SINGAPORE, 18 October 2006 — Up to 90 percent of the world’s six billion people will have mobile telephone coverage by 2010 but governments should remove customs and sales taxes to make hand phones and services more affordable to the poor, an industry study said yesterday.
The coverage will be up from 80 percent currently, according to a study commissioned by the GSM Association, a trade grouping of mobile phone operators worldwide. Despite the 80 percent coverage, industry estimates put the number of people with mobile phone connections at more than two billion, or about 40 percent, of the global population.
Mobile phone coverage can reach nearly 100 percent in four years’ time if governments use a pool of funds collected from telecom operators to extend mobile coverage to rural areas instead of using the money on fixed telephone line services, which are more expensive, it said. “Mobile networks now cover 80 percent of the world’s population, double the level in 2000,” said the study. “This can be attributed almost exclusively to the investment by mobile operators and the liberalization of telecom markets by governments.”
Industry research firm Intelecon Research carried out the study released on the sidelines of a telecom conference and exhibition organized by GSM Association.
Of the 92 developing countries surveyed, 32 have set up “universal service funds,” a levy collected by the government from telecom operators to subsidize the rollout of telecom networks in rural areas.
The levy ranges from one to six percent of revenues. But while the fund now totals $6 billion, only 27 percent, or $1.6 billion, has been used to expand networks.
In addition, governments used most of the money to extend fixed-line networks instead of mobile phone infrastructure which is less expensive to deploy, the study said. If the remaining $4.4 billion in unallocated funds were used to extend mobile phone networks, operators could extend coverage to an additional 450 million people living in rural areas, it said.
“Universal service funds should only be used as a short to medium-term policy tool, and should be phased out over time,” the study recommended, adding they should be spent on the lowest-cost technology that includes mobile networks.
The study also urged governments to focus on the 2.7 billion people who live in areas covered by mobile companies but still do not have mobile phones, in order to help stimulate economic growth.
“By removing sales taxes and customs tariffs on mobile handsets and services, for example, governments could boost affordability for the poorest members of society and mobile penetration by as much as 20 percent in areas which already have network coverage,” it said.
