TechTalk: Working with MNOs


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USAID's Global Broadband and Innovations program (GBI) hosts a monthly series, called Tech Talks. These events bring ICT4D professionals together to learn more about the successful implementation of information and communication technologies for social and economic growth.
In this event from Jan 2012, Pamela Riley of Abt Associates discusses the ins and outs of working with local mobile network operators.

The description of the event is as follows:
As USAID explores effective uses of mobiles for development, mobile network operators (MNOs) are actively exploring how to best position them- selves as partners in development projects. Using examples from Nicaragua, Bangladesh, Uganda and Pakistan, this TECHTalk discussion will touch upon:
• Trade-offs between engaging CSR departments vs commercial business units
• Pros and cons of exclusivity clauses
• Operator concerns, incentives and barriers

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  • Thank you for coming
  • Purpose to share experiences negotiating with mobile operators, what it takes to work effectively with MNOs. May be a lot of collective knowledge in this room., like to check on familiarity & exposure to MNOs. Are these terms known: ARPU, VAS, VOIP, SMS, SIM card, mPESA, GSMAFor case studies, want to emphasize still early days, feeling our way, programs need seasoning, validation. No standardization. Learning across many dimensions – this is not a cookbook or roadmap, but rather an initial set of considerations and insights
  • Massive shift from growth in developed to developing world
  • USAID partnerships extend to system strengthening,R&D, demand generation, service provision, quality improvements
  • Why mobile operators are exploring development opportunities
  • Why USAID is forming alliances with mobile operators
  • Investments include spectrum fees, infrastructure, customer acquisition costs. Whether 2 or 10 licensed providers in a market, competition has resulted in price cuts, high budget marketingAirtime is airtime, commoditized industry, differentiation strategies include better signal coverage, novel pricing plans, unique value added serviceNeed to speak operator language: bottom-line driven, measure what is important to MNOs. One example of where we don’t speak same language is segmentation strategies. MNOs not aligned with development silos, want cross-cutting applications: women empowerment, mpayments
  • These examples are health but apply across all development topics: agriculture, clean water, nutrition, democracy, financeRepresentative of considerations in beginning stages. These are reference points, many other examples, some very large. Gates Fdn/GSMA funding a comprehensive mhealth initiative with 17 licensed operators, 30m consumers. Columbia University/UNICEP MVP in 10 countries has long track record with AirTel, MTN. Esoko (market price platform) new deal with Ghana MTN call center for farmers, based on years of collaborationChangamka (mobile health savings account) has deal with Orange to act as agents of the other. Safaricom is biggest provider but charges a lot for women to top up, Orange provides for free – seeking to increase market share.
  • This is a good example of common approach to MNOs: generic category campaign that address important public health issues and involve multiple private sector partners.
  • The project’s overarching strategy for public-private partnerships (PPPs) was to bring private sector organizations under the umbrella of PSDW-HPP to leverage their strengths, expertise, and resources to actively contribute to the Millennium Development Goal of significantly reducing the incidence of diarrhea through safe drinking water and hygiene promotion. Roundtables are good forum to identify potential benefits across a host of categories
  • First messages sent middle of the night, initially not well-orchestrated, sporadic, driven by MNO priorities, not project needs Secret sauce was rigorous project management: communications on deliverables, milestones, and timelines, relentless follow-upCorporate partners bring skepticism about project’s ability to deliver on schedule and within budget, partners will be tested
  • Purpose to reduce maternal & newborn mortality & morbidity through stage based health messages tied to delivery dateCharacterized by Focus on women Encourage country ownershipLeverage technology to support development goals Promote private sector engagement, research, innovationAdditional MAMA partners include mHealth Alliance, BabyCenter, UN FoundationSHOPs focuson coalition formation, business models, technology platform evolution
  • Aponjon service owned by local NGO, overseen by MOH led Advisory BoardEmphasis was on the end user – formative research demonstrating demand, active VAS market, high production value. Business model combined user fees and ad messages – forcing partners to respond to market preferences, not push solutions
  • Branded commercial mobile phone service. Women subscribe, receive two recorded messages per week such as importance of ANC visits, post-partum family planning
  • Started from scratch, novelty of initiative needed leap of faith by Founding Partners.Coalition set aggressive deadlines, sought early traction amid fluid roles.Initial outreach happened at time when no platform to show them, marketing strategy yet to be developed, partners yet to be signed, complex structure.Another hypothesis to be validated is whether MAMA subscription increases the “stickiness” of the service provider, making subscribers less likely to switch out their SIM cards. Operators benefit from increased “costs” of switching.
