Making Waves : GRAMEEN VILLAGE PHONE
Stories of Participatory Communication
for Social Change
TITLE: Grameen Telecom's Village Phone Programme
COUNTRY: Bangladesh
MAIN FOCUS: Community development
PLACE: Countrywide
BENEFICIARIES: 65,000 villagers (1999)
PARTNERS: Grameen Bank, Grameen Phone
FUNDING: International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation
MEDIA: Cellular phones
In rural areas where isolation and poor infrastructural services are often the norm, telecommunications can play an extremely important role in enhancing rural social and economic development. The Village Phone is a unique undertaking that provides modern digital wirelesstelecommunication services to some of the poorest people in the world.
A Grameen Bank member (most often female) purchases a phoneunder the lease-financing programme of the Bank and provides telephone service to people in her village. Each Village Phone operator is responsible for extending the services to customers for both incoming and outgoing calls, collecting call charges, and ensuring proper maintenance of the telephone set. Repayment of the loan for the phone set is processed through the existing loan granting and collection procedures of the Grameen Bank.
The Village Phone programme contains many ruraldevelopment "firsts" :
- First rural development micro-credit facility in a developing country to target the creation of micro-enterprises based on information and communication technology (ICT) services.
- First rural development micro-credit facility in a developing country to assist in the creation of village telephone service businesses using digital, wireless telephony.
- First private sector rural telecommunication initiative that specifically targets poor village women for establishing a micro-enterprise (targeted, micro-level programme).
- First private sector telecommunication initiative with an explicit purpose of rural poverty reduction.
As a result of these factors, the Village Phone programmeshould be examined in-depth as an innovative model.
In Bangladesh, rural people's occupations are becoming increasingly diversified and many people live outside their villages. Fifty percent of rural households do not own any land; they seek off-farm and nonfarm incomeearning opportunities. Less than 8 percent of the Grameen Bank members surveyed for this report indicated that their main occupation is agriculture. Labour mobility has increased enormously in the recent past and millions now work outside their own village and abroad. Population mobility is a key indicator of demand for telephone services because when people move and relocate, they have agreater need to communicate with family and friends.
GrameenPhone is a commercial operation providing cellular services in both urban and rural areas of Bangladesh. A pilot programme of GrameenPhone, through the Grameen Bank and a wholly owned subsidiary, Grameen Telecom, is enabling members of the Bank's revolving credit system to retail cellular phone services in rural areas.
Already in 1999, the pilot project involves 950 Village Phones providing access to more than 65,000 people. Women access micro-credit to acquire a digital GSM cellular phone and subsequently resell phone calls and phone services within their villages. When the programme is complete, 40,000 Village Phone operators will beemployed for a combined net income of US$24 million per annum.
The beauty of Grameen Village Phone as well as of other initiatives by the Grameen Bank, is that the project is not only socially beneficial but also profitable. Few social development oriented organisations have been as successful in effecting such deep structural changes insociety on such a large scale as the Grameen Bank.
Village Phone enables rural people to make calls from their villages and also to receive calls from outside. A Village Phone operator has a financial incentive to ensure that incoming calls are completed, and she/he is therefore willing to make the extra effort to find the person for whom the incoming call is destined.
According to Grameen Bank member phone users surveyed forthe TeleCommons report (1999), 61 percent of the last phone calls completed were incoming calls received by villagers, and 58 percent of the last phone calls completed were connections with people (primarily family members) living outside of Bangladesh. Thus, theVillage Phone provides an important link that enables relatives who have left the village to stay in touch with family at home. And almost 42 percent of Grameen Bank member phone users indicate that their main reasons for using the phone involve discussions of financial matters (primarily discussions about remittances) with family members. Only 7 percent of calls were made for business and trading reasons.
The TeleCommons data reveals that the Village Phone plays a key role in facilitating family relationships and the flow of remittances to family members in the village when a family member has left the village for work in another country or Dhaka City.
For example, 54 percent of Grameen Bank member phone usersindicated that they were willing to spend between 100 to 300 Taka (US$2 to US$6) for a three minute phone call involving a financial matter with a family member overseas, and 27 percent said they were willing to spend between 300 to 600 Taka (US$6 to US$12.25) for this kind of call. Given an average reported monthly income of 5,000Taka (US$102) for respondents' households, these figures represent significant proportions of monthly household income ranging from two percent to 12 percent.
Bangladesh is, like many other countries in the developing world, an example of telecommunication systems that do not work. On the other hand, thanks to the Grameen Village Phone project it may soon become an outstanding example of telecommunications that work for social change and rural development.
