This document discusses business model innovations that have helped connect lower-income consumers to mobile networks. It notes that while over 75% of the world's population is covered by mobile networks, most companies focus on higher-income segments. Two key barriers to universal access have been affordability and availability of infrastructure. Some companies have adopted shared-use models to provide access, but individual ownership models using installment plans and micro-financing have also proven effective. Competition in densely populated markets like India has driven operators to innovate through ultra-low pricing, electronic recharges, and technologies to reduce infrastructure costs and expand coverage.

1. Serving the Poor: Drivers of
Business Model Innovation in
Mobile
By
Yogesh Garg
11EMPDM21
4
BIMTECH

2. Introduction
 This case focuses the light on the importance of connecting the lower
income consumers by mobiles
 There are more than 2.5 billion people at the bottom of pyramid. Of
those, more than 1 billion people have per capita income of less than
$1 per day.
 A study by London Business School found that, in a typical
developing country, a rise of 10 mobile phones per 100 people boosts
GDP growth by 0.6 percentage points.
 World Bank estimation: 75% of World’s population are in Mobile
networks coverage
 But Most companies choose to focus on Upper & middle income
segments of Developing World
 Two perceived reasons of Universal access gap: Affordability &
Availability
• Actions to fill Universal access gap: Universal access funds &
Subsidies for Infrastructure
investment

3. Beyond shared-Use Models
 Many have applauded shared use models adopted by Grameen
phone in Bangladesh and Vodacom in SA.
 Providing Telecommunication to Community that could not afford
individual ownership
 Fundamental Question: Why can’t poor afford such services?
 Barriers: Cost of Mobile Phone
 But research in Brazil and china
Penetration of refrigerators : 68% in E segment and 88% in D
segment
Penetration of television : 72% in E segment and 90% in D
segment
Mobile ownership in Brazil : 80 million individuals in 2006
 Reasons: Innovation in consumer credit ( Installment payments)

4. Business model innovation: Beyond Voice to
financing
 Relinace Infocomm in India: Adopted Handset
installment plan in a risk sharing arrangement
 Mansoon Hangama offer: A handset worth $120 for
only $10 upfront and $4 per month for 36 months
 Share of net adds: <20 % to >50%
 Market Share : from nothing to more than 20%
 Worked with insurance company to insure handset
 Redesigned dealer incentives
 Engaged in massive marketing efforts
 Built an elaborate collections infrastructure to control
bad debt
 Aggressive tariff packages

5. Individual Handset ownership
 Handset financing models
 New handsets are getting cheaper by the
introduction of ultra low cost handsets
 Availability of second-hand handsets
 So handsets affordability has not been the key
barrier to penetration in developing markets

6. Do firms really wants to serve the
people?
 are more concerned with the threat of cannibalising
their high-margin A & B segment consumers than in
realising the “opportunity” of serving the poor through
novel tariff and distribution approaches
 Model in India: Price:$0.02 per minute on almost all
networks and highest minutes of use per month in the
world
 Same model was adopted by Smart Communications
Inc. in the Philippines

8. Competition: A drive for
Innovation
 India: A lot number of players
 Hyper competitive market : 22 circles with 4-6 players in
each circle
 revenues per minute are low in India
 per-minute usage now the highest in Asia
 Smart approach electronic recharge and micro-top-ups
 village-level micro-finance organizations
 Innovation in Technology
innovations such as GSM extension technology – quite
simply attaching a long aerial to a mobile handset to
extend range from 15 kilometres to 30 kilometres or more
– that can reduce CAPEX and OPEX for operators.

10. Thank you