NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The mobile telephony business has thrived on a universal, deep-seated desire to communicate – to talk and be heard. Its success in penetrating the mass market everywhere – and in particular, reaching poorer people in developing countries – has hinged on a deliberate strategy of reducing the barriers to accessing the service. The industry has accomplished this primarily by shifting from postpaid plans that require credit checks to prepaid plans that can be bought (and sold) by anyone, thereby eliminating minimum monthly spend commitments.

But this extensive success has been shaped by customer ingenuity too. Maintaining a mobile phone line is not cheap – at least for a good fraction of the population. To cut these expenses, poorer customers have long sought to reallocate the cost of calling through the practice of requesting call-backs via missed calls. These customers avoid spending from their prepaid plans by calling, ringing and disconnecting before the call recipient answers, which registers as a “missed call” at the dialed destination and thereby signals a call-back. Often termed pinging, buzzing or flashing in Africa and many countries globally, this practice was devised entirely by low-income customers. It leverages a deep loophole in carrier billing: In a world where the calling party pays, calls are only billed when answered, and receiving a call is free.

This call-back workaround is an excellent illustration of the principle that you can design a product with certain use cases in mind, but in the end, it’s customers who will decide how they use it. Kleenex, for instance, was first introduced in 1924 as a facial tissue to remove cold cream, but according to this account its manufacturer “became intrigued by the number of letters from customers stating that they used their product as a disposable handkerchief.” After conducting some advertising tests, the company decided to change how they marketed Kleenex: Within a few years, they were promoting it as “The handkerchief you can throw away!”

In the case of missed calls, though, operators have never shifted their marketing stance: They are tolerating but not promoting the practice, and seem to feel that they’re stuck with the idea that a missed call is not a chargeable event, rather than seeing it as a tool for effective negotiation between the two call parties on who is to pay. And yet, what a phenomenal tool it has been to make mobile telephony affordable for the poor. Billions of prepaid cellular users regularly run out of airtime and cannot afford to make a call. They lack the pennies to pay for this essential service, let alone pay for it upfront – without this call-back option, they would remain disconnected from the digital economy. Why not embrace it as a solution that shifts the cost of calling to the party with the higher ability and willingness to pay?

A better, more inclusive, more sustainable solution is needed: a reversal of thinking among mobile operators. The billions of missed calls, every day, not only represent a fundamental re-negotiation of who calls and who pays – they signal an overlooked customer demand for a useful new feature. There is a great need in the marketplace to “ping” without credit. In fact, mobile operators have the opportunity not only to promote the practice but to productize it: to create a deliberate call-back request service that works better for all the parties involved.

That is what Starlogik, a telco innovation lab based in California, has done with its patented StarCALL service. Starlogik recognized that customer need and responded, figuring out how to optimize and formalize the practice – with a very light touch. It decided to use the overlooked star-key (the button with the asterisk that sits, largely ignored, on every phone) to unlock more affordable communication for all.

Customers can dial any phone number, putting a star in front (e.g. *123456789), and rather than attempting to connect the call, the company notifies the recipient, via a disconnected missed call, that the sender would like to talk. So caller A initiates the conversation, then caller B willingly pays. The process takes a fraction of a second, connecting users around the corner and around the world.

Starlogik has clearly tapped into some pent-up demand with StarCALL. The proof of the pudding is in West Africa. Following successful trials in Zambia and India, Starlogik partnered with a leading carrier on the continent to launch the service offering in early 2019. Within a month, and with zero marketing spend, the service notched up over 1 million users. Twelve months later, over 20 million StarCALLs are being made every day, with 25 million unique users accessing the service. And every day the numbers grow, with a run rate now of 700 million pings a month.

Starlogik has now serviced over 7 billion connections in just over a year, and it is growing rapidly as it deploys StarCALL further with other communication service providers. The company recently launched with Airtel in Tanzania, acquiring 3 million users in 90 days and delivering close to half a billion connections. Cell C, the third largest operator in South Africa (behind cellular giants Vodafone and MTN) has also launched the StarCALL service, and it has already notched up 250,000 users in its first month, while delivering close to 5 million calls. Starlogik plans to launch its service in key markets across Africa, Latin America and Southeast Asia, by partnering with global carrier partners and licensing its core technology and intellectual property.

This technology re-imagines telecom infrastructure, resulting in a rare win-win-win. Starlogik appropriates the global miss calling phenomenon into a managed cloud network service that extends its reach to users without credit. Missed calls generate call-back revenue when the recipient returns the call, a percentage of which goes to Starlogik. The company’s growth speaks to the effectiveness of this model – but mobile operators also come out ahead: Far from incurring any capital expenditure costs for operators, Starlogik, with its minimalist touch, frees their existing capacity, as they do not have to tie up costly network resources setting up a voice call that is not intended to be completed (since missed calls are directed into the Star cloud rather than onto the core network). Carriers also benefit from significantly reduced subscriber churn, since StarCALLs enable even the lowest-income customers to continue using their services.

Most importantly, customers win, as with this service, the star caller doesn’t run the risk that the recipient will unexpectedly answer the call, thereby leading the caller to incur an unwanted cost. The recipient gets a discreet ring prompting a call-back, and (if the call is returned) the star caller gets a free conversation. Users do not even need a data plan or smartphone connection, making it readily available to everyone. Indeed, StarCALL has already been dubbed “the WhatsApp for the next billion.”

The result is a service that’s more accessible to the poor, as well as more user-friendly for all, which reduces the costs of supporting call-back requests. This is a real nano-finance innovation on the virtual transfer of airtime, and a sustainable model for connecting the unconnected.

Ignacio Mas is Executive Director at the Digital Frontiers Institute.

Photo courtesy of Simon Berry.