Teleuse@BOP Digital Divide Digital Opportunity Rohan Samarajiva (samarajiva [at] lirne.net) Session 1: Accelerating the growth of broadband India Telecom.

Teleuse@BOP

Digital Divide Digital Opportunity

Rohan Samarajiva (samarajiva [at] lirne.net)

Session 1: Accelerating the growth of broadband India Telecom 2007December 13th, 2007, New Delhi

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Plan of presentation

Relevance of the BOP Methodology Digital opportunity Digital divide Bridging the divide and seizing the opportunity Non-owners owners: barriers In sum . . .

Teleuse @ BOP

Relevance of the BOP

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12

436

10 1232

85

282

5

44

16

0

50

100

150

200

250

300

350

400

450

500

Pakistan India Sri Lanka Philippines Thailand

Popu

latio

n ag

ed 1

5-60

(m

illio

ns)

Middle & top' of the pyramid (SEC A, B, C) Bottom of the pyramid (SEC D, E)

How big are the markets in emerging Asia: BOP and M & TOP?

*

*excluding FANA/FATA Tribal Areas; **excluding North & East Provinces

**

Teleuse@BOP

Methodology

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Bottom of the Pyramid (BOP) defined

Many definitions of poverty, but this study uses SEC D and E; between ages 18-60 SEC does not take into account income, but it is

closely related to income levels

BOP segment is representative of the BOP population Diary respondents also representative of BOP

Small (non-representative sample) taken of SEC groups A, B & C

SEC D & E

SEC A, B & C

SAMPLESouth Asia South East Asia TOTAL


TOP (SEC A, B & C)

731 652 596 92 348 2,420

BOP (SEC D & E)

1,081 3,348 481 1,008 352 6,269

Total 1,812 4,000 1,077 1,100 700 8,689

Error margin at 95 percent CI

2.7% 1.5% 3.0% 3.0% 7.0%

Quantitative sample

Teleuse @ BOP

Digital opportunity

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What are the opportunities afforded by ICTs?

Ability to communicate One-to-one One-to-many More than voice Social networking

Ability to retrieve information that will Improve ability to make money or save money Enhance ability to coordinate activities across time and space,

thereby improving quality of life Educate, improve know-how Entertain

Ability to publish Voice for the voiceless Niche publishing

Ability to transact Not only to interact, but to make payments

Remote computing Use of software and computing power that is elsewhere

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What are the prerequisites?

Reliable electricity A computer A broadband connection

More than 256 kbps up and down Always on

Service from an ISP Familiarity with the interface Literacy Language skills

. . . . Classic home Internet user?

How many at the BOP?

Teleuse@BOP

Digital Divide

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Use the Internet 1.9% 0.3% 1.5% 8.8% 10.4%

Internet use

3%

0%

2%

12%

14%

1%0%

1%

6%

7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Pakistan India Sri Lanka Philiphines Thailand

% a

t B

OP

Male

Female Large gender divide, even in South East Asia

Internet at the BOP…

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Have not heard about the Internet before

36%

72%

29%

14%

36%

0%

20%

40%

60%

80%


% a

t th

e B

OP

What Internet??

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Internet awareness: Never heard of the Internet before

24%

67%

23%

9% 10%

49%

78%

30%20%

43%

0%

20%

40%

60%

80%

100%

Pakist

anIn

dia

Sri La

nka

Philip

pines

Thailand

% o

f B

OP

Urban

Rural

Awareness poor, even in urban areas

Teleuse @ BOP

But divide can be bridged and opportunity seized

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Why not a different starting point: “more-than-voice” uses of mobile?

Access and use implies familiarity with the technology Access/ownership

Is ownership of the terminal necessary? Any conditions under which non-voice applications can be used

without individual ownership? How many currently own terminals?

What kinds of terminals?

Are they capable of supporting more than voice? How many likely to join the ranks of owner-users by 2008?

Use for voice without ownership use for voice with ownership more-than-voice applications digital opportunity?

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Access is surprisingly high familiarity

South Asia South East Asia


Used phone in last 3 months

98% 94% 92% 93% 95%

Most people approached for survey (BOP and other) had used a phone in the last 3 months

“Half the world’s population has not made a phone call” was wrong when Kofi Annan said it in 1999; absolutely wrong now

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Ownership and GDP per capita (USD, PPP)

23%

9%

22%

60%

11%

23%

7%

14%

64%

81%

59%

38%

23%

76%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


% 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 (household)

Own nothing (but use something) Per Capita GDP PPP (USD)

Ownership is not as high

Especially in South Asia…

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Easy access needed for more-than-voice . . .

