Teleuse on a Shoestring 2:Teleuse on a Shoestring 2:
Poverty reduction Poverty reduction through telecom access at through telecom access at the the Bottom of the PyramidBottom of the Pyramid
Harsha de Silva and Ayesha Zainudeen, Harsha de Silva and Ayesha Zainudeen, LIRNELIRNEasiaasia
Colombo, 6 December 2006Colombo, 6 December 2006
7th Annual Symposium on Poverty 7th Annual Symposium on Poverty ReductionReduction
AgendaAgenda
DefinitionsDefinitions LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues Access and poverty reduction?Access and poverty reduction? QuestionsQuestions
AgendaAgenda
DefinitionsDefinitions LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues Access and poverty reduction?Access and poverty reduction? QuestionsQuestions
*excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces
definition definition Bottom of the PyramidBottom of the Pyramid
SEC D and ESEC D and E RespondentRespondent: teleuser: teleuser between ages 18-60 between ages 18-60
PakistPakistanan IndiaIndia Sri Sri
LankaLankaPhilippinPhilippin
esesThailaThaila
ndnd
Population Population (million)(million) 165165 1,0951,095 20 20 8989 6464
Target Target population of population of study (million)study (million)
77*77* 260260 4**4** 4141 1515
definitiondefinition Access Access
Universal accessUniversal access Community accessCommunity access Household access; universal serviceHousehold access; universal service
ITU Maitland Commission (1998)ITU Maitland Commission (1998) In the developing world; within an In the developing world; within an
hour’s walkhour’s walk More recent definitions; in 30 More recent definitions; in 30
minutes walkminutes walk
AgendaAgenda
DefinitionsDefinitions LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues Access and poverty reduction?Access and poverty reduction? QuestionsQuestions
logiclogic Telco access, poverty, Telco access, poverty, inequalityinequality
Lack of access Lack of access poverty poverty Theory: improved access Theory: improved access less less
poverty?poverty? Telecom liberalization Telecom liberalization improved improved
accessaccess Less poverty; greater equality?Less poverty; greater equality? Less, same or more poverty; greater Less, same or more poverty; greater
inequality?inequality? What, on the ground?What, on the ground?
AgendaAgenda
DefinitionDefinition LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues Access and poverty reduction? Access and poverty reduction? QuestionsQuestions
untruth, truth, what?untruth, truth, what? Numbers we Numbers we use…use…
Sri LankaSri Lanka CBSL CFS 2003-04: access 24.5% CBSL CFS 2003-04: access 24.5% TRCSL (2006 June): teledensity 29.1%TRCSL (2006 June): teledensity 29.1%
How meaningful?How meaningful?
Ownership and GDP per capita (USD, PPP)
23%
9%
22%
60%
76%
11%
23%
7%
14%
63.60%
80.70%
59.00%
38.00%
22.70%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Pakistan India Sri Lanka Philippines Thailand
% a
t b
ott
om
of
pyr
amid
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
GD
P p
er c
apit
a, U
SD
(P
PP
)
Own a mobile Own a fixed phone
Own nothing (but use something) Per Capita GDP PPP (US $)
untruth, truth, what? untruth, truth, what? While ownership is While ownership is low…low…
Pakistan
India Sri LankaPhilippine
sThailand
Total number of phones per 100 population
29.38 12.80 29.10 45.30* 57.80**
Source: National regulatory agencies; * 2005, **2004
untruth, truth, what? untruth, truth, what? …access is very …access is very high*high*
South AsiaSouth East Asia
Pakistan India
Sri Lanka
Phils.Thaila
nd
Accessibility(used a phone in the preceding 3 months)
98% 94% 92% 93% 95%
Most (66%) can get to a phone in 5 minutes; much less than 1 hour…Most (66%) can get to a phone in 5 minutes; much less than 1 hour…
untruth, truth, what? untruth, truth, what? High reliance on High reliance on commercial phonescommercial phones**Main phone used to make /receive calls in last 3 months at BOP
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines Thailand
% o
f u
sers
at
BO
P
commercial & publicphones
Relative/friend's phone
Neighbor's phone
Household fixed phone
Own / householdmember's mobile
Does it mean no access; or have access?Does it mean no access; or have access?
AgendaAgenda
DefinitionsDefinitions LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues
TechnicalTechnical UsageUsage
Access and poverty reduction?Access and poverty reduction? QuestionsQuestions
technical issues technical issues Overestimation?*Overestimation?*
ImpactImpact Poverty reduced because access Poverty reduced because access
increased…increased… Inequality increased because access is a Inequality increased because access is a
more more middle class thing…middle class thing… Based on Based on whatwhat access? access?
Direct household access is normally usedDirect household access is normally used Whereas indirect but Whereas indirect but actualactual access of 90 access of 90
percent +percent +How relevant is direct access? Is it the same as other infrastructure; electricity, piped water, sanitation?
