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How to prevent 5G from creating a new digital class divide

5G
(Image credit: Shutterstock.com / Who Is Danny)

There is no doubt that more accessible 5G technology is becoming a reality. The major analyst houses such as Gartner, CCS Insight and Counterpoint all concur in predicting that 5G devices will consume around a third of smartphone shipments in 2021. The unifying factor in these predictions hitting the proposed 30-35 percent are more aggressive consumer price points, something that the handset manufacturers themselves are keen to propagate in order to recover from the black swan event that was 2020.

A virtual CES 2021 set the tone in this regard, with a number of 5G smartphone announcements such as the Motorola One 5G Ace and the TCL 20 5G, being primarily focused on the ‘low-cost’ side of the spectrum. Combined with Qualcomm’s announcement that its new Snapdragon 480 processor, which has the potential to develop 5G devices as low as $150, industry commentators also believe that this year, low-cost 5G devices will really begin to make traction. Affordability however, is subjective and, as it stands, the prices of current 5G devices all exceed $300 making 5G access something that will vary greatly depending on the market in question.

The Covid-19 impact

Covid-19 has exposed inequalities in tech access around the world. Huge disparities in global communications infrastructure became evident as did the gaps between countries that were ahead of the 5G roll out curve vs countries that are yet to make the jump even to ubiquitous 4G access. When we combine these global variations with the true economic consequences of the pandemic and ongoing geo-political instability, it is worth considering whether these devices will indeed penetrate the market to the extent that their proponents suggest – and certainly within the timeframes predicted.

2020 will long be remembered in tech as compressing perhaps as much as 5 years of global digital transformation into just 12 chaotic months. Online access to everyday resources such as education, finance and healthcare went from being a convenience to absolute mission critical for families around the world. The percentage of mobile broadband access dominates fixed line in many countries making high speed internet access no longer a ‘nice to have’. It has become a lifeline for the hundreds of millions of people working or schooling from home, for maintaining social relationships and a host of other reasons. Our newly altered lives aren’t expected to revert back to pre-Covid-19 times once the pandemic is over either. We are breaking new digital ground and  5G promises to further revolutionize the way we live and work. The issue here is that the countries that lack fixed line broadband are often the ones that would benefit from 5G access the most. The desire for affordable 5G devices is often required in the countries who’s populous is least able to afford it and as such we are in real danger of exacerbating the currently unacceptable digital divide.

Global access issues

On a positive note, internet access is improving globally, albeit not fast enough for most. Findings from the United Nations and the International Telecommunications Union have shown that within the last 15 years, the proportion of the world’s population with internet access has grown significantly – from approximately 17 percent to over 50 percent. The issue however, is that there remains a number of inequalities across different geographies – for example, the proportion of people with internet access is over 80 percent in Europe, but this figure drops to less than 30 percent in Africa. In addition, there are marked gender imbalances in access within many countries and across different socio-economic groups. This is true of all countries whether low or middle income or in the developed world.

Additionally, it is widely understood that the accessibility of internet access, as well as broadband speeds are directly correlated to GDP. This is why many governments around the world invest in and prioritize high speed broadband. However, for countries which have large populations living in remote or rural settings, building out high-speed fixed-line broadband infrastructure can be challenging and so instead they are reliant on mobile internet to achieve the same goals. In this context the transformative power of 5G is all the more evident and the importance of making 5G-enabled devices accessible all the more important.

Regarding affordability, we need to ensure that 5G devices permeate through the whole of society and not simply those who are better off, so that everyone can reap the benefits. If the upfront cost of a 5G mobile device is to remain a barrier for these markets for some time, then we need to turn our attention to alternate means such as smart financing and credit tools designed specifically for unbanked populations that have never experienced credit before. The cost of managing non-payment of bills and credit risks costing the telecoms industry $14bn per year. In addition, the increased value of smartphones means that they have become a target for fraud and supply chain theft – the latter of which costs the industry around $3.5bn each year. Both are growing issues of concern and are ones that we as an industry, must tackle.

Resolving the issue through better financing

As mentioned, one of the ways to increase device affordability, is to empower operators to provide more accessible financing arrangements through smart financing and credit tools. By lowering the risk threshold for device financing and offering credit solutions, for the first time in some markets, those on lower incomes can also benefit from the power of 5G.  Mobile operators are able to grow their digital revenues and offer new services to their customers without increasing their commercial risks.

Using a platform for device financing on a ‘per smartphone basis’ for example, gives operators the option to set up payment reminders for customers and provides control mechanisms to remotely restrict or lock a customer’s smartphone should they not make the outstanding payment – helping to reduce mobile bill payment delinquency rates which sit at around 15 percent globally, and can be up to 40 percent in some markets.

In the wake of the pandemic, the blunt instrument of ceasing access to mobile services due to non-payment has been prohibited by governments and regulators in some markets, with reputational impacts also playing a role here too.  However, the end result is added pressure on operators to function profitably. For this reason, a balance must be struck between supporting customers through tough financial difficulties and protecting revenues. Device financing and revenue assurance is a sensitive way to support operators to lower their overall customer risk profile. They are able to accept more new consumers while retaining existing customers to make sure the 5G devices – and by extension, 5G services – are attainable by all.

Traditional credit ratings are a blunt instrument and are now a hugely outdated means for consumers seeking access new devices around the world – many of these customers may have no credit history to speak of or may be finding themselves in financial difficulties for the first time. We also need to help, those who would never be considered for finance and considered high risk. Handset manufacturers will be looking to sell devices and meet their targets and mobile operators must balance that commercial risk from a cost perspective. However, by increasing control over devices and broadening financing options, both can achieve their goals and importantly, all consumers will benefit from having 5G access.

Making theft a thing of the past

In addition to making devices more affordable, mobile operators also need to further protect consumers and the smartphones they carry by making devices less enticing to steal and easy to repurpose. Wherever a smartphone is stolen in the world (including countries that do not use IMEI blacklisting), operators must implement technology that enables the device to be fully locked down, making it unusable and therefore removing its resale value.

Equal digital opportunities for all

With 2021 billed as the year for 5G to go mainstream and a string of product announcements lining up for launch, rapid adoption is on the cards. But in an industry often charged with widening the gaps in our societies, wouldn’t it be great if we could take the opportunity to level the playing field and give everyone access to a 5G device regardless of their position in society or money in the bank?

Dion Price, CEO, Trustonic

Dion Price is a global mobile and device industry expert. Currently CEO of Trustonic, he has previosuly held senior commercial roles at O2, Brightstar, Lightsquared and WaveOptics.