  • 6-operator market, with top three owning > 80% market share
  • Coalition offered valuable assets to MNO including customer registration, vetted content, mass media exposure Business model based on conjecture Urgency for “quick win” in signing a Founding PartnerFactors which influenced GP response Predecessor service BBC Janala had negotiated discounted flat monthly rate, GP seriously underestimated volume, lost substantial incomeAt the time, government threatening huge tax increase, led to conservative revenue projections
  • Given untested business case, made sense to start with CSR, but proposition was better fit for business unit
  • Key advantage of commercial agreements is to access advertising budgets of MNOs: dominate the mass media market – TV, print, billboards, point of sale, celebrity endorsementsCSR departments likely not in a position to deliver
  • Advantages of MNO exclusivity clauses : incentivesfor financial support/discounts from standard commercial terms in exchange for national visibilityMNO drive for differentiation is intense: need distinction for commodity service
  • Goal is moregenerous revenue sharing, financial support for MAMA through unique MNO positioningThis has been key to the India Gates/GSMA effort. Each of the 17 operators was given a distinct role with no overlap. Some are providing health training module, some EMR, others consumer messaging. SO each get a small slice of the revenue. Currently MAMA revenue sharing agreement with Grameenphone is 50/50 – industry norm is 60 (telco)/40 (service provider).
  • The platform would enable HWs and patients to access database by phone, specifically to support pregnancy referral and patient follow-up. Include electronic medical records, SMS reminders and follow-up. This map shows maternal mortality ratio estimates in 2005 per 100,000 live birth, big disparity between rural and urban areas In looking at important maternal and neonatal health indicators, more than 2/3 of pregnancies are “caught” by the system at some point during the prenatal period and attended by a birth assistant of some kind, but only about 1/2 are being followed for an entire pregnancy or were seen for follow-up care during the post-birth period.
  • This case study represents example of what GSMA has been advocating with development agencies: don’t develop a solution and then go to MNOs, first come to MNO with a problem and invite cooperation in solution design. Higher buy-in, fit with MNO prioritiesEricsson initiated, provided mapping of gaps. 4th Sector provides management, stakeholder convening, dissemination. NGO SSI designs and builds the intervention.Enitel incentive to explore B2B market for mhealth hosting, regional visibility with American Mobile
  • Project’s chief point of contact (director of interconnection) left Nicaragua, replaced by more junior representative unable to make decisions without broader approvals. Prior to staff turnover, project had benefited from leadership of championMNOs particularly volatile, turnover needs to be anticipated. Contrast to pharmaceutical, consumer goods, media companies in which senior management more stable. Also example of overlap between regional strategy and national strategy – not clear where mdevelopment partnerships should reside
  • Idea is to remain responsive to partner needs, shift focus of partnership as needed. Nicaragua one of handful of countries whose laws prevent hosting data out of the country. Result is that cost-effective cloud services such as those offered by non-local technology NGOs (e.g. Dimagi) not available at scale, post real barriers to use of open source, low cost solutions.
