Forum discusses ways to break cycle of poverty | Bangkok Post: tech

MOBILE TECHNOLOGY

ISLAMABAD : Islamabad was home to the expert meeting on mobile 2.0 applications and conditions, jointly hosted by think-tank LIRNEasia and the Pakistan Telecommunication Authority. In this forum academics, operators and regulators from the telecommunication, IT and financial sectors gathered together to share their research and experience on how a new generation of mobile applications can benefit the poor at the bottom of the pyramid (BOP) from micro-finance, agricultural, public transport or even social networking.

The answers gathered differed very much from what was learned from the west and provided insights into how developing nations can shape their policies to empower the BOP and break the cycle of poverty through mobile technology.

Rohan Samaravija, CEO of LirneAsia, explained how his organisation worked as a capacitative building organisation across 12 countries and said that the idea his think-tank is researching is how poor people at the bottom of the pyramid are likely to access the Internet through their mobile phones rather than through conventional means. A cell phone is much more simple than getting a computer and go through the bother of getting an Internet connection.

The researched was based on results from 10,000 samples across Asia including Mongolia, 800 of which were from Thailand. The research focuses on socio-economic groups D and E, which roughly equates to those earning less than $2 (64 baht) a day.

Across the study, only those in the Philippines and Thailand feel they are aware of, and use the Internet. For most of the others, more than half have never heard of the Internet and the majority have never used it.

"But what is the Internet? Is it the big screen and keyboard? Or is it the meta media that allows one to engage in commercial activities, do payments, remote computing? If that constitutes the Internet then we can say our people are participating," Samaravija asked.

The study has shown that the industry has succeeded in giving poor people access to voice communications. Even those who do not own their own phone now have easy access to someone else's to use. The question is how this access can be extended to Internet access.

One answer is the budget telecommunications model, a way for telcos to make volatile but good returns by serving the long tail - people who make very few transactions. They have been able to do this by dramatically reducing the transaction cost of pre-paid platforms and focusing on revenue-yielding minutes instead of average revenues per user (ARPUs) while controlling expenses through business innovation.

"It is like asking why Air Asia makes money while Malaysian Airlines doesn't," he said.

Network will be growing rapidly in chunks and returns will be volatile. Quality of Service (QoS) will not be spectacular.

Between 2008 and 2009, Nokia did a study of the same basket of services (on-net, off-net, SMS, etc.) and the world average price was $10.88 (351 baht). Brazil was highest ($28 or 904 baht) but many countries at the BOP were under the $5 (161 baht) mark: India, Pakistan, Bangladesh, Sri Lanka and these countries were also under the $5 mark back in the last study in 2006. Since then, China, Mongolia and Malaysia have seen prices come down to join the sub $5 group.

The question is how can the industry extend this success to broadband. Samarajiva, a former regulator in Sri Lanka, laid out a list of recommendations.

First is investment. Telecommunications has not succeeded because of public funding. In Pakistan, half the foreign investment was for the telco sector. Moving from voice to broadband, the extra cash needed is not incremental and major new investment is needed. The problem is at the same time, cash flows are going down, taxes are on the rise and there is a lot of uncertainty, not least because of the financial crisis. Regulation has become more prominent too and license renewal is not at all clear. When most voice concessions were granted, the technocrats were in control.

The public policy objective must be to connect more people, with quality and choice, and give them careers to increase their income.

Regulators need to pay attention to vertical pricing, where wholesale is crowding up against retail. Old-style price regulation needs to be replaced by forms of forbearance, bound to address competition concerns.

Countries need to focus on phasing out universal service obligation funds and rationalise the amount of extraction to the exchequer. Funding for projects can then be part of the mainstream budgeting process for infrastructure.