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The Mobile Economy 2017 Copyright © 2017 GSM Association
The GSMA represents the interests of mobile operators GSMA Intelligence is the definitive source of global mobile
worldwide, uniting nearly 800 operators with almost 300 operator data, analysis and forecasts, and publisher of
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THE MOBILE ECONOMY 2017
Contents
EXECUTIVE SUMMARY 2
1 INDUSTRY OVERVIEW 5
1.1 Mobile adoption still rising, but growth continues to slow 10
1.2 Technology shift ongoing 14
1.3 Revenue and investment trends 18
2 MOBILE DRIVING INNOVATION AND GROWTH 21
2.1 Platforms, scale and the shift to open 22
2.2 The operator response 26
2.3 Mobile contributing to jobs and economic growth 31
3 MOBILE ADDRESSING SOCIAL CHALLENGES 36
3.1 Mobile impact on Sustainable Development Goals 37
3.2 Call to the international development community: mobile can help deliver 41
greater impact for social and economic initiatives
3.3 Mobile delivering greater inclusion 44
4 RETHINKING REGULATION FOR THE DIGITAL AGE 52
4.1 Redesigning regulation 54
4.2 Resetting competition policy frameworks 54
4.3 Spectrum and laying the foundations for 5G 55
4.4 Securing data and safeguarding privacy 56
Contents 1
THE MOBILE ECONOMY 2017
Executive
Summary
Subscriber growth pivoting to Asia
By the end of 2016, two thirds of the world’s mobile market, will be the primary driver of this
population had a mobile subscription – a total growth, with 310 million new unique subscribers.
of 4.8 billion unique subscribers. There is a clear
By 2020, almost three quarters of the world’s
geographic shift underway, with Asia Pacific set
population – or 5.7 billion people – will subscribe
to account for two thirds of the 860 million new
to mobile services. Regional penetration rates are
subscribers expected globally by the end of the
forecast to range from 50% in Sub-Saharan Africa to
decade. India, already the world’s second largest
87% in Europe.
4G uptake driving surge in mobile broadband adoption
The generational shift to mobile broadband 5G will see a major shift in how cellular networks
networks and smartphones continues to gain are designed and what they are used for. Early
momentum. Mobile broadband connections (3G deployments will focus on enhanced mobile
and 4G technologies) accounted for 55% of total broadband as the key customer proposition but
connections in 2016 – a figure that will be close to 5G’s capabilities will evolve over time. 5G networks
three quarters of the connections base by 2020. The are forecast to cover around a third of the global
proportion of 4G connections alone is forecast to population by 2025, with adoption reaching
almost double from 23% to 41% by the end of 1.1 billion connections.
the decade.
2 Executive Summary
THE MOBILE ECONOMY 2017
Mobile revenue growth outlook remains modest
Total mobile revenues reached $1.05 trillion in 2016, Operators have invested $1.2 trillion in capex since
up 2.2% on 2015, marking the second consecutive 2010. With global mobile capex levels having peaked
year of rising revenue growth. Developing markets in 2015, they fell by 6% in 2016. Over the medium
saw a notable improvement in growth rates as the term, capex levels will continue to decline but at
macroeconomic headwinds eased and key markets a slower rate, before returning to growth in 2020.
such as China and India posted encouraging growth Operators in advanced telecoms markets will begin
rates. However, the future outlook remains mixed, to invest in the necessary infrastructure to support
with increasing competition, regulatory intervention 5G towards the end of the decade, with any uplift in
and slowing subscriber growth weighing on capex likely to occur as operators roll out 5G.
revenue growth.
Shift in consumer engagement to mobile and the rise
of the platform economy
The shift of consumer engagement to mobile is now embraced the power of collaborative partnerships,
manifesting itself in the rapid growth of messaging particularly those in the app economy and the
platforms, which are using their scale to monetise a mobile internet. Collaboration and open standards
growing range of services. With a global subscriber allow platforms to scale rapidly – a key success
base that is soon to reach 5 billion, the mobile factor when competing digital platforms have
ecosystem has created a global digital platform that already achieved significant scale. Mobile operators
is increasingly connecting everyone and everything. are developing new business models that leverage
The impact of this digital platform is felt across these trends to offer new platforms and services. As
a broad range of sectors as companies reinvent well as opening the door to new revenue streams,
their business models to offer new and innovative these trends will allow a faster pace of innovation
services. and raise the prospect of a lower cost operating
model for operators at a time when margins and
Players across the broader mobile ecosystem have
cash flows remain under pressure.
already adopted open innovation strategies and
Mobile contributing to jobs and economic growth
In 2016, mobile technologies and services generated The mobile ecosystem supported approximately 28
4.4% of GDP globally, equivalent to around $3.3 million jobs in 2016. The mobile sector also makes a
trillion of economic value. This is forecast to increase substantial contribution to the funding of the public
to more than $4.2 trillion (4.9% of GDP) by 2020, sector, with approximately $450 billion raised in
as countries benefit from the improvements in 2016 in the form of general taxation. In addition,
productivity and efficiency brought about by almost $19 billion was raised in government revenue
increased take-up of mobile services. through spectrum auctions in 2016.
Executive Summary 3
THE MOBILE ECONOMY 2017
Mobile is essential to realising the SDGs and addressing social
challenges
The UN Sustainable Development Goals (SDGs) Mobile technology also plays a critical role in
and their associated targets outline a broad and fulfilling the ambitions of universal internet access,
ambitious agenda that integrates economic, social closing the identification gap and expanding
and environmental issues across all geographies financial inclusion. The number of individuals
and applies both to developed and developing accessing the internet over mobile devices has
economies. Mobile technology provides access to doubled over the past five years to 3.6 billion, and
tools and applications that address a wide range of will rise to 4.7 billion, equivalent to 60% of the
socioeconomic challenges as well as enabling new global population, by 2020. The spread of mobile
technologies and innovations to build more efficient and digital technologies offers a transformative
and environmentally sustainable societies. opportunity to achieve development aims and
improve access to a range of life-enhancing services.
