The GrameenPhone case: benefits as to Sustainable Production and Consumption What may be improved

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The GrameenPhone case - benefits as to
Sustainable Production and Consumption - What
may be improved?

• Einar Flydal
• Senior adviser
• Telenor ASA

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Telenor Mobile, August 2004

• 12 companies, 9 consolidated (August 2002 4
  consolidated)

Konsoliderte
NorgeTelenor Mobil
ThailandDTAC
100
40,3
RussiaVimpelCom
SverigeTelenor Mobile
100
29,0
Danmark Sonofon
AustriaOne
100
17,5
Ungarn Pannon
100
MontenegroProMonte
100
PakistanLicence
100
MalaysiaDiGi
61,0
UkrainaKyivstar
56,5
BangladeshGrameen
51,0
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Sustainability?
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Telecom has always been about creating wellfare...

• Telecom used to be a progressive force Telcos
  was a socially responsible institution that made
  a conscious, explicit deal with the national
  government to give its people the best network
  possible in return for monopoly control and a
  guaranteed rate of return. Telcos held up their
  end of the deal for many decades, and were among
  the strongest progress engines in human
  history.
• So, telecom per se spurred development, and by so
  doing, showed good social responsibility ...
• Other examples of such infrastructure building
  actors
• road authorities, railway authorities, prison /
  detention authorities, the health care sector
• Telecom still has this function, but is
  increasingly part of the general ICT industry.
  With liberal trade, ICT is the DNA for continued
  economic growth and global integration.

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Can extensive production consumption of ICT
possibly be sustainable?

• Probably YES as to production, distribution,
  consumption, and organisation of networks and
  applications.
• Probably NO as to the amount of new ubiquitous
  applications and equipment.
• Probably NO as to the indirect impact on
  cultures, environment, transportation levels, etc
• Evaluation depends on what is considered to be
  alternative...

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Back to Bangladesh...

• A story about basic needs. 2nd thoughts about ICT
  and sustainability did not apply.
• The GrameenPhone story
• an extreme case of synergy between business
  models
• Grameen Bank Alleviation of basic needs through
  micro credit
• Telenorseeking international ventures for its
  competence and capital within mobile telecom

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Why do people starve?
To empower poor people we must provide them with
the loans they need to exploit their
talents! So, I shall make a bank for the poor!

• Bangladeshi characteristics
• 130 mill people
• 80.000 villages
• Lots of resources
• Tiny, rich middle class
• Well educated people are unemployed
• Endless poverty

Why? Analysis needed!

• Infrastructural lock-in / catch22
• time consuming to survive
• Landlords, moneylenders and middlemen easily
  exploit the poor
• lack of capital
• info deprivation

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Grameen Bankvolumes 2001

• and noumerous replications all over the world
  from Argentina via Norway to Mongolia...

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The GrameenPhone idea was born (1995)
Telephones would help!The fixed line telco
monopoly is absent in the villages! Why not
start with modern telecom?
Remember how time consuming it is to be poor?
We may use the Grameen model A mobile handset
would be like a cow! Let us find a telco who
will help doing this!

• 40 of households depend on income from guest
  workers overseas
• In a country without banks an high illiteracy,
  how do they send money?
• Prices from producer depend on market prices in
  the cities.
• How does a farmer avoid getting cheated?

Iqbad S. Quadir investment analystWall Street
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The VillagePhone Program
- providing communications infrastructure on a
village basis -

• Typically, a woman buys a handset and
  subscription with a loan of Taka 12,000.
• She gets trained on how to operate it and how to
  charge the users for it.
• Result The lady has got prestigeous work AND
  telecommunications is provided in rural areas!
• The Grameen Bank network is used for loans and
  billing.
• The micro credits are based on women network
  groups.

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Coverage 2005
DHAKA ZONE Dhaka, Munshiganj, Narayanganj,
Rajbari Narshingdi, Gazipur, Mymensing, Jamalpur,
Kishoreganj, Tangail Gopalganj, Manikganj,
Faridpur,Netrokona, Sherpur,Madaripur, Shariatpur
KHULNA ZONE Khulna,Jessore, Bagerhat, Kushtia,
Chuwadanga, Jhenaidah,Satkhira, Magura,Meherpur,Na
rail
CHITTAGONG ZONE Chittagong, Feni, Comilla,
Brahmanbaria, Laxipur, Coxsbazar, Noakhali,Chadpur
BARISAL ZONE Barisal, Pirojpur,Bhola,
Patuakhali,Jhalkathi
RAJSHAHI ZONE Rajshahi,Lalmonirhat, Rangpur,Chapai
nawabgonj, Sirajganj,Gaibandha, Dinajpur,Nilphamar
i,Bogra, Pabna, Naogaon, Natore,Kurigram, Jaipurha
t
SYLHET ZONE Sylhet,Hobiganj, Sunamgonj, Maulavibaz
ar
As of September 03
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Outcome for BangladeshA tremendous success!