  • Some operators ‘borrowed’ the account number of a friend but payments to bounce. Nov. 2009, 1500 operators sprayed 2 districts in 43 days
  • mPesa is the infamous example from Kenya, most countries playing catch up, dealing with numerous regulatory. Policy and infrastructure issues
  • TechTalk: Working with MNOs

    1. 1. Working with MobileNetwork OperatorsPamela RileyJanuary 25, 2012
    2. 2. GBI TECHTalkSeriesPresentation byAbt Associates
    3. 3. Overview Purpose of presentation Mobile industry snapshot Case studies – Pakistan: SMS awareness campaign – Bangladesh: National health information service – Nicaragua: Test platform to improve patient tracking – Uganda: Mobile payments Wrap-up Abt Associates | pg ‹#›
    4. 4. The Mobile Growth Story Abt Associates | pg ‹#›
    5. 5. Why Mobile is Important to USAID Abt Associates | pg ‹#›
    6. 6. Explosion in Development Uses Beneficiaries Workforce Project ManagementMarket pricing Training Supply chainHealth Remote Data collectioninformation supervisionmBanking Peer support MappingElection Resource Emergencymonitoring access response Abt Associates | pg ‹#›
    7. 7. Value Proposition for MNOs inmDevelopment Programs Brokered partnerships Reputational capital with regulators Risk protection Services to enhance their brand Evaluation research Demand generation, aggregation, user preferences Abt Associates | pg ‹#›
    8. 8. Value proposition for USAID in MNOpartnerships Reach into mass market through distribution channels, market research Brand-building skills and advertising budgets Consumer trust as transaction partner Rapid development and deployment of value-added services Incubation platform to leverage technology for social good Abt Associates | pg ‹#›
    9. 9. Linking MNO and Development Partner NeedsCharacteristics that Implications for Development drive MNOs Programs• Urgency to recoup upfront • Demonstrate link to growth in subscribers, investments network usage, loyalty• Highly competitive • Address the different motives of market leaders and newer entrants• Pressure to differentiate, • Offer unique services, fail fast product cycle 3-6 months • Provide evidence of good citizenship• Closely regulated• Segment markets by age • Continue move toward integrated services, and gender away from disease-specific programs | pg ‹#› Abt Associates
    10. 10. Case Studies: Mobile interventionsto improve health outcomes Pakistan: Free SMS Bangladesh: National campaign to promote health message service hygienic behaviors for pregnant women Nicaragua: Enhancing Uganda: Facilitating health infrastructure mobile payments to with data tracking malaria sprayers platform for maternal care Abt Associates | pg ‹#›
    11. 11. Pakistan: SMS messages to reinforce hygiene promotion program Pakistan Safe Drinking Water and Hygiene Promotion Project (PSDW-HPP) 2006- 2010 Behavior change communications (BCC) – Hygiene activities through community partners in 5 districts with population 50m Abt Associates | pg ‹#›
    12. 12. Provision of mass market SMS tobuild hygiene awareness Project sought PPPs for mass media campaigns, and provision of water treatment technologies. Conducted roundtables with 17 cross-sector corporations: educate them on needs, leverage their expertise  Partners included Unilever, Merck, Greenstar, Medentech Pakistan leading MNO Mobilink (31% market share) expressed strong interest, aligned with CSR objectives, signed MOU RESULTS: 3m free SMS across 15 districts during 6 month period, provided extensive reach and exposure in rural areas Abt Associates | pg ‹#›
    13. 13. Mobilink lessons learned• Specificity re: timelines, deliverables in MOU language • Early on lack of follow-through• Continuous and ongoing communications is necessary • MOUs not legally enforceable, need to demonstrate high expectation, clear directives Clarity of roles is critical • Companies must assign human resources to implement, a focal point for internal planning and coordination• Long planning periods needed, ideally one year ahead • Messages sent during project extension period Abt Associates | pg ‹#›
    14. 14. MAMA Bangladesh: National HealthInformation Service  Initiated by USAID, White House OTP in 2010, launched as global alliance with J&J in 2011  Bangladesh first countryProvide vital behavior to launch, South Africachange messages to new and India in developmentand expectant mothersthrough mobile phones  SHOPS project provided assistance in coalition formation Abt Associates | pg ‹#›
    15. 15. MAMA Bangladesh: AponjonOverview  Catalytic funding to attract national leadership, cross- sector partners  Locally owned, designed, implemented, co-funded, championed  Sustainable business model combines user fees, message advertising, corporate sponsorships Abt Associates | pg ‹#›
    16. 16. MAMA Bangladesh Partners as of July 2011 Lead Partners Implementing Partners Supporting Partners TECHNOLOGY COORDINATION CORPORATE SPONSORS OUTREACH - NGO CONTENT MOBILE OPERATORS OUTREACH - GOVERNMENT ICDDR, B Abt Associates | pg ‹#› MEDIA RESEARCH
