CHAPTER ONE: INDUSTRY OF CELL

PHONES

Mobile Phone Industry:

The Federal Communications Commissions is the main regulator of

the mobile phone industry in the United States. From clunky luxury
items to integral parts of daily life, cell phones now fuel an industry
touching all corners of the globe. The cell phone industry is the
fastest growing sector in the larger communications industry today.
Right now, the Internet is one of the industries attracting use by
the largest numbers of people globally. The cell phone industry is
primarily engaged in the manufacturing of mobile phones,
including mobile phone handsets. As of now, the cell phone
industry is totally concentrated on moving forward technologically.
It is one of the fastest moving industries in the world, growing
alongside up-and-coming technologies and innovations, building
upon the progress of "smartphones" and other phone feature and
segments made in recent years. The mobile industry also makes a
very significant contribution to public funding. For most countries,
this includes value added, corporation and income tax, and social
security from mobile ecosystem employees. It is estimated that the
sector contributed more than US$400 billion to public funding in
2014, before considering regulatory and license fees. Additionally,
spectrum auctions generated revenues of over US$14 billion for
governments globally

- Location:

It has only been since 1994 that the cell phone

began to become much more popular. In fact, these products'
increased in usage from 24 million since that time to 182 million
users in the US today. Larger-screen smartphones have been
made available in recent years in the US through such
companies as Samsung and HTC. Despite cultural perceptions

http://www.worldatlas.com/articles/all-about-the-cell-phone-industry.html
http://www.gsmamobileeconomy.com/GSMA_Global_Mobile_Economy_Report
_2015.pdf

that associate cell phones with the Western world, they can in
fact be found today in almost every corner of the world.

- Process: It is not just the technology of the cell phone that

has changed over recent periods of time. Their physical designs
have also gone through several rollercoasters of change and
makeovers. They have considerably reduced their bulkiness,
changing in shape, size, and weight. Now, cell phones are
becoming even sleeker still, making their users feel very
comfortable in carrying them. According to researchers, it is
believed that, in the future, cell phones will be enable to become
in sync with our biological reflexes and processes, such as eye
movements, thought processes, and kinesthetic movements,
and even cultural preferences as well.

Global Mobile Phone Market Overview:

The global mobile subscriber base increased by 5% in 2014.
Developed markets are growing more slowly as penetration rates
approach levels close to saturation. For example, in Europe and
North America, unique subscriber growth was below 1% in 2014. At
the other end of the spectrum, Sub-Saharan Africa was still the
worlds most under-penetrated region with subscriber growth at
nearly 12%.
Currently, mobile phones and smart phones market is experiencing
proliferation owing to factors such as decreased cost, improved
design and functionalities such as enhancement in mobile
browsing and email services, emergence of new network
technologies such as 3G and 4G, improved professional and
personal data supervision and the standardization and upgradation of all operating systems. The market is highly
competitive with major players facing strong competition from the

regional players thus creating difficulties for vendors retain their

market shares. For instance, Nokia has lost a considerable amount
of market share in the past two years. Android, iPhone OS
(operating system), BlackBerry OS, Symbian and Windows are
some of the operating system used in the smartphone. Blackberry
operating system is popular in North America. IPhone operating
system has recently witnessed a high growth rate in North America
and is anticipated to grow in the forecast period as well. Increase in
penetration of internet with technological advancements and up
gradation of the network infrastructure is contributing to the
growth of the market.

https://www.linux.com/blog/mobile-phone-and-smart-phone-market-globalindustry-analysis-and-forecast-2015-2021
http://www.gsmarena.com/makers.php3

General Uses of Mobile Phones:

Mobile phones are used for a variety of purposes, such as keeping in
touch with family members, for conducting business, and in order to
have access to a telephone in the event of an emergency. Some
people carry more than one mobile phone for different purposes,
such as for business and personal use. Multiple SIM cards may be
used to take advantage of the benefits of different calling plans. For
example, a particular plan might provide for cheaper local calls, longdistance calls, international calls, or roaming. The mobile phone has
been used in a variety of diverse contexts in society. For example, it
is used for: distributing content, while driving, mobile banking and
payments, tracking and privacy

