High Bandwidth Smartphones Fuel Economic Growth

About 35% of the world’s seven billion people have a mobile phone of one kind or another, and of those, one billion people use the more advanced device, a “Smartphone.”  Smartphones need copious bandwidth to really pay off for their users.  So-called 3G and 4G bandwidth provides the fastest data transfers, making data-intensive applications (such as downloading videos) possible.  But beyond use as an annoyingly small TV, Smartphones deliver massive payoffs in business applications and can efficiently handle tasks that most of us confront regularly.

The payoff for use of even a basic phone is well documented.  In developing countries, a 4.2% hike in long term productivity flows from each 10% jump in mobile phone penetration.  In developed economies, for each 10% of 2G users who migrate to 3G, the economy enjoys a 0.15% hike in per capita GDP – an important improvement and a solid reason to allot plenty of bandwidth is to the mobile marketplace.  As the U.S. moves toward wide 4G coverage, the payoffs will be even greater.

Consumers who use Smartphones experience productivity hikes in ways such as:

  • Better logistics coordination between remote salespeople, their customers, product warehousing and shipping;
  • Better sharing of insights and assessments among professional colleagues;
  • Online goods and services sales (skipping the high capital costs of bricks and mortar), which are expected to become 9% of all retail sales by 2016.  For some entertainment and services, broadband can completely avoid packaging and transport costs, e.g. the 27 million who rely on broadband to deliver movies from Netflix.

Some Smartphone services or “apps” have been created for consumers without need for purchase.  For example, “Cloud On” lets the Smartphone user pull in Microsoft’s Office products to work on files they have stored in cloud locations such as Dropbox or SkyDrive accounts.  The “KidzOut” app serves parents of young children, showing user-rated, local “diaper decks,” playgrounds, medics and family restaurants.  Some apps may be efficient but have not obvious productivity benefits for end-users.  For example apps such as Glyderand MailShot can be used to originate mass mailing of unsolicited marketing messages.

The ingenuity of app creators and online retailers has motivated consumers to adopt Smartphones.  That in turn boosts productivity, justifying the creation of new jobs and increases in pay.  That virtuous cycle can continue if enough bandwidth is allotted to the mobile marketplace.

Alan Daley is a retired businessman living in Florida and following public policy from a consumer’s perspective. 

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