With subscriber penetration still low in most high-growth markets, Ericsson is working with customers to bridge the “digital divide.” Mobile users in such markets are early adopters of new phones and services; they are more receptive to technology and innovation than developed markets.

For operators, continued subscriber growth in lower spending segments represents an untapped, potentially profitable market.

Rachel Ooi, associate principal in business consulting at Ericsson, says: “There is opportunity not only to respond to the mobile communication needs, but also to expand growth by connecting the unconnected in high-growth markets, to truly shape the economics and quality of life of a country. There are many cases where operators do not just play a traditional role but rather look beyond it and act as innovative service providers.”

Operators in high-growth markets often believe that they can secure revenues from low-income segments by increasing penetration with competitive pricing, in conjunction with winning high average revenue per user (ARPU) from advanced users by working on churn management, customer retention and loyalty programs. In the long term, however, these strategies have not been successful as competitors easily copy those services as a commodity.

The fact that operators start with a large volume of users, providing economies of scale, will help them create additional revenue streams and add services to the basic ones. Lower Total Cost of Network Ownership costs help bring mobile services to the masses and more leveraged revenues later, Ooi says.

Many traditional operators fail to realize that, for low-income users, mobile communication is not just communication, but also a way to meet need for security, inclusion and status. Empowering services that meet these needs and that low-income users can afford will stimulate their willingness to spend.

“Being insensitive or irrelevant to customers’ needs is dangerous in any market, but especially in high-growth markets which are often dynamic and volatile,” Ooi says. “The operator’s role in these markets is often more challenging than first thought, yet the rewards are greater. They have evolved their role beyond merely providing communications to become an integral, indispensable part of private life, social life and not least, their countries’ economic development.”