Africa invariably grabs the headlines whenever the mobile revolution is discussed. Commentators rightly point to the extraordinary rate at which mobile phones are being adopted and the impact the technology is having on lives and livelihood.
But while no one can doubt the transformation underway – or the innovation it is unleashing – it is a revolution still based largely on second-generation technology. If you want to see what the future holds for emerging markets, it is Latin America which holds more of the answers.
For the communication revolution underway across Latin America is driven by adoption of smart-phones. Smart-phone penetration had already reached over 34 per cent of the market by the end of last year. Another 16m smart-phones were bought in the first quarter of this year – a 53 per cent rise on the same period of 2012.
With mobile coverage now almost universal, the result is, as the World Bank said last year, that even in the remotest parts of Latin America you will see top-of-the-range smart phones being used. This is leading to a rapidly-growing demand for sophisticated services which go beyond the relatively simple connections which can still characterise mobile use in much of Africa.
Indeed, in some ways consumers in Latin America are already ahead of their counterparts in North America and Europe. According to a recent study carried out by the international mobile trade body, the region has the highest proportion of shoppers who say that information accessed through their smart phone influences the goods they buy.
So it is no surprise that we are also seeing Latin America move with astonishing speed to herald what is called the new “ICE Age” where information, communication and entertainment are offered together through mobile services. Changes which took a decade to happen in the United States and Europe are taking place within a couple of years.
It is not just in the high-profile countries like Brazil or Mexico where this revolution is underway but right across the continent. But while meeting this appetite for new services is bringing new opportunities, there are also old obstacles in the way.
For while consumers are open to new services and new ideas, the markets which serve them are still relatively closed. State-run enterprises can still control large sectors. Giants Telefónica and América Móvil have built unhealthily dominant positions in some countries.
Without competition, we know the market will fail consumers. It is competition which drives innovation, choice and reduces prices. It is why the latest market developments in Colombia hold out such hope.
Colombia is, as US Secretary of State John Kerry said in August, a “world-class success story”. After decades of terrible conflict, peace and security is returning. This stability, pro-business structural reforms and demand for its rich natural resources has delivered growth far ahead of the regional average. Colombia is now Latin’s America’s fourth biggest economy.
This economic success is slowly being translated into improved living standards. Colombia is still a very unequal society. But spending power is increasing rapidly and building a fast growing and young consumer class.
But while Colombia’s government has gone a long way to open up the economy to competition to deliver the services they want, there remain formidable obstacles. It is why the unprecedented merger between Millicom’s Colombian business Tigo and UNE, the state-owned telecoms provider based in Medellin, holds such significance for the future.
Winning local support for the merger was not easy. Unions were resistant to change. But the authorities in Colombia’s second city gave approval after being convinced of the employment benefits, the investment it would provide to improve the mobile infrastructure and the rich potential to improve services for their citizens.
The new business will immediately become the third biggest provider in the country. We are relishing the challenge of innovating to develop and bring new services. By having the courage to shake-up the market and provide new competition, Colombia has shown the way for other countries to follow to the benefits of their economy and their citizens.
Hans-Holger Albrecht is the President and Chief Executive Officer of Millicom
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