Teleuse on a Shoestring LIRNEasia Media Workshop Singapore. 28 February 2007
Agenda Research methodology & key findings: Harsha de Silva The SMS story and others Lorraine Carlos Salazar The next billion customers Ayesha Zainudeen
Research Methodology and Key Findings Harsha de Silva desilva@lirne.net
Agenda Research methodology & key findings: Harsha de Silva The SMS story and others Lorraine Carlos Salazar The next billion customers Ayesha Zainudeen
Background Emerging markets are where the action is The next billion... Want to know what users at the Bottom of the Pyramid want Pilot: Shoestrings 1 New and improved: Shoestrings 2
Research objectives Understand telecom use at the Bottom of the Pyramid (BOP) in Developing Asia Large sample survey in five countries India, Pakistan, Sri Lanka, Philippines & Thailand Representative of target population SEC D & E (BOP) between ages 18-60
Methodology Quantitative Qualitative Random sample 8,660 F-to-F interviews; in 5 countries 5 diary Final output 6 Focus Group Discussions per country (30)
Country profiles South Asia South East Asia Pakistan India Sri Lanka Philippines Thailand Population 165 million 1,095 million 19.6 million 89 million 64 million GNI per capita (2005), USD (Atlas) 690 720 1,160 1,300 2,750 GNI per capita (2005), USD (PPP) Population below Poverty Line Fixed teledensity (2006) Mobile teledensity (2006) Internet Users 2350 3460 4,520 5,300 8,440 32% (est. 2001) 4.16 (2006 Q4) 25.22 (2006 Q4) 7.5 million 25% (est. 2001) 4.58 (2006 Q1) 8.82 (2006 Q1) 50.6 million 23% (est. 2005) 9.50 (2006 Q4) 27.1 (2006 Q4) 0.3 million 4 (est. 2001) 4.07 (2005 Q4) 41.30 (2005 Q4) 7.8 million 1 (est. 2004) 10.25 (2005 Q4) 46.45 (2005 Q4) 8.4 million Notes: India on an April March reporting period ; Pakistan on a July June reporting period; Other countries follow Jan Dec (calendar year) reporting periods. Sources: India-COAI, TRAI; Thailand Company Reports; Pakistan PTA; Philippines NTC; Sri Lanka- TRC; 2000 onwards from company reports; World Bank (2006); CIA Fact Book (2005)
Bottom of the Pyramid defined Many definitions of poverty, but this study uses SEC D and E; between ages 18-60 SEC does not take into account income, but it is closely related to income levels Pakistan India Sri Lanka *excluding FANA/FATA Tribal Areas; **excluding N&E Provinces Philippin es Thailand Population (million) 165 1,095 20 89 64 Target population of study (million) 77* 260 4** 41 15
Quantitative sample SAMPLE South Asia South East Asia TOTAL Pakistan India Sri Lanka Philippine s Thailand TOP (SEC A, B & C) 685 800 250 120 200 2055 BOP (SEC D & E) 1125 3200 800 980 500 Total 1810 4000 1050 1100 700 6605 8660 BOP segment is representative of the BOP population Diary respondents also representative of BOP Small (non-representative sample) taken of SEC groups A, B & C
Access at the BOP Everyone has access, but not ownership
Overall access is very high Most have used a phone in the last 3 months South Asia South East Asia Pakistan India Sri Lanka Phils. Thailand Accessibility (% of those randomly approached (all SEC groups) who have used a phone in the preceding 3 months) 98% 94% 92% 93% 95%
Overall access is very high* Time it takes to reach nearest phone % of non-owners at the BOP 10 9 8 7 6 5 4 3 2 1 Pakistan India Sri Lanka Philippines Thailand >60 minutes 45-60 minutes 30-45 minutes 15-30 minutes 10-15 minutes 5-10 minutes 3-5 minutes < 3 minutes Around 6 at at BOP BOP in in all all countries can can get get to to a phone in in less less than 5 minutes