How relevant is direct access? Is it the same as other infrastructure; electricity, piped water, sanitation?
user issuesuser issues Affordability; tight Affordability; tight purse…purse…**
Pakista
nIndia
Sri Lanka
Philippines
Thailand
Pre Paid 99% 95% 92% 99% 96%
Post Paid
1% 4% 8% 1% 4%
Owners only: mobile is almost all pre-paid; to control expenditureOwners only: mobile is almost all pre-paid; to control expenditure
user issuesuser issues Affordability; only a Affordability; only a few calls…few calls…**
Source: Diary
Number of calls (incoming + outgoing) over a two-week period: Sri Lanka
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
% o
fdia
ry r
esp
on
den
ts
Number of calls over atwo-week period
11% 42% 18% 6% 4% 7% 8% 4%
0 calls1 - 5 Calls
6 - 10 Calls
11 - 15 Calls
16 - 20 Calls
21 - 30 Calls
31 - 50 Calls
51 and More
All users (owners or otherwise) on average one call a day
All users (owners or otherwise) on average one call a day
user issuesuser issues Affordability; short Affordability; short calls…calls…**
Source: Diary
Average call duraitons of diary respondents
0%
10%
20%
30%
40%
50%
60%
<1 minute 2-3minutes
About 5minutes
About 10minutes
>5 minutes
Duration of the call
% o
f c
alls
Pakistan
India
Sri Lanka
Philipines
Thailand
However, average MOUs for owners are higher e.g: Sri Lanka: Prepaid: 120 MOU per monthSource: Operators
However, average MOUs for owners are higher e.g: Sri Lanka: Prepaid: 120 MOU per monthSource: Operators
>15 min.
user issuesuser issues Affordability; abnormal Affordability; abnormal patternpattern……**
Time of day that calls are made and received
0
2
4
6
8
10
120
00
0
01
00
02
00
03
00
04
00
05
00
06
00
07
00
08
00
09
00
10
00
11
00
12
00
13
00
14
00
15
00
16
00
17
00
18
00
19
00
20
00
21
00
22
00
23
00
time of day
% o
f call
s
Source: Diary
Sri Lanka
Poverty premiumPoverty premium
user issuesuser issues Expenditure higher Expenditure higher than ARPUthan ARPU**
Ave. Monthly expenditure for users (USD)
Pakist
anIndia
Sri Lanka
Phils.Thaila
nd
Pre-Paid 8 5 7 2 8
Post Paid 21 7 18 10 19
Home Fixed Phone
12 7 9 9 9
Poverty premium; those who use other peoples’ or public phones are being charged higher rates…
Poverty premium; those who use other peoples’ or public phones are being charged higher rates…
user issuesuser issues Summary Summary
Have accessHave access Use sparingly; essential calls onlyUse sparingly; essential calls only Speak for a short whileSpeak for a short while Pay premiumPay premium
AgendaAgenda
DefinitionsDefinitions LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues Access and poverty reduction?Access and poverty reduction?
Macro numbersMacro numbers Household levelHousehold level
Action?Action?
benefit benefit At the macro level; At the macro level; large?large?
Contribution to GNPContribution to GNP 2003 – 4% 2003 – 4% 2004 – 5%2004 – 5%
Every additional 10% increase in Every additional 10% increase in mobile teledensity mobile teledensity 0.6% increase in 0.6% increase in annual GDP growth (Waverman et al., annual GDP growth (Waverman et al., 2005)2005)
Access Access poverty? inequality? poverty? inequality? Evidence Evidence
benefit benefit Access Access less poverty? less poverty?
Direct income generation through the sale Direct income generation through the sale of telecom servicesof telecom services Grameen, Nobel prize…Grameen, Nobel prize…
Indirect income generation; Indirect income generation; anecdotalanecdotal Auto-rickshaw driver to check hires Auto-rickshaw driver to check hires Farmer to check market pricesFarmer to check market prices Parents looking for health and education Parents looking for health and education
informationinformation Cost savings made by making a call as Cost savings made by making a call as
opposed to taking a bus ride into town; opposed to taking a bus ride into town; anecdotalanecdotal
benefit benefit Access Access Efficiency Efficiency
Efficiency of daily activities
1 2 3 4 5
India (3.90)
Sri Lanka (3.98)
Pakistan (4.17) Thailand (4.37)
Philippines (4.40)
worsened slightly worsened
no change somewhat improved
improved
benefit benefit Efficiency Efficiency economic economic benefit?benefit?
