ITU Strategy and Policy Unit Monthly Flash

When the mobile phone first appeared in the Moroccan market in 1994, it was initially considered — as in many developed countries — a luxury, and was used mostly by a small number of business users, which could afford the then quite high cost of the connection and monthly subscription charges. In fact, in 1999, 50 per cent of mobile users had an average revenue per month between DAM 5,000 and 20,000 (USD 510-2,200) — compared the minimum wage in Morocco of about USD 150/month. Even for these users though, the utilization of mobile services was in most cases limited to 1 or 2 calls a day, while just 16,5 per cent used the phone for more than ten calls every day.[i]

Revision of the telecommunication law in 1996/1997, and the prospects of liberalization introduced as of 1999, induced Maroc Telecom to differentiate its products and to start offering prepaid subscriptions. Prepaid cards appeared on the market only a few months ahead the entrance of the second mobile operator, offering end-users the possibility of having a phone for just a small initial investment, without having to pay monthly subscriptions.

The number of mobile users began to grow, exploding a few months later, when the second operator started to offer its services (see Figure 1). Since then, a multiplicity of offers appeared on the market and today both operators are offering prepaid either as a part of a which includes a cell phone at a favourable price, a SIM card and some credit; or simply as a SIM card.

The possibility of buying prepaid cards helped the growth of the market enormously - primarily because the system is able to address both the needs of small and larger users, allowing to the former to buy recharge cards for a very small amount of money (for a few minutes of conversation), and to control their expenses, and the latter to dispose of a large credit, but without the need to pay a monthly subscription, and with a good choice of price plans.

The strategy implemented by operators brought results almost immediately: the number of mobile users grew threefold from between 1998 and 1999, literally exploding in 2000, when Morocco passed from less than 400,000 to almost 3,000,000 mobile users, and today the country enjoys a telecommunication penetration rate well above the regional average: at the end of 2002 effective teledensity in Tunisia and Egypt were barely above 11 per cent, Algeria stood at 6.10 per cent, as compared with 21 per cent in Morocco.

This solution, however, although engendering a fast growth in the number of mobile customers, does not always lead to the consequent increase of the utilization of the service and does not guarantee the progress of the average revenue per user (ARPU), which remains very low.

Today, operators are more concerned with the problem of creating a “faithful” client-base and with increasing the utilization of mobile phones so as to raise ARPU.

The spread of mobile phones has had an important impact on Moroccan society from social, cultural and economic viewpoints. Mobile communication has answered the traditional need of this society to communicate orally, providing users with a new means of getting in touch anytime, anywhere.

While in the nineties, public phone shops (téléboutiques) helped to achieve universal service objectives, bringing telephones within a "reasonable distance" and allowing affordable access to phone services, today, the mobile phone constitutes a further step, bringing communication services even closer to the members of the Moroccan population who might otherwise not have had such easy and affordable access.

2. A Korean Mobile Information Society

As the twenty-first century gets under way, the Republic of Korea has found itself at the cutting edge of the information society.With the world watching, Koreans are taking uncharted steps into a life surrounded by information. For many, life in Korea has begun to revolve around high-speed information access. Koreans can access information easily from state of the art mobile networks and handsets, the world’s most extensive broadband network, or from 25,000 cybercafés located around the country. For younger generations, being Korean means being connected.

Koreans can be said to be swimming in information. The amount of information available to Koreans at any time of any day from anywhere can be overwhelming. Smart phones, PC Bangs, and even broadband-equipped restaurants all constantly beckon Koreans to keep in touch with information. This vast access to information seems to go hand-in-hand with Korea’s bbali bbali culture. Everything is a rush to be more productive and save time. Mobile networks, both current and in planning, have greatly expanded productivity and freed up more time for Koreans to work. However, bbali bbali also has some drawbacks. In Korean society, people often can’t (or don’t) take time to relax, disconnect, and enjoy.

Given Korea’s broadband penetration rate, it would be easy to assume that Koreans wouldn’t have a pressing need for Internet access on their mobile phones. However, Korean’s thirst for information makes them high mobile Internet users, despite having broadband access at home and most likely at work. An astounding 36.1 per cent of mobile phone users have used the wireless Internet in the past six months (see Figure 1 ). The average is higher for women (38.9 per cent) than men (34.1 per cent).

Figure 1: The wireless Internet is alive and well in Korea

36.1 per cent of all mobile phone users have used the wireless Internet at least once in the past six months with mobile phones being the preferred access method

Note: Wireless Internet access mode, by type will sum to greater than 100 per cent as some subs may use multiple terminal types.

Source: KRNIC.

The wireless Internet is most popular among an interesting demographic group, junior high school students. Students in general use the wireless Internet more than the general public. Indeed, junior high school students have grown up learning on the Internet and face a nearly non-existent learning curve looking up information on a mobile device. This has promising implications for the Korean information society. A whole generation of Internet users will be accustomed to pulling Internet information via their mobile phones. Section five will discuss the phenomenon in more detail.

Koreans use the mobile Internet mostly to search for quick, but important pieces of information. Examples include looking up information on a movie theatre (address and movies playing) or finding a listing of restaurants in a particular area by the type of food that they serve.

When Koreans stop in for snacks at the neighbourhood convenience store, they don’t need to bring any money with them. All they need is their m-commerce enabled mobile phone. SK Telecom’s Moneta service has more than 470,000 terminals around the country that will accept payments via RFID chips embedded in mobile phones. Users simply wave their phone in front of the Moneta receiver placed next to the cash register (see image). The purchase is then assigned to the mobile user.

