A new paper investigates the different effects that mobile and land-line phones may have on economic development, accounting for the possibility that causation may run in both directions. While previous studies have generally found that telecommunication is positively related to growth, few have looked at how mobile telecommunications specifically impacts on economic growth, especially where the growth in mobile telephony is disproportionate relative to the level of land-line telephony (we have previous discussed various micro studies e.g here, here and here). The key conclusion :
We find the current importance of traditional land-line phones for economic growth to be negligible in the sub-Saharan region. On the other hand, the contribution of cellular phones to economic growth has been growing in importance. While it is obvious that cellular phone use has been growing, we document that the impact itself of a single cellular phone has also been growing. Moreover, we find that the marginal impact of cellular phones is greater wherever land-line phones are rare. Combining these two results with the fact that cellular phone infrastructure is comparatively cheap, and the policy implication is clear – more cellular phone infrastructure should be encouraged in the sub-Saharan region, as it is the more cost-effective and beneficial technology.
Closer to home, the natural implication of this result is the relentless push for further deregulation of the international gateway, as well as elimination of cross subsidisation from ZAMTEL to Cell Z which distorts competition (further discussion of these issues here). We continue to champion both issues on this blog. But what particularly struck me is this early observation in the paper :
Mobile and land-line (fixed-line) telephones offer great promise for improving economic well being in Africa.... The two technologies, however, are imperfect substitutes, offering different types of services. Clearly, mobile phones offer most, and possibly all, of the services of land-line telephones. The opposite statement is less true. Land-line telephones do not offer text message services or mobileinternet access. Often, all that is required for an efficient decision to be made is a price quote. In this regard, a simple text message is far more cost-effective.
I have to say that I see no obvious reason why individuals would prefer fixed lines over mobile. By extension, it would seem to me that fixed land lines only become important nationally, as a compliment to broadband services. But I am no telecommunications expert, I defer these issues to Zedian and others. In particular, I would be interested to know what others think on a specific question : is there a future for fixed telephone lines in Zambia or should our communication strategy centre around expanding mobile telephony, as implied by the conclusions in the paper ? The answer has obvious implications for the future of ZAMTEL and how quickly every dot on these maps will be all red.