is getting stronger all the
time and it currently has a market
share of approximately 80 percent.
As well as a need for voice
services, there is a demand for
data connectivity and advanced
multimedia services in high-end
segments in emerging markets.
The lack of a fixed-network
infrastructure means that GSM/EDGE
and WCDMA/HSPA technologies will
be the primary access to high-speed
information networks in many
developing countries. The worldwide
economies of scale of GSM/EDGE and
WCDMA/HSPA technologies enable
a continuous reduction in TCO, so
that data services can ultimately be
delivered to a mass market.

27

7. Making it happen
If the outcomes of universal access, such as better-connected citizens, more
productive businesses and more efficient public services, are to be achieved,
mobile communications must be affordable and available to all. Working
together, the key stakeholders (shown in Figure 5) can help make this a reality
by creating a virtuous circle.

Private sector

Public sector

Consumers

Civil society

Figure 5: Key stakeholders

28

29

Private sector

National telecom policy in India aims to bridge the digital divide

To help bridge the digital divide between urban and rural India, national telecom
policy is being refocused away from a statutory Universal Service Obligation
toward a more market-driven Universal Service Opportunity for industry players.
The goal is to repeat the successful growth model of mobile communications
overseen by the Telecom Regulatory Authority of India (TRAI) in urban centers,
which was largely driven by opening up private-sector participation.
From 1994, competition was encouraged as the government adopted a series
of pro-growth incentives, including changing the high entry fees assessed to
operators to a revenue-sharing scheme, introducing a calling-party-pays regime,
and allowing operators to create innovative schemes to offer mobile handsets
to subscribers.
The results were impressive. Between 1999 and 2005, charges per minute fell
from 14 rupees (then 0.32 US dollars) to 0.40 rupees for local calls (0.01 US dollars)
and to 1.50 rupees (approx 0.03 US dollars) for calls across Indian operators.
With mobile tariffs equal to fixed-line tariffs, the number of mobile subscribers
climbed from fewer than five million to approximately 60 million. The Indian
government also reduced handset import duties significantly, giving another boost
to the rate of mobile penetration.
To increase mobile-penetration rates in rural India, TRAI aims to create a similarly
favorable business case that will be attractive to operators. This envisages
providing an initial subsidy to help establish the necessary mobile infrastructure to
serve rural areas. Other proposals include offering financial incentives to backbone
providers; ensuring adequate power supplies to help reduce the need for expensive
back-up systems; and lowering duties, levies and taxes that increase service costs.

30

India already has one of the fastest-growing mobile-phone markets in the world.
At the end of August 2006, the nation had some 111 million mobile subscribers,
with a net addition of approximately three million new subscribers every month.
TRAIs policy initiatives to increase mobile-penetration rates in rural areas promise
to drive those figures even higher.

Affordable connectivity
Public sector

Enabling
environment

Regulation
& initiatives

Figure 6: The role of the public sector

The public sector

By addressing
Market four key issues, the public sector can
createexpansion
an enabling environment, helping to extend
access to mobile technology (see Figure 6). These
four issues are: A fair and independent regulator
which stimulatesSocio-economic
free competition; compliance with
Consumers
benefits low taxation on mobile
global technology standards;
ICT on mobile
phones and services, and low duties
adoption
phones and network infrastructure
equipment.
Addressing these issues stimulates the private sector
to deliver more affordable connectivity.
Policymakers need to take a longer-term view
of mobile communications and consider how
regulations can encourage universal access rather
than hinder it. Governments can help to extend
access to mobile technology
to all sections of their
Income growth
populations by actively nurturing a flexible regulatory
environment. Reduced regulatory
risk and better
Social investment
governance would reduce costs for operators. This
society
would ultimately be Civil
passed
on to consumers in the
form of a lower total cost of ownership (TCO).
Government policymakers can combat a range of
specific mobile-growth inhibitors. These include
high custom duties, handset sales taxation, service
taxation and inefficiencies in service tariffs, all of
which add to the TCO and restrict growth. Fair and
open rules governing healthy competition can be put
in place to ensure a free, well-functioning market.

The Impact of Telecoms on Economic Growth in

Market
Developing Countries, a report
published in 2005
expansion
by the London Business School, found that every
reduction of one percentage point in sales taxes
on mobile services would result in a two percent
Enabling
increase in mobile
penetration between 2006 and
environment
2010 in several emerging markets. This means that
lowering taxes on mobile communications will
increase governments total tax revenue in the long
term as more subscribers sign up.
Establishing independent regulatory authorities,
with the ability to monitor a country or region
according to its local characteristics, would also be
an advantage. Awareness of local preferences and
Enabling
Socio-economic
patterns of usage
could be advantageously
increased,
environment
as should compliance with international benefits
technology
standards. By relying on global technology
standards rather than demanding special standards,
governments can help toIncome
bring economies
of scale to
growth
all sectors in the mobile services market. Consumers
can benefit from these savings via a reduced TCO.
Rural markets will benefit not only from regulatory
flexibility in licensing fees, but also from the
technological choice available to operators. In the
short to medium term, more licensees lead to more
expansion and coverage as well as to better services
and affordable prices.
Flexible and innovative authorities can take an active
role in supporting development. There is a need for a
new spirit of collaboration between governments and
the mobile communications industry. To maximize
the significant benefits to economies and societies,
governments, regulators, and the mobility industry
should develop a long-term partnership based on
consultation, collaboration and sustainability.
When the public sector addresses these issues, it can
create an enabling environment, which stimulates
the private sector to deliver affordable connectivity.

