Why cheap smartphones are great for the developing world

This past September saw the launch in India of the first mobile devices using the Android One standard, which aims to bring low-cost smartphones – and by extension, internet access – to the previously unconnected.

Helping low-income people in developing markets migrate from a life without digital connectivity to one in which high-quality smartphones are easily affordable is akin to compressing dozens of years of technological progress into one very short timeframe.

Android One followed the launch at the end of August by Mozilla, the non-profit behind the Firefox browser, of its own low-cost smartphone for the Indian mobile market. By making smartphones more affordable, Google and Mozilla hope to take the lead in connecting the estimated five billion people worldwide – primarily from emerging markets – who still have yet to join the developed world online.

Yet affordable smartphones are only one piece in solving the “connecting the unconnected” puzzle. In emerging markets, mobile data is rightly seen as too expensive or confusing for low-income mobile users to afford. Consider the ways in which mobile data is packaged and sold. For many people, a “megabyte” is an abstract concept, to say the least. Does anybody know for certain what 1MB, or 100MB, or even a gigabyte buys you? A single Facebook session, a music track, a three-minute video download…or any or all of the above?

Yet mobile operators undermine the appeal of mobile data to many consumers by pricing their plans and packages in ways that are often difficult to understand and appreciate – particularly when those consumers are already living on low incomes that don’t stretch far enough to paper over their confusion.

Consider as well the manner in which mobile users in emerging markets usually purchase their mobile plans and data packages. It’s a multi-step, time-consuming process that involves either a physical trek to a retailer to top up a data plan, or the dreaded and unreliable multi-sequence USSD call-and-response. This often fails in areas of poor data connectivity, driving consumers to abandon the entire process in frustration.

Such scenarios in turn prompt the question: unless mobile data becomes more affordable and easier to understand, won’t affordable smartphone initiatives like Android One struggle?

There has to be a better way. And as it turns out, operators and third parties across the developing world are working together to ensure that there is.

Mobile data becomes infinitely more affordable, understandable and attractive when there’s something to be gained by multiple interested parties. This potential is now beginning to be realised by sponsored data, which mobile operators from Pakistan to Nigeria to Malaysia have begun to embrace as both the business models and technology to support it have fallen into place.

It works like this: there’s a brand, a consumer and an operator. The brand wants access into a market – perhaps it’s India, perhaps it’s Mexico. Perhaps said brand is looking to boost its corporate social responsibility credentials and also grow its profile. Sponsored data lets it offer consumers something of high value – mobile data access for an hour, a day, a week or even a month – in exchange for simple exposure to its brand, via interstitial advertisements like banners, videos, quizzes or other forms of engagement. Consumers love getting something they already want – especially a precious but previously confusing commodity like mobile data – for virtually nothing. The halo effect accrues to the brand.

Consumers, when presented with sponsored data in increments they understand – say, an hour of a popular social media site or a day of full access to the mobile web – are quick to respond. Our work with sponsored data in developing markets over the past two years shows that offers such as these need to be simple to access (a 1-to-3 click process works best).

Consumers also need to feel that the sponsoring brand is not ever-present or too overbearing. Interstitial ads that pop up every five web pages won’t work and only serve to annoy and alienate consumers; however, a once- or twice-a-day message of some kind – the more varied, the better - is almost universally accepted.

Finally, there are the mobile operators themselves. They know that they often lack the capabilities to deliver sponsored data in a cost-effective manner, and further recognise that vague and confusing bundles of megabytes simply don’t work for all consumers, particularly those who are coming to the internet for the very first time. This is where the crucial role of data compression from third parties can make the economics of sponsored data much more viable.

Compression of video, audio and other forms of data, which allows for up to 90% more data to be used in a bundle at the same network cost to the operator, means that brand sponsors can afford to underwrite packages that they might not otherwise be able to offer. Once the sponsor is on board, the operator gains two key (and brand new) sources of revenue: a portion of the sponsor’s overall fee (since it’s the operator’s network that bears the brunt of these new mobile data consumers), and also the opportunity to upsell consumers on new paid data offers at the end of their free, sponsored offer.

By supporting even these paid offers with invisible-to-the-consumer data compression technology, operators can not only keep data pricing low: but also at the same time utilise the same infrastructure that allows for sponsored data to trial their own innovations in 21st-century premium data packaging.

This is how the trifecta of brand, consumer and operator can use sponsored data, along with fantastic, low-cost smartphones, to bring the mobile internet to life. In so doing, they can jumpstart the mobile data revolution in the developing world, and use the power of simplicity to help bring the next billion, two billion or even five billion users online.

 

Jay Hinman is the Vice President of Operator Solutions at Opera Software

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