PRESANTATION ON RURAL

TELECOMMUNICATION

SUBMITTED TO- SUBMITTED BY-

PROF PRSHANT GUPTA SHAILESH PATEL
 Introduction
• GrameenPhone is a commercial operation providing cellular services in both
urban and rural areas of Bangladesh, with approximately 40,000 customers.

• GrameenPhone was founded by three visionaries: IqbalQuadir, an

investment analyst who saw the role that telecommunications connectivity
can play in poverty reduction within Bangladesh and who developed the
concept in partnership with Muhammad Yunus, the founder of the Grameen
Bank, and Khalid Shams, Deputy Managing Director of the Grameen Bank.

• Through their efforts in establishing operating and investment partnerships,

investment in GrameenPhone began with initial funding of $125 million
USD, including a $50 million loan from International Finance Corporation,
Asian Development Bank and Commonwealth Development Corporation in
Britain.
 Grameen Telecom‟s Village Phone
(VP) programme
• The Village Phone (VP) programme established by Grameen Telecom
provides an opportunity for universal access: according to Grameen
Telecom, a person may not own a telephone but he/she should have access
to a telephone within a ten minute walk.

• The Village Phone is a unique undertaking that provides modern digital

wireless telecommunication services to some of the poorest people in the
world. A Grameen Bank member (most often female) purchases a phone
under the lease-financing programme of the Bank and provides telephone
service to people in her village.

• Each Village Phone operator is responsible for extending the services to

customers for both incoming and outgoing calls, collecting call charges,
remitting payments to Grameen Telecom, and ensuring proper maintenance
of the telephone set.
 Grameen Telecom‟s Village Phone
(VP) programme
• The Village Phone initiative was developed by combining the Grameen
Bank‟s expertise in village-based micro-enterprise and micro-credit with the
latest digital wireless technology. Grameen Telecom (GTC) is a non-profit
organization that forms part of the Grameen Bank family of organizations,
and it focuses exclusively on the deployment of the Village Phone
programme in rural parts of Bangladesh.

• GTC buys airtime in bulk from Grameen Phone Ltd. (GP), a for-profit
corporation holding a nation-wide license to operate and maintain a mobile
cellular network throughout the country.

• Bulk airtime purchasing from Grameen Phone Ltd. enables GTC to pass on
savings to the Village Phone (VP) operator. GTC owns 35% of the shares of
Grameen Phone Ltd., and plans to have controlling interest in Grameen
Phone Ltd. in the near future.
 Grameen Telecom‟s Village Phone
(VP) programme
• The operator‟s income consists of the difference between charges paid by
customers and the airtime charges billed to the operator by Grameen
Telecom.

• GTC prepares monthly bills for the airtime charges for each phone, and
Grameen Bank managers at the community level collect monthly payments
from operators, in person, at the village level
 The objectives of GTC are
• To provide easy access to telephones when needed all over rural
Bangladesh;

• To introduce a new income generating source for villagers;

• To bring the potential of the Information Revolution to the doorsteps

of villagers;

• To introduce telecommunications as a new weapon against poverty.

 How the VP programme works
• Selection, Subscription and Training.

• GTC first gathers information on villages that have cellular coverage

emanating from Grameen Phone‟s existing network of cellular towers.

• GTC Unit Officers then visit the Grameen Bank branches in that area and
prepare a list of villages where network coverage is satisfactory to provide
Village Phone service. The GB branch manager selects women from among
Grameen Bank members in those villages to act as VP operators.
 The Grameen Bank has a special set of criteria
for the selection of VP operators:
• She must have a very good record of repayment of Grameen Bank loans;

• She should have a good business, preferably a village grocery store, and
have the spare time to function as the VP operator.

