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Teleuse@BOP Digital Divide  Digital Opportunity Rohan Samarajiva (samarajiva [at] lirne.net) Session 1: Accelerating the growth of broadband India Telecom 2007 December 13 th , 2007, New Delhi www.lirneasia.net Plan of presentation Relevance of the BOP Methodology

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teleuse@bop

Teleuse@BOP

Digital Divide  Digital Opportunity

Rohan Samarajiva (samarajiva [at] lirne.net)

Session 1: Accelerating the growth of broadband

India Telecom 2007

December 13th, 2007, New Delhi

www.lirneasia.net

plan of presentation
Plan of presentation
  • Relevance of the BOP
  • Methodology
  • Digital opportunity
  • Digital divide
  • Bridging the divide and seizing the opportunity
  • Non-owners  owners: barriers
  • In sum . . .
teleuse @ bop

Teleuse @ BOP

Relevance of the BOP

how big are the markets in emerging asia bop and m top
How big are the markets in emerging Asia: BOP and M & TOP?

*

**

*excluding FANA/FATA Tribal Areas; **excluding North & East Provinces

teleuse@bop5

Teleuse@BOP

Methodology

bottom of the pyramid bop defined

SEC A, B & C

SEC D & E

Bottom of the Pyramid(BOP)defined
  • Many definitions of poverty, but this study uses SEC D and E; between ages 18-60
    • SEC does not take into account income, but it is closely related to income levels
  • BOP segment is representative of the BOP population
    • Diary respondents also representative of BOP
  • Small (non-representative sample) taken of SEC groups A, B & C

Quantitative sample

teleuse @ bop7

Teleuse @ BOP

Digital opportunity

what are the opportunities afforded by icts
What are the opportunities afforded by ICTs?
  • Ability to communicate
    • One-to-one
    • One-to-many
    • More than voice
    • Social networking
  • Ability to retrieve information that will
    • Improve ability to make money or save money
    • Enhance ability to coordinate activities across time and space, thereby improving quality of life
    • Educate, improve know-how
    • Entertain
  • Ability to publish
    • Voice for the voiceless
    • Niche publishing
  • Ability to transact
    • Not only to interact, but to make payments
  • Remote computing
    • Use of software and computing power that is elsewhere
what are the prerequisites
What are the prerequisites?
  • Reliable electricity
  • A computer
  • A broadband connection
    • More than 256 kbps up and down
    • Always on
  • Service from an ISP
  • Familiarity with the interface
  • Literacy
  • Language skills

. . . . Classic home Internet user?

  • How many at the BOP?
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Teleuse@BOP

Digital Divide

internet at the bop
Internet at the BOP…

Large gender divide, even in South East Asia

teleuse @ bop14

Teleuse @ BOP

But divide can be bridged and opportunity seized

why not a different starting point more than voice uses of mobile
Why not a different starting point: “more-than-voice” uses of mobile?
  • Access and use implies familiarity with the technology
  • Access/ownership
    • Is ownership of the terminal necessary?
      • Any conditions under which non-voice applications can be used without individual ownership?
    • How many currently own terminals?
      • What kinds of terminals?
        • Are they capable of supporting more than voice?
    • How many likely to join the ranks of owner-users by 2008?
  • Use for voice without ownership  use for voice with ownership  more-than-voice applications  digital opportunity?
access is surprisingly high familiarity
Access is surprisingly high  familiarity
  • Most people approached for survey (BOP and other) had used a phone in the last 3 months

“Half the world’s population has not made a phone call” was wrong when Kofi Annan said it in 1999; absolutely wrong now

ownership is not as high
Ownership is not as high
  • Especially in South Asia…
slide18

Easy access needed for more-than-voice . . .

  • Easy access provided by ownership is important
    • Unlikely that public/shared phones will be used for anything other than basic voice
  • Access for more-than-voice, in order of importance
    • Own mobile
    • Household member’s mobile
    • CDMA “fixed” phone
slide19

“Fixed” phones at S Asia BOP are mostly CDMA; Mimic GSM features.

Also note that 12% in PK, 4% in IN & 6% in LK use the mobile of another household member

Access modes among BOP phone users

  • S Asia BOP mainly used public phones; SE Asia mobiles

Except in India, combined BOP household use > BOP public phone use

sophisticated handsets at the bop average for new is usd70
Sophisticated handsets at the BOP: Average for new is USD70+
  • 60-70% of mobile owners at BOP use brand-new handsets
  • But even simple sets allow mobile payments and such
slide22
SMS as the main non-voice application; highest in Philippines, lowest in India (declined in the last quarter)
mobile as a voting device
Mobile as a voting device
  • “A key advantage of a phone, as seen by participants, is its ability to promote democratic participation. The example presented was a reality TV show . . . to select a ‘Super Star’ . . . based on the SMS/phone voting by the public. . . . Study participants viewed this as a case of telecom enabling the ‘unheard’ to voice their opinion. . . . They felt that their voice was heard; that they have been elevated from the level of mere observers to that of active participants in democratic processes. . . . None of them complained of having to pay five times the regular cost of an SMS to place their votes.”

From a focus group on phone use; reference is to an American Idol-type show

payment systems in place for more than voice applications
Payment systems in place for more-than-voice applications
  • For example, Sri Lanka’s largest GSM operator (~ 3.6 million subscribers)
    • 86% prepaid subscribers, overall
    • Approx. 50% of prepaid top-ups are via electronic reload (50% via card system)
    • 12,000+ electronic reload outlets
    • Mobile payment system recently launched for the first time in S Asia
      • Philippines is the world leader
    • Personal accident insurance system via mobile connection also recently launched
india s mobile internet users growing
India’s mobile Internet users growing
  • As at 30 June 2007 (TRAI, 2007; p.14)
    • Fixed Internet subscribers: 9.22 million (declined in last quarter!)
    • Internet subscribers accessing Internet via mobile handsets (GSM/CDMA): 38.02 million and growing
      • One out of five mobile users in India use their handsets to access Internet

 Mobile = 4 x Fixed

Foreshadowing the mobile-centric Internet?

teleuse @ bop26

Teleuse @ BOP

Non-owners  owners: barriers

the cost of getting connected expectation vs affordability gap
The cost of getting connected…Expectation vs. affordability gap
  • E.g., 70% of non-owners at BOP in Sri Lanka believe that the cost to get connected will be greater than USD56
  • But only 11% can afford more than USD50
  • New mobile and connection possible for USD 36; lower with second-hand phone
    • Greater potential for more-than-voice applications as prices of mobiles with additional capabilities decrease
use cost most can afford less than usd5 per month on communication
Use cost: most can afford less than USD5 per month on communication
  • Expectations and affordability are in line
    • Most expect the monthly cost to be less than USD 5, which most can afford to pay
    • Also in line with ARPUs of mobiles (USD 3-4)
      • 32% of customers of Sri Lanka’s largest mobile operator pay around USD 1 per month
in sum
In sum
  • Digital opportunity ≠ the way we use the Internet now
  • Need think of digital opportunity in terms of functions such as information retrieval
  • Massive divide exists if we think conventionally about the BOP
  • But possible to bridge the gap if we start from the mobile
    • BOP are not necessarily heavy users, but they do use mobiles
      • Even non-owners are participating in telecom
      • Potential owners, if connected, would also use phones for more than voice
  • BOP mobile market is growing; much of the BOP will first experience the Internet via mobiles
  • Prerequisites for ‘more than voice’ applications are in place
  • Digital divide can be bridged and digital opportunity can be seized, only if we take a road less traveled by

. . . that will make all the difference