1. Teleuse@BOP Owner-users, non-owner users and how they use phones at the Sri Lanka BOP Rohan Samarajiva Sri Lanka Telecom Limited Media Event Habarana, 15 September 2007 www.lirneasia.net

2. Bottom of the Pyramid  Emerging markets are ‘where the action is’ The next billion...  Untapped potential at the ‘bottom of the pyramid’

3. www.lirneasia.net Reality check... 1.What percentage of households had some kind of phone in 2004? 2.How many BOP households had some kind of phone in 2006? 3.Which Province was second highest in phones/households in 2004? Third? 4.Which province was second highest in computers/households in 2004? 5.Did fixed phones outnumber mobile phones or vice versa at the BOP in 2006? 6.What percentage of the BOP made or received international calls in 2006? 7.What percentage of people making international calls were women?

4. www.lirneasia.net Reality check... 8.What percentage of people had made/received a call in past three months, when approached by survey personnel in mid 2006? 9.Do women talk longer than men on the phone at the BOP in Sri Lanka? 10.Do women use the phone for different purposes than men in Sri Lanka? What is the dominant purpose for men? What is the dominant purpose for women? 11. Who makes the decision on whether a woman gets a mobile In Sri Lanka? In Thailand?

5. www.lirneasia.net Answers?  Not all the right answers in this presentation; some are from the 2004 Consumer Finance Survey of the Central Bank  The importance of challenging common knowledge/popular wisdom Recent fiasco over mobile taxes probably driven by ignorance  Industry needs to use representative surveys more and communicate the results more broadly

6. www.lirneasia.net Plan of presentation  Methodology and background  Everyone has access but not ownership  Who owns phones? Why?  Getting connected  Not getting connected  Gender and telecom  Beyond basic services at the BOP?

7. www.lirneasia.net Methodology 6 Focus Group Discussions per country (30) Random sample 8,689 F- to-F interviews; in 5 countries 50% diary Final output Qualitative Quantitative

8. www.lirneasia.net *excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces 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 PakistanIndiaSri LankaPhilippinesThailand Population (million)1651,095208964 Target population of study (million) 77*2604**4115 SEC D & E SEC A, B & C

9. www.lirneasia.net Teleuse@BOP  ~9,000 sample survey in five countries India, Pakistan, Sri Lanka, Philippines & Thailand  Understand telecom use at the BOP (= SEC Groups D &E) in Developing Asia  Representative of target population SEC D&E, ages 18-60

10. www.lirneasia.net Quantitative sample  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 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%

11. Bottom of the Pyramid Everyone has access, but not ownership

12. www.lirneasia.net Overall access is very high South AsiaSouth East Asia PakistanIndiaSri LankaPhilippinesThailand Used phone in last 3 months 98%94%92%93%95%  Most have used a phone in the last 3 months

13. www.lirneasia.net Phones are close at the BOP  Most can get to a phone in less than 30 mins

14. www.lirneasia.net Even in rural areas  A small number (6%) in rural areas incur up to US 50 cents to get to a phone

15. www.lirneasia.net But phone ownership is low  Just 41% of BOP own their own phone in Sri Lanka 22% own mobiles; 23% own fixed; few have both

16. www.lirneasia.net BOP in South Asia mainly used public phones  30% of BOP in Sri Lanka used public phones most frequently

17. www.lirneasia.net Why did they use their most-frequent mode?  Convenience and lack of other options override cost Users of public phones Not users of public phones

18. Bottom of the Pyramid Who owns phones? Why? 41% of BOP in Sri Lanka own a phone

19. www.lirneasia.net Why own a mobile phone?  Convenience is key; privacy is more of a concern for Sri Lanka (highest) and Philippines

20. www.lirneasia.net Why own a fixed phone?  Same reasons on fixed

21. www.lirneasia.net Growth in mobile phone ownership at BOP since 2001  92% of mobiles at Sri Lankan BOP are prepaid

22. www.lirneasia.net Older fixed connections; LK picked up after 2005

23. www.lirneasia.net Mobiles used more often as the primary phone by males at BOP in South Asia % of mobile owners at BOP

24. www.lirneasia.net Who decides female ownership of phone at BOP? (Patriarchy lives in South Asia!) % of female mobile owners at BOP Who makes the decision to obtain a mobile (among female mobile owners)?

25. Bottom of the Pyramid Getting connected 1.3 million from BOP in Sri Lanka will get connected between mid- 2006- mid-2008

26. www.lirneasia.net 31% of the BOP in Sri Lanka plan to get connected between mid-2006- mid-2008  This means that by mid-2008, 72% of BOP will own their own phone, unless actively hindered Prospective owners

27. www.lirneasia.net Hitting the poor (Hutch ARPU = LKR 311; Dialog prepaid ARPU = LKR 414; Dialog postpaid ARPU = LKR 1,709) Monthly spend (LKR) Current take (VAT+2.5%) Orig. proposal (VAT+50+7.5%) Am. proposal (VAT+10%) 2003595 (48%)50 (25%) 40070140 (35%)100 600105185 (31%)150 800140230 (29%)200 1000175275 (28%)250 1200210320 (27%)300 1400245365 (26%)350 1600280410 (26%)400 1800315455 (25%)450 2000350500 (25%) Understated because tax on tax not calculated

