the path to the information society: does it lie through the mobile? evidence from asia and thoughts...

The path to the information society: Does it lie through the mobile?

Evidence from Asia and thoughts for Africa

Rohan SamarajivaSA Connect Public Seminar, Cape Town

14 April 2009

The challenge . . .

• Solve the hardest problem: getting the poorest millions connected to the Information Society– This will potentially unlock many markets and drive the world

economy to a new level• Innovation at multiple levels needed

– Business models to connect large numbers of poor people to electronic networks; extend from mobile to broadband

– Technical solutions to make it possible for them to do more-than-voice, once connected

– More-than-telecom solutions to problem of putting money in people’s pockets through telecom, rather than taking money out

Connecting the millions at the bottom of the pyramid…

WSIS definition of Information Society

• “a people centered, inclusive, and development-oriented information society where everyone can create, access, utilize and share information and knowledge enabling individuals and communities to achieve their full potential in promoting their sustainable development and improving their quality of life.”

In other words . . .

• Everyone should be able to do some of what we do routinely using the metamedium known as the Internet– Communicate in multiple forms

• synchronous/asynchronous• One-to-one/one-to-many/many-to-many• Push/pull . . .

– Retrieve information from multitude of sources– Publish– Transact– Remotely compute . . .

Answers from LIRNEasia’s Teleuse @ Bottom of the Pyramid (T@BOP) research (2008)

• Six countries– Bangladesh– Pakistan– India– Sri Lanka– Philippines– Thailand

• 9,950 sample, representing >500m Bottom of the Pyramid, age 15-60• Design and analysis by LIRNEasia; fieldwork by Nielsen affiliates

Bottom of the Pyramid (BOP) = SEC D & E

• BOP defined as SEC D and E; between ages 15-60– SEC determined by education and

occupation of CWE; closely related to income levels

• BOP sample is representative of the BOP population– Diary respondents also representative of

BOP

• Only in Philippines, sample entirely SEC E, which gives a better match with the below USD 2/day classification

SEC D & E

SEC A, B & C

The hardest problem: Internet use and awareness in 2008

Bangladesh Pakistan India Sri Lanka Philippines Thailand

Use the Internet

0.6% 2.2% 0.8% 3.2% 20.7% 23.0%

43% 41% 36%

74%

70% 57%

56% 57% 63%

23%10%

20%


Internet use (% of BOP teleusers)

I haven't heard about the Internet

I have heard about the Internet but I haven't used it

Less than once a month

Once a month

2-3 times a month

Once a week

2-3 times per week

Daily

Among BOP teleusers

Little growth in South Asian Internet use since 2006

1.9 0.3 1.58.8 10.4

0.6 2.2 0.8 3.2

20.7 23.0


Internet use (% of BOP teleusers)

2006 2008

Among BOP teleusers

Will we ever get there? . . .

• But there is an alternative path . . .

Access = mobile?

What are the prerequisites for ‘more-than-voice’ mobile?

• Familiarity with the technology– Access and use

• Easy access via mobiles or CDMA ‘fixed’ phones is most appropriate

• Ownership– Only 40+% in the Indo-Gangetic Plain (world’s largest concentration of

poor people) own a phone– Sophisticated handsets can aid uptake

• Potential for use of “more-than-voice”– SMS is the most popular more-than-voice application– Payment systems in place: e-reloads as “gateway” to advanced

applications

Recent use of the phone to make/receive calls


% of BOP (outer sample) 95% 96% 86% 88% 79% 77 %

13


% of BOP (outer sample)

82% 66% 65% 77% 38% 72%

Used a phone in the last 3 months

Used a phone in the last week

Among BOP (OUTER SAMPLE)

Mobiles are used most as the primary phone; public phones in second place

14

43 37 36 31

61

8003 7

39

4

9

2032

13

109

6

4

11

8

812

0

2

9

3

4 111

32

8

33

7 4 3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Most frequently used phone (% of BOP teleusers)

Public acces phone

Friend/relative/workplace phone

Neighbor's phone

Other household member's phone

Household fixed phone

My own mobile

Access within the household

Among BOP teleusers

Also note that 20% in BD, 32% in PK, 13% in IN &10% in LK use the mobile of another

household member

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

Easy access needed for more-than-voice with mobile…

• 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– Other household member’s mobile– CDMA ‘fixed’ phone

