Digital Pulse - Ch 2 - Sec 1 - Graemeen's Village Phone (VP) Programme: A Multi-Media Case Study TeleCommons Development Group

The Digital Pulse: The Current and Future Applications of Information and Communication Technologies for Developmental Health Priorities

Chapter 2 - ICT for Development: A Review of Current Thinking

Section 1: The ICT4D Proponents



Graemeen Telecom's Village Phone (VP) Programme: A Multi-Media Case Study TeleCommons Development Group

Summary

This report details the context, structure, and impacts of Graemeen Telecom's Village Phone (VP) project to bring cellular phone service to regional areas of Bangladesh. The project combines the goal of improved connectivity with micro-level enterprise for women. The pilot project involves over 950 phones and provides telecommunications access to over 65,000 people. Village women are able to access micro-credit loans to acquire the digital GSM cellular phones and then re-sell phone services within the village. This project is also seen as an important opportunity to see how private sector development (PSD) in telecommunications can contribute to overall economic growth and poverty reduction.

Key Points

Impacts on Poverty Reduction - The village phones generate a significant consumer surplus in the form of significantly reduced costs to the household of travel into cities. The surplus for a call that replaces a physical trip to the city can equal 2.64% to 9.8% of the mean monthly household income. The main reasons project participants reported for using the telephone were to discuss financial matters with other members of the family – often in other countries. Bangladesh is a labour-exporting country (primarily to the Middle East) and the phone is often utilized to reduce the risks associated with international remittance transfers from family members working overseas. It was observed that the single most important variable in relation to phone use is whether or not a family member is overseas. This reduced risk has important microeconomic benefits and improves the living standards of households who may be primarily dependant on remittance income for subsistence and savings. Phones are also used to exchange information and keep up to date about market prices. The ability of family members to stay in touch with each other also has important social benefits that, while not easily quantifiable, are nonetheless important. Finally, the village phone operators derive between 24% and 40% of their household income from participation in the program.

The Business Case, Technical Choices and the Regulatory Context - The provision of rural telephone services in Bangladesh is very profitable and telephones in the Grameen Bank program bring in 3 times the revenue that urban cell phones do. This is in part because of the current regulatory environment that limits telecom providers from meeting the demand for services and advancing rural telecom infrastructure. As such, the authors of this report conclude that the VP programme, “appears to be the best available technical solution for rural universal access under current regulatory and commercial circumstances.” However, they do recognise that GSM cell phone technology is an expensive solution and note that changes in current regulatory practices may alter this evaluation.

Gender Analysis - During the evaluation of this program, the authors recognized that gender plays an important role in concepts of “universal access.” It is not gender neutral, and selection of the VP operator and physical placement of the phone affect women's access. Nearly 95% of VP operators are women because of the connections with the Grameen Bank's already existing micro-credit programs. This access is important from an economic standpoint because sustainability is not possible if 50% of the user base is excluded from access. Being a VP operator significantly enhanced a woman's status in the household and the community.

Replicable elements of the VP Programme - In order to attract telecom operators to serve rural areas they must be provided with quality market appraisals and data that will help prove the business case and secure investment. The project also points out that linking existing micro-credit organizations with telecom operators to expand public call offices (PCO) and services will provide the solutions for the “last-mile” challenge of rural telecom access.

Source: Grameen Telecom's Village Phone Programme: A Multi-Media Case Study, Executive Summary and Section 2