• By 2001
• 39.000 VillagePhone ladies - means jobs,
  empowerment, and social change among the poorest
  of the poor
• Largest telco in Bangladesh
• Made telephony accessible to 40 of the
  population
• A forrunner as to modern business operation and
  organisation in Bangladesh
• Implementation of health, environment and social
  welfare measures
• 1st choice employer to attractive jobseekers
• Largest foreign investment i Bangladesh
• A high profile model operation (Clinton, queen
  Sofia, ITU...)

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Where does GrameenPhone operate?

• 80.000 village phones (Nov. 2003)
• Village phones twice normal traffic / subscriber
• Village phones generate incomming calls

• gt2.400.000 subscribers 2004 in towns

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Direct Contribution to Government
5,290M

• Largest tax payer in Bangladesh
• Total Contribution so far gt 15,915M BDT
• Largest foreign investment

4,185M
3,170M
1,600M
760M
520M
380M
10M
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Outcome as to sustainable development

• For Bangladesh
• better infrastructure, new jobs, weakened middle
  men, faster modernization, opens for more
  participation in world economy
• standards for health, environment, safety, work
  culture, anti-corruption
• spread of idea of multiple bottom lines
• For GrameenBank
• more development in the villages
• income source, learning
• platform for other development initiatives
• For Telenor (and partners)
• valuable business
• much goodwill received
• learned a lot about international business and
  Asia
• GrameenPhone is competence exporter within
  Telenor
• could use the relations to build new business

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Hence, the story of GrameenPhone is the offspring
of a marriage between

• A backward telecom administration, with a poor
  network, poor funding, and poor organisation and
  motivation
• The idea that communications infrastructure was
  the key emancipator
• A local social development organisation based on
  micro loans
• Demonopolization and internationalization in the
  North / West resulting in search for new telecom
  ventures
• Traditional telco competence with overcapacity
  and social ambitions

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just a part of a whole
To

• Goal Poverty alleviation

• Welfare for its own sake

• Grameen Bank (NGO)

• Basic means
• microcredit, education, and the poors own
  desires of a better life

• loans and savings
• womens networks
• health information
• self confidence building

• Application areas
• agricultural initiatives
• fishfarming initiatives
• handcrafts initiatives
• electricity initiatives
• ..

• Grameen daughter organisations

Grameen Trust Grameen Fund

• telecom IT initiatives
• Village phones
• distance education
• applications for the poor
• distance health services
• .

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Barriers encountered

• Scepticism as to feasibility, motives, and
  profitability in West East
• Lack of regulatory bodies and legal procedures
  in BD
• Incumbent telco fear of competition - BD
• Culture clash - N/BD
• Corruption - BD
• Bureaucracy BD and inside Televerket
• Local conditions that demanded different
  solutions as to technology, billing models, work
  organization, and more N/BD
• Grameen Bank, NORAD, and internal resources in
  Telenor helped overcome these problems BDN

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What are the general challenges as to sustainable
PC as to this business?

• The delivery as such communications
  infrastructure and service platform highly
  supportive to SPC
• order effects environment sustainability
  within operations in focus, OK
• order effects handsets, batteries an
  overwhelming, serious challenge, difficult
  enough in the 1st and 2nd world
• order effects social change triggered by
  increased and ubiquitous communications a HUGE
  opportunity AND challenge as to SPC
• Is the Western life style sustainable?
• The driving forces are very, very, very strong,
  and in synergy with other Westernisation. The
  trends are irreversible.Urgent need for barriers
  to hinder rebound effects
• How take out the gains and protect from not
  wished 2nd and 3rd order effects?
• only weak tools are visible
• the ones with strong solutions are called
  extremists/traditionalists

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What may be done better as to SPC?

• Premises
• The telecom field is competitive and technology
  driven
• Many new players with similar and/or conventional
  business models and conventional mobile and/or
  new technology have appeared
• Cost efficient solutions as to deployment,
  operations, handsets, etc are continuously sought
  for
• New generations of technical solutions with
  better cost/efficiency ratio appear all the time,
  which imply continuous development of business
  models
• Governments and customers are highly sensitive to
  investment costs, license fees, and usage costs
  of suscriptions and usage
• Help develop regulatory regimes, bodies and legal
  procedures
• Stimulate/develop understanding as to how to
  harvest efficiency gains without loosing out to
  rebound effects related to 3rd order effects of
  ICT
• Continue to develop ties with local GOs / NGOs as
  to technology, billing models, work organization,
  and more
• Continue as a role model as to ethics codex and
  work environment standards

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