4. | Executive Summary2 THE MOBILE ECONOMY 2015 The world is seeing a rapid technology migration to both higher speed mobile broadband networks and the increased adoption of smartphones and other connected devices. Mobile broadband connections will account for almost 70% of the global base by 2020, up from just under 40% at the end of 2014. Smartphone adoption is already reaching critical mass in developed markets, with the devices now accounting for 60% of connections. It is the developing world—driven by the increased affordability of devices—that will produce most of the future growth, adding a further 2.9 billion smartphone connections by 2020. Fuelled by the growing range of new services and applications, data traffic is expected to see an almost ten-fold increase by 2019. Slowing subscriber numbers, as well as competitive and regulatory pressures, have led to a slowdown in industry revenue growth in recent years. Revenue growth is forecast to slow further over the coming years, with a compound annual growth rate (CAGR) of 3.1% per annum through to 2020, down from 4% in the period 2008-2014. More encouragingly, operators are showing an increasing ability to monetise the explosive growth in data traffic. Operators have invested heavily in their infrastructure over the past three years, with capital expenditure (capex) set to increase further to support mobile broadband network deployments. Capex is forecast to total US$1.4 trillion for the period out to 2020, with 3G coverage set to reach 86% of the population by 2020. Additionally, 4G is now being built out more rapidly than was the case with 3G. However, this magnitude of investment will be dependent on operators continuing to diversify their revenues, and developing new and more sustainable business models. The mobile ecosystem is a major driver of economic progress and welfare globally. In 2014, the mobile industry generated 3.8% of global gross domestic product (GDP), a contribution that amounts to over US$3 trillion of economic value across 236 countries. This figure captures the direct, indirect and productivity impacts of the mobile ecosystem, but does not include broader socio-economic effects. In the period to 2020, mobile’s contribution will grow at a faster rate than the rest of the global economy, contributing 4.2% to the world’s GDP by the end of the period. The mobile industry continues to scale rapidly, with a total of 3.6 billion unique mobile subscribers at the end of 2014. Half of the world’s population now has a mobile subscription—up from just one in five 10 years ago. An additional one billion subscribers are predicted by 2020, taking the global penetration rate to approximately 60%. There were 7.1 billion global SIM connections at the end of 2014, and a further 243 million machine-to-machine (M2M) connections. Executive Summary *GSMA Intelligence estimates that the total number of active SIM connections at end 2013 was 6.3 billion.
5. Executive Summary | 3 THE MOBILE ECONOMY 2015 The mobile ecosystem directly employed nearly 13 million people in 2014, rising to over 15 million by 2020. The sector also indirectly supported nearly 12 million jobs in the broader economy in 2014 and this figure is predicted to rise over 13 million by 2020. The industry also makes a very large contribution to public funding in the form of general taxation. In 2014, approximately US$410 billion was contributed globally, with spectrum auctions generating additional revenues of over US$14 billion. Mobile is at the heart of the new digital ecosystem. It is driving innovation and the development of new services in areas such as digital content, social networking and online commerce. Mobile is delivering a new and vibrant ecosystem, based on mobile broadband networks, advanced smartphones and tablets, and a growing range of other connected devices and objects. Mobile has already redefined consumers’ experiences in many aspects of their daily life, as well as created a range of new business opportunities and services. New technologies, imaginative use cases and business models are likely to generate even more profound innovations, with mobile increasingly linking the digital and physical worlds. Rapid smartphone adoption allows for new products and services to be created, whether they are based on apps or on the development of low power components that are the building blocks for new connected devices. Consumers are beginning to realise the transformative potential of the Internet of Things (IoT), with an increasing number of services and launches focused on, for example, wearables and the smart home. The benefits of the new mobile ecosystem are not limited to the developed world. Innovative mobile solutions are helping to provide underdeveloped, underserved and poverty stricken regions with the opportunity to overcome socio-economic challenges, particularly in the areas of financial inclusion, health, education and disaster response. For the full potential of mobile to be realised, populations across the world need access to mobile broadband networks, and affordable devices and services. At the end of 2014, the number of people using the mobile internet reached 2.4 billion. This is expected to rise to 3.8 billion by 2020, driven by growth in developing countries. The unconnected population is predominantly rural, with low incomes and high levels of illiteracy creating barriers to mobile internet adoption. Operators, other ecosystem players, as well as governments and regulators all have a role to play in addressing these barriers and improving the reach and affordability of mobile services. With a supportive regulatory framework, the mobile sector will continue to drive socio-economic progress, benefiting individuals, companies and governments alike. While regulatory frameworks will differ from market to market, there are some general principles that apply across the globe. There are a number of steps that policymakers can take to encourage investment. These include reducing constraints on market-driven restructuring as operators seek to gain the necessary scale, while also ensuring there is a solid business case for deploying mobile technologies and services. Governments also have a role to play in encouraging innovation, and policymakers can help the mobile industry build the necessary trust and confidence in the digital economy. If policymakers and regulators encourage investment, competition and innovation, both the mobile sector and the wider digital economy will expand, creating prosperity and new jobs. A precious and finite resource, radio spectrum is fundamental to the delivery of mobile services. The International Telecommunication Union (ITU) estimates between an additional 1340MHz and 1960MHz of spectrum will be required to meet the anticipated demand in 2020. The next opportunity to identify additional harmonised spectrum for mobile broadband is at the World Radiocommunication Conference in 2015 (WRC-15) in Geneva. The outcome of WRC-15 will determine whether the telecoms industry can continue to meet the growing demand for affordable, ubiquitous, high-speed mobile broadband services. As mobile disrupts and affects more areas of consumer and business life, the potential for collaboration also grows. Players from across the digital ecosystem, ranging from mobile operators to new entrants and existing players in adjacent industries, will increasingly recognise the need for collaborative innovation, rather than competition, if they are to realise the full potential of mobile.