• Initially, this may be a side business and eventually switch over to telecom
business on a full-time basis after services and revenue justify a full-time
commitment

• She should be literate or at least she must have children who can read and
write;

• Her residence should be near the centre of the village

 Purchase & Payment.
The basic Village Phone package contains:

• Nokia 1610 transceiver

• 1200 mAh battery
• fast charger
• sign board
• Calculator
• Stopwatch
• User guide in Bangla
• Price list for calling different locations
 Purchase & Payment

• The basic Village Phone package costs 15,000 Taka, or approximately $310
USD6. The VP operator pays for the phone through weekly loan payment
installments of 220 Taka or approximately $4.50 USD.

• These payments are made through the local Grameen Bank branch, which
is responsible for collecting on behalf of GTC.

• For the usage charge, the VP operators pay a minimum monthly bill of 154
Taka or approximately $3.20 USD that includes the monthly fee for the
line, Value Added Tax (VAT), a GTC service charge, and 100 Taka for the
annual government license and royalty fee.

• Actual airtime charges are added on top of all this.

 Electricity
• Widespread access to electricity in rural Bangladesh enables the phone
operator to recharge batteries or power the phone directly from an electrical
outlet.

• Solar power sources are provided for two Village Phones in non-electrified
villages.

• As Grameen Telecom expands its service, it will be providing phones to

many more non electrified villages.

• It thus provides a solar-powered solution for powering phones inthese

villages.
 Why GTC and the VP are unique
• The Village Phone programme contains many rural development “firsts”:
First rural development micro-credit facility in a developing country to
target the creation of micro-enterprises based on information and
communication technology (ICT) services

• First rural development micro-credit facility in a developing country to

assist in the creation of village telephone service businesses using digital,
wireless telephony

• First private sector rural telecom initiative that specifically targets poor
village women for establishing micro-enterprise (targeted, micro-level
program)

• First private sector telecom initiative with an explicit purpose of rural

poverty reduction
 Pretups
Insurance,
inventory

Conventional supply of physical

high in built costs
retailing models vouchers

transport,
Printing

• Grameen phone deployed a prepaid mobile solution, pretups, from bharti telesoft.

• That broke the conventional prepaid service delivery chain and replaced
scratch cards.

• Allowing operators to vend prepaid talk time in electronic form over existing
distribution channels.
 PreTUPS
• With PreTUPS, Grameen Phone was able to profitably grow the BOP
segment.

• PreTUPS replaced scratch cards and equipped intermediaries in the

prepaid value-chain.

• With a multilingual SIM-based menu to perform role-based functions to

distribute airtime.

• Grameen Phone's subscribers, PreTUPS translated into an affordable way

to use mobile phone services.

• Grameen Phone's subscribers can now budget mobile usage into their
daily expenses, equipping them with one of the tools of modern business.
 Goals of grameen phone
Promote economic development

Promote social development,,

provide affordable GSM cellular service nationwide

To connect rural Bangladesh through the provision of mobile telephone service

by creating micro-enterprises that can both generate individual income and provide
whole villages with connectivity.
 Strength
• Provides nationwide mobile GSM rural areas.

• The shared-access business model concentrates demand and

creates high cash flow.

• Financing from grameen bank. Grameen bank provides credit and

bill collection services.

• Gp has experienced rapid growth (has 63% of mobile phone market

in 2000), substantial revenue growth.

• Gp customer service, low rate of service cancellation.

• Extent of its gsm network

 Weaknesses
• Uses cellular technology too advanced and expensive for fixed
phone centers.

• limited rural marketing, no content development for Village

Phones.

• Inferior mobile-to-mobile phone services.

 Opportunity
• Development of trained entrepreneurs.

• Loan repayment rate to grameen bank is 90-95%, enhances

status of female operators.

• Female villagers feel liberated by public space, social and

economic benefits.

• Rural competitors unable to expand subscriber base further than

tens of thousands.
 Opportunity cont’d
• Bangladesh's new telecommunications control commission
assumes some powers from BTTB.

• Rural competitors have limited service areas.

• Bangladesh railways fiber optic infrastructure.

• Bttb's poor performance.

