Steve Song on the Philippines, SMS Pricing and the Economics of Abundance

Last week I asked what arguments would convince network providers in East Africa to stop fixing SMS prices artificially high. Steve Song answered with the 'economics of abundance' argument, where carriers earn more by having more users at lower costs. This is a familiarand powerful argument in the telecom policy world.  Steve explains how the argument worked in Phillipines, resulting in 1 cent SMSs (the global average is 10 cents):

Regarding what sort of pressure it would take to get operators to voluntarily drop their SMS rates, I think they need to be convinced of the economics of abundance. They need to believe that if they halved their SMS rates, that their SMS traffic would more than double. I have given the example of the Philippines where they send roughly a billion SMSes a day as compared to roughly 25 thousand per day sent in South Africa. The cost of an SMS in the Philippines is less than 1 US cent as compared to 7.5 US cents in South Africa. If you double South Africa's population (and resulting SMS revenue) to roughly match the Philippines, they are still generating more than 3 times the revenue at less than 1/7th of the price.

Amassing evidence that lower pricing leads to more revenue is the first step. The second step is finding someone in the Kenyan or Ugandan telecom sector with the gravitas and positioning to make the argument to the network providers