Changing of Cell Phone Industry:

The Evolution of the Cell Phone Industry: The cell phone
industry is quite fluid. While theres no risk of the industry falling
apart, its pretty clear that the future of the industry will be much

different. In fact, if you were to catch a glimpse of the marketplace

10 years down the road, you probably wouldnt recognize it.
- In April 1973, Motorola engineer Marty Cooper made the first call
from a real handheld portable cell phone
- A radio common carrier (RCC), which was introduced in the 60s
as a pre cellular system. Like a radio, it could transmit voice
communication through a push-to-talk system, but it used a
public telephone network and had its own telephone number.
- The first foray into truly portable devices was the clamshell form
factor.
- Nokia was at the forefront of this type of device. The candy bar
phone was named as such, because it was approximately the
size and shape of, well, a bar of candy.
- The mid 90s was a period of evolution for the mobile industry. The
clamshell phone shed some heft and paved the way for the
modern flip phone.
- Satellite Phone: A sat phone connects to orbiting satellites, rather
than Earth-bound cellular towers, which means it can make a
call from essentially anywhere in the world.
- The personal digital assistants (PDA) of the 90s ushered in a wave
of pocket computing and touchscreen devices. The industry
game changer was popularized by Palm, which launched the
Palm Pilot in 1997.
- Nokia 6000 Series the popular cell phone of the early 2000s made
mobile communication affordable and widely available for the
masses.
- The Razr: The slim, sleek, and super pocketable form factor made
by the Motorola Flip Phone, which launched in 2004.
- The BlackBerry email client and BlackBerry-to-BlackBerry instant
messaging took the mobile world by storm when it made
its debut in the early 2000s.
- The world wasnt quite ready for the iPhone when it was unveiled
in 2007. Apple founder Steve Jobs launched the all-in-one digital
music player, camera (2MP!), and Internet-enabled PDA device,
and the rest is history.

- Android platform made it possible for manufacturers like

Samsung, LG, HTC, and others to create devices based on the
mobile operating system.

Evolutions Cell Phone Industry Experienced:

1.Death of Network Contract
2.The Rise of Unlocked Smartphones
3.Changing Technology
The future of the Industry: The future of the industry will
look much different than the present state. Aside from changes in
actual mobile device technology, everything from how phones are
purchased to the structure of wireless network contracts will look
completely different. Whether youre a customer or a business in
the industry, its important that you stay up to date of changes to
ensure youre aware of whats next.

Key Players In Mobile Phone Industry:

The key players in the mobile phone industry are mobile phone
manufacturers, operating system companies, and carriers. The
manufacturers are referred to as mobile phone companies in the
paper. We focus on smart phone companies, which use an operating
system not unlike a computer. Pioneered in the Personal Digital
Assistant (PDA) era, these phones have been nearly eclipsed by

smart phones. A number of technologies are needed for a smart

phone to provide value to users. In addition to the operating system,
these technologies include discrete applications or 'apps'
downloaded from app stores. The competitive nature of the industry,
and requirements of high technology, have given rise to patent
wars. Main players can be listed below:
- Apple
- Microsoft
- Samsung
- HTC
- Nokia
- Acer
- Sony
- OPPO
- Huawei
- ZTE
- Motorola
- Lava
- Blackberry
- MaxWest
- Lenovo
- Micromax
- LG
- Asus
- Kyocera
- Vodafone

What are the effects of mobile phones on

GDP?
A.

What is the GDP?

GDP (gross domestic product) is one of the

primary indicators used to gauge the health of a
country's economy. It represents the total dollar value of all goods
and services produced over a specific period.

B.

