Asia at the leading edge of communication

and new media developments?

Rohan Samarajiva, LIRNEasia

International Conference on Information, Communication and New Media & the First Annual
Convention of the Information and Communication Association of Taiwan, May 17, 2008
Picture 21
Agenda

 Asia’s challenges (and opportunities)

 Access at the bottom of the pyramid (BOP) in
selected countries of emerging Asia
 Internet?
 An alternative path to the information society
 Innovations needed for the alternative path

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Which Asia?

 Taiwan ROC, Republic of Korea, Singapore . . .

OR
 Burma (Myanmar); DPR Korea; Nepal . . .

 The Asia that manufactures most of the world’s laptops,

semi-conductor chips . . .
OR

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 The Asia that is barely a blip in the information society
map . . .

 The Asia that is developed . .

OR
 The Asia that still contains the world’s largest
concentration of poor people . .
Workhorse of the information economy 
driver’s seat . . .
 Solve the hardest problem: getting the poorest
millions connected to the Information Society
 Convert Asia’s biggest weakness to an advantage
 This will potentially unlock many markets and drive the
entire Asian economy to a new level
 Innovation at multiple levels needed
 Business models to connect large numbers of poor

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people to electronic networks; extend from mobile to
broadband
 Technical solutions to make it possible for them to do
more-than-voice once connected
 More-than-telecom solutions to problem of putting
money in people’s pockets through telecom, rather
than taking money out
Connecting the millions at the bottom
of the pyramid. .

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WSIS definition of Information Society

 “a people centered, inclusive, and development-oriented

where everyone can create,
information society
access, utilize and share information and
knowledge enabling individuals and communities to
achieve their full potential in promoting their sustainable
development and improving their quality of life.”

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In other words . . .

 Everyone should be able to do what we do

routinely using the hybrid medium known as the
Internet
 Communicate in multiple forms
 synchronous/asynchronous
 One-to-one/one-to-many/many-to-many

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 Push/pull . . .
 Retrieve information from multitude of sources
 Publish
 Transact
 Remotely compute . . .
Answers from LIRNEasia’s Teleuse @ Bottom of the
Pyramid (T@BOP) research (2006)

 Five countries
 Pakistan
 India
 Sri Lanka
 Philippines
 Thailand

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 9,000 sample
 Design and analysis by LIRNEasia;
fieldwork by AC Nielsen
Bottom of the Pyramid (BOP) = SEC D & E

 BOP defined as SEC D and E; between

ages 18-60
 SEC determined by education and
occupation of CWE; closely related to
income levels SEC A, B & C
 BOP sample is representative of the BOP
population SEC D & E
 Diary respondents also representative of
BOP

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 Small (non-representative) sample taken
of SEC groups A, B & C, ‘middle and top’
of pyramid
Internet at the BOP…

Pakistan India Sri Lanka Philippines Thailand

Use the Internet 1.9% 0.3% 1.5% 8.8% 10.4%

Internet use

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16%
14%
14%
12%
Large gender
12% divide, even in
10%
South East Asia
% at BOP

7% Male
8%
6% Female
6%
4% 3%
2%
2% 1% 0% 0% 1%
0%
Pakistan India Sri Lanka Philiphines Thailand
…what Internet??

Have not heard about the Internet before

80% 72%

60%
% at the BOP

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40% 36% 36%
29%

20% 14%

0%
Pakistan India Sri Lanka Philippines Thailand
Will we ever get there? . . .

 But there is an alternative path . . .

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Access = mobile?
 Access through the phone is surprisingly high . . .

 Most people approached for survey (BOP and other) had

used a phone in the last 3 months
South Asia South East Asia

Pakistan India Sri Lanka Philippines Thailand

Used phone in
98% 94% 92% 93% 95%
last 3 months

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“Half the world’s population has not made a phone call” was wrong when Kofi Annan
said it in 1999; absolutely wrong now
Ownership is not as high . . .

 Especially in South Asia…

Ownership and GDP per capita (USD, PPP)

90% 9,000
81%
80% 76% 8,000

GDP per capita, USD (PPP)

70% 64% 7,000
% at bottom of pyramid

59% 60%
60% 6,000

50% 5,000

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38%
40% 4,000

30% 3,000
23% 22%23% 23%
18%
20% 14% 2,000
11%
9%
10% 7% 1,000

0% 0
Pakistan India Sri Lanka Philippines Thailand

Own a mobile Own a fixed phone (household)

Own nothing (but use something) Per Capita GDP PPP (USD)
What are the prerequisites for ‘more-than-voice’ mobile?

