Teleuse on a Shoestring


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  • Teleuse on a Shoestring

    1. 1. Teleuse on a Shoestring 2: Poverty reduction through telecom access at the Bottom of the Pyramid Harsha de Silva and Ayesha Zainudeen, LIRNE asia Colombo, 6 December 2006 7th Annual Symposium on Poverty Reduction
    2. 2. Agenda <ul><li>Definitions </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><li>Access and poverty reduction? </li></ul><ul><li>Questions </li></ul>
    3. 3. Agenda <ul><li>Definitions </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><li>Access and poverty reduction? </li></ul><ul><li>Questions </li></ul>
    4. 4. definition Bottom of the Pyramid <ul><li>SEC D and E </li></ul><ul><ul><li>Respondent : teleuser between ages 18-60 </li></ul></ul>*excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces 15 41 4** 260 77* Target population of study (million) 64 89 20 1,095 165 Population (million) Thailand Philippines Sri Lanka India Pakistan
    5. 5. definition Access <ul><li>Universal access </li></ul><ul><ul><li>Community access </li></ul></ul><ul><ul><li>Household access; universal service </li></ul></ul><ul><li>ITU Maitland Commission (1998) </li></ul><ul><ul><li>In the developing world; within an hour’s walk </li></ul></ul><ul><li>More recent definitions; in 30 minutes walk </li></ul>
    6. 6. Agenda <ul><li>Definitions </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><li>Access and poverty reduction? </li></ul><ul><li>Questions </li></ul>
    7. 7. logic Telco access, poverty, inequality <ul><li>Lack of access  poverty </li></ul><ul><li>Theory: improved access  less poverty? </li></ul><ul><li>Telecom liberalization  improved access </li></ul><ul><ul><li>Less poverty; greater equality? </li></ul></ul><ul><ul><li>Less, same or more poverty; greater inequality? </li></ul></ul><ul><li>What, on the ground? </li></ul>
    8. 8. Agenda <ul><li>Definition </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><li>Access and poverty reduction? </li></ul><ul><li>Questions </li></ul>
    9. 9. untruth, truth, what? Numbers we use… <ul><li>Sri Lanka </li></ul><ul><ul><li>CBSL CFS 2003-04: access 24.5% </li></ul></ul><ul><ul><li>TRCSL (2006 June): teledensity 29.1% </li></ul></ul><ul><li>How meaningful? </li></ul>
    10. 10. untruth, truth, what? While ownership is low… Thailand Philippines Sri Lanka India Pakistan Source: National regulatory agencies; * 2005, **2004 57.80** 45.30* 29.10 12.80 29.38 Total number of phones per 100 population
    11. 11. untruth, truth, what? …access is very high* Most (66%) can get to a phone in 5 minutes ; much less than 1 hour… 95% 93% 92% 94% 98% Accessibility (used a phone in the preceding 3 months) Thailand Phils. Sri Lanka India Pakistan South East Asia South Asia
    12. 12. untruth, truth, what? High reliance on commercial phones * Does it mean no access; or have access?
    13. 13. Agenda <ul><li>Definitions </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><ul><li>Technical </li></ul></ul><ul><ul><li>Usage </li></ul></ul><ul><li>Access and poverty reduction? </li></ul><ul><li>Questions </li></ul>
    14. 14. technical issues Overestimation?* <ul><li>Impact </li></ul><ul><ul><li>Poverty reduced because access increased… </li></ul></ul><ul><ul><li>Inequality increased because access is a more middle class thing… </li></ul></ul><ul><li>Based on what access? </li></ul><ul><ul><li>Direct household access is normally used </li></ul></ul><ul><ul><li>Whereas indirect but actual access of 90 percent + </li></ul></ul>How relevant is direct access? Is it the same as other infrastructure; electricity, piped water, sanitation?
    15. 15. user issues Affordability; tight purse… * Owners only: mobile is almost all pre-paid; to control expenditure 4% 1% 8% 4% 1% Post Paid 96% 99% 92% 95% 99% Pre Paid Thailand Philippines Sri Lanka India Pakistan  
    16. 16. user issues Affordability; only a few calls… * Source: Diary All users (owners or otherwise) on average one call a day
    17. 17. user issues Affordability; short calls… * Source: Diary However, average MOUs for owners are higher e.g: Sri Lanka: Prepaid: 120 MOU per month Source: Operators >15 min.