Total BOP phone ownership (mobile + fixed) at household level

16

43% 41% 45%

73%63%

91%


Total phone ownership (% of BOP teleusers)

owners

Among BOP teleusers

Mean price paid by BOP for:• Brand new handset: USD 63• Secondhand handset: USD 32

58 47 4865 63

96

35 27 35 36 28 38


Mean price paid by mobile owners for their handset (USD)

Brand new Second hand

0%20%40%60%80%

100%

What mobiles are used for (% of BOP mobile owners)


Mostly calls, SMS, missed calls, balance checking, but some download/upload, mostly entertainment-related

18Among BOP mobile owners

87

13

< 35 years> 35 years

Chart SMS use on fixed phones (% of BOP fixed phone owners)

SMS more popular among those below 35 yrs

19

36%54% 38%

67%100%

67%

24% 32% 24% 25%

99%

31%


SMS use on mobile (% of BOP mobile owners)

< 35 years > 35 years

Below 35 years

Among BOP mobile owners

Sri Lanka

Among BOP fixed phone owners

41

65

88 87

5

9696

74

23

52

95

38

220

6 3

40

190

9 9 7 0 21 1 3 0 0 20 4 3 1 0 1


Top-up method (% of BOP prepaid mobile owners)

Top-up cards Electronic reloads Load transfers from others

SMS-top-ups Other (bank, credit card, Internet) I dont know how

E-reloading most popular in Bangladesh, Pakistan, Philippines BOP

• Qualitative research is showing interesting hybrid strategies, where, e.g., Indian users will use a scratch card for monthly/weekly use and then top-up with small e-reloads

20

Among BOP prepaid mobile owners

Trust is key to payments over the mobile• 71% of Thai top-up

card users “completely trust” their method; highest level of distrust in Sri Lanka

• 77% of Bangladeshi electronic reload users “completely trust” their method; again, Sri Lankans most distrustful

21

Among BOP prepaid mobile owners who use each respective method

0%

0%

13%

2%

3%

0%

3%

10%

9%

0%

4%

0%

2%

15%

2%

3%

7%

10%

25%

52%

49%

26%

25%

20%

71%

24%

28%

68%

61%

70%

Thailand

Philippines

Sri Lanka

India

Pakistan

Bangladesh

Degree of trust in top-up cards (% of BOP top-up card users)

Completely distrust Somewhat distrust Neither trust nor distrust

Somewhat trust Completely trust

1%

0%

18%

3%

2%

0%

13%

2%

9%

3%

5%

3%

5%

1%

2%

10%

6%

5%

47%

29%

39%

32%

23%

15%

33%

68%

32%

52%

64%

77%

Thailand

Philippines

Sri Lanka

India

Pakistan

Bangladesh

Degree of trust in electronic reloads (% of BOP e-load users)

Completely distrust Somewhat distrust Neither trust nor distrust

Somewhat trust Completely trust

Top-ups are closer in urban areas

22Among BOP prepaid mobile owners

Awareness trial use

• Does the BOP know about more-than-voice services?• What experience do they have with these services?• Do they use them?

Poor awareness in the Indo-Gangetic Plain; better in LK and Southeast Asia

24

(n=56)

Among BOP teleusers

0%10%20%30%40%50%60%70%

Banking and financial services

Payment services

Government services

Health services Voting General information

services

Agricultural or fisheries

information

Awareness of services at the BOP (% of BOP teleusers)


Trial and use are even poorer Thai and Sri Lankan BOP a little more advanced than other countries

25

BD PAK IND SL PHIL THAI

Regularly

Not

regularly

Regularly

Not

regularly

Regularly

Not

regularly

Regularly

Not

regularly

Regularly

Not

regularly

Regularly

Not

regularly

Banking and financial services 1% 2% 1% 3%

Payment services 3% 2% 3% 1% 4%

Government services 2% 2%

Health services 1% 1% 8% 1% 2%

Voting, competitions, reality shows, etc 1% 1% 1% 5% 7% 1% 8%

General information services 1% 1% 3% 2% 5% 11%

Agricultural or fisheries information 1%

Among BOP teleusers who are aware of services

Payments: Most who are aware don't know how or don't feel the need to use it

26

Among BOP teleusers who are aware of services but don’t use them

0%

10%

20%

30%

40%

50%

60%

70%

Don't know how Not applicable to me

Don't own a phone/computer

Too expensive Not trustworthy My service provider/handset

doesn't allow it

Language I need a bank account for this

Happy with current methods

Reason for not using payments (% of those that are aware but don't use)