Importance of the GDP:

When talking about the importance of the GDP it is a must to

highlight on the text book Economics for Samuelson and
Nordhaus which believes that GDP enables the central bank and
policy makers in countries to take the correct decisions and apply
the needed policies (monetary or fiscal) . GDP also helps
economists judge whether the economy is expanding or
contracting, calculate the inflation.

C.Calculating the GDP:

GDP can be calculated through three approaches:

1) Expenditure-based: is the most common approach used
GDP=C+I+G+(X-M)
C: Consumption goods and services
I: Gross Investments
G: Government Purchases
X: exports
M: imports
2) Income approach:
Is calculated by adding up the factor income to the factors of
production in the society.
3) Output approach:
Is calculated by summing the value of sales of goods and
adjusting (subtracting) for the purchase of intermediate
goods to produce the goods sold

The impact of mobile phones on the GDP

Many variables affect the GDP of a country, from these variables

is the mobile phone selling and purchasing which is showing more
and more its importance. Buying and selling mobile phones has a
direct impact on the GDP:
1st: cellphones allowed the development of certain applications
which made transferring money applicable in a very easy way
throughout the world. (Banking applications)
2nd: cellphones became a trend in which selling of mobile phones
is increasing day after day, according to many studies increasing
mobile penetration has a positive impact on the GDP and is twice
large in developing countries as in developed countries.

The effect of mobile phones development on

the GDP

We have shown previously how selling mobile phones affects

the GDP of a country, but what we havent explained yet is
that developing these mobile phones also affects the GDP. To
start we will be studying the economic impact of
Changing from 2g service to 3g service.
A recent study done by GSM association Deloitte and
Cisco on 96 countries across 4 years (2008-2011)
shows that if countries had 10% higher 3g penetration
they would have experienced 0.15% points in the
average annual growth of the GDP per capital. Thus the
result shows that countries that have higher 3g
penetration have higher economic GDP growth
compared to countries with lower 3g penetration.
In America a new report by Deloitte finds that mobile
phones have a measurable impact on economic growth.
The studys authors demonstrate that for every 10%
shift in American markets from 2G to 3G between 2008
and 2011, per capita GDP increased by 0.4%.

 Difference in mobile phone effecting GDP

between developed and developing
countries:
To study the difference between developed and developing
countries we will take 8 countries and study their difference:
Developin
g
Countries

Develope
d
Countries

Pakistan

United
Arab
Emirates

Banglades
h

Germany

Ukraine

United
kingdom

Thailand

Japan

Table 1: shows a list of developing and developed

countries.

Country

Numbe
Populati
r of
on in
mobile
million
operat
ors

Number
of
subscrib
ers in
million

Mobile
penetration

Percenta
ge of
GDP

Pakistan

166

135

79%

5.10%

Banglade
sh

156.6

121800

40%

6.20%

Ukraine

46.3

57

5.90%

Thailand

67.01

98

75%

4.80%

Table2: shows the effect of mobile telecommunication in

developing countries

Country

Number Number
Populat
of
of
Mobile
Percent
ion in
mobile subscrib penetrat age of
million operato
ers in
ion
GDP
rs
million

United
Arab
Emirate
s

318.9

5.15

230.6

German
y

80.62

114.124

140

United
kingdo
m

64.1

89.9

139%

Japan

127.3

142,809,30
0

112.17%

4.00%

Table 3: shows the effect of mobile telecommunication in

developed countries.
By comparing the GDP between these countries with respect to
the other variables (population, operators) we find that
All the studies we previously discussed showed the direct impact
of mobile phones on GDP, but a recent study made by McKinsey
&Company a leading firm that serves businesses , governmental
and non-governmental organizations by helping them improve
and understand their goals by studying markets, trends, and
emerging best practices, in every industry and region, locally and
globally. This research concluded that the indirect impact of

mobile telecommunications to be at least three times as great as

the direct impact.

https://www.budde.com.au/Research/Afghanistan-Telecoms-Mobileand-Broadband-Statistics-and-Analyses
https://www.telenor.com/wpcontent/uploads/2012/03/Telenor_Eco_Impact_25_april.pdf

