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« Mobile as 7th Mass Media, now comparing ad performance vs 6th Media ie the internet | Main | Robert Redford talks about short films in new media »

February 13, 2008



Data gets old really fast, Tomi. For some of the latest news in what your refer to as the "most advanced mobile services industry", the Philippines, you may want to occasionally visit my blog, Textra Extra ( I'd be more than glad to share my experience in this neck of the woods.


Great post! Maybe you should make a more formal model around this, one that draws some kind of a quarterly "mobility index" per country once you punch in the numbers. Could be a popular thing. Seriously.

My pet peeve about megapixels arose there as a tiny part.. It's pure insanity to have anything over 5MP in a cameraphone, even that's too many. I hate to see the same disease that only leads to unnecessarily big files and degraded image quality affect phones the way it's affecting compact digital cameras. Subsequently I'd say that the people in a country who first have the common sense to break away from the megapixel race deserve a big bonus plus on your index ;)


"I think the mobile service maturity is a good proxy for how mature the mobile industry is in that country." - WOW!


One of the important elements in determining being ahead or being behind: usage is missing. The US is leading in use. In the United States the average amount of call minutes is around 800 compared to around 100 in the EU. This is because the United States doesn't use the Calling Party Pays system, but instead uses Bill and Keep, where you don't pay for terminating.

Terminating fees are blocking any real form of competition between networks by setting a bottom price to the price per minute being equal to (1 - marketshare)* terminating price=min retail price. In reality prices are set way above terminating prices. Funny thing is that the marketshare component means that the larger market parties are benefiting more than the smaller networks. All in all, quite simple to see why the telco's prefer the CPP model, but it doesn't benefit the end-use.

Tomi Ahonen

Hi Roland, Sami, Brendan and Rudolf

Thank you for the comments.

Roland - great site, good info, thanks

Sami - good points. And yes, megapixels are a false promise, but you also know well, that the top end makers are now going with branded high quality optics as started by Nokia and their partnering with Carl Zeiss. LG and Sony also already offer phones with branded optics. Megapixels are not the only way to improve the quality, but are also a relatively fair indicator of an evolution in a digital camera. Certainly early VGA quality stand-alone digital cameras were worse than the "Megapixel" cameras that followd, which were superceded by the 2, 3, five etc megapixel ranges. No counting pixels is not the answer, but for comparisons, its about the only measure we can have for the camera feature?

Brendan - thanks

Rudolf - good point. I do totally disagree with you, but I understand where you're coming from. Certainly one way to measure the industry is by the minutes used of telephone traffic on mobile networks. And by that measure (alone) the USA leads. And as you say, the reason this number is so lop-sided for the USA is the concept of "Calling Party Pays" (which has been adopted now in almost all countries of the world) and the older, faulty method of "Receiving Party (also) Pays" which the USA and an increasingly small number of other countries still use.

The American Receiving Party (also) Pays model has prevented all meaningful innovations and natural maturing of the telecoms industry. Only by abandoning the concept of Receiving Party Pays, can a consumer discover Reachability. Without Reachability there is no addiction. Without addiction the mobile telecoms industry has no particular advantage. When countries abandon Receiving Party Pays, and adopt Calling Party Pays - then Reachability will be discovered by users. After that the whole industry model changes.

I could go on for hours on it. Lets "cut to the chase". Yes, the USA consumer puts more minutes on their phones than those of any other country. But the USA consumer also pays the highest rates (with Japan). European consumers on average pay only about half of what Americans do, for better calls, on better networks, with far better network quality, far less congestion, more services, and far more users (Metcalfe's Law ie the utility of a network grows at the square of the number of users in the network).

American carriers are trying to engineer around the concept of Calling Party Pays without deploying CPP. So they are forced into a contest of free minute buckets (with then strange rules that occasionally punish given customers). American consumers pay the highest phone rates for their cellphones, and get the worst service in the world. In Europe and Asia, the consumers are charged for use, get very reasonable phone rates (here in Hong Kong the normal domestic cellphone per minute rate to any network is under one US cent per minute).

But the phone service is not prohibitively expensive. So all have the phones and services, even those very poor can afford it, getting a second hand phone and a pay-as-you-go (prepaid) subscription. Everybody can join, everybody is connected and the benefits of mobile telephony reach all.

The network providers (carriers) have a real incentive to constantly upgrade the quality of their networks and reduce congestion, because of that rule of economics, that comes to play with Calling Party Pays, and produces the concept of the termination revenue. It is totally economically feasible to bring a cellular network base station to a poor village where unemployment makes conventional (outbound) phone services economically unviable. But the employed kids of those people are in the cities, they send old used second-hand phones to their parents and cousins in the poor villages, and then the employed kids will call the parents, at their cost.