One reason that Moneta has been so successful is Moneta terminals were first installed in another branch of SK’s businesses, petrol stations.

SKT learned quickly in 2003 about how important pricing is to network health when it launched its “JUNE” EV-DO video-on-demand service. JUNE subscribers paid a monthly flat rate of US$ 17 (20'000 Won) for video data traffic and then US$ 0.85 (1'000 Won) for each movie they watched. The users were essentially paying a dollar for each movie and then a flat rate for the data connections the movies floated over. Mobile subscribers couldn’t resist being able to watch their favourite movies during their long commutes and the service was an astounding success.

While strong consumer interest is usually music to a mobile provider’s ears, SKT’s network began to buckle under its own success. There were simply too many users who were downloading movies and videos at US$ 0.85 each and too little bandwidth in the spectrum to accommodate them.

SKT was forced to discontinue the service under the existing pricing plan and move to a per packet charge on the video data. The US$ 0.85 “rental charge” remained the same but data charges jumped from US$ 17 per month unlimited to roughly US$ 60 per movie. Because the change in policy was so swift, some users didn’t realize the price of watching a movie had jumped astronomically and received huge bills the following month.

SKT has not given up on the idea of flat-rate pricing for movies. However, any new flat-rate pricing plans will most likely have an upper limit similar to the broadband bit caps common in some parts of the world.

3. Messaging Mania in Norway

The current high level of SMS use in Norway and its consistent growth since its introduction is a hallmark of Norway’s mobile information society. The Norwegian mobile subscriber is on average the most intensive user of SMS services (both person-to-person or P2P SMS as well as Premium SMS) among the Nordic countries and one of the most intensive in Europe. In 2002, each Norwegian mobile subscriber sent an average of 661 SMS messages. This was double the average number of messages sent by Norwegian mobile subscribers in 2000 (see Figure 1).

In terms of growth, the number of SMS messages sent increased steadily during the three-year period from 1999 to 2002. From 2000 to 2001, SMS messages sent increased by 830 million while from 2001 to 2002, 470 million more messages were sent. The average price of an SMS is less than NOK 0.70.

Box 1: Types of Premium SMS

There are essentially two main types of Premium SMS: mobile originated (MO) and mobile terminated (MT). In the case of the former, the service is charged to the mobile phone user who sends the message. In the case of the latter, the service is charged to the mobile phone user receiving the message. The type of technology deployed has a direct consequence on the kind of premium services that can be launched, For example, MO is ideal for offering interactive services which involve users sending information such as TV voting, Chat and Dating Services, Competitions, etc. while MT is ideal for content delivery such as logos or ringtones and subscription based services such as News Alerts, Horoscopes, etc.

Source: Netsize - SMS Guide at http://www.netsize.co.uk/.

In Norway, the basic SMS text service has evolved in recent years as a platform to deliver a whole host of different services and to provide a degree of interactivity that is easily accessible to the public. Premium SMS services were introduced in April 2000 and have since gained in popularity rapidly. Although premium SMS services constitute less than five per cent of the total volume of SMS messages sent in Norway, they represent around 20 to 30 per cent of overall revenues from SMS services on average. Typical prices for Premium SMS range from NOK 4 to NOK 30.

From the initial launch of Premium SMS services, mobile operators in Norway have offered the full range of mobile originated (MO) and mobile terminated (MT) Premium SMS services. By installing the capability to offer MO and MT Premium services early, Norwegian mobile operators were able to offer a wide range of Premium SMS services to their subscribers far sooner than operators in most other countries (see Box 3.4). For example, MT billing was only introduced in Sweden more than a year later.

Although pioneered in the Nordic region in general, Norway’s level of SMS use far surpasses that of its neighbours. Almost four times as many SMS messages per capita are sent in Norway than in Sweden while Denmark’s SMS traffic volume hovers at around two thirds of that of Norway’s.

A number of factors, both commercial and social, have been advanced to explain Norway’s high level of usage of SMS based services, both P2P as well as Premium. In terms of the former, initial take-up of SMS services was fuelled by a long introductory period (around a year) where sending SMS messages was free of charge. Furthermore, Norwegian mobile operators have continued to market SMS services continuously, particularly though reduced pricing schemes and advertisements aimed at the youth segment.

Mobile operators in Norway have also made a conscious effort to price P2P SMS lower than the price of a one-minute call.[i] The pricing of SMS, however, does not appear to be a determining factor in terms of SMS use. Despite mobile operators in Denmark charging significantly less for sending SMS, it still has a lower volume of SMS traffic per capita than Norway.

It is interesting to note that sending and receiving P2P SMS messages appear to be perceived as more socially acceptable than receiving voice calls on mobile phones when in the presence of company. During meetings in particular, communicating via SMS with external parties is regarded as less disruptive than taking a voice call.

In terms of Premium SMS, Norway’s high use of P2P SMS enabled the easy adoption of Premium SMS when it was introduced. Furthermore, the introduction of both MO and MT Premium SMS services provided mobile users with a wide range of services from the very beginning. Content for premium services was also developed and deployed more easily due to the cooperation between Telenor Mobil and NetCom with regard to pricing and technical interfaces.

Interestingly, mobile operators have also noted that Premium SMS services generate their own marketing publicity through constant exposure by the mass media, in particular through TV and Radio shows. This exposure has also led to a greater familiarity with P2P SMS among mobile phone users.

1. More Mobile in Morrocco

2. A Korean Mobile Information Society

3. Messaging Mania in Norway