The GSMA has been a leader in linking mobile networks and services with energy access, most notably through the introduction of pay-as-you-go (PAYG) solar. Power for All spoke with Ilana Cohen about major emerging trends related to the intersection of connectivity and rural electrification: 1. The significance of smartphones emerging as the next big consumer “appliance” with PAYG solar consumers. 2. The market entrance of international Mobile Network Operators (MNOs) into the energy access sector. 3. What the convergence of these two trends holds in store for achieving the Sustainable Development Goals (SDGs).
SMARTPHONES - THE NEXT “KILLER APP” FOR THE SDGS
Coverage alone does not support mobile internet adoption in rural and remote areas of developing countries. Access to smartphones has faced a significant cost barrier when the handset is purchased in a one-off lump sum. Smartphone cost can signify up to 16 percent of annual income for people at the bottom of the pyramid in some emerging markets (GSMA Connected Society and Connected Women, 2017, ‘Accelerating affordable smartphone ownership in emerging markets’). Linking smartphones and solar energy is a winning combination for MNOs, energy companies and customers.
By using the credit score rating, agent distribution and micro-financing capabilities of solar PAYG providers, MNOs can reach an additional customer segment with smartphones. Customers with energy are more likely to use their phones regularly through access to charging, which drives higher revenue for MNOs. Several organizations funded through the GSMA Mobile for Development Utilities Innovation Fund, supported by the UK Government Department for International Development, have demonstrated this:
-
Re-Volt and d.light launched a PAYG solar home service in Haiti that led to a 20 percent increase in average revenue per customer for Digicel.
-
Gham Power and the mobile operator NCell installed mini-grids to power new mobile towers and nearby households, leading to a 44 percent increase in smartphone ownership, and a 32 percent increase in mobile internet reported.
The complementarity of bundling energy and smartphones is likely to be greatest with productive energy usage that increases income. Gham Power also found a 32 percent increase in fridge ownership, driven by small hotels which saw a positive impact on their business after adding a fridge.
Rural communities benefit from a wide range of socio-economic improvements when households can get access to internet services via a smartphone or tablet. Mobile operators can improve their return on investment through new internet adopters at new or upgraded towers providing mobile internet. Better utilisation of tower sites supports potential increased network coverage, and justify internet expansion into rural areas beyond their preferred urban user base.
SCALING THE ENERGY ACCESS AND CONNECTIVITY LINK
Mobile operators bring existing customer scale and brand recognition that can help decentralized renewable energy solutions reach more customers. M-Kopa and Safaricom in Kenya, Fenix and MTN Uganda, and Lumos and MTN Nigeria are some of the best evidence of this, which the GSMA and the UK Government supported in the early days of PAYG solar, in 2013. Since then we have seen MNOs and utilities’ interest in this space grow dramatically.
This is well-matched with the shift in the off-grid energy sector to focus on value chain expertise (GOGLA, 2018, Off-Grid Solar Market Trends Report 2018) to enable big and small companies to partner and reach more households, at faster rates; MNOs and large energy companies can focus on their strengths, while getting product and service expertise from decentralised energy providers and distributors.
More MNOs are also launching services that fully ride on the synergies of energy and connectivity bringing the scale, technology, and resources needed to rapidly expand energy access.
Orange is trialing their prepaid smart-metering service for rural mini-grids in Burkina Faso with support from our Mobile for Development Utilities Innovation Fund, leveraging GSM for payments and remote monitoring. In un-electrified urban areas of Sri Lanka, Dialog is also developing pre-paid metering solutions that enable more low-income households to connect. Building these out as enterprise solutions can again support the kind of acceleration needed to meet SDG 7.
CONVERGENCE - HISTORIC CHANGE IS COMING
The increased involvement of major MNOs and the increased uptake of smartphones has the potential to radically accelerate connectivity for the 4 billion people still without internet access and the services it can augment, including healthcare and education. The power of mobile and energy to change lives is clear, and there’s a huge opportunity to further leverage this synergy to connect the unconnected at a faster rate.
Much greater collaboration is still needed between energy stakeholders to build partnerships, demonstrate evidence, and influence policy makers to address barriers. For example, risk-averse mobile operators are hesitant to provide any device payment plans to customers who do not have a positive credit history.
Vitalite in Zambia is trialing the sale of PAYG smartphones and cookstoves to customers who demonstrate good repayment for solar home systems. Testing and developing such sustainable revenue models that entice all parties but keep within a customer’s spending ability to stay in credit will be key to large scale collaborations.
Other barriers, such as customer digital literacy, also must be addressed further. For example, the Mobile Internet Skills Training Toolkit (MISTT) has helped operators provide customers the education needed to use mobile internet for the first time. The visual toolkit is designed for organisations interested in conveying the fundamentals of using the internet, focussed on the key services currently being used across the world (WhatsApp, YouTube and Google). A case study of MTN implementing MISTT in Rwanda can be found on this link. The kit has now launched in several African operator markets with successful deployments that have helped operators increase mobile internet adoption and data revenues significantly.
A GSMA case study from Tigo Rwanda noted over 250,000 citizens trained over six months in pilot regions, providing 240 percent ROI from increased data adoption and data revenues. We also work with governments and regulators to ensure data services are affordable and protect consumer privacy.
Ilana Cohen is the acting head of the GSMA Mobile for Development (M4D) Utilities Program. She holds an MSc in Water Science, Policy and Management from Oxford University and a Bachelor’s Degree in Biology from Brandeis University. Prior her work at the GSMA, Ilana’s master’s research on the use of mobile payments for water bills in Kenya led her to two years of consulting for water and sanitation organizations and international donors, advising on the application of mobile tools. Prior to this, Ilana worked as an environmental consultant. Ilana is based in the GSMA’s Nairobi office.
