Research Paper Example: Mobile Communications International Market

Since the turn of this century, there has been a tremendous growth of both the mobile network operators (MNO) and mobile virtual network operators (MVNO). The major global players have pursued various markets from the United States to Europe, Asia, and Africa. The telecommunications sector has emerged as a critical supporter of the economy, facilitating communications as well as employing millions of people globally. As of this year, the five largest MNO in the world served a client base of almost two billion people, employing millions of people. Based on 2015 revenues, American found AT&T was the most significant global firm with income of over $160 billion, closely followed by Verizon which had over $140 billion over the same period (Statista, 2015). Overall, all MNO total revenue in 2016 exceeded the one trillion dollar mark (The Mobile Economy, 2016), all generated by a total of 7.6 billion subscribers, of which 4.6 billion were unique subscribers. Mobile Virtual Network Operators, who role on MNO networks is another telecommunications category that has experienced an arid growth rate over the past few years. They are in direct competition with MNO, with other operators choosing to provide virtual services in other countries with a shift of the whole network infrastructure. On average the MVNO, have experienced more than 9 percent annual growth rate, and that is expected to continue until 2020. That rate is anticipated even to grow further, as the world moves to embrace flexible digital services.

Economic wise, these firms play is instrumental in addressing social-economic challenges in both the developed and developing countries. They are apparently ranked as not just the top employers, but also the best paying in almost every economy. They have provided millions of jobs to people, which is a factor in cutting down unemployment rates. They are also key where it comes to issues like digital and financial inclusion, particularly in developing economies where the banking system is still complex, and out of rich for common people. It is likely that digitization and financial inclusion in developing countries will promote economic and infrastructure development. It will also increase productivity employment across all sectors in any economy. Additionally, expansion of MNO into remote areas have improved access to essential services, where people are not just receiving financial services, but also service related to education, healthcare, security among other.

At the end of 2015, over 1.9 billion people were globally were using mobile banking provided by mobile network providers. Additionally, there were over 60 markets with over two operators offering mobile money services, and dozens of other market were planning to launch the same. Furthermore, the number of services that continued to be digitized based on MNO penetration rate increased rapidly. Globally, over 2.5 billion individuals were using mobile internet, enabling them to access critical information for education, news, and entertainment among other reasons. Despite that high mobile internet penetration, it is still estimated that over 40 percent of the global population has no access to mobile communication and internet connections (Telecommunications a sector in transformation, 2017). The MNO will base their growth prospect on these economies, as it looks to expand into new territories, particularly in developing countries.

The mobile industry contributes over $3.1 trillion to the global GDP, the highest in any company category. This revenue is expected to increase a further $600 billion by 2020, which will be equivalent to 4.2 percent of the global GDP (The Mobile Economy, 2016). Apparently, the MNO/MNVOs ecosystem directly employs over 17 million people globally, and that number will grow to 20 million jobs by 2020. Not just in that, regarding public funding, the mobile industry contributed over $430 billion, helping driving various sectors of the economy globally. MNO s providers also appeared on a top list of the most innovative firms, which have contributed o the emergence of critical services in the past decade. The innovative services range from those providing safe transport systems, financial services, internet penetration, and e-commerce among others.

Evidently, the mobile network industry remains one of the most important when it comes to promoting economic growth, directly and indirectly. Directly it is the provider of millions of jobs globally, offers services such as mobile money transfer and banking, provision of internet and digital services as well as funding public ventures and running corporate social events which continued to impact the society at different levels. Indirectly, digitization has enabled the development of several other mobile related services, like software which continue to influence various communities, promoting economic well-being and improving productivity. Communication services and internet service which they have enabled movement of information, some in a manner that has created jobs and supported a knowledge-based ecosystem. The advantages of flawless flow of information are many, and cannot be exhaustively mentioned here. Either way, regarding promoting the economies, the industry is among the leaders.

