The Mobile Revolution: How Mobile Technologies Drive a Trillion-Dollar Impact

The Mobile Revolution: How Mobile Technologies Drive a Trillion-Dollar Impact

          
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The Mobile Revolution: How Mobile Technologies Drive a Trillion-Dollar Impact

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  • The Mobile Technology Revolution

    Mobile technologies have transformed the way we live, work, learn, travel, shop, and stay connected. Not even the industrial revolution created such a swift and radical explosion in technological innovation and economic growth worldwide. Nearly all fundamental human pursuits have been touched, if not revolutionized, by mobile. In less than 15 years, 3G and 4G technologies have reached 3 billion subscriptions, according to Ericsson, making mobile the most rapidly adopted consumer technology in history.

    Just as the rise of the Internet in the late 1990s was marked by explosive growth and aggressive innovation, the shift toward mobile is reshaping the economic landscape once again. Mobile is not just an industry in and of itself. It is also the foundation upon which an impressive array of industries—new and old—have taken root and flourished.

    ABOUT THIS REPORT

    Mobile communications are the most rapidly adopted consumer technology in history. Globally, mobile technology has emerged as a primary engine of economic growth, stimulating enormous private-sector spending in both R&D and infrastructure, and profoundly changing daily lives—everywhere.

    To assess the global economic impact and implications of mobile technologies, Qualcomm commissioned The Boston Consulting Group to conduct an independent study. The work included extensive research in six countries and consultation with numerous independent experts. BCG is wholly responsible for all analysis and conclusions included in the report.

    By mobile, we refer to all technologies that enable voice and data services via cellular connectivity, including second generation (2G), third generation (3G), and fourth generation (4G) networks. With each leap forward in the core technologies, new digital services come online with the potential to transform fields that have massive social and economic impact, such as health care, finance, and education. Indeed, for consumers, small and medium-sized enterprises (SMEs), and the economy as a whole, mobile is a global success story. Revenues across the mobile industry have grown at 13 percent year on year since 2009—more than twice the rate of the global economy over the same period.

    Recent advances in core mobile communications technologies have driven tangible improvements in user experience and access costs, leading to rapid adoption of devices. Consumers and businesses are discovering new ways to use mobile at an astounding rate, and mobile devices have a stickiness unlike any other consumer commodity (save the necessities of food and clothing). Users cite the profound impact that mobile has had on commerce, health, and public safety, as well as communication with friends, coworkers, and other social circles. The idea of leaving the house or traveling for business without a mobile phone is unthinkable for an ever-increasing number of users.

    Mobile technologies are also fast becoming a growth engine for SMEs. Mobile is sparking entrepreneurship in both the developed and emerging world. It has also enabled myriad innovative business models that have helped SMEs compete on an even footing with much bigger companies. (See Exhibit 1.)

    Exhibit 1

    The Mobile Value Chain

    The transformative effect of mobile has been made possible by an enormous investment from a myriad of players within the digital space: innovators for the core communications technologies, component designers and manufacturers, original equipment manufacturers (OEMs), infrastructure suppliers, mobile network operators, content providers, mobile app developers, and device retailers. The mobile value chain spans continents, binding together key players in a manner that is at once deeply collaborative and fiercely competitive. And the value chain for mobile technologies is only becoming more international as countries such as China, India, and Brazil begin to take broader roles in technology innovation, device manufacturing, and application development.

    Each generation of mobile technologies takes years of fundamental research to develop in international standards-setting bodies, with the complexity of requirements increasing monumentally for each new generation. (See “Moving the Industry from 2G to 3G to 4G.”) These enormous investments have been fueled by policies and frameworks that incentivize innovation—including strong patent protection, licensing models that provide wide access to core technologies, and industry-driven standards. The development of technology standards, in particular, has driven the mobile industry forward. Companies across the mobile value chain need a solid foundation upon which they can implement new or upgraded products and solutions, whether they are designing compatible components, rolling out expensive infrastructure, or developing new content, apps, or services. By defining an industry standard and making it widely available through licensing, mobile players can develop infrastructure, products, and services with confidence that the core technologies are stable and universally accessible. This reduces risks associated with capital investments, so mobile companies can scale up faster, which in turn boosts consumer adoption and usage.

    MOVING THE INDUSTRY FROM 2G TO 3G TO 4G

    Consider the innovation required to move the industry from 2G to 3G to 4G.

    Most 2G phones support only one core technology (for example, GSM or CDMA) and can only be used for voice and text messaging. The Internet connectivity is barely fast enough for casual users and insufficient as the primary Internet portal for professionals.

    The arrival of 3G phones increased speeds dramatically and frequently supported multiple core technologies (such as WCDMA or CDMA2000) in order to enable global roaming. These next-generation devices incorporated location-based services through GPS, were compatible with Wi-Fi networks and Bluetooth, enabled picture sharing, and supported low-definition streaming video (albeit slowly at first).

    Yet another major leap occurred from 3G to 4G technologies. 4G has enabled dramatic improvements in capacity and cost. With 4G technologies, it is common to watch full-length, high-definition videos via mobile, take video conference calls, make mobile payments via near-field communication (NFC), control devices in cars and homes via mobile, and switch seamlessly from 4G to Wi-Fi networks without interruption. These functions rely on completely new technologies that were not a part of the previous generation of mobile phones, and required more costly R&D investments than the preceding technologies.

    The standardized core technologies have delivered major advances in capacity, while network and device costs have fallen sharply. (See Exhibit 2.)

    Exhibit 2

    • 4G technologies have enabled a 12,000-time improvement in capacity relative to 2G, with maximum download speeds of 250 megabits per second (Mbps), as opposed to 20 kilobits per second (Kbps) for 2G.
    • The cost of network infrastructure per megabyte fell 95 percent from 2G to 3G, and 67 percent from 3G to 4G.
    • The global average cost of mobile subscriptions relative to maximum data speed has decreased 99 percent or about 40 percent annually between 2005 and 2013.

    Smartphones have become much more affordable. Approximately 30 percent of all units sold cost less than $100, and some sell for as little as $40, according to International Data Corporation (IDC). These falling prices have encouraged usage to shift from a limited pool of luxury consumers to billions of mainstream users. This robust growth in bandwidth, combined with falling costs, has spurred extensive follow-on innovations, resulting in the tremendous variety of new entrants and applications that exist today.

    Looking Ahead to 5G and Beyond

    As we look ahead to fifth generation (5G) networks and beyond—which promise to deliver more bandwidth and higher data rates, support the Internet of Things, and dramatically increase the numbers of connected devices—we anticipate a reinvention of communication, content, and services on a global scale.

    While the mobile value chain is healthy and robust, the things that make it thrive must be nurtured. Many policies currently in place actively sustain the innovation and interoperability needed to stitch together the platforms and networks that make up the global telecommunications industry. As mobile continues to expand its reach, policymakers must continue to support an environment of innovation across the entire value chain.