    17. 17. Aponjon Service Description 17Expectant women/ Users receive 2 Partner advertising andnew mothers sign health-related advocacy will drive up for service messages weekly subscription levels “Your baby needs an “If you have any immunization this week bleeding during this to stay healthy, month, seek medical available free at all attention right away” clinics” Messages will provide critical life-saving information, leading to improved in health knowledge, behaviors and Abt Associates | pg ‹#› outcomes
    18. 18. MAMA Bangladesh: MNO Outreach Process initiation – Conducted active outreach: Ambassador reception, pitch meetings, government briefings Articulating the benefits of novel service – Broad alliance with international and local partners – Extensive outreach through health partners and mass media, opportunity to integrate with other services Key focus on potential for revenue generation Abt Associates | pg ‹#›
    19. 19. MAMA Bangladesh:Phase 1 MNO Negotiations GrameenPhone reception was warmest – CSR department history with health initiatives, MAMA partners – Had already developed a similar concept (stage-based pregnancy messages) but it had not gotten it off the ground – Most attractive partner because dominant MNO (46% market share) Other operators had limited interest without offer of long-term exclusivity Abt Associates | pg ‹#›
    20. 20. MAMA Bangladesh:Phase 1 MNO Negotiation Results Coalition proposal – Asked for large contribution ($250K cash/in-kind) in exchange for time- bound exclusivity and high visibility in national media Initial response to proposal took months – Initiative was still in conceptual stage: no design documents, MOUs, platform specifics – Selling internally took time: both to top management, across affected departments Ultimately Grameenphone offered Design Phase support only, contribution of free pilot airtime (~ $2K value) – Connectivity through standard commercial revenue sharing terms – Exclusivity offer withdrawn by Coalition Abt Associates | pg ‹#›
    21. 21. Lesson 1: Balancing CSR versusBusiness Unit Opportunities CSR departments generally have limited money, power, influence over decision-makers CSR team was not in a position to value and deliver marketing commitments MAMA coalition was not part of internal Grameenphone deliberations – Ability to emphasize revenue projections, integration with other Grameenphone services Abt Associates | pg ‹#›
    22. 22. Negotiation Trade-offs BUSINESS UNITS: CSR: Needed for mainstreaming To prove the business case• Faster to market, decentralized • More amendable to programming decision making objectives focused on needs of• Offers highly valuable non-cash beneficiaries resources  Build relationships  Technical  Incubator for new ideas  Marketing  Tax incentives for MNOs if pilot is  Distribution loss leader• Requires more rigorous business • Priorities and budgets often set at case regional level: long lead times  Metrics driven • Focus is short-term marketing and• Brand –building advertising will be PR benefits linked to revenue generation  Favors events, tangible goods • May not speak for relevant implementing departments Abt Associates | pg ‹#›
    23. 23. Lesson 2: Exclusivity problematic inplatform design Exclusive partnership agreements serve MNO need for competitive advantage – Assumed MNO would make greater investments in exchange for rights to be sole operator associated with MAMA Coalition intended for exclusivity to be short-term, opening service to all operators within a year – Consistent with guiding MAMA principles of broad public access In parallel with operator negotiations, began design and development of software platform – Interactive voice response (IVR) complex, raised concerns about future scale up with all operators Abt Associates | pg ‹#›
    24. 24. Exclusivity Barriers and Considerations• Unexpected limits on access • E.g. MAMA pilot location in Chittagong were predominantly Robi subscribers, not Grameenphone• National services need to accommodate different charging capabilities • E.g. three of six operators in Bangladesh could not provide reverse billing for mobile terminated calls• Design of scaled mobile interventions requires inputs from all the operators • E.g., variations in operator policies on remote platform connectivity may require decentralized design Abt Associates | pg ‹#›
    25. 25. MAMA Bangladesh:MNO Negotiations Phase 2 Strategy Nonexclusive agreements with all operators Develop customized marketing, distribution activities – Complementary applications: co-branding SIM cards, linkages to MNO branded services such as health hotlines – More targetted segmentation: e.g. Banglalink focus on women; Robi focus on rural, indigenous culture – Pilot technical innovations, such as voiceSMS, VOIP Ultimately MNO financial support will be tied to documented MNO benefits  New subscribers  Less churn  Higher revenue per MAMA user Goal is more generous revenue sharing for MAMA Abt Associates | pg ‹#›
