Access to telephony for low-income groups is largely based on different strategies of mobile telephony usage. The main goal of this research project is to explore the strategies employed by the poor in Latin America and the Caribbean to access and use mobile telephony services, as well as to identify the major market and regulatory barriers for increased penetration and usage. More generally, it seeks to contribute to the discussion on how access to mobile telephony contributes to improving the livelihoods of the poor –what we call mobile opportunities. Our results show that mobile telephony is highly valued by the poor as a tool for strengthening social ties and for increased personal security, and that it is beginning to prove useful for enhancing business and employment opportunities. Overall, the survey results suggest that the acquisition of mobile phones by the poor has an economic impact reflected mainly in improved social capital variables such as the strengthening of trust networks and better coordination of informal job markets. These findings reveal the continued need to develop innovative business models that extend the market frontier for mobile telephony. They also highlight the urgent need to rethink public policies that are premised on the mobile phone as a luxury good. Clearly, for the poor, mobile telephony has long been the most cost-effective and accessible alternative.

1. Poverty and Mobile Telephony in Latin America and the Caribbean
Mobile Opportunities:
Poverty and Mobile Telephony
in Latin America and the
Caribbean
Hernán Galperin
Judith Mariscal
DIRSI
November 2007

2. Poverty and Mobile Telephony in Latin America and the Caribbean
Mobile Opportunities:
Poverty and Mobile Telephony
in Latin America and the
Caribbean
Hernán Galperin
Judith Mariscal
DIRSI
November 2007
This work was carried out with the financial
support from a grant given to the Instituto de
Estudios Peruanos (IEP) from the International
Development Research Centre, Ottawa, Canada.

3. Abstract
Access to telephony for low-income groups is
largely based on different strategies of mobile
telephony usage. The main goal of this research
project is to explore the strategies employed by
the poor in Latin America and the Caribbean to
access and use mobile telephony services, as well
as to identify the major market and regulatory
barriers for increased penetration and usage. More
generally, it seeks to contribute to the discussion
on how access to mobile telephony contributes to
improving the livelihoods of the poor –what we
call mobile opportunities.
Our results show that mobile telephony is highly
valued by the poor as a tool for strengthening
social ties and for increased personal security, and
that it is beginning to prove useful for enhancing
business and employment opportunities. Overall,
the survey results suggest that the acquisition
of mobile phones by the poor has an economic
impact reflected mainly in improved social
capital variables such as the strengthening of trust
networks and better coordination of informal job
markets. These findings reveal the continued need
to develop innovative business models that extend
the market frontier for mobile telephony. They
also highlight the urgent need to rethink public
policies that are premised on the mobile phone
as a luxury good. Clearly, for the poor, mobile
telephony has long been the most cost-effective
and accessible alternative.
We acknowledge the valuable support of Andrea Molinari
and Fernando Ramírez in the research process. We would
also like to thank the team leaders who carried out research
in each country: Antonio Botelho (Brazil), Luis Gutiérrez
(Colombia), Hopeton Dunn (Jamaica), Roxana Barrantes
(Peru), and Kim Mallalieu (Trinidad and Tobago).

4. Poverty and Mobile Telephony in Latin America and the Caribbean 3
Introduction
Access to communication services and to telephony
in particular has long been recognized as an
important development input. In Latin America
and the Caribbean, telephony penetration has
grown exponentially in recent years, driven to a
significant degree by mobile services. This has been
particularly relevant for the poor, who for a variety
of reasons have had limited access to traditional fixed
telephony services. For those at the bottom of the
income pyramid, access to telephony is largely based
on different strategies for using mobile telephony.
Yet empirical studies aimed at understanding the
patterns of mobile phone use by the poor, and of
communication services in general, are rare.
The main goal of this research project is to
understand the strategies employed by the poor in
Latin America and the Caribbean to access and use
mobile telephony services, as well as to identify the
major market and regulatory barriers for increased
penetration and usage. The project also attempts to
analyze the untapped commercial and public policy
opportunities associated with increased mobile
penetration among low-income groups (the so-called
bottom of the pyramid). More generally, it seeks to
contribute to the discussion on how access to mobile
telephony contributes to improving the livelihoods
of the poor –what we call mobile opportunities.
Methodology
Over 7,000 face-to-face interviews were conducted
with individuals aged 13 to 70 residing in low-income
households in the following countries:
Argentina, Brazil, Colombia, Jamaica, Mexico,
Peru, and Trinidad and Tobago. A probabilistic
sample was drawn using maps from existing
georeferenced data provided by the national
statistics office of each country. Individual
respondents were randomly selected from each
household. The goal was to obtain a representative
(and statistically independent) sample of low-income
residents of urban areas in each country,
although in one case (Jamaica), semi-rural areas
were also included. Fieldwork was conducted
between April and June 2007.

