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The Scramble for BOP Penetration in Telecommunications

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					                  The Scramble for BOP Penetration
                           in Telecommunications
                                                          Richard Cooper and Andrew Boye
                                                                             Cactel Communications, UK




Gartner predicts worldwide mobile connections will increase by 1.5 billion by 2010,
with emerging markets accounting for 87% of that increase. By 2010 developing                                G Telecommuni-
regions will account for 69% of all the world’s phone connections. A telecom scram-                            cations
ble to connect the developing world is now in full swing. Yet, despite the benefits of                       G Infrastructure
liberalisation and the phenomenal uptake of mobiles, gains in rural telephony in India                       G Networks
and Ghana, the countries considered here, have lagged behind the aggregate national                          G Development
figures. Rural risks are even further behind urban than they were before. The chal-                          G Urban/rural
lenge in the BOP business case is in bringing telecom services to rural areas, while                         G Teledensity
making access affordable and relevant to the needs of the rural poor. The need for a                         G Civil society
holistic, convergent approach between government, service providers and other                                G Mobile phones
stakeholders, including civil society as well as the poor themselves, is discussed.                          G Fixed lines

   Andrew Boye holds a PhD in Chemical Engineering from the University of
London and is a certified IT Solutions Implementer. He is founder and CEO of
                                                                                        !   andrew.boye@cactel.com

      Cactel Communications and a leading authority in computational fluid              <   www.cactel.com
                                                           dynamic processes.




     Richard Cooper holds an MA in International Relations from the Fletcher
        School of Law and Diplomacy, Tufts University, USA, and is a certified
                                                                                        !   richard.cooper@cactel.com

      mediator, CEDR, London, UK. He has more than 25 years’ experience in              <   www.cactel.com
        business communications and is Communications Director for Cactel
                                                          Communications.




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richard cooper and andrew boye




        R
                    eflecting change happening across much of the developing world,
                    mobile phone use in Ghana has seen a take-up explosion by users who have been
                    unserved or under-served by incumbent fixed-line telecoms. Numbering only a few
                    thousand in 1994, mobiles in Ghana totalled over 3.34 million by June 2006, up
                    from around 2.65 million at the start of the year, and a rise of 82.8% on the 1.45
                    million recorded at the end of 2004.1 Ghana claims it now has the fastest teleden-
               sity growth in Africa, driven essentially by the mobile.2 Worldwide, it took the mobile
               12 years to reach one billion subscribers, then a mere three to reach the second billion—
               a creative destruction force, if there ever was one, for the fixed-line paradigm (Abraham
               and Subramanian 2007). But, in contrast to the seemingly buoyant developing-world
               market, mobile take-up in the first-world markets has slowed. Stung by lower-than-
               expected results due to mobile telephone saturation in their mature markets, mobile
               manufacturers now see the future in high-growth, high-volume, low-margin markets:
               that is, in the developing world. The Gartner Group, for example, predicts worldwide
               mobile connections will increase by 1.5 billion by 2010, emerging markets accounting
               for 87% of that increase. Factoring in fixed connections, by 2010 developing regions will
               account for 69% of all the world’s phone connections (Gartner 2006). Mobile’s expan-
               sion has beaten a path to the markets of BRIC and Africa, and as a result a telecom scram-
               ble to connect them is in full swing.
                  At first glance, head-turning numbers such as these should suggest to telecom indus-
               tries, governments and civil societies the BOP (bottom of the pyramid) potential in rural
               telephony. Enhanced telecommunications coverage could contribute toward the
               achievement of Millennium Development Goals (MDGs) by providing connectivity for
               the rural poor while making a profit. However, even after the significant take-up of
               mobile technology in recent years—in India, for example—a notable gap still remains
               between cities and rural areas. Telephone penetration in Indian metropolitan areas has
               reached 40–50%, compared to only 2% in villages, where 70% of India’s 1.1 billion peo-
               ple live. Ghana’s population of 20 million has approximately 12% aggregate teledensity,
               but the disparity between rural and urban areas, as suggested by a recent Panos Insti-
               tute report, is usually ignored, given that rural statistics are often not disaggregated from
               overall national statistics (Panos Institute 2004). Therefore, unlike the way the BOP con-
               sumer product markets are reached through innovative retail and distribution trans-
               formations—as described in Prahalad 2005, Hart 2005, and Mahajan and Banga
               2006—telecommunications, it would seem, requires a whole new infrastructure, and
               not just technological, just to get to these communities.
                  The International Telecommunication Union defines ‘rural’ as an area that exhibits
               one or more of the following characteristics: a scarcity or absence of reliable electricity
               supply, water, access roads and regular transport; scarcity of technical personnel; diffi-
               cult topographical conditions; severe climatic conditions; low level of economic activity;
               low per capita income; under-developed social infrastructures; low population density;
               very high calling rates per telephone reflecting the scarcity of telephone service; and the
               large numbers of people who rely on those available (International Telecommunication
               Union 2000).
                  To meet the rural challenge, it needs to be decided whether the best infrastructure
               should be increased mobile, mobile converged with technologies such as wireless, an
               innovative exploitation of existing infrastructure such as electricity and fibre-optic, new
               technologies such as VSAT (Very Small Aperture Terminal), or an interoperable combi-
               nation of them all. But, as Peters (2003) cautions, access to technology is of course crit-

