Wed, Oct 18, 2006 - Page 11 News List

Mobile operators aim to cover 90 percent of planet

INDUSTRY STUDY The GSM Association wants to put a cellphone in every hand by dipping into 'universal service funds' that subsidize rural telecom networks

AFP , SINGAPORE

Up to 90 percent of the world's six billion people will have mobile telephone coverage by 2010, but governments should remove customs and sales taxes to make cellphones and services more affordable to the poor, an industry study said yesterday.

The coverage will increase from the current 80 percent, according to the study commissioned by the GSM Association, a trade group consisting of mobile phone operators worldwide.

Despite the 80 percent coverage, industry estimates put the number of people with mobile phone connections at more than 2 billion, or about 40 percent, of the global population.

Mobile phone coverage could reach nearly 100 percent in four years if governments used a pool of funds collected from telecom operators to extend mobile coverage to rural areas instead of using the money on fixed telephone line services, which are more expensive, it said.

"Mobile networks now cover 80 percent of the world's population, double the level in 2000," the study said.

"This can be attributed almost exclusively to the investment by mobile operators and the liberalization of telecom markets by governments. By 2010, 90 percent of the world will be covered by mobile networks," it said.

Industry research firm Intelecon Research carried out the study. It was released on the sidelines of a telecom conference and exhibition that was organized by the GSM Association.

Of the 92 developing countries surveyed, 32 have set up "universal service funds," which are levies collected by governments from telecom operators to subsidize the rollout of telecom networks in rural areas.

The levies range from one to six percent of revenues.

But while the fund now is worth US$6 billion, only 27 percent, or US$1.6 billion, has been used to expand networks.

In addition, governments had used most of the money to extend fixed-line networks instead of mobile phone infrastructure, which is less expensive to deploy, the study said.

If the remaining US$4.4 billion in unallocated funds were used to extend mobile phone networks, operators could extend coverage to an additional 450 million people living in rural areas, it said.

"Universal service funds should only be used as a short to medium term policy tool, and should be phased out over time," the study recommended.

The report advocated the funds be spent on the lowest-cost network available, which is normally a mobile network.

The study also urged governments to focus on the 2.7 billion people who live in areas covered by mobile companies but who still do not have mobile phones, in order to help stimulate economic growth.

"By removing sales and customs taxes on mobile handsets and services, for example, governments could boost affordability for the poorest members of society and mobile penetration by as much as 20 percent in areas which already have network coverage," it said.

It cited studies showing that a 10 percent increase in mobile phone penetration could increase the annual economic growth of a developing country by 0.6 percent.

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