Because tech meccas don’t always conform to stereotype
July 19, 2019 9:01 AM Subscribe
In the 1980s, One of the World's Cellphone Hot Spots Was ... Zaire Now known as the Democratic Republic of Congo or DRC
Around late 2003, I was at a work dinner and sitting next to a guy who was with one of the major phone companies and was responsible for mobile phone infrastructure in Africa. It was an absolutely fascinating conversation, both because I knew so little about mobile phone use in that part of the world, and also because he was able to so clearly and convincingly articulate the reasons (geographic, social, political, security, etc.) why mobile would outpace landline tech in developing economies.
posted by NotMyselfRightNow at 10:46 AM on July 19, 2019 [2 favorites]
posted by NotMyselfRightNow at 10:46 AM on July 19, 2019 [2 favorites]
My dad worked for a company that did built cellular infrastructure (for cell companies to install) in the late 80s and early 90s, and by far the fastest-adopting markets during the early phase were central Africa, where landline penetration wasn't great, and Finland (where landlines were expensive and not as ubiquitous as in many European nations, and where reindeer herders immediately saw the utility of a cell phone). Most of his business trips were generally to countries where they were signing contracts with cell service providers in those nations to sell them cell towers so he'd be in Frankfurt or Paris or Tokyo selling to companies that were looking to set up networks for businesses to pay exorbitant fees to have their C-suite with the new luxury cell phones, but he went on some really interesting business trips to smaller cities in central Africa where a national telco wanted them to talk to local leaders about cell infrastructure, and to super-rural Finland where the Finnish government was trying to figure out how many towers they'd need to provide coverage across the unpopulated parts of the country.
Central Africa was also an exciting market because in the US and Europe and Japan, they had to work within legacy infrastructures with a lot of land-based telcos, a lot of radio and TV and shortwave and emergency communications on the spectrum, and a lot of existing regulations and legislation, and everything that already worked needed legacy support whenever they upgraded. In central Africa they typically got to leapfrog right to the latest technology when installing cellular infrastructure instead of mucking around ensuring they could support first-generation cell phones on sixth-generation equipment or whatever and -- as the article notes -- there wasn't a whole lot of legislation, which led to a lot more cellular-specific legislation instead of oddly-distorted legislation from the 1930s related to national monopoly telcos that had been adapted to manage early cell phones but created a lot of unnecessary obstacles and very high compliance costs.
(Americans may recall that until 2006 they paid a federal telephone excise tax that dated (in various forms) to the 1898 Spanish-American War, that's the kind of legacy legislation cell companies in the US were dealing with in the 1980s and 90s, trying to kick off large retail businesses with a brand new technology from within a sector with literally 100 years of regulations to comply with!)
I'm never surprised when new cell phone payment systems, or things like that, come out of Africa and spread from there, because they're still leapfrogging rickety old legacy systems in the US and Western Europe.
posted by Eyebrows McGee at 3:35 PM on July 19, 2019 [5 favorites]
Central Africa was also an exciting market because in the US and Europe and Japan, they had to work within legacy infrastructures with a lot of land-based telcos, a lot of radio and TV and shortwave and emergency communications on the spectrum, and a lot of existing regulations and legislation, and everything that already worked needed legacy support whenever they upgraded. In central Africa they typically got to leapfrog right to the latest technology when installing cellular infrastructure instead of mucking around ensuring they could support first-generation cell phones on sixth-generation equipment or whatever and -- as the article notes -- there wasn't a whole lot of legislation, which led to a lot more cellular-specific legislation instead of oddly-distorted legislation from the 1930s related to national monopoly telcos that had been adapted to manage early cell phones but created a lot of unnecessary obstacles and very high compliance costs.
(Americans may recall that until 2006 they paid a federal telephone excise tax that dated (in various forms) to the 1898 Spanish-American War, that's the kind of legacy legislation cell companies in the US were dealing with in the 1980s and 90s, trying to kick off large retail businesses with a brand new technology from within a sector with literally 100 years of regulations to comply with!)
I'm never surprised when new cell phone payment systems, or things like that, come out of Africa and spread from there, because they're still leapfrogging rickety old legacy systems in the US and Western Europe.
posted by Eyebrows McGee at 3:35 PM on July 19, 2019 [5 favorites]
::heart eyes Eyebrows McGee::
and to super-rural Finland where the Finnish government was trying to figure out how many towers they'd need to provide coverage across the unpopulated parts of the country.
Potato was telling me a story about how they followed the major highways first when setting up cellular towers, and only began penetrating deep into rural Finland much much later when they were able to figure out how to optimize the cost for a sparsely distributed population.
What's interesting about legacy infrastructure, like supporting 2G/EDGE, is that it still works in Finland - I can use an old Nokia from the early 2000s with little or no hiccups, but places like Singapore have completely replaced that with 3G so that the same phone won't work there.
I think they're keeping the same breadth of coverage in most African countries as well because you can still find those old Nokia models - unboxed and in their original plastic - for sale for $20 even now.
