cornell project
TRANSCRIPT
INCREASING PRODUCTIVITY AT THE BASE-OF-PYRAMID:
A ROLE FOR INFORMATION/COMMUNICATIONS TECHNOLOGIES AND
INHERENTLY NOT SCARCE RESOURCES
FOR SUSTAINABLE SOCIO-ECONOMIC DEVELOPMENT
A Project Paper
Presented to the Faculty of the Graduate School
of Cornell University
in Partial Fulfillment of the Requirements for the Degree of
Master of Public Administration
by
Jim Dennis Bunce
May 2006
© 2006 Jim Dennis Bunce
ABSTRACT
Information and communications technologies and their accessibility have the
potential to impact the lives of those in developing nations by providing services,
applications, and content necessary for them to increase the productivity of their labor.
By providing government services, education, health information, and other forms of
intellectual capital that cost society nothing to transfer, organizations will establish a
powerful catalyst to bring about an advanced form of development. Once knowledge
and information are created and captured digitally, they are available for transfer to the
next user at a cost in resources of zero. These resources do require infrastructure
through which they can be available for use. This infrastructure is typically made up of
resources that are scarce. For example, the Linux operating system is available free to
download by a potential user’s computer system through the Internet. For this to
occur, the following components must exist: trained human capital, a computer
system, the Internet, and a Linux operating system. This example provides a
representation of the symbiosis between resources that are scarce and those that are
inherently not scarce. This symbiosis and how the resulting interconnectedness can
lead to mutually beneficial results for the applicable stakeholders is the backbone of
the analysis conducted herein.
This project will present recommendations for how each of the necessary components
can be achieved despite the absence of earlier development and an initiative for
sustainable development in Salvador Da Bahia, Brazil.
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BIOGRAPHICAL SKETCH
Jim Dennis Bunce was born in Miami, Florida, and is the son of Marina Arias Orozco
and Dennis Morgan Bunce.
After graduating from Dade Christian School he attended Lehigh University, where he
studied civil engineering. Jim earned a Bachelor of Science Degree in Civil
Engineering from Lehigh University’s College of Engineering. Shortly after his
graduation, Jim began working in engineering and environmental consulting.
In 2003, Jim was accepted at and enrolled in Cornell University in Ithaca, New York.
Jim pursued a Master’s Degree in International Development and Management from
the Cornell Institute for Public Affairs. The degree will be completed in May 2006.
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ACKNOWLEDGMENTS
I would like to first express my gratitude to Professor Royal D. Colle for his guidance
in this project, and to Professor Alan McAdams for everything he has taught me and
for his influence. In addition, I am especially grateful to Professor Stewart Hart for the
knowledge he has shared with me. Thanks to Professor Norman Uphoff, Professor
Muna Ndulo, and Professor Terry Tucker. Thanks to Professor Colle for his kind
patience and mentoring and, of course, for acting as my advisor. Special thanks to
Aaron Levy and Tara Wood for working with me in conceiving the e-Kiosk concept.
To my family and friends, my gratitude and my love.
Thanks to my parents, Marina Arias Orozco and Dennis Morgan Bunce. I am so
grateful for your love and influence throughout my life. My love to you always.
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DEDICATION
To my grandparents, Abel Arias Vera, Florencia Orozco Arias,
Robert Morgan Bunce, and Marie Porter Bunce
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TABLE OF CONTENTS BIOGRAPHICAL SKETCH......................................................................................iii ACKNOWLEDGMENTS........................................................................................... iv DEDICATION .............................................................................................................. v Table of Contents......................................................................................................... vi List of Figures ............................................................................................................viii List of Tables................................................................................................................ ix List of ABBREVIATIONS........................................................................................... x Introduction .................................................................................................................. 1
“Project Building Block A: The Network” ............................................................ 2 “Project Building Block B: Portal of the Americas”.............................................. 3 “Project Building Block C: Internet Protocol”....................................................... 3 “Project Building Block D: Citizens Assistance Service Centers” ........................ 4 “Project Building Block E: The MotoBus Initiative”............................................. 5 “Project Building Block F: The e-Choupal Initiative” ........................................... 5
PART I: Project Building Blocks................................................................................ 7 Chapter I: Building Block A: The Network ............................................................... 7
A. The Network ...................................................................................................... 7 B. Community Broadband Options ...................................................................... 12 C. Networked Devices to Access Services, Applications, and Content ............... 13
Chapter II: Project Building Block B: Portal of the Americas ................................. 14 A. Aggregator ....................................................................................................... 14 B. Transmitter....................................................................................................... 14 C. Portal of the Americas Business Model........................................................... 16 D. Subscribers....................................................................................................... 17 E. Concept Maps .................................................................................................. 19
Chapter III: Project Building Block C: Internet Protocol......................................... 24 A. Voice over Internet Protocol............................................................................ 24
Chapter IV: Project Building Block D: Citizens Assistance Service Centers (SAC)30 A. Citizen’s Assistance Service Centers (SAC) ................................................... 30 B. Types of Centers .............................................................................................. 31
Chapter V: Project Building Block E: The MotoBus Initiative ............................... 34 A. Motorola, The MotoBus Initiative................................................................... 34
Chapter VI: Project Building Block F: The e-Choupal Initiative............................. 36 A. The e-Choupal Initiative.................................................................................. 36 B. The Indian Tobacco Company......................................................................... 39 C. Inefficient Farming Practices........................................................................... 41 D. Providing Services, Applications, and Content through the e-Choupal .......... 44 E. The ITC Hubs................................................................................................... 46 F. Increased Interaction Between the BOP and Digital Global Resources .......... 47 G. Leveraging the Success of the e-Choupal Model ............................................ 48 H. Increased Demand of Agricultural Inputs as a Result of e-Choupal Initiative 49 I. Addressing Additional Needs Through e-Choupal ........................................... 50
PART II: The e-Kiosk Initiative ............................................................................... 53
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Chapter VII: The e-Kiosk Initiative Proposal Summary.......................................... 53 A. Proposal in Brief.............................................................................................. 53
Chapter VIII: The University-Based e-Kiosk Initiative ........................................... 62 A. Project Description .......................................................................................... 62 B. Education ......................................................................................................... 63 C. Project Phases .................................................................................................. 66 D. Marketing......................................................................................................... 67 E. Public Sector BOP Subscriber Surrogate......................................................... 68
Chapter IX: e-Kiosk Phase I Preliminary Analysis of Salvador Da Bahia .............. 86 A. Demographic Features..................................................................................... 86 B. Education ......................................................................................................... 87 C. State Program of Information and Communication Technologies at Schools. 89 D. Illiteracy Rate Drop ......................................................................................... 89 E. College Education in Bahia.............................................................................. 90 F. Analysis of Bahia Development through the e-Kiosk Initiative ...................... 92 G. Rationale for e-Kiosk: Increased Education in Bahia ..................................... 94
PART III: Sustainability and the e-Kiosk Initiative ............................................... 96 A. Financial Sustainability ................................................................................... 96 B. Social Sustainability ........................................................................................ 98 C. Technological Sustainability.......................................................................... 100 D. Financial Sustainability ................................................................................. 102 E. Environmental Sustainability......................................................................... 103
Appendix A: Resource Allocation for Goods that are Inherently Not Scarce.... 105 Appendix B: Building Optical Networks for Healthcare:
Saving Lives and Cash...................................................................................... 130 Appendix C: An Introduction to the Portal of the Americas ............................... 139 Bibliography.............................................................................................................. 149
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LIST OF FIGURES Figure 1. e-Kiosk with Network Broadband Business Model......................................15 Figure 2. Business Model. ............................................................................................20 Figure 3. The Aggregation of Services.........................................................................21 Figure 4. The Controlling of the Transmission Network. ............................................22 Figure 5. The Aggregation of Subscribers. ..................................................................23 Figure 6. The World Economic Pyramid. ....................................................................33 Figure 7. Simplified Sketch of Organizational Structure: e-Kiosk. .............................79 Figure 8. Map of the State of Bahia. ............................................................................97
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LIST OF TABLES Table 1. Major Municipalities in the State of Bahia ....................................................87 Table 2. Illiteracy Rates, According to Ages, in Bahia, 1981–1996 ............................90
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LIST OF ABBREVIATIONS 3G third-generation ARPU average revenue per user BOP base of the economic pyramid CALS The College of Agriculture and Life Sciences at Cornell University CD compact disc CDD community-driven development CGAP The Consultative Group to Assist the Poor CIPA Cornell Institute for Public Affairs CSR corporate social responsibility DAP diammonium phosphate EM Element Mobile FMS First Mile Solutions HB high-bandwidth HQ headquarters IBD ITC’s International Business Division ICT information and communication technologies ICT4D information-and-communication technologies-for-development INS Inherently-not-scarce IP Internet Protocol ISP Internet Service Provider IT information technology ITC Indian Tobacco Company IXPs Internet Exchange Points Kbps kilobits per second Mbps megabits per second MFI micro-finance institutions MIT Massachusetts Institute of Technology MNC multi-national corporation MOP muriate of potash NAP Network Access Point NGO non-governmental organization OECD Organization of Economic Co-operation and Development PC personal computer PDA personal digital assistant POA The Portal of the Americas SAC Citizen’s Assistance Service Center SRISTI Society for Research and Initiatives for Sustainable Technologies and
Institutions UN United Nations UNEB State University of Bahia (Universidade do Estado da Bahia) UNESCO United Nations Educational, Scientific and Cultural Organization UPS uninterruptible power supply VOIP voice over internet protocol
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VSAT very small aperture terminal
1
INTRODUCTION
Many in the “developing and survival world”1 believe that their path towards
development cannot be made without the need to pollute. It is necessary to note that
the ecological footprint of a country is the product of its total population, its amenities
or standard of living, and its technology.
EF = P * A * T
Where:
P = population
A = amenities or standard of living
T = technology
As the standard of living increases in various developing nations such as China, India,
and Brazil, it is inevitable that the ecological footprint will increase as well. According
to Stuart Hart, the solution to this dilemma relies heavily on the final factor of the
equation, technology.
Our goal is to increase the standard of living for those in the developing and survival
world through the combined use of information/communications technologies and
inherently-not-scarce resources using a combination of for-profit and non-profit logic
while reducing the ecological footprint. Information/communications technologies and
inherently-not-scarce resources will enable individuals, government bodies,
educational institutions, and businesses to improve the efficiency of many aspects of
their work.
1 Developing and survival world join together to form the base-of-pyramid as described by Stuart Hart of the Center for Sustainable Global Enterprise at the Johnson School of Management, Cornell University.
2
Once knowledge and information are created and captured digitally, they are available
for transfer to the next user at a cost in resources of zero. These resources do require
infrastructure through which they can be available for use. This infrastructure is
typically made up of resources that are scarce. For example, the Linux operating
system is available free to download by a potential user’s computer system through the
Internet. For this to occur, there must exist the following components: trained human
capital, a computer system, the Internet, and a Linux operating system. This example
represents the symbiosis between resources that are scarce and those that are
inherently not scarce. This symbiosis and how the resulting interconnectedness can
lead to mutually beneficial results for the applicable stakeholders is the backbone of
the analysis conducted herein.
This project will present recommendations for how each of the necessary components
(trained human capital, a computer system, the Internet, and various “services,
applications, and content”) can be achieved despite the absence of earlier development
and an initiative for sustainable development in Salvador Da Bahia, Brazil.
“Project Building Block A: The Network”
Description: In order for services, application, and content of all types to be
accessible there must be a computer system with a high bandwidth broadband
network capable of carrying the present and future capacity requirements.
Infinite or relatively infinite bandwidth capacity is necessary to create what
Alan McAdams of Cornell University calls a “network of plenty.” New York
Presbyterian Hospital has achieved this and provides the model for creating
this type of network.
3
Application: “Project Building Block A: The Network” and the e-Kiosk
initiative will present how the computer system and a high-bandwidth
broadband infrastructure network can be created organically to enable
individuals to access services, applications, and content free of charge while
providing mutual benefit to the providers.
“Project Building Block B: Portal of the Americas”
Description: The Portal of the Americas (POA) is a web portal, which
provides a digital marketplace of aggregated services, applications, and content
to subscribers aggregated by surrogates in localized areas such as
municipalities, universities, and businesses. Subscribers who access digital
goods through the portal are exposed to advertisements of various service,
application, and content providers such as Google.
Application: “Project Building Block B: Portal of the Americas” will present
recommendations for how the Internet access component can be achieved
through a business model that relies on an abundance of digital services,
applications, and content rather than scarcity. The Portal of the Americas
aggregates the services, applications, and content and transmits these goods to
subscriber surrogates such as municipalities, universities, and businesses.
“Project Building Block C: Internet Protocol”
Description: Voice over Internet Protocol technology allows voice calls to
become another form of data to be delivered via the Internet. Skype, for
example, is a VOIP program that has 54 million users and is adding 150,000
users per day at a marginal cost of zero for each additional subscriber.
4
Application: “Project Building Block C: Internet Protocol” will describe how
the trained human capital component can be achieved. “Voice Over Internet
Protocol (VOIP)” will be the mechanism used to attract individuals to
inherently-not-scarce resources and to information/communication
technologies. The ability to communicate verbally without limit other than
language barriers will enable most individuals in the developing and survival
world to achieve a level of confidence with unfamiliar technologies, which will
enable them to access en masse inherently-not-scarce resources, in turn
allowing the POA business model to work. VOIP will initially be attractive to
university students, who will be able to train themselves and each other. This
section of the report presents VOIP as it applies to emerging economies and to
China in particular.
“Project Building Block D: Citizens Assistance Service Centers”
Description: These centers were created by the state government of Salvador
da Bahia to provide the services available at federal, state, and municipal
agencies in one location to citizens. This one-stop-shopping type approach,
facilitated by information and communications technologies, was taken a step
further by the mobile center initiative which delivered the actual center and the
services they provide to isolated and poorly served locations.
Application: “Project Building Block D: Citizens Assistance Service Centers”
provides a successful example of how government services were extended to
individuals in the developing and survival world. This physical one-stop-
shopping approach via mobile center provided the inspiration for the e-Kiosk
initiative and is an example of how a non-profit approach can be used to serve
citizens while increasing productivity and reducing the ecological footprint.
5
“Project Building Block E: The MotoBus Initiative”
Description: The MotoBus Initiative was devised by Motorola, which believes
that cell phones and their ability to enable individuals to negotiate deals,
transport goods to market, and access important services such as banking and
insurance are more critical than physical infrastructure to development. The
initiative seeks subscribers in remote and poorly served regions through the use
of vans and Motobuses. These vehicles bring the Motorola shop to individuals
rather than requiring them to travel to the store.
Application: “The MotoBus Initiative” provides vital information regarding
the for-profit component, which also provides the necessary incentive for the
services, content, and applications to be created in the first place.
“Project Building Block F: The e-Choupal Initiative”
Description: The e-Choupal initiative was devised by the Indian Tobacco
Company (ITC) and provides farmers with access to
information/communications technologies and inherently-not-scarce goods.
ITC created this initiative at first to give soybean farmers the information
necessary to make an educated decision regarding whom to sell their harvest
to. ITC’s gamble paid off, and many farmers are choosing to sell their
soybeans to ITC rather than to the local trader. The initiative has grown and
has led other initiatives to sell products such as fertilizers, agrichemicals,
seeds, insurance, and to provide credit.
Application: “The e-Choupal Initiative” provides vital information regarding
the for-profit component, which also provides the necessary incentive for the
services, content, and applications to be created in the first place. It also clearly
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presents the symbiosis between scarce goods and inherently-not-scarce goods.
The information/communications technologies and inherently-not-scarce goods
provided free to the farmers were able to improve the overall efficiency of their
farming, harvesting, and selling practices. The resulting capital increases and
access to better information led to an increased demand and ability to purchase
agricultural inputs of various types, which were also provided by the ITC.
This section is followed by a presentation of the e-Kiosk initiative, which was crafted
based upon the knowledge of the project building blocks. We discuss the details of the
initiative and how it will succeed in Salvador Da Bahia.
Finally, we end with a discussion of sustainability and how it pertains to the e-Kiosk
initiative from a financial, technological, and environmental perspective.
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PART I: PROJECT BUILDING BLOCKS
Chapter I: Building Block A: The Network
A. The Network
A Commodity Called Bandwidth
What technological innovation would be most vital to the development of Latin
America? Many ideas come to mind, but the innovation that will generate the greatest
impact is the creation of a high-bandwidth communication infrastructure. High
bandwidth will provide permanent high-speed connectivity throughout an interactive
digital web, from any location, at any time, and for whatever reason.
High bandwidth is the electricity of the information era and will be the fuel that
powers the information economy. High bandwidth is the proverbial information super
highway network upon which every type of digital content imaginable will be able to
travel effortlessly from anywhere in the world at any time.
High bandwidth and its accessibility have the potential to impact our lives in every
way and to impact every sector of the global economy. In particular, it will transform
our systems of education, government, health, communications, entertainment, and
commerce. By high bandwidth, we do not necessarily mean access to email, Web
sites, or more rapid web page views. High bandwidth is much more than just access to
these conveniences. It is the possibility of agricultural students in the State of
Uttaranchal, India, interactively attending a virtual lecture on Sustainable Global
Enterprise at Cornell University, in real time, from their networked digital notebooks
or tablet PCs. It is the possibility of a single mother in Ghoungzhou, China,
undergoing various types of three-dimensional imaging scans of her malfunctioning
heart valve, with a specialist in Turkey administering the exam and a doctor in
8
Colombia conducting the analysis. It is the possibility of a village elder in Senegal
visiting a networked telecenter to obtain information on how to prevent water-borne
disease by building wells and digging pit latrines. It is the possibility of a soybean
farmer in India selling this season’s harvest to someone willing to pay fair market
value based upon a review of the daily trading price from the Kuala Lumpur Exchange
or the Chicago Board of Commodities Exchange. It is the possibility of a woman in
Bangladesh building a business around her networked laptop computer, obtained
through a Grameen Bank-administered micro-loan introduced to her by a mobile e-
lender who visited her home in Daka. It is the possibility of residents throughout
Salvador Da Bahia, Brazil, being able to access government services in their own
neighborhoods without having to travel long distances to the city’s core.
The Network
Although varying degrees of connectivity exist within Latin America, Internet
penetration hovers at around 20 percent, compared with approximately 50 percent in
the United States. High-bandwidth penetration is estimated to be less than 1 percent.