5. Key results
Our results show that the exponential growth in the mobile
telephony market in Latin America and the Caribbean has
had a significant impact on telephony access opportunities
for the poor. With the exception of Mexico, the majority
of respondents in the countries studied had used a mobile
phone in the past three months, regardless of whether or
not they actually owned one (see Figure 1). Interestingly,
the level of shared ownership was relatively low: in most
cases, users own their own handset and service. The notable
exceptions are Colombia and Peru, where a healthy service
resale market in urban areas (with very competitive tariffs)
reduces ownership incentives.
Figure 1
Mobile usage and ownership (% of total)
90
89
37
Jamaica
Colombia
T & T
Argentina
Peru
Brazil
Our results also confirm the importance of prepaid service
models for a population with fluctuating incomes and limited
insertion in the formal economy. Overall, low-income
mobile users prefer prepaid plans (see Figure 2). However,
in a developed mobile telephony market like Argentina, the
solid performance of mixed plans (which combine a low
fixed monthly fee with top-ups for extra credit) illustrate the
potential of commercial innovations specifically targeting
the poor.
Figure 2
Prepaid plans (% of total)
74
92
90
98
96
96
96
0 20 40 60 80 100
Jamaica
Brazil
T & T
Peru
Mexico
Colombia
Argentina
This preference for prepaid plans is based on two factors, as
illustrated in Figure 3. The main motive is spending control:
users value the ability to purchase credit when they have cash
in hand, rather than committing to a fixed monthly charge.
The other factor is cost: users perceive prepaid plans to be
cheaper than post-paid plans. This counterintuitive result
must be interpreted carefully. On the one hand, there seems
to be information problems that prevent users from making
accurate comparisons of per-minute costs between prepaid
and post-paid plans. On the other hand, users are simply
referring to total monthly costs based on their particular
usage basket, which tends to be well below the post-paid
service packages offered by the operators.
Figure 3
Reasons for opting for prepaid mobile service (in %)
31
32
33
26
35
38
29
34
41
41
46
52
47
0 10 20 30 40 50
T & T
Brazil
Argentina
Mexico
Colombia
Jamaica
Peru
I can control my mobile spending better It is cheaper
61
60 70
53
60
70
86
30
42
63
61
83
94
37
0 20 40 60 80 100
Mexico
Owners Users

6. Poverty and Mobile Telephony in Latin America and the Caribbean
Interestingly, most users think mobile services are neither
cheap nor expensive, although the percentage of users who
consider the service expensive tends to be higher in markets
with lower ownership rates, such as Mexico, Peru and most
notably, Brazil (see Figure 4).
Figure 4
Mobile service cost perception (in %)
35
34
18
Argentina
T & T
Peru
Colombia
Mexico
Jamaica
For the poor, service affordability remains a key barrier for
increased adoption of basic as do value-added services. This
is confirmed by responses from non-users, who cite cost as
the main reason for non-adoption of mobile telephony, as
shown in Figure 5.
Figure 5
Reasons for not owning a mobile phone (in %)
5
20
21
28
32
32
34
23
40
38
46
0 10 20 30 40
Mexico
Peru
Brazil
Jamaica
Argentina
T&T
Colombia
52
49
56
I don’t think having a mobile of my own is necessary I can’t afford it
56
50 60
12
31
16
10
17
14
34
21
28
35
26
0 10 20 30 40
Brazil
Very cheap or cheap Neither cheap nor expensive
54
45
51
55
57
68
38
50 60 70 80
Expensive or very expensive