Rethinking regulation for the digital age
The fundamental changes taking place in the right time, and under the right conditions – is
telecoms markets and adjacent sectors have major crucial to the development of a rich and vibrant
implications for all aspects of policy, including digital economy. In particular, governments need to
regulatory frameworks, anti-trust reviews and identify now the harmonised spectrum that will be
the way spectrum is allocated. In order to drive required to enable 5G to transform economies and
the transition to more connected societies, it societies for the better.
is important that the regulatory environment
As the digital economy is increasingly global,
continues to evolve.
governments across the world should seek to
Prescriptive regulatory frameworks, which were harmonise international privacy and data protection
designed for a less dynamic era, can be redesigned rules. This requires accountability mechanisms
to encourage innovation and investment. The new to protect individuals’ privacy effectively and
features of the digital market call for a different enable the cross-border data flows necessary to
and more nuanced approach to competition policy. develop an efficient, global digital economy. The
Governments should ensure their competition and mobile industry is engaging with policymakers to
regulatory frameworks reflect how the market make these mechanisms interoperable. Ultimately,
has evolved and provide a sound foundation for global harmonisation will benefit businesses and
ongoing competition, investment and innovation consumers alike by creating a consistent and clear
that benefits everyone. Furthermore, the release of set of data protection and privacy rules that apply
harmonised spectrum – in the right frequencies, at across international borders.
4 Executive Summary
THE MOBILE ECONOMY 2017
1
Industry
overview
Industry overview 5
GLOBAL MARKET
Unique SIM connections
mobile
subscribers
2016 4.8 billion
4.2% CAGR 2016–20
65%
PENETRATION
2016 7.9 billion 100%
5.7 billion
RATE
4% CAGR 2016–20 PENETRATION
RATE*
2020 73%
2020 9.7 billion 112%
*Excluding M2M
ACCELERATING MOVES TO MOBILE BROADBAND NETWORKS
AND SMARTPHONE ADOPTION
Mobile broadband By 2020, there will be Mobile data traffic to grow
5.7bn 47%
connections to increase by a CAGR of
from 55% of total in 2016 to
73% by 2020
smartphones, growth of
1.9 billion from the end of 2016 over the period 2016–2020
Source: Ericsson
Data growth Operator total revenues
driving
revenues
and operator
2016
$1.05 trillion
2.1% CAGR 2016–20
investments
2020
$1.14 trillion
Operator CAPEX of up to $700 billion for the period 2017–20Mobile DIGITAL INCLUSION
Delivering digital inclusion to the still
contributing unconnected populations.
MOBILE INTERNET PENETRATION
to economic 48% 2016 2020 60%
and social FINANCIAL INCLUSION
Delivering financial inclusion to the unbanked
development populations. As of December 2016 there were
across the 277 live mobile money
services in 92 countries
world INNOVATION
Delivering innovative new services and apps.
Number of M2M connections to reach
1bn by 2020
Mobile
industry 2016
$3.3tn 4.4%
GDP
$4.2tn
contribution
4.9%
to GDP 2020 GDP
Public funding Employment
Mobile ecosystem contribution
to public funding (before regulatory
and spectrum fees)
2016 $450bn Jobs directly and indirectly
supported by the mobile ecosystem
$500bn
2020
2016
28.5 million
2020
30.9 millionTHE MOBILE ECONOMY 2017
Global TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 41% 2016 2020
65% 73%
2G
23%
4G
32% 2016 27% SMARTPHONE ADOPTION
2016 2020
32%
45%
3G
51% 65%
Asia Pacific TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 45% 2016 2020
65% 76%
2G
27%
4G 2016 28%
SMARTPHONE ADOPTION
26%
2016 2020
28%
47%
3G
51% 63%
CIS TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 35% 2016 2020
78% 83%
2G
9%
34%
4G 2016 28%
SMARTPHONE ADOPTION
2016 2020
37% 58%
3G
48% 66%
Europe TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 61% 2016 2020
84% 87%
2G
33% 14%
25%
4G 2016 SMARTPHONE ADOPTION
2016 2020
42%
25%
3G
65% 75%
8 Industry overviewTHE MOBILE ECONOMY 2017
Latin America TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 38% 2016 2020
70% 78%
2G
16%
22%
45%
4G 2016 SMARTPHONE ADOPTION
2016 2020
39%
41%
3G
55% 70%
MENA TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 19% 2016 2020
59% 62%
2G
6%
41%
49%
4G 2016 SMARTPHONE ADOPTION
33% 2016 2020
53%
3G
46% 64%
North America TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 82% 5% 2016 2020
81% 85%
2G
62% 10%
12%
4G 2016 SMARTPHONE ADOPTION
2016 2020
29%
3G
77% 79%
Sub-Saharan Africa TECHNOLOGY MIX SUBSCRIBER PENETRATION
2020 12% 2016 2020
44% 50%
2G
47% 2%
30%
4G 2016 SMARTPHONE ADOPTION
2016 2020
67%
41%
3G
28% 55%
Industry overview 9THE MOBILE ECONOMY 2017
1.1
Mobile adoption still rising, but growth
continues to slow
At the end of 2016, 65% of the world’s population With developed markets approaching saturation,
had a mobile subscription – a total of 4.8 billion developing markets will account for nine out of
unique mobile subscribers. The total is set to ten new subscribers in the four years to 2020.
reach 5 billion in mid-2017. By 2020, almost 860 Asia Pacific will add approximately 571 million
million new subscribers will be added, taking unique subscribers, representing two thirds of new
the global penetration rate to 73%. However, subscriber growth globally over the same period.
mobile subscriber growth is slowing; we expect Annual subscriber growth in Sub-Saharan Africa
a compound annual growth rate (CAGR) of 4.2% – the world’s most under-penetrated region – is
between 2016 and 2020, compared to 5.6% over expected to be 6.2%.
the preceding four years.
