More than half of the world won’t be part of the 5G conversation

5G has created quite the buzz lately. While, it is exciting and well deserved, the truth is that it won’t be available for four billion of the world’s population – these people can only dream of the economic benefits that will go along with having 5G.

Think about that for a minute. It is likely that over half of the world’s population won’t have access to the economic opportunities that 5G will place at the fingertips of those living in the developed world.

Talking about 5G is fine at MWC with its ‘Davos like’ richesse but we need to begin to have conversations about how we can enable the 1.7 billion financially excluded who are at most accessing a 3G connection currently – and who by and large are excluded from all that the digital world has to offer.

Staying connected in emerging markets

Everyone is talking about being 5G device-ready, my question is are we ready as a society? Many migrant workers are largely unbanked and rely on our platform to send small remittances in the form of international top-ups (ITU) to their families back home. In emerging market countries like Guatemala, the majority of mobile phones are prepaid and 70% of these have no credit (airtime) at any one time which means the user cannot make calls or access the internet – this is the problem that Ding helps address.

We recently completed research to gain a better understanding of migrant value transfer behaviours such as remittance and ITU. Our study revealed that remittances typically increase the income of the receiver by 30% to 100%. It also showed that up to 90% of remittances, including top-up are used for consumptions such as utilities, education, communications and transportation.

Once families can afford basic needs they are able to utilize the little leftover to purchase some network service. According to the UN 80% of adults have mobile phone subscriptions and with migrant flows surging,staying connected with family members overseas ultimately becomes a basic human need.

However, two billion people live in countries where 1GB of data is still unaffordable, costing over 10% of their monthly income. Many emerging market countries also lack the necessary infrastructure to provide 5G and the UN estimates that 2.5 billion are living with weak electrical connections and power outages. This lack of infrastructure and the limited availability of cellular stations provides challenges to mobile users, including the inability to charge phones and traveling great distances to reach a cellular signal strong enough to simply make a phone call.

In the past some technology has been easily adoptable in emerging markets allowing them to “leap-frog” or bypass older technology altogether. For instance, millions of people have leapfrogged directly to mobile phones without ever having a fixed landline in their home. In the case of 5G that just will not be possible.  The excessive cost of infrastructure will prohibit the implementation for years to come in these markets.  Not to mention that our research showed that 28% of respondents don’t even know what the technology is and how it could benefit them outside of simply making phone calls.

In a 5G world, LTE isn’t going anywhere

The study also revealed 84% of migrants fear that the delivery of 5G to their home country will lag far behind the developed world and over a third of those surveyed were yet to experience even 4G technology.

This is evident in sub-Saharan Africa where there is no sign of 5G and many people still only access 2G technology. GSMA reports that 3G will only emerge as the dominant technology in sub-Saharan Africa over the next few years, accounting for 60% of the connections by 2025. Investment in 4G is happening but it will only help drive 4G connections from 4% to 25% by 2025. No sign of 5G on this horizon.

Smartphone ownership will also drive 5G in emerging markets. Today, India has the lowest smartphone usage at only 24%, while Brazil tied South Africa with the highest percentage of users, with 60% owning smartphones.

While LTE may be on its way out in the developed world, emerging markets will be slow to adopt this “aging” technology due to many factors including the users inability to pay for such services. Undoubtedly, affordability remains a key issue for users in emerging markets receiving top-up and remittances. In terms of priorities when we asked our users what was important to them when choosing a network – some 60% said they feel that quality of connection is the key driver, followed by price, and customer services.

5G will be a game changer in ways yet to be imagined. According to the President of Qualcomm who was speaking at MWC, the roll out will likely begin this year – but will more certainly ramp up over the next 5-10 years in the developed world, benefiting only a small percentage of the population – and to serve to once again extend the growing social and technological divide in society. In a world where migration is a reality and a necessity, Ding is starting with what families in emerging markets have today, a basic phone.

Let’s begin by getting value directly to this user and seeing them joining the digital economy. 5G will just have to wait for the majority of the world’s population.