Harsha de Silva and Ayesha Zainudeen, LIRNE asia Colombo, 6 December 2006

1. 7th Annual Symposium on Poverty Reduction Teleuse on a Shoestring 2:Poverty reduction through telecom access at the Bottom of the Pyramid Harsha de Silva and Ayesha Zainudeen, LIRNEasia Colombo, 6 December 2006

2. Agenda • Definitions • Logic • Untruth, truth, what? • Issues • Access and poverty reduction? • Questions

3. Agenda • Definitions • Logic • Untruth, truth, what? • Issues • Access and poverty reduction? • Questions

4. definition Bottom of the Pyramid • SEC D and E • Respondent: teleuser between ages 18-60 *excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces

5. definition Access • Universal access • Community access • Household access; universal service • ITU Maitland Commission (1998) • In the developing world; within an hour’s walk • More recent definitions; in 30 minutes walk

6. Agenda • Definitions • Logic • Untruth, truth, what? • Issues • Access and poverty reduction? • Questions

7. logic Telco access, poverty, inequality • Lack of access  poverty • Theory: improved access  less poverty? • Telecom liberalization  improved access • Less poverty; greater equality? • Less, same or more poverty; greater inequality? • What, on the ground?

8. Agenda • Definition • Logic • Untruth, truth, what? • Issues • Access and poverty reduction? • Questions

9. untruth, truth, what? Numbers we use… • Sri Lanka • CBSL CFS 2003-04: access 24.5% • TRCSL (2006 June): teledensity 29.1% • How meaningful?

10. untruth, truth, what? While ownership is low…

11. untruth, truth, what? …access is very high* Most (66%)can get to a phonein 5 minutes; much less than 1 hour…

12. untruth, truth, what? High reliance on commercial phones* Does it mean no access; or have access?

13. Agenda • Definitions • Logic • Untruth, truth, what? • Issues • Technical • Usage • Access and poverty reduction? • Questions

14. technical issues Overestimation?* • Impact • Poverty reduced because access increased… • Inequality increased because access is a more middle class thing… • Based on what access? • Direct household access is normally used • Whereas indirect but actual access of 90 percent + How relevant is direct access? Is it the same as other infrastructure; electricity, piped water, sanitation?

15. user issues Affordability; tight purse…* Owners only: mobile is almost all pre-paid; to control expenditure

16. user issues Affordability; only a few calls…* All users (owners or otherwise) on average one call a day Source: Diary

17. user issues Affordability; short calls…* >15 min. However, average MOUs for owners are higher e.g: Sri Lanka: Prepaid: 120 MOU per month Source: Operators Source: Diary

18. user issuesAffordability; abnormal pattern…* Sri Lanka Poverty premium Source: Diary

19. user issues Expenditure higher than ARPU* Poverty premium; those who use other peoples’ or public phones are being charged higher rates…

20. user issues Summary • Have access • Use sparingly; essential calls only • Speak for a short while • Pay premium

21. Agenda • Definitions • Logic • Untruth, truth, what? • Issues • Access and poverty reduction? • Macro numbers • Household level • Action?

22. benefit At the macro level; large? • Contribution to GNP • 2003 – 4% • 2004 – 5% • Every additional 10% increase in mobile teledensity  0.6% increase in annual GDP growth (Waverman et al., 2005) • Access  poverty? inequality? • Evidence

23. benefit Access  less poverty? • Direct income generation through the sale of telecom services • Grameen, Nobel prize… • Indirect income generation; anecdotal • Auto-rickshaw driver to check hires • Farmer to check market prices • Parents looking for health and education information • Cost savings made by making a call as opposed to taking a bus ride into town; anecdotal

24. benefit Access  Efficiency

25. benefit Efficiency  economic benefit? • BOP does not see the benefit? • Except for in India, mean responses on efficiency of daily activities vs. ability to earn or save are significantly different at a 95 percent confidence interval

26. benefit Possible reasons… • Do people actually make that connection ? • Some do; services, trade, self employed… • What connection? • May see gains in saving travel time and cost but if the cost of using the telephone is high • Maybe no net benefit (RPP in LK?) • In LK, 24%said direct access has worsened their financial situation • Link may exist, but • Little business use; people prefer face-to-face interactions? • Not enough content? • Perception: time isn’t money?

27. benefit Security and keeping in touch

28. benefit Keeping in touch Source: Diary

29. Agenda • Definitions • Logic • Untruth, truth, what? • Issues • Access and poverty reduction? • Questions

30. questions Technical • Are access numbers in the 20s or 90s? • How important is it to define access? • Are we massively overestimating impact of access on economic development? • Are conclusions on improved access increasing inequality in Sri Lanka justified?

31. questions Practical • What is the link between access and poverty reduction? • No empirical micro-level literature • Is there one? Is it pure hype? • Is it a complex social networks based culturally sensitive mumbo jumbo nut no one’s cracked? • More likely, no silver bullet but one-of-many necessary conditions • Lessons from India: access  usage  efficiency  economic benefit

32. questions Important • How to increase usage? • Evidence of net economic benefits through lower prices • Current scenario: low price elasticity of demand ≈ 0.5; consistent with low and essential use only • Shift from Receiving Party Pays  Calling Party Pays • Sri Lanka mobile: 120 MOU/mo (estimate) • India GSM mobile: 414 MOU/mo; tumbling prices • Meaningful content • Increase rural access: VG levy and disbursement mechanism specifically setup; but Government “squandering” money?

33. In conclusion • Hypothesis is inequality in access to telecom is contributing to poverty • But, people at the BOP have easy access to phones • Use sparingly and pay premium • Inequality in access; not so black and white • Randomized evaluations • Question is how to increase usage bymaking access more meaningful • Regulatory policy • Content; convergence

34. Thank you. Harsha de Silva and Ayesha Zainudeen www.lirneasia.net