Figure 1 Source: GSMA Intelligence
Unique subscribers by region
(Millions)
6,000
5,000
4,000
3,000
2,000
1,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Asia Pacific CIS Europe Latin America MENA Northern America Sub-Saharan Africa
10 Industry overviewTHE MOBILE ECONOMY 2017
Ten countries will account for 72% of growth in driver of this growth, with 310 million new unique
new mobile subscribers worldwide. There is a clear subscribers expected in the period to 2020, helped
geographic shift underway, with Asia set to account by improving affordability, falling device prices and
for two thirds of the incremental subscriber growth better network coverage. This is followed by China
over the forecast period. India, already the world’s and fast-growth Asian markets including Indonesia,
second largest mobile market, will be the primary Pakistan and Bangladesh.
Figure 2 Source: GSMA Intelligence
Top 10 countries by projected new subscribers
(Millions), 2016-2020
1,200
158
1,000
310 800
600
400
21
23 200
18
27 21 17 11
11
0
India China Nigeria Indonesia Mexico US Brazil Pakistan Myanmar Bangladesh
Mobile subscribers 2016 Additional mobile subscribers (2016-2020)
Industry overview 11THE MOBILE ECONOMY 2017
Unique subscriber penetration rates vary As well as the challenging network economics of
significantly across regions. The average rate connecting remote and rural areas, other barriers
for developed markets of 84% is approaching will limit subscriber growth in developing markets.
saturation. In contrast, there remains upside for These include volatile economic conditions, the
subscriber growth in developing markets. Asia lower income and purchasing power of the still
Pacific, Latin America and Sub-Saharan Africa unconnected populations, uneven distribution and
are expected to see the largest improvements in quality of infrastructure, and social and political
penetration levels over the next four years. instability of different markets.
Figure 3 Source: GSMA Intelligence
Unique subscriber penetration by region
84% 87% 83% 85%
78% 81% 78% 76%
70%
65% 62%
59%
50%
44%
EUROPE CIS NORTHERN LATIN ASIA MENA SUB-SAHARAN
AMERICA AMERICA PACIFIC AFRICA
2016 2020
Multiple SIM ownership means that at the end likely consumers are to own dual-SIM handsets and
of 2016 there were 7.5 billion SIM connections switch between different operators to seek better
(excluding cellular M2M, which accounted for a network coverage.
further 0.4 billion) worldwide. However, the ratio of
Global SIM connections are forecast to grow at
SIM cards per person varies significantly by region,
a CAGR of 4% between 2016 and 2020, in line
with an average of nearly two in many developing
with unique subscriber growth and thus lifting
regions, where prepaid plans are the norm and
connections penetration to 112%. In Europe,
subscribers are most price-sensitive.
connections grew modestly in 2016 – by 0.3% to
Globally, the average number of active SIM cards 678 million – following three consecutive years of
owned per mobile subscriber declined to 1.44 decline. They are forecast to reach 723 million by
in 2016, from a high of 1.50 in 2012. The GSMA the end of 2020. As with unique subscriber trends,
Intelligence 2016 Consumer Survey suggests that, connections growth will be driven by Asia Pacific
after having separate SIM cards for personal and and Sub-Saharan Africa with forecast CAGRs of 5%
business use, variable network quality is the second and 6% to 4.7 billion and 0.9 billion respectively out
biggest driver of multi-SIM ownership. The higher to 2020.
the perceived network quality in a country, the less
12 Industry overviewTHE MOBILE ECONOMY 2017
Smartphone growth led by Asian markets as affordability improves
There were 3.8 billion smartphone connections with 347 million smartphone connections. India will
at the end of 2016, accounting for half of total account for just under one fifth of new smartphone
connections (excluding M2M) worldwide. Adoption connections globally in the four years to 2020; its
rates have reached 65% of the connected base in smartphone base will double to 686 million over the
developed markets. As with subscriber growth, period.
developing markets and particularly Asia are
Affordability is becoming less of a barrier to
driving the current phase of smartphone growth.
smartphone adoption as incomes rise and there
In developing markets smartphone connections
is continued growth in sub-$100 devices, led by
reached 47% of the total base at the end of 2016
Chinese manufacturers such as Huawei, Oppo,
and are forecast to reach 62% by 2020.
OnePlus and Xiaomi. While China, South Korea
Overall, Asia Pacific will account for half of the and Japan have been the traditional smartphone
1.9 billion new smartphone connections forecast manufacturing hubs in Asia Pacific, local
globally by 2020. India overtook the US to become manufacturers are also gaining prominence in India,
the second largest smartphone market in 2016, Indonesia and the Philippines.
Figure 4 Source: GSMA Intelligence
Global smartphone connections as a share of
total connections
75%
62%
Developed
Developing
17%
5%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Industry overview 13THE MOBILE ECONOMY 2017
1.2
Technology shift ongoing
1.2.1
4G uptake driving surge in mobile broadband adoption
The generational shift to mobile broadband smartphones. At the end of 2012, mobile broadband
networks across the world continues to gain connections (3G and 4G technologies) accounted
momentum, driven by improved coverage of higher for a quarter of total connections (excluding M2M).
speed networks, more attractively priced data This increased to 55% by the end of 2016, with 4
tariffs and greater availability and affordability of billion mobile broadband connections.
Figure 5 Source: GSMA Intelligence
Global connections by technology
(Excluding M2M)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2G 3G 4G
An additional 2.3 billion mobile broadband year to 1.7 billion. Indeed, the proportion of 4G
connections are forecast between 2016 and 2020, connections worldwide is forecast to almost double
with the proportion of the total rising to 73%. The between 2016 and 2020 from 23% to 41%. As a
rapid migration to 4G remained a key feature in result, by 2020, 2G will no longer be the dominant
2016, with 4G connections increasing 55% in the technology in terms of connections.
