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Hong Kong (China) and Denmark top ITU Mobile/Internet Index

New Report looks at the prospects for the convergence of mobile and Internet technologies and the take-up of 3G mobile services

Geneva, 17 September 2002 — The International Telecommunication Union released its first Mobile/Internet index as part of a 240-page research report entitled ‘Internet for a Mobile Generation’. The Index measures how each of more than 200 economies are performing in terms of mobile and Internet technologies and how likely they are to be able to take advantages of new developments in this field.

"Individually, mobile communications and the Internet have been the two major drivers of consumer demand for telecommunication services in the last decade of the twentieth century. Put them together and you should have one of the major demand drivers of this century," states Dr Tim Kelly, Head of ITU’s Strategy and Policy Unit. However, he cautions that while it takes "no great leap of imagination to believe that the convergence of mobile communications and the Internet will produce something big, it may take longer than we think."

Exploiting the new opportunities offered by the mobile Internet will require high levels of capital investment. For example, knowing the location of a particular mobile user, combined with targeted advertising, may make it possible for local businesses to attract users that are passing by. Investors want to see concrete evidence that a market for mobile Internet services exist. But operators can’t provide that evidence until they build the networks. Because of this ‘chicken and egg’ situation, the mobile Internet could potentially be the biggest gamble the telecommunication industry has ever taken on.

Nonetheless, the combination of mobile and Internet technologies, such as the short message service (SMS) and i-mode, is already transforming the way people interact and the way business is done. Some 24 billion SMS messages were sent worldwide in the first quarter of 2002.

Ready – Set – Go - Mobile Internet

Determining which economies are likely to provide the most fertile ground for the development of the mobile Internet is not an easy task. Countries that are doing well in terms of mobile services (for example, the Philippines) may not be doing so well in terms of Internet penetration. On the other hand, countries that are leaping ahead on Internet use, such as India, may have a sluggish mobile sector. Again, countries that have the most potential in terms of infrastructure development may be the most closed to foreign investment. It should also be noted that although the economies that score highest in the report, like Hong Kong (China), Denmark or Sweden are all high income, there are many low, lower-middle and upper-middle income economies doing much better than their relative GDP per capita would lead one to expect. Among the lower-middle income economies, the Philippines (33rd) is in the best position to be a rapid adopter of the mobile Internet, particularly due to a relatively open market structure. China (47th) is also well positioned relative to its modest GDP per capita. It recently overtook the United States as the market with the most mobile phone users worldwide. Other middle-income countries that are likely to do well in adopting the mobile Internet include Romania (37th), Peru (39th) and the Dominican Republic (41st). Appendix A provides a list of the top 20 countries of the ITU Mobile/Internet Index and Appendix B outlines how their scores were determined.

Market Trends

There are a number of factors that will enable the rapid growth of the mobile Internet. First and foremost, the timely deployment of high-speed 3G networks will be a crucial catalyst for the generation of diversified multimedia services. Second, the availability and affordability of adequate Internet-enabled handsets will be a prerequisite for mass penetration. Finally, the development of unrestricted and non-proprietary mobile Internet content needs to be actively fostered.

Towards a Mobile Information Society

Mobile phones are already pervasive in all major developed economies and in an increasing number of developing ones as well. However, with the advent of the mobile Internet, wireless gadgets are set to invade new areas of personal life and work.

The average car now has as much computer power as some of the early Apollo rockets and most families in developed nations own dozens of microchips embedded in different devices. The next stage of development is for microchips to gain the ability to communicate with other devices and to report on their location and status. Such is the vision of ‘pervasive communications’. By using existing technology (e.g., nanotechnology, location tracking systems etc) over new networks, the mobile Internet can make this happen.

Consider the following scenarios:

  • Future medical devices may be so small that they could be swallowed to provide health status reports from inside the body, for instance on blood pressure or on the workings of a heart pacemaker.

  • Miniaturized GPS chips could be located in cars to assist with road charging schemes. They could record, for instance, whenever a car uses a particular road, or crosses into a particular urban area, allowing the motorist to pay on a monthly basis rather than having to queue to pay at toll stations.

  • Every valuable item we own may in future have a positioning device embedded in it, to help track it if it is lost or stolen. People may no longer invest in insurance against theft but in private security companies to trace and recover stolen goods.

  • Inventory management systems will help factory-owners to track the location and quantity of spare parts by pinging out messages to "intelligent barcodes" that are added to each item that passes through the factory

Teenagers Driving the Market

Teenagers appear to be the most avid users of the mobile Internet, notably in markets where it is at an advanced stage of development, such as the Republic of Korea and Japan. In Korea, for example, as much as a third of a user’s mobile phone bill stems from data services. The major uses of mobile data tend to be "flirtatious and frivolous", such as downloading cartoon animations or ‘avatars’ to represent the user when entering chat rooms or sending messages.

