ITU Strategy and Policy Unit Monthly Flash

At the end of 2003, there were over 1.35 billion mobile subscribers worldwide, compared with only 1.2 billion fixed-line users (see Figure 1). Mobile phones had overtaken the number of fixed lines globally by the end of 2002 and the number of subscribers continues to grow, albeit more slowly now that many economies are approaching universal coverage. The rise of mobile telephony to overtake fixed has numerous implications, but perhaps the most significant relates to access to basic telecommunication services and information and communication technologies (ICT). It is noteworthy that this explosion in the use of mobile telephony has occurred largely irrespective of geographic, socio-demographic or economic criteria.

Probably the biggest market driver for mobile phones is “convenience”, but there is a cluster of other factors that drive take-up, including security, fashion, social contacts and work requirements. Among mobile data users, the main applications include ring tones, logos and games. Over time, new services are being developed that benefit from the higher capabilities of 3G networks, such as downloading of songs, m-commerce or location-based services (LBS). Wireless LANs, too, are extending the usefulness of spectrum-based services.

Market inhibitors include costs and the ability to control them, health fears and loss of privacy. The North American market and others that have persisted in the use of receiving party pays (RPP) continue to lag behind other economies that use calling party pays (CPP) or, like India, that have shifted to CPP.

In the developing world, the cost of ownership has come down considerably but continues to be a deterrent to wider mobile use in some economies. In Morocco, operators enable contract users to set a voluntary limit on their monthly usage, but this does not apply to prepaid users. To extend mobile usage to lower-income users, Médi Télécom, the new market entrant, offers prepaid cards for DAM 20 (USD 2.30).

Social changes are highly differentiated by age, gender and culture. In the future, we will communicate not only with each other but increasingly with machines. Early manifestations of this trend can be found in the development of radio-frequency identification tags (RFID) (see Box 1), ubiquitous networking, and various trials on human to machine interaction.

Box 1 -- RFID tags and shopping in Tokyo’s trendy Roppongi Hills

RFID tags are essentially tiny microchips that act as transponders (transmitters/responders), continuously waiting for radio signals to be sent by transceivers, or by RFID readers. When a transponder receives a radio query, it responds by transmitting a unique ID code. Most RFID tags are passive, i.e. not battery powered. The most important functionality of RFID tags is the ability to track location. RFID tags can cost as little as 0.50 US cents. Some analysts say that RFID will soon replace the familiar bar code used for retail.

At Roppongi Hills in Tokyo, RFID is now used for retail shopping: the trial of NTT DoCoMo’s “R‑click” service ran from 1 November 2003 to 1 February 2004, delivering information on users’ locations. DoCoMo issued about 4 500 RFID tags (embedded in small handheld terminals), which can be attached to users’ mobile phones. Subscribers can inform the network that they wish to be located by pushing a button. The small, handheld device then enables users to receive a wide variety of area information as they walk around the complex.

Source: ITU Japan case study on “Shaping the Future Mobile Information Society”.

How have culture and etiquette and mobile usage affected each other? It seems that users experience a liberating and unrestrained tendency to experiment, as mobile phones increasingly become central part of daily life. One consequence of this is the rise of a new casualness about space and time constraints, and about use in public and private spaces and contexts. For example:

Of course, the future of wireless communications is not limited to the small mobile devices of today. One promising concept to help accelerate the narrowing of the digital divide is being promoted in the Republic of Korea, where some 100 MHz have been set aside in the 2.3 GHz band in order to bridge the gap between short-range wireless LAN technologies and longer-range 3G technologies. This type of "portable Internet" solution could offer up to 1-2 Mbit/s of bandwidth per user for an estimated USD 15 per month. Future mobile handsets would work seamlessly with existing wireless infrastructures This could prove popular in developing markets where new networks are planned and where there is a requirement to cover low-density rural populations. The "Portable Internet" will be the subject of a new ITU Internet Report, due to be released in the latter half of 2004.

