The Covid-19 (coronavirus) pandemic and resulting widespread shift in working patterns and increased demand for home entertainment has thrust communications and the resiliency of telecoms networks to the fore. The outbreak has, and will continue to have, sweeping effects on all aspects of the global economy. As social distancing and travel disruption continue to impact supply and demand, a reduction of global GDP growth by 4.5 percentage points is expected in 2020, with a direct knock-on effect to the telecoms sector among others.

However, the impact of Covid-19 could well be magnified in emerging markets, which are disproportionately impacted by falling commodity prices, reduced international investment, decreased incoming remittances, rising foreign debt burden and large itinerant worker populations. So, while much of the media coverage has focussed on the shifting epicentres, first China, then Europe and the US, here we want to examine how the outbreak will affect the development of the mobile ecosystem in countries perhaps less well equipped to deal with it, despite admirable efforts to cushion the impact.

Digital divide is accentuated in a pandemic
Mobile is the primary access technology in emerging markets: fixed broadband subscriber penetration is around 11 per cent, while mobile internet penetration exceeds 40 per cent. This does, however, still leave a significant proportion of the population unconnected (see chart, below, click to enlarge), and the pandemic has brought to the fore how detrimental that digital divide is.

As a result of lockdowns, many have turned to the internet to maintain a sense of community, access education or crisis information, and safeguard a limited level of economic activity. But billions of people across emerging markets who are still unfamiliar with the internet are excluded from opportunities to overcome the social and economic limitations of self-isolation, while governments without established digital platforms are less able to effectively manage the pandemic and the associated economic fallout.

There are some specific areas where the limited use of mobile internet services exacerbates the impact of lockdowns:

  • Education: following the closure of schools and other educational institutions, millions of students now depend on remote learning. Although 1.4 billion mobile subscribers around the world already use a phone to improve their education or that of their children, the shift to online solutions for remote learning is leaving many behind. Some governments have had to turn to non-interactive technology, such as radio and television, to provide a minimum level of educational continuity for those unable to use the internet. For example, the Rwanda Education Board (REB) began broadcasting educational radio programs on weekdays on 4 April, starting with literacy lessons for primary school students, while in Malaysia, a new TV channel called TV Okey from the public broadcaster Radio Televisyen Malaysia (RTM) was launched on 6 April to deliver educational television programs to all students, especially those without internet access.
  • E-commerce: the limited uptake of digital services in emerging markets is preventing businesses from moving to e-commerce or other online platforms to maintain a level of continued consumption. For example, the GSMA Intelligence Consumer Survey 2019 showed fewer than 20 per cent of smartphone owners across sub-Saharan Africa and Developing Asia (excluding China) use their devices to purchase goods regularly (at least once a month), compared with around 50 per cent in Europe and North America.
  • Information: the effective distribution of crisis communications largely depends on digital channels, and the capability of individuals to discern trustworthy sources and advice apart from manipulated information. This poses a challenge for those who have not been online before.

Operators also face different challenges versus counterparts in higher income regions
Operators in emerging markets face several unique challenges. With retail outlets closed, many have lost their direct handset sales channel, which GSMA Intelligence Operator Device Survey 2020 showed accounts for nearly 40 per cent of all smartphone sales in emerging markets (excluding China). Some operators, for example in South Asia, have already increased third-party sales channels including bank ATMs, pharmacies and grocery stores, but as these efforts are reactive, operators are failing to capture the full revenue potential and not maximising consumer engagement. Emerging markets are also mostly prepaid (84 per cent versus 36 per cent in developed markets), meaning operators are more exposed to customer spend reductions.

Meanwhile, the risk of potential delays to network builds is growing. Auctions of 5G spectrum are already starting to slip as operators seek additional spectrum for 4G to handle the jump in network traffic. In Brazil, for example, operators have requested a delay to the 5G spectrum auction while they assess long-term financial impacts. India’s 5G spectrum auction has similarly been postponed from 2020 to 2021 at the earliest: Reliance Jio and Bharti Airtel have also asked the regulator for additional 4G spectrum. Yes, 5G isn’t the biggest priority for many emerging markets right now, but it is still vital for timelines not to slip too far so the gap between emerging and advanced countries doesn’t widen further. At the same time, though, some emerging markets, for example India, see 5G as a key stepping stone in their transition to a fully-fledged digital economy, so delays are unfortunate.

When a challenge becomes an opportunity
It’s not all negative though, as the digital ecosystem has proved vital in the response to Covid-19.

Operators have increased mobile data packages and even made data free in many cases to help users access information, and health and education services, while participants from the entire digital value chain including operators, vendors, internet players and governments are pulling together to support people during lockdown and prepare for a return to normality once the pandemic ends. As a side effect of more people working remotely or having to stay at home, mobile operators have been granted a unique opportunity: they can/should leverage the boost in the adoption of mobile services (for example video calling for business, online collaboration tools, video streaming, e-commerce and mobile payments) to grow their role in people’s lives.

Likewise, despite the challenges facing the industry, times of crisis can serve as a driver of technological advancement and, in some cases, 5G is already proving its worth. For example, in various countries (including China and Cambodia), operators have launched 5G-enabled telemedicine services which allow doctors to assess patients via video. And while working from home has already been an option for office workers for some time, 5G can provide an enhanced experience for virtual meetings and, of course, higher network capacities, making it an important tool to help meet new traffic demands.

The outlook for emerging markets ensconced by the pandemic is fluid and will continue to be monitored closely. The human cost has been terrible, and the repercussions will likely reverberate for decades, but emerging countries could well have been given the stimulus needed to start catching up to their developed counterparts. Governments with weak digital economies have been given a warning to ensure they are never placed in such a vulnerable position again, while populations with, up until now, limited awareness of the benefits of the mobile internet have all of a sudden had their eyes opened to how essential mobile services can be.

– Jan Stryjak – senior manager, Mobile Operators and Networks Research, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.