Coverage is the Problem in Developing Markets, Capacity is the Issue for Developed Markets

In a broad sense, one might argue that “capacity” and “coverage” are the twin drivers of mobile network access issues.

But one might also argue that, at the moment, those issues also correspond to the fundamental drivers of mobile and other Internet access business models in developed and developing markets.

Simply, the big issue in developed markets is “capacity,” while the key present issue in developing markets is “coverage.” That is a relative statement, as every mobile network requires both ubiquity (reach) and capacity (bandwidth).

Still, the big issue in many developing markets is coverage, in a twin sense. Mobile and other Internet access networks do not reach into rural areas, while the capacity and performance of next generation networks is not available (2G is the mainstay).

For a number of reasons, include disposable income profiles, the practical implication is that even as next generation networks are built, coverage still will be the main issue. Capacity is important, but not yet as big a requirement as in developed markets.

Colloquially, supplying some bandwidth is very valuable. Where in a developed market in 2014 a typical user might consume 1.4 Gbytes of data a month, in a developing market a typical user might consume 255 Mbytes (30 Mbytes for a 2G user, perhaps 550 Mbytes for 3G and 4G users), according to the International Telecommunications Union.

source: Facebook  

Deployment of next generation networks also tends to be constrained by retail consumer ability to pay.

The ITU, for example, considers an Internet access service affordable if it accounts for up to no more than five percent of gross national income (GNI) per capita.

A better measure, some would argue, is household spending. In developing markets, people who already use the internet spend on average 3.8 percent of their household income per capita on mobile data.

source: Facebook  

The bottom line is that although both "coverage" and "capacity" are real issues for suppliers and consumers of Internet access services, coverage is the bigger issue in developing markets.