                1 Balancing Act, www.balancingact-africa.com, accessed 5 November 2006.
                2 This claim was made by the Director General of Ghana’s National Communications Authority, J.R.K.
                  Tandoh, in the Daily Graphic, 15 February 2007.



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                                                    the scramble for bop penetration in telecommunications


ical, yet it must be about more than just physical access. Otherwise, connectivity ser-
vices risk being unloaded at that iconic last mile in ways reminiscent of Robert Cham-
bers’s potent study of potentially well-meaning but ineffective development projects
(Chambers 1997). Connectivity actually deepens digital division where it is most needed
if the technology is unaffordable, if there is inadequate provision to help people under-
stand how to use and adapt it, or if people are left to feel discouraged from using it. Tele-
phony and internet access genuinely delivered as relevant to the needs of the rural poor
is far more challenging to understand than that of similar services delivered to urban
businesses, government and private users. Yet these are the understandings needed for
a BOP proposition that represents an equitable telecom contribution to the development
of India and Ghana, the countries considered in this paper.



India
At current growth rates, India will be the most significant contributor to the world’s next
billion telecom subscribers. In 2006, India crossed the 100 million mobile subscriber
mark and has been growing steadily since, in part a consequence of mobile’s relative
ease in leapfrogging infrastructure and bureaucratic deficiencies. Significantly, also in
2006, India overtook China as the world’s fastest-growing mobile phone market. In
November of that year alone, India added 6.8 million new mobile subscribers, bring-
ing its total to 143 million. India’s Department of Telecommunications has set an ambi-
tious target of 500 million phone subscribers, including mobile and fixed lines, by 2010,
or approximately 50% teledensity. Even if total phone subscribers were to reach only
half or two-thirds of that target, such growth would still be phenomenal, given that in
1998, less than ten years ago, India’s total telephone penetration was under 2% (Yee
2007).
   Another reason for mobile’s success has been price. Competition among mobile
phone operators such as Bharti Airtel, Reliance, Hutchison Essar and state-owned BSNL
has reduced rates to as little as two US cents per minute. Handset costs themselves have
also fallen, as manufacturers have established factories in India with an eye to intro-
ducing a Rs 1,000 (or about US$22) handset some time in 2007. Sector liberalisation
aided by effective regulatory policy in India has also facilitated this growth. Initially
focused on attracting private investment and limiting competition in the early stages of
the market’s development, more recently policy has sought to drive growth by remov-
ing artificial licensing boundaries rendered obsolete by advancing technology, and
reducing entry barriers to permit more competition. In the wake of those decisions, rates
have fallen and subscriber acquisition has flourished (Abraham and Suramanian 2007).
   Yet, despite the benefits of policy liberalisation and the record growth of mobile, gains
to rural telephony have not kept up with the rest of India—in fact, far from it. In 1996,
Indian rural teledensity was 0.3% while for urban areas it was 1.3%, or about four times
the rural figure. But, by 2005, rural areas had grown to 1.98%, while the aggregate urban
areas were at 31%, or 16 times the rural percentage. Estimates suggest rural could grow
to over 15% by 2010, but the metros will grow even faster, to over 80%. In other words,
India is witnessing a gratifying increase in aggregate teledensity, but with the disheart-
ening corollary of a widening of its digital divide.
   The Universal Service Obligation (USO), originally for fixed line but recently extended
to include mobile, was established to help promote infrastructure roll-out to otherwise
uneconomical segments such as rural India, where infrastructure is thin and costly to
build. Such incentives for expanding coverage and ensuring competitive markets will
likely result in some form of infrastructure sharing. The fund, for the moment, remains
under-exploited. As reported by Singh (2006), infrastructure sharing would increase


