My understanding is that China has 250 million cell phones out of a population of 1.3 billion. Africa also has about 100 million cell phones out of 800 million people. India is adding about 2 million new subscribers to mobile phones every month.
Considering that in the US it costs $50/month for a cell phone, how did these developing countries afford a working cell phone infrastructure when many of these people only make about $1-5 a day?
Did the phones really make a major differece in life? My understanding is that cell phones are to places like Africa or China what the internet was to the developed world, it allowed mass communication and totally revamped how business was done. Is there truth to this for anyone who lives there or knows people there?
As I understand it, when a new area is to get telephone service, these days it’s far easier to set up cellphone pylons than attempt to wire for land lines.
I also imagine it’s not the very poorest who have the cellphones (or anything else) but the local upper crust. And that the cellphones are priced with an eye to what the local market will bear.
From what I’ve been told by African people, I understand that cell phones are more and more widespread, especially in the countryside where there wasn’t any phone lines, and not limited to the “upper crust”.
In the US, cell phones are a de facto luxury item because everyone already has a landline. In the developing world, cell phones don’t have to be marketed that way because a lot of folks don’t have phones at all.
Here in South Africa, cellphones are extremely common. Prepaid plans are very popular, and with the fact that a person isn’t charged for incoming calls or SMSs, they’re a lot more affordable than a prepaid plan in the States. On the flip side, contracts are rather expensive, and not very cost effective - no such thing as “free nights and weekends” here; my $140/month cell phone plan gives me 500 anytime minutes, and that’s it. But since a decent portion of my cellphone bills in the US were due to incoming calls, I do end up saving a little bit of money (that, and the fact that I don’t know enough people to call).
Also, I have never had a problem finding a signal. The infrastructure seems to be much more widespread here - as mentioned earlier, it’s a lot easier to stick a cellphone tower (often disguised as a tree) in the middle of nowhere than to run landlines for hundreds of miles for a handful of houses.
Ah, something I could report because I experienced it:
Looking at El Salvador, I do remember that originally the telephone service was a monopoly of the state. I don’t swallow the idea that all things the government do, can be done better by private industry; water distribution for example was a disaster to privatize, but I do think it was because many times a monopoly was replaced by a cartel. In the case of the phone system, wireless came at the right time to prevent that from happening, the expected windfall that many times is the result of corruption failed to materialize for the new owners of the wired Telco company (I do remember the bulky and soviet like telephone boots that the wired private company expected all to use) competition by Korean and Japanese companies on the wireless front meant that many new homes go without wired telephone service.
While getting wired phone service could take months, wireless service can be obtained in a day.
And there was a surprising benefit of this new access to communication elsewere in Latin America: In Venezuela, when the military did a coup against the elected Chavez, the cell phone was a critical toll in organizing the almost instant counter coup.
The Third World use of cell phones is also driving much of the new development in cell phones. One of the things that they’ve come up with is the ability to send air time credits to someone else. So if you try to call your cousin in the next village, but can’t reach him because he’s out of air time, you can transfer some of yours to his phone, so you can talk. If once you reach him, you discover that he’s short of money, you can transfer more air time to him, and he can either sell it to people in his village or rent his phone out to people who don’t have them.
How do they afford the infrastructure and the phones though? The US has about 180 million cell phones out of a population of 300 million. Compare that to China where the ratio of phone subscriptions:population is 1:5 ours is 3:5. However even with huge numbers of subscribers (arguably the more subscribers you have the lower prices will be due to bulk discounts and competition) plans still cost $50ish a month. $50/month is more than some people in Africa make in total.
Is it because in places like Africa, China & India the infrastructure is state subsidized? Do they use older technology that is 10x cheaper but only slightly less efficient than modern technology?
In China you can buy prepaid cell phone cards that are good for 6 months. I think the cheapest is $7. Because the fixed line infra is poor, most people wouldn’t be caught dead without a cell phone - even if it is their biggest monthly expense.
Think your numbers are old for China. It’s over 300 million users and growing.
Cell phone coverage in China is very good - much better than the US. Most likely because there are just 2 dominant carriers. I travel to the interior of China and it’s rare when there is no cell coverage - even when taking a 10 hour train ride through the countryside.
What phone companies have come to find is that the most-expensive aspect of putting in a phone system is literally stringing wires to every single house that wants a phone. So in a lot of poor countries, they are skipping “land lines” entirely and wireless phones are the first phones that have ever been widely available–it is simply cheaper and faster to put in a wireless system than it is to do an old-fashioned wired one. These places even market “home”-style phones (in home- and business-phone styles) that are wireless but that run off of wall-socket power instead of batteries.
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In India, cell phone usage is growing at an exponential rate. The way it works in India is quite different from the way it works in the US.
Some points:
An entry level handset costs about US$57 (~Rs. 2500)
A pre-owned (second hand) handset could come for about half that
There is no charge for incoming calls. Ever. All incoming is free (unless roaming)
Outgoing calls cost less than US$0.02 (~Rs. 1) per minute (down from $0.40 when cell phones were first launched)
Some plans offer outgoing calls at US$0.01 (~Rs. 0.50) per minute
Monthly charge for an entry level user is about US$7 (~Rs. 300)
Handsets are usually not subsidised by network carriers
There is usually no lock-in period or extended service agreement
SMS is hugely popular, at about US$0.01 (~Rs.0.50) per message
Roaming is still very expensive
Calls to areas outside of your home network are still expensive
Network carriers are offering agressive promotions and offers
“Nights and weekends free” is not a common offering
GSM is more widely used than CDMA
Network coverage is extensive, and extremely reliable in the bigger cities
GPRS data used to be available at a flat rate of about $10 (~Rs.500), but since there is increasing demand for data, prices are steadily rising
Average monthly charge for bare minimum usage: US$3.5 per month
Average monthly charge for entry level user: US$7 per month
Average monthly charge for simple user: US$11 per month
Average monthly charge for heavy user: US$28 per month
Average monthly charge for power user: US$68 and above per month
Here are two of the more popular network carriers:
Yes, cell phones have changed the way people communicate, as it has in other parts of the world. Almost everyone who can afford one, has one. The other thing you might not have considered is that many of the richer folk sponsor cell phones for their domestic help, chauffeurs, etc.
Another factor in poorer countries is that they don’t have to pay as much for the land that they put the phone towers in, and the labor to put up those towers and maintain them is going to be a lot cheaper than in the US.
Going off what xash said, some sample rates in India using the plan i use:
Charge per month = $4.5 (Rs. 200) , includes Rs. 50 talktime
100 minutes/month = free at Rs 0.50/minute* (included minutes)
500 minutes/month = $5.60 (Rs. 250)
2000 minutes/month = $23 (Rs. 1000)
So, even a heavy user at 2000 minutes outgoing per month is still talking only US$30. Plans here are far, far cheaper than they are in the USA.
Keep in mind, that there is a significant sized middle class in India. These are the people using cell phones. By and large, i don’t think the majority of the people in India can afford a cell phone.
*Plans and rates here vary widely. Cell-phone to cell-phone is generally considerably cheaper than cell-phone to landline.