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 Household member’s mobile CDMA “fixed” phone

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Most frequently used mode

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%%

at

BO

P

Public phone 35% 71% 30% 8% 7%

Relative / friend's phone 10% 1% 12% 14% 6%

Neighbours phone 8% 7% 14% 7% 1%

Mobile of another householdmember

12% 4% 6% 11% 5%

Household fixed phone 14% 9% 21% 4% 8%

Own mobile 21% 9% 17% 56% 73%


Access modes among BOP phone users

S Asia BOP mainly used public phones; SE Asia mobiles

Also note that 12% in PK, 4% in IN & 6% in LK use the mobile of another household member

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

Except in India, combined BOP household use > BOP public phone use

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Sophisticated handsets at the BOP: Average for new is USD70+

60-70% of mobile owners at BOP use brand-new handsets But even simple sets allow mobile payments and such

Average price paid for mobile handsets: brand new & second-hand

USD 0

USD 20

USD 40

USD 60

USD 80

USD 100

USD 120

USD 140

USD 160


Ave

rag

e pr

ice

pa

id

ave. price paid for brand new ave.price paid for second hand

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South Asia South-east Asia


% of non-owners who plan to get connected between mid-2006 and mid-2008

53% 38% 53% 42% 38%

Mobile access is high … and growing

36%

19%

41%

62%

77%

70%

50%

72%78%

86%

0

25

50

75

100

125

150


Con

nect

ion

s at

BO

P (

mill

ion

s)

0%

20%

40%

60%

80%

100%

% o

f ho

useh

olds

at

BO

P w

ith a

tel

epho

ne

Already own something Don't own but plan to buy

Current ownership at BOP (%) Penetration at BOP by mid 2008

Type of phone prospective owners would buy

23% 29%

52%

8%

68%67%

40%

91%

9% 4% 7% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pakistan India Sri Lanka Philippines

Not decided yet

Mobile

Fixed phone

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SMS as the main non-voice application; highest in Philippines, lowest in India (declined in the last quarter)

Frequency of SMS use (DE)

50%

65%

40%

70%

0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f m

ob

ile

ow

ner

s

Never

Less than once a month

At least once a month

At least once a w eek

Daily

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Mobile as a voting device

“A key advantage of a phone, as seen by participants, is its ability to promote democratic participation. The example presented was a reality TV show . . . to select a ‘Super Star’ . . . based on the SMS/phone voting by the public. . . . Study participants viewed this as a case of telecom enabling the ‘unheard’ to voice their opinion. . . . They felt that their voice was heard; that they have been elevated from the level of mere observers to that of active participants in democratic processes. . . . None of them complained of having to pay five times the regular cost of an SMS to place their votes.”

From a focus group on phone use; reference is to an American Idol-type show

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Payment systems in place for more-than-voice applications

For example, Sri Lanka’s largest GSM operator (~ 3.6 million subscribers) 86% prepaid subscribers, overall Approx. 50% of prepaid top-ups are via electronic reload (50% via

card system) 12,000+ electronic reload outlets Mobile payment system recently launched for the first time in S Asia

Philippines is the world leader Personal accident insurance system via mobile connection also

recently launched


Pre Paid @ BOP

99% 95% 92% 99% 96%

Post Paid @ BOP

1% 4% 8% 1% 4%

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India’s mobile Internet users growing

As at 30 June 2007 (TRAI, 2007; p.14) Fixed Internet subscribers: 9.22 million (declined in last

quarter!) Internet subscribers accessing Internet via mobile handsets

(GSM/CDMA): 38.02 million and growing One out of five mobile users in India use their handsets to access

Internet

Mobile = 4 x Fixed

Foreshadowing the mobile-centric Internet?

Teleuse @ BOP

Non-owners owners: barriers

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Reasons for not owning a phone

75% 82%72% 77% 77%

18%16%

19% 15% 15%

7% 8% 7% 7%2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f n

on

-ow

ner

s at

BO

P

I cannot afford it Don't need one Other

Key barrier to ownership is affordability

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The cost of getting connected…Expectation vs. affordability gap

Expected cost of a new phone by non-owners

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f non

-ow

ners

at B

OP

>USD 176

USD 146-175

USD 116-145

USD 86-115

USD 56-85

USD 26-55

<USD 25

Initial cost that prospective owner can afford

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f pro

spec

tive

owne

rs a

t the

BO

P

More than USD 71

USD 51 - 70

USD 31 - 50

USD 10 - 30

Less than USD 10

E.g., 70% of non-owners at BOP in Sri Lanka believe that the cost to get connected will be greater than USD56

But only 11% can afford more than USD50 New mobile and connection possible for USD 36; lower with second-hand

phone Greater potential for more-than-voice applications as prices of mobiles with

additional capabilities decrease

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Use cost: most can afford less than USD5 per month on communication

Monthly charges: expected vs. affordable

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

affo

rdab

le

expe

cted

affo

rdab

le

expe

cted

affo

rdab

le

expe

cted

affo

rdab

le

expe

cted


% o

f us

ers More than USD 20

USD 11 - 15USD 5 - 10Less than USD 5

Expectations and affordability are in line Most expect the monthly cost to be less than USD 5, which most can

afford to pay Also in line with ARPUs of mobiles (USD 3-4)

32% of customers of Sri Lanka’s largest mobile operator pay around USD 1 per month

Teleuse @ BOP

In sum

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In sum

Digital opportunity ≠ the way we use the Internet now Need think of digital opportunity in terms of functions such as

information retrieval Massive divide exists if we think conventionally about the BOP But possible to bridge the gap if we start from the mobile

BOP are not necessarily heavy users, but they do use mobiles Even non-owners are participating in telecom Potential owners, if connected, would also use phones for more than

voice BOP mobile market is growing; much of the BOP will first

experience the Internet via mobiles Prerequisites for ‘more than voice’ applications are in place Digital divide can be bridged and digital opportunity can

be seized, only if we take a road less traveled by

. . . that will make all the difference

Teleuse@BOP Digital Divide Digital Opportunity Rohan Samarajiva (samarajiva [at] lirne.net) Session 1: Accelerating the growth of broadband India Telecom.

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