The economics of the mobile web

Two interesting factoids from the Economist’s Technology Quarterly piece on mobile phones. First:

A case in point is M-PESA, a mobile-payment service introduced by Safaricom Kenya, a mobile operator, in 2007. It allows subscribers to deposit and withdraw money via Safaricom’s airtime-sales agents, and send funds to each other by text message. The service is now used by around a quarter of Safaricom’s 10m customers. Casual workers can be paid quickly by phone; taxi drivers can accept payment without having to carry cash around; money can be sent to friends and family in emergencies. Safaricom’s parent company, Vodafone, has launched M-PESA in Tanzania and Afghanistan, and plans to introduce it in India.

And second:

As countries work their way up the development ladder, however, the situation changes in favour of full mobile-web access. Jim Lee, a manager at Nokia’s Beijing office, says he was surprised to find that university students in remote regions of China were buying Nokia Nseries smart-phones, costing several months of their disposable income. Such handsets are status symbols, but there are also pragmatic reasons to buy them. With up to eight students in each dorm room, phones are often the only practical way for students to access the web for their studies. And smart-phones are expensive, but operators often provide great deals on data tariffs to attract new customers.

Xuehui Zhao, a recent graduate of the Anyang Institute of Technology in Henan province, explains that a typical monthly package for five yuan ($0.73) includes 10 megabytes of data transfer—more than enough to allow her to spend a couple of hours each day surfing the web and instant-messaging with friends. It is also much cheaper than paying 200 yuan per month for a fixed-broadband connection.

It seems interesting to me that mobile phone innovation is becoming more of a developing-world phenomenon, simply because the networks in the developed world are raking in a lot of cash from traditional services, and those revenues need to be protected. I well remember a session with Vodafone back in my Guardian days when a chap from Vodafone complained about a lack of “creativity” when it came to media companies developing phone applications. He became a bit shirty when I pointed out that the economics of developing for mobile phones (ie, there weren’t any) meant media companies had better ways of spending ther time. In the developing world, that is not the case. Another example of why rich companies with healthy revenue streams find it so hard to innovate, because innovation means taking risks with their bottom line. Only when taking a risk becomes riskier than not taking a risk will that become easy.

A farmer on a mobile. Innovation in action.
A farmer on a mobile. Innovation in action.

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