Urban-rural differences % of non owners at BOP % of non owners at BOP 10 9 8 7 6 5 4 3 2 1 Urban Rural Urban Rural Time to nearest phone: urban vs. rural: Sri Time Lanka to nearest phone: urban vs. rural: Philippines Pakistan India 10 9 8 7 6 5 4 3 2 1 Urban Rural Sri Lanka More than 9 an hour Betw een 8 45-60 minutes 7 Betw een 30-45 minutes 6 Betw een 15-30 minutes 5 Betw een 10-15 minutes 4 Betw een 5-10 minutes 3 Betw een 3-5 minutes 2 Less than 1 2-3 minutes % of non owners at BOP 10 10 9 More than 9 an hour Betw een 8 45-60 minutes Betw een 8 45-60 minutes Betw een 7 30-45 minutes 7 Betw een 30-45 minutes Betw een 6 15-30 minutes 6 Betw een 15-30 minutes Betw een 5 10-15 minutes 5 Betw een 10-15 minutes Betw een 4 5-10 minutes 4 Betw een Betw een 3 3-5 minutes 3 5-10 minutes Less than 2 Betw een 3-5 minutes 2-3 minutes 2 1 Less than 1 2-3 minutes Urban Rural Urban % of non owners at BOP 10 Time to nearest phone Philippines More than an hour Betw een 45-60 minutes Betw een 30-45 minutes Betw een 15-30 minutes Betw een 10-15 minutes Betw een 5-10 minutes Betw een 3-5 minutes Less than 2-3 minutes % of non owners at BOP Thailand Urban-rural Differences in in time time to to phone phone in in Pakistan & India India Rural
But ownership is low Ownership and GDP per capita (USD, PPP) % at bottom of pyramid 9 8 7 6 5 4 3 2 1 Total number of phones per 100 population 23% 18 % 63.6 9% 11% 80.7 22% 23% 59.0 6 7% 38.0 76% 14 % 22.7 Pakistan India Sri Lanka Philippines Thailand Pakistan India Sri Lanka Philip-pines Thailand Own a mobile Own a fixed phone Own nothing (but use something) Per Capita GDP PPP (US $) 29.4 13.4 36.6 45.4 56.7 Notes: India on an April March reporting (2006 period Q4) ; Pakistan (2006 on a July Q1) June reporting (2006 period; Q4) Other (2005 countries Q4) follow Jan (2005 Dec (calendar Q4) year) reporting periods. Sources: India-COAI, TRAI; Thailand Company Reports; Pakistan PTA; Philippines NTC; Sri Lanka- TRC; 2000 onwards from company reports; World Bank (2006); CIA Fact Book (2005) 9,000 8,000 7,000 6,000 5,000 4,000 0 3,000 2,000 1,000 GDP per capita, USD (PPP)
So, mainly use public phones* % at BOP 10 9 8 7 6 5 4 3 2 1 Most frequently used mode Pakistan India Sri Lanka Philippines Thailand Public phone 35% 71% 3 8% 7% Relative / friend's phone 1 1% 12% 14% 6% Neighbours phone 8% 7% 14% 7% 1% Household fixed phone 14% 9% 21% 4% 8% Mobile of another household 12% 4% 6% 11% 5% member Own mobile 21% 9% 17% 56% 73% Public phone Relative / friend's phone Neighbours phone Household fixed phone Mobile of another household member Own mobile Many at at BOP BOP in in South Asia Asia use use public phones
Mobiles used more often by males in South Asian BOP Most frequently used phone: Own mobile 8 7 76% 7 6 56% 55% % at BOP 5 4 3 2 1 3 22% 11% 12% 12% 5% Pakistan India Sri Lanka Philiphines Thailand Male Female
Females use household fixed phones more often Most frequently used phone: Household fixed phone 8 7 6 % at BOP 5 4 3 2 1 23% 19% 16% 11% 9% 1 12% 3% 4% 4% Pakistan India Sri Lanka Philiphines Thailand Male Female
Females more reliant on other peoples phones in South Asian BOP Most frequently used phone: Someone else's phone (neighbor, friend, family, work) 8 7 % at BOP 6 5 4 3 2 1 48% 39% 34% 33% 27% 16% 13% 13% 12% 8% Pakistan India Sri Lanka Philiphines Thailand Male Female
Public phones used much more by Pakistani males at BOP Most frequently used phone: Public phone 8 7 71% 7 6 % at BOP 5 4 3 2 1 45% 31% 24% 26% 7% 7% 7% 6% Pakistan India Sri Lanka Philiphines Thailand Male Female
Usage patterns Keeping in touch
Around 1 call per day in S Asia; less than 1 call per day in SE Asia Average number of calls (incoming + outgoing) for a month mean number of calls 90 80 70 60 50 40 30 20 10 0 Average # of calls for a month (in+out) Source: Diary 14.1 16.8 20.0 18.3 10.1 5.3 13.0 10.3 33.8 46.5 Pakistan Pakistan India India Sri Sri Lanka Lanka Philippines Philippines Thailand Thailand 34.2 35.1 23.2 15.6 80.3 outgoing Incoming
Mostly local calls at the BOP Type of call (local, long distance, international) % of calls 10 9 8 7 6 5 4 3 2 1 Source: Diary 1% 4% 1% 6% 6% 16% 22% 28% 34% 71% 78% 62% 88% 84% Pakistan India Sri Lanka Philipines Thailand International call Long distance call Local call
