Teleuse on a Shoestring

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

Agenda
Definitions
Logic
Untruth, truth, what?
Issues
Access and poverty reduction?
Questions

definition Bottom of the Pyramid
SEC D and E
Respondent : teleuser between ages 18-60
*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

definition Access
Universal access
Community access
Household access; universal service
ITU Maitland Commission (1998)
In the developing world; within an hour’s walk
More recent definitions; in 30 minutes walk

Agenda
Definitions
Logic
Issues
Questions

logic Telco access, poverty, inequality
Lack of access  poverty
Theory: improved access  less poverty?
Telecom liberalization  improved access
Less poverty; greater equality?
Less, same or more poverty; greater inequality?
What, on the ground?

Agenda
Definition
Logic
Issues
Questions

untruth, truth, what? Numbers we use…
Sri Lanka
CBSL CFS 2003-04: access 24.5%
TRCSL (2006 June): teledensity 29.1%
How meaningful?

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

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

untruth, truth, what? High reliance on commercial phones * Does it mean no access; or have access?

Agenda
Definitions
Logic
Issues
Technical
Usage
Questions

technical issues Overestimation?*
Impact
Poverty reduced because access increased…
Inequality increased because access is a more middle class thing…
Based on what access?
Direct household access is normally used
Whereas indirect but actual access of 90 percent +
How relevant is direct access? Is it the same as other infrastructure; electricity, piped water, sanitation?

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

user issues Affordability; only a few calls… * Source: Diary All users (owners or otherwise) on average one call a day

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.

user issues Affordability; abnormal pattern … * Source: Diary Sri Lanka Poverty premium

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

user issues Summary
Have access
Use sparingly; essential calls only
Speak for a short while
Pay premium

Agenda
Definitions
Logic
Issues
Macro numbers
Household level
Action?

benefit At the macro level; large?
Contribution to GNP
2003 – 4%
2004 – 5%
Every additional 10% increase in mobile teledensity  0.6% increase in annual GDP growth (Waverman et al., 2005)
Access  poverty? inequality?
Evidence

benefit Access  less poverty?
Direct income generation through the sale of telecom services
Grameen, Nobel prize…
Indirect income generation; anecdotal
Auto-rickshaw driver to check hires
Farmer to check market prices
Parents looking for health and education information
Cost savings made by making a call as opposed to taking a bus ride into town; anecdotal

benefit Access  Efficiency

benefit Efficiency  economic benefit?
BOP does not see the benefit?
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

benefit Possible reasons…
Do people actually make that connection ?
Some do; services, trade, self employed…
What connection?
May see gains in saving travel time and cost but if the cost of using the telephone is high
Maybe no net benefit ( RPP in LK?)
In LK, 24% said direct access has worsened their financial situation
Link may exist, but
Little business use; people prefer face-to-face interactions?
Not enough content?
Perception: time isn’t money?

benefit Security and keeping in touch

benefit Keeping in touch Source: Diary

Agenda
Definitions
Logic
Issues
Questions

questions Technical
Are access numbers in the 20s or 90s?
How important is it to define access ?
Are we massively overestimating impact of access on economic development?
Are conclusions on improved access increasing inequality in Sri Lanka justified?

questions Practical
What is the link between access and poverty reduction?
No empirical micro-level literature
Is there one? Is it pure hype?
Is it a complex social networks based culturally sensitive mumbo jumbo nut no one’s cracked?
More likely, no silver bullet but one-of-many necessary conditions
Lessons from India: access  usage  efficiency  economic benefit

questions Important
How to increase usage?
Evidence of net economic benefits through lower prices
Current scenario: low price elasticity of demand ≈ 0.5; consistent with low and essential use only
Shift from Receiving Party Pays  Calling Party Pays
Sri Lanka mobile: 120 MOU/mo (estimate)
India GSM mobile: 414 MOU/mo; tumbling prices
Meaningful content
Increase rural access: VG levy and disbursement mechanism specifically setup; but Government “squandering” money?

In conclusion
Hypothesis is inequality in access to telecom is contributing to poverty
But, people at the BOP have easy access to phones
Use sparingly and pay premium
Inequality in access; not so black and white
Randomized evaluations
Question is how to increase usage by making access more meaningful
Regulatory policy
Content; convergence

Thank you. Harsha de Silva and Ayesha Zainudeen www.lirneasia.net

Teleuse on a Shoestring

by lirneasia on Dec 14, 2006

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