One challenge for telecom operators is that teenage users generally have less to spend than older age groups. But while teenagers may send more text messages than they receive, they probably receive more voice messages than they send. Thus they are a more profitable market than their disposable incomes would suggest. However, the report points out that if teenagers are driving the market for the mobile Internet, it may be because advertisers are ignoring other segments of the market. The ‘grey market’ (senior citizens), for instance, can prove to be a highly profitable one. The Japanese ‘Raku-Raku’ (Easy-Easy) handset with a bigger keypad and an easier-to-read screen proved an instant hit in Japan, selling more than 200,000 units in the first two months.

Internet for a Mobile Generation – The Report

The ‘Internet for a Mobile Generation’ gives an in-depth technical background to the history and current development of the mobile Internet including an analysis of market and regulatory trends. It contains the latest data on the licensing and deployment of third-generation mobile systems and services. Individual country case studies serve to illustrate these various aspects. Finally, the Report contains an 80-page statistical annex with data on more than 200 economies worldwide, including details on various parameters outlined in Appendix B. For more information on the report consult itu.int/mobileinternet.

About ITU

Appendix A:
Top 20 Mobile/Internet Index rankings, worldwide*

Economy

Mobile/Internet score (/100)

Ranking

Hong Kong, China

65.88

1

Denmark

65.61

2

Sweden

65.42

3

Switzerland

65.10

4

United States

65.04

5

Norway

64.67

6

Korea, Rep. of

63.42

7

United Kingdom

63.00

8

Netherlands

62.25

9

Iceland

62.03

10

Canada

61.97

11

Finland

61.22

12

Singapore

60.58

13

Luxembourg

58.58

14

Belgium

57.80

15

Austria

57.72

16

Germany

55.53

17

Australia

55.40

18

Portugal

55.13

19

Japan

54.94

20

*Note: The above table is an extract from the ITU Mobile/Internet Index included in the full Internet for a Mobile Generation Report. The Index measures how each economy is performing in terms of information and communication technologies (ICTs) while also capturing how poised it is to take advantage of future ICT advancements. The Index covers 26 variables sorted into three groups: infrastructure, usage, and market structure. These three components combine for a score between a low of 0 and a high of 100. The table is taken from the Statistical Annex to the Report, which provides comprehensive data on network and service development for over 200 economies.

Appendix B:
ITU Mobile/Internet Index: How the scores are reached

Each economy’s score on the Mobile/Internet Index falls between a maximum of 100 and a minimum of 0. The Index is a composite of 26 separate indicators clustered into factors of infrastructure, usage and market structure. These three clusters of variables together determine how economies stand to benefit from ICTs. The clusters are formed in a two-part process. First, each of the 26 variables is standardized (reported as a percentage of the highest observation). Second, the standardized variables in each cluster are averaged to come up with a cluster score for each economy. Finally, the three cluster scores are weighted and aggregated with 50 per cent of the weight going to infrastructure, 25 per cent for usage, and the remaining 25 per cent for market structure. The final, aggregated score is then scaled between 100 and 0.

Physical network infrastructure

Fixed

Fixed lines per 100 inhabitants

Mobile

Mobile cellular subscribers per 100 inhabitants

Users

Estimated Internet users per 100 inhabitants

PCs

Personal computers per 100 inhabitants

Bandwidth

International Internet bandwidth (Mbit/s) (Telegeography/ITU)

Broadband

Broadband subscribers per 100 inhabitants (OECD/ITU)

Leased lines

Number of leased lines in the country in Dec of the year (Netcraft)

2.5G deployment

Does the economy have a 2.5G mobile network in operation?

3G licence

Has the economy licensed 3G?

3G deployment

Does the economy have a 3G mobile network in operation?

Network usage

Roaming

Roaming agreements (based on main operator)

ISPs

Number of ISPs in the country (Source: Netcraft)

Secure socket layers

Number of servers using SSL encryption > 40 bits (Source: Netcraft)

Mobile cost basket

Subscription + 30 three-minute, local, peak calls a month

Internet cost basket

30 hours of monthly residential Internet access (PSTN and ISP charges)

Revenue

Telecom revenue per capita (US$, per annum)

Market conditions

Private

Is the incumbent public (0) or privatized (1)?

Years private

For how many years has the incumbent been private?

Separate regulator

Is there a separate regulator? Yes =1, No = 0.

Years separate

For how many years has the regulator been separate?

Local calls — market

What is the market structure for local services?

Long distance — market

What is the market structure for long distance?

Int'l calls — market

What is the market structure for international calls?

Mobile — market

What is the market structure for cellular?

Leased lines — market

What is the market structure for leased lines?

ISP — market

What is the market structure for Internet service providers?

 

 

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