1/3rd + of the unaware in Bangladesh, Sri Lanka and Philippines willing to use money transfer services & govt services via mobile

27

439 11

37 38

22

20 186 15

14

31 30 18

4521

41 41 392

Bangladesh Pakistan India Sri Lanka Philippines

Willingness to try sending or receiving money (% of BOP teleusers who are currently unaware of such services)

I dont need to use this service

No

Not Sure

Yes

316 9

29 37

20

16 164

15

22

30 33 20

4427

48 41 47

3

Bangladesh Pakistan India Sri Lanka Philippines

Willingness to try accessing government services (% of BOP teleusers who are currently unaware of such services)

I dont need to use this service

No

Not Sure

Yes

Among BOP teleusers who are not aware

Innovations to get from here to there

• “Less for less” (budget-telecom-network) business model to be successfully extended from mobile voice to mobile broadband– Special attention to quality of service experience

• Technical innovations

An incredible innovation that has already been made in South Asia and is now spreading

• Average for 77 emerging economies was USD 13.15; four South Asian countries were below USD 5 TCO in 2007, now joined by 12 others (Guinea and Madagascar in Africa)

Total cost of

ownership < USD 5:

BD, IN, PK, LK

High EBITDA margins, suggesting . . .

Weighted EBIDTA margin (%), 2007

Notes

Bangladesh 31% Excl. Warid & Teletalk; Banglalink negative

India 37% Industry; not mobile only

Sri Lanka 45% Excl. Tigo

A new business model

• Driven by hostile external conditions, low purchasing power and pressure from disruptive innovation, South Asian operators are– Executing a new “budget-telecom-network” business model

• Service-process innovations that enable exploitation of long-tail markets

• Revenue-yielding minutes not ARPUs high minutes of use and high EBITDA margins

• Because of high loading of networks quality of service is likely to be spotty– However, this being a necessary feature of the model, excessive

quality regulation could have prevented/delayed its discovery/ implementation

An inapplicable definition …

• “Disruptive competition may be defined as existing when competitors to the incumbent have been so aggressive with their pricing that they do not cover their costs and end up making short-term losses. Their hope is in this way to gain market share and possibly force the exit of some of their competitors. In the longer term they hope they will be able to price more profitably.” Fransman, Global broadband battles (2008)

Fransman does not explain why operators would engage in this kind of behavior.

We know it makes sense for multi-product firms with one line of business that is

under regulation or where it enjoys monopoly power; this would most likely be the

Incumbent/dominant operator. But his claim here is about challengers. On the face,

it does not make sense.

What we do use and what makes sense: Disruptive innovation (“less for less”) - Christensen & Raynor

• Potential customers want a service, but because they lack money or skill, a simple, inexpensive solution has been beyond reach

• They will compare the disruptive product to having nothing at all. They are happy to buy it, even though it may not be as good as other products available at high prices to current users

• The enabling technology can be quite sophisticated, but disruptors deploy it to make purchase and use of the product simple and convenient (enabling people with less money and training to begin consuming)

• The disruptive innovation creates an entirely new value network. The new consumers typically purchase the product through new channels and use the product in new venues

Postpaid vs. prepaid

• Think of postpaid as the conventional mode of supply• Prepaid was a different service delivered through different channels to

customers who could not have taken postpaid– It required more sophisticated technology than postpaid

• Minutes increased with low ARPUs prices declined service-process innovations & exploitation of economies of scale and purchasing lower costs per minute prepaid & postpaid prices also declined

• 98% of BOP mobiles are prepaid• 54% of “fixed” phones at BOP in LK are prepaid


Prepaid (% of BOP mobile owners) 99 97 98 95 100 98

Extension to (mobile) broadband . . .

Recognize that not everyone has regular income

• Budget-telecom-network model for voice recognizes that income is irregular at the BOP and comes in small increments: e reloads

– Broadband pricing should follow; all-you-can-eat, flat-rate pricing models will not work at BOP

– Should it be based on time (easier to understand) or on volume of data?

