4. Telecom for Rural Development Portrait

4.1 Reviewing Grameen Telecom goals and assumptions
4.2 A Snapshot of Grameen's Village Phone programme
4.3 Key research findings related to telecommunication and rural development in Bangladesh
4.4 Gender-related findings
4.5 Recommendations toward universal telecom access in rural Bangladesh and elsewhere

4.1 Reviewing Grameen Telecom goals and assumptions

• Grameen Telecom's goal is universal access to telecommunications in rural areas, which will advance social and economic development.
• Grameen Telecom is not limited to working with any one particular technology or telecommunication operator, provided that it does not affect the business of GrameenPhone.
• Grameen Telecom is committed to enabling rural entrepreneurs to gain access to telecommunications, through Grameen Bank-associated credit programmes, in order to create viable rural businesses and micro-enterprises.
• Current partnership with GrameenPhone does not limit exploration or establishment of partnerships with other telecom providers, provided that it does not affect the business of GrameenPhone.

4.2 A Snapshot of Grameen's Village Phone programme

• 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 organizational solution to rural telecommunication access partly necessitated by a regulatory environment that is not conducive to advancing rural telecommunication infrastructure.
• The marriage of Grameen Bank's revolving loan system & network of branches with cellular phone loan scheme is unique and working very well.

Villagers of all ages make use of Village Phones

Grameen Telecom staff are committed and providing 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.

4.3 Key research findings related to telecommunication and rural development in Bangladesh

• It is probably not justified to conclude that the Village Phone programme exists only because BTTB does not provide sufficient interconnection to competing rural operators in Bangladesh. However, this must certainly be a significant factor that has led to the emergence of Grameen Telecom's services. Bangladeshi telecommunication regulations are definitely not supportive of advancing telecommunications in rural areas, and are thus an obstacle to achieving rural development benefits from rural access.
• Rural Bangladesh holds potential rural telecommunication revenue of $205 million USD per year, but this potential revenue is not being leveraged for improving investments in telecommunication services that can contribute to rural development and universal access.
• According to a variety of sources, the BTTB's current target was to have about 600,000 lines installed by 1998, and about 900,000 lines by the year 2000. "Even with private sector providing another 100,000 line units in 2000, an achievement that will depend heavily on BTTB's ability to provide interconnectivity, supply will fall nearly 500,000 short of demand and the number of lines will still be less than 10 per 1000 population - among the lowest in the world" (World Bank and BCAS 1998). The Government of Bangladesh's Fifth Five Year Plan requires the installation of over eight million lines by 2020. Even the conservative projection foresees a requirement of more than four million lines. Either way, supporting infrastructure - adequate numbers of interconnection circuits and long-distance channels - must be provided to ensure the effective operation of access lines. These challenges far exceed the demonstrated capacity of the BTTB. We support Bayes (1999) in the belief that only privatization can give rise to a telecom sub-sector strong and modern enough to support 7-8% annual growth in GDP.
• In the Bayes et al. (1999) report, the income operators derived from the Village Phone was reported to be about 24% of the household income on average; and in some cases it was as high as 40% of the household income.
• The main reasons Grameen Bank members reported for using the telephone are discussions of financial matters with family, including discussions of remittances (42%) and social calls to family and friends (44%), accounting for 86% of all calls. The Village Phone is used more by respondents for receiving incoming calls than for dialing out of the village.
• 54% of Grameen Bank member phone users in our survey indicated that they were willing to spend between 100 to 300 Taka ($2 to $6 USD) for a three minute phone call involving a financial matter with a family member overseas, and 27% said they were willing to spend between 300 to 600 Taka ($6 to $12.25 USD) for this kind of call. Given an average reported monthly income of 5,000 Taka ($102 USD) for respondents' households, these figures represent significant proportions of monthly household income ranging from 2% to 12%.
• A single phone call made to facilitate, for example, a remittance from a family member wage labourer in Dhaka City can have a consumer surplus ranging from 2.64% to 9.8% of mean monthly household income. The cost of the trip ranges from 1.93 to 8.44 times the cost of the phone call, meaning real savings of between 132 to 490 Taka ($2.70 to $10 USD) for calls that substitute for travel between a village and Dhaka.
• Telephones in the Grameen Telecom Village Phone programme bring in 3 times as much revenue as urban phones (an average of $100/month versus $30/month).
• Of the 292 Grameen Bank members surveyed in their villages, 34% reported never having used a phone and 64% reported having used a phone at least once. Having a family member working overseas was significantly correlated with phone use with 75% of respondents with a family member working overseas reporting that they had used a phone while 45% of people with no family members working overseas had never used a phone. Having a family member working overseas was the most important variable in determining phone use.
• Labour mobility among respondents' families, and especially labour mobility to destinations overseas, contributes significantly to demand for and willingness to pay for telephone services.
• When respondents who indicated that they had never used a phone were asked why, 78% reported that they had no one to call, which may be an indicator of a household in which members experience little labour mobility. Indeed, 83% of non-phone users had no family members working overseas. As reasons for not using the phone, only 7% indicated that they did not know how to use a phone. It is important to note that none of the non-phone users indicated that phone use was too expensive. This would seem to indicate that the cost of telephone use is not a significant barrier to phone use, as we had originally suspected.
• There is strong respondent support for access to phone card pay phones as an alternative tool for accessing telephone services.

