How many mobile phones?
I'm featuring mobile phones again this month as, with enough context, even seemingly random
data can tell an intriguing story. At first sight the fact that Mongolia has overtaken the United
States in the number of active mobile phones per 100 people seems highly unlikely if not
unbelievable. But according to the figures in this chart, taken recently from The World Bank
database, that is the case. For every 100 people the United States has 90 active mobile phones and
Mongolia has 91. As you can see, the increase in the number of mobile phones in Mongolia only
really started to take off in 2006 and for the next three years grew at a rate of more than 15%
annually. The context is that Mongolia is one of the world's most sparsely populated countries and,
while the government had discouraged the building of a land-line phone system, in the last few
years it has encouraged the building of mobile phone base stations. Four mobile operators,
Mobicom, Skytel, Unitel and G-Mobile provide the service, and wireless local loop technology has
been used to provide coverage. The result is that in some parts of Mongolia mobile coverage is
better than in some rural locations in the U.S. Last year South Korea Telecom, who had a 29.3%
stake in Skytel, sold all of its shareholding for $25.4 million and exited the country, blaming a
saturated mobile phone market.
Maybe they should have hung on. It's a reasonable assumption that when one reaches a point
where everybody has a mobile phone, then that market is saturated. That would be the rational
economic viewpoint taken by most logical economists. But as anybody involved in marketing will
tell you, people definitely do not behave rationally. So, why not a mobile phone for every occasion?
As I wrote last month, for many people in the developed world the mobile phone has become a
powerful fashion statement. Even before their mobile network contract runs out they must have
the latest model. For more detail on this process, see last month's chart. Using The World Bank
database I've added some of the countries which have comfortably passed the level of a
"saturated" market. The world leader is Macao in China: for every 100 people they have 206 active
mobile phones, and looking at the graph you can see it is only now starting to level off. Not far
behind is Saudi Arabia with 188 active mobile phones per 100 people. But catching up fast, with the
steepest growth rate on the chart, is Vietnam with 177 active mobile phones per 100 people.
Nearly every country in the world is seeing the number of people using fixed land-line telephones
decrease. And obviously countries like Mongolia, Macao, Saudi Arabia and Vietnam have jumped
technological progress and instead of building fixed land-line networks they've built mobile base
stations instead. In this respect I would expect these countries to have a higher number of mobile
phones than developed countries which have an established fixed land-line network.
So who needs more than one active mobile phone? In today's complex lifestyles, there can be
numerous reasons for having multiple mobiles including: the need to cope with specific coverage
problems; being able to use different tariffs for varying types of calls; choosing a dedicated mobile
phone for foreign travel; having a specific mobile for an Internet connection; craving the latest
mobile handset technology; finding an extra mobile vital due to a short battery life; responding to
promotional offers that encourage using more than one mobile; and having a mobile on the same
network (with the lower calling costs) as close family and friends. The mix between these and other
reasons for multiple mobile phone ownership needs to be appreciated by the network operators in
each country because there are likely to be wide variations due to different cultural contexts. Not
only that, the actual distribution of mobile phone ownership within each country needs to be
understood. If, for example, in Vietnam the average is 177 mobile phones per 100 people, those
mobiles will almost certainly not be evenly distributed. Some people will have four or five mobile
phones and others only one. To be successful in marketing a product laden with so many practical,
fashionable, psychological and economical factors it is vital to have an unbiased insight into what is
actually happening within a particular country than to believe in the rational economic diktat that a
market has reached saturation at the 100 per cent level.
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