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Africa: Green Power for Mobile
AfricaFocus Bulletin
Oct 27, 2009 (091027)
(Reposted from sources cited below)
Editor's Note
"The GSMA's Green Power for Mobile (GPM) programme estimates there
are 485 million mobile users without access to the electricity
grid, a factor which severely limits usage opportunities. The
report identifies a range of charging choices available that, if
implemented effectively, will extend service availability and could
boost average revenues per user by 10-14%." - Balancing Act Africa
News Update
A new report from the GSM Association Development Fund (the GSMA is
the worldwide organization of mobile phone networks, representing
more than 750 mobile networks across 219 countries and territories)
estimates that there is a $2.3 billion business opportunity in the
fact that almost one-third of the 1.5 billion people around the
world without access to the electricity grid are now users of
mobile phones. Providing inexpensive or free charging solutions,
such as through solar-powered phones or charging systems could
improve access, help the environment, and also increase revenues
for the mobile phone operators.
This AfricaFocus Bulletin contains a brief news account from
Balancing Act News Update (http://www.balancingact-africa.com), as
well excerpt from the report, which was released on October 20.
Another AfricaFocus Bulletin published today on the web, but not
sent out by e-mail, contains several updates on ICT Access in
Africa, including lower internet rates in Tanzania and Botswana,
new opportunities for use of Google Earth in Africa, and the latest
Information Economy Report from UNCTAD. See
http://www.africafocus.org/docs09/ict0910.php
For previous AfricaFocus Bulletins on information and
communications technology issues, and a custom search of
recommended websites, visit http://www.africafocus.org/ictexp.php
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Off-Grid Charging for Mobile Phones to Power US$2.3bn Market
Opportunity in emerging markets
Balancing Act News Update
Issue no 477
23rd Oct 2009
There is a US$2.3 billion opportunity for mobile operators through
the provision of off-grid charging solutions such as solar phones
or external solar chargers in emerging markets, claims a new report
from the GSMA.
The GSMA's Green Power for Mobile (GPM) programme estimates there
are 485 million mobile users without access to the electricity
grid, a factor which severely limits usage opportunities. The
report identifies a range of charging choices available that, if
implemented effectively, will extend service availability and could
boost average revenues per user by 10-14%.
"We are extremely excited that operators are able to provide people
in off-grid areas with solutions to power mobile phones, as this
will not only improve quality of life and access to information but
can also act as a unique and significant opportunity to fuel
economic growth," said David Taverner, GPM Programme Manager, GSMA.
"The figures we used to calculate the market size of off-grid
charging solutions were on the conservative side, so the actual
benefit to mobile operators could in fact be much greater than the
US$2.3 billion we are estimating. This preliminary market overview
is the start of what the GSMA believes will be an important area of
industry growth in the coming years."
"Mobile networks are increasingly being deployed in rural areas of
emerging markets, where consumer access to the grid is at best
limited and unreliable and in many cases non-existent," said
Windsor Holden, Principal Analyst, Juniper Research. "As Juniper
Research has observed, usage will in large be dependent on
consumers being able to charge the handset through alternative
methods, and solar-powered chargers in particular could become a
key means of facilitating reliable access to mobile services in
these markets."
The research has found that there is significant interest in off
grid solutions - 60% of mobile operators interviewed already have
or are exploring off-grid charging initiatives - but there is
currently only limited understanding about the full scope of
options and the associated social and business benefits. Pioneers
Digicel and Safaricom, however, have demonstrated how the consumer,
the environment and the mobile operator can reap the benefits of
off-grid charging solutions. Charging Choices provides initial
exploration into alternative charging options and examines the
types of solutions currently available on the market.
As part of its GPM programme, the Development Fund conducted the
study over a three-month period from June through August 2009. It
included extensive desk research to identify emerging vendors,
their products, and other players in the field, and dozens of
interviews and surveys of mobile operators and vendors covering 50
countries across Africa, Asia and Latin America.
