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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 2007December 13th, 2007, New Delhi
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Plan of presentation
Relevance of the BOP Methodology Digital opportunity Digital divide Bridging the divide and seizing the opportunity Non-owners owners: barriers In sum . . .
Teleuse @ BOP
Relevance of the BOP
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12
436
10 1232
85
282
5
44
16
0
50
100
150
200
250
300
350
400
450
500
Pakistan India Sri Lanka Philippines Thailand
Popu
latio
n ag
ed 1
5-60
(m
illio
ns)
Middle & top' of the pyramid (SEC A, B, C) Bottom of the pyramid (SEC D, E)
How big are the markets in emerging Asia: BOP and M & TOP?
*
*excluding FANA/FATA Tribal Areas; **excluding North & East Provinces
**
Teleuse@BOP
Methodology
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Bottom of the Pyramid (BOP) defined
Many definitions of poverty, but this study uses SEC D and E; between ages 18-60 SEC does not take into account income, but it is
closely related to income levels
BOP segment is representative of the BOP population Diary respondents also representative of BOP
Small (non-representative sample) taken of SEC groups A, B & C
SEC D & E
SEC A, B & C
SAMPLESouth Asia South East Asia TOTAL
Pakistan India Sri Lanka Philippines Thailand
TOP (SEC A, B & C)
731 652 596 92 348 2,420
BOP (SEC D & E)
1,081 3,348 481 1,008 352 6,269
Total 1,812 4,000 1,077 1,100 700 8,689
Error margin at 95 percent CI
2.7% 1.5% 3.0% 3.0% 7.0%
Quantitative sample
Teleuse @ BOP
Digital opportunity
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What are the opportunities afforded by ICTs?
Ability to communicate One-to-one One-to-many More than voice Social networking
Ability to retrieve information that will Improve ability to make money or save money Enhance ability to coordinate activities across time and space,
thereby improving quality of life Educate, improve know-how Entertain
Ability to publish Voice for the voiceless Niche publishing
Ability to transact Not only to interact, but to make payments
Remote computing Use of software and computing power that is elsewhere
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What are the prerequisites?
Reliable electricity A computer A broadband connection
More than 256 kbps up and down Always on
Service from an ISP Familiarity with the interface Literacy Language skills
. . . . Classic home Internet user?
How many at the BOP?
Teleuse@BOP
Digital Divide
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Pakistan India Sri Lanka Philippines Thailand
Use the Internet 1.9% 0.3% 1.5% 8.8% 10.4%
Internet use
3%
0%
2%
12%
14%
1%0%
1%
6%
7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Pakistan India Sri Lanka Philiphines Thailand
% a
t B
OP
Male
Female Large gender divide, even in South East Asia
Internet at the BOP…
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Have not heard about the Internet before
36%
72%
29%
14%
36%
0%
20%
40%
60%
80%
Pakistan India Sri Lanka Philippines Thailand
% a
t th
e B
OP
What Internet??
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Internet awareness: Never heard of the Internet before
24%
67%
23%
9% 10%
49%
78%
30%20%
43%
0%
20%
40%
60%
80%
100%
Pakist
anIn
dia
Sri La
nka
Philip
pines
Thailand
% o
f B
OP
Urban
Rural
Awareness poor, even in urban areas
Teleuse @ BOP
But divide can be bridged and opportunity seized
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Why not a different starting point: “more-than-voice” uses of mobile?
Access and use implies familiarity with the technology Access/ownership
Is ownership of the terminal necessary? Any conditions under which non-voice applications can be used
without individual ownership? How many currently own terminals?
What kinds of terminals?
Are they capable of supporting more than voice? How many likely to join the ranks of owner-users by 2008?
Use for voice without ownership use for voice with ownership more-than-voice applications digital opportunity?
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Access is surprisingly high familiarity
South Asia South East Asia
Pakistan India Sri Lanka Philippines Thailand
Used phone in last 3 months
98% 94% 92% 93% 95%
Most people approached for survey (BOP and other) had used a phone in the last 3 months
“Half the world’s population has not made a phone call” was wrong when Kofi Annan said it in 1999; absolutely wrong now
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Ownership and GDP per capita (USD, PPP)
23%
9%
22%
60%
11%
23%
7%
14%
64%
81%
59%
38%
23%
76%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Pakistan India Sri Lanka Philippines Thailand
% a
t b
ott
om
of
pyr
amid
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
GD
P p
er c
apit
a, U
SD
(P
PP
)
Own a mobile Own a fixed phone (household)
Own nothing (but use something) Per Capita GDP PPP (USD)
Ownership is not as high
Especially in South Asia…
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Easy access needed for more-than-voice . . .
Easy access provided by ownership is important Unlikely that public/shared phones will be used for anything other
than basic voice Access for more-than-voice, in order of importance
Own mobile Household member’s mobile CDMA “fixed” phone
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Most frequently used mode
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%%
at
BO
P
Public phone 35% 71% 30% 8% 7%
Relative / friend's phone 10% 1% 12% 14% 6%
Neighbours phone 8% 7% 14% 7% 1%
Mobile of another householdmember
12% 4% 6% 11% 5%
Household fixed phone 14% 9% 21% 4% 8%
Own mobile 21% 9% 17% 56% 73%
Pakistan India Sri Lanka Philippines Thailand
Access modes among BOP phone users
S Asia BOP mainly used public phones; SE Asia mobiles
Also note that 12% in PK, 4% in IN & 6% in LK use the mobile of another household member
“Fixed” phones at S Asia BOP are mostly CDMA; Mimic GSM features.
