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March 21, 2005

The SIM card stampede

Set70_01The crowd started forming at dawn. By 8.30am they had started jostling against the armed guards outside the Ethiopian Telecommunications branch office. When I asked someone what was going on he said two words - "mobile phones".

Later in the day, I watched a similar crowd gathering outside the main telecoms office on Churchill Road in the centre of town (see pic). The young men - and in both cases it was mainly young men - had got up early to push and shove to get hold of one of the 200,000 new mobile phone lines that have been offered to the public over the past few weeks.

Those lines have been a long time coming. For years there has been a huge backlog in the SIM cards distributed exclusively through Ethiopian Telecommunications Corporation (ETC), a state monopoly. Until recently, the only way to get one was to go one a two-year waiting list, rent one by the week, or get a letter from some ministry pushing you ahead of the queue. (As a registered journalist I got to use the last technique with the help of the Ministry of Information).

The recent rush for SIM cards highlights two things. First, and most obviously, there is the huge demand for mobile phones in Ethiopia and beyond that Africa as a whole. The second is the inefficiency of leaving the state to run a country's telecommunications industry. There is a huge demand for mobile telecoms in Ethiopia and - in the worldwide market - there is a huge supply of mobile handsets and services. But, for some reason, over here supply is so limited that the arrival of some SIM cards starts a stampede.

Last week's Economist had some interesting facts and figures in their lead article The real digital divide:

Instead of messing around with telecentres and infrastructure projects of dubious merit, the best thing governments in the developing world can do is to liberalise their telecoms markets, doing away with lumbering state monopolies and encouraging competition. History shows that the earlier competition is introduced, the faster mobile phones start to spread. Consider the Democratic Republic of Congo and Ethiopia, for example. Both have average annual incomes of a mere $100 per person, but the number of phones per 100 people is two in the former (where there are six mobile networks), and 0.13 in the latter (where there is only one).

Ethiopia's mobile phone story took an interesting twist in last week's Fortune, one of the country's two Sunday business papers. Ayenew Haileselassie reported on the paradox that while thousands were queuing to snap up SIM cards, the country's officially-licensed mobile phone shops were doing very bad business. The reason, of course, was that Ethiopia's new mobile users were taking their new cards down to the markets to put them into a flood of much cheaper, illegally imported handsets. Customers had found a way to get round at least one state control.

Ayenew visited an official Siemens dealer in the Piazza:

Their best daily sale over the past three weeks since the ETC started doling out 200,000 lines to subscribers has been five phones. Their worst sale, which could happen once or twice a week, amounted to zero…

"Sometimes we get our salary a day or two late," said Tariku [one of the salesmen]. "We feel embarrassed to remind our employer, for we know we have not made many sales."

ETC, by the way, is going through a process of gradual privatisation.

Posted by aheavens at March 21, 2005 5:34 AM