TeleuseBOP

1
Teleuse_at_BOP

• Findings from a multi-country study

2
Table of contents

• Background methodology
• Everyone has access, but not ownership
• Usage patterns
• Who owns phones? Why?
• BOP is prepaid
• SMS use and its relative cost
• Missed calls
• The unconnectedthe next billion
• Getting connected
• Not getting connected
• International calls who is calling?
• Gender divide?
• Benefits of access to telecom?
• Internetwhat Internet?
• What is to be done?

3
Bottom of the pyramid

• Background methodology

4
Bottom of the Pyramid

• Emerging markets are where the action is
• The next billion...
• Untapped potential at the bottom of the pyramid

5
Methodology
Qualitative
Quantitative
6 Focus Group Discussions per country (30)
Random sample 8,660 F-to-F interviews in 5
countries 50 diary
Final output
6
Bottom of the Pyramid (BOP) defined

• Many definitions of poverty, but this study uses
  SEC D and E between ages 18-60
• SEC does not take into account income, but it is
  closely related to income levels

excluding FANA/FATA Tribal Areas excluding
NE Provinces
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Teleuse_at_BOP

• gt6,000 sample survey in five countries
• India, Pakistan, Sri Lanka, Philippines
  Thailand
• Understand telecom use at the BOP ( SEC Groups D
  E) in Developing Asia
• Representative of target population
• SEC DE, ages 18-60

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Quantitative sample

• BOP segment is representative of the BOP
  population
• Diary respondents also representative of BOP
• Small (non-representative sample) taken of SEC
  groups A, B C

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Teleuse_at_BOP

• 9,000 sample survey in five countries
• India, Pakistan, Sri Lanka, Philippines
  Thailand
• Understand telecom use at the BOP ( SEC Groups D
  E) in Developing Asia
• Representative of target population
• SEC DE, ages 18-60

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Country profiles
Notes India on an April March reporting period
Pakistan on a July June reporting period
Other countries follow Jan Dec (calendar year)
reporting periods. Sources India-COAI, TRAI
ThailandCompany Reports PakistanPTA
PhilippinesNTC Sri Lanka- TRC 2000 onwards
from company reports World Bank (2006) CIA Fact
Book (2005)
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Bottom of the Pyramid

• Everyone has access, but not ownership

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Access (used a phone in the preceding 3 months)

• Most have used a phone in the last 3 months

13
Time to reach nearest phone the BOP

• Most can get to a phone in less than 30 minutes

14
Urban-rural divide Mostly in Pakistan India
Time to nearest phone
15
Additional transport cost incurred to reach a
phone Urban vs. rural

• Mostly in rural Pakistan and India, to a limited
  extent in Sri Lanka

16
Amount of additional transport cost incurred to
reach a phone in rural India Pakistan

• Rural Pakistan
• Many incur gt 40 US cents

• Rural India
• typically lt 40 US cents

17
Access modes among BOP phone users

• S Asia BOP mainly used public phones SE Asia
  mobiles

18
Urban-rural differences
73 68
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Why did they use their most-frequent mode?

• Convenience and lack of other options override
  cost

Not users of public phones
Users of public phones
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Ownership levels at BOP

• Phone ownership is low in South Asia

21
How often phone owners allow others to use their
phones
22
Number of mobiles within the respondents
household
23
Bottom of the pyramid

• Usage patterns

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Average number of calls (incoming outgoing) per
month

• Approximately one call per day (except Thailand)

Source Diary
25
Average call durations
Source Diary
26
Call destination (type of call)
Source Diary
27
Call purposes (primary)
Source Diary
28
Time of day that calls are made and received
Source Diary
29
Expectation of the cost of a one minute local call
30
Bottom of the pyramid

• Who owns phones? Why?

29
of BOP in owned a phone in mid-2006
31
Phone ownership urban vs. rural
32
Mean age of phone owners
33
Why own a mobile phone?

• Convenience is key privacy is more of a concern
  for higher-income countries (highest in Sri
  Lanka)

34
Growth in mobile phone ownership at BOP since 2001
35
Handsets
36
Who decides female ownership of phone at BOP?
(patriarchy lives in South Asia!)
Who makes the decision to obtain a mobile (among
female mobile owners)?
of female mobile owners at BOP
37
Reasons for selecting mobile service provider
38
Coverage more important in rural India tariff in
urban India
39
Coverage more important in rural Pakistan tariff
is less important
40
Why own a fixed phone?
41
Older fixed connections LK picked up after 2005
42
Reasons for selecting fixed service provider
43
Ownership of both a fixed and mobile phone
44
Bottom of the Pyramid

• BOP is prepaid

45
Prepaid vs. postpaid mobile packages (among
mobile owners)
46
Reasons for choosing prepaid

• Prepaid helps to control expenditure reasons
  are largely cost-related

47
Frequency of prepaid mobile top-ups

• Expenditure control evidenced by infrequent
  top-ups in PK, IN, LK TH

48
Amount of last recharge
49
How long the last recharge is expected to last
(calculated)
50
Time to travel to location where mobile owner can
re-credit mobile
51