Where do we go from here? Evidence suggests that a partnership between the public
sector, the private sector, and the NGO community will be necessary to accelerate the
development of high bandwidth at a rate of connectivity necessary to address, in a
sustainable manner, the needs of a growing population increasingly dependent upon
scarce resources. Digital goods or inherently-not-scarce resources will provide the
means to address our current needs without preventing future generations from
meeting their own potential needs. Inherently-not-scarce (INS) resources (please refer
to Alan McAdams, “Resource Allocation for Goods that are INS,” for a more detailed
discussion of INS resources) are digital goods that, once created, can be provided to
each additional user at a marginal cost of zero to the provider. This provision is made
possible through high-bandwidth broadband networks, which allow digital goods to
9
flow uncongested, without the need for management. One can envision such a network
as a water pipe of relatively infinite capacity. Digital goods, much like water, flow into
one end of the pipe and out the other end.
There are entrepreneurs (such as Stratum Broadband2) who believe that, because
digital goods capable of being distributed through a high-bandwidth network can be
provided to all users at a marginal cost of zero once the infrastructure is in place, the
cost should reflect this fact and the use of such a network should be provided free of
charge to the users. Currently, a high-bandwidth connection in Mexico, Colombia, and
the United States costs approximately $40 a month. This cost represents a much larger
percentage of income in Mexico and Colombia than it does in the United States. This
imbalance will need to change in order for the global landscape to become more
equitable.
The role of government in promoting high-bandwidth access is vital to the
development of an efficient network available to all. Infrastructure created by private
enterprises will reflect their commercial needs and desires and will make every
attempt to exclude its competitors. For example, if instead of a National Highway
System in the United States, we had a General Motors Highway System, we would be
in big trouble. GM Highways would be designed specifically for GM vehicles and
would evolve based upon the needs of that company’s customers and its particular
business strategy. Areas in which GM vehicles were not sold would not be accessible
by this highway system. Over time, private automobile highway networks would
evolve without any plan for efficiency. This was the case prior to the passage of the
National Highway System Designation Act, signed into law by then President General
2 Stratum Broadband is an experienced system integration company working with universities, colleges, municipalities, and businesses to leverage existing data, voice, and video infrastructures to find new revenue streams.
10
Dwight D. Eisenhower after a research-based road trip from Washington, D.C. to San
Francisco took the Commander-in-Chief three months to complete. This inefficient
network was unacceptable to the President and was viewed as a threat to national
security.
The National Defense Highway system was designed to move military equipment and
personnel efficiently, in much the same manner that a future National Defense High
Bandwidth Network could enable the real-time transfer of information and the
efficient coordination of communications. The United States ranking continues to fall
in terms of its broadband connectivity as measured by the OECD (Organization of
Economic Co-operation and Development) and has gone from a leadership position to
ranking 19th.3 This inefficiency should be unacceptable to our leaders and to the
American people. From a national security perspective, this represents a serious threat
to our continued prosperity and to our ability to compete in an increasingly
interconnected global economy.
It is useful to compare the past government-built highway system for the transport of
scarce goods with the current need for government-built high-bandwidth networks for
the transport of non-scarce digital goods such as digitized books, data, music, and
applications. During World War II, then General Eisenhower saw the advantages
Germany enjoyed because of the autobahn network. He also noted the enhanced
mobility of the Allies after they fought their way into Germany and were themselves
able to take advantage of the autobahn’s efficiency. As President, Eisenhower
established the Highway Trust Fund to enable the United States to build a national
road network similar to the German Autobahn. Similarly, the United States is lagging
3 John Reynolds, “Building Community Broadband Nationally” (seminar, Johnson School of Management, Cornell University, February 24, 2006).
11
behind and will continue to be at a disadvantage if it allows the digital gap to widen
further. Yesterday’s German Autobahn is today’s e-Japan National High bandwidth
Network System. The Japanese Government is currently establishing a network that
will provide high-bandwidth fiber-optic connectivity to every home. The United
States, on the other hand, is the only G-74country that lacks an industrial policy on
Internet connectivity.
New York Presbyterian Hospital: A “Network of Plenty”
The successful development of e-Government, e-Education, e-Health, and e-
Commerce depends upon the ability of high-bandwidth (HB) networks to carry the
necessary capacity. Such networks are the best strategy to achieve sustainable
economic growth. Individuals and organizations that are connected to HB networks
are more productive because of the value of the information they can access and the
interconnectedness of the networks. High bandwidth enables us to do many things we
were not able to do before and to accomplish them more quickly, easily, safely, and
cheaply, thereby reducing our ecological footprint. For example, New York
Presbyterian Hospitals (NYPH) has built a high-bandwidth broadband network
(ADVA Optical Networking’s Fiber Service Platform [FSP] 3000).5 With four major
campuses, two data centers, and four clinics, in addition to an aging IT (information
technology) infrastructure and a rapidly increasing cost of bandwidth (approximately
20% annually), NYPH realized that significant improvements were needed. The
upgraded network is expected to meet the capacity requirements of grid computing,6
4 The seven leading industrial countries, including the US, Germany, Japan, France, UK, Canada, and Italy. 5 Refer to Todd Bundy, “Building Optical Networks for Healthcare: Saving Lives and Cash,” for further information related to the ADVA Optical Networking’s Fiber Service Platform 3000. 6 Using grid technology, researchers are able to attain speedier results in diagnostics, research, and analysis. A hospital can split the processing load of a text-mining application, for example, among multiple desktop and laptop computers across geographically dispersed hospitals and research facilities. Time to diagnosis is slashed and doctors have an enhanced opportunity to save lives.
12
computerized physician order entry,7 electronic record-keeping systems,8 a picture
archiving and communication system,9 real-time physiological monitoring,10 robotic-
arm surgery,11 and disk mirroring12 without requiring a network budget increase for at
least 10 years. The high-bandwidth broadband component is critical to NYPH’s ability
to provide affordable, high-quality, around-the-clock care.
B. Community Broadband Options
Wi-Max, Fiber to Premises, Satellite Backhaul, Broadband over Power Line
A variety of community broadband options has been explored. Included are Wi-Max
wireless,13 fiber to the premises,14 satellite backhaul15 in rural areas, and broadband
over power line.16 Broadband over power line holds tremendous promise given that 87
percent of the global population has access to the power grid, as opposed to only 40
percent who are reachable via telephone.17 “Broadband over powerline technology 7 Enables a caregiver to access a patient’s medical history and order procedures from a handheld device. It is an important tool in more rapidly diagnosing ailments and eliminating the human errors that sometimes prove deadly for patients and become more likely as manual touch points increase. 8 Nurses use wireless mobile laptop computers to record patients vital signs, symptoms, and medications. Doctors can sign in to the same central system to order prescriptions and lab tests and to monitor their patients’ progress. 9 Allows caregivers to digitally store, manipulate, and share cardiology and radiology images, enabling efficient collaboration in diagnosis. 10 Telemetry data are relayed from intensive-care units to central locations for constant monitoring and analysis, enabling caregivers to respond more swiftly to patients’ changing conditions. 11 A widening variety of surgeries are taking place this way. The doctor views a magnified image of the area being treated and guides a robotic arm – unsusceptible to the routine tremors of a human hand – in making smaller, more precise incisions. The procedure can be conducted remotely. Bleeding is dramatically diminished, and post-operation recovery time is reduced. 12 Via Fiber Channel protocol, network data is synchronously written to multiple data centers, ensuring continuity of care in the event of failure at any one of the sites. 13 WiMAX is a standards-based wireless technology that provides high-throughput broadband connections over long distances. WiMAX can be used for a number of applications, including ‘last mile’ broadband connections, hotspots and cellular backhaul, and high-speed enterprise connectivity for business. 14 Refers to a broadband telecommunications system based on fiber-optic cables and associated optical electronics for delivery of multiple advanced services such as the triple play of telephone, broadband Internet, and television to homes and businesses. 15 Refers to content that is transmitted via satellite to a receiving entity where it is integrated into a finished product. 16 Broadband over power line technology allows the delivery of broadband connectivity and content services directly to electric outlets in homes or offices. 17 Reynolds, “Building Community Broadband Nationally.”
13
enables businesses and homes to receive Internet services through their existing
electrical lines. This means that customers can download movies, music, news in any
room in their homes or offices through electrical outlets, at fast speeds, and often at
lower prices than they are currently paying for Cable TV and Internet access. Speeds
can range up to 200 Mbps full-duplex, a much faster and a more robust bandwidth in
comparison with what is attainable with current DSL or cable modem broadband
access technologies.”18 This technology is particularly applicable in Latin America,
where a much larger percentage of the population will be reachable. Areas that are yet
to be connected to the power grid could still be reached with a combination of Wi-Fi
and Wi-Max technology and satellite backhaul.
C. Networked Devices to Access Services, Applications, and Content
Laptops, Tablet PCs, and Cell Phones
In November 2005, at the United Nations World Summit on the Information Society, a
$100 manually powered laptop was formally introduced to the world community. The
“Green Machine,” as it is known, was created by MIT professor Nicholas Negroponte
and was scheduled for full production within a year.19 It will provide individuals with
a multi-purpose device for learning, playing games, watching movies, and listening to
music. The laptop is an important development in the commoditization of personal
computers: it will enable providers to transmit aggregated services, applications, and
content to subscribers at any place, at any time. Tablet PCs and cellular phones will
also provide networked access to various types of services, content, and applications.
18 Gridline Communications Corp, “Gridline set to Introduce Broadband over Powerlines Technology,” http://www.primezone.com/newsroom/news.html?d=88293 19 Jo Twist, “UN debut for $100 laptop for poor,” BBC News Technology, November 17, 2005, http://news.bbc.co.uk/2/hi/technology/4445060.stm
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Chapter II: Project Building Block B: Portal of the Americas
A. Aggregator
Services, Applications, Content
Once the network infrastructure is in place, computers in the hands of students at
universities can become a driving force in development. We believe that the e-Kiosk
initiative (discussed in Part V of this report) should initially focus on university
students and on equipping them with the mobile computer devices and the high-
bandwidth broadband network capability necessary for them to access various types of
digital services, applications, and content from providers of various types through a
digital one-stop market of services, applications, and content. There is currently a
portal constructed to serve subscribers in Latin America known as “The Portal of the
Americas (POA).”20 The POA is approaching being a one-stop digital market where
users can obtain digital goods or INS21 resources.
B. Transmitter
Digital Services, Applications, and Content
Currently, “The Portal of the Americas” is an aggregator of services, applications, and
content from various providers that are transmitted via the Network Access Point
(NAP) of the Americas to potential users, including universities, municipalities, and
businesses. A NAP is a major Internet interconnection point that allows Internet access
providers and carriers to exchange traffic and services with each other in the same way
that a major international airport allows carriers to exchange passengers and freight so
that they can more efficiently serve their clients as they travel to their ultimate
20 Refer to Figure 1 for a visual representation of the POA. Refer to Section E of Part II for the concept maps associated with the POA Business Model. 21 Alan McAdams, “Resource Allocation for Goods that are INS” (Johnson Graduate School of Management, Cornell University, 2004).
15
destinations. The NAP enables the Portal of the Americas, which is the aggregator of
providers, to transmit various services, applications, and content to potential users.
Services
Applications
Content
Portal ofAmerica NAP
Universities
Businesses
Administrators
Researchers
Students
MunicipalitiesGovernment
Public Safety
Citizens
Company A
Company B
Company C
“Providers” “Subscribers”
Providers•Power Companies (BPL)•Phone (DSL)•Cable (BB)•Satellite•(GIGE)
“Transmitters”
e-Kiosk with Networked Broadband Business Model
“Aggregator” “Operator”
BOP SUBSCRIBERSAggregateThru
e-Kiosk
Micro-Entrepreneurs
SKYPE
Ribeira Azul
UNICAMP
Figure 1. e-Kiosk with Network Broadband Business Model. Source: Professor Alan McAdams, Rhode Island Wireless Innovation Networks (RI-WINS) 2006.
The NAP of the Americas is the fifth Tier-1 Network Access Point (NAP)22 in the
Americas and the first carrier-neutral23 Tier-1 NAP. It is also the first to be housed in a
facility built specifically for a NAP. Located in Miami, Florida, and owned and
operated by Terremark Worldwide, NAP of the Americas is a premier facility,
providing interconnection among global carriers, Internet Service Providers (ISPs),
22 NAP is the original term for the data communications facilities built in the early days of the Internet to provide on-ramp access to higher-speed Internet links (which were typically transcontinental or intercontinental in extent). Also known as Internet Exchange Points (“IXPs”), these facilities in their modern role are an essential component of the global telecommunications and Internet infrastructure. 23 Can be used by any carrier much in the same manner that a national highway system can be used by any vehicle despite being made by a different car manufacturer.
16
and others. In addition, it connects the fiber networks in Latin America to those in the
U.S. and beyond and offers the latest Internet Protocol (IP) technology.24
C. Portal of the Americas Business Model
Infinite Bandwidth Capacity
A portal, such as the Portal of the Americas, uses a “network of plenty” business
model.25 This portal aggregates services, applications, and content from various
providers. Through portal subscriber surrogates, such as universities, businesses, and
municipalities that are also aggregated by the portal, a transmission network to be
managed by the subscriber surrogates can be established that provides subscribers
such as university students access to the “Portal” digital marketplace, where scarce
resources and non-scarce resources can be obtained.26 To start, VOIP services will lure
university students to this marketplace, creating a “buzz” and resulting in a viral
expansion of “Portal” use through “word of mouth” advertising. Initially the Portal of
the Americas will provide services in support of university students; then services will
expand to the local community, government, and private sector businesses. This viral
expansion will create a “tornado” type of environment that will attract all sectors to
adopting pricing models based upon abundance rather than scarcity.
Creation of Services, Applications, and Content
Service, application, and content providers will be shielded from network management
so that they may concentrate on what they do best while allowing the subscriber
surrogates (e.g., universities) to focus on crafting a network that is tailored to the
24 Nap of The Americas, March 8, 2006, http://www.napoftheamericas.net/index.cfm 25 Refer to section C in Part II for a discussion of the POA Business Model and refer to Concept Map Section of Part II for further information. 26 John Reynolds, “Building Community Broadband Nationally” (Seminar, Johnson School of Management, Cornell University, February 24, 2006).
17
needs of their particular subscribers.27 The service, application, and content providers
will pay the Portal of The Americas for being featured within its portal, upon which
the Portal will share a percentage of its revenue with the subscriber surrogates. For
example, a service provider such as Google is currently partnered with the Portal of
the Americas in Bolivia. Google pays the Portal of the Americas 3 cents per click for
each individual subscriber who seeks access through the portal.28 Google also shares a
percentage of the advertising revenue associated with particular searches conducted. If
a sale results from the click, there will be an additional share of revenue by Google
with the Portal of the Americas.29 When considering the ease with which a “network
of plenty” can be managed and the compounding effect of each additional subscriber,
it becomes clearly evident that this business model is financially sustainable.
D. Subscribers
Universities, Municipalities, and Businesses
Once VOIP data is flowing efficiently through these networks and subscribers as a
whole adopt this form of voice communication, it will be possible to attract
subscribers to other “INS” (INS) resources, thus allowing for a “Portal of the
Americas” type business model to be used in emerging economies such as Brazil,
China, and India.30 An initial focus will be placed upon university students because of
their ability to teach themselves how to use new technologies.
27 Reynolds, “Building Community Broadband Nationally.” 28 Each time an individual subscriber accesses Google through the portal, Google will pay 3 cents to the POA. 29 Mozilla confirms that Firefox is taking in millions of Google dollars. May 7, 2006; Reynolds, “Building Community Broadband Nationally.” 30 McAdams, “Resource Allocation for Goods that are INS.”
18
University Students
Why start with university students? In order for future societies to bridge the digital
divide it will be necessary for all to have access to information. Who better to start the
viral expansion than a more-educated portion of the population? University students
are capable of teaching themselves and those around them how to use new
technologies, creating a viral-ype expansion throughout a society. The Portal of the
Americas will initially provide services in support of students at universities, and then,
in response to demand, will move organically to local communities, governments, and
private-sector businesses.
If future societies are to become more equal we will need to provide information
access to all equally. The goal should be for all university students to have access to a
computer, but not just any computer, a networked computer. An interconnected web
will help accomplish this. This web, consisting of a combination of broadband over
power line, wireless broadband, satellite, and gigabit Ethernet, will provide the
“network of plenty”31 necessary for every citizen of Salvador da Bahia to be within a
stone’s throw of vast amounts of digital goods.
BOP Subscribers
By bundling voice services with data it will be possible to attract the attention of those
at the BOP.32 This is a very large portion of the global population, and VOIP will
attract these non-internet savvy individuals and will lure them to the digital world.
Students will be the first to hear the call and will be best equipped to learn and
embrace INS resources.
31 Alan McAdams, Professor at the Johnson School of Management at Cornell University. Refers to bandwidth capacity that is relatively infinite in nature. Capacity is so large that traffic can efficiently flow throughout the network without the need for being managed. 32 Stuart Hart, Capitalism at the Crossroads (Upper Saddle River, NJ: Wharton School Publishing, 2005).
19
Figures 2 through 5 are the Portal of the Americas concept maps which provide a
visual representation of some of the details described in Part II of this report as well as
other information vital to understanding the POA business model.
E. Concept Maps
Below are concept maps that present the business model of the POA and the role of e-
Kiosk in a visual format. Figure 2. Business Model, presents the basic aspects of the
POA as an aggregator of services, a controller of the transmission network, and as an
aggregator of subscribers. Figure 3, The Aggregation of Services, Figure 4, The
Controlling of the Transmission Network, and Figure 5, The Aggregation of
Subscribers present further details on the business model as it pertains to the POA role
as an aggregator and controller.
20
Service providers
Applications providers
Content providers
portal
controls
Transmission network
Universities
Municipalities
Businesses
thru
Health careinstitutions
subscribersservices
aggregates
thru
aggregates
Internetportal
For thatIt creates
Aggregates
BOP Subscribers
thruE-Kiosk
Figure 2. Business Model. Source: Stratum Broadband, John Reynolds, Joachim Goller, RI WINS Consulting, Johnson School of Management.
Note: Refer to “An Introduction to the Portal of the Americas.”
21
Service providers
Applications providers
Content providers
services
such as
The Portal of theAmericas
partners
paya “franchise fee”
Being partof the Internet-portal “Mozilla-model”
They can dobusiness
Google pays Mozillafor being part of
its browser
3 cents per click
revenue on purchases
e.g.
shares
pays
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forthatIs the
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where i.e.
e-Kiosk
Figure 3. The Aggregation of Services. Source: Stratum Broadband, John Reynolds, Joachim Goller, RI WINS Consulting, Johnson School of Management.
