Socioeconomic Implications of Mobile Technology
on Emerging Markets – The Case of Egypt
(Work-in-progress)
Sherif Kamel, The American University in Cairo, Egypt
Amira Farid, The American University in Cairo, Egypt
LA Mobility Roundtable
1-2 June 2007
Los Angeles, California, USA
Overview – Mobility in Telephony





Way of living much more than a telephone/communication
device
Increasing dependence on value added services (SMS,
MMS, voice mail, video conferencing)
Increasing demand for faster, advanced, more efficient
services
Evolving trends such as convergence
Establishing a user-friendly platform for mServices including
mBanking, mGovernment, mLearning, etc…
Issues to Consider…

Environmental factors (cultural and organizational) differ
across different communities





Location-free workspace (telecommuting)
Social networking (remotely)
Serving underprivileged communities (opportunities)
Use of IT (transfer and adaptation in the context of
developing nations) – problems of awareness, introduction
and diffusion
Capitalizing on developed countries experiences and lessons
Global Growth of Mobile Technology

Continuous growth and development (1 billion users in 2002 and
estimated to reach 2 billion users by 2009)






Diversity in access and services used (United Nations, 2006)
Growth in ICT diffusion worldwide was fueled by mobile technology
Increasing desire for value-added content and advanced features
and services
Context of developing nations: mobile power user in emerging
markets (becoming digitally connected)
Mobile services compensate for the lack of infrastructure (financial,
technology)
Developing nations population make 20% of the world’s mobile
phone users (twice the rate of growth compared to developed
countries)
Regional Growth in Mobile Technology


MENA region population (310+
million in December 2006; 4% of
global population)
Real impact of mobile technology
exceeds the rates of penetration



Innovative and entrepreneurial
ways in which technology was
extended beyond individual
ownership
Thousands of jobs
created/companies established
PPP models driving the
telecommunications sector
(liberalization of telecom and role of
the private sector and the civil
society)
40
35
30
25
20
15
10
5
38
27
12
1999
16
17
20
21
2000
2001
2002
2003
2004
Number of Mobile Operators
2005
Regional Growth in Mobile Technology





MENA region is price sensitive (large income disparities, increasing
population)
Young population (65% under the age of 35)
December 2006, 90 million mobile subscribers (5% of current
subscribers base)
Penetration rate of 30% expected to increase in 2008 (33%)
Top Value added uses




Messaging (SMS and MMS)
News
Entertainment
Information (value-added content): banks, stocks, news, sports,
weather, etc…
Case of Egypt



Largest country in the MENA region (76+ million)
GDP growth 5.7%
Labor force (21.8 million)



32% agriculture sector
17% industry sector
51% services sector
Social Class
Population Percentage
Monthly Income
A
5%
Above 550US$
B
6%
Between 238-550US$
C
17%
Between 159-238US$
D
28%
Between 84-159US$
E
44%
Below 84US$
Evolution of Telecom in Egypt




Over 150 years of telecommunication services (telephony
introduced in 1881)
Mobile telephony was introduced in 1996
Telecom liberalization started in 1998
Increasing role of private sector mobile operators (Vodafone and
MobiNil), most recently Etisalat in May 2007
Mobile Telephony Diffusion in Egypt




Initially very high connection fees (high revenue during early period
of rapid growth)
Pre-paid subscription was welcomed for lower income groups
(major driver of growth – mass market strategy)
Contract subscriptions started to fall in 2001 (age, preferences)
Shift of strategy from a subscriber growth strategy to more focus
on value and profitability



In 2001, SMS generated less than 1% of total operator revenue, now it
is more than 6% (individual/organizational)
Encouraging other value added services including MMS, voice mail,
email, etc
In 2005, mobile subscribers exceeded the fixed lines subscribers
base
Mobile Subscribers
Decade of Growth (1997-2007)
Year
Number of Subscribers
(000)
Growth Rate
1997
58.2
---
1998
119.4
205.15%
1999
476
398.66%
2000
1353
284.24%
2001
2909
215%
2002
3951
135.82%
2003
5034
127.41%
2004
6370
126.54%
2005
9860
154.79%
2006
17971
182.26%
April 2007
20214
112.48%
Research Focus




Mobile phones are having more impact on countries where the
infrastructure has been less extensive and complete
Mobiles (as a social platform) are having real impact on the
community (cultural element)
Remote connectivity is important in developing nations with limited
resources (transportation and remote communities)
Indirect economic opportunities (sales of products and gadgets,
music downloads, web communities)


5500 jobs in the industry and more than 150000 outside the industry
Mobiles are doing much the same that fixed lines did for the growth
of developed nations (economic growth and job creation)
Mobiles and Socioeconomic Implications






Social Implications
Remote connectivity to social
networks
Ability to include less digitally
literate communities
Optimize the use of time
irrespective of distance as a
barrier
Engaging and empowering
community members
Privacy issues!
Learning tool – new generations



