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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

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Page 1: Cornell Project

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

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© 2006 Jim Dennis Bunce

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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

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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.

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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.

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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.

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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.

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“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

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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

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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.

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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).

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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.

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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.”

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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).

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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.

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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).

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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.”

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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).

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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.

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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.”

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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

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3 cents per click

revenue on purchases

e.g.

shares

pays

that haveto

forthatIs the

aggregates

And works with

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.”

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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

Transmissionnetwork

The Portal of theAmericas

controls

Economies ofscale

Deploys 30 MBsymmetric

Costs only 10%Of DSL

doneby the

need newrevenues

needed formobile VOIP

the fastestInternet connection

“virgin-territory”

i.e.

that

to achieve

That is

thatis

that is

and works best in

Satellite

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.”

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Universities

Unicamp

Municipalities Businessessuch as

surrogatesthrough

such as

Health careinstitutions

their ownfree Internet portal free VOIP

Which givesstudents

subscribers

The Portal of theAmericas

aggregates

get 60%of the revenue

dealing withsubscribers

first step subscribers teachthemselves

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making available their computer powerthru grid-computing

can even makemoney

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do businesswith subscribers

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the whole modelis financiallysustainable

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free podcasts

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solve problemsand

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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.”

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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

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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.

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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.”

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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.

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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.”

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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.

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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

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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

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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.

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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

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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.”

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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.

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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.

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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

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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

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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.

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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.

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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.”

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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.

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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.”

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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

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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

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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.”

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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.”

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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.

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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.

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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.

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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.

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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

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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

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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

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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.

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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.

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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.

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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.

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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,

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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.

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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

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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

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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).

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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.

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Figure 8. Map of the State of Bahia.

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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.”

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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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Appendix B: Building Optical Networks for Healthcare: Saving Lives and Cash

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Appendix C: An Introduction to the Portal of the Americas

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