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Dhaka Tribune

THE FINAL WORD BY TIM WORSTALL

Can I have your number please?

Unravelling the mysteries behind the telecom sector

Update : 22 Oct 2022, 02:28 PM

Numbers do lie I'm afraid. Sad, though this shock may be to accountants and mathematicians everywhere. Or perhaps we should slightly amend this: Numbers are indeed numbers, it's the story behind them which can so terribly mislead.

We have the news that Grameenphone is losing subscribers, Robi and Banglalink are adding them. But the net position is a reduction in the total number of active mobile phone subscriptions by about 500,000 to only 183.5 million in the country.

What disaster caused this? Not the washing of the customer base to other providers, but that fall in the total? A usual and basic economic calculation is that more connectivity -- yes, more mobile phones -- increases the GDP growth rate. So, do we have a problem here with this fall? Is there some disaster that's happened so that people cannot afford coverage? 

That could be, it's entirely possible. But it's also possible to look at the numbers another way. The total number of connections is 183.5 million, the population of the country is some 165 million. We have more than one connection for every man, woman, and child -- possibly enough for every baby's crib as well as the baby in it. 

Just to switch examples, Italy has long had more connections than people. So the story goes, it's because every Italian man has two phones, one for his wife, another for his mistress. That might not be entirely and wholly true but it contains that grain of truth which, when exaggerated, produces the joke. This of course cannot be the story in a society as moral as Bangladesh, so another explanation is required.

I certainly don't say this is the true one, only that it's a possible one. Perhaps the networks themselves are getting better? Coverage increasing, the number of dropped calls falling? In which case too many people will revert from having two phones, on two networks, back to having just the one? Now that having just the one still leaves a reasonable chance of being able to talk to the intended target? 

The real point here is to insist that while the numbers are right, what we make of them depends upon the story that leads to them. Simply playing with numbers doesn't work -- causes and reasons for them do. 

To make this point at a larger scale. Within the standard economics numbers -- GDP, global output, productivity, all that -- the existence of WhatsApp makes us poorer. Which is insane, of course, but it is also true.

At least for a time WhatsApp charged no fee and also carried no advertising. So, there's no output, production, revenue, associated with its existence or use. There are clearly costs to providing WhatsApp though. I once asked Facebook what those were and while they wouldn't give me accounting numbers, they did agree that they had “a couple of hundred” engineers working on it.

So, WhatsApp has no output but it does have costs. When we put that into GDP that comes out as a reduction in productivity. Higher costs with no higher output is a reduction in productivity. WhatsApp makes us, as a species, poorer.

On the other hand, some 1 billion people are gaining some-to-all of their telecoms for free. To claim that this makes us all poorer is of course insane, as above.

The numbers themselves are what they are. But it's vital to know how they're calculated. Only those who grasp the intricacies of GDP accounting will realise that a billion folk getting free stuff is recorded as us all being poorer. Without knowing why the number of mobile connections is falling we can't determine what is actually happening. Is this because people can't afford connections, or because connections are better and people can afford to have only one? 

It's the reasons, the stories, behind the numbers that matter. Of course, as with any hypothesis, those stories must actually agree with the numbers. But what this does mean is that we cannot go and pan the economy just on the basis of those numbers alone. Simply because if we don't know what the numbers mean then we can't manipulate them, can we? 

Or even, in our ignorance we can manipulate them but we've an even chance of making things worse rather than better.

Tim Worstall is a senior fellow at the Adam Smith Institute in London

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