28. www.lirneasia.net The cost of getting connected…Expectation vs. affordability gap  70% of non-owners at BOP in Sri Lanka believe that the cost to get connected will be greater than USD56  Only 11% can afford more than USD50  Can get new mobile and connection for USD 33; lower with second-hand phone

29. www.lirneasia.net Use cost: most can afford USD5 per month on communication  Expectations and affordability are in line Most expect the monthly cost to be less than USD5, which most can afford to pay Also in line with ARPUs of mobiles (USD 3-4)

30. www.lirneasia.net Most would use phone for emergency communication & keeping in touch s

31. www.lirneasia.net Most new connections in Sri Lanka will be fixed phones

32. www.lirneasia.net Affection for fixed higher in rural Sri Lanka…

33. Bottom of the Pyramid Not getting connected 1.2 million from BOP in Sri Lanka will not get connected between mid- 2006 & mid-2008

34. www.lirneasia.net The biggest barrier to ownership at the BOP is affordability  31% plan to get connected between mid-2006 and mid-2008  BUT, 28% will not

35. www.lirneasia.net What do we know about this group?  The majority in Sri Lanka will be females

36. www.lirneasia.net Among those not planning to buy phones, males are more dependent on public phones, while women are more dependent on other peoples’ phones

37. www.lirneasia.net What do we know about this group?  The large majority in Sri Lanka will be rural

38. www.lirneasia.net What do we know about this group?  Poorer. The large majority will have monthly household incomes below USD75.81 (median)

39. www.lirneasia.net What do we know about this group?  Older The mean age of this group will be 40 years of age  Compared to mean age of mobile owners at BOP of 33 years

40. www.lirneasia.net What do we know about this group?  Make fewer calls  They make and receive a total of 8.65 calls per month Compared to the average for the Sri Lankan BOP of 23.2 (compared to those who plan to buy a phone who make and receive a total of 15.05 calls per month) Non-owners Do not plan on buying phone by mid-2008 Plan on buying phone by mid-2008 Mean monthly number of calls (incoming + outgoing) 8.6515.05 Source: diary

41. Gender and telecom at the BOP Findings from T@BOP2

42. www.lirneasia.net Access: Primary phone used in Sri Lanka  Small gender divide in access exists at BOP in Sri Lanka Individually owned mobiles and public phones appear to be more male-dominated access modes Use of household fixed phones, and other people’s phones (within as well as outside of the house) is more often among females Ratios: f : m Public phone1 : 1.2 Neighbor/friend/relative' s phone 1 : 0.8 Mobile of another household member 1 : 0.5 Household fixed phone1 : 0.8 Own mobile1 : 1.8 Ratio of 1 indicates equal access between males and females. Ratio > 1 indicates males use access mode more often as primary phone (e.g. mobiles). Ratio < 1 indicates females use access mode more often as primary phone (e.g. neighbor/friend/relative’s phone).

43. www.lirneasia.net However, far larger divide exists in India and Pakistan, esp. on mobile, and public phones in Pakistan Ratios: f : m India Public phone 1 : 1.0 Neighbor/friend/relative's phone 1 : 0.6 Mobile of another household member 1 : 0.5 Household fixed phone 1 : 0.9 Own mobile 1 : 2.7 Pakistan Public phone 1 : 1.9 Neighbor/friend/relative's phone 1 : 0.4 Mobile of another household member 1 : 0.1 Household fixed phone 1 : 0.7 Own mobile1 : 2.7

44. www.lirneasia.net Access almost equitable in Philippines and Thailand Ratios: f:m Philippines Public phone1 : 0.9 Neighbor/friend/relative's phone1 : 1.2 Mobile of another household member1 : 0.7 Household fixed phone1 : 0.7 Own mobile1 : 1.0 Thailand Public phone1 : 1.1 Neighbor/friend/relative's phone1 : 0.7 Mobile of another household member1 : 1.9 Household fixed phone1 : 0.3 Own mobile1 : 1.1

45. www.lirneasia.net Little urban-rural differences in Sri Lanka except on individually owned mobiles  Gender divide on mobile is most severe in rural Pakistan (ratio of 1 : 4.8) and rural India (ratio of 1 : 3.9)  Highest reliance on other peoples’ phones among women in rural Pakistan  Public phones hold strong among women even in rural India Ratios: f:m UrbanRural Public 1 : 1.2 Other peoples’ phones 1 : 0.7 Fixed 1 : 1.01 : 0.8 Own mobile 1 : 1.41 : 1.9

46. www.lirneasia.net Access: Urban vs. Rural (India and Pakistan only) Ratios: f:m IndiaPakistan UrbanRuralUrbanRural Public 1 : 1.0 1 : 1.6 1 : 2.2 Other peoples’ phones 1 : 0.5 1 : 0.3 1 : 0.2 fixed 1 : 0.81 : 1.1 1 : 0.6 1 : 0.8 own mobile 1 : 2.31 : 3.9 1 : 2.1 1 : 4.8