4.4 Gender-related findings

• Universal access is not gender neutral. In the case of Bangladesh, the gender of the Village Phone operator and the physical placement of the phone within a gendered village context can either inhibit or improve women's access to phones. A woman's home provides a space that is acceptable for other village women to access. Our findings indicate clearly that when women are VP operators, women who are Grameen Bank members are more likely to feel comfortable using a phone and will more likely have more equitable access to a phone. From the standpoint of revenue generation and profitability, it is important to ensure that the Village Phone is fully accessible to the entire village population: if 50% of the user base faces obstacles to phone use, then a significant revenue stream is lost.
• 52% of female phone users responded that they preferred to use a phone operated by a woman phone owner, 2% preferred a male phone owner, and 46% had no preference.
• When we reviewed our data to examine research sites where Village Phones were operated by men, we found that only 6.25% of Grameen Bank member phone users were recorded as women. In comparison, where the operators are female, 82% of the Grameen Bank member phone users were recorded as women. The latter is, of course, expected given the high proportion of Grameen Bank members who are women, but this fact only highlights the differential access afforded by VPs operated by men.
• The current GB criteria for the selection of VP operators explicitly includes having a store business as one possible advantage. Our findings suggest that this criteria is not consistent with the goal of women's empowerment as such stores tend to be operated by men (husbands or other male relatives), and thus phone use by women is reduced.
• The consumer surplus we have calculated based on travel from a village to Dhaka would likely be higher for women than for men due to the various gender-related challenges associated with a woman making a journey to Dhaka City from a rural village.