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               incentives for investment, as costs can be spread among the various entities sharing the
               infrastructure. The effective cost of the backbone to the user is reduced, which is more
               likely to happen when the backbone is installed by an infrastructure provider as opposed
               to a service provider. USO funds and other government programmes are important
               instruments in expanding and promoting infrastructure and in mitigating an otherwise
               potentially offputting barrier to viability. Improved interconnection and access revenues
               can also increase viability and spur backbone reach into areas that were previously com-
               mercially sidestepped.
                   We present here three very different examples of backbones that could complement
               overall telecom penetration without duplicating essential service provision. The first,
               drawing on the successes of mobile networks, would be the introduction of Mobile Vir-
               tual Network Operators (MVNOs) into rural markets, a policy under study and likely to
               be recommended in the course of 2007 by the Telecom Regulatory Authority of India
               (TRAI) (Abraham and Subramanian 2007). A second infrastructure provision is cable,
               which could be leased for telephony provision at a substantially lower cost than the con-
               struction of new infrastructure. Cable TV in India has quickly developed a broader pen-
               etration than telephone (Kalra 2007). Third, the state-owned PowerGrid Corporation of
               India, mandated with the responsibility of setting up a national power grid, was granted
               in 2006 a national long-distance licence by the Department of Telecommunications for
               a proposed foray into the telecommunications business (Economist Intelligence Unit
               2006a). While PowerGrid’s public plans have been to provide services to corporate and
               government agencies, a strategic potential lies in further leveraging electricity networks
               for telecommunications purposes. While nearly all villages in India have access to elec-
               tricity, household electrification remains at about 40% for India as a whole (ESMAP
               2002). In other words, a powerline telecommunications component could capitalise on
               an infrastructure already in place and which has substantial rural penetration and a con-
               vergent growth potential of electricity and telecom.
                   A fourth example is the contentious area of Voice-over Internet Protocol (VoIP)—con-
               tentious, that is, to regulators and mainstream telephony service providers. As robust
               broadband is a precondition to the success of high-quality VoIP services, the debate for
               rural telephony expansion is therefore dependent as much on an infrastructure to sup-
               port its requirements as on acceptance by the regulatory authorities. VoIP’s core chal-
               lenge is to fashion appropriate policies and regulations that will facilitate the transition
               and growth of shared national telecom infrastructures into electronic information
               superhighway that at a national policy level will enable the development of knowledge
               economies and information societies, but at the rural level will contribute to the process
               of narrowing the digital divide (Melody et al. 2005). VoIP represents another example of
               creative destruction in as far as it could challenge current telecom policy paradigms in
               the pursuit of a pro-poor agenda.
                   According to Kunal Bajaj, director of BDA India, a telecom consultancy in New Delhi,
               ‘Getting to the very bottom of the pyramid has to be through transformative change’
               (Yee 2007). Such change means—for mobile as well as other service provider opera-
               tors—initially rethinking distribution networks and drastically reducing customer
               acquisition and distribution costs, which can easily account for up to 30% of the cost of
               serving a customer. But growth and development cannot be bundled as the same thing.
               Innovative, interoperable and cross-industry partnerships—including technologies
               such as wireless, cable, powerline, satellite and of course fixed line—to leverage distri-
               bution platforms are a way forward for telecom players to mitigate the financial inse-
               curities and meet the Indian rural connectivity challenge. But, above all, a BOP
               telecommunications initiative will be a profoundly adaptive technology that ‘is an exten-
               sion of human lives, someone makes it, someone owns it, many use it, and all interpret
               it’ (Nye 1990).