2. Living in the Mobile Information Society, Japan-style

No one will deny the perception that the Japanese are a highly technophile people, who are regularly seen sporting the latest technological gadgets. This holds just as true for the mobile phone. No tourist visiting Japan can miss the dazzling array of mobile handsets and accessories on display all over Tokyo, and notably in the "electric towns" of "Shibuya" and "Akihabara". Indeed many of those interviewed during the research phase preceding the publication of this case study pointed to the cultural factors affecting the take-up of new technologies in the country. In particular, they highlighted the fact that the Japanese consumer is informed and demanding, carefully choosing technology for its innovative quality, functionality, and value for money. At the same time, Japan is a highly homogeneous society, and consumers are keen on having the latest gadgets, in order not to be outdone by their neighbours and friends. Therefore, the threshold for a product to hit the mass market is much lower in Japan than in other countries. If a service or technology reaches 15 per cent penetration, it is well on its way to becoming a mass-market product.

In terms of manufacturing and distribution, Japan is famous for developments in miniaturization and product packaging. Foreign pharmaceutical firms, for instance, face significant challenges when distributing products in Japan, due to the strict packaging requirements imposed on them. The look and design of a product are key marketing elements, particularly for mobile phones, and the discriminating Japanese consumer takes these into account when purchasing electronics. Given the country’s success in miniaturization and robotics, it is not surprising that the penetration of home electronics is quite high in Japan, with the notable exception of the larger sized colour television

Another important trend in Japan is the use of mobile phones as a fashion accessory. Users have access to a wide variety of colourful tags and stickers that can be used to personalize mobile phones, in line with the latest trend and fashion of the day. Handset replacements are very common in Japan. According to a survey conducted by Video Research in July 2002, 63 per cent of users replace their mobile devices within two years. Young students have an even shorter replacement cycle: almost half of those surveyed reported an annual replacement cycle. 40 per cent of those who replaced their handset at least once, reported one of the following reasons for their latest replacement: a desire to have the latest model or service, or the fact that the design or function was "out of date". Mobile phones have become such trendsetters in Japan that KDDI has recently released a "retro" design, with a certain hint of the past, in order to appeal to the younger generation. The slim-line phone is known as "Infobar" and comes in three different colours, each with a different catchy name.

There is a general misconception that Japanese people use their mobile phone mostly while commuting. In fact, a large majority (46.2 per cent) of Japanese use their mobile phone at home to make calls (Figure 1, left chart). Similarly, although some consider that the most frequent use of the mobile Internet browser in Japan is on commuter trains and public transport, the reality is quite different: a survey conducted by MoCoBe reveals that the use of the mobile Internet in Japan is highest at home and this is confirmed by Video Research’s survey in 2002 (Figure 1, right chart). In fact the peak time period for browser usage is after working hours, between 19:00 and 23:00 on weekdays and 21:00-23:00 on weekends.

Another interesting aspect of mobile phone use in Japan is the portability and proximity of the device to the human user. According to the Mobile Content Forum, 70 per cent of Japanese mobile users keep their mobile within one meter of their body during the day time, and 40 per cent during the night, most likely not far from their pillow. In this respect, the mobile phone has become somewhat an extension of one’s physical self, intrinsically linked to identity and accessibility. Box 1 describes a day in the life of a typical 22-year old Japanese and her mobile phone.

Box 1 A day in the life of 22-year old Kyoko and her keitai

A fictional story based on the observations of authors and interviewees while researching this case study

Kyoko, a 22 year-old woman works at an office in the city. Kyoko woke up at 6.30 AM to the sound of her mobile phone. She checks her keitai (the Japanese word for mobile phone) immediately for new mails: 10 e-mails from friends/family and 5 SPAM messages. Her best friend Noriko suggests a new movie tonight. Her newly met boyfriend Takeshi asks for a date over the weekend. Her sister Kaori, currently studying in USA, asks for easy Japanese recipes. Her mother in her hometown asking how she is. Her father on a business trip wants to know what souvenirs she would like. After acquiring a mobile phone, she has more had more contact with her father and he is so happy that he continues to subsidize her mobile bills. Kyoko then starts here commute to work.

During her time on the train, she replies to most of her messages. She interrupted her mobile game, after she received a call. Before she boarded the train, however, she had set her mobile to ‘manner mode’ so that it didn’t ring. Her mobile also has a sticky film covering, an accessory for the LCD display. This film covering is recently a popular item to avoid a snooping by others especially in the very crowded trains. It means that mobile screens can only be viewed by the person who is facing the phone directly, and not by people on either side of the phone. Kyoko heard from her friends that a new ringing tone of a popular Japanese song has just been released, so she immediately downloads it to her mobile phone for a small fee. Kyoko works as a secretary for a worldwide trading company. Typically, she sits in front of her PC in the office, but she communicates with her friends only through her mobile phone, because she doesn’t have computer at home.

