Wireless technology is fulfilling the promise of telecommunications in
areas of the world that have had little contact with the outside.

The “island city” of Parintins in Brazil’s Amazon jungle. A refugee camp in northern Uganda. A remote village in the Khomas region on Namibia that doesn’t have electricity. Impoverished areas of Haiti and Papua New Guinea. Besides their Third World status, they all have something else in common. They’re getting telecommunication through wireless networks, some of them powered by the sun or even bicycles.

Although emerging markets like these areas are relatively poor, these are the regions of the world expected to see the biggest growth in wireless telecom in the next few years. And companies are proving that these markets can be profitable, given the right business plan.

Thanks to efforts by Intel, schools such as this one in Parintins, Brazil, gain a connection to the outside world.

There are about 3.1 billion wireless subscribers globally now. Most developed countries have either reached 100% penetration or are nearing that. Emerging markets are the ones from which the next 1 billion subscribers will come; Pyramid Research estimates more than three-fourths of the new subscribers will come from emerging economies, with Asia providing the lion’s share of those. Africa and the Middle East are next.

Those numbers, however, tell a different story than they did in the developed world, where wireless telecommunications started out as a secondary method of making voice calls and then using data services such as messaging. In emerging markets, wireless telecom is most often the first method of telecommunications these millions of people have and will have.

DIGITAL VILLAGES
Parintins, Brazil, is one example. The Amazon city of 100,000 can only be reached by airplane or boat and just 61 of the 190 public schools in the region have power. One computer in one school had Internet access via a dial-up line. That was before Intel and its partners, together with the Brazilian government, installed a WiMAX network in the city with high-speed access for a health care center, two schools and a community center.

Intel has had similar projects under its “digital village” and “World Ahead” initiatives, including the remote Egyptian city of Oseem on the Nile River, the town of Bela Bela in the Republic of South Africa, in the Indian town of Baramati, in Ta Van Set in northern Vietnam, and in Guangdong Province in China.

Motorola has brought cellular telecommunications to several emerging markets, including the aforementioned use of a specially rigged bicycle to charge phones. In a project with the GSM Association, Motorola deployed a wind and solar power system to power a GSM cell site in Dordabis village in Namibia, in a demonstration with MTC Namibia to provide voice and data coverage in rural areas.

The GSMA, through its development fund, has spearheaded a number of efforts to bring telecommunications to remote areas. Another example, in partnership with the U.N. High Commissioner for Refugees (UNHCR), is connecting refugee camps in northern Uganda to help reunite families and provide education, health care and economic activity.

GETTING INFORMATION
“Information is a basic human need, and it is vital that we do everything we can to help refugees fulfil that need,” said GSMA CEO Rob Conway, in a statement. “Mobile networks are the only economically viable way to connect refugee camps to the outside world and provide their occupants with the means to communicate with their relatives, access health information, run a business and, above all, educate their children.”

The GSMA’s partners in Uganda are the local operator, MTN Uganda, and infrastructure provider Ericsson. The GSMA has similar projects in Algeria, Kenya, India, Pakistan, Nigeria and South Africa.

Some companies are building real business cases around emerging markets. Nokia is a case in point. While some of its rivals have had growing market share, or losing share, Nokia sold a record 133.5 million mobile phones during the fourth quarter of 2007. Its strongest growth came in the Middle East and Africa, where shipments rose 52.3%, and in Asia-Pacific and China.

Africa is gaining attention from established operators in other parts of the world. Milicom International Cellular of Luxembourg and Warid Telecom of the United Arab Emirates have both launched service recently in several African countries. Warid announced plans to invest $1 billion in the region.

One carrier that has focused completely on emerging and underserved markets in the Caribbean, Central America and South Pacific is a relative newcomer named Digicel. The Jamaica-based operator was founded by an Irishman, Denis O’Brien, in 2001. The company now has networks in 23 countries with more than 6 million subscribers. O’Brien provided the initial funding after selling Esat Telecom in Ireland to British Telecom for about $2.5 billion.

Digicel expects to launch service this year in the British Virgin Islands and Honduras, according to CEO Colm Delves. The privately held company has been adding subscribers at an annual growth rate of 50% and had revenues in its last fiscal year of more than $1 billion, he says. Most of Digicel’s subscribers are prepaid.

Digicel has spent significantly in the markets it has entered, Delves says, because it wants to have the best network available. Sometimes it has purchased an existing network, but more often has built its own, using GSM. In Haiti, Digicel spent about $260 million in the first year after launching in May 2006. It signed 1.8 million Haitian subscribers in its first year, helping to bring mobile penetration in the country to 35%.

Some of the countries that Digicel operates in have little in the way of telecommunications or power infrastructure. Delves says Haiti is a prime example of that, so the operator had to install generators at each of its cell sites and also has charging banks at all of its stores so subscribers can charge their phones. Digicel featured a Christmas promotion in Haiti for a wind-up phone charger, which sold well. It also has charging banks on some Haitian buses.

HELPING BUSINESSES
Having a simple voice connection provides economic benefits in most of its countries, Delves says. Vegetable and fruit sellers in Haitian cities are now able to call their farmer suppliers with orders instead of sending orders by messengers. Hunters in Papua New Guinea, where Digicel South Pacific has a network, use the phone to help them coordinate their hunt for wild pigs. Digicel also is helping fund construction of 25 new schools in Haiti, he says, as part of the company’s charitable work.

Delves says Digicel, which won a license recently to operate in Honduras, aims to increase mobile penetration in that Central American country from 38% to 75% within five years. He says the network build-out will have “significant” costs, although declined to be more specific.

Digicel also has pre-qualified for a new license to be auctioned off in Panama later this year. It will be bidding against Claro, owned by Mexico’s America Movil, and Telemovil, owned by Luxembourg’s Milicom. Delves says Digicel also is eyeing Nicaragua and Costa Rica.

Maureen Rabbit, Digicel’s Caribbean spokeswoman, says the carrier decides which markets to enter by seeing where there is low subscriber penetration and Digicel has the best opportunity. It sells affordable handsets, including the Coral manufactured by ZTE for Vodafone, and has pricing based on seconds of use. It does offer BlackBerry devices in all its markets as well, and has a GPS-based vehicle tracking service for fleet management companies.

Digicel also is using WiMAX in some markets, including the Caymans and Jamaica, so it can provide Internet access to areas where there are no landlines. “We see a lot of opportunity for WiMAX in a lot of our markets,” Delves says.

And, opportunity for carriers like Digicel also is an opportunity for populations of emerging markets where wireless is the first telecommunications they’ve had.