• Indian BOP mobile owners recharge less
  frequently, but in larger amounts (thus recharge
  expected to last longer 22 days )
• possibly because they have to travel further to
  recharge
• Opposite case in the Philippines
• Possibly because of the intense use of SMS
  (recharge will last less than 6 days)

52
Bottom of the pyramid

• SMS use and its relative cost

53
Use of SMS at the bottom of the pyramid
Lowest SMS prices SMS capital of the world
54
Frequency of SMS use
55
Urban vs. rural SMS use
56
Call vs. SMS charges Prepaid

• Call charges weighted for local and national
  calls
• Charges as at June 2007
• Packages selected based on lowest connection
  charge package of the largest operator

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Ratio of call to SMS charges Prepaid
1 min call more expensive than SMS SMS cheaper
than 1 min call
58
Call vs. SMS charges Postpaid

• Call charges weighted for local and national
  calls
• Charges as at June 2007
• Packages selected based on cheapest monthly
  rental package of the largest operator

59
Ratio of call to SMS charges Postpaid
1 min call more expensive than SMS SMS cheaper
than 1 min call
60
Relative cost of SMS vs. use at the BOP Prepaid
This relationship is examined only for the
prepaid case, because mobile use at the BOP is
predominantly prepaid.
61
Relative cost of SMS vs. use at the BOP Prepaid

• VERY strong positive relationship between the
  relative cost of an SMS and SMS use at BOP, both
  on-net off-net mobile calls
• statistically speaking 96.2 of variability of
  SMS use is explained by (or due to) the relative
  cost of on-net calls or 99.9 of variability of
  SMS use is explained by (or due to) relative cost
  of off-net calls.
• The relationship between the actual cost of an
  SMS and SMS use at the BOP is very WEAK.

This relationship is examined only for the
prepaid case, because mobile use at the BOP is
predominantly prepaid.
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Oct 2006
63
Bottom of the pyramid

• Missed calls

64
Use of missed calls by mobile and fixed phone
owners!

• Missed calls used just as much in the SEC A,B C
  samples

65
Use of missed calls by fixed phone owners
66
Use of missed calls Males vs. females
67
Other strategies
68
Bottom of the pyramid

• The unconnectedthe next billion

69
Key barrier to ownership is affordability
70
Affordability more of a problem in urban S Asia
need may be higher
71
The cost of getting connectedExpectation vs.
affordability gap

• 70 of non-owners at BOP in Sri Lanka believe
  that the cost to get connected will be greater
  than USD56
• Only 11 can afford more than USD50
• Can get new mobile and connection for USD 33
  lower with second-hand phone

72
Use cost most can afford USD5 per month on
communication

• Expectations and affordability are in line
• Most expect the monthly cost to be less than
  USD5, which most can afford to pay
• Also in line with ARPUs of mobiles (USD 3-4)

73
Non-owners planning to get connected by mid-2008
74
Bottom of the Pyramid

• Getting connected

115 million
from BOP will get connected between mid-2006
mid-2008
75
Those that planned to get connected between
mid-2006-2008
Prospective owners
76
Projected BOP penetration
77
As many rural Indians plan to get connected as
urban Indians
78
Most would use phone for emergency communication
keeping in touch
79
Type of phone that prospective owner would buy
80
Affection for fixed higher in rural Sri Lanka
81
Urban-rural break down of prospective owners
82
Gender break down of prospective owners
83
Usage patterns of prospective owners are heavier
users
84
Bottom of the Pyramid

• Not getting connected

165 million
from BOP will not get connected between mid-2006
mid-2008
85
The biggest barrier to ownership at the BOP is
affordability

• 29 plan to get connected between mid-2006 and
  mid-2008

86
What do we know about this group?

• The majority in Sri Lanka will be females

87
Among those not planning to buy phones, males are
more dependent on public phones, while women are
more dependent on other peoples phones
88
What do we know about this group?

• The large majority will be rural

89
What do we know about this group?

• Poorer.
• E.g. The large majority will have monthly
  household incomes below USD 75.81 (median) ( LKR
  7500) in Sri Lanka

90
What do we know about this group?

• Older
• E.g. The mean age of this group will be 40 years
  of age compared to mean age of mobile owners at
  BOP of 33 years

91
What do we know about this group?

• Make fewer calls
• E.g. In Sri Lanka they make and receive a total
  of 8.65 calls per month
• Compared to the average for the Sri Lankan BOP of
  23.2 (compared to those who plan to buy a phone
  who make and receive a total of 15.05 calls per
  month)

Source diary
92
Bottom of the pyramid

• International calls who is calling?

93
Mostly local at BOP, but some international in LK
PH
Source Diary
94
1.5 million expatriate workers, 90 in West Asia

• 44 male 56 female, according to SLBFE
• 840,000 women separated from families
• 660,000 men separated from families
• Dont they need to talk?