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Ghana
Thanks to the growth of mobile telephony, Africa has now far in excess of the total num-
ber of phones in Manhattan, though, perhaps ironically, most of that growth has been
in African urban centres. In 2004 alone, there were some 25 million new mobile sub-
scribers on the African continent, a figure almost equivalent to the total number of tele-
phone subscribers—fixed and mobile—in Africa in 1996.3 Many telecom analysts
would see this explosive growth as proof of African ‘pent-up demand’ for basic telephone
services. If that is true, then Africa demand remains confined. Despite having 14% of
the world’s population, the continent still has less than 3% of the world’s fixed-line
phones and 8% of its mobile. Internet penetration is even smaller with, in 2005, an esti-
mated 16 million internet users out of 900 million people, or 1.8% (AFRISPA 2005).
There are more internet users in Seoul than in all of sub-Saharan Africa excluding South
Africa, so in some ways Africa’s teledensity is back to the same scale as that of a single
city. But such numbers should represent the sorts of shortfall that attract investment to
the bottom of an infrastructural pyramid. And there are more challenges. According to
the official Ghanaian ICT4D report: 40% of Ghanaians live on under one dollar a day;
the Ghanaian economy has not experienced a structural transformation since indepen-
dence in 1957; 60% of the workforce is in agriculture, and the informal private sector
drives 81% of the economy, the formal sector accounting for only 8% of the active work-
force; and the majority of women work in the informal sector with little support (Repub-
lic of Ghana 2003). These are daunting challenges for Ghana: essential to the ICT4D
objectives as well as a daunting market for BOP entrepreneurs.
   Nonetheless, as reported in 2005 by the Information Society Research Group, mobile
phone and internet use among the poor has seen explosive uptake in Ghana. The most
significant impacts of telephony and internet are in the management of extended fam-
ily networks and business contacts, both within Ghana and across the Ghanaian dias-
pora. ICTs (information and communications technologies) also have the scope to make
migration a more flexible process by providing cheap, direct and regular communica-
tions across dispersed networks; by providing access to cheaper sourcing of means for
travel and transportation of goods; by providing information and facilities for cheaper,
quicker and more reliable flows of remittances; and by allowing people to feel—whether
they are in Ghana or abroad—that they need not lose contact with their social networks
and resources when they physically move in either direction (Miller et al. 2005). Yet,
despite these findings and a growing body of similar research, the largely information-
oriented bias of government and NGOs (non-governmental organisations) with regard
to ICTs is only recently beginning to change to include this more user-based research in
policies.
   In contrast to India’s IT boom which began before 2000 as Indian companies took
on the massive task of fixing the so-called Millennium Bug in computer codes, a momen-
tum that is yet to waver (Fernandez and Gupta 2006), Ghana is looking for ways to kick-
start its own boom. There are signs of growing confidence in Ghana’s future, such as
an agreement made during the 2006 Africa–China summit in Beijing to build a
US$600 million hydroelectric dam, a project that will increase Ghanaian annual gen-
eration capacity by 400 MW, representing about 10% of Ghana’s current energy needs
(African Review of Business and Technology 2006b). Later that same year came a US Mil-
lennium Challenge Corporation4 grant of US$547 million over five years to be focused
primarily on improving the country’s agricultural production through mechanised

3 World Summit on the Information Society, www.itu.int/wsis/tunis/newsroom/stats, accessed 17 Jan-
  uary 2007.
4 MCC is a foreign aid programme initiated under the current Bush administration.