 Familiarity with the technology

 Access and use
 Easy access via mobiles or CDMA ‘fixed’ phones is most
appropriate
 Sophisticated handsets can aid uptake
 Ownership
 Current

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 Only 30% own a phone
 Majority prepaid
 Mobile users using SMS
 Future?
 Majority of new connections will be mobile
 Affordability is a barrier among the un-connected
 Payment systems in place
Easy access needed for more-than-voice with mobile…

 Easy access provided by ownership is important

 Unlikely that public/shared phones will be used for anything other
than basic voice
 Access for more-than-voice, in order of importance
 Own mobile
 Other household member’s mobile
 CDMA ‘fixed’ phone

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 80%

%
70%
60%
50%
40%
Most frequently used mode 30%
100% 20%
% at BOP

90%
10%
80%
0%
70% Pakistan India
Public phone 35% 71%
60%
Relative / friend's phone 10% 1%
50%
Neighbours phone 8% 7%
40% 12%
Mobile of another household Access 4%

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30% member
Household fixed phone 14%
within9%
20%
Own mobile 21%house9%
10%
0%
Pakistan India Sri Lanka Philippines Thailand
Public phone 35% 71% 30% 8% 7%
“Fixed” 10% 1% 12% 14% 6%
Relative / friend's phone
phones at S
Neighbours phone 8% 7% 14% 7% 1%
AsiaofBOP
Mobile another household 12% 4% 6% 11% 5%
are mostly
member
Also note that 12% in PK,
CDMA;fixed phone
Household 14% 9% 21% 4% 8%
4%73%
in IN & 6% in LK use
Own mobile 21% 9% 17% 56%
Mimic GSM the mobile of another
features. household member

back
Average price paid for handset > USD70: Sophisticated
handsets?

Average price paid for mobile handsets: brand new & second-hand

USD 160

USD 140

USD 120
Average price paid

USD 100

USD 80

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USD 60

USD 40

USD 20

USD 0
Pakistan India Sri Lanka Philippines Thailand

ave. price paid for brand new ave.price paid for second hand

 60-70% of mobile owners at BOP use brand-new handsets

Payment systems in place for more-than-voice
applications

Pakistan India Sri Lanka Philippines Thailand

Pre Paid 99% 95% 92% 99% 96%

Post Paid 1% 4% 8% 1% 4%

For example, Sri Lanka’s largest GSM operator (~ 3.6 million

subscribers, 2007):
 86% prepaid subscribers, overall

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 Approx. 50% of prepaid top-ups are via electronic reload
(50% via card system)
 12,000+ electronic reload outlets
 Mobile payment system launched in S Asia in 2007
 Philippines is the world leader
Evidence of other applications

‘A key advantage of a phone, as seen by participants, is

its ability to promote democratic participation. The
example presented was a reality TV show . . . to select a
‘Super Star’ . . . based on the SMS/phone voting by the
public. . . . Study participants viewed this as a case of
telecom enabling the ‘unheard’ to voice their opinion. . . .
They felt that their voice was heard; that they have been
elevated from the level of mere observers to that of active

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participants in democratic processes. . . . None of them
complained of having to pay five times the regular cost of
an SMS to place their votes.’
Focus group on phone use in Sri Lanka, reference to an American Idol
type show

back
 An incredible innovation that has already been made

 Despite poor governance and regulation, despite low purchasing

power, 4 South Asian countries are the best in price

Only ones with total cost of ownership < USD 5

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Optimizing revenues from subscribers 
optimizing revenues from minutes
 Analogy: airline business models
 Model A: conservative, based on 55% fill
factor, which will cover both fixed and
variable costs (capex and opex)
 Model B: more risky, where at 65% variable
costs would be covered, at 75% fixed costs

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would also be covered and everything above
that is pure profit
 Model B: Budget airlines
Budget telecom networks

 By dramatically dropping prices (and total

cost of ownership), budget telcos have
 Added minutes (and usage) from the top of pyramid
 Added large numbers of low-volume users from the
BOP (exploiting the long-tail)
 Thereby increasing fill factors on their networks, where

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costs are, for the most part, static with added minutes
 Resulting in
 Low prices
 High profits
 Patchy quality of service
Declining tariffs, increasing connections and enabling
actions in India, 1998-2007