• Cooperation between competitive mobile providers to compete

with BTTB.
 Threats
• Very limited infrastructure,
• Underdevelopment, poverty,
• Telecom market is controlled by BTTB,
• BTTB to launch its own GSM mobile network,
• Competition from rural providers,
• Bangladesh currency constraints, taxes, and illiteracy.
 Impacts on poverty reduction:
• The Village Phone programme yields significant positive social and , including
relatively large consumer surplus and immeasurable quality of life benefits. The
consumer surplus for a single phone call from a village to Dhaka,a call that replaces
a physical trip to the city, ranges from 2.64% to 9.8% of mean monthly household
income. The cost of a trip to the city ranges from 2 to 8 times the cost of a single
phone call, meaning real savings for poor rural people of between 132 to 490 Taka
($2.70 to $10 USD) for individual calls.

• The main reasons Grameen Bank members reported for using the telephone are
discussions of financial matters with family, including discussions of remittances
(42%) and social calls to family and friends (44%), accounting for 86% of all calls.
Bangladesh is a labour-exporting country with many rural villagers (predominantly
men) working in the Gulf States.

• The Village Phone acts as instrument to reduce the risk involved in remittance
transfers, and to assist villagers in obtaining accurate information about foreign
currency exchange rates.
 Impacts on poverty reduction:
• Transferring cash from a Gulf State to a rural village in Bangladesh is fraught with
risks; remittances are thus a key factor in demand for telephone use.

• Reducing the risk of remittance transfers from overseas workers has important
micro-implications for rural households and villages. At the micro level,
remittances tend to be used for daily household expenses such as food, clothing and
health care.

• Remittances are thus an important factor in meeting household subsistence needs

and can make up a significant portion of household income.

• Remittance funds are also spent on capital items including building or improving
housing, buying cattle or land, and buying consumer goods such as portable
tape/CD players and televisions. Once subsistence needs are met, remittances tend
to be used for “productive investments,” or for savings.
 Impacts on poverty reduction:
• Social calls to family and friends frequently involve transfer of information
about market prices, market trends and currency exchange rates, making
the Village Phone an important tool for enabling household enterprises to
take advantage of market information to increase profits and reduce
productive expenses.

• The income that Village Phone operators derive from the Village Phone is
about 24% of the household income on average - and in some cases it was
as high as 40% of the household income - and Village Phone operators
become socially an economically empowered.
 Distribution structure to stimulate
greater sales
• 120,000 point of sales

• Direct delivery of to retailers

• Sales tracking system

• Daily visits to 70,000 retailers

• Grameenphone manager at distributor

premises for monitoring and training

• Flexibility, lower fixed cost and

• real-time tracking
 Quality network and nationwide
coverage
• Best overall quality compared to competitors

• 740 k Erlang core capacity

• Nation wide fibre optic network:

– Highway: 2,715 Km
– Railway: 2,014 Km

• Over 12,000 base stations

• Huawei and Ericsson key network equipment vendors

 The largest IPO in Bangladesh
• Offer size of USD 140 million of primary shares

• USD 70 million PPO tranche

• USD 70 million IPO tranche

• IPO offer period starting October 2009

• 10% free float

• Telenor‟s ownership share to be diluted from 62% to 55.8%

Rural market the next growth phase
 AWARDS
• Grameenphone received the GSM in the Community Award at the global GSM
Congress held in Cannes, France in February 2000 for its Village Phone initiative.

• In 2002, Grameenphone was adjudged the Best Joint Venture Enterprise of the
Year at the Bangladesh Business Awards.[20]

• Grameenphone was presented with the GSM Association's Global Mobile Award for
„Best use of Mobile for Social and Economic Development' under Bridging the
digital divide category at the 3GSM World Congress held in Singapore, in October
2006, for its Community Information Center (CIC) project.

• In the next year, 2007, Grameenphone was again presented with the same award for
its `HealthLine Service' at the 3GSM World Congress held inBarcelona, Spain, in
February
THANK YOU