The GSMA Development Fund launched its GPM programme in September
2008 to extend mobile beyond the grid, with two primary objectives:
to systematically reduce diesel consumption by mobile operators
through the promotion of renewable energy technologies and energy
efficient base stations and to remove the barriers to handset
charging in off-grid regions.
The market opportunity is calculated by taking the 485 million
people, at an average ARPU of US$4 (GSMA estimate, based on
Wireless Intelligence data) and an increase of 10%, on annual
basis.
Green Power For Mobile: Charging Choices
Off-grid charging solutions for mobile phones
[Excerpts: Full 17-page paper available at:
http://www.gsmworld.com/documents/charging_choices.pdf
For a press release see
http://www.gsmworld.com/newsroom/press-releases/2009/4041.htm]
GSMA Head Office
Tel: +44(020) 7759 2300 Fax: +44(020) 7759 2301
Email: [email protected]
Web: http://www.gsmworld.com/developmentfund
Blog: http://devfundblog.org/
1 Introduction
There are more than 4 billion mobile connections worldwide. Over
the coming years, many more millions of people at the "base of
the economic pyramid" are expected to acquire mobile phones,
greatly benefiting their lives, business activities and access to
information. However, most of these new subscribers will not have
direct access to electricity. This makes it more challenging and
expensive for them to charge their mobile phone, not to mention
to power the myriad of other daily functions for which
electricity is important such as lighting, cooking and
refrigeration.
The GSMA Development Fund believes that the issue of
electrification is extremely relevant to mobile operators.
The innovative nature of base of the pyramid markets has spawned
creative solutions to the charging problem-primarily via
entrepreneurs who provide electricity on a per-charge basis,
powered either by their own access to the grid or through the
use of portable car batteries. But now is the time for the mobile
industry - including operators, handset vendors, and renewable
energy providers - to better understand and address the challenge
of electrification. Excitingly, it seems likely that renewable
energy devices, such as photovoltaic chargers, will provide a
practical and environmentally friendly fix. These solutions will
therefore be beneficial to low income consumers, the planet and
the bottom line.
As part of its Green Power for Mobile programme, the Development
Fund has conducted research into off- grid charging solutions for
mobile phones.This study was conducted over a three month period
(June-August, 2009) and included extensive research to identify
emerging vendors, their products, and other players in the
field. The process also included dozens of interviews and surveys
of mobile operators and vendors covering 50 countries across
Africa, Asia and Latin America.
The research has found that there is significant interest in
off-grid charging solutions from mobile operators - over half
those interviewed have already introduced, or are considering
introducing off-grid charging solutions in the near term. At the
same time, there is only limited understanding about the full
scope of options and the associated social and business
benefits. The industry is eager for support to help accelerate
this new area of activity.
This publication is intended to provide initial market
information and a framework for decision-making about off-grid
charging solutions. More practically, it lays out a series of key
questions that the GSMA refers to as "Charging Choices" - to
help companies think through the possibilities for off-grid
charging. The paper is not a fully exhaustive review of all the
existing players or initiatives in the market, and the
Development Fund is not endorsing the products or companies
reviewed herein. This publication is, however, a start of what
the GSMAbelieves will be an important and exciting area of
industry growth in the coming years.
The Universal Charger
The GSMA is leading an initiative known as the 'Universal
Charging Solution (UCS)' - a uniform charging method for all
phones (the micro USB) which will be standardised in 2012. The
energy-efficient chargers will result in an estimated 50%
reduction in standby energy consumption, the potential
elimination of up to 51,000 tonnes of duplicate chargers and the
enhancement of the customer experience by simplifying the
charging of mobile phones.
The Off-Grid Mobile Customer Today
How do mobile phone owners charge their phones if they don't
have household access to electricity? Across the developing
world, charging mobile phones on a pay-per-charge basis is
prolific. For the average consumer, it is typical to take their
phone to a local shop and leave it (or just the battery) to
charge whenever power is low.