BOP does BOP does notnot see the benefit? see the benefit? Except for in India, mean responses on efficiency of Except for in India, mean responses on efficiency of
daily activities vs. ability to earn or save are daily activities vs. ability to earn or save are significantly different at a 95 percent confidence significantly different at a 95 percent confidence intervalinterval
Ability to earn or save
1 2 3 4 5
Sri Lanka (3.19)
Thailand (3.56)
Pakistan (3.80) India (3.97)
Philippines(4.07)
worsened slightly worsened
no change somewhat improved
improved
benefit benefit Possible reasons…Possible reasons… Do people actually make that connection ?Do people actually make that connection ?
Some do; services, trade, self employed…Some do; services, trade, self employed… What connection? What connection?
May see gains in saving travel time and May see gains in saving travel time and cost but if the cost of using the telephone cost but if the cost of using the telephone is highis high Maybe no net benefit Maybe no net benefit ((RPPRPP in LK?) in LK?) In LK, 24%In LK, 24% said direct access has worsened their said direct access has worsened their
financial situation financial situation Link may exist, butLink may exist, but
Little business use; Little business use; people prefer face-to-face people prefer face-to-face interactions?interactions?
Not enough content?Not enough content? Perception: time Perception: time isn’tisn’t money? money?
benefit benefit Security and keeping in Security and keeping in touchtouch
Ability to act in emergency
1 2 3 4 5
India (4.28)
Pakistan (4.48)
Sri Lanka (4.58)
Philippines (4.63)
Thailand(4.83)
worsened slightly worsened
no change somewhat improved
improved
Family and social relations
1 2 3 4 5
India (4.14)
Pakistan (4.30)
Sri Lanka (4.35)
Philippines (4.45)
Thailand(4.66)
worsened slightly worsened
no change somewhat improved
improved
benefitbenefit Keeping in touch Keeping in touch
Purpose of calls among diary respondents
0%10%20%30%40%50%60%70%80%90%
Business Keep in touch- family /friends
To checksomething /
Delivermessage
% o
f ca
lls
Pakistan
India
Sri Lanka
Philipines
Thailand
Source: Diary
AgendaAgenda
DefinitionsDefinitions LogicLogic Untruth, truth, what?Untruth, truth, what? IssuesIssues Access and poverty reduction?Access and poverty reduction? QuestionsQuestions
questions questions TechnicalTechnical
Are Are accessaccess numbers in the 20s or numbers in the 20s or 90s?90s? How important is it to define How important is it to define accessaccess?? Are we massively overestimating impact Are we massively overestimating impact
of of accessaccess on economic development? on economic development? Are conclusions on improved access Are conclusions on improved access
increasing inequality increasing inequality in Sri Lankain Sri Lanka justified?justified?
questionsquestions Practical Practical
What is the link between access and What is the link between access and poverty reduction?poverty reduction? No empirical micro-level literatureNo empirical micro-level literature Is there one? Is it pure hype? Is there one? Is it pure hype? Is it a complex social networks based culturally Is it a complex social networks based culturally
sensitive mumbo jumbo nut no one’s cracked?sensitive mumbo jumbo nut no one’s cracked? More likely, no silver bullet but one-of-More likely, no silver bullet but one-of-
many necessary conditionsmany necessary conditions Lessons from India: access Lessons from India: access usage usage
efficiency efficiency economic benefit economic benefit
questionsquestions Important Important How to increase usage?How to increase usage?
Evidence of net economic benefits through Evidence of net economic benefits through lower priceslower prices
Current scenario: low price elasticity of demand Current scenario: low price elasticity of demand ≈ 0.5; consistent with low and essential use only≈ 0.5; consistent with low and essential use only
Shift from Receiving Party Pays Shift from Receiving Party Pays Calling Party Calling Party PaysPays
Sri Lanka mobile: 120 MOU/mo (estimate)Sri Lanka mobile: 120 MOU/mo (estimate) India GSM mobile: 414 MOU/mo; tumbling pricesIndia GSM mobile: 414 MOU/mo; tumbling prices
Meaningful contentMeaningful content Increase rural access: VG levy and disbursement Increase rural access: VG levy and disbursement
mechanism specifically setup; but Government mechanism specifically setup; but Government “squandering” money? “squandering” money?
In conclusionIn conclusion
Hypothesis is Hypothesis is inequality in access to inequality in access to telecom is contributing to povertytelecom is contributing to poverty But, people at the BOP have easy access to But, people at the BOP have easy access to
phonesphones Use sparingly and pay premiumUse sparingly and pay premium Inequality in access; not so black and whiteInequality in access; not so black and white
Randomized evaluationsRandomized evaluations
Question is how to Question is how to increase usage byincrease usage by making access more meaningfulmaking access more meaningful Regulatory policyRegulatory policy Content; convergenceContent; convergence
Thank you.Thank you.Harsha de Silva and Ayesha Harsha de Silva and Ayesha
ZainudeenZainudeen
www.lirneasia.netwww.lirneasia.net