7. Overall, we find that the poor highly value mobile services.
This is not surprising given the lack of alternatives,
particularly traditional fixed telephony services. Most
respondents are willing to spend significant amounts on
handsets, with averages ranging from USD 53 in Peru to
USD 68 in Argentina. In fact, our results show that the
informal market for second-hand handsets is relatively small
(see Figure 6). Rather, the real driver of increased adoption
is the trickle-down effect of handset replacement from the
top of the income pyramid: in the more developed markets
such as Argentina, over a third of respondents had obtained
handsets as a gift from an acquaintance or family member.
Figure 6
Owners who bought a new handset (in %)
86
86
83
Jamaica
T & T
Peru
Mexico
Argentina
Colombia
It is well known that existing tariff levels, combined with
the calling party pays (CPP) system, lead low-income users
to limit use of mobile phones for outgoing calls. Our results
show that most users in Latin America average less than one
call per day (see medians in Figure 7), whereas outgoing call
levels are higher in Caribbean countries, where tariffs are
more affordable. These results also explain the preference for
prepaid plans, since most operators do not offer fixed-rate
plans for such low volumes of outgoing calls.
Figure 7
Total outgoing calls per week (average and median)
25
7 7
30
25
20
15
10
5
A surprising result is that the number of incoming calls is
only slightly higher than that of outgoing calls, with the sole
exception of Jamaica. Contrary to the common perception
that poor users receive many calls but make very few, we
find that volumes of incoming and outgoing calls tend to be
closely related, as Figure 8 demonstrates.
Figure 8
Incoming calls over total calls (in %)
52
51
50
55
Jamaica
Peru
T & T
Argentina
Colombia
Mexico
In addition to making a very limited number of outgoing
calls, the poor utilize other cost-control strategies that involve
so-called ‘beeping,’ or simply not making outgoing calls for
a period of time. In fact, in most of the countries studied,
over a third of respondents had not made a single outgoing
call in the week preceding the survey (see Figure 9).
80
76
98
97
0 20 40 60 80 100
Brazil
Average Median
11 10
5
17
13
5
7 7
5
10
22
0
T & T Jamaica Colombia Brazil Argentina Peru Mexico
50
67
55
0 10 20 30 40 50 60 70
Brazil
80

8. Poverty and Mobile Telephony in Latin America and the Caribbean
Figure 9
Most common cost-reduction strategies (% of users)
33
23
60
50
40
30
20
10
Our results reveal that the poor represent a significant
market for mobile operators, with higher than expected
average per capita expenditure. As shown in Figure 10,
average monthly spending on mobile telephony services in
Latin America ranges from USD 6.1 in Colombia to USD
15.7 in Mexico, while in Caribbean nations expenditure
levels are considerably higher.
Figure 10
Average monthly spending on mobile telephony (USD)
7
16
12
18
16
14
12
10
8
6
4
2
7 6
Peru Colombia
11
0
Mexico Brazil Argentina
57
51
57
50
25
16
32
44
21
47
0
Argentina Brazil Colombia Jamaica Mexico Peru
Only used the mobile to receive calls Beeping
70
61
26
T & T

9. While accurate income data are difficult to obtain in this
type of survey, our estimates reveal that average spending
on mobile telephony as a percentage of income ranges from
3.2% in Brazil to 6.3% in Argentina, however, in some cases,
users may spend well above 10% of their monthly income
on mobile telephony services. We also found that demand
for mobile services at the bottom of the pyramid appears to
be rather inelastic with respect to tariff variations, although
price elasticity tends to rise with income levels. In general,
poor users highly value the few calls they make or receive and
would not significantly change usage patterns in the event of
price increases. However, for some users, there appears to be
a threshold point after which they would simply stop using
their mobile phones (see Figure 11).
Figure 11
If the cost of using a mobile phone doubled… (in %)
21
9
T&T
Argentina
Mexico
Brazil
Jamaica
Peru
At the same time, our results confirm that current tariff
levels represent a significant deterrent to use: most users
would significantly increase their consumption of mobile
telephony services if the costs were reduced, as shown in
Figure 12.
Figure 12
If the cost of using a mobile phone were halved… (in %)
41
84
83
83
82
78
77
0 10 20 30 40 50 60 70 80
Brazil
Argentina
Mexico
Peru
Colombia
T & T
Jamaica
I would increase my phone usage
90
Although lower than expected, income elasticity of mobile
telephony usage also appears significant in some cases, such
as in Peru (see Figure 13).
Figure 13
If your income doubled… (in %)
43
Peru
Colombia
Jamaica
Brazil
Argentina
T & T
Meanwhile, despite increased adoption, users are not
taking full advantage of the services enabled by the mobile
platform. Text messaging (SMS) is the only service beyond
voice that is rapidly being adopted across the region. In the
20
22
36
9
11
8
9
16
23
34
24
29
0 5 10 15 20 25 30 35 40
Colombia
I would not change my phone usage I would stop using my phone
30
34
42
37
68
47
0 10 20 30 40 50 60 70 80
Mexico
I would increase my phone usage