The GSMA has been a leader in linking mobile networks and services with energy access, most notably through the introduction of pay-as-you-go (PAYG) solar. Power for All spoke with Ilana Cohen about major emerging trends related to the intersection of connectivity and rural electrification: 1. The significance of smartphones emerging as the next big consumer “appliance” with PAYG solar consumers. 2. The market entrance of international Mobile Network Operators (MNOs) into the energy access sector. 3. What the convergence of these two trends holds in store for achieving the Sustainable Development Goals (SDGs).
SMARTPHONES - THE NEXT “KILLER APP” FOR THE SDGS
Coverage alone does not support mobile internet adoption in rural and remote areas of developing countries. Access to smartphones has faced a significant cost barrier when the handset is purchased in a one-off lump sum. Smartphone cost can signify up to 16 percent of annual income for people at the bottom of the pyramid in some emerging markets (GSMA Connected Society and Connected Women, 2017, ‘Accelerating affordable smartphone ownership in emerging markets’). Linking smartphones and solar energy is a winning combination for MNOs, energy companies and customers.
By using the credit score rating, agent distribution and micro-financing capabilities of solar PAYG providers, MNOs can reach an additional customer segment with smartphones. Customers with energy are more likely to use their phones regularly through access to charging, which drives higher revenue for MNOs. Several organizations funded through the GSMA Mobile for Development Utilities Innovation Fund, supported by the UK Government Department for International Development, have demonstrated this:
-
Re-Volt and d.light launched a PAYG solar home service in Haiti that led to a 20 percent increase in average revenue per customer for Digicel.
-
Gham Power and the mobile operator NCell installed mini-grids to power new mobile towers and nearby households, leading to a 44 percent increase in smartphone ownership, and a 32 percent increase in mobile internet reported.
The complementarity of bundling energy and smartphones is likely to be greatest with productive energy usage that increases income. Gham Power also found a 32 percent increase in fridge ownership, driven by small hotels which saw a positive impact on their business after adding a fridge.
Rural communities benefit from a wide range of socio-economic improvements when households can get access to internet services via a smartphone or tablet. Mobile operators can improve their return on investment through new internet adopters at new or upgraded towers providing mobile internet. Better utilisation of tower sites supports potential increased network coverage, and justify internet expansion into rural areas beyond their preferred urban user base.
SCALING THE ENERGY ACCESS AND CONNECTIVITY LINK
Mobile operators bring existing customer scale and brand recognition that can help decentralized renewable energy solutions reach more customers. M-Kopa and Safaricom in Kenya, Fenix and MTN Uganda, and Lumos and MTN Nigeria are some of the best evidence of this, which the GSMA and the UK Government supported in the early days of PAYG solar, in 2013. Since then we have seen MNOs and utilities’ interest in this space grow dramatically.
This is well-matched with the shift in the off-grid energy sector to focus on value chain expertise (GOGLA, 2018, Off-Grid Solar Market Trends Report 2018) to enable big and small companies to partner and reach more households, at faster rates; MNOs and large energy companies can focus on their strengths, while getting product and service expertise from decentralised energy providers and distributors.
More MNOs are also launching services that fully ride on the synergies of energy and connectivity bringing the scale, technology, and resources needed to rapidly expand energy access.
Orange is trialing their prepaid smart-metering service for rural mini-grids in Burkina Faso with support from our Mobile for Development Utilities Innovation Fund, leveraging GSM for payments and remote monitoring. In un-electrified urban areas of Sri Lanka, Dialog is also developing pre-paid metering solutions that enable more low-income households to connect. Building these out as enterprise solutions can again support the kind of acceleration needed to meet SDG 7.
CONVERGENCE - HISTORIC CHANGE IS COMING
The increased involvement of major MNOs and the increased uptake of smartphones has the potential to radically accelerate connectivity for the 4 billion people still without internet access and the services it can augment, including healthcare and education. The power of mobile and energy to change lives is clear, and there’s a huge opportunity to further leverage this synergy to connect the unconnected at a faster rate.
Much greater collaboration is still needed between energy stakeholders to build partnerships, demonstrate evidence, and influence policy makers to address barriers. For example, risk-averse mobile operators are hesitant to provide any device payment plans to customers who do not have a positive credit history.
Vitalite in Zambia is trialing the sale of PAYG smartphones and cookstoves to customers who demonstrate good repayment for solar home systems. Testing and developing such sustainable revenue models that entice all parties but keep within a customer’s spending ability to stay in credit will be key to large scale collaborations.
Other barriers, such as customer digital literacy, also must be addressed further. For example, the Mobile Internet Skills Training Toolkit (MISTT) has helped operators provide customers the education needed to use mobile internet for the first time. The visual toolkit is designed for organisations interested in conveying the fundamentals of using the internet, focussed on the key services currently being used across the world (WhatsApp, YouTube and Google). A case study of MTN implementing MISTT in Rwanda can be found on this link. The kit has now launched in several African operator markets with successful deployments that have helped operators increase mobile internet adoption and data revenues significantly.
A GSMA case study from Tigo Rwanda noted over 250,000 citizens trained over six months in pilot regions, providing 240 percent ROI from increased data adoption and data revenues. We also work with governments and regulators to ensure data services are affordable and protect consumer privacy.
Ilana Cohen is the acting head of the GSMA Mobile for Development (M4D) Utilities Program. She holds an MSc in Water Science, Policy and Management from Oxford University and a Bachelor’s Degree in Biology from Brandeis University. Prior her work at the GSMA, Ilana’s master’s research on the use of mobile payments for water bills in Kenya led her to two years of consulting for water and sanitation organizations and international donors, advising on the application of mobile tools. Prior to this, Ilana worked as an environmental consultant. Ilana is based in the GSMA’s Nairobi office.
