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GSMA and Deloitte Release Comprehensive Research Into The Impact Of Mobile Telephony On Economic Growth
Posted: 20-Nov-2012 [Source: GSMA]

[Report from GSMA and Deloitte looks into the impact of next-generation mobile services on economic growth. One key finding shows a doubling of mobile data use leads to an increase of 0.5 percentage points in the GDP per capita growth rate across the 14 countries studied.]

Singapore -- Today the GSMA and Deloitte released the first comprehensive assessment of the incremental benefits of next-generation mobile telephony services, such as 3G technology and mobile data services, and their impact on economic growth. The report 'What Is the Impact of Mobile Telephony on Economic Growth?' provides the first estimates of the impact of mobile data usage on GDP growth in developed and developing markets. The report draws from research of data usage and economic growth across 14 countries provided by Cisco Systems based on their Visual Networking Index (VNI), as well as Deloitte studies on the productivity impact of mobile in 79 countries and the impact of 3G penetration across 96 countries.

"The development of data services have the potential to drive economic development in the same way in which voice services have in previous generations," said Chris Williams, Deloitte telecommunications partner. "This report offers the first serious quantification of this impact and confirms industry expectations that the impact is significant. Policy makers need to consider the implications of this report in their support for the development of mobile data."

Key findings of the report include:

-- A doubling of mobile data use leads to an increase of 0.5 percentage points in the GDP per capita growth rate across the 14 countries;

-- Countries characterised by a higher level of data usage per 3G connection have seen an increase in their GDP per capita growth of up to 1.4 percentage points;

-- A 10 per cent rise from 2G to 3G penetration increases GDP per capita growth by 0.15 percentage points; and

-- In developing markets, a 10 per cent expansion in mobile penetration increases productivity by 4.2 percentage points.

The impact of 3G penetration on GDP growth

The report measures the impact on GDP growth of consumers moving from basic 2G connections to 3G connections. This analysis of 96 developed and developing markets shows the positive effect of consumers substituting a 2G connection with a 3G connection. A 10 per cent rise in 3G penetration increases GDP per capita growth by 0.15 percentage points.

"Total mobile connections will stand at 6.8 billion with mobile subscriber penetration at 45 per cent by the end of 2012," said Tom Philips, Chief Government and Regulatory Affairs Officer, GSMA. "In this period of economic uncertainty, governments should look to the mobile industry as a key partner for economic growth and put in place policies that encourage investment in broadband infrastructure, which will serve to enhance productivity, as well as policies to drive the development of new data services that will boost the economy and benefit society."

The impact of mobile data on GDP growth

The increase in 3G connections, supported by the proliferation of data-enabled devices that allow mobile Internet connectivity, has led to a massive growth in the use of mobile data. Total mobile data usage has more than doubled on average every year from 2005 to 2010 in each of the 96 countries in the sample. In Western European countries, it grew by 350 per cent.

Using data from Cisco's VNI for 14 countries, this study finds a strong relationship between usage of mobile data per 3G connection and economic growth. A doubling of mobile data use leads to an increase of 0.5 percentage points in the GDP per capita growth rate across the 14 countries.

The impact of increased mobile data usage is stronger in countries where the average level of mobile data consumption per 3G connection is comparatively higher. Countries characterised by a higher level of data usage per 3G connection, such as Russia, the UK and South Korea, have seen an increase in their GDP per capita growth of up to 1.4 percentage points. The effect is more limited for countries where mobile data usage is currently less prevalent, such as China, India, Mexico and South Africa.

"This study is an important addition to the growing body of empirical evidence demonstrating the impact of broadband on economic growth," said Dr. Robert Pepper, Vice President, Global Technology Policy, Cisco. "As people around the world increasingly connect to the Internet via multiple wireless devices to use rich content anytime, anywhere, it is creating a deluge of data that is changing the way we work, live and play. The fact that increasing high-speed mobile broadband data usage leads to greater average per capita income underscores the need for increased investment in wireless networks as well as for government policies to foster that investment, including the allocation of additional spectrum."

Impact of mobile telephony on productivity in developing markets

While the effects from mobile data are most evident in more developed markets, mobile telephony in developing markets continues to deliver strong benefits through voice services, with huge potential for additional benefits as mobile data networks are rolled out. In developing markets, a 10 per cent expansion in mobile penetration increases productivity by 4.2 percentage points. Rather than look to capture value from the mobile industry via sector specific taxation and high regulatory fees, government could seek to incent investments in mobile broadband networks, which will deliver significant economic and social benefits.

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