4.5 Recommendations toward universal telecom access in rural Bangladesh and elsewhere

• Our data would seem to strongly confirm that in rural Bangladesh, men tend to use telephones owned by male operators while women prefer female operators, an important consideration when trying to expand phone service and ensure universal telephone access for both men and women. To the best of our knowledge, this is the first documented evidence of gender being significantly important in the provision of universal access to telephone service. Future programmes focused on universal access ought to include analysis of gender and access.
• 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 - once the regulatory environment improves, cellular phone technology may not be the most viable and efficient means of providing universal service. GSM cell phone technology also places much higher tariffs on rural phone users than would be the case for wireless local loop (WLL) technologies. Without regulatory improvements, cellular technology is a practical solution.
• Cellular phone technology is currently not a viable option for inexpensive email/Internet/data connectivity. WLL and other options can provide much better bandwidth and cost of service. It appears that Grameen Communications and Grameen Telecom will expand their pilot telecentres in rural areas (such as the pilot Village Computer and Internet Programme launched in June 1999 in Madhupur village, Tangail). If this programme expands on a large scale, given current cellular data capabilities, a non-cellular connectivity solution will clearly be required. The Madhupur telecentre recently acquired a WLL terminal from BRTA and is reporting significantly improved Internet connections.
• Telecommunication investors, financial institutions that provide telecom loans, urban telecom operators, and telecom equipment vendors are generally reluctant to involve themselves in rural operations because they see telecom ventures in rural areas, especially those in developing countries and emerging markets, as high-risk, troublesome, or not worth significant effort. The Grameen Telecom experience leads us to suggest one potential solution: target un-served and under-served regions and provide support for acquisition of quality market appraisal knowledge and market data through market research in the field, in order to prove the business case, attract investment capital, and reduce the effort required by investors and operators. Telecom operators and equipment vendors typically have the technical resources and operational expertise necessary to leverage profitable rural telecom opportunities, and if they are presented with a solid business case, this relieves them of the burden of researching rural markets themselves. In the case of Grameen Telecom, it was business case interventions on behalf of Gonophone and Grameen Bank that attracted external investment from a qualified foreign operator.
• Initiatives such as Grameen Telecom are proving that micro-credit programmes tied to the development of Public Calling Office (PCO)-type micro-enterprises can significantly increase rural access to telecommunication systems. However, in many regions of developing countries and emerging nations where rural service exists, the challenges of acquiring service and equipment prevent rural entrepreneurs from establishing locally-owned and managed PCO operations. As well, operators of existing rural telecommunication systems may be reluctant to expand due to the challenges of revenue collection, equipment maintenance, vandalism, and customer support. The Grameen Telecom experience points to a potential solution: link existing and successful micro-credit organizations with rural telecom operators (fixed line and/or wireless) to expand PCO coverage in rural areas. Small loans to rural entrepreneurs (perhaps targeted to women and youth) can enable entrepreneurs to establish PCOs providing a range of services including telephone, fax, email and even web, photocopy and computer word-processing services. A franchise programme of this sort would also establish consistency of service across a region that would, in turn, support the social and economic development of the region.
• We understand that there are 25-year exclusive territory license arrangements for Sheba's WLL line deployment in the south of Bangladesh and BRTA's line deployment in the north, and we understand that these licenses were introduced with the assumption that rural telecom is not profitable - an obviously false assumption. Grameen Telecom can examine licensing options for becoming an alternative, national, rural telecom operator, perhaps integrating alternative technologies such as WLL or collaborating with Sheba and/or BRTA. Through its relationship with GrameenPhone, Grameen Telecom has access to substantial infrastructure in the form of wireless towers, backbone service and operating experience.
• Examine the possibility of widening the reach of Grameen Telecom through partnering with BRTA and Sheba, and others, as appropriate (especially once interconnection problems are resolved) to provide business opportunities in association with, or with the support of, Grameen Bank's credit programme for a variety of end-user technologies including:

• WLL terminal village phones (similar to cell phone strategy)
• WLL terminals at village married to PABX to provide a local village exchange and multiplying the number of phones available from a single line - VP operator could become a local network operator
• PCO operations - Communication shops including phone, fax, email, Internet, computer training, photocopying, etc.
• "Virtual telephones" or village voice mail systems that can provide everyone with their own telephone number and access to a voice mailbox
• Village or town pay phones (card phones would be best). These pay phones would be owned and operated by a Grameen Bank member (a possible alternative or supplement to the current VP-style system).

• BRTA and Sheba do not appear to be very interested in operating end-user technologies - during interviews we heard clearly that they prefer the more technical job of supplying operating service and having a straightforward method of collecting revenue. This provides a substantial market opportunity for facilitating the operation of end-user technologies and services, especially those that provide consistent, high-quality and low-cost services and which enable the operator to simply provide technical service without the worries of revenue collection and rural service at the village level.
• Grameen Telecom's technical staff express a strong desire to improve their understanding of available technologies and options for rural universal access solutions. Technical staff would benefit immensely from a rural telecom learning programme that could include study tours, visits with equipment vendors, and dialogue with independent rural telecom analysts.

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