Note: Refer to “An Introduction to the Portal of the Americas.”
22
NAP of the Americas
BroadbandWireless
they are responsiblefor maintenance of
the network
managed by the
GigabitEthernet
Broadband overpower line
Power companies
Deal with scarcegoods
that have to
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Deploys 30 MBsymmetric
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the fastestInternet connection
“virgin-territory”
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outsourcedthatare
Figure 4. The Controlling of the Transmission Network. Source: Stratum Broadband, John Reynolds, Joachim Goller, RI WINS Consulting, Johnson School of Management.
Note: Refer to “An Introduction to the Portal of the Americas.”
23
Universities
Unicamp
Municipalities Businessessuch as
surrogatesthrough
such as
Health careinstitutions
their ownfree Internet portal free VOIP
Which givesstudents
subscribers
The Portal of theAmericas
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for
Figure 5. The Aggregation of Subscribers. Source: Stratum Broadband, John Reynolds, Joachim Goller, RI WINS Consulting, Johnson School of Management.
Note: Refer to “An Introduction to the Portal of the Americas.”
24
Chapter III: Project Building Block C: Internet Protocol
A. Voice over Internet Protocol
Attracting Subscribers at the BOP In China to ICTs
According to Clayton Christensen,
“Working harder, being smarter, investing more aggressively and listening closely to customers are all solutions to the problems posed by new sustaining technologies. These models of sound management are useless—even counterproductive, in many instances—when dealing with disruptive technologies.”33
Christensen determined the power of emerging technologies to be disruptive based
upon an analysis of the history of disruptive technologies; once again it is clear that a
disruptive technology will bring a giant to its knees.
Creative Destruction through VOIP
That emerging technology is voice over internet protocol (VOIP). Skype, a VOIP
solution, is preparing to destroy the century-old traditional telephone industry pricing
model. For example, in China, the threat to incumbent telecom operators is
particularly strong because of the one-sided dependence upon voice revenue by the
major telecoms, which include China Mobile (83% voice revenue), China Unicom
(82% voice revenue), and China Telecom (79% voice revenue). It is unfortunate that,
instead of looking forward and embracing change, the incumbents are hoping to shield
themselves from VOIP behind state protections. For instance, China Mobile (China’s
largest operator, with a majority of its stock owned by the Chinese Government, and
which generated 23.6 billion dollars in revenue in 2003) has decided to respond to
Skype by blocking access.34 Clearly, VOIP is causing a dramatic shift that has the
33 Clayton Christensen, The Innovators Dilemma (Harvard Business School Press, 2002). 34 “The Meaning of Free Speech,” The Economist, September 15, 2005, http://www.economist.com/displaystory.cfm?story_id=4400704
25
telecommunications industry in a state of shock in light of the fact that it is the first
threat to these mobile operators’ business model, which tends to charge 3 to 5 times as
much as fixed-line operators do for each minute of phone time.
VOIP technology allows voice calls to become just another data package to be
delivered via Internet protocol. Skype, a VOIP program, which has 54 million users
and was recently acquired by EBay, has placed VOIP at the center stage of the
telecommunications industry, and the incumbents are unsure of how to react.35 Mobile
operators have invested in the third generation (3G) technology, and now this
technology allows VOIP to operate over cellular networks. The answer lies in
embracing VOIP and strengthening its ability to be used over 3G networks. VOIP, as a
free application, will lure subscribers to other services, applications, and content that
could potentially provide revenue through a “network of plenty” business model (such
as the Portal of the Americas business model described below).
Bundling Services, Applications, and Content
The bundling of voice services with data will make it possible to attract the attention
of those at the “base-of-the-pyramid.”36 This is a very large portion of the global
population, and VOIP will grab the attention of these individuals who are not
accustomed to ICTs and will lure them to the digital world. Students will be the first to
hear the call and will be best equipped to learn and embrace INS resources. Chinese
people as a whole are spending nearly two billion hours online each week, compared
to 129 million hours spent online by a U.S. audience. Chinese Internet users number
more than 150 million, and possibly 200 million, compared with 154 million active
users in the U.S. It is important to note that Chinese users average about 15.9 hours
35 “The Meaning of Free Speech.” 36 Hart, Capitalism at the Crossroads.
26
per week online compared with less than an hour per week in the U.S. Chinese users
with Internet access account for only 11.7% of the Chinese population, leaving much
room for growth. The U.S. audience is roughly half the total U.S. population.37
The opportunity to lure subscribers to a digital market place similar to the one
associated with the Portal of the Americas’ “network of plenty” type pricing model is
clear. In China, there are 400 million cell phone users, with over 6.1 million mobile
users connecting online.38 Given the data regarding current Internet use and the room
for new technology-based growth in the telecom sector, it will be wise for the
telecommunications incumbents to take notice and begin a process of evolution
quickly.
Bundling INS Goods with Scarce Goods
China represents an enormous opportunity for the selling of consumer goods and is
currently experiencing the greatest economic expansion ever witnessed in the world at
any point in history. It is reportedly the largest market for mobile phones, presenting a
particularly attractive arena for embracing VOIP through 3G networks and beyond. As
a literate society (85% literate) in which consumers’ disposable income is rapidly
rising, networked data services, of which VOIP would be the initial attracting
mechanism, will enable corporations to reach consumers directly through a central
portal such as the Portal of the Americas. Since China is such a large country,
consisting of 600 cities, with seven major dialects and 80 spoken tongues, it will
become increasingly critical for corporations to rely less on blanket-type market
37 Natalie Pace, “China Surpasses U.S in Internet Use,” Forbes Magazine, April 3, 2006, http://www.forbes.com/2006/03/31/china-internet-usage-cx_nwp_0403china.html?partner=yahootix 38 Pace, “China Surpasses U.S in Internet Use.”
27
research and to embrace a more direct approach, which networked data services could
provide in an individual manner.39
Within 35 years, China is expected to take the lead as the world’s largest consumer
market; many are watching its middle class and the three-trillion-dollar annual prize
that will be waiting for those marketers who are most successful in understanding their
hopes, dreams, and aspirations.40 In order to anticipate the market and capture a lead
position in China with young mothers (young mothers are responsible for making
most consumer decisions), it will be necessary to satisfy their most passionately felt
needs. Those needs revolve around providing their children with the necessary
equipment to “take their place in society.” Chinese women, who typically make home
management decisions and whose views range from traditional to new age, typically
have one thing in common: they want their only child to be able to acquire knowledge.
Piano lessons, books, university lectures, and other learning tools are and can easily
become INS resources capable of being transmitted over high-bandwidth broadband
networks. Networked data services could open up the world of knowledge that China
hungers for. By uniting services, applications, and content providers with subscribers
through a Portal of the Americas “network of plenty” Business Model,41 it will be
possible to provide INS resources to subscribers aggregated through various
surrogates including universities, municipalities, and businesses. These surrogates
facilitate access to the Portal for the subscribers they have aggregated. It will also be
in their best interest to create a “network of plenty” given the manner in which
revenue is shared through this pricing model. As the attracting mechanism, VOIP
(Skype) is capable of adding 150,000 subscribers per day without requiring the
39 “The Meaning of Free Speech.” 40 “The Meaning of Free Speech.” 41 Refer to Todd Bundy, “Building Optical Networks for Healthcare: Saving Lives and Cash,” for further information related to the ADVA Optical Networking’s Fiber Service Platform 3000.
28
spending of a single dollar on new equipment. Users bring their own equipment and
marketing because users invite each other to become members.42
Adding New Subscribers at a Marginal Cost of Zero
With no marginal cost for the addition of each additional subscriber, a VOIP provider
in China could afford to maximize its number of users knowing that if only some
begin buying fee-based services or products, it will make a fortune. As the founder of
Skype once said, “We want to make as little money as possible per user, we don't have
any cost per user, but we want a lot of them.”43 This is the exact opposite of the
traditional business model in the telecom industry, which is based on maximizing the
average revenue per user, or ARPU. And that model has only one logical
consequence. According to Rich Tehrani, the founder of Internet Telephony, a
magazine devoted to the subject, Skype and services like it are leading inexorably to a
future in which all voice communication, near or far, will be free.44
Building a “network of plenty” is key to the success of this model. Infinite bandwidth
will permit the free flow of INS resources through a co-created, government-planned
information superhighway that will enable an already highly literate population to
improve its rural schools and add fire to the “soft revolution,” in which knowledge is
replacing physical resources as the main driver of economic growth. With 200 million
fixed lines and 175 million mobile lines it is clearly evident that the voice telecom
market in China is booming. Instead of holding back on investment, China Telecom as
the dominant mobile operator should continue to take the lead, as it has with
investments, in producing a network that will support VOIP and future technologies.45
42 “The Meaning of Free Speech.” 43 “The Meaning of Free Speech.” 44 “The Meaning of Free Speech.” 45 “The Meaning of Free Speech.”
29
China Telecom should embrace the destructive technology that is VOIP, understand it,
and control it, but definitely not run away from it as China Mobile and China Unicom
appear to be doing.
30
Chapter IV: Project Building Block D:
Citizens Assistance Service Centers (SAC)
A. Citizen’s Assistance Service Centers (SAC)
Consolidation of Multiple Federal, State, and Municipal Agencies in One
Location
The state government of Bahia has created Citizen Assistance Service Centers (SAC)
that offer the services of federal, state, and municipal agencies in one location to
citizens of Bahia. The centers are located in convenient places such as major public
transportation hubs and are placed strategically throughout the city. The major benefits
of the centers are their ability to provide services in a timely manner, to offer greater
courtesy and professionalism to clients, and to reduce government costs and spending.
Traditionally, delivery of public services in Bahia has been ineffective, with agencies
scattered across various inconvenient locations, providing low standards of service. It
is reported that in order to receive a single service a person might have to visit
multiple bureaucratic agencies. People often had to rely on private agencies for
services that could have been provided by a public agency.
Services Offered
The SAC centers, on the other hand, bring multiple government services together in a
single location. In 2001, 29 different service agencies were part of the SAC system.
Participating agencies include the State Department of Motor Vehicles, the Social
Security Ministry, the Secretary of Agriculture and Agrarian Reform, the Municipal
Public Services Secretariat, Labor and Social Action, Public Safety, the Federal
Police, Small Claims Court, the State Water and Sanitation Company, and Bahia’s
private electric company. Since the SAC centers were implemented, a person can
31
register a vehicle, obtain a driver’s license or a national identification card, apply for
unemployment benefits, look for a new job, obtain a labor identification card, go to
small claims court, secure a passport, or take advantage of almost any service provided
by a public agency. More than 500 separate services are offered by the participating
agencies through the SAC centers.
B. Types of Centers
SAC Centers: Large, Medium, Small
Not all government services, however, are available at every center. There are three
types of SAC centers: large, medium, and small. The large centers are located in the
capital city of Bahia and usually represent approximately 20 different agencies. The
medium-sized centers extend beyond city limits and house between eight and 20
government agencies. The five small SACs represent fewer than eight agencies.
Within these agencies many signs and help desks guide people to the appropriate
location for the service they desire. In addition, people can also obtain information
about available services through a toll-free SAC information hotline.
Mobile Documents SAC to Reach Remote and Deprived Communities
In addition to the fixed SAC centers, a Mobile Documents SAC was developed to
reach the most remote and deprived communities in Bahia. This Mobile SAC is a
large, 18-wheel truck equipped with air conditioning, a TV set, toilets, and a covered
waiting area. Inside the truck, four basic citizenship services are provided: issuance of
birth certificates, identification cards, and labor identification cards, and verification of
criminal records. When the Mobile SAC arrives in a community, the truck links to the
computer network of the SAC headquarters through a telephone line. The truck
32
typically parks in the town square and remains three to four days before moving on the
next community on its route.46
History
The first SAC was created in Bahia in September 1995. By 2001, nearly 32 million
government services had been delivered through the SACs (two-thirds in the 8 SACs
of the capital, and the remaining one-third in the Mobile SACs and 14 fixed SACs of
the interior). In April 2001 alone, more than 175,000 services were delivered at the
largest SAC, which is located at the Iguatemi shopping center in the capital, Bahia.
The Mobile Documents SAC obtained similar results; by 2001 it had made 884 visits
to 417 townships. The SAC experience in Bahia demonstrates how a government can
create an environment that fosters citizen participation and truly improves the quality
of the public services it provides.47
Applicability to Proposed Project
Bahia has already established itself as the Brazilian leader in e-Government, and we
intend to build our e-Kiosk (to be discussed in Part VII) Base-Of-Pyramid (BOP)48
subscriber base around this already successful and established process of ICT49 service
provision. As Figure 6 indicates, the BOP represents the 4 to 6 billion individuals
around the world who survive on the equivalent of 1,500 dollars per year. e-Kiosk will
act as a subscriber surrogate to this government service provider. Our intent is to
continue to learn and build upon this successful model through our primary BOP 46 The World Bank Group, “e-Government,” http://www1.worldbank.org/publicsector/egov/bahiaSAC.htm#4 47 The World Bank Group, “e-Government,” http://www1.worldbank.org/publicsector/egov/bahiaSAC.htm#4 48 The phrase and concept of the “Base of the Pyramid” originated from the work of Stuart Hart and C. K. Prahalad and their seminal article “The Fortune at the Bottom of the Pyramid,” http://www.digitaldividend.org/pdf/bottompyramid.pdf 49 ICT is a broad subject concerned with technology and other aspects of managing and processing information. In particular , it deals with the use of electrical computers and computer software to convert, store, protect, process, transmit, and retrieve information.
33
subscriber–aggregator partnership with the government of Bahia and to incorporate a
swifter and more technologically advanced high-bandwidth network device system,
through a partnership with Portal of the Americas, which will allow a greater degree of
flexibility and unlimited potential for the provision of e-Government, e-Education, and
e-Commerce services. As we can see, Salvador da Bahia has already established the
foundation upon which e-Government services can be extended to individuals in hard-
to-reach areas in Brazil.
The Indian Tobacco Company (ITC) has also broken ground in exposing the power of
ICTs to increase the productivity of the agricultural sector in India. The e-Choupal
initiative is a good example of how certain digital goods or INS resources, when
offered for free, can result in increased profits for businesses due to a variety of factors
which reduce costs.
Figure 6. The World Economic Pyramid. Source: Stuart Hart and C. K. Prahalad, “The Fortune at the Bottom of the Pyramid,”
http://www.digitaldividend.org/pdf/bottompyramid.pdf
34
Chapter V: Project Building Block E: The MotoBus Initiative
A. Motorola, The MotoBus Initiative
Mobile Phones
Another important tool for igniting development at the bottom of the pyramid (BOP)
may be mobile phones and appears to be more critical to development than physical
infrastructure. The ability to communicate enables individuals to negotiate deals,
transport goods to market, and access important services such as banking and
insurance, among others. This fact has been noted in the projects already discussed,
and the benefits will continue to expand as the networked zone of influence continues
to expand.
Limitations
The problem with cell phones is that they are still out of reach for most people in the
developing world because of cost constraints. Many believe that by cutting the cost of
the average phone from 60 dollars to 30 dollars we would be able to double the
number of users at the BOP, adding 930 million phones to poor countries by the year
2010.50
Cost
In 2006 GSM Associates, a London-based trade group, hosted a competition that
promised cell phone manufactures a contract to supply 6 million handsets to 10 mobile
companies operating in emerging markets from Bangladesh to Uganda, if they could
produce the phone under 30 dollars.51 Motorola won the prize by producing a durable
plastic phone with text messaging capability and a long battery life while foregoing
the costly color display. 50 Bruce Chaddus, “Calling for Change,” Foreign Policy, March/April 2006. 51 Chaddus, “Calling for Change.”
35
Reaching for the BOP
The problem now is in reaching the areas far outside the zone of influence at the BOP.
Motorola devised a wise solution and employs some of the elements characteristic of
the e-Kiosk initiative. Motorola will drive vans it calls Motobuses into remote villages
to sell the phones to customers.
Applicability to Proposed Project
e-Kiosk will seek to reach individuals on an individual basis through a combination of
the approaches embraced by SAC and Motorola. It will be necessary to deliver
services, applications, and content to individuals instead of requiring them travel to
obtain them if those at the BOP are to embrace unfamiliar ICTs. Both the Motobus
and the Mobile Documents Center travel to the hardest-to-reach places and those
which are most deprived.
36
Chapter VI: Project Building Block F: The e-Choupal Initiative
A. The e-Choupal Initiative
Increasing Productivity at the BOP Through For-Profit Means
The parallels between the success of the ITC soy-purchasing facilities described below
and its link to the services, applications, and content provided free at the e-Choupal
are clear. Farmers are able to use the free services, applications, and content to
improve their productivity and as an alternative to the local mandi52 to sell their
soybeans. The improvements in efficiency made possible by these digital goods and
services provide them with greater profits by reducing costs. The farmers are also
receiving compensation based upon fair market prices at the ITC hub rather than being
taken advantage of at the Mandi because of a lack of other outlets for selling their
soybeans. ITC has not only benefited from acquiring quality soybeans but has also
created a marketplace for selling various other ITC products that farmers can use for
personal and professional use. Everything from fertilizers, pesticides, and soybean oil
to cell phones and automobiles are being sold in mega-market-type facilities designed
to meet the needs of the local communities (based upon a plethora of information
obtained via Internet-based research conducted at the various e-Choupals). Our e-
Kiosk is similar to the e-Choupal, and the Portal of the Americas is similar to the ITC
hub.
Free Digital Goods Improve Lives and Increase Profits
Individuals will be able to access services, applications, and content at any e-Kiosk to
use for various purposes. Uses of an entrepreneurial, learning, or improvement nature
will lead to efficiency improvements in all aspects of life and will lead, in turn, to
52 Mandi refers to the local middlemen in India who are often the sole option for farmers to sell their season’s harvest. This lack of alternatives proves to be a major benefit for the mandi at the expense of the farmer.
37
reductions in costs and an improvement in profits. These efficiency improvements will
result in a surplus of capital to be spent and invested at the Portal of the Americas on
the various goods available within this digital marketplace.
