Mobile telephony is an excellent example of a BoP market. Mobile phones were originally sold to affluent consumers living in developed countries. But today, three quarters of the mobile phones in the world are owned by people in developing countries. Annual growth rates of mobile telephony in developing countries are tens of percents. In 2008, Africa alone added 96 million users.
A recent study by the World Bank found that the economic impact of Internet access is even bigger than that of mobile telephony. A 10 percent point increase in Internet access in a developing country increases GDP by 1.1 - 1.4% as compared to 0.8% for mobile telephony. Unlike mobile telephony, however, the penetration of Internet in developing countries is still very low. The average penetration in Sub-Saharan Africa is 4%. This means there is a huge untapped potential for economic growth through increasing Internet access.
There are a number of reasons for the low penetration of Internet access in developing countries:
- People cannot afford a computer
- People cannot afford an Internet connection (e.g. a 0.5 Mbps connection in The Gambia costs EUR 300 per month, compared to EUR 20 per month in The Netherlands for a 20 Mbps conncetion. This is 600 times more expensive in developing countries!)
- A lack of a stable electricity supply (72% of people in Sub-Saharan Africa do not have access to electricity)
- (Computer) illiteracy
- A lack of content on the Internet that is tailored towards people in developing countries
NICE expects that Internet penetration in developing countries will steadily grow in the coming years. This growth will be driven by the strong desire of people and businesses to access the Internet, but also by the reducing cost of connectivity due to the deployment of glass-fiber networks.
Shared Internet access will remain the dominant method for Internet access for the majority of BoP customers. It will take years before a significant portion of the population will have access to Internet from their homes. For some applications Internet access through the mobile phone will be the dominant access method, but for many applications a full-size computer and broadband connection will remain needed.