Association for Public Policy Analysis & Management

The hypothesized benefits to individuals and households in developing countries of mobile technology include access to direct price, weather, and other valuable information and facilitating financial inclusion through digital financial services. Although the empirical support is thus far mixed, the World Bank details evidence of benefits from mobile technology in agriculture, health, finance, economic development, governance, education, and gender equality.

In this paper, we use the most recent available data to estimate access to mobile coverage, expressed as the percentage of the population that is covered both overall and in rural and urban areas, and use spatial analysis to identify where these populations are concentrated. We find that although mobile coverage has increased significantly in recent years, rates of coverage expansion are slowing as easier to reach urban populations are now almost entirely covered and the remaining uncovered populations are more dispersed in rural areas and therefore more difficult and costly to reach.

Remoteness and a lack of supporting infrastructure contribute to a high cost base for the proliferation of mobile networks in most of these uncovered areas. In addition, the potential return on investment is sometimes not favorable due to low population densities and a largely low-income customer base, hypothesized to slow (and potentially end) the expansion of mobile coverage by private mobile network operators (MNOs) in developing countries. Efforts to expand mobile access include government efforts to foster stable regulatory environments and promote competition among MNOs and the promotion of new mobile access technologies by private companies. But it is unclear how closely market liberalization is associated with coverage, and whether some form of subsidization or public provision is necessary to achieve universal coverage.

We test the assumption that levels of mobile coverage are related to the degree of market liberalization at the country level. We find no significant relationships between mobile coverage and the number of MNOs or the Herfindahl-Hirschman Index (HHI) of market concentration in the mobile industry, but a strong and significant relationship with the CPIA Business Regulatory Environment rating, an indicator of general market liberalization. This result indicates that general market liberalization to promote competitiveness in both the mobile industry and in complementary industries may support mobile coverage expansion.

We also find a strong negative relationship between mobile coverage and the rural proportion of the population, and a strong positive relationship between coverage and GNI per capita, highlighting the importance of demand side factors in coverage expansion. However, we cannot assess whether market liberalization alone will be sufficient to reach universal mobile coverage, especially for rural populations, without also increasing GNI per capita or subsidizing expansion costs to less profitable areas. Our findings have significant implications for policy-makers, as without efforts to promote coverage expansion, the largely rural, agricultural, and low-income populations without mobile coverage are likely to be increasingly disadvantaged by their inability to access information and financial services, among other potential benefits of mobile technology.