Adopting Digital Innovations—Market Anomalies?

What is the difference between Kenya and Kyrgyzstan?

In assessing mobile markets we have found lots of anomalies over the years—markets that at first looked similar yet had very different adoption levels.  Take Kenya and Kyrgyzstan.  Or Turkey and Russia.  What about Canada and Finland?  And Malawi and Mozambique 

All of these country pairs have roughly the same income per capita (adjusted for PPP) yet very different mobile penetration levels.  Kenya is seen as the high tech incubator of Africa yet lags well behind land-locked Kyrgyzstan in mobile penetration—81% to 131%— even as mobile coverage is harder to provide in mountainous Kyrgyzstan. 

On the other hand, Turkey, Kyrgyzstan’s distant ethno-cultural cousin, lags way behind Russia, with its coverage-resistant vastness—97% to 163%.   Canada also lags Russia (with about half of Canada’s GDP income level) as well as its northern income peer Finland, which has a 134% mobile penetration rate compared to Canada’s 84%.   Russia like Canada has a large territory to cover but has virtually twice Canada’s mobile penetration in subscription terms.

Why these differences?  The underlying answer is that more factors than are commonly thought of affect the adoption of digital innovations.  On the supply side, the geography to be covered, the assigned spectrum, the number of operators, and the prices charged are a few of the obvious ones.  Less obvious are some unexpected effects.   Users in hard-to-cover Russia (or Kyrgyzstan) can use three or more SIMs to increase their chances of having a signal in rural areas, not to mention to benefit from different price discounts in urban ones.

On the demand side, not just income but education, age, the size of households, and rural populations can play a role along with available content and apps.  Again, there are paradoxes.  Older users may use more mobile, mobile broadband, and mobile money services than the young, as they generally have more disposable income.  This helps explain the higher penetration numbers in places like Kyrgyzstan and Russia.

Having a dominant operator, which is the case in Kenya or Mexico, reduces the need for as many SIMs and therefore the connection count.  Mexico’s mobile penetration is much lower than Argentina’s for example.  By the same token, the presence of a dominant operator can facilitate the use of mobile money services, as it has in Kenya, reducing the need for interoperability.  Digital gender parity has helped the Philippines become the world’s leading texting market when measured on a per capita basis.

At Kalba International we have been assessing mobile, broadband and digital applications markets for decades—see the map above for where we have done so.  The members of our digital development practice include Olivier Alais (social technology, digital IDs, NERNs), Dr. Bob Bell, Jr. (data analytics, STI), Francois du Plessis (mobile money services), Dr. Chris Hogendorn (OTT economics), Kas Kalba (innovation adoption), Dr. Christelle Scharff (mobile apps/incubators), and Dr. Jenny Wan (consumer surveys).

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