Teleuse on a Shoestring 2: Poverty reduction through telecom access at the Bottom of the Pyramid Harsha de Silva and Ayesha Zainudeen, LIRNEasia Colombo,

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


*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


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)



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)



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)



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


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

Teleuse on a Shoestring 2: Poverty reduction through telecom access at the Bottom of the Pyramid Harsha de Silva and Ayesha Zainudeen, LIRNEasia Colombo,

Documents

issues issues access

telecom access

poverty reduction slide

logic telco access

questions questions

poverty greater inequality

poverty greater equality

hour slide