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Socioeconomic Implications of Mobile Technology on Emerging Markets – The Case of Egypt ( Work-in-progress)

Socioeconomic Implications of Mobile Technology on Emerging Markets – The Case of Egypt ( Work-in-progress). Sherif Kamel, The American University in Cairo, Egypt Amira Farid, The American University in Cairo, Egypt LA Mobility Roundtable 1-2 June 2007 Los Angeles, California, USA.

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Socioeconomic Implications of Mobile Technology on Emerging Markets – The Case of Egypt ( Work-in-progress)

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  1. Socioeconomic Implications of Mobile Technology on Emerging Markets – The Case of Egypt(Work-in-progress) Sherif Kamel, The American University in Cairo, Egypt Amira Farid, The American University in Cairo, Egypt LA Mobility Roundtable 1-2 June 2007 Los Angeles, California, USA

  2. Overview – Mobility in Telephony • Way of living much more than a telephone/communication device • Increasing dependence on value added services (SMS, MMS, voice mail, video conferencing) • Increasing demand for faster, advanced, more efficient services • Evolving trends such as convergence • Establishing a user-friendly platform for mServices including mBanking, mGovernment, mLearning, etc…

  3. Issues to Consider… • Environmental factors (cultural and organizational) differ across different communities • Location-free workspace (telecommuting) • Social networking (remotely) • Serving underprivileged communities (opportunities) • Use of IT (transfer and adaptation in the context of developing nations) – problems of awareness, introduction and diffusion • Capitalizing on developed countries experiences and lessons

  4. Global Growth of Mobile Technology • Continuous growth and development (1 billion users in 2002 and estimated to reach 2 billion users by 2009) • Diversity in access and services used (United Nations, 2006) • Growth in ICT diffusion worldwide was fueled by mobile technology • Increasing desire for value-added content and advanced features and services • Context of developing nations: mobile power user in emerging markets (becoming digitally connected) • Mobile services compensate for the lack of infrastructure (financial, technology) • Developing nations population make 20% of the world’s mobile phone users (twice the rate of growth compared to developed countries)

  5. Regional Growth in Mobile Technology • MENA region population (310+ million in December 2006; 4% of global population) • Real impact of mobile technology exceeds the rates of penetration • Innovative and entrepreneurial ways in which technology was extended beyond individual ownership • Thousands of jobs created/companies established • PPP models driving the telecommunications sector (liberalization of telecom and role of the private sector and the civil society) 38 40 35 27 30 21 20 25 17 16 20 12 15 10 5 1999 2000 2001 2002 2003 2004 2005 Number of Mobile Operators

  6. Regional Growth in Mobile Technology • MENA region is price sensitive (large income disparities, increasing population) • Young population (65% under the age of 35) • December 2006, 90 million mobile subscribers (5% of current subscribers base) • Penetration rate of 30% expected to increase in 2008 (33%) • Top Value added uses • Messaging (SMS and MMS) • News • Entertainment • Information (value-added content): banks, stocks, news, sports, weather, etc…

  7. Case of Egypt • Largest country in the MENA region (76+ million) • GDP growth 5.7% • Labor force (21.8 million) • 32% agriculture sector • 17% industry sector • 51% services sector

  8. Evolution of Telecom in Egypt • Over 150 years of telecommunication services (telephony introduced in 1881) • Mobile telephony was introduced in 1996 • Telecom liberalization started in 1998 • Increasing role of private sector mobile operators (Vodafone and MobiNil), most recently Etisalat in May 2007

  9. Mobile Telephony Diffusion in Egypt • Initially very high connection fees (high revenue during early period of rapid growth) • Pre-paid subscription was welcomed for lower income groups (major driver of growth – mass market strategy) • Contract subscriptions started to fall in 2001 (age, preferences) • Shift of strategy from a subscriber growth strategy to more focus on value and profitability • In 2001, SMS generated less than 1% of total operator revenue, now it is more than 6% (individual/organizational) • Encouraging other value added services including MMS, voice mail, email, etc • In 2005, mobile subscribers exceeded the fixed lines subscribers base

  10. Mobile SubscribersDecade of Growth (1997-2007)

  11. Research Focus • Mobile phones are having more impact on countries where the infrastructure has been less extensive and complete • Mobiles (as a social platform) are having real impact on the community (cultural element) • Remote connectivity is important in developing nations with limited resources (transportation and remote communities) • Indirect economic opportunities (sales of products and gadgets, music downloads, web communities) • 5500 jobs in the industry and more than 150000 outside the industry • Mobiles are doing much the same that fixed lines did for the growth of developed nations (economic growth and job creation)