After her day at work, she goes shopping and replaces her mobile phone with a newer model, one that has a very secure system with fingerprint identification. Now, she can assign different fingers for accessing different data: for instance, the right forefinger for Noriko’s folder, the left middle finger for Takeshi’s folder and so on. Another attractive function that Kyoko enjoys mobile chatting: this allows a series of message to be exchanged in the form of near real-time dialogue similar to Internet chatting software. She did end up going to the movie with Noriko, after buying both tickets electronically through her keitai. She did not find the new movie interesting. So in the theatre, she wrote a few more e-mails and sent pictures to friends with her new mobile handset….

Source: ITU.

3. Case studies on the mobile information society

The four countries selected for the case studies (Korea, Japan, Morocco and Norway) each represented early adopters of mobile in their regions:

Republic of Korea: Mobile is continuing to grow by around 160’000 subscribers per month, but the fixed-line service has started to decline in terms of subscriber numbers. Based on CDMA-1x technologies, Korea is an early market leader in 3G use. As of June 2003, just over 36 per cent of all Korean mobile subscribers were mobile Internet users with usage levels peaking at over 80 per cent among Junior High School students. Particularly popular applications in Korea include karaoke songs and TV soap operas delivered to mobile phones.

Japan: The switchover from fixed-lines to mobile took place around the end of 2000. Japan’s major contribution to a "more mobile world" is possibly its early leadership in mobile data services, initially through i-mode, and latterly through the adoption of 3G mobile (IMT-2000). As at December 2003, there were some 13.8 million 3G users of whom over 90 per cent were using CDMA 1-X systems and the remainder using wideband CDMA. Japan’s leadership in this field has given it an early insight into the use of video-telephony (real-time) and video-messaging (store and forward) over mobile phones. Vodafone’s "Happy Time" is an example of the former while NTT DoCoMo’s "i-motion mail" is an example of the latter.

Morocco: Mobile overtook fixed in August 2000. The critical factors in its growth included the introduction of prepaid cards in late 1999 and the market entry of a second GSM operator in April 2000. As at the end of 2003, mobile user numbers (at around a quarter of the population) now exceed fixed-line subscribers by more than five-fold. But even though fixed-line subscriber numbers are declining, they still account for two-thirds of total revenue.

Norway: A head start in the 1980s (with NMT; an analogue mobile service) was followed up with aggressive rollout of GSM in the 1990s. By the time mobile overtook fixed, in mid-2000, penetration of both services was over 70 per 100 inhabitants. The volume of voice traffic has actually fallen since 2000, but the shifts in usage—from fixed to mobile, and from voice to data—have helped to sustain revenue. Use of SMS (short message service), in particular, tripled between 1999 and 2002 and now stands at an average of over 600 per user per year.

India: Despite a late start, India has recently started to add new mobile subscribers at a rate of around 2.5 million per month. Key factors in triggering this turnaround have been the introduction of increased competition, a move from receiving party pays (RPP) to calling party pays (CPP) and the introduction of a unified licensing system. The combination of these factors has helped to reduce calling rates to below 2 US cents per minute, making them among the lowest in the world. This would not have been possible in fixed-line networks, or in earlier generations of mobile networks, given the higher capital and operating expenditures that would have been necessary. In such a large economy, the average margin per user (AMPU) can be just as important as the more-commonly quoted average revenue per user (ARPU).

Comparative study of mobile data users in Hong Kong SAR and Beijing, China: Although the former are more numerous (per 100 inhabitants) and have longer experience of using mobile communications, they are actually less likely to use SMS. Part of the reason is due to the fact that Chinese users have an aversion to talking to machines, and are therefore more likely to use SMS to check that their interlocutor is available, or to substitute for the voice call.

•Developments in the youth markets in the Philippines and the United States: In the Philippines, the peak usage of picture messaging is among 17-20 year-olds, ring tone downloading amongst 21-24 year olds, and downloads of news stories among 25-28 year-olds. Under 16s favour horoscopes and jokes. In the United States, young girls are using SMS to extend their social life beyond bedtime.

1. Trends in mobile communications

2. Living in the Mobile Information Society, Japan-style

3. Case studies on the mobile information society

4. New ITU-T e-flash