MWC � Demand to stay strong despite downturn - UN

Mobile phones are “a basic necessity” and should enjoy persistent strong demand throughout an economic downturn

“With or without a recession,” millions of people in India, China, Nigeria, and other emerging markets will seek out mobile phones, according to the International Telecommunication Union (ITU).

Increasingly cost-conscious households in Europe and North America are also expected to keep up their mobile use, and many will drop their fixed-line telephones to save money, the ITU said.

“Once a user gets a mobile phone, it is difficult to give up, and in many countries mobile phones have become a necessity,” it said in a report entitled ‘Confronting the Crisis’.

“Many communication technologies including mobile telephony and broadband still offer huge growth potential, with or without a recession,” it said. “With its strong growth potential, mobile telephony can help facilitate economic recovery.”

There were 4 billion mobile subscriptions worldwide at the end of 2008, after an average of 24 per cent annual growth since 2000. Take-up rates are above 100 per cent in Singapore and Hong Kong, compared with 30 per cent in Nigeria and just over a quarter in India, two of the fastest expanding mobile markets.

The ITU said people in developing countries are increasingly reliant on telephones for voice and information services, such as farmers and fishermen who get text messaging for information about commodity prices and the weather.

The popularity of mobiles in developing markets such as China, Pakistan, Malaysia, Thailand and Bangladesh could create an opportunity for these countries to shortcut the technological development path of other nations by providing Internet services through handsets, rather than PCs.

In richer markets, such as western Europe and North America, the ITU said mobile operators may be better placed than fixed-line telephone providers because the investments required to maintain cellular networks can be less onerous.

Many developed-world customers are likely to favour their mobiles over their home lines as a result of a downturn, but may be more careful about their spending and delay purchases of handsets, the ITU report said, signalling trouble for telecom equipment and gear makers such as China's Huawei and ZTE, Ericsson, Nokia.

Pre-paid and flat-rate packages could also become more popular.

“There is some evidence that consumers are already postponing plans to upgrade their mobile phone and have become more cost-conscious when making calls,” it said.

“Operators will find it harder to promote value-added services to wary consumers and the adoption of new services (such as mobile TV) will certainly be impacted.”

Tight credit could cause telecom operators to reduce their investments, and encourage industry consolidation, the report said, noting cost-saving outsourcing may also grow.

The ITU encouraged governments to include investments in telecoms in economic stimulus packages now being developed.

“Investing in high-quality, affordable information infrastructure, education and knowledge may be the best way to innovate out of this crisis, especially for developing countries ... Investing in broader access to knowledge becomes even more important during times of crisis, rather than less so.”

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