18 1 8 0 .0 0
1 6 6 .00
16
NT P-99 L o we rin g o f 1 6 0 .0 0
A D C fro m 3 0%
t o 1 0% o f
T e lec o m
14 se cto r rev en u e 1 4 0 .0 0

Mob ile S ubs c rib e r ba s e (m n)

T a riff Or de r
C PP
E ffe c tiv e ta r iff (R s ./m in)

12
in tro d u c ed 1 2 0 .0 0

10 1 0 0 .0 0
9 0 .0 0
3 rd & 4th W LL
8 cel lu lar In tro d u c ed 8 0 .0 0

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o p e rato r
6 6 0 .0 0
5 2 .1 7

4 4 0 .0 0
3 3 .6 0

2 2 0 .0 0
1 3.0 0
6 .5 0
0 .8 8 1 .2 0 1 .8 8 3.5 8
0 0 .0 0
M a r-9 8 M a r-9 9 M a r-0 0 `M a r- 0 1 ` Ma r -0 2 ` M ar- 0 3 `M ar -0 4 `M ar- 0 5 `M ar -0 6 `M ar- 0 7

F ix e d Ta r iff C e llula r Ta r iff M obile Sub s

Source: Payal Malik

Revenues and profitability of budget telcos in S Asia

Revenues EBITDA (USD) EBITDA margin

(USD) (%)

Bangladesh 655,900,000 344,500,000 53

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Sri Lanka 259,041,928 124,833,464 48

India 26,723,674,194 9,938,340,523 37

Technical solutions that need to be
made for mobile more-than-voice . . .

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Handsets

 Lower costs
 Higher functionalities
 Voice interfaces
 Trust-building features

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Network equipment

 Design of 3G networks to give decent QOS with high load

factors

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Web interfaces

 Optimized for mobile not conventional Internet access

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Social science has a major role to play

 Everyone wants to understand the end

user
 Handset designers
 Network designers
 Service designers
 Who will tell them?

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 LIRNEasia quantitative research
 Nokia, Telenor qualitative research
 Where are the universities
 U of Salzburg, usability labs
 ???
Putting money in user’s pockets, not taking from . . .

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 Efficiency of daily activities, as seen at the BOP

 BOP in all countries sees efficiency

Efficiency of daily activities

Thailand
Pakistan (4.17)
(4.37)

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Sri Lanka (3.98) Philippine
s (4.40)
India (3.90)

1 2 3 4 5
worsened slightly no change somewhat improved
worsened improved
 Efficiency  income benefit?

 Indian & Filipino BOP see economic benefit

Ability to earn or save

Pakistan (3.80) India (3.97)
Philippines

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Thailand (3.56) (4.07)
Sri Lanka (3.19)

1 2 3 4 5
worsened slightly no change somewhat improved
worsened improved
Seen both in services and agriculture
% of owners who's ability to earn or save has

100%
90%

80%
70%
60%
improved

India
50% Sri Lanka
40% Pakistan

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30%
20%
10%
0%
Agriculture / Employed in Labourer / Trader / Self Employed in
Farming an off ice Industrial Employed service
w orker sector

Saving travel time and costs, checking price information,

sale of minutes?
 But, sense of security is main perceived benefit

 Ability to act in an emergency is key

Ability to act in emergency

Philippines (4.63)
Sri Lanka (4.58)

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Thailand
Pakistan (4.48) (4.83)
India (4.28)

1 2 3 4 5
worsened slightly no change somewhat improved
worsened improved
 Keeping in touch is important

Philippines (4.45)
Family and social relations
Sri Lanka (4.35)
Thailand

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Pakistan (4.30)
(4.66)
India (4.14)

1 2 3 4 5
worsened slightly no change somewhat improved
worsened improved
 Social status and recognition improves in all countries except
LK

Pakistan Thailand
Social status and recognition
(4.05) (4.28)

India

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Philippine
(4.03)
s
Sri Lanka ` (4.29)
(3.47)

1 2 3 4 5
worsened slightly no change somewhat improved
worsened improved
Need innovations in making/saving money from
ICTs

 Agricultural information
 Our research shows the key interventions should be at
 Selling stage (market information in real time)
 Decision stage (ability to tell what the prices will be at
harvest time)
 M-payments

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 Reduce transaction costs for migrant workers
 Reduce expensive cash use
 Transportation
 Help in cutting travel time and costs
 More . . . ?
www.lirneasia.net

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Rohan Samarajiva, samarajiva@lirne.net