I’m a big fan of Huawei‘s website.  Like any good company they publish information intended for their clients, mobile operators.  Reading their publications from the perspective of a mobile operator makes perfect sense but reading it as a consumer has quite a different flavour.

I first noticed this last year when I mused about the possibility of a one-cent SMS.  Huawei was the only place that I was able to find any documentation about the real cost of SMS.  They acknowledge that:

SMS margins estimates vary, but typically maximum of up to 80-90% of SMS messaging revenues being profit are often quoted

base station antenna, NV

This is the sort of information that is just good news being shared in the mobile industry but for the consumer, it is pretty disturbing.

In a happy turn of events, Bharti-Airtel through their recent acquisition of Zain Africa have made the dream of a 1 cent SMS come true by slashing mobile voice and SMS costs to 25% of the previous market rates.  Safaricom briefly blustered about the prices being “unsustainable” but shortly followed suit.  It will be interesting to see what the ripple effects of this “India comes to Africa” strategy will have on the continent.  Zain are in 15 African markets.  That should shake things up.  A pity they aren’t in South Africa.

These days, when I hear an African telco claim as Safaricom did that Zain’s pricing was “unsustainable” or as the mobile operators in South Africa did that a drop in interconnection fees was “unsustainable”, I can’t help but wonder exactly what it is that they really mean.  In the words of Inigo Montoya, I do not think that word means what you think it means.

Which brings me to the title of this post, The Importance of Being Local.  Another kind of data that is very hard to get hold of is the percentage of phone calls that are local i.e. where people are not far from each other.  In the case of mobile, that would be calls that happen on the same cell tower.  This sort of information is jealously guarded by mobile operators as sensitive corporate information.  Huawei to the rescue again:

In general, an average of 30% of all the calls processed by a base station controller (BSC) is local calls. Billing analysis of China Mobile shows that the number of local calls amounts to about 50% in some areas. The number is even higher in Latin American and in some African countries. For example, billing analysis of an operator in Colombia shows that BSC local calls accounts for about 60% of all calls made.

This information is particularly interesting to me as the Village Telco is at least partly based on the premise that even just offering local calls would deliver significant value to people.  We’ve got localised reports that provide evidence that this is true but it is great to see that validated by a more sweeping assertion from Huawei.  For me this means that there is a strong value proposition for the Village Telco and other technologies such as OpenBTS which offer the possibility of locally-owned infrastructure.

If you clicked on the link to read the Huawei article, you may have noticed the title “Exploring the Gold Mine of GSM”… like I said, not really consumer focused..

Posted by Steve Song

@stevesong local telco policy activist. social entrepreneur. founder of @villagetelco #africa #telecoms #opensource #privacy #wireless #spectrum #data