14 Industry overviewTHE MOBILE ECONOMY 2017
LTE now reaches 60% of the population as operators continue to invest in
network rollouts
Operators have invested heavily in LTE network of the world’s population in 2016, up from 50% in
rollouts, which have been instrumental in driving the 2015 and 11% in 2012. In the developing world, half
surge in 4G adoption. As of 2016, 580 LTE networks of the population is covered by 4G; this is expected
had been deployed in 188 countries. The developing to increase to almost 70% by 2020. In contrast, 4G
world accounted for three quarters of the new coverage levels in the developed world, at 93% of
network launches in 2016 and now represents the population, are only expected to improve by two
just under half of total LTE networks, up from one percentage points to 95% by 2020.
quarter in 2012. 4G networks reached almost 60%
Figure 6 Source: GSMA Intelligence
Global live 4G networks
Number of countries
(cumulative)
188
Developing
Developed 158
580
127
484
Number of live LTE networks (cumulative)
97
361
64
26 253
11
138
45
16
2010 2011 2012 2013 2014 2015 2016
The proliferation of smartphones and other browsing and file downloads. This surge in mobile
advanced devices (such as tablets) connected to data traffic means that volumes are expected to
increasingly higher speed networks (both 3G and grow at a CAGR of 47% between 2016 and 2020 to
4G) continues to drive the use of data-intensive reach almost 40 EB per month by 2020, according
applications, including video and music streaming, to Ericsson.
Industry overview 15THE MOBILE ECONOMY 2017
1.2.2
5G will be delivered in a phased approach; capabilities will
evolve over time
5G from a technology perspective is beginning to networks using millimetre wave (mmW) spectrum,
crystalise. Over time 5G will see a major shift in how currently championed by Verizon in the US. While
cellular networks are designed and what they are there will likely be a handful of pre-5G wireless
used for. Mobile operators will use new network networks, including those linked to sporting events
architectures, as well as new radio technologies, to taking place ahead of the standardisation date, the
achieve the flexibility required to serve an extremely first commercial 5G cellular networks will launch
diverse set of applications from mission-critical in late 2019 and early 2020. These networks will
communications between machines to highly be built on evolved LTE (Release 15) and will offer
immersive entertainment and fingertip control over increased performance. 5G’s second phase, based
remote devices and appliances. on LTE Release 16, will deliver mobile data over
mmW frequencies, facilitating a massive increase
5G will be delivered in a number of phases; the pre-
in bandwidth potential.
emptive phase will comprise fixed-wireless access
Demand for a new network technology cycle is accelerating the
development of 5G
The desire to frame the development of the 5G • China – China Mobile plans to deploy 10,000 5G
standard and gain first-mover advantage is seeing base stations by 2020
operators set ambitious targets for 5G commercial
• US – operators have been testing and developing
launches. 5G is the first technology cycle that the
fixed-wireless access solutions using mmW
mobile industry is approaching in a state of maturity,
technologies, and are expected to be among the
with subscriber penetration close to demographic
first to launch commercial 5G wireless networks
ceilings in most developed markets, and revenue
growth averaging low single digits globally. As a • Europe – in July 2016, the major European
result, the imperative to deliver a new network operators published a 5G manifesto, which
technology is stronger than ever. indicated a target of launching 5G in at least one
city in each of the European member states by
The following look set to host the first commercial
2020
5G network deployments:
• Middle East – Etisalat has indicated that it will
• South Korea – KT has announced that it will
launch a nationwide 5G network in time for Expo
launch commercial 5G services in 2019
2020 in the UAE.
• Japan – NTT DoCoMo has announced that it will
launch commercial 5G services in 2020
16 Industry overviewTHE MOBILE ECONOMY 2017
5G networks will cover a third of the world’s population by 2025
Early 5G networks based on LTE Release 15 will be device vendors see the technology as a means to
deployed in dense urban areas, as operators look differentiate handsets, while the fact that average
to supplement existing mobile broadband capacity, selling prices for smartphones have declined since
while also providing a test-bed for 5G use cases to the launch of 4G means affordability will prove less
emerge. Operators are expected to roll out 5G at of a barrier to ownership. 5G connections (excluding
a similar rate to the deployment of 4G, attaining cellular M2M) are anticipated to reach 1.1 billion
coverage of 34% of the global population, 2.6 billion by 2025.
people, by 2025. Adoption will scale rapidly, as
Figure 7 Source: GSMA Intelligence
5G adoption forecast
2020–2025
34%
29%
1.1
25%
22%
0.8
17%
8%
0.5
0.3
0.1
0.0
2020 2021 2022 2023 2024 2025
5G connections (billions) 5G coverage (percentage of population)
The rollout profile for 5G Phase 2 (LTE Release 16, that support investment, then under the current
based on small cell deployments) will be much more operator business model rollout is likely to be
varied between operators and countries. Cost is patchy and slow. In order to bring down the cost
the principal concern; rolling out a dense small cell of ownership, the industry must determine how
network in urban areas will require considerable best to promote rollout while maintaining network
amounts of capex, while also adding to current competition. The onus is also on regulators and
network opex burdens. Access to, and ideally public bodies not only to promote a healthy
ownership of, dense urban fibre networks will be investment climate but also remove bottlenecks
a pre-requisite. to network rollout, particularly those linked to
planning regulations.
Mobile operators’ need for a new business model
is most stark here. If new use cases do not emerge
Industry overview 17THE MOBILE ECONOMY 2017
1.3
Revenue and investment trends
1.3.1
Revenue: short-term spike in growth, but challenges
remain
Total mobile revenues reached $1.05 trillion in 2016, an increase of 2.2% on
2015. While down considerably on growth rates mobile operators witnessed
over the last ten years, 2016 marked the second consecutive year of rising
revenue growth. 2016 saw improved growth rates in developing markets in
particular, as the macroeconomic headwinds eased and key markets such
as China and India posted encouraging growth rates. The future outlook is
more mixed – competition, regulatory intervention and slowing subscriber
growth will continue to weigh on revenues, while rising demand for data
and more sustainable pricing will act as a positive lever in ensuring mobile
revenues continue to grow over the next four years.
Revenue growth in developed markets has remained 2014 (year-on-year), the US market grew by 1.7% in
relatively level over the last few years, as falling 2015, and by a mere 0.1% in 2016. T-Mobile USA and
revenues in Europe were offset by growth in other Sprint continue to act as challengers in the market,
key developed markets such as the US, Japan and with the former in particular proving successful in
South Korea. In 2016 key European markets such attracting customers from AT&T and Verizon.
as Germany, Italy and Spain returned to growth.