IMO, for sub Saharan Africa, the perfect storm for phone adoption took place approximately between 2003 to 2007; it took the development of micro-fractionalization of airtime to trigger mass adoption when the barrier to the price of service finally became low enough to jump over the threshold, even as older models of cellphones were in the process of being replaced in the upper income markets leading to the availability of second hand phones.
* Fractionalization meant that prepaid or pay as you go vouchers for airtime purchase could be had for as little as 50 cents
* Nokia's robustly engineered phones meant that secondhand/thirdhand even end of life models could be had in the market for $10
This perfect storm of a phone, a business model (which needed the s/w to bill in real time for prepaid), and a continent recovering the Structural Adjustment Programmes (SAPs) of the 80s and the 90s, all coming together in the first 5 years of the 21st Century, has completely transformed the landscape of the African continent, particularly among the informal sectors of the economy (much of which were the outcome of the SAPs).
Today, what we're looking at essentially, is a hybrid economy emerging from the rapid adoption of mobile telephony and subsequently mobile money. A decentralized digital economic ecosystem that is triggering transformational beneficial change in the system. I'll end my future book with just one data point of the immensity of the impact of this ICT in less than 20 years:
This is the Banque de France’s working paper on the role of financial innovation in the informal economy - mobile financial services (MFS). Their analysis shows that the presence of MFS have a proven relationship to the decrease in economic contribution of the informal sector (the relative size of the informal economy), in that particular country. In their own words:
This paper investigates the impact of mobile financial services – MFS (mobile money, and mobile credit and savings) on the informal sector. Using both parametric and non-parametric methods on panel data from 101 emerging and developing countries over the period 2000-15, we find that MFS negatively affect the size of the informal sector.
Given that most of subSaharan African nations have informal economies that employ 4 out of every 5 working age adults, if not more, and can contribute hefty chunks of the GDP, just think of what it would mean to economic development and growth over the next 20 years if the rate of pace of transformation is maintained. And, all the data, such as from the GSMA on the Mobile Economy, points to exactly that happening.
posted by Mrs Potato at 2:43 AM on July 20, 2019 [2 favorites]
and to super-rural Finland where the Finnish government was trying to figure out how many towers they'd need to provide coverage across the unpopulated parts of the country.
Potato was telling me a story about how they followed the major highways first when setting up cellular towers, and only began penetrating deep into rural Finland much much later when they were able to figure out how to optimize the cost for a sparsely distributed population.
What's interesting about legacy infrastructure, like supporting 2G/EDGE, is that it still works in Finland - I can use an old Nokia from the early 2000s with little or no hiccups, but places like Singapore have completely replaced that with 3G so that the same phone won't work there.
I think they're keeping the same breadth of coverage in most African countries as well because you can still find those old Nokia models - unboxed and in their original plastic - for sale for $20 even now.
IMO, for sub Saharan Africa, the perfect storm for phone adoption took place approximately between 2003 to 2007; it took the development of micro-fractionalization of airtime to trigger mass adoption when the barrier to the price of service finally became low enough to jump over the threshold, even as older models of cellphones were in the process of being replaced in the upper income markets leading to the availability of second hand phones.
* Fractionalization meant that prepaid or pay as you go vouchers for airtime purchase could be had for as little as 50 cents
* Nokia's robustly engineered phones meant that secondhand/thirdhand even end of life models could be had in the market for $10
This perfect storm of a phone, a business model (which needed the s/w to bill in real time for prepaid), and a continent recovering the Structural Adjustment Programmes (SAPs) of the 80s and the 90s, all coming together in the first 5 years of the 21st Century, has completely transformed the landscape of the African continent, particularly among the informal sectors of the economy (much of which were the outcome of the SAPs).
Today, what we're looking at essentially, is a hybrid economy emerging from the rapid adoption of mobile telephony and subsequently mobile money. A decentralized digital economic ecosystem that is triggering transformational beneficial change in the system. I'll end my future book with just one data point of the immensity of the impact of this ICT in less than 20 years:
This is the Banque de France’s working paper on the role of financial innovation in the informal economy - mobile financial services (MFS). Their analysis shows that the presence of MFS have a proven relationship to the decrease in economic contribution of the informal sector (the relative size of the informal economy), in that particular country. In their own words:
This paper investigates the impact of mobile financial services – MFS (mobile money, and mobile credit and savings) on the informal sector. Using both parametric and non-parametric methods on panel data from 101 emerging and developing countries over the period 2000-15, we find that MFS negatively affect the size of the informal sector.
Given that most of subSaharan African nations have informal economies that employ 4 out of every 5 working age adults, if not more, and can contribute hefty chunks of the GDP, just think of what it would mean to economic development and growth over the next 20 years if the rate of pace of transformation is maintained. And, all the data, such as from the GSMA on the Mobile Economy, points to exactly that happening.
posted by Mrs Potato at 2:43 AM on July 20, 2019 [2 favorites]
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I can see why Gatt has mostly dropped off the radar. Making millions by meeting the communications needs of a brutal dictator, mmmm.
posted by Fukiyama at 9:20 AM on July 19, 2019 [1 favorite]