It is still not widely appreciated that the rapid spread of mobile telephony, and the only slightly slower spread of Internet services, have over the past 6 years transformed the lives of more people at the BOP than all of the world’s development projects together. More than 1.5 billion people in developing countries now have mobiles, and cybercafés even in small towns are crowded every hour they are open. This transformation has been almost entirely driven by the private sector, although development efforts played a key role in improving regulations to make it possible. The spread of ICT has empowered users—with access to livelihoods, critical market information, and other well-documented benefits—and created wealth for mobile companies.

This remarkable transformation—not yet matched in any other sector—can be attributed to two factors. First is the entrepreneurial drive of (especially) local mobile companies, who have developed and refined a pre-paid business model with voice and text messaging services available in ever-smaller units, the "sachet marketing" of ICT. The companies have also frequently developed vast networks of small resellers of their services, creating income streams for the resellers and easy availability of services for customers. They are rapidly pioneering new services, such as remittances and banking services, and perhaps before long, educational services over mobiles. Think of it as business model push.

Second, however, is market pull—the insatiable demand for ICT services even at very low income levels. As the graph above shows, the share of household spending devoted to ICT rises remarkably as incomes rise—and this pattern is found in varying degrees in nearly every country for which data is available. That is what is behind the 6 million new mobile customers a month being added in India, and fairly similar comparable growth rates in China and Africa. In effect, the value of ICT services to the BOP is so high, that there is very high latent demand. Given that most rural areas do not yet have access to mobile services, there is still a lot of growth to come. That’s why large amounts of money are being spent to buy mobile companies in emerging markets when they become available.

The following is an excerpt from Chapter 3 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid.

(This post continues past the break; click "Read More" to continue)