A summary of indicators provides a picture of the telecommunications sector: The telephone density of 0.26 lines per 100 people is one of the world's lowest; the waiting time for a connection is more than 1 years; the installation charge of US$450 for a new line is one of the highest in the world; on average, only 2 of 1 calls aresuccessfully completed.
The Village Phone initiative was developed by combining theGrameen Bank's expertise in micro-enterprise and micro-credit with the latest digital wireless technology. Grameen Telecom (GTC) is a nonprofit organisation part of the Grameen Bank, focusing exclusively on the deployment of the Village Phone programme in rural Bangladesh. GTC owns 35 percent of the shares of GrameenPhone (GP), a private sector urban cellular telephone operation from which GTC buys airtime in bulk and passes on most of the savings to the Village Phone (VP) operator, making use of Grameen Bank's extensive network (1,140 branches spread over 39,346 villages) and its loan system to collect revenue from the operators.
An estimate of the percent of cellular vs. landline telephone subscribers in Bangladesh is over 20 percent: 500,000 landlines vs. 100,000. GrameenPhone plans to double the number of subscribers each year. This is an unprecedented situation where a cellular network is poised to dominate the national telecom industry. Personalvoice communication beyond hearing distance is simply not possible today from 90 percent of the 68,000 villages of Bangladesh. The Village Phone programme provides an opportunity for universal access: a person may not own a telephone but he/she should have access to a telephone within a ten-minute walk.
This is what the Grameen Village Phone is achieving:
- The Village Phone programme appears to be the best available technical solution under current regulatory and commercial circumstances.
- The Village Phone programme is a technical and organisational solution to rural telecommunications access.
- The marriage of Grameen Bank's revolving loan system and network of branches with the cellular phone loan programme is unique and working very well.
- Grameen Telecom staff is committed and provides excellent service to users.
- There are significant positive social and economic impacts, including relatively large consumer surplus and immeasurable quality of life benefits.
The Village Phone programme raises, perhaps for the first time, the important issue of gender when considering goals of universal telecommunication access.
Social calls to family and friends frequently involve transfer of information about market prices, market trends and currency exchange rates, making the Village Phone an important tool for enabling household enterprises to take advantage of market information, to increase profits and reduce productive expenses.
Grameen Telecom first gathers information on villages that have cellular coverage emanating from GrameenPhone's existing network of cellular towers. The current coverage expands through fibre optic cable along the Bangladesh Railway network. GTC officers then visit the Grameen Bank branches and prepare a list of villages where network coverage is satisfactory to provide Village Phone service.
The Grameen Bank has a special set of criteria for the selection of the operators: they must have a very good record of repayment of loans; they should be literate or at least have children who can read and write; their residence should be near the centre of the village; they should have a good business, and the spare time to function as operators. Initially, this may be a side business and eventually switch over to telecom business on a full-time basis.
After the initial selection the Unit Officer ensures signal availability in the house where the operator intends to use the phone. Experience has demonstrated that a weak signal can be improved by use of a high gain antenna mounted on a four-to five-metre bamboo pole. The high gain antenna effectively makes the cellular phone a "fixed-Mobile" phone, although the antenna and pole can be moved within a village, if needed. GTC then buys from GrameenPhone a cellular phone user subscription on behalf of the operator, provides the connection to the member, and supplies the necessary hardware and the training to operate the phone.
The basic Village Phone package (Nokia transceiver, battery, fast charger, sign board, calculator, stopwatch, user guide in Bangla, and price list for calling different locations) costs approximately US$310. The Village Phone operator pays for the phone through weekly loanpayment installments of US$4.50. These payments are made through the local Grameen Bank branch. On average, the Village Phone operator earns a net profit of 2,000 Taka per month (or US$40). Widespread access to electricity in rural Bangladesh enables the phone operator to recharge batteries or power the phone directly from an electrical outlet. Solar power sources are provided in non-electrified villages.
The Government's card phones installed in towns may represent a competition for the Grameen Village Phone Because tariffs for card phone use are lower than tariffs for Village Phone use, and becauserural phone users are very price sensitive, the Village Phone initiative may see a drop in demand for outgoing calls if card phones and prepaid calling cards are more accessible in towns.
GSM cell phone technology is a high-cost solution for universal access in rural areas. Limited cellular coverage of rural areas may only be viable under the current set of cumbersome regulatory practices. GSM cell phone technology also places much higher tariffs on ruralphone users than would be the case for wireless local loop (WLL) technologies. Cellular phone technology is currently not a viable option for inexpensive email/Internet/data connectivity.
This chapter is based on Grameen Telecom's "Village Phone Programme in Rural Bangladesh: a Multi-Media Case Study" by Don Richardson, Ricardo Ramírez, Moinul Haq.TeleCommons Development Group (TDG), March 2000.
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