10. Poverty and Mobile Telephony in Latin America and the Caribbean
more developed markets such as Jamaica and Argentina, the
large majority of low-income mobile phone users have used
SMS services. However, factors such as literacy levels seem
to have deterred adoption in other countries, notably Brazil
(see Figure 14).
Figure 14
SMS use among mobile phone users (in %)
45
53
Argentina
Jamaica
Mexico
T & T
Peru
Colombia
As shown in Figure 15, the main reason mentioned for
not using SMS services is lack of knowledge, which is not
surprising given that most respondents are relatively new
users (two years or less). In fact, our results suggest that
adoption of services beyond voice increases over time, as
users advance along the technological learning curve.
Figure 15
Main reason for not using SMS services
9
36
44
46
67
91
0 10 20 30 40 50 60 70 80 90 100
Brazil
34
37
42
39
38
53
57
0 10 20 30 40 50 60
T&T
Peru
Jamaica
Mexico
Brazil
Argentina
Colombia
I don’t know how to use SMS

11. In most markets, the current structure of tariffs creates
incentives for intensive use of SMS as a cost-control
strategy. As shown in Figure 16, the volume of SMS usage
is significantly higher than the volume of voice calls,
particularly in markets with high SMS adoption rates, such
as Argentina.
Figure 16
Total outgoing SMS per week (average and median)
40
35
30
25
20
15
10
5
13
10 9 8
4 5 5
Aside from text messaging and voice services, low-income
users make little use of mobile telephony services. In the
more developed mobile markets such as Jamaica and Trinidad
and Tobago, there is some usage related to downloading ringtones
and participating in radio/TV games, but the use of more
sophisticated services such as banking and government
services is practically non-existent. This represents an
interesting opportunity for the delivery of information and
transaction services by the government as well as market
actors, given the relatively high level of penetration of this
transaction platform among the poor.
As mentioned, the main perceived benefit of mobile use
among the poor is improved communication with family
and friends. This is consistent with the fact that most mobile
calls are made to or received from friends and family, followed
by work-related calls, as illustrated by Figures 17 and 18.
Figure 17
Destination of outgoing calls (in %)
100
80
60
40
20
Figure 18
Origin of incoming calls (in %)
100
80
60
40
20
In other words, as illustrated by Figure 19, the main
value associated with mobile phones is the strengthening
of existing ties, although increased personal security (in
emergencies, for example) is also frequently mentioned
as a major benefit. Increased business opportunities also
appear to be an important factor, particularly for longer-term
users. In the case of Mexico and Peru, it is interesting
to note that those who use mobile phones for work-related
reasons tend to have higher call volumes. Overall, our results
suggest that the economic impact of mobile adoption by
the poor is mediated by social capital variables such as the
strengthening of trust networks and improved coordination
of informal job markets.
33
26
14
8
20
8
5
0
Argentina Mexico T & T Jamaica Peru Colombia Brazil
Average Median
0
Argentina Brazil Colombia Mexico Peru T&T
Workplace Friends Relatives in the country Others
0
Argentina Brazil Colombia Mexico Peru T&T
Workplace Friends Relatives in the country Others

12. Poverty and Mobile Telephony in Latin America and the Caribbean 11
Figure 19
Perceived benefits associated with mobile use (in %)
0 20 40 60 80
Colombia
47
43
42
71
69
65
37
43
0 20 40 60 80
73
73
56
49
0 20 40 60 80
0 20 40 60 80
Jamaica
65
54
64
45
46
44
38
31
0 20 40 60 80
Mexico
29
48
40
27
0 20 40 60 80
Peru
30
52
14
26
0 20 40 60 80
Argentina
Family
Friends
Emergencies
Work
Family
Friends
Emergencies
Work
Family
Family
Friends
Emergencies
Work
Trinidad and Tobago
Brazil
Family
Friends
Emergencies
Work
Family
Friends
Emergencies
Work
Family
Friends
Emergencies
Work
Friends
Emergencies
Work

13. Finally, our results revealed that beyond mobile networks,
the poor have limited access to other communication
platforms (see Figure 20). With the notable exception of
Colombia, most respondents lack fixed telephony services
in their homes, confirming the unequal distribution of
traditional fixed networks as compared with new mobile
telephony networks.
Figure 20
Mobile and fixed telephony ownership (in %)
96 96 87
70
81 80
62
43 39
37 38
31
15
63
100
90
80
70
60
50
40
30
20
10
0
T & T Jamaica Argentina Brazil Mexico Colombia Peru
Mobile owners Fixed owners
A similar pattern is found with respect to internet access.
With the exception of Peru, the poor seem relatively
uninterested in the internet, although usage tends to rise
among the younger population. Interestingly, the factors
that explain the lack of internet usage by the poor are only
partly related to affordability or infrastructure availability,
since in most urban areas access is widespread via public
internet centres (such as cyber cafés), which offer relatively
inexpensive hourly access (at least compared with per-minute
mobile tariffs). Our results reveal that the poor
simply perceive no benefit in using the internet, with the
exception of a small percentage of youth who consider it
useful for school purposes and for keeping in touch with
friends. This represents a red flag for policymakers who
promote universal access policies and who frequently focus
on internet/PC shared-access programs. For the poor, the
mobile phone has become a much more important and
familiar platform than the internet.