Following two years of low growth, which marked
The principal driver of this turnaround is tariff
a convergence with developed markets, the
readjustments, which specifically offer greater
developing world rebounded in 2016, with revenues
data allowances at higher cost, and have been
increasing 5.3% year-on-year. Macroeconomic
implemented in a number of European markets.
headwinds eased, with China and India the key
Alongside increasing demand for data, and the
drivers of growth; rising demand for data and
positive impact of earlier consolidation, these
subscriber penetration helped accelerate growth
price adjustments will help to drive higher revenue
rates in both countries. Revenue growth in
growth in 2017.
developing markets is forecast to slow over the next
By contrast, the US market has grown consistently four years as heightened competition in key markets
over the last few years but is now entering a more (India and Malaysia) and regulatory cuts to mobile
stagnant growth phase, as strong competition termination rates in Brazil weigh on growth.
weighs on revenues. From 5% growth witnessed in
18 Industry overviewTHE MOBILE ECONOMY 2017
Figure 8 Source: GSMA Intelligence
Mobile revenues, 2014–2020
($ billion)
1,200 12%
1,000 10%
800 8%
600 6%
400 4%
200 2%
0 0%
2014 2015 2016 2017 2018 2019 2020
Developed Developing
Developed growth Developing growth
Industry overview 19THE MOBILE ECONOMY 2017
1.3.2
Capex: spend continues to fall from earlier peaks but will
begin to stabilise
Since 2010 mobile operators have invested $1.2 Over the course of this timeframe, operators
trillion in capex as they look to increase capacity and will invest an additional $700 billion in mobile
deploy mobile broadband networks. Global annual networks and infrastructure worldwide. Operators
capex increased consistently from 2010, to reach in advanced telecoms markets will begin to invest
$197 billion in 2015. However, 2015 marked a peak in in the mobile infrastructure necessary to support
global mobile capex levels, which subsequently fell 5G towards the end of this decade. We expect
by 6% in 2016. The knock-on impact of falling mobile capex to rise as a result, as operators seek to gain
capex on network infrastructure vendors is already a competitive advantage in this new technology.
apparent and is set to continue. Over the medium However, given the likely incremental nature of early
term, capex levels will continue to decline but at a 5G networks, any uplift is likely to occur after 2020
slower rate, before returning to growth in 2020. as operators roll out 5G in mmW.
Figure 9 Source: GSMA Intelligence
Mobile capex forecasts, 2014–2020
($ billion)
200
150
100
50
0
2014 2015 2016 2017 2018 2019 2020
Developed Developing
Capex in developed markets is forecast to continue growth, with its aggressive 4G network rollout
to decline in 2017 but to rise towards the end of the cementing its position as the largest market
forecast period. Operators will continue to seek to worldwide in terms of capex. However, 2016 marked
drive competitive advantage from their networks, a strong decline in developing market capex of
and begin to invest in the infrastructure necessary to almost 10% year-on-year, as Chinese network rollout
support 5G. slowed comparatively. Developing market capex
will continue to fall in the medium term, as further
Having risen rapidly over a number of years,
declines in China and macro-economic pressures in
the share of global mobile capex attributable to
other developing economies weigh on the growth
developing markets equalled that of developed
seen in markets such as India.
markets in 2015. China was the key driver of this
20 Industry overviewTHE MOBILE ECONOMY 2017
2
Mobile
driving
innovation
and growth
Mobile driving innovation and growth 21THE MOBILE ECONOMY 2017
2.1
Platforms, scale and the shift to open
The shift of consumer engagement to mobile is WhatsApp was the first messaging platform to
now manifesting itself in the rapid growth of reach 1 billion users, subsequently followed by
messaging platforms. The leading messaging Facebook Messenger. Newer messaging platforms
platforms across the world continue to scale are also emerging and growing rapidly, including the
rapidly, with a total user base of around 3.6 billion likes of Snapchat. Messaging platforms have now
at the end of 2016. The vast majority of the users overtaken the larger social media sites in terms of
on these messaging platforms are on mobile, their user bases, while also typically showing higher
suggesting that the majority of the just under user retention and engagement than other apps.
5 billion mobile subscribers across the world are
using messaging apps.
Figure 10 Source: Company data
Major messaging platforms: active user base
(Billions)
3.6
2.8
1.9
1.1
Q4 2013 Q4 2014 Q4 2015 Q4 2016
22 Mobile driving innovation and growthTHE MOBILE ECONOMY 2017
The leading messaging platforms are using their including Uber and Airbnb, but many regions are
scale and platform business models to monetise now seeing a range of new players emerge. All
a growing range of services. The most successful of these companies gain enormous power and
examples to date include several of the Asian revenues through network effects – the more users
messaging platforms. In China, WeChat has the platform attracts, the more customers, which
amassed a merchant base of 30 million connected in turn attract a greater number of merchants and
with its payment systems – mostly SMEs but also partners. High levels of smartphone ownership,
large enterprises – through concerted marketing especially in developed markets, have enabled the
and opening up its APIs1. When combined with its emergence of scalable, on-demand services that are
consumer user base of almost 700 million as of the affordable and accessible anywhere.
third quarter 2016, it is not hard to see the prodigal
Platforms are now spreading further with the
network effects that become available.
growing adoption of cloud computing; a range
However, the use of digital platforms now extends of industrial companies are putting analytics and
well beyond the mobile messaging ecosystem automation into cloud-based services. These
and internet players to embrace a broad range of services and real-time analytics, combined with
consumer sectors where companies are reinventing new scalable connectivity services (such as LPWA),
their business models to offer new and innovative will be key in realising the potential of the industrial
services. The growth of the sharing economy is now Internet of Things.