A GSMA field study in Kibera, Kenya (Nairobi's largest slum)
indicated that the price of a mobile charge was KES 20
(approximately US$0.25) and required an average of two hours to
complete. The frequency of charges per customer ranged between
one per day on the high end and once per week on the low end.
Presuming an average of three charges per consumer per week
(twelve charges per month) it appears that the typical mobile
consumer in Kibera spends US$3.00 on charging per month. This
is a notable sum, given that the same customers spend between
KES 4-16 (US$0.18-US$0.21) per minute for voice calls (depending
on the tariff and time of day) and a monthly total of KES
400-500 (US$6.00) per month on airtime. The implication is that
one third of total spend by off-grid mobile subscribers goes on
power, rather than airtime.
The Business Case for Off-Grid Charging Solutions
Key facts
Nearly 500 million people worldwide have a mobile phone
connection but no access to the electricity grid
Operator tests show that off-grid charging solutions can
increase ARPU by 10-14%
This represents a US$2.3 billion market opportunity for mobile
operators
There are 1.6 billion people in the world without access to grid
electricity. The GSMA and Wireless Intelligence research
estimates suggest that 30% of those people have a mobile phone
connection. This means nearly 500 million people currently have
access to a mobile phone but do not have their own means of
charging it.
Without reliable charging solutions, mobile phones end up
running out of power. And when mobile phones are switched off,
it results in missed calls and reduced airtime revenues for
mobile operators.
The GSMA Development Fund believes that there is a commercial
reason for mobile operators to deploy off-grid charging
solutions. Recent field trials in Haiti and Madagascar suggest
that when off-grid subscribers acquire mobile charging
solutions, usage and therefore ARPU increases by at least 10%.
Three early examples of markets where off-grid charging
solutions are making an impact follow:
Example 1: Digicel
[Papua New Guinea - see full report]
Example 2: Toughstuff Madagascar
"Solar charger increases phone usage by 0.5-1.5 minutes per day"
According to ToughStuff - a UK based company that produces solar
products for low income families in developing countries � the
provision of solar mobile chargers can increase mobile phone
usage by 0.5 to 1.5 minutes per day. ToughStuff's analysis comes
from face to face consumer research in Madagascar in early 2009.
In developing markets where mobile phones are often used for
only a few minutes per day, this represents a significant
increase.
Example 3: Safaricom Kenya
"Lack of power means missed ARPU"
In August 2009, Safaricom launched a solar phone - a similar ZTE
handset to the one launched by Digicel. The company had been
looking for alternative charging solutions for a long time,
trying to match quality and price.
Since only 23% of Kenyans have access to the electricity grid,
but mobile penetration has moved beyond 40% of the population,
Safaricom has a lot of off-grid subscribers. They hope to bridge
the gap by offering consumers the opportunity to buy low cost
solar handsets. The solar handset is retailed
at Shs2,999 (US$40) - by comparison, the cheapest normal handset
costs around Shs1,800 (US$25).
Safaricom has also deployed public phone charging facilities at
several rural base stations.
A US$2.3 Billion Market Opportunity
These examples suggest an exciting commercial opportunity exists
for mobile operators. Even when applying conservative estimates
about the increase of ARPU resulting from charging solutions
(10%), and the average airtime spend of the off-grid customer
(US$4 per month), for 500 million off-grid consumers the
expected increase in direct revenues to operators would total
US$2.3 billion per year.
"Charging Choices"
When deciding on which off-grid charging solution to implement,
there are four important choices to consider:
(1) Who will use it? Is the solution designed for use by an
individual, or by a larger number of people?
Off-grid charging solutions generally fall into two broad
categories - individual solutions and community solutions.
Individual solutions are the property of the consumer, and
include stand-alone chargers that can be plugged into different
phones (or other devices), or solutions that are integrated into
the handset. The latter can, for example, come in the form of a
solar panel on the back of a phone, a wind-up mechanism
integrated into the phone, or a handset that runs on overthe
-counter batteries.