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               farming—a sector that employs over 70% of the labour force (African Review of Business
               and Technology 2006a). And, in June 2006, the Ghanaian Minister for Communica-
               tions, Mike Ocquaye, announced that the country had a teledensity of 20%, six months
               ahead of target. In the spirit of this optimism, Samuel Itam, senior advisor in the IMF
               (International Monetary Fund)’s African Department, has commented that ‘At the cur-
               rent pace [in Ghana], the Millennium Development Goal of halving income poverty by
               2015 should be achieved ahead of schedule’ (Ford 2006) And, yet, how will telecom-
               munications fit into this picture?
                  The success of mobile has shifted infrastructural development attention away from
               the traditional investment solution of installing more fixed lines. According to a study
               by Mbarika, Meso and Musa (2007), cellular telephony has become widely seen in sub-
               Saharan Africa as a practical, feasible and perhaps the most potent solution to closing
               the digital divide. Given the ever-increasing numbers of mobile users in comparison to
               fixed-line, and the importance attached to higher teledensity in matters such as attract-
               ing more FDI (foreign direct investment), it is perhaps no surprise that sub-Saharan
               Africa stakeholders in the Mbarika et al. study advocate a mobile telephone strategy.5
               But that preference, at least for Ghana, means co-existing with a state monopoly infra-
               structure that historically has cooperated poorly with competition.
                  Until the beginning of the 1990s, the Ghanaian telecom network was a state monop-
               oly funded largely from multi- and bilateral development assistance sources (Frempong
               and Henten 2004). With the liberalisation of the telecom sector from the mid-1990s in
               keeping with the World Trade Organisation’s Basic Telecommunication Services Agree-
               ment which came into force in 1998, the strategy for funding an expansion and improve-
               ment of the telecom system moved toward attracting foreign investment capital, both
               for new operators and for the incumbent operator by way of partial privatisation. In 1995,
               Ghana was one of the first countries in Africa to privatise its national operator. During
               this time, and against fierce pressure from the state monopoly, mobile operators were
               extended permissions to operate. At the same time, and particular to Ghana, a fixed-line
               duopoly was created as a means of improving teledensity more widely in the country.
               Westel, from its inception in 1997, invested about US$26 million in its network devel-
               opment target of creating 50,000 new telephone subscribers. But, after five years, the
               actual number of subscribers attained was barely 3,000. What happened? Blaming its
               interconnection problems with Ghana Telecom in the early stages of its operation, which
               hamstrung business operations, and a weak regulatory regime that did little to resolve
               the matter, Westel was unable to attract foreign investment. The poor-service, combat-
               ive playing field was established, conducive to mobile’s sensational expansion, leapfrog-
               ging the fixed-line players who seemed to be at arms against their own interests.
                  Since 2004, Ghana has seen an explosive grass-roots development in ‘Space-to-
               Space’. Personal micro-financed ‘Communication Centres’ are basically an umbrella, a
               table, a pair of chairs, a desktop wireless-enabled phone and a book for keeping records.
               They have become an iconic sight in Ghana, especially in urban areas (Ajao 2005). The
               BBC reported that in 2005 there were about 25,000 of these new entrepreneurs in
               Ghana, and the number was growing rapidly (Day 2005). Not all observers approve of
               the viral entrepreneurship represented by the Space-to-Space phenomenon, fearing they
               conflict with the longer-term impact of more formal, and financed, telecentre opera-
               tions. The ingenuity of Space-to-Space, though, in finding a functioning interconnec-
               tion pathway within the Ghanaian networks, has created a sort of truly public telephone,

                5 By ‘stakeholders’, Mbarika et al. refer to government stakeholders, such as government entities, para-
                  statals (‘for-profit’ auxiliary government controlled pseudo-corporations) and telecommunications
                  operators (government-controlled), as well as non-government stakeholders, such as telecommuni-
                  cations operators (non-government-controlled), academia, research centres, IT experts, and interna-
                  tional/regional private organisations.



