Mobinomics

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: A lot has been written by experts on many forms of economics. From Reaganomics which stood for American President Ronald Reagan’s form of pro-capitalistic brand of economics. To the latest best seller called Freakanomics that captures the peculiar aspects of studying economics.

I won’t be too surprised if someone soon writes a book called Mobinomics; or the many different aspects of the growth in mobile penetration, on the economic growth, social interaction, language habits etc. Economist, in its article a few months ago, did mention that experts opine that a 10% increase in mobile penetration results in a 0.7% increase in the GDP of the country. This number has been gathering legitimacy but one wonders whether this has been proven with hard data.

Shashi Tharoor in his book, The Elephant, The Tiger and The Cellphone, speaks of the transformational effect of the cellphone in India, giving stories from many parts of the country, including one from his home town where he found a toddy tapper cum tender coconut vendor answering his call from atop a coconut tree (I wonder what is the accident rate of coconut vendors falling off coconut trees answering mobiles?).

The mobile penetration in the country has climbed up from less than 10% to over 35% in the last three years, so it would be right to imagine that this growth in penetration has resulted in a GDP growth effect of about 2% or so. The latest reports say that every month we are adding almost 8 million subscribers, an awesome number of 100 million a year. And if penetration continues to climb at the rate of 7% a year it would add about 0.5% to the GDP going forward.

This seems a little too simplistic. While mobile operators report large numbers, at times numbers hide more than what they reveal. A large part of the reported ‘total subscriber’ figures are inactive numbers; and if the subscriber has paid the Rs 200 towards lifetime incoming, then the operator has to retain the number and will continue to count the subscriber as an active one. Some report put the inactive subscribers at a staggering 30%.

The other issue is one of multiple mobile ownership, by even taxi drivers. As a tourist taxi driver in Hyderabad explained to me “One number is reserved for home calls and the other for regular customers”. So what is the real penetration of mobile phones in the country?

A simple analysis puts the penetration at 100% of all socio economic class A, B and C consumers in metro cities; but this sounds very specious. What about the children and the aged, even if we are to assume that all men and women have mobiles in these cities?

It is undeniable that mobiles have transformed the lives of millions of small traders, vendors and artisans. People who practice a skill like that of a carpenter or a plumber or an electrician, are able to put through a lot more work in a 10-hour work day. The same could be told of tutors, trainers, masseurs, direct vendors and coaches.

Another key beneficiaries are the small traders, who are now in a position to send and reroute their runner boys, cater to smaller orders and more.

I was also pointed out to yet another interesting use of the mobile, especially by young women. They use it as their security blanket, pretty much like Linus of Peanuts fame. The mobile saves them the effort of looking at the men in bus stops, and keep away unwanted attention. If not a call, the mobile is very useful even as a distraction, what with its many features. So the mobile helps the young ladies avoid eye contact with the young admirers. She is no longer alone, the mobile is her security blanket, her friend in need, her companion and yes, even her bodyguard.

So how are mobiles being used around the country, stretching from urban to rural India?

One interesting story brought alive to me the ubiquitous nature of mobile phones. Emergency Management & Research Institute (EMRI) is a pioneering effort of B Ramalinga Raju of Satyam Group. The CEO of EMRI, C Venkat is a seasoned professional who has set up possibly one of the world’s best emergency service. A call to the number 108, from anywhere in Andhra Pradesh, and within a very short time (measured in minutes; 16 minutes average) an ambulance will reach you.

EMRI handles several thousand calls a day (1,00,000 a month), and while touring their impressive facilities I asked them the source/origin of the calls, since all calls are traceable on their system. They confirmed what we have been reading about, almost 99% of the calls come from mobile phones.

While there are possibly several million landlines in Andhra Pradesh, almost 99% of the consumers are reaching for their mobiles while making the emergency call. And not all emergency calls are made from the road or are to do with road accidents (though a significant number are).

Consumers still use their landlines for those leisurely conversations, and business transactions, may be. But the fact that mobile is the choice during an emergency, it will not be too far in the future that it will be the choice for all calls, whatever the occasion.

Mobiles will continue to evolve in the way they will affect our lives. Will they become the new internet delivery mechanism? Will they become a driver of literacy, especially English literacy? Will they be the medium that will drive the FM Radio? Will they become a new payment device? Will they become a new way of delivering services, movie tickets, airline tickets?

Unlike in other categories, the mobile revolution that we are seeing in India seems to be unique in many respects. The prepaid payment system is just one of those available in the market.

All said, I think ‘Mobinomics’ does seem to be a great new book waiting to be written.