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Wireless Technology Helping to Shrink Digital Divide

The technological divide between the industrialized world and sub-Saharan Africa is a major roadblock in the region's development. Economists say the expansion of wireless telecommunications systems in sub-Saharan Africa is bridging that gap.

According to industry data, last year in sub-Saharan Africa, there were more new mobile phone subscribers than in all of North America. And with current cell phone penetration rates in sub-Saharan Africa at nine percent, that means more growth is still to come, this in a region where the average per capita income is $1,600 a year.

Leonard Waverman, professor of economics at the London Business School and co-author of a groundbreaking study on telecommunications infrastructure and economic development, says the rapid growth of Africa's mobile phone industry is bridging the so-called digital divide between the continent and the industrialized world.

"We have a new study from the World Bank that says the digital divide - this gap we've got between the developing world and the developed world, in terms of digital technologies - is closing very quickly. Not because of PC penetration, which is a very expensive, clumsy device - sorry Microsoft, but because of mobile phones," said Mr. Waverman.

According to Mr. Waverman, mobile phones in Africa have succeeded partially because of the dismal lack of fixed-line telephone service. About 100 years after the invention of the telephone, less than one percent of Africans have fixed-line phones.

"In developing countries, mobile phones are the source of communications systems because fixed-line phones are expensive to roll out [set up], and slow to roll out. Mobile phones have the ability of being much more scalable,” he added. “You don't have to roll out the entire infrastructure, so cell phones have a lot of advantages, plus [you have with cell phones] the ability to have 'pay-as-you-go.' Mainline phone companies have never put in the software to have 'pay-as-you-go' platform. They could. But pay as you go is an enormous advantage for the poor, and we're finding that also in the United States."

Before mobile telecommunications systems took hold in Africa, small towns and outlying rural areas that lacked extensive communications systems had to rely on transportation to exchange news and information, which is both time-consuming and costly. For instance, renting a bicycle for a year could represent 20 percent of one's income, and bicycling 40 kilometers into town over rough dirt roads could take up to three hours one way.

Economist Diana Coyle, who runs the consultancy, Enlightenment Economics, which conducts research on the impact of new technologies and globalization, says it is not surprising, then, that people are spending as much as 10 percent of their income on mobile phone service.

"People are willing to spend a lot of money, they find the services very valuable. And one of the reasons is that it is saving them more money on these travel and transportation costs," she explained.

Ms. Coyle says research shows that age and gender are not barriers to accessing mobile phones, neither are education and income levels.

"The things that you might think of as being insurmountable barriers to mobile access, ownership or use, actually are not,” she noted. “People are finding ways, even the poorest people, even the people with no electricity in their homes, are finding ways to use mobiles."

In fact, she says, those who benefit the most from mobile telephones are the unemployed.

"If you give an unemployed laborer a mobile, it turns him into a self-employed entrepreneur," she added.

The private sector is beginning to take notice. In late March, Kuwaiti telecommunication provider Mobile Telecommunications Company announced it was acquiring Africa's third largest mobile phone operator, CelTel, for $3.3 billion.

Scott Wallsten is a former World Bank economist who currently works at the American Enterprise Institute, a Washington-based research organization. He says so much of the news out of Africa is bad news, but the mobile communications industry and its impact on economic growth is a real success story.

"What it does show is that, when entrepreneurship is rewarded, when entrenched interests don't step in to swipe profits as soon as someone is successful, when markets are allowed to thrive, change happens, and it can happen fast, and that is a very positive story," he explained.

Mr. Wallsten cautions that, while the use of wireless technology in Africa is spurring change and economic development, mobile phones alone are not the solution to the continent's problems.

Instead, he says, African governments need to focus on institutional factors, like regulation and competition, which foster consumer demand, and allow consumers to satisfy their demand for telecommunication services.