The success of the agricultural sector in India depends on several factors, including
Information Communication Technologies (ICT), access to better varieties of crops,
agricultural extension (i.e. Cornell University College of Agriculture and Veterinary
School INS resources), and information about new technologies, pest management,
credit, and insurance. ICTs enable the Indian rural community to benefit from new
technologies, market data, environmental data, and to learn from and network with
others. In light of the fact that the Indian agricultural sector is home to some 700
million people, 72% of the population and 60% of the nation’s workforce, it is
impossible to achieve the economic growth agenda without them.53 India’s middle
class is growing, but the nation still contains the largest pool of economically
disadvantaged people in the world. The true challenge for India lies in sustaining a
high rate of economic growth over many years in order to convert this pool of labor
into viable consumers, thereby translating development into economic freedom.
The role of ICTs in India’s Path to Development
Along its path to development, India overlooked the agricultural sector in favor of
more-appealing higher levels of industry. Countries such as Japan and China focused
initially on their agricultural sectors, and once productivity improved, the resulting
surpluses of labor and capital were shifted to higher levels of industry including
mining and textiles, followed by heavy industry. India has benefited greatly from its
status as the world’s largest democracy, and a familiarity with the English language
53 Shirish Nadkarni, “Kiosks in India,” Kiosk Marketplace, June 14, 2002, http://www.kioskmarketplace.com/research.htm?article_id=12753&pavilion=54&step=story
38
and a solid rule-of-law have enabled it to achieve a level of respect for intellectual
property rights that has allowed its service economy to flourish. However, the ICT
miracle of Bangalore has not spread across India as one might have expected.
Before 1991, India was a socialist, closed society, although the agricultural sector was
in the hands of land owners and was controlled by middlemen. All of the higher levels
of industry were state controlled, and they were subject only to domestic market
clearing forces. The steel, telecommunications, transportation, and educational
systems were all state controlled and were, with the exception of the educational
system, very inefficient. This inefficiency led to a national infrastructure network that
was insufficient to support the growth of a strengthening and more-inclusive national
economy. India understood this disadvantage and, instead of fixing the problem,
decided to leapfrog to much higher levels of industry, using the brainpower created
through the nation’s excellent educational system. Today the INS infrastructure is
much more advanced, and the knowledge economy has developed strongly upon this
resource.
The nation’s network of Indian Institutes of Technology, which resulted in the creation
of one of the world’s most powerful knowledge- and service-based economies, has
enabled India to capitalize on the creation of INS resources. INS resources are non-
depletable and non-excludable goods that, once created, can be provided to others at a
marginal cost of zero. Since the reforms of 1991, when India began dismantling its
state-run economy and opening up its markets to foreign imports and investment, the
nation has experienced an explosion of productivity. India’s focus has shifted back
slightly to scarce resources and to building the necessary infrastructure to support the
39
agricultural sector, light industry (textiles, mining), and heavy industry, as evidenced
by the Golden Quadrilateral National Highway54 system project.
B. The Indian Tobacco Company
The Traditional Choupal
The choupal is a time-honored tradition in India, and in the city of Dahod it holds a
special place because this is where the technological revolution in the soybean
agricultural sector occurred as a result of the implementation of the e-Choupal
initiative. Dahod is located about 25 kilometers south of Bhopal in India’s central state
of Madhya Pradesh and was dominated by soybean farmers who made their living as
their ancestors did, harvesting their crop and selling it in the local market yard. Kamal
Chand Jain was one such soybean farmer. He spent 40 years cultivating a reputation as
a trustworthy unofficial leader in this quiet community of 3,000 people. He lived in a
simple concrete home that opened onto a dusty crossroads, providing both a physical
and social center to the village. For years, his fellow villagers had gathered in the cool
cement front room of Jain’s home on their way in from the fields or a trip to town to
chat, gossip, or share stories and news from the day. This evening gathering was a
traditional staple of Indian farm life, not only in this area but throughout India. In
Hindi, the word for this meeting place was “choupal.” The choupal constituted an
informal assembly, a forum that villagers could call their own, and a place where
knowledge could be shared and captured.55
54 The Golden Quadrilateral (GQ) is the largest expressway project in India. It is the first phase of the National Highways Development Project (NHDP), and consists of building 5,846 kilometers of four/six lane expressways connecting Delhi, Mumbai, Kolkata, and Chennai (thus forming a quadrilateral of sorts). (“Golden Quadrilateral,” Wikipedia, http://en.wikipedia.org/wiki/Golden_Quadrilateral) 55 David M. Upton and Virginia A. Fuller, “The ITC eChoupal Initiative,” Harvard Business School, January 15, 2004.
40
Company BOP Strategy
The Indian Tobacco Company (ITC) consciously exercises the strategic choice of
contributing to and securing the competitiveness of the entire value chain of which it
is a part. This philosophy has shaped the company’s vision, known as “A
Commitment Beyond the Market.” Creative use of information technology through the
e-Choupal initiative has enabled ITC to unite diverse agencies, each with specialized
competencies, in a bid to empower the Indian farmer, while enabling them to increase
profits.56
ITC’s International Business Division (IBD), located in Hyderabad, was run by chief
executive S. Sivakumar, who came up with the e-Choupal concept. IBD was the
agricultural commodities export division of ITC and in 1999 was lagging far behind
the other divisions of the company. The soybean and its derivatives comprised two-
thirds of ITC’s agricultural export business. ITC sourced soybeans from farmers
located throughout Madhya Pradesh, dubbed “India’s soyabowl.” ITC had been
successful in selling soybean oil domestically and processed soymeal internationally,
but both the input and output sides of the agricultural supply chain in India remained
far from efficient. Farmers did not have access to quality inputs, such as sowing seeds,
herbicides, and pesticides, or information such as accurate weather reports that would
help them improve their crop quality as well as the process of bringing it to market.
Rural communities are able to increase their productivity if they are well-informed
about their environment. ICT helps farmers manage their land using GIS, soil
classification data, and weather forecasts, among other technologies.57 However, both
farmers and soybean processors were locked in an unproductive cycle. Farmers had
56 Excerpts from speech by Chairman Shri Y. C. Deveshwar, ITC Annual General Meeting, 2003. 57 S. Bhatnagar, “Information Technology and Development: Foundation and Key Issues,” in Information and Communication Technology in Development. Cases from India, eds. S. Bhatnagar and R. Schware. (New Dehli: Sage Publications, 2000), 17–31.
41
limited capacity for risk and therefore tended to minimize their investment in crops,
lest inclement weather or pests destroy their investment.
In March 1999, Sivakumar was challenged by ITC to generate a new business plan for
the International Business Division that would increase their ability to thrive in a
growingly competitive market. Sivakumar began to ponder how to use digital
technologies that were changing so many of the companies around them and to rethink
the supply chain. He studied the farmers’ villages and market yields and market yards
to identify pieces of the supply chain that could be improved.
C. Inefficient Farming Practices
In Madya Pradesh, the farmers were making their living in much the same way their
predecessors did 50 years earlier. The process of getting crops to market began with
farmers harvesting the soybeans and loading them onto tractors and bullock carts.
Farms varied in size, from under five acres to greater than 12 acres.58 An average
farmer, with about nine acres of farmland, could expect an annual net income of
approximately $443 from soybeans and wheat together. After the harvest, farmers
hauled their loads of produce 30–50 kilometers to the closest mandi59 and then waited
for his crop to be auctioned.60
On any given day, at least 1,000 farmers could be found trying to file into the market
to sell their produce. Some had to wait for a couple of days just to be able to enter the
marketplace. Once inside the mandi, the farmer faced the further challenges of the
chaos and pressure that characterized the market yard:
58 For comparison, the average American farm is about 450 acres. 59 Hindi word meaning market yard. 60 Upton and Fuller, “The ITC eChoupal Initiative.”
42
Farmers suffered as a result of the time it took to sell produce in the mandi, for they were dependent on timely cash flow for subsistence. Thus, when harvest time arrived, they all descended upon the mandi at once. The crop had to go to market immediately, and, more importantly, it had to be sold. Farmers were stuck in the position of not being able to turn down an offer. In many cases it had taken him all day to reach the mandi from his village, and to return with a full cart of unsold produce would be a waste of time and money. Farmers rarely had access to adequate storage facilities in which to hold the crop if it was not sold. If a farmer were able to store the soybeans, and sell before or after harvest, without the time pressures associated with the perishable product, he would have more leverage over their value. This was impossible, however, under the prevailing system, where the farmer did not have other options.61
Isolation is Broken Down Through Information and Communication
Technologies
The farmers were isolated from one another, and the lack of telecommunications
meant they had no way of knowing ahead of time what price would be offered the day
they arrived at the mandi, other than word-of-mouth information. As a result, price
discovery occurred only at the end of their growing and selling process. ICT-enabled
networks of farmers, however, increased the efficiency and productivity of the existing
cooperative enterprises, and helped them defend their interests against the deeply
entrenched middlemen and government bureaucracy.62
ITC’s Sivakumar knew that in order to reduce the costs and inefficiencies incurred
along the current supply chain, the “village A to mandi B to factory C” cycle had to be
broken. An ITC team worked to develop a business plan that incorporated digital
technologies into an age-old tradition of village choupals that would facilitate the
reorganization of the cycle. Very important was the team’s belief that they needed to
61 Upton and Fuller, “The ITC eChoupal Initiative,” Page number? 62 N. Vijayaditya, “A Wired Village: The Warana Experiment,” in Information and Communication Technology in Development. Cases from India, eds. S. Bhatnagar and R. Schware. (New Dehli: Sage Publications, 2000), 132–148.
43
work within the cultural infrastructure that had evolved in the villages rather than
owning or controlling the entire value chain from top to bottom.63
Sharing Knowledge
Knowledge shared and captured in the traditional chaupal could be extraordinarily
valuable to farmers but unfortunately had been limited to verbal communication and,
therefore, excluded many. The absence of telecommunications, and even electricity in
some places, meant that news and information took days to reach a village. This lack
of information, and the cash flow uncertainty, prevented farmers from establishing a
solid financial base; as a result they were locked into subsistence living.
ITC knew that the price trends for soybeans and their derivative products could be
forecasted because they generally followed the agricultural futures market on the
Chicago Board of Trade and the Kuala Lumpur Commodity Exchange. Farmers
needed to understand their product in a global context in order to be able to plan their
activities with more confidence. This was difficult for them because of the volatility of
the mandis market and the fact that agricultural commodities values were based
largely upon uncontrollable factors such as weather, disease, and pest infestation.
Applying ICTs to the Traditional Choupal Model
Sivakumar’s evaluation resulted in the creation of ITC’s e-Choupal initiative, based on
the knowledge-sharing tradition found in the traditional choupal model and extending
it by further using information and communication technologies. ITC supplied a
computer kit to each village with the following components:
63 Upton and Fuller, “The ITC eChoupal Initiative.”
44
1. A PC with a Windows/Intel platform, multimedia kit, and connectivity
interface
2. Connection lines, either telephone (with a bit rate between 28.8 and 36
Kbps) or, more commonly, VSAT (in 75% of e-Choupals; average 2003
usage 64 Kbps inbound, 1 Mbps outbound)
3. A power supply consisting of UPS and solar-powered battery backup
4. A dot-matrix printer.
The total setup cost ITC $3,762 per choupal. Another $2,213 was spent on personnel,
travel, communication, software, and training. ITC estimated that they would be able
to recover the cost and make a profit within three years of the initial e-Choupal rollout.
With the arrival of these components, the nightly choupals were no longer limited to
stories and gossip of the village. Instead, farmers were accessing the World Wide Web
through a site completely dedicated to them—ITC’s www.soyachoupal.com.64
D. Providing Services, Applications, and Content through the e-Choupal
The site contains eight links to the areas of key information that comprised the e-
Choupal: weather, best practices, crop information, market information, FAQs, news,
feedback, and information about ITC. The site had been developed progressively with
the complete involvement of the farmers using the system. The computer, typically
located in the house of the lead farmer (designated the Sanchalak), is linked to the
Internet and serves about 600 farmers in 10 surrounding villages.65
64 Upton and Fuller, “The ITC eChoupal Initiative.” 65 K. Annamalai and R. Sachin, “What Works: ITC’s e-Choupal and Profitable Rural Transformation. Web-Based Information and Procurement Tools for Indian Farmers,” University of Michigan, 2003, http://www.digitaldividend.org/pdf/echoupal_case.pdf
45
The Introduction of Global Market Clearing Forces
Web technology brought price discovery to the village level and changed the way
farmers did business. It empowered them with the knowledge of what price they
would get at an ITC hub, as well as reports on prices at nearby mandis, information
that allowed them to make informed decisions about where to sell their soybeans. By
learning about prices in the village itself, the farmer could determine how his revenue
would compare to the cost of transportation. If he felt he could get a better deal at the
mandi through the open auction process, he could choose to go there. However, given
the uncertainty of the mandi versus the set published prices offered by ITC’s hubs, in
addition to the benefit of being reimbursed for transport costs, farmers began regularly
defecting from the mandis and choosing ITC. In 2005, about 3 million farmers from
more than 20,000 villages benefited from e-Choupal services.66
Decisions Based upon a Wide Range of Knowledge
Furthermore, by following the real-time price information on the Web site, the farmers
could decide when to sell. Knowing the price in advance meant that a farmer could go
to the ITC hub on his own schedule. A third feature distinguishing the e-Choupal was
its transparency. One might argue that prices could be communicated to farmers by
other means, such as telephone or radio broadcast. However, such methods still relied
on the spoken word. The ability to actually see prices being offered, in writing, on the
computer screen, was instrumental in establishing the trustworthiness that made the e-
Choupal effective. The Web model was also more scalable, since one kiosk could be
used by hundreds of farmers.
66 B. V. Mahalkshmi, “Netting Them. e-Choupal Is a Hit, Both with Customers and Companies,” The Financial Express, May 22, 2005, http://www.financialexpress.com/fe_archive_full_story.php?content_id=91593
46
E. The ITC Hubs
Once the farmer arrived at one of ITC’s hubs, his beans were weighed on a
computerized weighbridge, and the weight was multiplied by ITC’s published price.
The farmer then received cash on delivery. ITC maintained enough cash in a secure
kiosk at the processing plant to pay farmers fairly and immediately. ITC also
reimbursed farmers for the cost of transporting their material to the factory. Depending
upon how far a farmer had traveled, ITC repaid him based on fixed freight-cost
parameters, and that sum was added to the payment for the produce. This is one
example of the foundation leading to help catalyze rural transformation, alleviative
rural isolation, create transparency for farmers, and improve productivity and
incomes.67
Simple amenities at the ITC processing plant made the experience much more
enjoyable for the farmer than the mandi alternative. Once the soybeans were weighed
farmers entered a shaded area to wait for payment. Bathroom facilities were also
provided. Very important is the fact that there were also 15-liter jugs of soybean oil
available for purchase. This was the farmers’ oil, made from their beans, and ITC
emphasized this fact. When the farmer bought this soybean oil directly from ITC, he
in essence skipped four or five middlemen in that supply chain, thereby keeping his
own purchasing costs to a minimum. The popularity of being able to purchase oil at
the same time revealed an opportunity that ITC would further capitalize on.
As an added service, the processing plant would provide soil testing on the premises.
Based upon the soil testing results, scientists would make recommendations for
fertilizers or additives specific to the chemical composition of the farmer’s sample.
The farmer could use this information to choose an appropriate fertilizer.
67 Annamalai and Sachin, “What Works: ITC’s e-Choupal and Profitable Rural Transformation.”
47
A One-Stop-Shop of Scarce Goods Facilitated by Non-Scarce Goods
The sale of soy oil led ITC to implement a “one-stop-shop” feature of the e-Choupal.
“Farmers could buy herbicides, sowing seeds, gas lanterns, fertilizers, and soybean oil
among other sundries directly from the company.”68 The goods would be ordered
through the eChoupal and moved to the eChoupal or warehousing hub closest to the
farmer.69
e-Choupal as a Source for Market Intelligence
Three systems enabled ITC to sell and deliver goods to farmers through the e-
Choupal. The first was at the village level, where aggregated demand for products was
assessed. The e-Choupal manager would then e-mail the order to ITC, and the items
would be either picked up by the manager at the ITC warehousing hub, or delivered to
the villages. It is estimated that ITC saved $5/ton on freight cost; from those savings,
ITC would reimburse the farmer for the time it took him to travel to the ITC facility.
The farmer, in turn, earned an average increase of $8/ton, according to ITC.70 The
mandi, the traditional choupals, and the e-Choupals became sources of “market
intelligence” to be used by ITC.
F. Increased Interaction Between the BOP and Digital Global Resources
The e-Choupal system depended strongly on trust. The Web site was simply a tool to
facilitate the interaction between human beings. It is this interaction that drives the
choupal concept. No contract bound the farmer using the e-Choupal to ITC, and he
was free to go to the mandis instead if he wished. The farmer was in a good position
because he could actually use the e-Choupal facilities, gather all the information, and
still choose to take his crop to the traditional mandi. ITC wagered on the notion that
68 Upton and Fuller, “The ITC eChoupal Initiative.” 69 Upton and Fuller, “The ITC eChoupal Initiative.” 70 Upton and Fuller, “The ITC eChoupal Initiative.”
48
once farmers were given these tools, they would realize on their own that selling
directly to ITC was the best alternative to the mandi.
G. Leveraging the Success of the e-Choupal Model
The need for growth led ITC to seek additional applications for the e-Choupal
concept. They were eager to see the success of the soybean e-Choupal model
leveraged into International Business Developments’ three other product groups:
coffee and spices, aqua food, and value-added horticultural products. ITC established
pilot e-Choupals in three other regions of India that were as diverse from one another
as possible and representative of all crops in ITC’s product portfolio. Each of these
projects shared a common management approach with respect to scale and scope.
“First, pilot-test the concept in a small number of villages; second, make changes
based on the learning from the pilot phase and validate them in a larger number of
villages; and third, grow the project to reach as many villages as possible and saturate
the region.” ITC called the approach “Roll Out, Fix it, Scale Up.”71
Adding Value
The results of the soybean experiments proved that margins could potentially be
generated in other commodities through logistics-cost savings between the farm and
the factory, where non-value-added activities were eliminated with the use of ICT.
While these cost savings were immediately realized, many pondered whether they
would be sustainable over a long period of time, as the market would naturally become
more efficient in response. ITC set out to potentially generate value via three other
primary mechanisms: traceability (i.e., accountability for the quality of the product in
relation to its source), ability to match farmer production more accurately to consumer
demand, and the facilitation of an electronic marketplace.
71 Upton and Fuller, “The ITC eChoupal Initiative,” 13.
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Traceability
With seafood, traceability provided the opportunity for ITC to generate value and
additional revenue through the e-Choupal. There definitely appears to be a strong
demand for seafood, and India’s consumers are willing to pay a premium for shrimp
that can be traced to its source.
