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7th Annual Symposium on Poverty Reduction. Teleuse on a Shoestring 2: Poverty reduction through telecom access at the Bottom of the Pyramid. Harsha de Silva and Ayesha Zainudeen, LIRNE asia Colombo, 6 December 2006. Agenda. Definitions Logic Untruth, truth, what? Issues

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teleuse on a shoestring 2 poverty reduction through telecom access at the bottom of the pyramid

7th Annual Symposium on Poverty Reduction

Teleuse on a Shoestring 2:Poverty reduction through telecom access at the Bottom of the Pyramid

Harsha de Silva and Ayesha Zainudeen, LIRNEasia

Colombo, 6 December 2006

agenda
Agenda
  • Definitions
  • Logic
  • Untruth, truth, what?
  • Issues
  • Access and poverty reduction?
  • Questions
agenda1
Agenda
  • Definitions
  • Logic
  • Untruth, truth, what?
  • Issues
  • Access and poverty reduction?
  • Questions
definition bottom of the pyramid
definition Bottom of the Pyramid
  • SEC D and E
    • Respondent: teleuser between ages 18-60

*excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces

definition access
definition Access
  • Universal access
    • Community access
    • Household access; universal service
  • ITU Maitland Commission (1998)
    • In the developing world; within an hour’s walk
  • More recent definitions; in 30 minutes walk
agenda2
Agenda
  • Definitions
  • Logic
  • Untruth, truth, what?
  • Issues
  • Access and poverty reduction?
  • Questions
logic telco access poverty inequality
logic Telco access, poverty, inequality
  • Lack of access  poverty
  • Theory: improved access  less poverty?
  • Telecom liberalization  improved access
    • Less poverty; greater equality?
    • Less, same or more poverty; greater inequality?
  • What, on the ground?
agenda3
Agenda
  • Definition
  • Logic
  • Untruth, truth, what?
  • Issues
  • Access and poverty reduction?
  • Questions
untruth truth what numbers we use
untruth, truth, what? Numbers we use…
  • Sri Lanka
    • CBSL CFS 2003-04: access 24.5%
    • TRCSL (2006 June): teledensity 29.1%
  • How meaningful?
untruth truth what access is very high
untruth, truth, what? …access is very high*

Most (66%)can get to a phonein 5 minutes; much less than 1 hour…

untruth truth what high reliance on commercial phones
untruth, truth, what? High reliance on commercial phones*

Does it mean no access; or have access?

agenda4
Agenda
  • Definitions
  • Logic
  • Untruth, truth, what?
  • Issues
    • Technical
    • Usage
  • Access and poverty reduction?
  • Questions
technical issues overestimation
technical issues Overestimation?*
  • Impact
    • Poverty reduced because access increased…
    • Inequality increased because access is a more middle class thing…
  • Based on what access?
    • Direct household access is normally used
    • Whereas indirect but actual access of 90 percent +

How relevant is direct access? Is it the same as other infrastructure; electricity, piped water, sanitation?

user issues affordability tight purse
user issues Affordability; tight purse…*

Owners only: mobile is almost all pre-paid; to control expenditure

user issues affordability only a few calls
user issues Affordability; only a few calls…*

All users (owners or otherwise) on average one call a day

Source: Diary

user issues affordability short calls
user issues Affordability; short calls…*

>15 min.

However, average MOUs for owners are higher e.g: Sri Lanka: Prepaid: 120 MOU per month

Source: Operators

Source: Diary

user issues affordability abnormal pattern
user issuesAffordability; abnormal pattern…*

Sri Lanka

Poverty premium

Source: Diary

user issues expenditure higher than arpu
user issues Expenditure higher than ARPU*

Poverty premium; those who use other peoples’ or public phones are being charged higher rates…

user issues summary
user issues Summary
  • Have access
  • Use sparingly; essential calls only
  • Speak for a short while
  • Pay premium
agenda5
Agenda
  • Definitions
  • Logic
  • Untruth, truth, what?
  • Issues
  • Access and poverty reduction?
    • Macro numbers
    • Household level
  • Action?
benefit at the macro level large
benefit At the macro level; large?
  • Contribution to GNP
    • 2003 – 4%
    • 2004 – 5%
  • Every additional 10% increase in mobile teledensity  0.6% increase in annual GDP growth (Waverman et al., 2005)
  • Access  poverty? inequality?
    • Evidence
benefit access less poverty
benefit Access  less poverty?
  • Direct income generation through the sale of telecom services
    • Grameen, Nobel prize…
  • Indirect income generation; anecdotal
    • Auto-rickshaw driver to check hires
    • Farmer to check market prices
    • Parents looking for health and education information
  • Cost savings made by making a call as opposed to taking a bus ride into town; anecdotal
benefit efficiency economic benefit
benefit Efficiency  economic benefit?
  • BOP does not see the benefit?
    • Except for in India, mean responses on efficiency of daily activities vs. ability to earn or save are significantly different at a 95 percent confidence interval
benefit possible reasons
benefit Possible reasons…
  • Do people actually make that connection ?
    • Some do; services, trade, self employed…
    • What connection?
  • May see gains in saving travel time and cost but if the cost of using the telephone is high
    • Maybe no net benefit (RPP in LK?)
    • In LK, 24%said direct access has worsened their financial situation
  • Link may exist, but
    • Little business use; people prefer face-to-face interactions?
    • Not enough content?
    • Perception: time isn’t money?
agenda6
Agenda
  • Definitions
  • Logic
  • Untruth, truth, what?
  • Issues
  • Access and poverty reduction?
  • Questions
questions technical
questions Technical
  • Are access numbers in the 20s or 90s?
    • How important is it to define access?
    • Are we massively overestimating impact of access on economic development?
  • Are conclusions on improved access increasing inequality in Sri Lanka justified?
questions practical
questions Practical
  • What is the link between access and poverty reduction?
    • No empirical micro-level literature
    • Is there one? Is it pure hype?
    • Is it a complex social networks based culturally sensitive mumbo jumbo nut no one’s cracked?
  • More likely, no silver bullet but one-of-many necessary conditions
    • Lessons from India: access  usage  efficiency  economic benefit
questions important
questions Important
  • How to increase usage?
    • Evidence of net economic benefits through lower prices
      • Current scenario: low price elasticity of demand ≈ 0.5; consistent with low and essential use only
      • Shift from Receiving Party Pays  Calling Party Pays
        • Sri Lanka mobile: 120 MOU/mo (estimate)
        • India GSM mobile: 414 MOU/mo; tumbling prices
      • Meaningful content
    • Increase rural access: VG levy and disbursement mechanism specifically setup; but Government “squandering” money?
in conclusion
In conclusion
  • Hypothesis is inequality in access to telecom is contributing to poverty
    • But, people at the BOP have easy access to phones
    • Use sparingly and pay premium
    • Inequality in access; not so black and white
      • Randomized evaluations
  • Question is how to increase usage bymaking access more meaningful
    • Regulatory policy
    • Content; convergence
thank you harsha de silva and ayesha zainudeen www lirneasia net
Thank you.

Harsha de Silva and Ayesha Zainudeen

www.lirneasia.net