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and has, in its own unorthodox BOP way, increased teledensity. Indeed, as R. Southwood
(2004) has pointed out, teledensity as a measure of connectivity is more complicated in
developing markets. Although teledensity can differ by an order of magnitude (Bot-
swana, 33%; Ghana, 3.7%; Uganda, 2.3%), it is the level of usage that counts. South-
wood’s research showed that users were driven by the necessity of access to bear the
extra cost of travel to find somewhere to place their calls. He found the level of phone
usage in Botswana and Uganda to be on a par at 78% despite the huge difference in
strict teledensity figures.
   Problems with internet accessibility also illustrate the hampering of growth by the
state’s unwillingness to liberalise the infrastructure market to new operators and infra-
structures. The absence of a true national backbone slows the geographical dispersion
of the internet in Ghana, and in its place pockets of ISPs (internet service providers) have
built their own backbones confined to a few regional capitals. Yet, as with telephones,
internet use centres on Ghana’s capital Accra (Osiakwan and Foster 2004). In the
absence of a concerted policy of liberalisation, the practice has evolved of sidestepping
the core infrastructure. For the most part, Ghana’s internet service remains slow and
inefficient and demands high connection fees compounded by the absence of
economies of scale. The motivation for governments to restrain or prohibit new infor-
mation and communications technologies—such as limitations on VoIP, restrictions on
Wi-Fi and other wireless standards, crippling ISP licensing requirements, and limited
access to fibre-optic cable connectivity—again appears to be the government’s contin-
ued self-defeating relationship with its state-owned monopoly operator (Osiakwan and
Foster 2004).
   Ghana’s electricity rural footprint is over 65%, with no village or town of over 3,000
inhabitants without electricity (Ahiataku-Togobo 2005). A powerline infrastructure
interoperable with mobile could provide additional low-cost access, especially in rural
areas. Yet, as with infrastructures such as VSAT and Wi-Max, without supportive regu-
latory policy from government new technologies risk sidestepping a weak core infra-
structure and fostering pockets of connectivity, centred around urban markets: a
clear-cut recipe for deepening the divide. The role of GIFTEL, Ghana’s Universal Service
Access fund—similar to India’s USO, created to inject start-up funds for rural telecom-
munication projects financed by contributions from operators as stipulated in their
licences—has been bedevilled by inefficiencies and perceived corruption. Wild (2006)
has pinpointed the sector challenge in terms of convergence, such as technical conver-
gence which allows for new and existing telecommunications or institutional and reg-
ulatory convergence and takes into account the need for new regulatory approaches in
the digital era. Ghana’s formal ICT policy adopted in 2003 identifies convergence as the
new challenge for the sector, one that can meaningfully shape the delivery of govern-
ment health and education services, and redefine the way business can be conducted as
well as facilitate social connectivity. As in the case of India, effective interconnection and
access regimes would increase viability and thus encourage backbone development in
rural areas. However, in lieu of regulatory facilitation, operational efficiency and con-
sistently applied government incentives to facilitate a broader range of rural options,
teledensity is liable to follow the mobile-phone path of least resistance, and a BOP-style
telecommunications innovation for rural Ghana will see delayed growth.



Conclusion
In their study, Andrew and Petkov (2003) point out that the ‘tendency amongst telecom-
munications practitioners is to regard the technological infrastructure subsystem as the