seeing a global impact, with prominent successes
1. Application programming interfaces (APIs) allow software programs to “talk” to one another.
2.1.1
The platform economy: messaging was just the start
Open innovation and the development of open • OpenAI: a non-profit artificial intelligence
standards has a long history in computing and research company, associated with business
software development, starting with the Linux magnate Elon Musk, that aims to carefully
operating system and spreading to a broad range promote and develop friendly AI in such a way as
of software products. Today, openness is de rigueur to benefit, rather than harm, humanity as a whole.
in all aspects of the internet, and the widespread
• The Telecom Infrastructure Project: founded
adoption of large-scale collaboration has helped
by Facebook, this initiative includes telecoms
drive the rapid pace of innovation in the digital age.
operators, infrastructure providers and other
Recent examples of open source initiatives include technology companies. This is an engineering-
the following: focused initiative that aims to reimagine ways
of building and deploying telecoms network
• Open Compute Project: its mission is to design
infrastructure and drive the development of next-
and enable the delivery of the most efficient
generation open components.
server, storage and data centre hardware designs
for scalable computing. Members of the initiative
include Facebook, Intel, Nokia, Google, Apple and
Microsoft.
Mobile driving innovation and growth 23THE MOBILE ECONOMY 2017
Figure 11
The platform economy:
messaging was just the start
From OTT
messaging
apps
To a broad range of
consumer-focused
sectors reinventing
how business is done
through digital
platforms
PORTATIO
ANS N
TR
AVIATION ER D
ISTRIBU
TIO
OW
N
P
NT ENVIRON HE A
LTHCARE
IGE M
LL 1
EN
E
INT
TS
SCHEDULING
AND LOGISTICS
7 2
OPERATIONS CONNECTED
OPTIMISATION PRODUCTS
ER GENERATIO To major OIL & GAS
OW
industrial sectors
N
P
putting analytics
6 and automation in 3
ASSET the cloud INTELLIGENT
PERFORMANCE ENVIRONMENTS
MANAGEMENT
WIND WATER
5 4
INDUSTRIAL FIELD FORCE
ANALYTICS MANAGEMENT
OMOTIVE MINING
AUT
NUFACTURING
MA
Source: Adapted from General Electric
24 Mobile driving innovation and growthTHE MOBILE ECONOMY 2017
2.1.2
Driving new areas of innovation: AI and new user
interfaces
The near ubiquity of smartphones, high-speed for AI has been with virtual agents and chatbots
connectivity and the on-demand accessibility (computer programs designed to simulate
of cloud computing are driving new areas of conversation with human users). Chatbots can
innovation, particularly in the field of artificial respond to people in their native language, either
intelligence. Some of these developments and verbally or in text, and can interact with both
new services represent a further evolution in the humans and other machines. The AI component
smartphone ecosystem, while others move well allows chatbots to respond to more complex
beyond smartphones. situations and continuously ‘learn’ so as to improve
their effectiveness over time.
The development of AI is being led by a
combination of new start-ups, established players Chatbots have seen the most extensive deployment
from the internet ecosystem (Twitter, Apple, Google, to date on the large messaging platforms, where
Amazon and Facebook) and more established IT the user interface is text messaging. However,
players such as Microsoft and IBM. Google has been advances in natural language processing mean that
particularly active, with nine major acquisitions over voice interfaces are increasingly a reality. A number
the last three years, but other companies are also of virtual assistants have now been launched, and
investing heavily in this area. AI promises a new while some are still tied to smartphones (such as
category of products and services, many of which Apple’s Siri), others can be accessed by a new
will not be tied to existing devices. category of device, such as the Amazon Echo.
These relatively ‘dumb’ terminals have little
The growing utility of AI and in particular natural
processing power but rely on connectivity and
language processing, allowing technology to
intelligence in the cloud to provide information
understand humans, is opening the door to a
and control other devices.
paradigm shift in the user interface. One use case
“The last 10 years have been about building a world
that is mobile-first, turning our phones into remote
controls for our lives. But in the next 10 years, we
will shift to a world that is AI-first, a world where
computing becomes universally available.”
Sundar Pichai, CEO of Google
Mobile driving innovation and growth 25THE MOBILE ECONOMY 2017
2.2
The operator response
It is the newer and more innovative digital players in venture capital and start-up companies. Total
that have generally been most successful in driving investments by telecoms sector operators tripled
innovation and capturing the opportunities from the between 2014 and 2015. Reflecting the ongoing shift
digital revolution, often in the process cannibalising in growth and innovation in the mobile ecosystem
some of the mobile operators’ core services. This to emerging markets, operators have invested an
has led mobile operators to collaborate more closely increasing amount in developing regions. In 2015
with tech start-ups and to develop more open alone, the total was $3.2 billion, well over twice the
models of innovation. amount in the previous year.
Reflecting these developments, mobile (and other
telecoms) operators continue to invest significantly
Figure 12 Source: Operator data, Capital IQ, Delta Partners
Telecoms operators’ investments in tech companies
($ billion)
3.2 10
5.8
9
8
7
6
5
1.4
4
0.4 1.8
2.4
3
0.4 0.2 2
0.1 0.8
0.9 0.9
1
0
2010 2011 2012 2013 2014 2015
Developed markets Developing markets
26 Mobile driving innovation and growthTHE MOBILE ECONOMY 2017
2.2.1
New networks: LPWA and 5G
LPWA networks are being developed to support IoT affordable as other networks such as Zigbee
services and offer a range of advantages over other and Z-Wave for IoT connections. Industry data
wireless and cellular technologies. LPWA networks suggests that in 2017 alone over 35 NB-IoT networks
are designed for M2M applications with low data will be deployed in more than 20 countries across
transmission levels that require long battery lives the world.
and that operate unattended for long periods of
Operators and equipment vendors are collaborating
time. Some of the early LPWA network deployments
to help drive the development of 5G standards
used unlicensed spectrum, including Ingenu, Sigfox
and are already planning early-stage deployments.
and LoRa. Sigfox has deployed networks in most of
GSMA Intelligence forecasts that 5G networks will
the major markets around the world, having recently
cover around a third of the world’s population by
announced a deployment in Japan.
