Box 1: A tale of two countries

Cambodia, with a population of 10.3 million, is a poor (1997 GNP per capita: US$ 286), mainly agriculture-based economy in Southeast Asia. Finland, with a population of 5.1 million, is a wealthy (1997 GNP per capita: US$ 23’596), industrialized Nordic nation. These two countries could hardly be more different from a cultural, economic or geographic perspective, yet they have one thing in common: they both have more mobile cellular than fixed telephone subscribers.

Mobile cellular came to Cambodia in late 1992. Within a year, mobile subscribers had already surpassed the number of fixed telephones in the country. The main reason was that the fixed network had been extensively damaged during more than two decades of war. It was logical to exploit the advantages of mobile cellular (e.g., there are no wires to lay which is particularly useful in a country like Cambodia endangered by many land mines) in order to provide rapid access to communication facilities. No less than five companies operate mobile cellular services, and all these are backed by strategic foreign investors, an important consideration in a poor nation like Cambodia. A Wireless Local Loop (WLL) system is also in use for fixed service. The spread of mobile communications has happened so quickly that serious questions are being posed about the viability of expanding the fixed network, despite the fact that Cambodia has one of the lowest teledensities in the world. As a result of mobile growth, Cambodia has surpassed 31 other countries in overall telephone penetration over the past six years. Cambodia illustrates the case that leaping straight to wireless is a viable option for rapidly expanding telecommunication access in developing countries with low levels of fixed infrastructure.

Finland is in some ways a curious place to be the world leader in mobilephone penetration. It is not the richest country in the world (for example both Japan and Switzerland have a GNP per capita twice that of Finland while all of its Nordic neighbours have a higher GNP per capita). Furthermore, Finland does not particularly stand out when the factors that are normally believed to drive rapid mobilephone growth are considered. For example, while there is competition, it was essentially a duopoly until 1998. In contrast, Sweden has had three mobile competitors for some time and the United Kingdom four, yet they both lag behind Finland in mobilephone penetration. Also, despite being the headquarters of Nokia, the world’s top vendor of mobile telephones, handsets are not subsidized in Finland. Instead, three other factors seemed to have driven the Finnish mobile craze:

• The early adoption of cellular technology has given Finland a wealth of mobile experience. Finland introduced the analogue Nordic Mobile Telephone (NMT) system in 1982 and was the first country to introduce the digital GSM standard a decade later.
• Second, there were historically many co-operatives providing local telephone service at fairly low rates and with a high penetration. This meant that for mobile cellular to be successful, tariffs would have to be competitive with fixed-line ones. Furthermore, unlike most other countries, the largest operator, Sonera (formerly Telecom Finland), did not have a monopoly for local telephone service, obliging it to look elsewhere for revenue growth.
• Third, there seems to be a Finnish affinity for adopting new technology. In addition to having the highest mobilephone penetration in the world, Finland also leads in Internet host penetration. Finns have also pioneered the use of mobile technology for other applications, such as short message text and data services, chat rooms and even for connecting vending machines.

What Finland illustrates is that mobile cellular penetration may exceed fixed-line penetration even in countries that have already attained a high level of telecommunication development. In the past, a family would have obtained one fixed telephone connection. Today, it is not inconceivable that each member of the family will own their own mobilephone.