14. Poverty and Mobile Telephony in Latin America and the Caribbean 13
Our results also show that public phones –often overshadowed
by other priorities in universal access programs such as
telecentres– continue to play a significant role for the poor,
often as a complement to mobile services (see Figure 21).
Cost, convenience and simply the lack of other options
are the reasons most often mentioned by the poor for the
continued use of public phones (see Figure 22), despite the
increased availability of and access to mobile telephony.
Figure 21
Use of public telephony in the last month (in %)
3
3
33
33
33
Peru
Brazil
Mexico
Colombia
Argentina
Figure 22
Reason for using a public payphone (in %)
49
55
64
70
46
6
9
0 10 20 30 40 50 60 70 80
T & T
Public telephones or non-specialized commercial establishments
Commercial establishments specialized in telephone service
100
80
60
40
20
0
Argentina Brazil Colombia Mexico Peru T&T
Lower cost Easy access Privacy Lack of other options Other

16. Poverty and Mobile Telephony in Latin America and the Caribbean 15
Conclusion
The goal of this report was to contribute to the
discussion on how access to mobile telephony
contributes to improving the livelihoods of the poor
in Latin America and the Caribbean –what we call
mobile opportunities. Our results show that mobile
telephony is highly valued by the poor as a tool for
strengthening social ties and for increased personal
security, and that it is beginning to prove useful for
enhancing business and employment opportunities.
Overall, the survey results suggest that the acquisition
of mobile phones by the poor has an economic
impact reflected mainly in improved social capital
variables such as the strengthening of trust networks
and better coordination of informal job markets.
Given their limited access to traditional fixed
telephony, the poor attribute a significant
improvement in quality of life to mobile access.
Demand for mobile services at the bottom of the
income pyramid appears to be rather inelastic with
respect to tariff variations. The significant level
of expenditure on mobile handsets and services
found among these low-income populations is also
consistent with the numerous benefits perceived
by users. Nonetheless, there are still barriers that
discourage the poor from acquiring mobile phones.
In countries like Mexico, Brazil and Peru, a majority
of the poor still cannot afford a mobile phone,
although many rely on informal resellers and
family or friends to make or receive calls. Those
who can afford their own mobile phone make little
use of voice and other services, tightly controlling
their expenditure and frequently relying on public
payphones for outgoing calls.
These findings reveal the continued need to develop
innovative business models that extend the market
frontier for mobile telephony. They also highlight
the urgent need to rethink public policies that are
premised on the mobile phone as a luxury good. For
the poor, mobile telephony has long been the most
cost-effective and accessible alternative.
Since affordability is the most significant barrier
to extending the reach of mobile services, as
well as the range of services offered to the poor,
priority should be placed on policies aimed
at reducing tariffs. Enhancing competition
through increased spectrum allocation, reducing
taxation levels, and implementing number
portability are among the initiatives worth
considering. Tariff reductions need not penalize
operators. Our results show ample room for
win-win initiatives that increase overall traffic
and create new commercial opportunities for
operators and third-party service providers,
ranging from simple information to more
complex transaction services.
Along these lines, our results also reveal that users
are rarely taking full advantage of the services
offered by the mobile platform. Text messaging
is the only service beyond voice that is rapidly
being adopted. Many of the applications that
could most benefit the poor, such as m-banking
and m-government, are still in their infancy in
the region.
Taking advantage of the poverty-reduction
opportunities created by the widespread
adoption of mobile phones among the poor will
require a concerted effort between market actors
and governments. As users advance along the
technological learning curve, and handset prices
continue to drop, these mobile opportunities
should continue to increase.

17. Contact information:
Hernán Galperin hgalperin@udesa.edu.ar
Judith Mariscal judith.mariscal@cide.edu
info@dirsi.net www.dirsi.net
Editing: Kristin Keenan
Layout: Carlos Abril
Photographs: Aldo Arozena / Kim Mallalieu