    18. 18. user issues Affordability; abnormal pattern … * Source: Diary Sri Lanka Poverty premium
    19. 19. user issues Expenditure higher than ARPU * Poverty premium; those who use other peoples’ or public phones are being charged higher rates… Ave. Monthly expenditure for users (USD) 9 9 9 7 12 Home Fixed Phone 19 10 18 7 21 Post Paid 8 2 7 5 8 Pre-Paid Thailand Phils. Sri Lanka India Pakistan  
    20. 20. user issues Summary <ul><li>Have access </li></ul><ul><li>Use sparingly; essential calls only </li></ul><ul><li>Speak for a short while </li></ul><ul><li>Pay premium </li></ul>
    21. 21. Agenda <ul><li>Definitions </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><li>Access and poverty reduction? </li></ul><ul><ul><li>Macro numbers </li></ul></ul><ul><ul><li>Household level </li></ul></ul><ul><li>Action? </li></ul>
    22. 22. benefit At the macro level; large? <ul><li>Contribution to GNP </li></ul><ul><ul><li>2003 – 4% </li></ul></ul><ul><ul><li>2004 – 5% </li></ul></ul><ul><li>Every additional 10% increase in mobile teledensity  0.6% increase in annual GDP growth (Waverman et al., 2005) </li></ul><ul><li>Access  poverty? inequality? </li></ul><ul><ul><li>Evidence </li></ul></ul>
    23. 23. benefit Access  less poverty? <ul><li>Direct income generation through the sale of telecom services </li></ul><ul><ul><li>Grameen, Nobel prize… </li></ul></ul><ul><li>Indirect income generation; anecdotal </li></ul><ul><ul><li>Auto-rickshaw driver to check hires </li></ul></ul><ul><ul><li>Farmer to check market prices </li></ul></ul><ul><ul><li>Parents looking for health and education information </li></ul></ul><ul><li>Cost savings made by making a call as opposed to taking a bus ride into town; anecdotal </li></ul>
    24. 24. benefit Access  Efficiency
    25. 25. benefit Efficiency  economic benefit? <ul><li>BOP does not see the benefit? </li></ul><ul><ul><li>Except for in India, mean responses on efficiency of daily activities vs. ability to earn or save are significantly different at a 95 percent confidence interval </li></ul></ul>
    26. 26. benefit Possible reasons… <ul><li>Do people actually make that connection ? </li></ul><ul><ul><li>Some do; services, trade, self employed… </li></ul></ul><ul><ul><li>What connection? </li></ul></ul><ul><li>May see gains in saving travel time and cost but if the cost of using the telephone is high </li></ul><ul><ul><li>Maybe no net benefit ( RPP in LK?) </li></ul></ul><ul><ul><li>In LK, 24% said direct access has worsened their financial situation </li></ul></ul><ul><li>Link may exist, but </li></ul><ul><ul><li>Little business use; people prefer face-to-face interactions? </li></ul></ul><ul><ul><li>Not enough content? </li></ul></ul><ul><ul><li>Perception: time isn’t money? </li></ul></ul>
    27. 27. benefit Security and keeping in touch
    28. 28. benefit Keeping in touch Source: Diary
    29. 29. Agenda <ul><li>Definitions </li></ul><ul><li>Logic </li></ul><ul><li>Untruth, truth, what? </li></ul><ul><li>Issues </li></ul><ul><li>Access and poverty reduction? </li></ul><ul><li>Questions </li></ul>
    30. 30. questions Technical <ul><li>Are access numbers in the 20s or 90s? </li></ul><ul><ul><li>How important is it to define access ? </li></ul></ul><ul><ul><li>Are we massively overestimating impact of access on economic development? </li></ul></ul><ul><li>Are conclusions on improved access increasing inequality in Sri Lanka justified? </li></ul>
    31. 31. questions Practical <ul><li>What is the link between access and poverty reduction? </li></ul><ul><ul><li>No empirical micro-level literature </li></ul></ul><ul><ul><li>Is there one? Is it pure hype? </li></ul></ul><ul><ul><li>Is it a complex social networks based culturally sensitive mumbo jumbo nut no one’s cracked? </li></ul></ul><ul><li>More likely, no silver bullet but one-of-many necessary conditions </li></ul><ul><ul><li>Lessons from India: access  usage  efficiency  economic benefit </li></ul></ul>
    32. 32. questions Important <ul><li>How to increase usage? </li></ul><ul><ul><li>Evidence of net economic benefits through lower prices </li></ul></ul><ul><ul><ul><li>Current scenario: low price elasticity of demand ≈ 0.5; consistent with low and essential use only </li></ul></ul></ul><ul><ul><ul><li>Shift from Receiving Party Pays  Calling Party Pays </li></ul></ul></ul><ul><ul><ul><ul><li>Sri Lanka mobile: 120 MOU/mo (estimate) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>India GSM mobile: 414 MOU/mo; tumbling prices </li></ul></ul></ul></ul><ul><ul><ul><li>Meaningful content </li></ul></ul></ul><ul><ul><li>Increase rural access: VG levy and disbursement mechanism specifically setup; but Government “squandering” money? </li></ul></ul>
    33. 33. In conclusion <ul><li>Hypothesis is inequality in access to telecom is contributing to poverty </li></ul><ul><ul><li>But, people at the BOP have easy access to phones </li></ul></ul><ul><ul><li>Use sparingly and pay premium </li></ul></ul><ul><ul><li>Inequality in access; not so black and white </li></ul></ul><ul><ul><ul><li>Randomized evaluations </li></ul></ul></ul><ul><li>Question is how to increase usage by making access more meaningful </li></ul><ul><ul><li>Regulatory policy </li></ul></ul><ul><ul><li>Content; convergence </li></ul></ul>
    34. 34. Thank you. Harsha de Silva and Ayesha Zainudeen