Economic Implications
Engine for long-term economic
growth
Serving as virtual offices to
carpenters, painters, electricians,
small-scale trading (SMEs)
Liberalization of telecom services
with related economic
opportunities
Research Hypotheses
H1
Mobiles are becoming an integral part of life and a medium for entertainment rather than being only a medium
for communication
H2
Mobiles are leading to more flexibility in terms of everyday activities, planning, decision making as well as
finishing up different tasks and responsibilities
H3
Relying more on mobile telephony in accessing each other, led to having face-to-face interactions becoming
less important, hence weakening social relationships
H4
Value added services such as chatting, MMS, and SMS are becoming increasingly popular especially among
younger generations leading to the formation of relationships previously uncommon within the society in the
rural areas
H5
Mobiles are perceived as a status symbol, and thus all social segments have strived to own mobiles to avoid
being socially excluded from some social networks
H6
Mobiles lead to the invasion of privacy and to the removal of the distinction between personal and work cycles
H7
More businesses (especially in the informal sector such as small retailers and manufacturers) are depending
on mobiles due to its role in connectivity and positive economic gains (higher profits, higher turnover and
increased efficiency)
H8
Mobiles have contributed to the labor market by creating additional job opportunities and decreasing
unemployment rates
Research Methodology

Empirical research through a field study instrumented via





Questionnaire
Interviews
Sample was randomly selected (classes A, B and C)
Mobile users from the two main operators (Vodafone and MobiNil)
Sample size targeted was 500

350 (English) and 150 (Arabic)
Initial Findings – Population Sample






Response rate 57% (284 subscribers)
Gender relative balance (45%/55%) Females/Males
Income group balance: 81 (A); 133 (B); 70 (C)
Age distribution was slightly higher among university students and
fresh graduates (43.5%)
193 respondents (73%) were university graduates
Sectors/services covered included: telecom, health, marketing,
education, automotive, tourism, trading, engineering and SMEs
Research Findings

H1: Mobiles are becoming an integral part of life and a medium for entertainment
rather than being only a medium for communication



72% believe that mobility is an integral part of life (irrespective of income and social
group)
Focus on entertainment services and not just communication
Negative correlation between age and use of value added mobility entertainment
services
Research Findings

H2: Mobiles are leading to more flexibility in terms of everyday activities, planning,
decision making as well as finishing up different tasks and responsibilities



Confirming Gillard and Wale (2003) strategy that mobiles have helped accommodate
to unforeseen short term changes, opportunities, preferences and moods
Contributing to telecommuting (accommodating to overcoming increasing traffic
problems)
Creating employment opportunities with an emphasis on SMEs
Research Findings

H3: Relying more on mobile telephony in accessing each other, led to having
face-to-face interactions becoming less important, hence weakening social
relationships




Findings contradicted with the hypothesis
Social relationships seem to have strengthened confirming Swallowe (2002) that
mobiles make people more sociable (personal and professional levels)
Time and geographical barriers smoothly removed (Matsuda, 2005)
Frequency of interaction increased – irrespective of time and distance (cultural
element)
Research Findings

H4: Value added services such as chatting, MMS, and SMS are becoming
increasingly popular especially among younger generations leading to the
formation of relationships previously uncommon within the society in the rural
areas



Negative correlation between age and adoption of value-added services
SMS is becoming very popular – average 50-60 messages sent/received everyday
among the sample tested
Enforcing the notion that mobiles are becoming a social platform
Research Findings

H5: Mobiles are perceived as a status symbol, and thus all social segments have
strived to own mobiles to avoid being socially excluded from some social networks




20% agreed with Swallowe (2002) study that indicated that people
show off their mobile phones in public as a status symbol
21.5% indicated that it was a cool gadget to display but 50% felt that it
did not add to one’s prestige and self-esteem
66% thought it was beneficial
41% believe that not owning a mobile could exclude them from
specific social networks (SMS being the main method to
communicate, especially for younger generations and more
specifically class B and C)
Research Findings

H6: Mobiles lead to the invasion of privacy and to the removal of the distinction
between personal and work cycles


When, where and how to use mobile phones (Gillard and Wale)
71% believe that mobile phones are an imposition on privacy and on
one’s personnel space
Research Findings

H7: More businesses (especially in the informal sector such as small retailers and
manufacturers) are depending on mobiles due to its role in connectivity and
positive economic gains (higher profits, higher turnover and increased efficiency)



70% of the respondents used their mobiles for conducting business
and helped conducted it in an easier way
52% felt that mobiles led to their work becoming more efficient and
profitable
There was a positive correlation between age and business
improvement using mobiles (the higher the age bracket, the more the
positive impact of mobile phones on business)
Research Findings

H8: Mobiles have contributed to the labor market by creating additional job
opportunities and decreasing unemployment rates



60% of the respondents believe that mobile phones have influenced
the economy positively
84.5% believe that mobile companies operating in Egypt have aided
the creation of many new jobs
77% felt that mobile operators led to new job creations outside the
telecomm sector
Conclusion


Mobility is having social and economic implications on individuals with
varying degrees
Socially, old-accustomed to values are being transformed and exchanged
with new emerging ones



Economically, implications are affecting individuals, organizations and the
society





More of an evolution of different norms and values adapted to emerging
technologies
Formation of new attitudes and behaviors
Investments
Businesses/SMEs
Job creation
Mobility penetration helps pave the way to other ICT platforms and tools
With the growth of mServices, massive potentials and growth is expected
in different business process outsourcing domains