Community solutions provide charging possibilities for multiple
users. This can be in the form of a charging dock attached to a
base station (cell phone tower), or a solar charged charging
station located in a village centre. Community solutions tend to
be operated by mobile operators or third parties with
pre-existing distribution networks in rural communities, such
as non-governmental organisations. Community solutions allow for
a larger number of people to be reached, while reducing the cost
of the solution per user.
(2) Who will own it?
Will the solution be owned by a consumer, an entrepreneur, a
community, a technology company, a mobile network operator or an
NGO?
Consumers value direct ownership of solutions, however
individual ownership means the investment requirement falls
fully onto the consumer, which even at a cost of US$10 or US$20
may be a major barrier to adoption in low income areas.
Alternatively, a charger may be owned by an entrepreneur who
runs a small charging business, the proceeds of which pays back
their initial investment. For community solutions, the upfront
investment is easier to manage since costs are spread across a
larger company or group of people, but joint ownership does mean
that ongoing access and upkeep responsibilities for the solution
are more complicated.
(3) What will it charge?
Will the solution charge only one phone, a few phones, or can it
also charge other devices such as lights and radios?
Since phone charging is only one of the reasons off-grid people
need electricity, the possibility of charging other devices with
a solution can contribute to its popularity with consumers. This
is the case with both auxiliary chargers and community solutions
that provide standard sockets. When the charger is integrated
into the phone, its use is limited to the phone itself. The
advantage is however that the charger is always present, which
makes it easier to keep the phone charged and reduces the risk
of loss or damage.
(4) Who will finance it?
Will the consumer pay for the solution, or the entire community?
Will the operator subsidise it, or will it be necessary to
provide microfinance?
The price consumers ultimately pay for a charging solution is a
very important factor in the uptake of the solution. People
living in off-grid areas are typically low income and their
spending capabilities only allow for small, frequent payments.
But to make a large investment - even US$10 or US$20 worth - is
a trickier proposition. To pay a small amount for charging a
phone once a week is more feasible than making a significant
one-off investment.
The growth of mobile uptake among low income consumers has been
accelerated by the provision of ever smaller airtime top-up
values. Mobile operators have reduced the minimum purchasable
amount to as little as US$0.03, which can be bought from airtime
agents via text messaging (SMS). According to the The Next 4
Billion report, authored by the World Resources Institute and
the World Bank, this payment innovation has allowed for the
rapid growth of mobile communication services to millions of low
income people. The future growth of charging solutions may
depend on the ability of the mobile industry to enable similarly
small, incremental payments for power.
...
Operator Interviews: Key Findings
Mobile operators were interviewed on their current practices and
preferences in the field of off-grid charging solutions. Eighty
per cent of the respondents were either the decision maker on
off-grid charging solutions within their company or were in a
position to influence the decision maker.
The most important findings from the operator interviews are
summarised here:
- .60% of mobile operators surveyed already have off-grid
charging initiatives or are investigating off- grid charging
solutions.
The market is gathering momentum.
- 78% of mobile operators surveyed prefer a combination of
individual and community solutions.
Both individual and community solutions are important to trial.
-
*Only 30% of mobile operators surveyed had knowledge of current
market prices for individual solutions. There is a perception
that the cost of deploying off-grid charging solutions is high.
More research and trials are necessary to provide clarification
on the economics of off-grid charging.
-
*Price, plus the ability to charge non-mobile devices (e.g.
lights) were rated as the two most important features for
individual charging solutions.
The importance of the ability to charge other devices indicates a
preference for stand-alone charging solutions over integrated
versions, such as a solar phone. Current prices however suggest
the opposite, as the cost of an integrated solar phone is lower
than that for an auxiliary charger.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues,
with
a particular focus on U.S. and international policies.
AfricaFocus
Bulletin is edited by William Minter.
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