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BOP Families To Trigger Mobile Penetration in Asia
By Sonal Desai
Mumbai, Mar 27, 2007
Mobile telephony will penetrate the homes of bottom or pyramid (BOP) families in India, Pakistan and Sri Lanka, a study instituted by LIRNEasia has found.
In the study, titled, "Teleuse on a Shoestring- A Study of the Financially Constrained in Asia", it interviewed and maintained diaries of respondents from Thailand and Philippines besides the above mentioned countries. A C Nielsen conducted the fieldwork. International Development Research Center (IDRC), Canada funded the research.
The study notes that south Asia has the largest concentration of poor people in the world. It is an accepted fact that the new growth markets in telecom, especially mobile, are concentrated amongst the poor, or at BOP. According to the GSM Association, the next billion subscribers will come from such markets, a large share from India.
According to the study, 94 per cent of the BOP in India had used a phone in the last three months, 81 per cent relied on shared phones, 38 per cent of non-owners plan to buy a phone in the next two years, 28 percent of the mobile owners use second hand sets, 35 per cent used SMS, compared to 100 per cent in the Philippines and 60 per cent in Sri Lanka, and keeping in touch with friends and family was the biggest use of telephones.
"96 percent of BOP who do not own a phone in rural India. They can access a phone in less than an hour, and public phones are the most popular access mode, followed by relative's/ friend's phone, neighbor's phone, own (fixed) phone, household member's mobile and own mobile," the survey points out.
Convenience is the key for using a mobile phone for BOP families, privacy is more of a concern for higher income countries, it notes. Most BOP families in India obtained a mobile connection early 2000s. Pakistan has seen similar growth as previous years, where as Thailand BOP has grown much more steadily, the research states. It says that coverage was more important in rural India, and tariff was a major concern role in urban India.
Distinguishing the needs of the urban and rural BOPs, it opines, "While urban India wants cheap incoming and out going rates, better and easy connectivity, customer service and wider coverage, rural India's needs are focused on a handset with connection, availability of easy payment schemes, interest in a particular package, low connection charges, as also cheap incoming and outgoing rates, better voice clarity, range of services and wider coverage."
The researchers feel that the BOPs are more interested in prepaid mobile to control expenditures and no monthly rentals. Miss call alert is a universal strategy to minimize call costs by owners. Majority still call from fixed line to a fixed line, while a few use mobile to mobile calls and some use phone only as an incoming device.
The respondents experienced efficiency in daily activities after using a phone. "Only India BOP perceives economic benefit activities vs ability to earn or save are significantly different at 95 per cent confidence interval," the study states. Respondents in India, Sri Lanka and Pakistan said that they benefited in services and agriculture by saving travel time and costs, checking prices information and sale of minutes. They added sense of security is the main benefit in the ability to act during emergency.
The study also notes that three billion people would use phones by 2008, of which 50 per cent users would be from Asia Pacific, including China. India would lead the pack with a possible 101 new connections at BOP in the next two years, followed by Pakistan at 30 million, Philippines at ten million, and Sri Lanka and Thailand at one million each. Most respondents replied that they wanted to buy a mobile phone citing better value proposition as the reason.
A brief comparison in the fixed phones growth since liberalization (post NTP 1999) shows that the fixed phones have grown at a CAGR of 9.5 per cent in India, as against 11 per cent in Pakistan, 18.8 per cent in Sri Lanka, 10.43 per cent in Thailand and 11.1 per cent in Philippines. Mobile phones on the other hand have grown at a CAGR of 87.8 per cent in India, 109 per cent in Pakistan, 50.8 per cent in Sri Lanka, 65 percent in Indonesia, 68.8 per cent in Philippines and 49.6 per cent in Thailand.
Harsha de Silva, lead analyst at LIRNEasia avers the telecom operators should think about leveraging benefits of direct access, convergence, collaboration on meaningful content, SMS based services and innovations to enable cheaper calls for eg: any amount prepaid balance top ups. He also calls upon handset manufacturers to develop affordable handsets with local language SMS capabilities and ultra low cost phones with a warranty'.
Quoting C.K. Prahalad, ". if we stop thinking of poor as a burden and start recognizing them as value conscious consumers, a whole new world of opportunity will open up," he lists benefits from direct access as income generation through the sale of telecom services similar to the Grameen model. Indirect access includes use of a phone by an auto rickshaw driver, obtaining agricultural information by a farmer and cost savings made by making a call as opposed to taking a bus ride into town.
De Silva notes that the expectations of initial cost do match affordability and the mismatch between need and affordability has to be addressed. Most respondents expect the monthly usage charges to be below $5. He concludes adding, " Wide PCO availability in India is perhaps protecting Indian BOP from paying poverty premium that Sri Lankan BOP has to face, those who use other people's or public phones are being charged high rates."
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