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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: chargingchoices@gsm.org
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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