In many developing countries, mobile networks play an important role in meeting universal access goals. Mobile or wireless networks may be more economic than conventional landline networks, particularly in remote or rural areas.
In many developing countries, there is a tension between ensuring low fixed-to-mobile rates, and encouraging greater penetration of mobile services.
In markets with low mobile penetration there may be theoretical and practical justifications for above cost mobile termination charges. Revenue from high termination charges may enable mobile operators to subsidize:
- Access to the service, for example by subsidizing the cost of handsets, and
- Usage charges (mobile-to-mobile and mobile-to-fixed calls).
Before intervening to reduce mobile termination charges, developing country regulators should weigh up the potential effect on access to the network for poorer segments of population, against the purported benefits from reduced termination charges.
The Role of Prepaid Services
Prepaid services can play an important role in reducing barriers to access for poor customers, or those in rural areas. Under prepay options, customers:
- Do not need a fixed address in order to access the service,
- Are not required to visit the service provider’s offices to pay their bills (particularly if the provider has wide retail distribution channels for prepay cards), and
- Do not need to commit to a fixed monthly payment, which can be a problem for customers with low or unpredictable incomes.
For example, in Jamaica, access to telecommunications services increased dramatically when competing mobile phone companies introduced prepaid, no-deposit accounts. This was a major cause of Jamaica’s phenomenal increase in telephone penetration following liberalization.