How much and for how long?

37

Among BOP prepaid owners (mobile or “fixed”)


USD* 0.29 0.66 1.11 0.92 0.65 1.45

Local currency* BDT 20 PKR 50 INR 50 LKR 100 PHP 30 THB 50

*Mode values


Days* 2 2 10 7 1 7

Is expected to last…

Value of last prepaid top-up…

Unbundle the mobile Internet

• The Internet is a metamedium, which includes multiple functionalities– those who are starting may not require all the

functionalities and may not be able to pay for all at first– What does “less for less” mean in broadband?

Some broadband services and significance of quality

+++ highly relevant, ++ very relevant, + relevant, - not relevant

Throughput Delay

Service Down Up RTT Jitter Loss

Browse (text) ++ - ++ - -

Browse (media) +++ - + + +

Download file +++ - - - -

Transactions - - ++ + -

Streaming media + - + ++ ++

VOIP + + +++ +++ +++

Games + + +++ ++ ++

Keep costs (and prices) down

• Low prices are key, but cannot be sustained unless costs are also lowered

• This would, most likely, require economizing on links to the Internet cloud– Domestic access network is not the main problem now

0

500

1000

1500

2000

8:00 11:00 15:00 18:00 20:00 23:00

Dow

nloa

d sp

eed

(kbp

s)

Time

Dialog (2M) Colombo, SL SLT (2M) Colombo, SL

2 Mbps

February 2009

ADSL/WiMax Colombo: Download speeds within ISP domain…

0

20

40

60

80

100

8:00 11:00 15:00 18:00 20:00 23:00

actu

al a

s a

% o

f sta

ted

TimeDialog (2M) Colombo, SL

ADSL/WiMax Colombo: Download speeds accessing international server…

February 2009

100%

Where is the bottleneck (Colombo)?

NB: Upto 5th hop IP addresses are within SL (www.whois.net)

65 ms

25 ms

170 ms

10 ms

RTT from Dhaka- Submarine Cable vs Satellite (international sites)

0100200300400500600700800900

8:15 11:30 15:00 17:30 20:00 22:30

RTT

in m

s

Time

SKYbd, Submarine Cable ADNSL, Satellite

October 2008

Colombo: International bandwidth a problem in 2009, but less than in 2008

0

20

40

60

80

100

8:00 11:00 15:00 18:00 20:00 23:00

Actu

al a

s a

% o

f sta

ted

Tme

Dialog (2M) Colombo, SL Dialog (2M) Colombo, SL SLT (2M) Colombo, SL SLT (2M) Colombo, SL

100%

February 2009 February 2008

February 2008 & 2009

Colombo: HSPA better than ADSL/WiMax

0

25

50

75

100

125

150

8:00 11:00 15:00 18:00 20:00 23:00

Actu

al a

s a %

sta

ted

Time

Dialog 3G (1M) Colombo, SL - II Mobitel 3G(1M) Colombo, SLDialog (2M) Colombo, SL SLT (2M) Colombo, SL

100%

February 2009

Latency; some operators, but not all, meet IDA (Singapore) standard

0

150

300

450

600

750

8:00 11:00 15:00 18:00 20:00 23:00

RTT

(ms)

Time

SKYbd (256k) Dhaka, BD Airtel (256k) Delhi, IN BSNL (2M) Delhi, INMTNL (256k) Delhi, IN Airtel (256k) Chennai, IN BSNL (256k) Chennai, INDialog (2M) Colombo, SL SLT (2M) Colombo, SL

IDA standard 300 (ms)

February 2009

Actions

• Buy more international capacity, and/or• Do a lot of mirroring

– Can this be done within the region?• And, encourage locally hosted content

– Given nature of mobile broadband (possibly more P2P content), this may be a significant factor

Regional mirroring?

• The route to www.yahoo.com (hosted in USA) from Colombo takes roughly 250-300 milliseconds with 11 hops

• To next-door India (ww.yahoo.co.in), takes roughly the same time and 17 hops to Mumbai via Singapore and Chennai

• Unless these links are improved, not much benefit from regional mirroring

Quality adequate to purpose at affordable prices

• If voice quality is atrocious and price is high, will people buy voice services?