    26. 26. Nicaragua mhealth demonstration platform• Objective to develop and test mhealth platform – To improve tracking and case management for pregnancy and birth USAID 4th Sector project brokered agreement with Ericsson, MNO Enitel, NGOs – Sept 2010 – Sept 2012 Abt Associates | pg ‹#›
    27. 27. MNO role in Nicaragua project Enitel is largest operator in a two player market, owned by large regional carrier American Mobile – Eager to build relationship with MOH, particularly for data services – Wanted platform to test voice data transmission Enitel commitments in signed MOU – Subsidize service and equipment charges – Optimize communication protocols to support the applications – Expand mobile coverage to rural areas still without service Abt Associates | pg ‹#›
    28. 28. Nicaragua MNO Lesson 1 Progress flagged when key internal champion promoted regionally, left Nicaragua – Movement of senior management very common in dynamic industry – Project commitments were not broadly institutionalized Solutions – To build internal visibility & buy-in, need comprehensive stakeholder communications, prepare regular updates for MNO management – Engage partners with scheduled site visits, frequent partner meetings Abt Associates | pg ‹#›
    29. 29. Nicaragua Lesson 2 Business case for build out to new rural locations weak – Objective to convince MOH of value in infrastructure development for health improvement – Project data alone does not secure long-term government support, or address tensions such as tax policy Solutions – Change pilot locations: To maintain flexibility, adjusted terms to test platform where mobile infrastructure already in place – Identify new partnership benefits: e.g. convene workshops on regulatory barriers, advocacy for policy change – Independent evaluation on costs and benefits Abt Associates | pg ‹#›
    30. 30. Nicaragua Lesson 3 Project had retail needs not controlled by department (interconnection) negotiating the MOU – Enitel’s national structure decentralized into retail outlets – Purchase of handsets delayed by lack of internal coordination, disagreements over subsidy total value – No process in place to authorize topping up airtime in locations where phones used Solutions – Longer timeframes in workplan during deployment phase to establish processes – Specificity in MOU critical Abt Associates | pg ‹#›
    31. 31. Uganda: Payments for household sprayers to combat malaria Program overview Approach to the MNOs What we learned Abt Associates | pg ‹#›
    32. 32. Uganda IRS Overview Indoor Residual Spraying (IRS) is a cornerstone of President’s Malaria Initiative program to reduce malaria- related mortality – 3 year program (2009-2012), spray 80% dwellings with insecticide in NorthWest Uganda – Twice per year, each campaign last 20-25 days Challenge: total 3500 field workers to be paid each spray cycle – Most no bank accounts, those that did had to travel long distances Initial solution: drive truck with cash from village to village – Safety and cost concerns Abt Associates | pg ‹#›
    33. 33. Uganda IRS challenge  Interim solution to contract with PostBank • No requirement for sprayers to have accounts  Travels from village to village  Charged $1 per transaction Objective: Switch to moreCash dispensed from cost effective phone-based“teller trucks” payment process Abt Associates | pg ‹#›
    34. 34. Uganda IRS: Approach to the MNOs Mobile money utilizes mobile network for financial transactions: – Distribution structure is well positioned for high-volume, low value transaction processes – Spray operators all owned phones Successes in Kenya (mPesa) and Philippines not yet replicated in other countries • Policy, infrastructure, regulatory hurdles In Uganda, only MTN offered mobile money at that time (June 2010) Abt Associates | pg ‹#›
    35. 35. Uganda IRS Lessons Learned Critical mass needed for cost recovery in rural trading centers for agent overhead – Too early in the MTN product roll-out period: focus was still in urban centers – Would expect different result in 2012 as competitors begin to saturate dense areas Minimum per transaction mbanking pricing is costly for low value payments – Project pays to transfer, sprayers pay to cash out – “Mobile teller” was more cost-effective for predictable pay schedule Abt Associates | pg ‹#›
    36. 36. Wrap-Up MNO partnership challenges and success factors not unique – Relationships must be nurtured, expectations clearly stated, terms flexible – Setbacks are universal, adaptability is essential Case studies highlight early stage of mobile partnerships – Ambiguity regarding how to maximize benefits for end users and implementers – Requires field-testing range of approaches, text cases – Many additional examples from which to learn Abt Associates | pg ‹#›
    37. 37. Thank you! Abt Associates | pg ‹#›