Cell phones play vital role in fueling growth In Vietnam - and across developing worl

[jones]

In Vietnam - and across developing world - cell phones play vital role in fueling growth
MALCOLM FOSTER, AP Business Writer
January 27, 2007 9:32 AM
HANOI, Vietnam (AP) - Nguyen Huu Truc's trusty cell phone has revolutionized his small embroidery business - and his life.

When he bought his first mobile phone in 1995, Vietnam had just one fixed-line phone for every 100 people, and cell phones were a pricey novelty. Communication was difficult, forcing Truc to make time-consuming trips to suppliers and buyers.

But these days, Vietnam has 33 telephones per 100 people - and two-thirds of the phones are mobile. Now Truc can make calls on his cell phone from virtually anywhere in the country for about 10 cents a minute, saving him time and money and providing quicker access to information.

''I cannot imagine what it would be like if I didn't have my mobile phone for a day,'' he says. ''It's no longer just something that only the rich can afford. Now, it's a basic means of communication.''

Truc's experience provides a glimpse into how wireless communication is helping fuel Vietnam's rapid growth - and transforming dozens of other developing nations from the ground up.

Today, mobile phones are the primary form of telecommunication in most emerging economies, fulfilling much the same role as fixed-line phone networks did in facilitating growth in the United States and Europe after World War II.

Some developing nations have even jumped out in front as mobile pioneers. In the Philippines, more than 4 million people use their cell phones as virtual wallets to buy things or transfer cash - services still rare in many wealthy countries, with few exceptions like Japan.

As service charges and handset prices have plunged and coverage areas have expanded, cell phone subscriptions in the developing world have surged fivefold since 2000, to 1.4 billion at the end of 2005, according to the U.N. International Telecommunication Union. That's nearly double the 800 million in advanced economies.

Research shows that greater cell phone use can drive economic growth in emerging economies. Based on market research in China, India and the Philippines, consulting firm McKinsey & Co. found that raising wireless penetration by 10 percentage points can lead to an increase in gross domestic product of about 0.5 percent, or around $12 billion for an economy the size of China.

''There's enormous entrepreneurship and creativity worldwide, and through mobile phones you're providing people with the tools - rather than aid - to earn a living,'' says Leonard Waverman, a London Business School professor. In a separate study of 92 countries, Waverman had findings similar to McKinsey's report.

''It's not a magic bullet, but it's a vital tool,'' says Waverman, whose research was partly funded by British mobile carrier Vodafone Group PLC.

By bouncing signals off base stations, relay towers and satellites instead of over copper wires strung to villages and homes, cell phones can hurdle mountains. Mobile phones are not hampered by illiteracy - which is a barrier to computer use - giving millions new opportunities to exchange information, make money and conduct business.


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Handset makers, meanwhile, are offering ultra-cheap phones. Motorola Inc., under the GSM Association's emerging market handset program, has produced cell phones with a wholesale price of less than $30. Retail prices vary depending on taxes and local market conditions.