Mobile proves a driving force across Arab world

The astonishing advance of mobile in the Arab states is not only transforming access to information and services, but is also acting as a fundamental driver of economic growth, writes Peter Lyons.

The mobile industry contributed US$54 billion to the economies of the Arab states and created 1.2 million full-time jobs in 2011. Pawan Singh / The National

The astonishing advance of mobile in the Arab states is not only transforming access to information and services, but is also acting as a fundamental driver of economic growth. Over the last 10 years, total mobile connections in the Arab states have increased at an average annual rate of 32 per cent, from 19 million in 2002 to 391 million last year.

In 2011, the mobile industry contributed US$54 billion to the economies of the Arab states and created, directly and indirectly, an additional 1.2 million full-time jobs.

To put the economic effect of those numbers into perspective, it helps to compare mobile's contribution to that of the region's chief economic driver, oil. In real terms, the combined oil revenues in 2011 of the 11 members of the Organisation of Arab Petroleum Exporting Countries stood at US$479 billion. Directly revenues from mobile operators would be about 11 per cent of revenue generated by the oil industry. But like oil, mobile also provides a significant indirect economic contribution, in terms of jobs, new skills and workplace innovation.

What is certain is that the availability of mobile networks creates great opportunities for new business and services within the region. In 2011, the mobile industry was responsible for driving a further $78bn of GDP for the Arab states' economies. When taken alongside the mobile operators' revenues, that equates to approximately 5.5 per cent of total GDP.

The Groupe Speciale Mobile Association (GSMA) projections indicate that the industry could stimulate a further GDP increase across the region of $108bn over the next 12 years while helping to generate an additional 5.9 million full-time jobs - important numbers when you consider that for an oil-producing nation, economic diversity is the key to long-term growth.

The need to look beyond oil is even more pressing in those Arab states with high youth unemployment. The latest World Bank report shows that the unemployment rate among young people in the Middle East and North Africa is the highest in the world and warns of "high levels of vulnerability", particularly in Egypt, Syria and Tunisia, if governments do not take urgent steps towards greater economic inclusivity.

For the Arab states, the mobile industry could indeed help provide the answer. However, the sufficient allocation of spectrum - the lifeblood of mobile communications, which enables you to make a call, download data or connect to a remote device via your handset - must first be a priority.

With such a vital economic role to play, one might be forgiven for thinking that the region's long-term strategy already provided sufficient radio frequencies for mobile. However, across the Arab states, mobile spectrum levels are currently insufficient to accommodate fast-increasing data demand and are, in fact, considerably lower than those in other developed economies.

Since the mobile industry has demonstrated, time and again, its capacity to generate tangible and manifold economic and social benefits, surely it is time for national regulators to release sufficient appropriate spectrum to help realise its full potential.

Governments should leverage spectrum that is not being used to its full extent, such as the sub-1 MHz band, to ensure that the mobile industry can continue to meet demand for broadband internet access.

If all countries across the region allocate this spectrum for mobile broadband in a way that is coordinated with the rest of the world, the Arab states will then be able to provide the additional broadband access their people and industry require while also reducing the cost of mobile services and devices as they benefit from mass production and international economies of scale.

At a user level, mobile broadband has the ability to provide access to services that enhance people's lives, including innovative teaching methods and cutting-edge ways of monitoring individuals' health. At a macro level, mobile already contributes to national economies via massive investment in network infrastructure and the direct employment of hundreds of thousands of people. Mobile also contributes significantly to public finances through paid taxation, licence and regulatory fees.

Governments need to take a longer-term view instead of focusing on quick-win gains with minimum returns, such as the high consumer and mobile operator taxes that are imposed by some countries and high spectrum reserve prices. They should adopt global best practices that maximise the advancement of mobile technology and generate long-term private-sector investment to foster greater opportunity for future generations.

The current shortfall of the right kind of mobile spectrum puts the Arab states in a precarious position, potentially hindering socio-economic advancement as well as the region's ability to demonstrate information and communications technology leadership to the rest of the world.

It is the responsibility of regulators and governments to allocate additional mobile spectrum quickly, efficiently and through transparent and fair processes. This will secure the future of mobile in the Arab states and maybe even allow us to start to compare the effect of mobile communications in the region with that of oil.

Peter Lyons is the director of public policy for the Middle East and Africa at the GSMA