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               RTS [rural telecommunications system]’. The authors define a rural telecommunications
               system as one that has emergent properties that lead toward a provision of benefits for
               stakeholders. In their view, an RTS is in fact made up of subsystems, and these consist
               of sociological and cultural systems, parallel infrastructures such as roads and water,
               economic systems, the physical environment, the political and regulatory context, as
               well as the rural telecommunications infrastructure subsystem itself. In this case, the
               stakeholders who stand to benefit are foremost the rural community itself, the telecom-
               munications infrastructure providers, other investors and government agencies.
                  In other words, if rural telecommunications infrastructures are to achieve their
               intended purpose—and that purpose being one of bringing benefit to all their stake-
               holders—then a holistic interaction between these subsystems needs to be observed.
               Yet a choice of telecommunications technologies can easily be politically motivated
               rather than working toward the most effective and durable outcome. There is no magic
               bullet, no one-stop shop, no technocratic hole-plugging paradigm that at the end of the
               day has its eye above all on cost optimisation. Growth cannot be confused with devel-
               opment. The world has been described by New York Times op-ed writer Thomas L. Fried-
               man as ‘flattening’ but, for many who live at the bottom of the pyramid, the flatness of
               the world is more to do with a lack of options than the idea of interconnected playing
               fields. Will the world get flatter as Friedman describes it if rural India and Ghana have
               affordable and appropriate access to telecommunications? In the 1970s and 1980s, the
               OECD (Organisation for Economic Cooperation and Development) countries enjoyed a
               huge sustained uptake in fixed lines and built the platform supporting their ‘digital com-
               munications revolution’. Perhaps mobile phones and other technologies in Africa, espe-
               cially in reaching the poor, can achieve a comparable effect.
                  Other lessons can be learned from the North, as suggested by Anders Igel, CEO of
               TeliaSonera, when he says, ‘All so-called incumbents have to exit their traditional busi-
               ness and focus on new businesses’ (Economist Intelligence Unit 2006b). Consider
               Vodafone, which currently draws 81% of its revenue from voice, when, by comparison,
               a formerly flatfooted incumbent telecom such as BT now earns only 20% of its revenue
               from voice. If telecom operators, for example, expect mobile VoIP—or other technolo-
               gies that can deliver cheap, or even free, voice and video—to be prevalent long before
               2020, a business model of shared infrastructures, policy innovation and a concerted
               systemic awareness of the needs of the poor will need to address, understand and con-
               nect a BOP telecommunications market in ways that will be instructively difficult and
               creative to imagine.
                  Connectivity is widely assumed to represent a critical tool in shaping a better life,
               though, as with the famous Solow paradox, it can seem elusive to prove.6 Market-based
               telephone penetration alone, on the other hand, into the rural areas of India and Ghana,
               has thus far demonstrably deepened the divide and further excluded the poor. The ISRG
               study cited earlier (Miller et al. 2005) argues that, in rural areas: (1) telecoms have gen-
               erally provided a basis for extensive micro-enterprise and employment; (2) increased
               access to telecommunications has allowed new social networks to emerge and allowed
               for the easier maintenance of existing ones; (3) a more efficient and integrated use of
               these networks would spread health information more deeply into communities; (4) a
               widespread belief that ICTs are now part of everyone’s future (socially, politically, eco-
               nomically) is coupled with an equally widespread lack of guidance within education sys-

                6 Robert Solow, 1987 Nobel Prize in Economics, observed that we have a lot of investment in IT, but
                  we do not see the productivity improvement. In December 2006, Jean-Claude Trichet, President of
                  the ECB (European Central Bank), opined that, as of 1995–96, ‘we saw the end of the paradox, because
                  we could see a significant change in labour productivity increases’; www.ecb.int/press/pressconf/
                  2006/html/is061207.en.html, accessed 20 March 2007. Trichet then offers further support in link-
                  ing ICTs to development.



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tems as to how ICTs and ICT skills might be connected to future livelihood strategies;
and (5) mobile phones have become central to women’s livelihood strategies and activ-
ities, and the importance of mobile phones extends well beyond women’s economic and
kinship roles to issues of social isolation and autonomy. But the same report also found
that in India and Ghana the absence of ‘network coverage of rural areas—rather than
poverty per se—was the major impediment to adoption’. BOP telecom opportunities are
to be found in innovations to address that coverage, by finessing new technologies and
existing infrastructures from the electricity grid even to fixed line, in order to serve the
poor and create opportunity across a spectrum of benefits.



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Description: Gartner predicts worldwide mobile connections will increase by 1.5 billion by 2010, with emerging markets accounting for 87% of that increase. By 2010 developing regions will account for 69% of all the world’s phone connections. A telecom scram- ble to connect the developing world is now in full swing. Yet, despite the benefits of liberalisation and the phenomenal uptake of mobiles, gains in rural telephony in India and Ghana, the countries considered here, have lagged behind the aggregate national figures. Rural risks are even further behind urban than they were before. The chal- lenge in the BOP business case is in bringing telecom services to rural areas, while making access affordable and relevant to the needs of the rural poor. The need for a holistic, convergent approach between government, service providers and other stakeholders, including civil society as well as the poor themselves, is discussed.