1. Teleuse@BOP Digital Divide  Digital Opportunity Rohan Samarajiva (samarajiva [at] lirne.net) Session 1: Accelerating the growth of broadband India Telecom 2007 December 13 th, 2007, New Delhi www.lirneasia.net

2. 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...

3. Teleuse @ BOP Relevance of the BOP

4. www.lirneasia.net How big are the markets in emerging Asia: BOP and M & TOP? * *excluding FANA/FATA Tribal Areas; **excluding North & East Provinces **

5. Teleuse@BOP Methodology

6. www.lirneasia.net Bottom of the Pyramid (BOP) defined  Many definitions of poverty, but this study uses SEC D and E; b etween 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 SAMPLE South AsiaSouth East AsiaTOTAL PakistanIndiaSri LankaPhilippinesThailand TOP (SEC A, B & C) 731652596923482,420 BOP (SEC D & E) 1,0813,3484811,0083526,269 Total 1,8124,0001,0771,1007008,689 Error margin at 95 percent CI 2.7%1.5%3.0% 7.0% Quantitative sample

7. Teleuse @ BOP Digital opportunity

8. www.lirneasia.net 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

9. www.lirneasia.net 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?

10. Teleuse@BOP Digital Divide

11. www.lirneasia.net PakistanIndiaSri LankaPhilippinesThailand Use the Internet1.9%0.3%1.5%8.8%10.4% Large gender divide, even in South East Asia Internet at the BOP…

12. www.lirneasia.net What Internet??

13. www.lirneasia.net Awareness poor, even in urban areas

14. Teleuse @ BOP But divide can be bridged and opportunity seized

15. www.lirneasia.net 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?

16. www.lirneasia.net Access is surprisingly high  familiarity South AsiaSouth East Asia PakistanIndiaSri LankaPhilippinesThailand 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

17. www.lirneasia.net Ownership is not as high  Especially in South Asia…

18. www.lirneasia.net 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

19. www.lirneasia.net 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

20. www.lirneasia.net 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

21. www.lirneasia.net South Asia South-east Asia PakistanIndiaSri LankaPhilippinesThailand % 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

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

23. www.lirneasia.net 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

24. www.lirneasia.net 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 PakistanIndiaSri LankaPhilippinesThailand Pre Paid @ BOP 99%95%92%99%96% Post Paid @ BOP 1%4%8%1%4%

25. www.lirneasia.net 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?

26. Teleuse @ BOP Non-owners  owners: barriers

27. www.lirneasia.net Key barrier to ownership is affordability

28. www.lirneasia.net The cost of getting connected…Expectation vs. affordability gap  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

29. www.lirneasia.net Use cost: most can afford less than USD5 per month on communication  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

30. Teleuse @ BOP In sum

31. www.lirneasia.net 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