• But when service was offered at quality adequate for purpose and at low prices, the market flourished and enabled needed investment

• This is the key to broadband success, though the quality problem is more complex than was with voice

Technical solutions that need to be made for mobile more-than-voice…

Handsets

• Lower costs• Higher functionalities• Voice interfaces• Trust-building features

Network equipment

• Design of 3G networks to give decent QOS with high load factors

Web interfaces

• Optimized for mobile not conventional Internet access

Social science has a major role to play

• Everyone wants to understand the end user– Handset designers– Network designers– Service designers

• Who will tell them?– LIRNEasia quantitative research– Nokia, Telenor qualitative research– Where are the universities

• U of Salzburg, usability labs• ???

Putting money in user’s pockets, not taking from…

Need innovations in making/saving money from ICTs

• Agricultural information– Our research shows the key interventions should be at

• Selling stage (market information in real time)• Decision stage (ability to tell what the prices will be at harvest time)

• M-payments– Reduce transaction costs for migrant workers– Reduce expensive cash use

• Transportation– Help in cutting travel time and costs

• More . . . ?

Largest benefits perceived in emergency communication and relationship maintenance

• Smallest benefit on economic factors

60

1=worsened 2 = slightly worsened 3=no change 4=slightly improved 5=improved

Among BOP teleusers with personal incomes > 0

4.5 4.8 4.8 4.6 4.7 4.44.14.7 4.7 4.4 4.6 4.3

3.84.4 4.4 4.1 4.4 4.14.1

4.6 4.74.1 4.5

2.6

3.84.6 4.6 4.2 4.4

3.83.74.7 4.8

4.3 4.6 4.2

Ability to increase earnings and/or savings

Ability to act in emergency

Ability to contact others in emergency

Efficiency of daily activities

Family and social relations

Social status/recognition

Perceived benefits of telecom access: General


Teleusers less certain when it comes to financial benefits

61Among BOP teleusers with personal incomes > 0

1=worsened 2 = slightly worsened 3=no change 4=slightly improved 5=improved

4.4 4.4 4.7 4.6 4.5 4.74.1 4.0 4.1 4.1 4.1 4.4

3.7 3.7 4.1 4.0 4.0 4.2

2.41.4

2.6 2.63.6

4.33.7 3.6

4.1 3.8 4.1 4.33.6 3.4

4.0 3.6 3.74.5

Ability to make more money

Ability to make more money by selling calls

Ability to find out about jobs/work

Ability to access price/market information

Ability to save money Ability to save on travel cost

Perceived benefits of telecom access: Livelihood-related


Zooming in on the Indian BOP

• Indians who use the phone for business activities see more benefits in terms of: making more money (also via sale of calls), ability to find out about employment, save money, improve efficiency of daily work– 77% of Indian teleusers at BOP use their mobile for business, financial

or work-related purposes• More than half of these do so on a daily basis

77% of Indian teleusers at BOP use their mobile for business, financial or work-related purposes; more in BD and PH

72

3142

21

4932

8

14

21

14

17

15

3

7

7

5

10

9

2

4

4

4

2

14

0

3

2

3

6

5

1

1

2

3

19

14

3923

50

15 17


Use of the phone for financial, business or work-related purposes (% of BOP mobile owners)

Never


Once a month

Two-three times a month

Once a week

Twice a week

Daily

63

Daily u

se


72

42

21

49

3231

79 70

34 2951

4121 21

46 52 55

26

87

13 16

1622

16 14

1618 17

14

23

4 10

5 7

2 6

811 8

9

02

5 3

5 4

5 4

41 5

16

20

2 3

2 2

2 4

93 1

6

02

1 1

1 2

2 3

1 1 110

9 16

41 3821 23

54 50

16 15 13 18

Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural


Use of the phone for business, financial or work puposes (% of BOP mobile phone owners)

Never


Once a month


Once a week

Twice a week

Daily

Most pronounced differences between BOPs in urban and rural Thailand


Who is the most entrepreneurial of them all?

65

7566

Male Female Male Female Male Female Male Female Male Female Male Female


Use of the phone for business, financial or work puposes (% of BOP mobile phone owners)

Never


Once a month


Once a week

Twice a week

Daily


the path to the information society: does it lie through the mobile? evidence from asia and thoughts...

Documents

pyramid slide

bop teleusers slide

pyramid bop

sec d e bop

representative of bop

b c slide

bop research

bop outer sample