  12. Social Implications Remote connectivity to social networks Ability to include less digitally literate communities Optimize the use of time irrespective of distance as a barrier Engaging and empowering community members Privacy issues! Learning tool – new generations Economic Implications Engine for long-term economic growth Serving as virtual offices to carpenters, painters, electricians, small-scale trading (SMEs) Liberalization of telecom services with related economic opportunities Mobiles and Socioeconomic Implications

  13. Research Hypotheses

  14. Research Methodology • Empirical research through a field study instrumented via • Questionnaire • Interviews • Sample was randomly selected (classes A, B and C) • Mobile users from the two main operators (Vodafone and MobiNil) • Sample size targeted was 500 • 350 (English) and 150 (Arabic)

  15. Initial Findings – Population Sample • Response rate 57% (284 subscribers) • Gender relative balance (45%/55%) Females/Males • Income group balance: 81 (A); 133 (B); 70 (C) • Age distribution was slightly higher among university students and fresh graduates (43.5%) • 193 respondents (73%) were university graduates • Sectors/services covered included: telecom, health, marketing, education, automotive, tourism, trading, engineering and SMEs

  16. Research Findings • H1:Mobiles are becoming an integral part of life and a medium for entertainment rather than being only a medium for communication • 72% believe that mobility is an integral part of life (irrespective of income and social group) • Focus on entertainment services and not just communication • Negative correlation between age and use of value added mobility entertainment services

  17. Research Findings • H2:Mobiles are leading to more flexibility in terms of everyday activities, planning, decision making as well as finishing up different tasks and responsibilities • Confirming Gillard and Wale (2003) strategy that mobiles have helped accommodate to unforeseen short term changes, opportunities, preferences and moods • Contributing to telecommuting (accommodating to overcoming increasing traffic problems) • Creating employment opportunities with an emphasis on SMEs

  18. Research Findings • H3:Relying more on mobile telephony in accessing each other, led to having face-to-face interactions becoming less important, hence weakening social relationships • Findings contradicted with the hypothesis • Social relationships seem to have strengthened confirming Swallowe (2002) that mobiles make people more sociable (personal and professional levels) • Time and geographical barriers smoothly removed (Matsuda, 2005) • Frequency of interaction increased – irrespective of time and distance (cultural element)

  19. Research Findings • H4:Value added services such as chatting, MMS, and SMS are becoming increasingly popular especially among younger generations leading to the formation of relationships previously uncommon within the society in the rural areas • Negative correlation between age and adoption of value-added services • SMS is becoming very popular – average 50-60 messages sent/received everyday among the sample tested • Enforcing the notion that mobiles are becoming a social platform

  20. Research Findings • H5:Mobiles are perceived as a status symbol, and thus all social segments have strived to own mobiles to avoid being socially excluded from some social networks • 20% agreed with Swallowe (2002) study that indicated that people show off their mobile phones in public as a status symbol • 21.5% indicated that it was a cool gadget to display but 50% felt that it did not add to one’s prestige and self-esteem • 66% thought it was beneficial • 41% believe that not owning a mobile could exclude them from specific social networks (SMS being the main method to communicate, especially for younger generations and more specifically class B and C)

  21. Research Findings • H6:Mobiles lead to the invasion of privacy and to the removal of the distinction between personal and work cycles • When, where and how to use mobile phones (Gillard and Wale) • 71% believe that mobile phones are an imposition on privacy and on one’s personnel space

  22. Research Findings • H7:More businesses (especially in the informal sector such as small retailers and manufacturers) are depending on mobiles due to its role in connectivity and positive economic gains (higher profits, higher turnover and increased efficiency) • 70% of the respondents used their mobiles for conducting business and helped conducted it in an easier way • 52% felt that mobiles led to their work becoming more efficient and profitable • There was a positive correlation between age and business improvement using mobiles (the higher the age bracket, the more the positive impact of mobile phones on business)

  23. Research Findings • H8:Mobiles have contributed to the labor market by creating additional job opportunities and decreasing unemployment rates • 60% of the respondents believe that mobile phones have influenced the economy positively • 84.5% believe that mobile companies operating in Egypt have aided the creation of many new jobs • 77% felt that mobile operators led to new job creations outside the telecomm sector

  24. Conclusion • Mobility is having social and economic implications on individuals with varying degrees • Socially, old-accustomed to values are being transformed and exchanged with new emerging ones • More of an evolution of different norms and values adapted to emerging technologies • Formation of new attitudes and behaviors • Economically, implications are affecting individuals, organizations and the society • Investments • Businesses/SMEs • Job creation • Mobility penetration helps pave the way to other ICT platforms and tools • With the growth of mServices, massive potentials and growth is expected in different business process outsourcing domains

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