Considering a future in which rural India will be effectively wired, ITC is beginning to
think about using e-Choupals as a marketing channel. Approximately 60% of India’s
workforce live in rural areas, and ITC is betting that the true engine of growth will lie
in marketing and distributing to these individuals.
“ITC’s vision for marketing via the eChoupal involved three features: superior product
and distinctive functional benefits, process benefits (simplified transactions between
buyer and seller), and relationship benefits (farmers’ willingness to identify
themselves and reveal their purchasing behavior).”72 ITC had in mind various input
items that could be specifically developed for new business given this framework.
Their plan was to provide these products through the e-Choupal network, thus
increasing the value of the farmer’s product as well as generating additional revenue
for ITC.
H. Increased Demand of Agricultural Inputs as a Result of e-Choupal Initiative
Fertilizers
Some of the products being considered are fertilizers, agrichemicals, seeds, insurance,
and credit. Rural Indians are spending about 5.7 billion dollars per year on fertilizer,
primarily urea, diammonium phosphate (DAP), and muriad of potash (MOP). It is
very difficult for farmers to access these needed fertilizers given the inability of most
72 Upton and Fuller, “The ITC eChoupal Initiative,” 14.
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companies to access rural markets due to fragmented, or non-existent, distribution
channels. As a result, 35% of DAP and 100% of MOP were imported in 2003. ITC
sees here an opportunity to take advantage of using the e-Choupal network.73
Insecticides, Herbicides, and Fungicides
In addition, farmers spent 775 million dollars on insecticides, herbicides, and
fungicides. This highly fragmented and consolidated market is primarily dominated by
Dupont, Novartis, and Cyanamid. Farmers are having trouble accessing these needed
products and are being hurt by their unavailability. High costs of labor hurt soybean
and wheat farmers, whose fields could have been protected with herbicides, instead of
workers pulling weeds by hand, at a lower cost.
Seeds
Seeds represent a small and fragmented market of 663.9 million per year; however,
only 4% of farms use commercial seed.74 There may be a great opportunity for growth
in this area if one takes into consideration the potential for the use of genetically
modified crops that are resistant to pests, fungus, and weeds without the need for the
application of pesticides, fungicides, and herbicides.
I. Addressing Additional Needs Through e-Choupal
Life Insurance
At the time of this writing, Indians collectively pay about $11 billion in yearly life
insurance premiums; this figure is expected to swell to $33 billion by 2010.75 A huge
portion of the population in poor rural areas is not being served because of a lack of
trustworthy intermediaries. ITC believes it can build a relationship of trust and help
73 Upton and Fuller, “The ITC eChoupal Initiative,” 14. 74 Upton and Fuller, “The ITC eChoupal Initiative,” 14. 75 Upton and Fuller, “The ITC eChoupal Initiative,” 14.
51
farmers understand the rules and benefits of insurance plans. ITC envisions offering
the e-Choupal infrastructure to agents for a fee or establishing its own insurance
brokerage company. An opportunity also exists with other types of insurance policies
which cover fire, marine, motor, and workmen’s compensation. Insurers have tended
to gravitate toward larger accounts while leaving less-prosperous farmers unable to
participate. In order for insurers to adequately assess risk they require quality data on
the risks and parameters of farm life. The inadequacy of the data associated with rural
customers is the main reason for hesitation on the part of insurance companies.
However, with ITC as a liaison, data about potential rural customers could be
delivered to the insurance companies, thereby revealing the heretofore hidden rural
market.
Banking
A national survey conducted in 2001 revealed that 30% of Indians save their annual
income, but not in financial institutions.76 Both private-sector and public-sector banks
lacked a customer-friendly approach and were often avoided by those in rural areas.
Farmers reportedly avoided saving through banks because such transactions were
typically tied to some sort of loan.77 Farmers preferred saving their cash in their
homes.
ITC envisions using e-Choupal’s trusted infrastructure to facilitate financial
transactions. Farmers’ savings could potentially be channeled to the mutual fund
arena, and ITC could earn a commission from banks, using the technology introduced
in the e-Choupal. The discussions conducted throughout the e-Choupal system will
76 Upton and Fuller, “The ITC eChoupal Initiative.” 77 Total crop loans in 2001 amounted to $7 billion.
52
create the data necessary to determine the willingness to invest on the part of this
underserved portion of the population to be stored and used for various campaigns.
53
PART II: THE E-KIOSK INITIATIVE
Chapter VII: The e-Kiosk Initiative Proposal Summary
A. Proposal in Brief
We propose the University-Based Mobile e-Kiosk Initiative. The Initiative will spawn
a new corporation called e-Kiosk, which will start in Bahia, Brazil and spread
throughout Brazil and South America. Mobile e-Kiosks will bring information and
communication technologies (ICT), including Internet access, to regions where they
are absent or lacking. ICT promotes the free flow of ideas, connecting people to each
other and to empowering knowledge. It is our belief that strong links between social
and technology networks should occur through gradual, localized, and organic
developments over time and in response to the needs of the particular community of
users. Providing valuable ICT services to the developing world is the central concept
of e-Kiosk. The initiative we propose will aggregate BOP subscribers to the Portal of
the Americas for the Citizen Assistance Center (SAC) program created by the state
government of Bahia. e-Kiosk will establish partnerships with universities and
colleges, multi-national corporations, local businesses, governments, and NGOs. It
will be organized with a tiered-franchise model, where mobile e-Kiosks are franchised
to local entrepreneurs, and marketing and administrative tasks are executed by district
offices and e-Kiosk headquarters. Services, applications, and content will flow to
subscribers through the use of the Portal of the Americas Business Model.78 This
report provides the details of the University-Based e-Kiosk Initiative, and explains
how e-Kiosk will embody corporate social responsibility (CSR) and generate
sustainable development.
78 Concept map which presents the business model is presented in Section E of Part II. Refer to Figure 1 and “An Introduction to the Portal of Americas” for further information.
54
Why Salvador Da Bahia?
Salvador Da Bahia, Brazil has been chosen as the first city for implementation for
several reasons. Mainly, the country is at a turning point in the 21st century—no
longer third world, but striving to obtain first-world status. Brazil has been very
committed to comprehensive anti-poverty measures, even while surviving an
international economic disturbance and domestic energy crisis in recent years.
Despite Brazil’s impressive advances, it is second only to South Africa in a world
ranking of income inequality. More than one-quarter of the population live on less
than $2 a day, and 13 percent live on less than $1 a day. Brazil’s northeast contains the
single largest concentration of poverty in Latin America. Opportunities for Brazilians
in the Northeastern Region to improve their economic and social welfare are
undermined by their lack of access to general health and social services, and by
general discrimination in public services, a poor judicial system, and low levels of
educational achievement. Salvador Da Bahia, commonly known as Bahia, is the
largest metropolitan area in the Northeastern region of Brazil. The entire state has
rural and urban populations that are under-served by the existing ICT infrastructure,
making it ideal for the University-Based e-Kiosk Initiative.
Bahia’s Citizen Assistance Centers (SAC)
Bahia has already established herself as the Brazilian leader in e-Government, and it is
our intention to build e-Kiosk around this already-successful and established process
of bringing ICT to underserved areas. The state government of Bahia created the SAC
service, which offers the services of federal, state, and municipal agencies within one
ICT-equipped facility to the citizens of Bahia. The centers have been very successful
and encompass a wide range of services from various departments throughout the
Government of Bahia network. SAC sites have been strategically chosen throughout
55
Bahia and include such areas as major public transportation hubs and other convenient
locations. The reduction in government costs and spending has been enormous, and
the tremendous time convenience of one facility for multiple purposes is very much
appreciated by its clients.
The SAC centers, established in 1994, bring multiple government services together in
a single location through ICT. By 2001, 29 different public service agencies were a
part of the SAC system. Participating agencies include the State Department of Motor
Vehicles, the Social Security Ministry, The Department of Agriculture and Agrarian
Reform, the Municipal Public Services Administration, Labor and Social Action,
Public Safety, the Federal Police, Small Claims Court, the State Water and Sanitation
Company, and Bahia’s private electric company. Since its inception, people have been
able to register a vehicle, get a driver’s license, obtain a national identification card, go
to small claims court, obtain a passport, and take advantage of almost every service
available at the traditional non-integrated public agencies.
SAC has even successfully established mobile service centers, where clients are able
to obtain service in four basic areas, including obtaining a birth certificate, an
identification card, a labor identification card, and conducting a criminal background
check. All of these services are available within a custom built, air-conditioned 18-
wheel mobile SAC truck. When the truck arrives at its particular destination it is
linked to the SAC headquarters network via a pre-established telephone line
connection. Typically, the truck will set up shop in the town square and remain in this
location approximately three or four days before advancing to the next community on
its route. Our intention is to continue to learn about and build upon this successful
model through our primary partnership with the government of Bahia and to
incorporate a network-of-plenty connection through the Portal of the Americas, while
56
using high-bandwidth wireless broadband for mobile kiosk web connection, which
will allow a greater degree of flexibility and unlimited potential for the provision of e-
Government, e-Education and e-Commerce services. Future individual subscribers
could be connected via a combination of broadband over power line, gigabit ethernet,
and satellite connectivity. Tablet PCs and handheld networked devices will extend e-
Kiosk services to individuals in a personal manner to be used whenever and wherever.
e-Kiosks will provide additional services such as printing services and a help desk.
The e-Kiosks
A typical e-Kiosk will consist of an IVECO bio-diesel-fueled van equipped with 12 to
24 standing-room-only laptop and tablet PC stations. Network access will be provided
to subscribers with personal networked devices within a to-be-determined zone. Portal
of The Americas will provide university students with a portal which will funnel
VOIP, distance learning, and podcast entertainment services as an attracting
mechanism to the other services, applications, and content available at the digital POA
Market. Three different types of devices will be available for subscribers, including
laptop personal computers, tablet PCs, and Skype phone devices. Devices will be
provided to students, municipal workers, and consumers through agreements with
various universities, government agencies, and businesses, respectively. Depending
upon a subscriber’s affiliation, networked devices will be provided at fees ranging
from free to the cost of the device. Financing will be provided via micro-lending
agreement. Group lending agreements will also be available.
Fuel cell power generators will be on board the e-Kiosk in order to power the stations
upon various site stops. Much in the same manner that The Grameen Bank of
Bangladesh has been able to take banking to the door of its customers, e-Kiosks will
go to the people of Bahia. Subscribers will be served within their local area in town
57
squares, plazas, favelas, parks, secondary schools, government facilities, national
parks, historic landmarks, soccer parks, and an unlimited combination of other
locations.
Marketing
Our primary marketing-focus will be on the youth of Bahia, and our initial marketing
campaign could potentially appear during the first Brazilian National Team match at
the 2006 World Cup (Copa Mundial) in Germany, where the squad is expected to be a
Cup favorite. We believe this approach, although not academic in nature, will provide
the force necessary to create a comfort zone and to attract and retain the young, in
particular, as well as all citizens of Bahia to the mobile e-Kiosks that will begin rolling
into Bahia’s communities as the World Cup unfolds.
Ronaldo, the Brazilian National Team Captain, is our first choice to be the official
spokesman throughout the World Cup campaign. Future goals include being able to
provide all e-Kiosk subscribers with a live broadcast of the 2010 World Cup from
South Africa.
Franchising, Microfinancing, and Growth
In order to be able to influence large numbers of individuals, we will stimulate a spirit
of entrepreneurship through our franchise growth approach. This will allow
individuals to experiment with different technologies, service locations, financing
options, multi-sector alliances, and growth strategies. The success of The Grameen
Bank of Bangladesh and Grameen Telecommunications in the form of their Grameen
Cell Phone Ladies will be adapted to fit our model by using tablet PC technology
instead of cell phones. Villages across Bangladesh are crossing the digital divide
through a program that turns local women into successful telecommunications
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entrepreneurs. Through Grameen Telecom’s innovative Village Phone program, a
Bangladeshi woman can obtain a cell phone kit through a micro-credit loan, and then
become the operator of a phone service for the rest of her village. We envision being
able to initiate a similar program using networked tablet PC kits in subsequent e-Kiosk
phases. Microfinancing will be provided by The Consultative Group to Assist the Poor
(CGAP) and the Interamerican Development Bank through other, more localized
group-based lending micro-finance institutions (MFI). We will begin by conducting
in-field evaluations of MFIs that would be more compatible with Salvador Da Bahia
and recruit them to be a service provider through the Portal of the Americas Business
Model.
The University-Based Aspect of the Initiative
Bahia has seven universities: five public universities (one federal and four state
universities), and two private; and 17 independent colleges. Strong partnerships with
local universities and colleges are a key aspect of the e-Kiosk initiative. In addition to
being stable and trusted institutions within Bahia, universities and colleges offer a
number of other benefits. Partnering with universities and colleges will highlight the
educational component of the e-Kiosk initiative. Institutions of higher education bring
welcome technical expertise and creativity to e-Kiosk. It may be possible for
university faculty members to secure grants to conduct research through the e-Kiosk
initiative. Students from local and foreign universities could intern with e-Kiosk,
injecting talent, energy, and innovation into the e-Kiosk vision. The e-Kiosk initiative
will build momentum toward nations making their colleges, universities, and institutes
even more relevant to the world around them. Finally, as a source of people with
technical expertise, universities and colleges will help secure e-Kiosk’s technical
sustainability. The potential for creating an e-Education platform that would bring the
world of knowledge to the fingertips of all is clearly within reach. Content from local
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universities and from global sources will be aggregated and provided to subscribers
throughout Salvador Da Bahia in a tailored manner.
Our Vision
Initially, e-Government services based upon the SAC alliance through wireless
Internet access will be the primary service of e-Kiosk (Phase I); in the future,
however, we envision a multi-media and multi-purpose approach with the ultimate
goal of creating a sustainable link to global knowledge resources using whatever
means is deemed suitable to Salvador Da Bahia. It is our hope that our experiment to
inspire exploration and discussion in Bahia will bring about new insight into how e-
Kiosks can be used to create a positive impact in the lives of the citizens of Salvador
Da Bahia. The lessons learned in Bahia, although not completely applicable to other
regions, will provide valuable data to conduct comparative analyses in the future, as
our e-Kiosk venture expands throughout Brazil and South America.
Our vision approach includes attaining the highest standards of sustainable
development. It is possible to achieve economic profit while protecting the
environment and creating a positive social impact in the lives of the people of
Salvador Da Bahia. To accomplish this, the University-Based e-Kiosk Initiative will
create a corporation that meets the multiple criteria of technical sustainability,
financial sustainability, social sustainability, and environmental sustainability.
Financial sustainability will come from aggregating strong partnerships, innovation,
successful marketing, and economies of scale generated by the Portal of the Americas
Networks of Plenty Business model. Social sustainability will be achieved by
understanding the communities e-Kiosk will serve. Aggregating subscribers through
municipalities, universities, and businesses while providing them with access to the
Portal of the Americas will help give e-Kiosk technical and financial sustainability.
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Environmental sustainability will come from the inherently clean nature of ICT
services, and from using renewable fuels, such as bio-diesel and solar, to power the
mobile e-Kiosks.
Business Model: Portal of The Americas and Financial Sustainability
A portal such as the Portal of the Americas would be the primary innovator by
aggregating services, applications, and content from various providers around the
world while ensuring that they are applicable to Salvador Da Bahia. Through portal
subscriber surrogates, such as universities, businesses, and municipalities that are also
aggregated by the portal, it will be possible to establish a transmission network,
managed by the subscriber surrogates, to provide subscribers such as Unicamp
students in Brazil the means to create their own individually designed and
personalized portal. Such a portal will provide Voice Over Internet Protocol (VOIP)
service, distance learning, and podcast entertainment services at first. Initially the
Portal of the Americas will provide services in support of the youth at Unicamp, and
then move to the local community, government, and private sector businesses. This
viral-type expansion will create a “tornado” type of environment that will attract all
sectors to adopting “networks of plenty.”
Service, application, and content providers will be shielded from network management
so that they may concentrate on what they do best while allowing the subscriber
surrogates (e.g., universities) to focus on crafting a “network of plenty” that is tailored
to the needs of their particular subscribers. The service, application, and content
providers will pay the Portal of The Americas to be featured within its portal, upon
which the Portal will share a percentage of its revenue with the subscriber surrogates.
For example, a service provider such as Google is currently partnered with the Portal
of the Americas in Bolivia. Google pays the Portal of the Americas 3 cents per click
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by each individual subscriber that seeks access through the portal. Google also shares
a percentage of the advertisement revenue associated with particular searches
conducted. If a sale results from the click there will be an additional share of revenue
by Google with the Portal of the Americas. When considering the ease with which a
“network of plenty” can be managed and the compounding effect of each additional
subscriber, it becomes clearly evident that this business model is financially
sustainable. Refer to Section E in Part II for concept maps which present this business
model.
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Chapter VIII: The University-Based e-Kiosk Initiative
In Chapter VII, we briefly presented the overall concept of the e-Kiosk initiative. In
this chapter we expand the discussion with greater detail regarding implementation.
A. Project Description
e-Kiosk
The University-Based Mobile e-Kiosk Initiative will spawn a new corporation called
e-Kiosk, which will begin in Bahia, Brazil and spread throughout Brazil, South
America. Mobile e-Kiosks will bring information and communication technologies
(ICT), centered around access to the Portal of the Americas, to regions where it is
absent or lacking. ICT promotes the free flow of ideas, connecting people to each
other and to knowledge that will empower them. The initiation is based on the
assumption that strong links between social and technology networks should occur
through gradual, localized, and organic developments over time and in response to the
needs of the particular community of users. Providing valuable ICT services to the
developing world is the central concept of e-Kiosk. The initiative we propose will
build upon the existing Citizen Assistance Center (SAC) program created by the state
government of Bahia, and our primary goal associated with e-Government will
initially be to aggregate subscribers to the portal by offering SAC program services. e-
Kiosk will establish partnerships with universities and colleges, multi-national
corporations, local businesses, governments, and NGOs. It will be organized using a
tiered-franchise model, where mobile e-Kiosks are franchised to local entrepreneurs,
and marketing and administrative tasks are executed by district offices and e-Kiosk
headquarters. Services, applications, and content will flow to subscribers through the
use of the Portal of the Americas Business Model. This report provides the details of
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the University-Based e-Kiosk Initiative, and explains how e-Kiosk will embody
corporate social responsibility (CSR) and generate sustainable development.