Moving towards universal

access in Pakistan
In Pakistan, encouraging competition
and market liberalization has led to
a decrease in the prices of handsets,
services and prepaid cards.
There are now six mobile operators
offering services in Pakistan, and
activation charges have fallen from
around 66 US dollars to just over
8 US dollars.
Public sector

This liberalization has resulted in

far-reaching consequences for mobilephone penetration in Pakistan.
While fixed-line penetration stands
at 3.41 percent, mobile penetration
rose from 0.22 percent in 2000 to
more than 15 percent in January
2006. The growth rate in 2005 hit a
record-setting 154 percent as the total
subscriber base surpassed 20 million.
Another key factor in the success of
Pakistans mobile communications
market has been tax relief for the
Information and Communication
Technology (ICT) sector, including
mobile phones. Everything related
to ICTs is duty-free in Pakistan,
including all imports.

31

Private sector
Affordable connectivity

Market
expansion

Income growth
Enabling
Socio-economic
environment
benefits
Social investment

Market
expansion
Socio-economic
benefits

Consumers

Figure 8: The role of consumers

Figure 10: The role of civil society

The private sector

Consumers

Civil society

In an enabling environment created by the public

sector, the private sector can offer affordable
connectivity, delivering what lower-income
Enabling
Socio-economic
consumers
need at a price they can benefits
afford (see Figure
environment
7). To achieve this, the private sector needs to focus
on four factors: Reducing TCO, the ultimate driver of
Enabling
penetration;
end-to-end solutions,
because only with
Public sector
environment
growth
a holistic approach Income
is it possible
to deliver a truly
Regulation and attractive handsets
optimal solution; affordable
& initiatives
that meet consumer
needs, and innovative services
that are relevant to lower-income consumers. The
result is market expansion: An increasing number of
consumers can afford to participate in this category.

As the market expands, more consumers adopt

Income growth Technologies (ICTs)
Information and Communication
due to a lower TCO, and are thus able to enjoy the
Private
sector
Social
investment
associated
socio-economic
benefits
(see Figure 8).
Public sector
Taking examples from just four sectors, these benefits
connectivity
Civil society Affordable
include greater entrepreneurial
activity, improved
access to healthcare and education,
and a greater
Market
expansion
ability to make financial transactions.

Civil-society organizations such as charities and

non-governmental organizations (NGOs) can help
to accelerate this growth process by making social
investments (see Figure 10).

Enabling

environment
The socio-economic
benefits of multi-stakeholder
cooperation can help to generate income growth,
which in turn can contribute to greater tax revenues,
providing resources for further public-sector
investment in the enabling environment (shown in
Figure 9).

Market
expansion
Enabling
environment
Socio-economic
benefits

32

ICT
adoption

Socio-economic
benefits

Consumers
Income growth

Affordable
connectivity

Income growth

Figure 7: The role of the private sector

Closing the virtuous circle

Public sector

Civil society

ICT
adoption

Enabling
environment

Private sector

Market
expansion

Public sector

Enabling
environment

Socio-economic
benefits
ICT
adoption

Regulation
& initiatives

For example, development banks can provide

technical assistance for the planning and execution
of mobility development projects, as well as
responding to requests for help in coordinating
development policies and plans. They may also
provide low-interest loans, interest-free credit
and grants to help build and maintain basic
infrastructures.

Income growth
Social
investment
Civil society

The virtuous circle of multistakeholder cooperation

Thus the interaction between the public sector,
private sector, consumers and civil society in the
delivery of access to mobile communications creates
a virtuous circle (see Figure 11). When all the
stakeholders
understand and make a commitment
Public sector
to their roles, this virtuous circle can deliver
extraordinary socio-economic benefits.

Figure 11: The virtuous circle of multi-stakeholder cooperation

By considering the structure of tax regimes, it is possible to encourage and accelerate

the use of mobile communications, enabling their economic and social benefits to be
available to as many people as possible around the world, without the need for a cent
of aid from richer countries
Tax and the Digital Divide, GSM Association, September 2005

Figure 9: Closing the virtuous circle

Consumers

33

8. Embracing the benefits

of universal access
Universal access is a natural aim for a company that is all about
connecting people. As a global citizen, Nokia recognizes and embraces
the socio-economic benefits offered by mobile access to Information and
Communication Technologies. As a commercial enterprise, we welcome the
challenges and opportunities presented by competition, provided there is a
level playing field and a sense of fair play.

Whereas it took traditional fixed-line telephone

networks more than a century to reach one billion
users, mobile communications services achieved the
same in only a tenth of that time. The exponential
growth of mobile communications means that the
number of mobile-phone users increases by more
than one million every day. Some 80 percent of this
growth comes from developing countries.
The mutual efforts of stakeholders in the mobility
industry can enrich the lives of billions of people in
developing countries. These people will know more,
interact more and achieve more than ever before.
Pervasive and affordable access, delivered via mobile
devices and networks, can help improve peoples
education, economic wellbeing and health. It also
enables businesses to be more agile and responsive,
contributes to the creation of new small enterprises,
and builds stronger communities.

34

Working together delivers

benefits for all
Nokia offers a broad base of skills and services,
which allows us to provide optimal value in every
type of market across the globe. Our work addresses
the full scope of mobility, from the underlying
network technologies to the ways in which end-users
experience mobile life, to the methods operators
use to market and support mobile services.
We believe that mobile technology can enrich
the lives of millions of people living and working
in rural areas of developing countries.
No single individual, company or organization can
do this alone. But together, we can extend the reach
of mobile communications in rural areas and move
towards making universal access a reality.

35