rs indiatelecom07 final

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Teleuse@BOP

Digital Divide Digital Opportunity

Rohan Samarajiva (samarajiva [at] lirne.net)

Session 1: Accelerating the growth of broadband

India Telecom 2007

December 13th, 2007, New Delhi

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Plan of presentation

Relevance of the BOP

Methodology

Digital opportunity

Digital divide

Bridging the divide and seizing the opportunity

Non-owners owners: barriers

In sum . . .



Teleuse @ BOP

Relevance of the BOP



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12

436

10 1232

85

282

5

44

16

0

50

100

150

200

250

300

350

400

450

500

Pakistan India Sri Lanka Philippines Thailand

P o p u l a t i o n a g e d 1 5 - 6

0 ( m i l l i o n s )

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

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

*

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

**



Teleuse@BOP

Methodology



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Bottom of the Pyramid (BOP) defined

Many definitions of poverty, but this studyuses SEC D and E; between ages 18-60

SEC does not take into account income, but it isclosely related to income levels

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

Small (non-representative sample) taken of

SEC groups A, B & C

SEC D & E

SEC A, B & C

8,6897001,1001,0774,0001,812Total

6,269

2,420

TOTAL

7.0%3.0%3.0%1.5%2.7%Error margin at 95

percent CI

3521,0084813,3481,081BOP(SEC D & E)

34892596652731TOP(SEC A, B & C)

ThailandPhilippinesSri LankaIndiaPakistan

South East AsiaSouth Asia

SAMPLE

Quantitative sample



Teleuse @ BOP

Digital opportunity


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What are the opportunities afforded by ICTs?

Ability to communicate One-to-one

One-to-many

More than voice

Social networking

Ability to retrieve information that will Improve ability to make money or save money

Enhance ability to coordinate activities across time and space,thereby improving quality of life

Educate, improve know-how

Entertain

Ability to publish Voice for the voiceless

Niche publishing

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

Remote computing Use of software and computing power that is elsewhere



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What are the prerequisites?

Reliable electricity

A computer A broadband connection

More than 256 kbps up and down

Always on

Service from an ISP

Familiarity with the interface Literacy

Language skills

. . . . Classic home Internet user?

How many at the BOP?



Teleuse@BOP

Digital Divide



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


Internet use

3%

0%

2%

12%

14%

1%0%

1%

6%

7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Pakistan India Sri Lanka Philiphines Thailand

% a

t B O

P

Male

Female Large genderdivide, even in

South East Asia

Internet at the BOP…



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Have not heard about the Internet before

36%

72%

29%

14%

36%

0%

20%

40%

60%

80%


% a

t t h e B O P

What Internet??



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Internet awareness: Never heard of the Internet

before

24%

67%

23%

9% 10%

49%

78%

30%20%

43%

0%

20%

40%

60%80%

100%

P a k i

s t a n

I n d i a

S r i L

a n k a

P h i l i p

p i n e

s

T h a i l a

n d

% o

f B O P

Urban

Rural

Awareness poor, even in urban areas



Teleuse @ BOP

But divide can be bridged and opportunity seized



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

Access and use implies familiarity with the technology

Access/ownership Is ownership of the terminal necessary?

Any conditions under which non-voice applications can be usedwithout individual ownership?

How many currently own terminals?

What kinds of terminals?

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

Use for voice without ownership use forvoice with ownership more-than-voice

applications digital opportunity?



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Access is surprisingly high familiarity

95%93%92%94%98%Used phone inlast 3 months


South East AsiaSouth Asia

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

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



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Ownership and GDP per capita (USD, PPP)

23%

9%

22%

60%

11%

23%

7%

14%

64%

81%

59%

38%

23%

76%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


% a

t b o t t o m o

f p y r a m i d

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

G D P p e r c a p i t a ,

U S D

( P P P )

Own a mobile Own a fixed phone (household)

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

Ownership is not as high

Especially in South Asia…



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

Easy access provided by ownership is important Unlikely that public/shared phones will be used for anything other

than basic voice

Access for more-than-voice, in order of importance

Own mobile

Household member’s mobile

CDMA “fixed” phone



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Most frequently used mode

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10%

20%

30%

40%

50%60%

70%

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90%

100%

% a

t B O P

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

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

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

Mobile of another household

member

12% 4% 6% 11% 5%

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

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


Access modes among BOP phone users

S Asia BOP mainly used public phones; SE Asia mobiles

Also note that 12% in PK,4% in IN & 6% in LK usethe mobile of anotherhousehold member