They defined the total economic impact of mobile phones as the

sum of three key elements:
1. the direct impact from mobile operators;
2. the direct impact from other companies in the wireless
business system (hardware and software vendors, handset
vendors)
3. Indirect impact - the surplus enjoyed by the end users,
which included the improved productivity for mobile workers
and the less tangible, but nonetheless valuable benefits of
access to family, improved security, peace of mind and
other virtues enjoyed by both enterprise workers and
consumers.
This study focused on the mobile telecommunications industries
in three developing countries in Asia; China, India and the
Philippines. The result of this study showed a total impact of $24
billion was direct while $84 billion was indirect including a $47
billion contribution to GDP.

In China and India the study showed that increasing the

penetration by 10% would produce tremendous end-user value of
at least $10 billion, equivalent to an incremental 0.38%-to-0.61%
contribution to GDP.

Benefits of increased mobile penetration

According to all she studies made by different companies and
researchers the mobile penetration is increasing day after day
and year after year. Thus this increase has many benefits:
l Remittance: mobile phones can be an easy, cheap and a
quick way to transfer funds. Compared to the traditional
money transfer operators (Western Union, MoneyGram)
mobile phones are much cheaper for example Smart
Communications allows Filipinos workers to transfer money
overseas in a minute with a text message for a fraction of
the cost.
l Empowerment of poor: bringing easy and affordable
access to telecommunication for rural families will help
increase access to education and health services, in addition
to reducing corruption by M-Governance.
l Productivity gain to Business and Individual: with
respect to businesses mobile phones enables a faster and a
more efficient decision making and moreover doubles up the
productivity. For individuals the gain is in the time and
money saved.
l Foreign direct investment: with all the mobile phones
development it has become much easier to invest
worldwide, thus the investment is higher in countries with
higher mobile penetration.
With all these benefits it is important for the government to take
some actions that will ensure the mobile penetration increase:
- Digitalization of information
- Encourage companies to cover rural areas
- Ensure that taxes on the industry(telecommunication) are
reasonable

- And others...
(http://www.telecomcircle.com/2009/01/impact-of-mobility-oneconomic-growth-in-developing-countries/)

Mobile phones contribution in the future

globally
With all the great influence of mobile phones on economy
nowadays and its fast development, researchers believe that
there will become a greater impact in the future. According to a
research done by GSMA Mobile Economy in 2016 shows:

percent
2015 2020
age
growth
Unique
Subscribers

4.7
billio
n

5.6
billio
n

+3.9%

Penetration

63%

72%

Global
Connections

7.3
billio
n

8.9
billio
n

+3.9%

Mobile Operators
Revenue

1.1
trillio
n

1.2
trillio
n

+1.90%

Mobile phone
internet
penetration

44%

60%

Mobile phone
contribution to
GDP

3.1
trillio
n

3.7
trillio
n

+4.20%

Public Funding

430
billio
n

480
billio
n

Employment

17
millio
n

20
millio
n

Table 4: shows the mobile phones effect in 2015 and estimates

its effect in 2020.
This comparison shows that the effect of mobile phones will
increase within five years positively and with a high percentage

SOURCES
http://www.gsma.com/mobileeconomy/
https://www.boundless.com/economics/textbooks/boundlesseconomics-textbook/measuring-output-and-income-19/measuringoutput-using-gdp-92/calculating-gdp-350-12447/
http://www.gsma.com/publicpolicy/wpcontent/uploads/2012/11/gsma-deloitte-impact-mobile-telephonyeconomic-growth.pdf
http://www.amta.org.au/articles/amta/New.study.calculates.the.full
.benefit.of.mobiles.to.economies
http://www.mckinsey.com/about-us/who-we-are
https://www.linux.com/blog/mobile-phone-and-smart-phonemarket-global-industry-analysis-and-forecast-2015-2021
http://www.gsmarena.com/makers.php3