Except in India, combined BOP household use > BOP public phone use
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Sophisticated handsets at the BOP: Average for new is USD70+
60-70% of mobile owners at BOP use brand-new handsets But even simple sets allow mobile payments and such
Average price paid for mobile handsets: brand new & second-hand
USD 0
USD 20
USD 40
USD 60
USD 80
USD 100
USD 120
USD 140
USD 160
Pakistan India Sri Lanka Philippines Thailand
Ave
rag
e pr
ice
pa
id
ave. price paid for brand new ave.price paid for second hand
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South Asia South-east Asia
Pakistan India Sri Lanka Philippines Thailand
% of non-owners who plan to get connected between mid-2006 and mid-2008
53% 38% 53% 42% 38%
Mobile access is high … and growing
36%
19%
41%
62%
77%
70%
50%
72%78%
86%
0
25
50
75
100
125
150
Pakistan India Sri Lanka Philippines Thailand
Con
nect
ion
s at
BO
P (
mill
ion
s)
0%
20%
40%
60%
80%
100%
% o
f ho
useh
olds
at
BO
P w
ith a
tel
epho
ne
Already own something Don't own but plan to buy
Current ownership at BOP (%) Penetration at BOP by mid 2008
Type of phone prospective owners would buy
23% 29%
52%
8%
68%67%
40%
91%
9% 4% 7% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
Not decided yet
Mobile
Fixed phone
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SMS as the main non-voice application; highest in Philippines, lowest in India (declined in the last quarter)
Frequency of SMS use (DE)
50%
65%
40%
70%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines Thailand
% o
f m
ob
ile
ow
ner
s
Never
Less than once a month
At least once a month
At least once a w eek
Daily
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Mobile as a voting device
“A key advantage of a phone, as seen by participants, is its ability to promote democratic participation. The example presented was a reality TV show . . . to select a ‘Super Star’ . . . based on the SMS/phone voting by the public. . . . Study participants viewed this as a case of telecom enabling the ‘unheard’ to voice their opinion. . . . They felt that their voice was heard; that they have been elevated from the level of mere observers to that of active participants in democratic processes. . . . None of them complained of having to pay five times the regular cost of an SMS to place their votes.”
From a focus group on phone use; reference is to an American Idol-type show
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Payment systems in place for more-than-voice applications
For example, Sri Lanka’s largest GSM operator (~ 3.6 million subscribers) 86% prepaid subscribers, overall Approx. 50% of prepaid top-ups are via electronic reload (50% via
card system) 12,000+ electronic reload outlets Mobile payment system recently launched for the first time in S Asia
Philippines is the world leader Personal accident insurance system via mobile connection also
recently launched
Pakistan India Sri Lanka Philippines Thailand
Pre Paid @ BOP
99% 95% 92% 99% 96%
Post Paid @ BOP
1% 4% 8% 1% 4%
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India’s mobile Internet users growing
As at 30 June 2007 (TRAI, 2007; p.14) Fixed Internet subscribers: 9.22 million (declined in last
quarter!) Internet subscribers accessing Internet via mobile handsets
(GSM/CDMA): 38.02 million and growing One out of five mobile users in India use their handsets to access
Internet
Mobile = 4 x Fixed
Foreshadowing the mobile-centric Internet?
Teleuse @ BOP
Non-owners owners: barriers
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Reasons for not owning a phone
75% 82%72% 77% 77%
18%16%
19% 15% 15%
7% 8% 7% 7%2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines Thailand
% o
f n
on
-ow
ner
s at
BO
P
I cannot afford it Don't need one Other
Key barrier to ownership is affordability
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The cost of getting connected…Expectation vs. affordability gap
Expected cost of a new phone by non-owners
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
% o
f non
-ow
ners
at B
OP
>USD 176
USD 146-175
USD 116-145
USD 86-115
USD 56-85
USD 26-55
<USD 25
Initial cost that prospective owner can afford
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
% o
f pro
spec
tive
owne
rs a
t the
BO
P
More than USD 71
USD 51 - 70
USD 31 - 50
USD 10 - 30
Less than USD 10
E.g., 70% of non-owners at BOP in Sri Lanka believe that the cost to get connected will be greater than USD56
But only 11% can afford more than USD50 New mobile and connection possible for USD 36; lower with second-hand
phone Greater potential for more-than-voice applications as prices of mobiles with
additional capabilities decrease
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Use cost: most can afford less than USD5 per month on communication
Monthly charges: expected vs. affordable
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
affo
rdab
le
expe
cted
affo
rdab
le
expe
cted
affo
rdab
le
expe
cted
affo
rdab
le
expe
cted
Pakistan India Sri Lanka Philippines
% o
f us
ers More than USD 20
USD 11 - 15USD 5 - 10Less than USD 5
Expectations and affordability are in line Most expect the monthly cost to be less than USD 5, which most can
afford to pay Also in line with ARPUs of mobiles (USD 3-4)
32% of customers of Sri Lanka’s largest mobile operator pay around USD 1 per month
Teleuse @ BOP
In sum
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In sum
Digital opportunity ≠ the way we use the Internet now Need think of digital opportunity in terms of functions such as
information retrieval Massive divide exists if we think conventionally about the BOP But possible to bridge the gap if we start from the mobile
BOP are not necessarily heavy users, but they do use mobiles Even non-owners are participating in telecom Potential owners, if connected, would also use phones for more than
voice BOP mobile market is growing; much of the BOP will first
experience the Internet via mobiles Prerequisites for ‘more than voice’ applications are in place Digital divide can be bridged and digital opportunity can
be seized, only if we take a road less traveled by
. . . that will make all the difference