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Summary:

The mobile market may not be as saturated as one might think. Data form Wireless Intelligence shows that less than half of the world has a mobile subscription, with people in developed countries having more than one throwing off penetration calculations.

The days of easy mobile growth are gone in the developed world, and those who want a smartphone have one — or 1.57 mobile connections according to recent research. That’s why the theme of third-quarter wireless industry financial results calls in the U.S. have focused on how carriers will grow in a saturated market.

But when you look at the rest of the world closely, less than half of the addressable population has a mobile connection according to Wireless Intelligence, the analysis arm of the GSM Association. The GSMA estimates that only 45 percent of the population who could get a mobile subscription (this might be a phone or a tablet or a cellular modem) has one in 2012, but it predicts that number to rise to 53 percent by 2017. That means in the next five years, we’ll cross over the point where more people have mobile access than don’t. That’s a good thing.

The research is part of a larger report that my colleague Kevin Fitchard reported on earlier this week, and expands on the idea that it’s important to measure the number of people with connections, not just the connections themselves. In poorer areas of the world, for example, people tend to have multiple pre-paid SIM cards to get the best rates, which can then make penetration numbers look higher than they really are. Thus, the report estimates there are 1.8 billion potential subscribers that operators must try to reach.

That’s a significant number, although many of these new subscribers will be in developing countries where the average revenue per user (ARPU) is far lower than in places like the U.S., Japan or Europe. From the release discussing the research:

However, there is a significant gulf in penetration levels between developed and developing markets. By the end of this year, the developed region is forecast to be close to 80 percent unique mobile subscriber penetration – the threshold above which subscriber growth will begin to slow. In contrast, subscriber penetration in the developing world is forecast to increase from 39 percent in 2012 to 47 percent in 2017.

This suggests that the vast majority of the 1.8 billion opportunity over the next five years will involve connecting ‘unconnected’ users in developing economies, which will require building-out network coverage into rural areas.

And my hunch is since those networks will have to be built at lower costs so companies can profit despite the lower ARPUs, this represents a big opportunity for vendors like Huawei and ZTE. It may also lead to innovative plan structures that strike a balance between operator profits and growing the base among people who have less money but a great demand for a mobile connection. And getting those people online should serve to drive up their income and living standards.

Image courtesy of Flickr user kalleboo.

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  1. The half of the unconnected world represents less than 10% of the overall market in terms of dollars.

  2. Also worth noting… the usefulness of a mobile is not at all limited to having a mobile subscription. The ability to run apps (even on feature phones), capture & play photos & videos, play music, etc. make mobiles quite useful even without voice, texting,or data service. My guess is that a large number of people in the developing world use mobiles in this way.

  3. 80:50 is a little known ratio …

    80% worlds population lives in coverage and as your article highlights only 50% are connected. however the billions at the BOP can barely afford to feed themselves let alone feed a phone and seeking ways to profit on the plight of the poor is unconscionable.

    so this less about building out network coverage and more about solving the most vexing problem ever to face this industry: “how to earn when nothing to spend”

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