Description
A typical e-Kiosk will consist of a combination of e-Kiosk buses and vans, fueled by
bio-diesel, and equipped with 12 to 24 standing-room-only tablet PC stations. The
objective is that individuals who are lured to ICTs at the e-Kiosk bus or van will
become familiar enough with the system to want to become a subscriber to the POA
and will want to purchase a networked device similar to those used in the van or bus.
In addition to municipal services, the POA will provide university student subscribers
with the means to access VOIP service, distance learning, and podcast entertainment
services. Fuel cell power generators provided by the Ballard Fuel Cell partner will be
on board the e-Kiosk in order to power the stations upon various site stops. e-Kiosks
will go to the people. Subscribers will be served in town squares, plazas, favelas,
parks, secondary schools, government facilities, national parks, historic landmarks,
soccer parks, and an unlimited combination of other locations.
B. Education
Education for Socio-Economic Development
Education helps ensure that people have the skills to be productive workers, informed
consumers, responsible citizens, and stakeholders in government and business. An
educated population earns more, has lower fertility rates, is more effective in
maintaining family health, and has greater choice in life decisions. The Internet is
central to the network revolution that is transforming the way people interact all over
the world, and it has taken Latin America and the Caribbean by storm. The number of
registered domain names in the region doubled in 1997 and 1998 and rose 136% in
1999, compared with increases of 74% in North America, 60% in Asia, 30% in
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Europe, and 18% in Africa. The Latin American region, however, lags far behind. Its
Internet infrastructure represents only 1.6% of the world’s total. Only 2% of
inhabitants of Latin America use the Internet, compared to 40% in the United States
and 36% in Canada.79 We propose to change this through a University-Based e-Kiosk
Communication approach.
While primary education is widespread, many children in emerging economies do not
have opportunities for advanced learning, and in some regions girls have far less
access to secondary education than do boys. Furthermore, within regions and countries
with high levels of average school enrollment, there are often significantly under-
served populations. More-advanced skills and learning will become increasingly
important as the world’s economy becomes more knowledge- and science-intensive.
Education as an Economic Good, an INS Good
Education is an economic good that is considered to be INS (INS),80 and allocating
this type of resource will require a different type of approach to that of a scarce
resource.81 The United States is the industry leader on which the allocation of INS
resources is based. Higher education initiatives are key sources of new knowledge and
information vital to “knowledge workers” and “knowledge products,” toward which
world commerce is gravitating in the information age. It is necessary to change the
manner in which resources which do not need to be scarce are kept scarce. This
mechanism for imposing an artificial scarcity on these types of goods may require a
different approach.
79 Telecenters for Socioeconomic and Rural Development in Latin America and the Caribbean, Investment Opportunities and Design Recommendations, with special reference to Central America. http://www.iadb.org/sds/itdev/telecenters/index.htm You need more info if this is a source. Name of report, authors, date of publication, etc. 80 Refer to Alan McAdams, “Resource Allocation for Goods that are INS” (Johnson Graduate School of Management, Cornell University, 2004), for further information associated with INS Resources. 81 McAdams, “Resource Allocation for Goods that are INS,” 1.
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More than 180 nations have signed the Millennium Declaration, which has spawned
eight development goals. These include cutting world poverty in half, establishing
universal primary education, reducing child mortality by two-thirds, reducing the
proportion of the population without clean drinking water by two-thirds, halting the
incidence of malaria by one half, and other goals. Information and communication
technologies are widely acknowledged to be major tools for working toward those
goals.82 Thus, interest in creating an Information Society intersects with the challenges
of reaching the Millennium Development Goals.
C. The Role of the University
As they are among a society’s most stable institutions, universities in developing
nations must partner in these parallel movements by building a physical, academic,
and research infrastructure that will engage students and faculty in supporting their
nation’s efforts to employ information and communication technologies for social and
economic development. It is important to broaden the range of tools for extending ICT
technology to rural areas. University-based and mobile e-Kiosks are vital in reaching
low-income people, and women in particular, for whom small-scale enterprises are
very important to their well-being and the well-being of their families.83
Our strategy, with an initial focus on Salvador Da Bahia, Brazil, will generate a shift
toward the use of information-and-communication technologies-for-development
(ICT4D) that engage a mobile-service type approach in addition to those provided in-
house at stationary satellite campus sites. This will give nations momentum toward
making their colleges, universities, and institutes even more relevant to the world
82 United Nations, UN Millennium Development Goals, “What are the Millennium Development Goals?” http://www.un.org/millenniumgoals/ 83 Royal Colle and Raul Roman, “University-Based Village Telecenters,” in Connected for Development: Information Kiosks and Sustainability, eds. Akhtar Badshah, Sarbuland Khan, and Maria Garrido (ICT Task Force Series 4, Department of Economic and Social Affairs, 2003), 159.
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around them. The intent of this effort is to revolutionize the manner in which e-
Government, e-Commerce, and e-Education are conducted in Brazil and, ultimately,
throughout South America.
The initiative focuses on Brazil. As part of Phase I, we will create a series of
experimental-learning type laboratories in order to understand the specifics of Brazil
urban culture and the best manner in which to serve those who have been overlooked
as a result of a lack of understanding and an inability to adapt current business plans to
very different segments of the global population.
C. Project Phases
The e-Kiosk initiative will be implemented in four phases.
• Phase I: Salvador Da Bahia, Mobile e-Kiosk Initiative (only Phase I will be fully
addressed here). The initial services will complement those provided by SAC. In
addition, our University approach will reach subscribers by initially providing
them with VOIP services, distance learning, and podcast entertainment services.
• Phase II: Establish e-Kiosk High-bandwidth network throughout Brazil. We
anticipate that individuals will become familiarized with the POA and the
networked devices used to access the portal, and that they will purchase or be
given one for personal private use. Opportunities to create home-based e-Kiosks
will also be explored.
• Phase III: Strengthen e-Kiosk network throughout Brazil and establish
experimental kiosk laboratories in neighboring Bolivia.
• Phase IV: Establish e-Kiosk network throughout South America and begin the
linking of 4 billion people at the base-of-the-pyramid to e-Education, e-
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Government, and e-Commerce in a manner that is in balance with the landscape at
the local level.
The e-Kiosk model will be a tiered-franchise type model (we explain the tiered system
below) aimed at expanding networking in both urban and rural areas through the
establishment of e-Kiosks that are owned and managed by local entrepreneurs at a fee
for license. We propose to build an alliance with the public sector, the private sector,
and various non-governmental organizations to seek and encourage triple bottom-line
returns on investments to ensure sustainability. The e-Kiosks will enable people to
take responsibility for how connected they would like to be and will allow them to
seek solutions to various challenges in a manner that best suits their needs and
abilities. By using university-based locations initially with mobile outreach to the
underserved communities, we hope to reach those who lack confidence to seek out the
services on their own. By bringing the e-Kiosk to the people, we will avoid losing the
patronage of those who may be too intimidated to visit an e-Kiosk or the university
campus personally. We hope that the marketing approach will do much to attract those
least likely to seek the benefits of the initiative.
D. Marketing
Our primary marketing focus will be on the youth of Bahia and our initial marketing
campaign will explode on the scene during the first Brazilian National Team match at
the 2006 World Cup (Copa Mundial) in Germany where the squad is expected to be a
Cup favorite. We believe this approach, although not academic in nature, will provide
the force necessary to create a comfort zone, attract, and retain the young in particular
—but also all citizens of Bahia—to the mobile e-Kiosks that will begin rolling into
Bahia’s communities as the World Cup unfolds.
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Ronaldinho, of the Brazilian National Team, could be the first-choice to be the official
spokesman throughout the World Cup campaign. Future marketing goals include
being able to provide all e-Kiosk subscribers with 2010 World Cup soccer from South
Africa in real time.
The e-Kiosks will ultimately provide a full range of services that could potentially be
unlimited in nature. The intent is to begin on a very small scale and to create a
“perpetual evolution by learning” environment in which services are expanded at a
rate that is appropriate for the local franchise based upon the recommendations of the
district office. District Headquarters will directly assist in the management of the
various e-Kiosks in their districts; the various district offices will ultimately report to
e-Kiosk Headquarters. e-Kiosk Headquarters will be linked to the various partners in
the public, private, and non-profit sectors. Partnerships are intended to develop and
perpetually evolve as needed, based upon the determination of each individual e-
Kiosk. The acquisition of data associated with all aspects of individuals being served
and services rendered will be gathered meticulously and stored for analysis.
Adjustments associated with e-Kiosk evolution will occur yearly based upon the
analysis of this data.
E. Public Sector BOP Subscriber Surrogate
e-Kiosk Phase I will focus on aggregating BOP subscribers for municipalities,
businesses, and universities. SAC, the Government of Bahia (Governo Da Bahia), and
the State University of Bahia (Universidade do Estado da Bahia [UNEB]) subscribers
will be able to access the Portal of the Americas. In addition, we expect e-Kiosk to
include stakeholders representing many aspects of the Brazilian government,
universities, the private sector, and the NGO community.
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The Public Sector Service, Application and Content Providers; and their
Applicable Subscribers
The public sector goal for our organization will be to bring government services to
underserved urban and rural areas. Our goal is to serve those in need in their own back
yard, to bring the e-Kiosk to them. We will establish a strong relationship with all
aspects of Brazil local government and create an ongoing training process by which
we establish links and opportunities to provide government services remotely through
the aid of e-Kiosk technologies within the e-Kiosk portal. Government services will
include, but will not be limited to, the following:
Public Services, Applications, and Content to be Provided
• Various e-Government services will be provided as part of our partnership with
SAC. Our intention is to allow growth to occur organically as needed upon the
already established and successful SAC foundation.
• Applications for drivers’ licenses
• Submission of grievances of various types
• Applications for certificates of various types
• Maintenance of Public records
• Dissemination of public information
• Coordination of local programmes
• Local implementation of central government initiatives
• Loan applications
• Pension applications
• Auction centers for agricultural products
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Public Sector Services, Applications, and Content Providers; and their
Applicable Subscriber Surrogates
• SAC (Phase I)
• Governo Da Bahia (State Government of Bahia)
• UNEB–Universidade do Estado da Bahia (State University of Bahia)
• Department of Health
• Department of Agriculture
• Department of Transportation
• Postal Service
• Department of Education
• Department of Rural Development
• Social Services Departments
• Youth Services Departments
• Voting Campaigns
• Brazil Information Campaigns
Our model was developed to empower those living at the “Base-of-the-pyramid,”84
while taking into account all of the factors which contribute to this condition such as
marginalization, oppressive social norms, and lack of responsive and accountable
governance. By linking and combining different media to already-established and
successful networks, including social networks, we will be well-positioned to improve
the situation of the poor while achieving economic growth and implementing
measures to better protect the environment.
84 According to Stuart Hart of the Center for Sustainable Global Enterprise at the Johnson School of Management at Cornell University, this represents the 4 billion people who currently remain outside of the global market system surviving on less than 1,500 dollars per year.
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Public Sector Goals:
• Strengthen SAC network by providing additional areas of access to the various
services provided (Refer to SAC Web page at http://www.ba.gov.br/).
• Provide the Universidad do Estado da Bahia with a revolutionary tool to reach and
serve individuals throughout Bahia through the distribution of INS resources of an
academic nature.
• Strengthen social networks.
• Strengthen civil life.
• Challenge social norms that put marginalized people at a disadvantage.
• Improve public democracy.
• Grow local social capital.
• Make ICTs accessible to all people.
Private Sector Services, Applications, and Content Providers; and their
Applicable Subscribers
Field research conducted within villages should employ an immersion process in
which pilot studies, learning laboratory experiments, and decisions on content,
applications, and services are based upon and crafted to meet the needs of the local
people and not a foreigner at the corporate office. It is our desire to change the manner
in which businesses sell their products to people in developing nations through
creative on-line marketing campaigns associated with digital goods provided to
subscribers free. Google’s partnership with the POA and the Indian Tobbacco
Company (ITC) have given us a glimpse of the power of free digital goods to attract
people to their advertising pages. At the time of this writing, there are 4 billion
individuals at the “base-of-the-pyramid,” with per-capita income of less than $1,500
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per year in purchasing power parity.85 Some estimate this number to continue to grow
in the 6–8 billion range as a result of rapid population growth. These individuals live
in high-cost economies concentrated in rural villages or urban slums/shanty towns. We
are optimistic about the potential role of e-Kiosks in educating this portion of the
global population in a sustainable manner,86 using for-profit and non-profit logic.
Brazil will provide access to the ultimate learning laboratory, in which the knowledge
created through trial and error will enable e-Kiosk to expand into other base-of-the-
pyramid type countries in Latin America as well as Africa, and Southeast Asia. e-
Kiosk will enable government, national/multinational corporations, and educational
institutions to serve those who have been underserved. This will create conditions for
competition to serve in these areas, and will potentially reduce the stranglehold that
monopolistic enterprises currently enjoy in this and other similarly underserved areas.
Private Sector Services, Applications, and Content to be provided:
• VOIP services
• Distance Learning
• Podcast Entertainment Services
• e-Career Guidance
• Personal and Property Insurance Policies
• Micro-Finance request applications
• Youth/Adult/Elderly Education
• e-Language Training
85 Stuart Hart, Capitalism at the Crossroads (New Jersey: Wharton School Publishing, 2005), 53. 86 Meaning that the use of scarce resources is significantly limited. Once scarce resources are used to create digital services, content, and applications, they can be provided to all at a marginal cost of zero utilizing a network of plenty. The efficiency that results also leads to a drastic reduction in scarce resources. Individuals capable of receiving e-education, e-government, and e-health services in their local community will not be required to travel long distances to city centers.
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Private Sector Services, Applications, and Content Providers; and their
Applicable Subscriber Surrogates:
• e-Medicine
• e-Pharmacy
• e-MicroLending
• e-Insurance
• e-Agricultural Inputs
• Microsoft
• Linux
• Skype (see analysis below of the impact that Voice Over Internet Protocol will
have on the telecom industry)
Skype is a good example of how a service provider can provide an INS resource to
subscribers at a marginal cost of zero while improving profits. Profits are improved
through the reduction of costs provided by the efficient nature of the transmission of
digital goods through a high-bandwidth broadband network. The ability of Skype to
add 150,000 subscribers per day is a clear indication of the power this service will
have to attract subscribers in Salvador Da Bahia, Brazil (refer to Part III).
Non Governmental Organization (NGO) Service, Application and Content
Providers; and their Applicable Subscribers
NGO Sector Services, Applications, and Content to be provided:
• e-Medicine services will be provided through a portal-based partnership with
AXON consultants, whose objective is to provide physicians in the third world
with INS resources and technologies that will enable them to educate themselves
so that they may more effectively diagnose and treat their patients.
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• e-Veterinary services will be provided through a portal-based partnership with
Consultant, an e-Education service provided by the Cornell University College of
Veterinary Medicine. Consultant is one of the largest veterinary databases in the
world. Created by Dr. Maurice E. White, this database provides veterinarians the
world over with a valuable tool to conduct diagnoses at no charge. For additional
information, see Web page at http://www.vet.cornell.edu/consultant/consult.asp
• Brazilian Educational Institutions
• Cornell Institute for Public Affairs (CIPA). It may be possible to create a summer
and semester course for credit through the CIPA program whereby public policy
students participate in an individually funded e-Kiosk internship. Students would
be assigned to a particular area of interest where they would use research-based
strategies to obtain portal subscribers for subscriber aggregators such as
universities, municipalities, and businesses.
• Engineers for a Sustainable World. Create a summer and semester course for credit
whereby engineering students could participate in an individually funded e-Kiosk
internship.
• Center for Sustainable Global Enterprise. Creating a summer and/or semester
course for credit whereby business school students could participate in an
individually funded e-Kiosk internship.
• Society for Research and Initiatives for Sustainable Technologies and Institutions
(SRISTI): an NGO that promotes environmental information and eco-friendly
solutions in local languages. Through this partnership SRISTI will provide
information and knowledge to the e-Kiosks on environmental and biodiversity
issues that are relevant to the local communities.
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• Digital Partners: an NGO which provides financial support, loan services, and
strategic planning to help in the expansion and diversification of operations and
services.
• The College of Agriculture and Life Sciences at Cornell University (CALS):
creation of a Web site that would answer farm-related questions associated with
the production of local crops. Farmers would be willing to pay a flat rate or time-
based rate to have associated questions to be answered or to explore services or
knowledge that could potentially improve the efficiency of producing soybeans
and generating a greater amount of profit. Soybeans are of particular importance in
Brazil due to the increased dependence on biodiesel fuel.
• First Mile Solutions (FMS): portal subscriber partner that will enable e-Kiosk to
reach out into even more secluded areas of Bahia and Brazil via motorbike and
bicycle where telecommunication coverage is not available. FMS is an existing
model which provides Internet connectivity to rural communities.
• Element Mobile (EM): another potential e-Medicine partner that will complement
the services provided by AXON Consultants. EM was created by Students at the
Johnson School of Management to provide mobile medical patient data
connectivity via the browser of Blackberry and other PDA-type devices to
healthcare providers in areas where cellular telecommunication networks are
present.
The Tiered-Franchise Model
The University Based e-Kiosk Initiative will employ a tiered-franchise model, similar
in many ways to other corporate franchise models. The model will include an e-Kiosk
Headquarters (HQ), a number of District HQs, a larger number of individual e-Kiosks,
local colleges and universities, Brazilian government stakeholders, private-sector
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stakeholders, and various multi-national stakeholders. Below, each element of this
model is described briefly.
e-Kiosk Headquarters will serve as the central planning office for the initiative,
similar to a corporate headquarters. Each District HQ will report to the e-Kiosk HQ. e-
Kiosk HQ will perform management, long-term planning, and outreach activities for
the Initiative.
• Management: supervision of the initiative from a whole-system perspective,
considering all aspects of the operation, with the goal of maximizing efficiency,
development, and sustainability.
• Long-term planning: monitoring the development of new ICT technologies and
strategies, and considering them for adoption in the e-Kiosks.
• Outreach: communicating with the various stakeholders (including corporations,
NGOs, governments, international organizations, and international universities and
colleges).
