| Most associate the economic value of the mobile phone industry with the earnings of the operators (direct earnings) and those of the auxiliary players like handset manufacturers and content providers. This, according to Luis Enriquez, Stefan Schmitgen and George Sun's piece in the latest McKinsey Quarterly, added up to around 0.7 per cent of India's GDP in 2005 (calendar year), and was a higher 3.2 per cent in the case of China and 3.8 per cent in the case of the Philippines. These numbers, however, don't capture the benefits subscribers get, over and above what they share with the mobile phone company "" what economists call 'consumer surplus'. What the authors have done to calculate this is to look at the amount subscribers pay their mobile phone firms when they first begin their service (the Average Revenue Per User, or ARPU), and see how this has changed over time. Since subscribers would have been willing to pay this tariff in the future, any decline in ARPU thanks to competition has to be the consumer surplus. For 2005, this was calculated at $4.5 bn in India, a figure that equals around half the revenue earned by the mobile phone firms. |
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