This model totally does not work in the USA model. The network is perennially congested. The carriers have no incentive to expand their networks. They have oversold the "free minutes" to their customers. In the Calling Party Pays model, the carriers have every incentive to bring the network to every nook and cranny where there are people who could RECEIVE calls, even if they are too poor to make calls.

All benefits of CPP are better than Receiving Party (also) Pays. That is why so many countries have abandoned the model and gone to CPP. The USA is struggling now with a legacy system that is delaying benefits and forcing false economies. The only "benefit" to American consumers is an enormous bucket of minutes, on networks that often cannot deliver their "free" calls. For that they pay the highest rates in the world. Ask any of them would they prefer to get better phone services for half the price, and they'd jump at it.

ALL people I've ever talked to, who have lived in both a Non-USA/Canada mobile telecoms market and the USA/Canada mobile telecoms market over the past 10 years, say the USA/Canada is the worst of the two, whichever country is the alternate, including many in the developing world.

Sorry, Rudolf. I totally disagree with you. The American customer is punished by paying through the nose for a system which is archaic.

Thank you all for writing

Tomi Ahonen :-)

Paul Ruppert at Mobile Point View

Nice analysis, as a 'globalized American' I assure you we know we're 5th and falling when it comes to 'cellular' country competition. But you've made a critical oversight: ultimately the value of any commercial concern is the market valuation of the company. Bits and bytes, penetration, usage should all roll into what is the value of the company or the in-country industry as reflection of finacial markets' capitalization. That would be an interesting comparision layering over your data against the relative market values of operators in those countries. The winner I think would be...perhaps China Mobile?


Wow - nice post. Great info. It's fantastic to see quantified information that helps measure the market from the consumer's perspective.

As a Brit who is now lifing in the US, I am constantly confounded by how backwards the US mobile market is. I've been here 4 years, and I still feel like I had better service in the UK when I lived there. And don't start me on the devices and the proveder's stranglehold!

I agree with Sami - I'd love to see a quarterly update on the state of the industry.


Great blog post, it will be interesting to see how the new telecoms legislation will effect the mobile market in the USA, Im not optimistic however


I really agree, and been saying this for years, about how lagging we are in mobile comparatively to the rest of the world - and I blame one thing and one thing only: 'provider stranglehold' as an above commenter called it.

The reason we are not at 100%+ saturation is because a user in the U.S. has to sign into a company for a year or more for service. There are hefty fees for stopping service early. This is ridiculous.

Additionally the false impression has been built up to consumers that hardware (phones) are locked to certain providers (service.) That's B.S. unlocking is not neurosurgery, yet still the providers strangle the U.S. into the locked mentality.

This, and only this, is why we are so behind in usership and in innovation.

Tomi Ahonen

Hi Paul, Steve, Gerry and Sharon

Thank you all for writing.

Paul, yes, market capitalization is one way also to look at the industry, but has two major flaws - one is the expectation vs reality - stock market evaluations of given companies is almost always strongly weighted with the expectations, not just reality today, but what the market thinks of the tomorrow for that company. So its quite an imprecise measure of only "achieved" performance. And on international comparisons, the fluctuations in international currency exchange rates can play a dramatic role, such as the recent rapid decline in the US dollar's value compared with most other major currencies.

Still, you're right, China Mobile is currently the biggest telco by market capitalization. But I wouldn't really go that far as using this as a primary measure of who is ahead, more perhaps of an additional indicator.

Steve, thank you. As to quarterly updates, ha-ha.. I wish I had that much time (or someone would pay me for it.) I'll see if I can do an annual update in 2009, ha-ha.. I do have a day job, and we get no money at this site (no ads), so for Alan and me this is purely a hobby, to share info.

Gerry, legislation is important of course, but I'm far more confident in the free marktets. How long will American stockholders put up with American carriers (and equipment makers) underperforming compared to their global peers - see now for example Motorola taking steps to get rid of its underperforming handsets unit. If American management can't do it, then bring in European/Asian management - or the cannibals will come in and eat up the industry - as it should in a free market...

Then competition will fix the matters in the long run. Here in Hong Kong we have 6 mobile operators/carriers (serving a country of 7 million) and we have 140% per-capita handset penetration. The competition is fierce, the per-minute call charges are at one fifth of one US cent per minute.

Finland is another country of severe mobile competition - was the first country where national competition was introduced for mobile in 1991 when the world's first GSM operator - my former employer Radiolinja/Elisa Group - launched. Today Finnish handset penetration level is at about 115% per capita and the standard price of your annual contract costs at the low end - get this - one dollar per month (66 Euro cents). Then your per-minute and per-SMS text message costs are 10 US cents each with no free bundled minutes. But think about that, if you're a kid and just want the occasional use - a monthly fee of one dollar. Perhaps a bit better?