In summary, e-Kiosk HQ will focus on the big-picture, allowing the District Offices
and individual e-Kiosks to focus on their day-to-day operations.
e-Kiosk HQ will house mid-level management and administration. They will be the
conduit of information between individual e-Kiosks and e-Kiosk HQ. District HQs
will focus on month-to-month operations, dealing with issues at individual e-Kiosks as
they arise. District HQs will be responsible for monitoring the performance of each e-
Kiosk under its supervision, collecting data, and reporting this information to e-Kiosk
HQ. When directives come from e-Kiosk HQ, each District HQ will take
responsibility for implementing the directive in its district. District HQs will spearhead
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local outreach to the private sector, NGOs, universities, and colleges. District HQs
will be crucial in maintaining working relationships with institutions of higher
education. In fact, college campuses will be strongly considered as locations for
District HQs. District HQs will also process paperwork and provide general back-up
services, including technical assistance and financial advising, for the e-Kiosks.
e-Kiosks are the units in the field that will bring ICT to individuals at the BOP. They
will be owned and operated by individual franchisees. Each e-Kiosk will report to the
District HQ in its district. Managerial decisions by e-Kiosk operators will be verified
by the appropriate District Headquarters before they are implemented. In exchange for
sacrificing autonomy, and paying a portion of revenues to the District HQ, the e-Kiosk
franchisees will receive a wide range of support services.
Colleges and universities will provide a sturdy backbone for the Initiative. In addition
to being stable, institutions of higher learning will be sources of cutting-edge
technologies, creative thinking, and technical expertise. Students, staff, and faculty at
universities and colleges will be encouraged to participate in the Initiative. For
example, it may be possible for faculty to secure research grants to experiment within,
and study, the Initiative. The Initiative will encourage students to participate as interns
and to conduct useful research about ICT for development. Associating with local
colleges and universities will give the Initiative immediate local credibility.
Private-sector stakeholders could include multi-national corporations (MNCs) as
well as local businesses. Private-sector stakeholders could contribute equipment and
financial assistance to the e-Kiosk initiative. Alliances will develop when there are
common interests between the e-Kiosk initiative and the private sector. MNCs could
become involved in order to promote their corporate social responsibility (CSR)
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agendas and to reach people in the developing world. Consider how the Indian
Tobacco Company provided farmers in rural India with networked computers through
their e-Choupal program and how the resulting boost in productivity benefited both
the farmers and the ITC.
Public-sector stakeholders will include the Brazilian government in Phase I, and
could include other governments that are interested in bridging the digital divide. As
explained above, the Brazilian government has already showed interest in providing
ICT to under-served regions in order to expand its provision of government services
and to increase inclusiveness among its citizenry. Other government initiatives
described previously will be encouraged to invest in the e-Kiosk Initiative. We
anticipate that they will respond favorably in light of the efficiency benefits that this
will bring to their operations. Consider the SAC example discussed previously. The
goal of the e-Kiosk initiative is to create a self-sustaining enterprise not reliant on
external sources of funding, but in the start-up phase, the Initiative will market itself to
development agencies as a way to create sustainable economic growth in the
developing world.
NGO stakeholders may include local NGOs and international NGOs. NGOs can
contribute many of the same things that private sector and government partners can,
and for basically the same reasons. Local NGOs may be especially valuable as
partners, because they have experience running development enterprises in Bahia,
Brazil.
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Figure 7. Simplified Sketch of Organizational Structure: e-Kiosk.
e-Kiosk Management Structure, Phase I, Salvador Da Bahia
e-Kiosk Manager: There will be one manager per e-Kiosk, and this individual will
receive the support of the District HQ with the aid of student volunteers from one of
the various educational institutions within the e-Kiosk Partnership Group. The District
HQ will work directly with each e-Kiosk to meet its specific needs and will make all
necessary adjustments accordingly. The link to Headquarters will provide a plethora of
available public, private, and NGO links that could be used based upon need.
District HQ will begin with one District Manager and student volunteers from one of
the various educational institutions within the e-Kiosk Partnership Group. As our
knowledge base of the local landscape evolves, we will make adjustments accordingly.
NGOs, Microlenders
•Experience w/ ICT4D
•Local Contacts
•Services and Resources
Government, SAC
•Support
•Contracting for E-Government Services
Universities and Colleges, UNICAMP
•Steady Backbone
•Cutting-edge Technology
•Faculty and Student Participation
•Research
Private Sector, Motorola, Skype
•Financing
•Equipment
•Advertising
•Service Contracts
e-Kiosk HQ
•Management
•Long-term Planning
•Outreach
District HQ
•Local Outreach
•Local Adaptation
•Radical Transactiveness
District HQ
•Mid-level Management
•Administration
•Technical Support
District HQ
•Gather Information
•Report to e-Kiosk HQ
•Implementation of e-Kiosk HQ directives
e-Kiosk e-Kiosk e-Kiosk e-Kiosk e-Kiosk e-Kiosk
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Our goal is to create an evolving business plan that can perpetually adapt to an ever-
changing environment and provide the tools necessary for individuals to put
knowledge into motion and create an “entrepreneurship environment.” District HQ
will be responsible for processing the demand for e-Education, e-Government, and e-
Commerce services from the various e-Kiosks/e-Kiosk networks and will make
necessary arrangements to include applicable providers within the Portal of the
Americas. Once services, applications, and content providers are aggregated within the
Portal of the Americas, subscribers aggregated by the surrogates (universities,
municipalities, and businesses) will have access to these digital goods and services,
while the providers will be free of the necessity to create and maintain the applicable
networks (Please refer to concept maps in Section E of Part II). Services will be
available in the local language, and arrangements for translation will be conducted at
the e-Kiosk Headquarters level and District HQ level.
Management
• Use knowledge obtained from project building blocks such as the e-Choupal
initiative. Further explore sustainable manner in which INS resources can be
provided to individuals at the base-of-the-pyramid at zero cost.
• Experiment with clean solar energy and biodiesel-fueled technologies for Kiosk.
• Conduct further research of the local landscape to determine the most efficient
manner in which to effectively transmit INS resources and conduct e-Learning, e-
Government, and e-Commerce.
• Success will depend upon the ability of e-Kiosk to effectively provide its
subscribers with unfettered access to the basket of goods and services available at
the Portal of the Americas, the level of efficiency at which District HQ process
requests, and the extent to which the e-Kiosk HQ addresses the challenge to access
information in languages other than Portuguese.
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• E-Conferencing: Face-to-face interaction with representatives of various public,
private, non-profit organizations. This will help immensely with individuals who
are not literate and who may feel intimidated by the process in general.
Personnel Plan: During Phase I of Project
• e-Kiosk (number of e-Kiosks will be based upon demand and population of
each individual district)
o One Manager per Kiosk
o Student volunteers as needed to be provided by e-education
Partnerships on an internship-type basis. Potential candidates will
participate in credit internship from various Brazilian education
institutions, Engineers for a Sustainable World, and the Cornell
Institute for Public Affairs.
• e-Kiosk Headquarters (one per district)
o One Manager per District HQ
o Student volunteers as needed to be provided by University Partnerships
on an internship-type basis. Potential candidates will participate in
credit internship from various Brazilian education institutions,
Engineers for a Sustainable World, and the Cornell Institute for Public
Affairs.
• e-Kiosk Headquarters (one)
o One e-Government Manager
o One e-Education Manager
o One e-Commerce Manager
o Student volunteers as needed to be provided by e-Education
Partnerships on an internship type basis. Potential candidates will
participate in credit internship from various Brazilian education
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institutions, Engineers for a Sustainable World, and the Cornell
Institute for Public Affairs.
o Embedded Partnership Employees to assist in initial phase of learning
to establish the methods by which e-Government, e-Education, and e-
Commerce will be conducted.
Training of Staff
• Managers and the Kiosk, District HQ, and Headquarters levels will all be trained
in the field through a combination of expertise provided by local Brazilian
government officials, Cornell University Institute for Public Affairs, Engineers for
a Sustainable World, and The Johnson School of Management Program for
Sustainable Global Enterprise.
• e-Government training will be conducted directly through embedded
representatives provided by the government organization desiring to use our
network to provide their various services in a more efficient manner.
• e-Education training will be conducted directly through embedded representatives
sponsored by alliances and partnerships made in the private sector, desirous of
using our network to educate and reach a market segment which until now has
been off-limits to multi-national corporations. Knowledge and information will be
provided at zero cost to the client in an effort to promote efficiency and to promote
certain techniques, products, and services that could potentially be offered through
e-Commerce.
• e-Commerce training will be conducted directly through embedded representatives
sponsored by alliances and partnerships made with the private sector. Simplicity is
a goal to be addressed at the headquarters level in conjunction with the particular
organization.
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Job Description, Middle Level Manager (Kiosk District HQ):
• Manager will be educated in Brazil or be of Brazilian origin. Able to effectively
communicate in Portuguese, knowledgeable about the Brazilian economy, and
capable of maneuvering through the economic transition currently taking place.
Capable of understanding the manner in which public, private, and non-
governmental organizations operate in Brazil and throughout the world. Expert in
Information Technology and Management of Sustainable Global Enterprise.
Duties:
• Link e-Kiosks to Headquarters.
• Inform Headquarters of specific needs of district.
• Translate the desires and solutions of the individuals in the district to
Headquarters.
• Determine range of services to be provided for a particular district.
• Assist Headquarters in developing alliances that would be most beneficial to
particular district in e-Government, e-Education, and e-Commerce.
• Advance awareness of e-Kiosks throughout district by building alliances and
partnerships with local leaders, union representatives, educational institutions, and
local commerce.
• Responsible for processing the requests for e-Government, e-Education, and e-
Commerce services that come from the various Kiosks and for administering the
Kiosks under their umbrella.
Qualifications:
• Educated in Brazil and a native of the particular district to be served.
• Established knowledge base in Information Technology.
• Ability to adjust and evolve throughout the learning portion of Phase I.
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• Facility in coordinating and communicating with institutions from the private,
public, and non-profit sector.
• Membership in Engineers for a Sustainable World is a plus.
• Satisfactory completion of the e-Kiosk Training Program for Management Service
in the Developing World–Brazil.
• Respected community leader in the particular district. Involved in local
organizations, and exhibiting a sincere desire to create an impact from the bottom
tier of the pyramid.
• Ability to organize student staff and individual e-Government, e-Education, and e-
Commerce staff who may be needed on a temporary basis.
• Ability to simplify the complex into a language and process that requires little
outside expertise and which is understandable to those targeted through a
particular initiative.
• Fluent in Spanish, Portuguese.
• MBA, or other graduate degree, with Sustainable Global Enterprise concentration.
• Work experience in or knowledge of government, educational, and commerce-type
institutions.
• A humble leader willing to serve the people of the district.
Relationship to Others:
• Answers directly to Headquarters but has the flexibility to provide for the needs of
the individual e-Kiosks as required.
• Able to develop alliances and partnerships at the local level in much the same
manner as Headquarters does at the national and international level in increasing
the basket of goods to be provided.
• Direct link to Headquarters who will be the link to national and international e-
Government, e-Education, and e-Commerce Links
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• Technical support to e-Kiosks
• Face of e-Kiosk Corp. at the District Level
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Chapter IX: e-Kiosk Phase I Preliminary Analysis of Salvador Da Bahia
We remind the reader that despite Brazil’s advances, it is second only to South Africa
in a world ranking of income inequality. Greater than one-quarter of the Bahia
population live on less than $2 per day, and 13 percent exist on less than $1 per day.87
Brazil’s Northeast quadrant contains the single largest concentration of poverty in all
of Latin America. The opportunities for Brazilians in the Northeastern Region to
improve their economic and social welfare are undermined by their inability to access
government services, general health services, the justice system, and educational
services. Salvador Da Bahia, commonly known as Bahia, happens to be the largest
metropolitan area in the Northeastern region of Brazil.88 The entire state has rural and
urban populations that are chronically under-served by the existing ICT infrastructure,
making it ideal for our University-Based e-Kiosk Initiative.
A. Demographic Features
Based upon a review of a report conducted by Maria de Fatima and Francisco Marcilio
of George Washington University,
Bahia is the fourth most populated state in Brazil, with 13 million inhabitants according to the population census done by the Instituto Brasilero de Geografia y Estatistica (IBGE) in 2000, and the most populated state in the northeastern region, with 28% of the region’s population. The annual population growth rate has been falling. Between 1980 and 1991 the average growth rate was 2.1% and it fell to 1.1% between 1991 and 1996. Within this same period the annual growth rate of the Brazilian population decreased from 2.0% to 1.4%. The economically active portion of the population in 1996 totaled 5.7 million people, equivalent to 44.3% of the total population of the state. The Salvador Metropolitan Region (RMS), with 10 municipalities and 2.7 million
87 The World Bank Group, Brazil Country Brief, Development Progress, April 2003, http://wbln0018.worldbank.org/LAC/LAC.nsf/ECADocByUnid/A220784F5BC3A1FB85256DB40070253B?Opendocument 88 Maria de Fatima Araujo D’Olieira Santos and Francisco Alfredo Marcilio De Sousa Miranda, “Investments in the State of Bahia Tourism: A Way to Development,” The George Washington University Institute of Brazilian Business and Public Management Issues, Instituto Cultural Minerva, “Theory and Operation of a Modern National Economy,” 1998, Section 2.2.
87
inhabitants, is where approximately 22% of the state population is concentrated in. Its economically active population totals approximately 1.3 million people.89
Table 1. Major Municipalities in the State of Bahia
Municipalities Population
Salvador da Bahia 2,220,480
Feira de Santana 438,480
Vitoria da Conquista 242,920
Ilheus 241,216
Itabuna 199,994
Juazeiro 138,648
Camacari 117,574
Barreiras 85,255
Simoes Filho 78,269
Source: Maria de Fatima Araujo D’Olieira Santos and Francisco Alfredo Marcilio De Sousa Miranda, “Investments in the State of Bahia Tourism: A Way to Development,” The George Washington University Institute of Brazilian Business and Public Management Issues, Instituto Cultural Minerva, “Theory and Operation of a Modern National Economy,” 1998, Section 2.2.
B. Education
The State of Bahia has been concentrating investments on the improvement of the
quality of education. The governmental project for the education sector is directly
linked with the transformations that have been taking place in the social context. In
order to meet the current expectations for improving the education quality and raising
the aptitude level of the student population, several actions have been introduced
89 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 2.2.
88
including improving the management system, expansion options, conducting teacher
appraisals.
It is evident that the e-Kiosk initiative will enable the state government of Bahia to
address the actions listed above. Students will have direct access to the Portal of the
Americas, in which services, applications, and content of an educational nature will be
available to them over high bandwidth networks.
The state public school system has 4,345 schools (elementary and high schools), in
which there are 1.8 million students.90 The state public network is complemented by
municipal schools and by private schools. Each and every student could potentially
become a e-Kiosk subscriber.
In addition, Maria de Fatima and Francisco Marcilio of George Washington
University indicate that
It is important to note the teacher training program at Anísio Teixeira Institute, which has had a successful role within the education program in achieving a double objective: appraisal of education professionals and improvement of the quality of public schools. Its priorities—teachers’ qualification, and technological and educational experiments—represent the search for improved teaching-practice alternatives, and consequently, for achieving public schools status.
Between 1995 and 1997, Anísio Teixeira Institute trained 292,335 teachers at 3,141 training seminars and conducted research and educational seminars at schools. The Teachers Training Program has enabled teachers to qualify for wage incentives that vary from 5 to 15% of the salary, according to the course duration (40 to 360 hours).91
90 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 5.1.1. 91 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 5.1.1.
89
There is an opportunity here for a digital curriculum to be created by the Anisio
Teixeira Institute that could potentially be provided to e-Kiosk subscribers. Once the
training seminars and educational seminars are recorded with video digital equipment,
it would be possible to have this resource networked and accessible to all e-Kiosk
subscribers. Research of various kinds will also be efficiently conducted through
direct on-line links to subscribers who are involved in education.
C. State Program of Information and Communication Technologies at Schools
“Focused on the modernization and upgrading of the efficiency patterns of public
schooling, the State Program of Informatics at School is initially installing 8,910
computers in 681 schools of the state system, in 238 municipalities. Together with the
Education Ministry (MEC), another 16 Centers of Education Technology are being
created in order to train teachers in the use of computers in the classroom.”92 e-Kiosk
can provide the expertise and resources to make these schools subscribers to the Portal
of the Americas. Networked computers with access to the POA (where education-
related services, content, and applications are available) will be provided to
subscribers.
D. Illiteracy Rate Drop
There have been positive results due to governmental action. Schools have been
improving, depicted by an approximately 17 percent decrease in the illiteracy rate of
the school-age population, in Bahia, between 1990 and 1995.93
92 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 5.1.2. 93 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 5.1.3.
90
Table 2. Illiteracy Rates, According to Ages, in Bahia, 1981–1996
Ages Illiteracy Rate
1981 1990 1996
5 years old or more 43.7 39.6 26.9
7 to 14 years old 49.1 43.8 23.2
15 to 49 years old 29.9 26.1 17.1
Source: IBGE-PNAD data
Table 2 provides evidence of improvement; however, much more can be
accomplished. e-Kiosk could potentially be used as a more aggressive tool to combat
illiteracy among all age groups through the e-Education portion of our initiative.
E. College Education in Bahia
According to Maria de Fatima and Francisco Marcilio of George Washington
University, Bahia has seven universities: five public universities (a federal and four
state universities), and two private; and 17 independent colleges.94 These are all
potential subscriber surrogates. These universities could aggregate subscribers to e-
Kiosk and thus provide a link to the POA.
University students equipped with digital notebooks, Skype phones, and tablet PCs
that will be given away and/or sold to them through the e-Kiosk initiative, will be able
to access the POA and the services, applications, and content contained therein.
Getting these Web-connected devices into the hands of the citizens of Bahia will
provide more benefit than any other International Development Initiative. Bruce 94 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 5.1.3,
91
Chaddus writes, “Forget about free trade agreements, hydroelectric dams, and paved
roads. The most important tool for spurring development in poor countries might just
fit in the palm of your hand. ‘Mobile phones are more critical [to development] than
physical infrastructure,’ says University of Michigan management expert C.K.
Prahalad. Easy communication helps people negotiate deals, get goods to market, and
access important services, such as banking or insurance.”95 Initiatives conducted by
Motorola, Skype, and Google, will be discussed further in this report as they pertain to
University Based ICT initiatives. Refer to Parts II, III, and V for further information.
Bahia’s Education Program for Competitiveness, which focused on improving
education at the university level, will provide individuals access to knowledge that
will improve their productivity and their ability to move into higher levels of industry.
This improvement in professional education in strategic areas will contribute to
Bahia’s positive economic development.
