Economic benefits and implications in investing and deploying new technologies - Bridging Digital Divide with Mobility Dr. Walid Moneimne SVP, Nokia Networks Dr. Walid Moneimne SVP, Nokia Networks

Contents The Scenery Global Trends Economic impacts of Wireless Networks & Industry Case example India Total Cost of Ownership Conclusions

The Scenery “In cooperation with the private sector, make available the benefits of new technologies— especially information and communications technologies” UN Millenium Goal 8, Target 18 “Increase of 10 mobile phones per 100 people boosts GDP growth by 0.6 percentage points” Vodafone / London Business School Study “Encouraging the spread of mobile communications is the most sensible and effective response to the digital divide” The Economist “Cellphones are a better way than laptops to bring computing to the masses in developing nations” … “because everyone is going to have a cellphone” Bill Gates & Craig Mundie, Microsoft “Mobile phones can boost development in poor countries — if governments let them” The Economist

Key trends in the Mobility Environment Towards the 3 billion milestone e Current global penetration 33 % 2 billion in 09/ billion in 2008 Mobile phone subscriptions globally, millions Source: Informa Telecoms&Media, January 2006, and Nokia estimate

Digital Network Technology Evolution GSM EDGE WCDMA 2G 2.5G 3G phase 1 GPRS Evolved 3G HSDPA HSUPA 2000/ / EDGE Evolution Customer Confidential

Evolution is Driven by Cost Efficiency 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20, E2005E2006E2007E Cost per Erlang of capacity ($) GSMWCDMA WCDMA Provides Lowest Cost Per Erlang Cost efficiency due to high capacity Source: Credit Suisse First Boston, May G investments up to date € 125 B in Technology € 125 B in Networks

Mobility is significantly reducing the Digital Divide in the New Growth Markets New growth markets Mature markets Source: Building Digital Bridges with Emerging Technologies, ITU, September Personal computers (millions) % of PCs are in the mature markets Internet Users (millions) % of Internet users are in the mature markets Mobiles (millions) 4 times more mobiles than PCs in the new growth markets, exceeding mature markets’ PC penetration by 100M

Significant economical benefit from ICT investments Studies on digital divide indicate strong correlation between GDP and connectivity Source: Monitoring the Digital Divide …and beyond, Orbicom, 2003 One point increase in Infodensity index increases GDP per capita 124 … 164 USD GDP raising effect is higher at lower Infodensity level

Economic impacts of wireless networks Source GSMA Direct impact Economic value for users Indirect impact Network build-up Service provision Other Enterprise Consumer HW/SW suppliers Client device providers Content providers Other Overall economic impact of wireless Overall economic Impacts of wireless Direct impact Economic value forusers Indirect impact Network build-up Service provision Other Enterprise Consumer HW/SW suppliers Client device providers Content providers Other

Example India Favorable government policies have tremendous impacts on industry and GDP growth the industry generates a GDP contribution of R313 billion per year 1. This is already 1.0% of Indian GDP in Today number is higher 3.6 million jobs in India depend on the mobile services industry. The industry itself employs only 171,000 staff. But it buys in support services which generate another 912,000 jobs while the taxes, interest payments and profits generated by the industry support a further 720,000 jobs. Finally the employees in these jobs spend their money within the Indian economy and this expenditure supports a further 1.8 million jobs the Government receives R145 billion in revenues as a result of the industry and the employment which it generates. (0,5 % GDP). This revenues comes from a variety of sources - from industry specific spectrum and license fees together with import duties on mobile equipment; from sales taxes on mobile terminals and service taxes on use of mobile services; and from income tax and contributions to the Provident fund by employees and employers. HOWEVER, India still has very high industry specific taxation in the form of spectrum, license fees and import duties Heavy cross subsidy from mobile to fixed Promotion of site sharing would have a positive impact on rural connectivity

Affordability drives Mobile Growth and GDP Mobile Growth Affordable communications Total cost of ownership Cash barrier for entry Regulatory environment

Total Cost of Ownership Vendors Operators Governments & Regulators Governments & Regulators Civil Society

Role of the Governments & Regulators Open Telecom market is key in driving favorable growth Capacity and competence - not copy & paste regulation

Role of the Governments & Regulators Governments Establish a National Telecoms Act Create an efficient National Regulatory Authority Maintain a National, strategic telecoms plan Lowering of all Affordability Barriers Regulators Independent, resourced and skilled with powers to act Clear policy objectives and targets Transparent policies with regular stakeholder dialogues Stable and predictable regulatory environment Open Telecom market is key in driving favorable growth Capacity and competence - not copy & paste regulation

Conclusions Mobile telephony is a major catalyst of economic and social development and is playing a central role in bridging the digital divide Affordability drives mobile penetration and teledensity and thus increases GDP and economic impact of Mobility in the society Reducing regulatory risk will reduce investment risks and Total Cost of Ownership The enormous growth opportunity will not happen on its own