47. www.lirneasia.net Use: average number of calls per month Only country where differences were significant (95% confidence interval) was Pakistan Total (in+out)

48. www.lirneasia.net Use: Average call duration (mins) NB, minutes recorded were an approximation (e.g., ‘1 min or less’, ‘2-3 minutes’, ‘about 5 mins,’ ‘about 10 mins’…) Only country where differences between men & women were significant (95% confidence interval) was Pakistan

49. www.lirneasia.net Use: Purpose of calls  Significant differences: Pakistan: male vs. female use of the phone to keep in touch and for business purposes (95% confidence interval) India: male vs. female use of the phone for business purposes (90% confidence interval)

50. Bottom of the Pyramid What about “beyond-basic” services, including IDD, at the BOP?

51. www.lirneasia.net Currently few at the BOP use the Internet; even fewer know what it is PakistanIndiaSri LankaPhilippinesThailand Use the Internet 1.9%0.3%1.5%8.8%10.4% Internet ‘un-awareness’ Next to the Philippines, highest level of knowledge...

52. www.lirneasia.net Even less so in rural Sri Lanka PakistanIndiaSri LankaPhilippinesThailand Use the InternetUrbanRuralUrbanRuralUrbanRuralUrbanRuralUrbanRural 3.0%0.7%0.2%0.1%2.1%1.4%12.8%4.3%22.0%2.3% Internet ‘un-awareness’ Not a massive urban-rural gap in knowledge

53. www.lirneasia.net SMS is popular even at BOP Among non-users, 39% in Sri Lanka state the reason as not knowing how to use it

54. www.lirneasia.net Relative cost of an SMS plays a more significant role (than actual cost) on SMS use at BOP * This relationship is examined only for the prepaid case, because mobile use at the BOP is predominantly prepaid; charges as at June 2007

55. www.lirneasia.net Call vs. SMS charges: Prepaid Prepaid charges (USD) Pakistan: Jazz Budget* India: Airtel regular* Sri Lanka: Dialog KIT standard Philippines: Smart TnT Charge per minute Call to mobile on-net0.030 0.0630.119 Call to mobile off-net0.0410.0490.0630.141 Charge per SMS0.0140.0300.0180.022 * Call charges weighted for local and national calls Charges as at June 2007 Packages selected based on lowest connection charge package of the largest operator

56. www.lirneasia.net Mostly local at BOP, but some international in LK & PH Source: Diary

57. www.lirneasia.net 1.5 million expatriate workers, 90% in West Asia  44% male; 56% female, according to SLBFE 840,000 women separated from families 660,000 men separated from families  Don’t they need to talk?

58. www.lirneasia.net International calls: Who is calling/being called?  Primarily rural females, with primary or secondary education, aged 25-54 Different from the Philippines: more males, mostly living in urban areas, with higher levels of education, mostly below 34.  The bulk of the calls are made by trained & untrained laborers (25 %); Farmers / agricultural workers (16%); Housewives (13%) Again, different from the Philippines: mostly housewives (32%), those employed in services (18%) or unemployed (17%) 2006 data; excluding N&E provinces

59. www.lirneasia.net Gender of the caller/callee (as a percentage of international calls made)

60. www.lirneasia.net Location of the caller/callee (as a percentage of international calls made)

61. www.lirneasia.net Educational attainment of callers/callees

62. www.lirneasia.net Age of the caller (as a percentage of international calls made)

63. www.lirneasia.net Fragmented families in a maldeveloped country...  In North as well as South, but more pronounced in Jaffna...  Results from a unique snapshot from “between the wars” cleared areas of Jaffna district (2005 end of Q1)

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65. People in Jaffna were heavier users, especially on mobiles  Received and made more international calls than any other location in SL  Mobile  Fixed  Reflects highly dispersed families: need to keep in touch, arrange for remittances 80% of households in Jaffna district have family/friends outside district

66. www.lirneasia.net Higher % spend longer time talking on their mobiles

67. www.lirneasia.net Jaffna urbanites used the Internet more than others in same socio-economic groups Mostly for keeping in touch

68. www.lirneasia.net Reality checked 1.What percentage of households had some kind of phone in 2004? 24.5% 2.How many BOP households had some kind of phone in 2006? 41% 3.Which Province was second highest in phones/households in 2004? NWP. Third? Northern (excl. Mannar, Kili, Mulativu districts). 4.Which province was second highest in computers/households in 2004? Northern (as above). 5.Did fixed phones outnumber mobile phones or vice versa at the BOP in 2006? F=23%; M=22% 6.What percentage of the BOP made or received international calls in 2006? 4% 7.What percentage of people making international calls were women? 71%

69. www.lirneasia.net Reality checked 8.What percentage of people had made/received a call in past three months, when approached by survey personnel in mid 2006? 92% 9.Do women talk longer than men on the phone at the BOP in Sri Lanka? No 10.Do women use the phone for different purposes than men in Sri Lanka? No What is the dominant purpose for men? Keeping in touch What is the dominant purpose for women? Same 11. Who makes the decision on whether a woman gets a mobile In Sri Lanka? Male In Thailand? Female

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