3GSM Asia: Two billion GSM subs today, tomorrow the world

Operators should already be thinking beyond the next 1 billion subscribers and looking towards a time when GSM coverage reaches out over 90 per cent of the world’s population. That was the message delivered to delegates by a panel of leading CEOs at the 3GSM World Congress keynote address this week in Singapore.

It took 12 years to reach the first 1 billion GSM subscribers, then just 30 months to breach the 2 billion milestone in June of this year. The phenomenal growth rate is set to continue in the short term, however, carriers will need to innovate if they are to close the gap that exists between the current global mobile penetration figure of 38.9 per cent and the current potential market of 4.8 billion people.

Smart Communications’ president and CEO, Napoleon Nazareno, was on hand to describe how his company looked beyond the more heavily populated urban areas and into rural communities. Smart has 99 per cent coverage of the Philippines. Smart initially invested heavily in backbone and transmission, and combined that with its fixed network, but its success is down to more than infrastructure.

“When we reached 25 per cent penetration the analysts said we were hitting the wall, but we wanted to push the wall back. So we looked at making the service more affordable. In the Philippines people have daily earnings, so they have daily spending patterns. But when you sell smaller units it is not necessarily lower margins,” said Nazareno, making reference to his firm’s innovations around micro-payments.

Alexander Izosimov, CEO of Russian operator VimpelCom, suggested that his company managed to drive up subscriber numbers thanks not just to lower prices,” but also a lack of over-regulation on the part of his country’s government. There are no excessive taxes in Russia. None on any part of the operation, none on SIMs.” Russia now has penetration based on SIM cards of 101 per cent.

The Russian government is, however, planning to introduce a universal access fund (UCF). Something that Izosimov and Arve Johansen, CEO of Telenor (which owns a substantial portion of VimpelCom) both agreed is not necessarily the best method of achieving improved telecommunications coverage.

“If I am honest I have seen very little benefits of the universal access funds,” said Johansen, whose company has operations in Pakistan, Thailand and Malaysia – all countries in which the governments have introduced such funds. Johansen added: “Governments take the money, but they don’t know what to spend it on. There is a tendency to spend on fixed, but mobile is more efficient.”