Part 2

Handset Market

The mobile handset market has also been overgrowing, with over 4 billion handsets now in the hands of consumers. However, the emergence of smartphones has changed the landscape for mobile handsets. In 2013 alone, over 1.8 billion were sold globally, of those, closer to one billion were smartphones, the first time for the device to outdo the features hone, which had sustained market dominance since the emergence of mobile communications in the 1990s. The leading vendors of mobile phone devices originated from China, with South Koreas Samsung gaining a spot in the top ten. Chinese vendors included ZTE, Huawei, Lenovo, Yulong among others. These manufacturers provided most devices in their home economies and shipping millions of others into overseas markets. Whereas Western economies have approached saturation when it comes to smartphone sales, tremendous opportunities remain in developing countries in Asia and Africa. The figures are likely to continue growing as manufacturers scramble for new markets.

Most of the mobile devices run on the Android software, an open source operating system provided by Google. The android gadgets had a 62 percent market share, followed by iOS ran by Apple, and then Windows run by Microsoft at 36 and 2 percent respectively (MobiForge, 2015). These gadgets were driven consumption of digital contents, with most of them utilizing broadband services from MNOs or MNVOs. In essence, the devices facilitated the numerous economic benefits generated by mobile network operators. For instance, the devices are used by SIM cards to access financial services, run software and make inquiries, all elements which have accelerated economic growth over the past couple of years.

In 2013, the number of people who accessed the internet through smartphones grew by 11 percent. Over the same period, the market share for features phones declined by 6 percent, and the trend has been that way since 2013. The cross elasticity of the two is given by;

Cross elasticity = 11%/-6% = -1.83

A negative cross elasticity denotes that the two products, smartphones, and internet are compliments; otherwise a positive would denote that they were substitutes. In 2011, only ten percent of the global population owned smartphones. The list below shows each the smartphone ownership penetration compared to the population.

Data Source: Daze Information

Notably, Singapore had the highest penetration rate, followed by Hong Kong (Singh, 2011). An interesting feature is that Western Countries had a lower penetration rate than anticipated. However, this situation has rapidly changed over the past few years, and the smartphone ownership, given the lower prices, are now owned by almost every individual in the developed country.

The industry has enjoyed high innovation rates since the turn of the century, but concerns in regulatory frameworks, challenges in privacy and data security continue to serve as hindrances to further innovation. A data breach at Verizon in 2014 exposed over 14 million customers, leaving them vulnerable to scamming and other informational improprieties (Fox News, 2017). The reparations from such cases can be vast and can hamper a firms ability to continue innovating. Every mobile operator, either MNOs or device manufacturer is trying to invest heavily in informational security, resources that would be used to drive innovation in other areas. However, regulatory frameworks have put hindrances in changes outside the telecommunication sectors. For instance, in some countries, mobile banking has failed to kick off due to stringent regulations and legislation.

References

Fox News. (2017). Verizon data breach: 14 million customers reportedly exposed. [online] Available at: http://www.foxnews.com/tech/2017/07/12/verizon-data-breach-14-million-customers-reportedly-exposed.html [Accessed 14 Dec. 2017].

mobiForge. (2015). Global mobile statistics 2014. [online] Available at: https://mobiforge.com/research-analysis/global-mobile-statistics-2014-part-a-mobile-subscribers-handset-market-share-mobile-operators#phone-shipments [Accessed 14 Dec. 2017].

Singh, A. (2011). Only 10 Percent Global Population Owns Smartphone: India And China Are Worse [STUDY]. [online] Dazeinfo. Available at: https://dazeinfo.com/2011/12/15/global-smartphone-penetration-2011/ [Accessed 14 Dec. 2017].

Statista, T. (2017). Top telecom companies worldwide revenue 2015 | Statistic. [online] Statista. Available at: https://www.statista.com/statistics/221382/revenue-of-top-30-global-telecommunication-operators/ [Accessed 14 Dec. 2017].

Telecommunications a sector in transformation. (2017). [ebook] Available at: http://www.ey.com/Publication/vwLUAssets/ey-global-telecommunications-study-navigating-the-road-to-2020/$FILE/ey-global-telecommunications-study-navigating-the-road-to-2020.pdf [Accessed 14 Dec. 2017].

The Mobile Economy. (2016). [ebook] Available at: https://www.gsma.com/mobileeconomy/archive/GSMA_ME_2016.pdf [Accessed 14 Dec. 2017].