ApEc 3071. Cell (Mobile) Phones, Marketing & Development Jeffrey Sachs (dev. guru) has referred to them as “ the single most transformative.

ApEc 3071

Cell (Mobile) Phones, Marketing & DevelopmentJeffrey Sachs (dev. guru) has referred to them

as “ the single most transformative tool for development (currently”.

First cell-phones were thought of as niche product fro urban businessmen & wealthy in developing countries.

However, prices fell & cell-phone networks spread .

Much cheaper to build a cell-phone network than a wire-line one.

Theft of copper line.

Plus Pre-Paid payment system developedAll cash; these are cash societies and small only

have small amounts at once.Can load up phone with credit (minutes) & use it

until the time runs out; then buy new credit.Vouchers sold in small shops & on street corners.Top-up vouchers sold for as little as 50 cents.Went from a luxury to a commodity.Price of basic cell-phone has fallen to $20 or less.Group of village women could get micro-financing

to buy a cell-phone then rent it to others –village-phone.

Liberalization of Telecom MarketsIn developing countries telecom has typically

been a government-run monopoly.Many countries deregulated telecom, at lest

for cell-phones.Mobile tele-density: cells per hundred people.40 in Africa.4 billion mobile phone subscriptions in the

world, only 1 billion of those in developed countries (in 2008).

Impacts on MarketingOne study off coast of southern India in 2007

by Robert Jensen.Found access to cell-phones as they spread

down the coast between 1997 & 2001 allowed fisherman to market their catch much more efficiently.

Could call several markets in nearby coastal villages while still at sea instead of just going back to home village.

Then go to market with best price that day.

continuedDramatically reduced variation in price

between villages along the coast.Reduced consumer prices by 4% & raised

fisherman’s profits by 8%.Information makes market work, & better

markets improve welfare. Regular people call around to find best prices.

In another study in 2008 in Niger, cell-phones reduced price variation between village markets by a minimum of 6.4% & more in remote, hard to reach ones.

Impact of Micro-Entrepreneurship50-60% of businesses globally; 90% in Africa.Self-employed carpenters, porters, etc. can post

notices to lamp-posts, etc. with their cell-phone #’s.In Bangladesh a barber who couldn’t afford to rent a

shop bought a cell-phone and motor-bike instead.Then posted his # & prices and made appointments to

go to customer’s homes.One street merchant found his business increased by

70% after he started using a cell-phone & posting ads.Could also negotiate with different suppliers to get

better prices.

Source of EmploymentCreates new jobs, stimulates investment, & a

source of government revenue.Afghanistan’s largest private company, investor

& tax payer is Roshan, a mobile phone company.Has a network of 25,000 agents who sell top-up

cards.Grameen Bank’s Mr. Yonus, 2006 Nobel Peace

Prize winner, said:When you have a mobile phone, it is almost like

having a card to get out of poverty.