Frequent Flier Miles at the Base of the Pyramid

Wednesday, December 7, 2011

OK, so you are a cell-phone user in rural Nigeria or Zimbabwe, and your provider is Econet Wireless. You’ve been a customer for a while, so you’ve accumulated loyalty rewards, just like airline frequent flier points. You live in a small hut in a village with no electricity, so you can’t use your phone as much as you would like, because you can only charge it on market day at the district headquarters.

But now you can get a big discount on a solar lantern, or if you have enough Bonus Points, a rooftop home solar system from Econet — electricity has become an added feature of cell phone service. But the wrinkle is that having electricity enables you to use your cell phone when you want to, instead of hoarding a charge — so Econet can afford to discount the price of the lantern or home solar system dramatically, so that even the poorest cell phone customer can afford it.

The leader behind this model — loyalty rewards that enable cell phone users to get clean solar electricity in remote villages — is Strive Masiyiwa.

And today Econet launched its latest initiative, an affordable Home Solar Station, electricity in a box, which enables a poor family to electrify without paying the upfront costs of solar power — they just pay for the electricity as they use it, thanks to a “slave sim card,” which bills their cell phone account for each kilowatt hour, but at a rate low enough that even if the lights are left on all day the monthly bill is only a dollar, far less than poor families currently pay for candles or kerosene.

The basic Home Solar Station has four LED lights, a rooftop solar cell whose size varies on the household size, and an outlet which can be used to charge a cell phone, run a fan, or power a small computer. Larger versions can actually power a television which Econet is designing for this low voltage market. Masiyiwa is crystal clear. His business is not selling handsets, or solar panels — it’s selling airtime, or in the case of the Home Solar Station electron time. Customer loyalty is his holy grail — and how better to obtain that loyalty than to provide his cell phone customers with light, fans, and electrical charging capacity in their own homes, however humble. (The systems are designed for the basic informal urban slum dwelling, the kind that fills the slums of Lagos or Harare — or for rural huts. He’ll also offer much larger systems for middle-class customers. This is power for everyone.)

It’s a radical notion, and if he has the economics right, will transform the lives not only of his customers, but potentially of all 1.2 billion of the world’s population who are currently denied light and electricity. Econet will license its technology to other cell-phone providers, and if the model takes off, competitors are sure to spring up.

Source: The Huffington Post (link opens in a new window)