28. | Mobile empowering people and society26 THE MOBILE ECONOMY 2015 MOBILE SERVICES VAT Handset VAT CorporatION tax Employee income & social security TOTAL 40 158 93 121 411 Tax contribution by the mobile ecosystem (2014 US$ bn) Source: GSMA Intelligence 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 licence fees. Additionally, spectrum auctions generated revenues of over US$14 billion for governments globally.
46. | Mobile empowering people and society44 THE MOBILE ECONOMY 2015 Research in low- and middle-income countries indicates that there are notable and persistent gaps in women’s access to mobile and its services which meet their needs. Recent research by the GSMA Connected Women programme suggests women in low- and middle-income markets are 14% less likely to own a mobile phone than men, which translates approximately into 200 million women. While substantial progress toward phone ownership for women is evident on an aggregate level, certain regions, such as South Asia, have made little progress in closing the gender gap in mobile ownership (women of the region are in fact 38% less likely to own a phone than men). Other regions, such as Sub-Saharan Africa, have a 13% gender gap in mobile phone ownership overall, but certain countries exhibit high gender gaps in mobile phone ownership. For example, Niger and the Democratic Republic of Congo had gender gaps in mobile phone ownership of 45% and 33% respectively. A mobile gender gap also exists at the usage level—even when women own mobile phones, they tend to use mobile services less frequently or less intensively than men. Closing the usage gender gap will enable women to gain access to the life-enhancing services of mobile, including mobile internet. Additionally, closing the gender gap in terms of mobile ownership and usage in low- and middle-income countries could unlock an estimated US$170 billion market opportunity for the mobile industry in the next five years. Cost was identified as the greatest barrier overall to owning and using a mobile phone, particularly for women, who often have less financial independence than men. Security and harassment also emerged as an important barrier to mobile phone ownership and usage, and is a key concern for women. Other barriers include service delivery issues (network quality and coverage and agent or operator trust) and technical literacy and confidence. Finally, it was found that social norms tend to influence women’s access to and use of mobile technology, and often contribute to women experiencing barriers to mobile phone ownership and use more acutely than men. 2.4.1 Connected Women: Addressing issues of gender inequality Gender inequality in the mobile industry remains an issue across both developing and developed countries. Women tend to be left behind, not only as consumers of mobile services, but also as employees and leaders in the mobile industry.
56. | Delivering the digital future54 THE MOBILE ECONOMY 2015 Working with its partners across the ecosystem, the GSMA is active in a number of areas to drive forward this initiative: •	Creation of fully interoperable specifications for remote SIM provisioning of M2M devices and and evaluation of convergence between M2M and smartphone/tablet solutions. •	Evaluation of the viability of existing networks to meet the low power, low data rate and low mobility use cases, as well as an assessment of the viability of alternative complementary networks including integration with macro network & spectrum/policy issues. •	Deployment of a GSMA sandbox platform to demonstrate how to monetise IoT Big Data. •	Device security requirements and an accompanying accreditation process for operators to demonstrate that solutions utilising their networks are secure. Engaging with partners across the broader ecosystem, the GSMA is also helping to facilitate the development and drive the adoption of new services in other sectors, with special interest groups for automotive, health, education, utilities and transportation. These groups allow manufacturers and mobile operators to meet and share information, enabling industry cooperation with the goal of resolving barriers to deployments and to accelerate the adoption of services. 3.2.1 The GSMA’s role in realising the potential of M2M The initial focus of the Connected Living programme is to accelerate the delivery of new connected devices and services in the M2M market through industry collaboration, appropriate regulation, optimising networks and develop key enablers to support the growth of M2M in the immediate future. The ultimate aim is to enable the IoT, a world in which consumers and businesses enjoy rich new services, connected by an intelligent and secure mobile network.