Calls mostly to keep in touch % of all calls Source: Diary 10 8 6 4 2 Main purpose of call 8% 14% 14% 15% 4% 29% 14% 27% 21% 2% 82% 72% 65% 7 64% Pakistan India Sri Lanka Philipines Thailand Keeping in touch with family & friends To check something / Deliver message Business
Calls are short Average call durations 6 5 % of calls 4 3 2 1 Source: Diary <1 minute 2-3 minutes About 5 minutes Duration of the call About 10 minutes >15 minutes Pakistan India Sri Lanka Philipines Thailand
Bottom of the pyramid Some do own phones
Why own a phone?* Primary reason for choosing to own a mobile (SEC D & E) % of mobile owners at the BOP 10 1% 1% 3% 4% 1 7% 9 18% 16% 2 8 17% 7% 4% 6% 7 9% 11% 5% 6 5 92% 4 71% 3 64% 66% 68% 2 1 Pakistan India Sri Lanka Philippines Thailand Convenience is Convenience: accessibile at is key any key time among So I don t depend mobile on others owners; is of For privacy privacy It is cheaper is more Other of a concern for for higher income countries
Why own a phone 2?* Primary reason for choosing to own a fixed phone (SEC D & E) % of fixed owners at the BOP 10 9 8 7 6 5 4 3 2 1 3% 7% 11% 24% 55% 1% 6% 1 18% 65% 17% 22% 7% 14% 8% 6 Pakistan India Sri Lanka Philippines Thailand Convenience: accessibile at any time It is cheaper So I don t depend others For privacy Other Similar pattern among fixed owners 6% 63% 16% 8
More recent mobile connections at BOP in South Asia %(cumulative) at BOP who obtained mobile connection in year X 10 8 6 4 2 before 2001 2001 2002 2003 2004 2005 2006 (Q1&2) Year during which mobile connection was obtained Pakistan India Sri Lanka Philippines Thailand
Older fixed connections %(cumulative) at BOP who obtained mobile connection in year X 10 8 6 4 2 before 2001 2001 2002 2003 2004 2005 2006 (Q1&2) Year during which mobile connection was obtained Pakistan India Sri Lanka Philippines Thailand
Perceived benefits of ownership Why does ownership matters
Economic benefits from direct access Income generation through the sale of telecom services; Grameen model Indirect Use of a phone by an auto-rickshaw driver Obtaining agricultural price info by farmer Cost savings made by making a call as opposed to taking a bus ride into town
Efficiency of daily activities BOP sees the benefit Efficiency of daily activities Pakistan (4.17) Thailand (4.37) Sri Lanka (3.98) India (3.90) 1 2 3 4 5 worsened slightly wo rsened no change somewhat improved Philippine s (4.40) impro ved
Efficiency income benefit? Indian & Filipino BOP perceives economic benefit Large transactions costs avoided? Ability to earn or save Thailand (3.56) Sri Lanka (3.19) 1 2 3 4 5 worsened slightly wo rsened Pakistan (3.80) no change somewhat impro ved India (3.97) Philippines (4.07) improved
Seen both in services and agriculture % of owners who's ability to earn or save has improved 10 9 8 7 6 5 4 3 2 1 Agriculture / Farming Employed in an office Labourer / Industrial worker Trader / Self Employed Employed in service sector India Sri Lanka Pakistan Saving travel time and and costs, checking price information, sale sale of of minutes?
But, sense of security is main perceived benefit Ability to act in an emergency is key Ability to act in emergency Philippines (4.63) Sri Lanka (4.58) Pakistan (4.48) India (4.28) Thailand (4.83) 1 2 3 4 5 worsened slightly no change somewhat improved
BOP in summary Almost everyone has access to a phone, but very low ownership Benefits of ownership (direct access) are known Perceived as improving efficiency and economic benefit in India
To think about Telecom operators Leverage benefits of direct access Security, friends & family Particularly in India: cost saving + income enhancing Increase awareness on efficiency economic gain Convergence; collaborate on meaningful content SMS based services vs. Bollywood movies Innovations to enable cheaper calls e.g. any-amount prepaid balance top-ups
C K Prahalad, The Fortune at the BOP if we stop thinking of the poor as a burden and start recognizing them as value conscious consumers, a whole new world of opportunity will open up