2025. However, 5G will be one of a range of cellular
New opportunities for operators are emerging from and wireless technologies set to co-exist in a multi-
3GPP-approved LPWA standards in 3GPP Release 13 device, multi-network future. Rather than operating
(Q2 2016) in licensed spectrum using their existing as separate networks, 4G, 4.5G and 5G are likely to
LTE or GPRS networks. These standards cover LTE be integrated into a single network architecture. This
Machine-Type Communication (LTE-M), Extended architecture may also integrate radio technologies in
Coverage GSM IoT (EC-GSM-IoT) and Narrowband unlicensed spectrum, such as Wi-Fi.
IoT (NB-IoT). Both LTE-M and NB-IoT run on LTE
Small cells and network densification will be key
networks, while EC-GSM-IoT runs on 2G. The global
elements of these future network deployments.
addressable market for LPWA applications is large,
These fully integrated multi-vendor, multi-
totalling around 1.4 billion connections by 2020,
technology HetNets (heterogeneous networks),
with some industry watchers forecasting 5 billion
connecting a broad range of devices, will mean
by 2022.
high levels of complexity in terms of network
Operators across the world are now beginning to management and will pose new challenges
deploy networks and services using these new for operators and other ecosystem players. 5G
LPWA standards, with a focus on using their existing will require a new, software-centric, network
LTE network infrastructure. For example, Verizon architecture and for operators to build a broader
is launching an LTE-M network, with the goal of open ecosystem to develop new business models
nationwide coverage by mid-2017. The company and use cases.
believes it will make its LTE network roughly as
Mobile driving innovation and growth 27THE MOBILE ECONOMY 2017
2.2.2
Embracing the move to open
Many players in the broader mobile ecosystem have Telecom Infrastructure Project (TIP), including Nokia
already adopted open innovation strategies and and Cisco.
embraced the power of collaborative partnerships,
These trends reflect a more fundamental shift in
particularly those in the app economy and the
innovation and the spread of the ‘open’ concept
mobile internet. Open strategies are now being
down to the network layer itself. Operators are also
embraced by a number of equipment vendors, for
now embracing the move to open innovation, with
example Huawei’s Open ROADS initiative. A number
several joining collaborative initiatives such as TIP
of equipment manufacturers have joined the
and the Open ROADS community.
Figure 13 Source: GSMA Intelligence
The network layer and the shift to open
Access and
spectrum
(unlicensed options) Equipment
Moving to
Network APIs softwarisation of
controls
BA
S
SE
N
S TAT I O
BA
O
S
E SE
C
R
ET NT
N
ROLL S TAT I O
E
N
R
WORK CO
BA
S
SE
N
S TAT I O
The rapid pace of technological development and customers, these trends will allow a faster pace
open innovation promises a paradigm shift in future of innovation and raise the prospect of lower cost
networks, leading to a world of heterogeneous operating models for operators at a time when
networks where multiple network technologies margins and cashflows remain under pressure.
co-exist. This creates the opportunity for mobile
IoT and the prospects of 5G deployments have
operators to further support start-ups and
changed the outlook for network API utility. Both
new business models, whether through direct
require partnerships for success, and a number
partnerships or the use of open APIs, access
of new use cases come into play with the shift of
channels, incubator programmes or direct funding.
networks to a platform model. As an example, there
Operators can play a crucial role as enablers of open
is an increase in value to be gained in moving from
innovation, which would allow them to capture a
traditional M2M to a full service model by allowing
greater share of value from these future innovations.
enterprise customers to plug into the host network
Operators are already developing new business through custom APIs. The extension of this is to
models that leverage these trends in open networks, adopt a more decentralised model of network
to offer new platforms and innovative new services. service, in effect bringing cloud principles to mobile
As well as opening the door to new services for networks through edge computing.
28 Mobile driving innovation and growthTHE MOBILE ECONOMY 2017
2.2.3
Identity and messaging as a platform
Platforms have been at the heart of most of collaborators and other platform users are able to
the successful ecosystems created in the digital target each other’s customers. While this may result
economy, but the mobile operator community in less control and lower margins for each individual
has had limited success in deploying successful player, the reduced overall costs, ability to scale
platforms that have scaled and found a route to rapidly and increased rate of innovation afforded by
monetisation. One challenge has been a reluctance open standards will usually outweigh any benefits of
to embrace the opportunities of open standards a proprietary platform.
and collaboration, as well accepting the fact
The trade-off of scale versus value leakage by
that competition on digital platforms is often
opening up proprietary control points such as a
asymmetric.
network or database to third parties is not a new
Collaboration and open standards allow platforms to one. However, the developments in the broader
scale rapidly – a key success factor when competing digital ecosystem over the last 10 years clearly show
digital platforms have already achieved significant the benefits of an open approach. Amazon, eBay,
scale. Collaboration and the nature of asymmetric Netflix, Uber, Facebook, Google, Twilio and the
competition mean that on an open platform, the emerging fintech cohort are all testament to this.
There are two opportunities for operators to build
collaborative and scalable platforms:
Identity and access management
In a multi-network, multi-device world with operators will need to collaborate as an industry
increasing cyber-security threats, the need to to achieve the sufficient scale required to offer a
accurately identify people and/or devices for compelling proposition to service providers. The
secure access has become more urgent than ever. industry has an opportunity to collaborate on an
There are two key problems that the ecosystem identity platform to provide a common interface
requires to be solved: validating the ‘true’ identity of between operator-led digital identity services
people (allowing access to certain actions) and the and service providers to minimise technical and
challenge of access management (making sure the commercial fragmentation.
right devices access the right networks for the right
Mobile Connect is an example of how operators
reasons).
have come together as an industry to collaborate on
Operators are well placed to solve both these identity. This is a global and federated solution for
challenges for the mobile ecosystem due to their mobile phone-based authentication, authorisation,
unique range of credentials: network credentials identity and attribute services. With a potential
(including the SIM, mobile number and mobile user base in excess of 2.8 billion, Mobile Connect
subscriber/device identity number), customer offers the potential of a scale solution for digital
account credentials (including customer account identity. It is built on OpenID Connect − a widely
data, point of presence locational data and billing) used open standard that can be delivered either by
and personal credentials (such as individual open source platforms, making it simple and cost
biometrics and PIN codes). effective, or bespoke platforms. Mobile Connect is a
good starting point to provide a holistic proposition
To compete effectively with the internet giants
throughout the identity lifecycle, with future
already offering authentication for both their
evolution likely to see it evolve into a platform-
proprietary and third-party service providers,
orientated product.
