Rory Sutherland Rory Sutherland

Why smartphones work better in Soweto

issue 01 September 2012

A friend of mine insists that when Alfred Hitchcock’s Psycho first opened in Britain, the emotional impact of the most famous murder in cinematic history was slightly diminished. As Norman Bates’s knife came into frame, British audiences of 1960 were still recovering from the shock of a scene they had witnessed a few minutes earlier when they were shown a hotel room that had its own shower.

I can still just remember a time when it was normal to walk along a hotel corridor to take a bath or use the loo. And the folk memory of these regional variations still lingers. I don’t think anyone in Britain still packs loo rolls to take to the continent, but people did. Americans, who first travelled to Europe in large numbers at a time when the transatlantic plumbing divide was widest, still believe all French people stink (a US satirical website claims Lance Armstrong was disqualified from the Tour de France after local investigators detected the presence of the banned substances soap, deodorant and toothpaste).

To a visiting Brit of the 1960s, California seemed like science fiction. Now, Japan aside, the capacity of a country to amaze us with its technology seems to have gone. In fact there is now a strange kind of reverse process at work. Technological infrastructure is often unexpectedly better in poorer countries than in rich ones. The mobile coverage in Soweto is far better than in Covent Garden. Vodafone in Portugal is much better than in the UK. And the speed of internet access in a hotel or café is impossible to predict: it can be lousy in Silicon Valley and brilliant on a Greek island.

Partly this can be explained by the leapfrog effect: that the countries who upgrade their infrastructure last are the ones who do it best. Brits also have a problem in that we don’t build wooden houses — 3G mobile signals are hopeless at penetrating stone or brick. But there is another problem in developed countries: overuse. In countries where bandwidth-hungry smartphones are common, much of the available mobile bandwidth is misused. And investment in mobile infrastructure is misdirected.

Both regulators and mobile phone operators are to blame for the fact that the quality of the mobile phone service in Britain has shockingly declined over the past few years. Too much attention has been paid to reducing prices and not enough to improving quality. (If Ofcom were put in charge of water regulation in Britain, we would get cheap water from our taps, but it would be undrinkable.)

But the existence of unlimited or indiscriminate pricing packages has made this worse, since there is no incentive for people to make intelligent, discriminating use of mobile bandwidth. Nor is there an incentive for the mobile networks to invest where it really matters. In fact poor service is the best way to limit usage.

Before we introduce 4G mobile networks in this country, we first need to have a sensible debate about how we charge for it. (This is as important to Britain’s future as our roads.) So, rather than squandering bandwidth as we do at present, we should create pricing systems where people have basic, cheap mobile data all the time, but pay extra on specific occasions when they need high-speed service.

Some hotels use this two-tier approach to Wi-Fi. Basic internet access is free — for emails and so forth — but if you want something faster, you pay. This makes sense. A cynical colleague of mine tells me that there is another motive for this:  what economists call a ‘substitution effect’. Hotels are especially reluctant to offer free high-speed broadband to their guests because they then would lose all revenue from selling pornographic films.

Rory Sutherland is vice-chairman of Ogilvy Group UK.

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