Of if you want a bundle of 500 free minutes per month and 100 free text messages, in Finland today that will set you back 30 US dollars per month (2O Euros). The effective price is then 5 US cents per minute.. Competition will fix the problem over time. But unfortunately, in the USA it will still take a lot of time, ha-ha...

Sharon - I hear you. It is most frustrating, to find out that in other parts of the world there are better services, and then to notice your American carriers lock you into long-term contracts and lock your phones as well (and on the CDMA technology, won't even provide you with the SIM card ability to switch to other handsets and networks which you at least have in the GSM networks).

But I'm afraid you are actually barking at the wrong tree. You said is only because of the carrier annual contracts (with penalties) and locking of the phones, that the American market is so behind and the customer so badly served. Actually, if you look at the rest of the world, in many advanced markets there are similar long-term contracts, UK, Finland, Japan just three to mention - and the latest Ofcom (UK regulator) data finds that in the UK the contracts have recently gotten longer - shifting from 12 month contracts to 18 month contracts. There are SIM locked phones in many countries - all Japanese phones are SIM locked, and for example Vodafone in the UK tends to lock its more expensive phones, and the iPhone for example is locked in all European markets where it is sold. That alone is not enough to explain the problem.

Actually the biggest reason for the American lag is a fundamental misunderstanding of the industry. American carriers still for the most part are stuck in the mindset of a cellphone replacing the fixed landline. We got past that thinking in Finland in 1998, when evidence emerged that there were customers getting cellphones who never would have even had a fixed landline. And then we explored reasons for that - and discovered Reachability (we carry our cellphone 24 hours a day, not because we might need to call someone - but rather because an unanticipated emergency with someone ELSE may happen, and THEY need to get in touch with us).

Reachability was obvious to why SMS is addictive (proven in university studies to be as addictive as cigarette smoking, and today already over half of American cellphone owners send SMS text messages. That will grow to 85% in the next four years, to catch up with European averages). Reachability incidentially is why the Blackberry is "so addictive" to American users, and so not-particularly-addictive to the rest of the world... 75% of all Blackberry users are in North America.

So yes, reachability. If the cellphone becomes addictive - then you can understand that users will want two of them... Most Americans still find this surprising. It is NOT for cellular network coverage reasons (which Americans do understand) but just "because". Two phones. Its now a sign of being cool, if you're young, to have two phones.

When American carriers start to understand how much more important cellphones are than fixed landlines - then they can start to build real business around it.

SMS texting is obviously the biggest single key. Now in Europe many operators already say, the primary use of the mobile phone is texting, and only the secondary use of the phone is voice calls. The Finnish Prime Minister says don't leave me voicemail, send me a text message instead. This kind of thinking is still very "weird" for Americans - and hence, the carriers struggle trying to make little profits out of poor quality networks and selling price and the "my bucket is bigger than your bucket" kind of marketing.

It will change.. :-)

But yes, my view is that the primary reason why American carriers are so bad at it - is because they don't understand it. Want to find a good US based carrier - try Virgin or Helio.. They are signs of the way things will become one day, also in America.

Thanks for writing

Tomi Ahonen :-)

Cellular Motorola Philippine Phone

Nice post. I enjoyed reading your article.
This information is very helpful. Keep posting.
Thanks for the info.

Tomi T Ahonen

Hi Cellular..

Thanks. The blog entry is from February obviously. I had then refined the thinking, and included it as the last chapter of my new book Mobile as 7th of the Mass Media - where it is rewritten (and updated and cleaned-up) as "Why America Lags".. You might find that also useful (if you happen to pick up the book..)

Thank you for commenting

Tomi Ahonen :-)


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ppdf (on twitter)

There is a lot theory in here and I agree is a great post. However I live in a emerging country of southamerica and we had never reached 100% penetration witn MPP model. We've moved to CPP ten years ago and penetration have been growing much faster since then.
One practical example regarding mass adoption. In a CPP you can have a prepaid phone first or second hand and pay only when you need to do calls. Many people of low incomes and young people uses those prepaid only to receive calls (reachability). That would be impossible in a MPP scheme.

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That will grow to 85% in the next four years, to catch up with European averages). Reachability incidentially is why the Blackberry is "so addictive" to American users, and so not-particularly-addictive to the rest of the world... 75% of all Blackberry users are in North America.

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We've moved to CPP ten years ago and penetration have been growing much faster since then.
One practical example regarding mass adoption. In a CPP you can have a prepaid phone first or second hand and pay only when you need to do calls.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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