The proposed Education Program for Competitiveness is composed of a distance
learning initiative, a emerging sector professional training initiative, and an
entrepreneurship incentive initiative.
e-Kiosk can provide the mechanism to reach individuals in any location and at any
time to truly implement the Distance Learning Initiative portion of this project. e-
Kiosk will continue to explore the abundant possibilities for the use of ICT for
improvement through our proposed e-Education initiative.
Strong partnerships with local universities and colleges are a key aspect of the e-Kiosk
initiative. It is these institutions that will be able to aggregate the subscribers to the
95 Bruce Chaddus, “Calling for Change,” Foreign Policy, 2006.
92
POA. e-Kiosk will work to equip these subscribers and provide the technical expertise
to reach those outside of the zone of influence of these institutions and to improve the
efficiency of the educational experience within the university campus nucleus. In
addition to being stable and trusted institutions within Bahia, universities and colleges
offer a number of other benefits. Partnering with universities and colleges will
highlight the educational component of the e-Kiosk initiative. Institutions of higher
education bring technical expertise and creativity that will be welcomed by e-Kiosk.
Students from local and foreign universities could intern with e-Kiosk, injecting talent,
energy, and innovation into the e-Kiosk vision. The e-Kiosk initiative will build
momentum toward nations making their colleges, universities, and institutes even
more relevant to the world around them. Finally, as a source of people with technical
expertise, universities and colleges will help secure e-Kiosk’s technical sustainability.
F. Analysis of Bahia Development through the e-Kiosk Initiative
The State of Bahia has evolved its urban development policy and strategy from a
previously sectoral one, aimed mainly at conventional housing projects, to one
implementing integrated programs that link physical interventions to social and
income-generation actions, as reflected in the 2000/2001 Strategic Plan for Housing
and Urban Development. The Plan also envisages partnerships between local
governments, international aid agencies, other development organizations, and
community-based organizations.
Salvador da Bahia is a city of almost three million, of which over a million live in
informal settlements. A Poverty Reduction Program in the Ribeira Azul area was
developed in order to reduce poverty in one of the metropolitan areas BOP type
communities. According to de Fatima and Marcilio of George Washington University,
“Ribeira Azul consists of several bayside neighborhoods located at the northwestern
93
outskirts of the city. Its population totals approximately 150,000 inhabitants, which is
approximately 6% of the population of the city of Salvador.96
Based upon population data, Novos Alagados, one of the neighborhoods in the Ribeira
Azul area, 45% of the active age population do not generate any income. It was also
noted that 59% have household incomes totaling less than 50% of the minimum wage,
which is approximately $45 per month. Also noted, 13% of the Novos Alagados
homes were built on dry ground and do not have bathrooms. Sanitary structures are
also a concern due to potential contamination of the ground water table considering
64% have incomplete sanitary structures. Scholastically, students in Novos Alagados
are at a disadvantage, represented by the fact that 21% do not attend school and 71%
score below average academic standards. The ability to access public health services,
including obtaining information is also limited, 40% of the population have indicated
to have encountered difficulties in obtaining services. This data from Novos Alagados
is representative of the entire Ribeira Azul area.97
The State of Bahia has implemented community-driven development (CDD), urban
development, and education projects in the various communities within Bahia. This
comprehensive program has helped reduce poverty in the area through urbanization
and the introduction of infrastructure, eradicating shanties perched on stilts in the
swamps, as well as providing social programs in health, education, day care and
workers training. Improving the telecommunications infrastructure through the e-
96 de Fatima and Marcilio, “Investments in the State of Bahia Tourism: A Way to Development,” Section 5.2. 97 The World Bank Group, Cities Alliance, for Cities Without Slums, “Local Partnership Moving to Scale, 2000,” http://www.citiesalliance.org/citiesalliancehomepage.nsf/Attachments/Cities+Without+Slums+Action+Plan/$File/brln_ap.pdf
94
Kiosk initiative are ideal for providing service in areas such as Ribeira Azul and our
intention is to work in conjunction with the Ribeira Azul Program.
Bahia has already established herself as the Brazilian leader in e-Government and it is
our intension to build our e-Kiosk subscriber base around this already successful and
established project. e-Kiosk will act as an subscriber surrogate to this government
service provider. Our intention is to continue to learn and build upon this successful
model through our primary partnership with the government of Bahia and incorporate
a swifter and more technologically advanced high bandwidth network device system,
with a partnership with Portal of the Americas, which will allow a greater degree of
flexibility and unlimited potential for the provision of e-Government, e-Education and
e-Commerce services.
G. Rationale for e-Kiosk: Increased Education in Bahia
The relationship between education and poverty reduction is very clear: educated
people have higher income earning potential, and they are better able to improve the
quality of their lives. Education is always an important catalyst in developing a
talented, relevant, and skillful workforce. The future of a nation depends greatly on its
education system. People who have access to e-Kiosks will be able to maximize their
education and to participate more actively in local and national government through
voting and community involvement. Furthermore, they are less likely to be
marginalized within the larger society. Access to education empowers; it helps people
become more proactive, gain control over their lives, and widen their range of choices.
In fact, the opposite of marginalization is empowerment, and basic education is one of
the keys to empowerment, both for individuals and for groups.98 The ease with which
98 United Nations Educational, Scientific, and Cultural Organization, Education for All Status Report (Paris, 1997).
95
educational resources can be accessed through e-Kiosks will create a ripple effect of
far-reaching benefits.
The combination of increased earning ability, political and social empowerment, and
enhanced capacity to participate in community governance is a powerful instrument
for helping to break the poverty cycle that Bahia struggles with. In fact, this kind of
access to education is the primary vehicle by which economically and socially
marginalized adults and children can lift themselves out of poverty and obtain the
means to participate fully in their communities. Increased educational attainment
through the e-Kiosks can improve the livelihoods of the poor and reduce the likelihood
of becoming poor.
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PART III: SUSTAINABILITY AND THE E-KIOSK INITIATIVE
To achieve the highest standards of sustainable development, the e-Kiosk initiative
should meet the multiple criteria of technological sustainability, financial
sustainability, social sustainability, and environmental sustainability. Of course, these
four categories of sustainability are tightly integrated. For example, technological
sustainability contributes to financial sustainability because financial success hinges
on the continuous and smooth operation of the ICT kiosks. This section describes how
the University based e-Kiosk approach we are proposing will meet all four categories
of sustainability.
A. Financial Sustainability
The old business paradigm would conclude that financial sustainability is impossible
to achieve by serving subsistence-oriented populations. Capitalism at the Crossroads,
a new book by Stuart Hart, a Professor of Management at the Johnson School of
Management at Cornell University, explains that consumer and producer surplus exists
in the base of the economic pyramid (BOP) for those with the ingenuity to find it.99
According to Hart, there are 4 billion people in the BOP, all earning less than $1,500
in purchasing power parity annually.100 The e-Kiosk Initiative is born of the new idea
that serving the BOP is a viable strategy for economic growth. Indeed, there are many
examples of successful businesses that serve the BOP. The e-Choupal initiative
described earlier is but one example of a businesses model that has found success
serving developing regions with ICT.
99 Stuart Hart, Capitalism at the Crossroads (Upper Saddle River, NJ: Wharton School Publishing, 2005). 100 Hart, Capitalism at the Crossroads, 53.
97
Figure 8. Map of the State of Bahia.
98
B. Social Sustainability
Social sustainability is strongly related to commercial success. To achieve both,
understanding the society one is serving is crucial. Hart calls this process “becoming
indigenous.”101 For the e-Kiosk initiative, the process of becoming indigenous begins
with local universities and the SAC foundation. However, universities are often
detached from the communities that e-Kiosk hopes to reach with ICT. Therefore, the
next step in the process will involve dialogue between e-Kiosk managers and the
communities they will serve. Hart calls this phase “radical transactiveness.”102 It is
radical because it involves gaining access to stakeholders that the business, or
university, community would not normally engage with. It is transactive, because the
dialogue goes both ways, influencing both sides of the conversation.
Ideally, e-Kiosk managers will engage locally without being preoccupied with selling
ICT services. The best learning will occur if the managers are there simply to observe
and listen. The Initiative will encourage its managers to spend time living in the
communities that they will later serve. This is what Hart calls “engage first, design
second.”103 After the managers have engaged the communities they will serve, then
they can begin planning how to customize their e-Kiosk to meet their target audience.
This immersion will also pay large dividends toward achieving social sustainability,
because managers will acquire knowledge about the social institutions in the regions
they are serving. The “engage first, design second” strategy was employed in West
Bengal, India by a UNESCO initiative called Nabanna:104 Networking Rural Women
101 Hart, Capitalism at the Crossroads, 163. 102 Hart, Capitalism at the Crossroads, 171. 103 Hart, Capitalism at the Crossroads, 190. 104 A Bengali word literally meaning “first rice.”
99
and Knowledge.105 The UNESCO initiative builds information-sharing networks
among low-income, rural women, with a focus on health. The first step involved
grass-roots information gathering. Nabanna brought together groups of women and
trained them to operate ICT centers in their municipalities. One of the first activities
for the women was to write diaries, sometimes on set topics, which helped them and
the project staff to explore local concepts of information, local knowledge, and local
information needs.106 As a result, the Nabanna initiative incorporated a newsletter that
is circulated among women’s groups. The newsletter is popular among the women,
and it helps to publicize the ICT centers. This is the type of benefit the e-Kiosk
initiative hopes to gain from local engagement, which will be a key part of the Phase I
Brazil Experiment Laboratory.
Social sustainability transcends earning the public’s permission to operate. The e-
Kiosk initiative will include research to assess the impact of ICT on the social fabric
of the communities it serves. Indeed, if the e-Kiosk initiative is a success it will
empower members of society who were marginalized before. In some cases there may
be aspects of introducing ICT that are not positive. For example, an academic
assessment of Grameen Telecom’s operations in Bangladesh found that the new phone
service disrupted the local social structure.107 Grameen’s business plan involved
“phone ladies” with cellular phones. In each village, anyone wishing to use Grameen’s
phone service had to contact, and pay, the village phone lady. Grameen’s business
model enhanced the incomes, status, and visibility of the phone ladies within their
villages. While this is viewed as an overwhelmingly positive development, the
newfound status of the phone ladies produced friction and conflict within households
105 Don Slater and Jo Tacchi, Research ICT Innovations for Poverty Reduction (UNESCO: Asia Pacific Regional Bureau for Communication Information, 2004). 106 Slater and Tacchi, Research ICT Innovations for Poverty Reduction, 5. 107 Hart, Capitalism at the Crossroads, 153.
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that were traditionally male-dominated. In some cases, phone ladies experienced
increased physical abuse and violence. Hopefully, this represents the growing pains of
a society moving towards greater gender-neutrality. This example illustrates the
potential of new services to alter the social fabric of a local society. If the disruption is
viewed as too extreme, there is a risk of a local backlash against the new services,
which would be the ultimate sign of social un-sustainability.
The e-Kiosk initiative does not have a hidden agenda to alter the social structures of
the communities it serves. This must be made clear. This initiative will try to
anticipate, avoid, and neutralize negative social impacts that were observed in case-
studies of past ICT for development projects. Any social disruption that results from
the introduction of kiosks will be observed and noted. After each stage of the e-Kiosk
initiative, a scholarly assessment of social impacts will be conducted.
Ultimately, we believe that the multi-tiered franchise model moves the Initiative quite
far down the path toward social sustainability, because of the simple fact that the
people operating the e-Kiosks will be local to the community they are serving.
The final point about social sustainability is that the ideal e-Kiosk initiative will aim to
be all-inclusive. Access to information can empower any member of society. Because
the initiative will include a diverse cross-section of society, no one will feel left out, or
threatened by the introduction of ICT kiosks.
C. Technological Sustainability
Technological sustainability will be achieved if each e-Kiosk can maintain and operate
its technology on a continuous and long-term basis. Simply placing advanced
technology in developing regions is not sufficient for technical sustainability. The e-
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Kiosk initiative will cultivate local “know-how.” In the early phases of the project, and
when new technology is introduced, it may be necessary to draw on university
resources to train local e-Kiosk managers. For the longer term, when e-Kiosk is firmly
established, local knowledge should be sufficient for technical sustainability, without
universities or other partners in the initiative. The key to technical sustainability is
consistent training of people who live where the e-Kiosks are located. If a, e-Kiosk
manager becomes unavailable, someone else must be ready to fill in. If there is no one
readily available, the university or district headquarters will have the capacity to
recruit and train a replacement to sustain the operation of the kiosk.
The technology used to bring ICT to developing regions and the services provided at
each e-Kiosk will depend on the existing communications infrastructure in each
region. Determining the method of connectivity will be an important decision in the
Phase I Brazil Laboratory Experiment in Salvador de Bahia, Brazil. This decision will
be guided by input from all stakeholders involved. Recommendations from contacts at
local universities, government employees with rural connectivity experience, and
interviews with local residents will be considered in this decision. At this point, the
plan is to provide connectivity with a partnership with Portal of the Americas.
Phase I of the e-Kiosk initiative, which involves an e-Kiosk in Salvador de Bahia, will
help us ascertain the demand for ICT services in underserved areas of Brazil. A Kiosk
that offers a wide range of the services listed above will have a wide range of
equipment to manage and operate. For example, there may be demand for digital
camera and video equipment at some e-Kiosks. e-Kiosk managers will be trained to
operate and maintain all of the technology in their e-Kiosk. If there is a change in
manager, change in technology or addition of technology at a e-Kiosk, student
volunteers, university staff, and/or the District Manager will be available to provide
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additional training. The tiered-franchise model, with universities as the solid bedrock,
will facilitate technical sustainability in a way that a privately-owned small, or
medium-sized, business, could not provide autonomously.
D. Financial Sustainability
The business plan will also include aspects of a tiered-franchise type model. This
model will reduce the overhead and start-up costs for each individual Kiosk. The
tiered-franchise model introduces economies of scale that would not be available if
each Kiosk were individually-owned. Economies of scale are present because
overhead costs are reduced for each individual Kiosk by allocating administrative and
planning duties to District Offices and e-Kiosk HQ (e-Kiosk HQ). Similar to other
franchise-based corporations, e-Kiosks associated with the Initiative will be able to
charge lower prices than an independently operated Kiosk in Phase II of our initiative.
Even though ICTs are an inherently-not-scarce (INS) resource,108 with a marginal cost
of zero for providing one additional unit, there is a realistic demand for fee-based ICT
services. Note that the overhead cost of providing this INS resource is not zero. The
Phase II business model is designed to have the consumers of the INS resource pay the
fixed cost. ICT is practically unavailable in the areas the Initiative will serve, giving
the Kiosks market power and the ability to charge fees for services. In summary, the
market power created by the Initiative has the potential for profitable provision of
ICT, an INS resource.
Worldwide, especially in India, there is enough experience with ICTs to show that
financial sustainability is a realistic goal for the e-Kiosk Initiative. The UN ICT Task
Force and the World Resources Institute’s Digital Dividends Clearing House are just 108 See Alan McAdams, “Resource Allocation for Goods that are INS” (Johnson Graduate School of Management, Cornell University, 2004), for further discussion of INS resources.
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two examples of organizations that have conducted and accumulated numerous case
studies about e-Kiosk programs.109 While the e-Kiosk initiative will use available
knowledge, it also understands that nothing can replace learning-by-doing and
immersion in the locations that it wishes to serve. The right combination of learning
from the past and learning about the unique areas it wishes to serve will be important
to the success of the e-Kiosk Initiative. The involvement of universities in the e-Kiosk
initiative can be a significant force in harnessing this local knowledge and expertise.
E. Environmental Sustainability
From an environmental perspective, ICT has many inherent advantages. Information is
an inherently-not-scarce (INS) resource.110 One person “using” information does not
exclude other people from “using” the same information. In contrast, a pair of jeans is
a scarce resource. If one person is wearing a pair of jeans, no one else can be wearing
those jeans at the same time. Furthermore, unlike information, there is a finite amount
of cotton in the world at any given time to make jeans with.111 Another way to look at
it is that the marginal cost of one more person using an INS resource is zero. The
marginal cost of downloading an agricultural weather report is zero, especially when
we ignore the opportunity cost of time. The point is that once an Internet kiosk is built,
using it does not deplete natural resources, or pollute the environment. The major
exception to this statement is that kiosks will consume electricity to operate.
Electricity consumption is the primary environmental concern for kiosk operation.
109 See http://wriws1.digitaldividend.org/wri/app/index.jsp and http://www.unicttaskforce.org/ 110 McAdams, “Resource Allocation for Goods that are INS.” 111 Another way to look at INS resources is that if I have an apple and you have an apple and we trade apples, we are both left with one apple each. However, if both of us have an idea and we trade ideas, both of us have at least two ideas, and potentially much more.
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One clean, and environmentally sustainable, way to power a kiosk is with solar power.
The e-Choupals operated by the Indian Tobacco Company in India use solar batteries
to power the computers in this project.112
Solar Power
Solar power is an environmentally sustainable alternative but is costly unless
independent power producer policies are in place and financing is available. Import
duties also add to the cost of solar equipment in many countries, as they do for ICT
equipment. Although import tariffs have decreased in many countries for fully
assembled personal computers, they usually remain high for satellite equipment,
components, and peripherals.113 Further research on the feasibility of solar power is
necessary to determine whether it is feasible for each e-Kiosk.
Bio-Diesel and Fuel-Cell Technologies
The current plan is to emphasize bio-diesel and fuel-cell technologies to power the
mobile e-Kiosks when feasible. Bio-diesel is especially promising, because Brazil is a
prolific producer of sugar cane, which is good for bio-diesel, given its high energy
content. Sugar cane bio-diesel is considered more sustainable than conventional fossil-
fuels, because it is a renewable resource, is produced domestically, and contributes
less to global warming. Soyminas Biodiesel and Ballard Fuel Cells are potential
partners for equipping the e-Kiosks with environmentally responsible technologies.
112 Refer to e-Choupal Section in Part VI 113 Mike Jensen, “Information Kiosks and Sustainability: Key Components for Success,” in Connected for Development: Information Kiosks and Sustainability, eds. Akhtar Badshah, Sarbuland Khan, and Maria Garrido (ICT Task Force Series 4, Department of Economic and Social Affairs, 2003), 46.
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Appendix A: Resource Allocation for Goods that are Inherently Not Scarce
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108
109
110
111
112
113
114
115
116
117
118
119
120
121
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123
124
125
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Appendix B: Building Optical Networks for Healthcare: Saving Lives and Cash
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134
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137
138
139
Appendix C: An Introduction to the Portal of the Americas
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