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Wednesday, September 7, 2005

Mobile telephony and pro-poor growth

By Rob Katz

Ethan Zuckerman of the WorldChanging blog writes eloquentlyabout the importance of mobile phones in low-income communities. He identifies three factors critical to thespread of mobile telephony: new versus replacement infrastructure,pay-as-you-go pricing, and used phones.

Zuckerman is right on. By leapfrogginglandline infrastructure, developing communities have been able to adopt moderntechnology faster and cheaper than we have in the U.S.,for example. Pay-as-you-go pricing,meanwhile, lets low-income consumers afford to make a call when they need to,rather than sign up for lengthy guaranteed contracts ? as documented in thiscase study of Smart Communications in the Philippines. Used phones, operating on analog networks,are often more affordable than new GSM handsets - and the shipping containers they arrive in can even be used as shared-access, entrepreneur-run phone shops.

However, it?s only towards the end of his post where Zuckerman hits the nail onthe head: ?More fundamental than these three factors is the fact that very poorpeople are willing to pay money to communicate.? He cites Grameen Phone as an example ? read thecase study here. (PDF)Mobile telephony is already profitable for the telecoms. Now the question is: how do we incorporatethis leapfrog innovation into a range of pro-poor business models? Stay tuned.

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