NextBillion.net - Development Through Enterprise - Mobile telephony and pro-poor growth - Comments

Emerging market handset program just the beginning

Rob Katz — Fri, 09 Sep 2005 09:14:50 -0400

I agree with Gabriel that affordability is key in terms of access, and the GSM Association's Emerging Markets Handset Program is doing loads to push costs down. Simply having access to communications, however, isn't enough. What will really empower the BOP (and be a profit center for businesses) are the services made possible through access to affordable telephony. African telecom MTN, for example, has introduced a cellphone-based banking system. What other services currently out of reach to millions of BOP customers will become available with cheaper cell phones?

The key to extending the comm

gabriel — Fri, 09 Sep 2005 07:52:13 -0400

The key to extending the communcations franchise to BOP custmers is affordability. Affordability has three main determinaents: handset cost, regulation and tax, and service costs. The trasnaction method is also critical so micro pre-pay top ups and micro credit are key. The GSMA is working on all these fronts and more information can be found at www.gsmworld.com/emh

Mobile telephony and pro-poor growth

Rob Katz — Wed, 07 Sep 2005 08:50:16 -0400

Ethan Zuckerman of the WorldChanging blog writes eloquently about the importance of mobile phones in low-income communities. He identifies three factors critical to the spread of mobile telephony: new versus replacement infrastructure, pay-as-you-go pricing, and used phones.

Zuckerman is right on. By leapfrogging landline infrastructure, developing communities have been able to adopt modern technology faster and cheaper than we have in the U.S., for example. Pay-as-you-go pricing, meanwhile, lets low-income consumers afford to make a call when they need to, rather than sign up for lengthy guaranteed contracts – as documented in this case study of Smart Communications in the Philippines. Used phones, operating on analog networks, are often more affordable than new GSM handsets - and the shipping containers they arrive in can even be used as shared-access, entrepreneur-run phone shops.

However, it’s only towards the end of his post where Zuckerman hits the nail on the head: “More fundamental than these three factors is the fact that very poor people are willing to pay money to communicate.” He cites Grameen Phone as an example – read the case study here. (PDF)

Mobile telephony is already profitable for the telecoms. Now the question is: how do we incorporate this leapfrog innovation into a range of pro-poor business models? Stay tuned.