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

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



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

60-70% of mobile owners at BOP use brand-new handsets

But even simple sets allow mobile payments and such

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

USD 0

USD 20

USD 40

USD 60

USD 80

USD 100

USD 120

USD 140

USD 160


A v e r a g e p r i c

e p a i d

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



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38%42%53%38%53%% of non-owners who plan toget connected between mid-2006 and mid-2008


South-east AsiaSouth Asia

Mobile access is high … and growing

36%

19%

41%

62%

77%70%

50%

72%78%

86%

0

25

50

75

100

125

150


C o n n

e c t i o n s a t B O P ( m i l l i o n s )

0%

20%

40%

60%

80%

100%

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f h o u s e

h o l d s a t B O P w i t h a

t e l e p h o n e

Already own something Don't own but plan to buy

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

Type of phone prospective owners would buy

23%29%

52%

8%

68%67%

40%

91%

9% 4% 7%1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pakistan India Sri Lanka Philippines

Not decided yet

Mobile

Fixed phone



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

Frequency of SMS use (DE)

50%

65%

40%

70%

0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f m o b i l e o w n e r s

Never Less than once a month

At least once a month

At least once a week

Daily



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Mobile as a voting device

“A key advantage of a phone, as seen by participants, is itsability to promote democratic participation. The example

presented was a reality TV show . . . to select a ‘Super Star’ . . .based on the SMS/phone voting by the public. . . . Studyparticipants viewed this as a case of telecom enabling the

‘unheard’ to voice their opinion. . . . They felt that their voicewas heard; that they have been elevated from the level of mereobservers to that of active participants in democratic processes.. . . None of them complained of having to pay five times theregular cost of an SMS to place their votes.”

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



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Payment systems in place for more-than-voice applications

For example, Sri Lanka’s largest GSM operator (~ 3.6 millionsubscribers)

86% prepaid subscribers, overall

Approx. 50% of prepaid top-ups are via electronic reload (50% viacard system)

12,000+ electronic reload outlets

Mobile payment system recently launched for the first time in S Asia

Philippines is the world leader

Personal accident insurance system via mobile connection also

recently launched

4%1%8%4%1%Post Paid

@ BOP

96%99%92%95%99%Pre Paid @BOP




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India’s mobile Internet users growing

As at 30 June 2007 (TRAI, 2007; p.14)

Fixed Internet subscribers: 9.22 million (declined in lastquarter!)

Internet subscribers accessing Internet via mobile handsets(GSM/CDMA): 38.02 million and growing

One out of five mobile users in India use their handsets to accessInternet

Mobile = 4 x Fixed

Foreshadowing the mobile-centric Internet?



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Reasons for not owning a phone

75%82%

72% 77% 77%

18%16%

19%15% 15%

7% 8% 7% 7%2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


%

o f n o n - o w n e r s

a t B O P

I cannot afford it Don't need one Other

Key barrier to ownership is affordability



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The cost of getting connected…Expectation vs. affordability gap

Expected cost of a new phone by non-owners

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f n o n - o w n e r s a t B O P

>USD 176

USD 146-175

USD 116-145

USD 86-115

USD 56-85

USD 26-55

<USD 25

Initial cost that prospective owner can afford

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f p r o s p e c t i v e o w n e r s a t t h e B O P

More than USD 71

USD 51 - 70

USD 31 - 50

USD 10 - 30

Less than USD 10

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

But only 11% can afford more than USD50

New mobile and connection possible for USD 36; lower with second-handphone Greater potential for more-than-voice applications as prices of mobiles with

additional capabilities decrease



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Use cost: most can afford less than USD5 per month oncommunication

Monthly charges: expected vs. affordable

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

a f f o r d a b l e

e x p e c t e d

a f f o r d a b l e

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a f f o r d a b l e

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% o

f u s e r s More than USD 20

USD 11 - 15

USD 5 - 10

Less than USD 5

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

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

32% of customers of Sri Lanka’s largest mobile operator pay around

USD 1 per month



Teleuse @ BOP

In sum



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In sum

Digital opportunity ≠ the way we use the Internet now

Need think of digital opportunity in terms of functions such as

information retrieval Massive divide exists if we think conventionally about the BOP

But possible to bridge the gap if we start from the mobile BOP are not necessarily heavy users, but they do use mobiles

Even non-owners are participating in telecom Potential owners, if connected, would also use phones for more than

voice

BOP mobile market is growing; much of the BOP will firstexperience the Internet via mobiles

Prerequisites for ‘more than voice’ applications are in place

Digital divide can be bridged and digital opportunity can be

seized, only if we take a road less traveled by

. . . that will make all the difference

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