Mobile driving innovation and growth 29THE MOBILE ECONOMY 2017
Messaging as a platform
The leading IP messaging platforms have achieved operators representing more than 1.5 billion users
significant scale, with the total global user base demonstrated the potential to build an ecosystem
approaching 4 billion. Some of the most successful around the platform.
platforms such as WeChat have proved the potential
Mobile operators have a unique authority to position
commercial success and value of ‘messaging as a
themselves at an important junction between
platform’ to consumers and businesses/brands. In
subscriber and bot technology interactions,
fact, such ecosystems are transforming the way
with messaging gateways that provide chatbot
consumers and businesses interact – from the
functionality via SMS or RCS. Operators also have
current model of apps and web search to a unified
several key advantages that only they can claim,
experience for search, interaction and payment of
such as network reliability, global interoperability,
services in one spot: messaging
service ubiquity and, perhaps most importantly,
Rich Communication Services (RCS) is a GSMA- subscriber trust enabled by security and privacy
backed technology for advanced messaging management. Ensuring a secure network will be
services built on an IP multimedia subsystem especially important as chatbots move into the
(IMS) backbone, including video calling, presence, enterprise applications space. In organisations
photo sharing and enhanced messaging. In operating in the financial or healthcare sectors, there
2016, announcements supporting RCS and the are also complex legal requirements for protecting
universal profile2 from leading handset operating information stored on and exchanged
system providers, handset suppliers, and via applications.
2. RCS Universal Profile Service Definition Document, GSMA, 2016
30 Mobile driving innovation and growthTHE MOBILE ECONOMY 2017
2.3
Mobile contributing to jobs and
economic growth
For the purposes of this analysis the mobile by measuring their value added to the economy,
ecosystem consists of mobile network operators, including employee compensation, business
infrastructure service providers, retailers and operating surplus and taxes.
distributors of mobile products and services,
In 2016, the total value added generated by the
mobile handset manufacturers and mobile content,
mobile ecosystem was around $1 trillion (or 1.4% of
application and service providers. The direct
GDP), with network operators accounting for two
contribution to GDP of these firms is estimated
thirds of this.
Figure 14 Source: GSMA Intelligence
Direct GDP contribution of the mobile ecosystem
(2016 $ billion, % 2016 GDP)
665
0.88%
110 90 100
60
0.14% 0.12% 0.13%
0.08%
Infrastructure Mobile Device Distributors and Content, applications
providers operators manufacturing retailers and other services
Mobile driving innovation and growth 31THE MOBILE ECONOMY 2017
This value added footprint changes across regions. (labour costs in particular). Low income countries
High income countries have advanced digital have on average a less skilled workforce, so their
economies, skilled labour and capital so tend to ecosystem configuration typically relies more on
specialise more on value creation in areas such as the parts of the value chain that are more labour
content and services. Medium income markets have intensive, particularly distribution and retail.
competitive advantages in device manufacturing
Figure 15 Source: GSMA Intelligence
Value added footprint by income
Percentage of total ecosystem value added
12% 6% 6% 5% 13% 4%
9% 8%
8%
21% 8%
6%
HIGH INCOME MEDIUM INCOME LOW INCOME
COUNTRIES COUNTRIES 67% COUNTRIES
67%
59%
Device Distributors and Content and
Infrastructure Operators manufacturing retailers services
32 Mobile driving innovation and growthTHE MOBILE ECONOMY 2017
In addition to their direct economic contribution, In 2016, this additional economic activity generated
firms in the mobile ecosystem purchase inputs from a further $430 billion in value add (or 0.6% of
their providers in the supply chain. For example, GDP). The use of mobile technology also drives
handset manufacturers purchase inputs from improvements in productivity and efficiency for
microchip providers and mobile content providers workers and firms. These productivity impacts
require services from the broader IT sector. generated around $1.85 trillion in 2016 (or 2.5%
Furthermore, some of the profits and earnings of GDP). Overall, taking into account the direct,
generated by the ecosystem are spent on other indirect and productivity impacts, in 2016 the mobile
goods and services, stimulating economic activity in industry made a total contribution of approximately
those sectors. $3.3 trillion in value added terms, equivalent to 4.4%
of global GDP.
Figure 16 Source: GSMA Intelligence
Total contribution to GDP
2016 $ billion, % 2016 GDP
1,865 3,320
2.5%
430 4.4%
360 0.6%
665 0.5%
0.9%
MOBILE RELATED INDIRECT PRODUCTIVITY TOTAL
OPERATORS INDUSTRIES IMPACT
MOBILE ECOSYSTEM
Mobile driving innovation and growth 33THE MOBILE ECONOMY 2017
Employment and public funding
In 2016 mobile operators and the ecosystem generated by the mobile sector. Furthermore, the
provided direct employment to more than 11 million wages, public funding contributions and profits paid
people globally. Economic activity in the ecosystem by the industry are spent in other sectors, which
also generates jobs in other sectors. Firms that provide additional jobs. In 2016, around 17 million
provide goods and services as production inputs for additional jobs were indirectly supported in this way,
the mobile ecosystem (for example, microchips) will bringing the total impact (both direct and indirect)
employ more individuals as a result of the demand of the mobile industry to more than 28 million jobs.
Figure 17 Source: GSMA Intelligence analysis
Employment impacts
Jobs (millions)
17.3 28.5
1.3 11.2
4.7
1.5
3.1
0.7
INFRASTRUCTURE OPERATORS DEVICE DISTRIBUTION CONTENT, APPS DIRECT INDIRECT TOTAL
PROVIDERS MANUFACTURING AND SERVICES
Note totals may not add up due to rounding.
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