95
International calls Who is calling/being called?

• Primarily rural females, with primary or
  secondary education, aged 25-54
• Different from the Philippines more males,
  mostly living in urban areas, with higher levels
  of education, mostly below 34.
• The bulk of the calls are made by trained
  untrained laborers (25 ) Farmers / agricultural
  workers (16) Housewives (13)
• Again, different from the Philippines mostly
  housewives (32), those employed in services
  (18) or unemployed (17)
• 2006 data excluding NE provinces

96
Gender of the caller/callee (as a percentage of
international calls made)
97
Location of the caller/callee (as a percentage of
international calls made)
98
Educational attainment of callers/callees
99
Age of the caller (as a percentage of
international calls made)
100
Bottom of the pyramid

• Gender divide?

101
Most frequently used phone Males vs. Females
102
Access Primary phone used in Sri Lanka

• Small gender divide in access exists at BOP in
  Sri Lanka
• Individually owned mobiles and public phones
  appear to be more male-dominated access modes
• Use of household fixed phones, and other peoples
  phones (within as well as outside of the house)
  is more often among females

Ratio of 1 indicates equal access between males
and females. Ratio gt 1 indicates males use access
mode more often as primary phone (e.g. mobiles).
Ratio lt 1 indicates females use access mode more
often as primary phone (e.g. neighbor/friend/relat
ives phone).
103
However, far larger divide exists in India and
Pakistan, esp. on mobile, and public phones in
Pakistan
104
Access almost equitable in Philippines and
Thailand
105
Little urban-rural differences in Sri Lanka
except on individually owned mobiles

• Gender divide on mobile is most severe in rural
  Pakistan (ratio of 1 4.8) and rural India
  (ratio of 1 3.9)
• Highest reliance on other peoples phones among
  women in rural Pakistan
• Public phones hold strong among women even in
  rural India

106
Access Urban vs. Rural
(India and Pakistan only)
107
Female mobile owners at BOP who pays for their
mobile?
of female mobile owners at BOP
108
Males use mobiles more often in South Asian BOP
109
Females more reliant on other peoples phones in
South Asian BOP
110
Household fixed phones used equally by males and
females
111
Public phones also, except in Pakistan
112
Use average number of calls per month
Total (inout)

• Only country where differences were significant
  (95 confidence interval) was Pakistan

113
Use Average call duration (mins)

• NB, minutes recorded were an approximation (e.g.,
  1 min or less, 2-3 minutes, about 5 mins,
  about 10 mins)
• Only country where differences between men
  women were significant (95 confidence interval)
  was Pakistan

114
Use Purpose of calls

• Significant differences
• Pakistan male vs. female use of the phone to
  keep in touch and for business purposes (95
  confidence interval)
• India male vs. female use of the phone for
  business purposes (90 confidence interval)

115
Bottom of the pyramid

• Benefits of access to telecom?

116
Economic benefits from direct access

• Income generation through the sale of telecom
  services Grameen model
• Indirect
• Use of a phone by an auto-rickshaw driver
• Obtaining agricultural price info by farmer
• Cost savings made by making a call as opposed to
  taking a bus ride into town

117
Efficiency of daily activities

• BOP in all countries sees efficiency

118
Efficiency ? income benefit?

• Indian Filipino BOP see economic benefit

119
Seen both in services and agriculture
Saving travel time and costs, checking price
information, sale of minutes?
120
But, sense of security is main perceived benefit

• Ability to act in an emergency is key

121
Keeping in touch is important
122
Social status and recognition improves in all
countries except LK
123
Bottom of the pyramid

• Internetwhat Internet?

124
Internet use at the BOP
Large gender divide exists, even in South East
Asia for e.g.11.9 of Filipino men at BOP use
the internet, but only 5.7 of Filipino women at
BOP use the internet
125
Internet use at the BOP contd
Large urban-rural divide also exists in Internet
use at the BOP across all five countries
126
Internet awareness at the BOP
Internet awareness at the BOP is poor, especially
in South Asia 36 of Pakistanis at the BOP have
not heard of the Internet before.
127
Internet awareness at the BOP contd
Gender as well as urban-rural divides also exists
in terms of Internet awareness at the BOP
128
Bottom of the pyramid

• What is to be done?

129
Mostly, reduce entry costs at the BOP

• Telecom operators
• Leverage benefits of direct access security,
  keeping in touch
• Improve coverage
• Infrastructure sharing is the right way to go
• Solve the connection/use charge problem
  installment plans?
• Collaborate on meaningful content and
  applications for BOP
• e.g., SMS-based remittances
• Handset manufacturers
• Ultra low-cost phones with warranty
• Affordable, functional handsets (e.g., with local
  language SMS capability)

130
Mostly, reduce entry costs for the BOP

• Policy makers/regulators
• Sustain competitive conditions
• India has lowest HHI concentration ratios
• Improve regulatory environment on all fronts
• Universal service and spectrum management seen as
  most problematic by stakeholders responding to
  TRE questionnaire
• Encourage well-functioning second-hand market
  (e.g., Pakistan)
• Exclude stolen sets by mandating equipment
  registration
• Rethink tax regimes move away from taxing
  handsets
• Accelerate USO Fund disbursements and
  infrastructure sharing to increase rural coverage
• India can show the world how to do it

131
In sum

• BOP uses telecom, frugally but intelligently
• Many plan to get connected
• Industry as well as policy makers have roles to
  play