Hi, Keith, Your observation about bureaucracy leads me to wonder if mobile phones expanded in the third world because of this status? I know that in Egypt tit took a long time to get a land-line installed -- years -- and that this gave a great boost to mobile phones, for which there was essentially no waiting time.
The situation in Egypt was so bad that people, when they sold their flats, would sell their phone line along with it, without canceling it and going to the end of the line for a new phone. Naturally, phone directories became next to useless as the numbers remained registered in old names no longer associated with the phone number. People took to creating their own personal directories of the phone numbers of their acquaintances, relatives, and colleagues, sometimes a couple of inches think, with accurate names and phone numbers. I once did a day's work in Cairo in a car, while by host made call after call, fingering through her massive personal directory, setting up appointment after appointment, and pencilling in a few corrections when she hit old numbers, and giving the person at the other end of the line numbers that they needed. But the mobile phones worked well -- there just weren't any directories for them. Cheers, Lawry On Nov 3, 2010, at 4:42 PM, Keith Hudson wrote: > Hi Lawry, > > Well . . . thanks for the tutorial. I guess I was wrong about hawala's lack > of scalability. That's made the subject even more interesting than Friedman's > original article. > > Friedman's article didn't mention one unfortunate fact about India which > rather militates against his case. It's a highly bureaucratic country (a > residue of the long-time British occupation) and it's difficult to get a new > business established, especially in anything that's to do with basic > industries (e.g. retail stores, electricity). However, mobile phones escaped > much of the usual regulation and lengthy procedures because they were > considered to be a luxury. > > Best, > Keith > > At 15:49 03/11/2010 -0400, you wrote: >> Hi, Keith, >> >> Actually, hawala operates on a wide scale. It is a network of financial >> networks and spans many countries. That is, hawala can process transactions >> into areas they don't do business with directly through third party hawala. >> The network can also aggregate large sums that individual hawala stores >> can't cover. Millions of people use it reliably for large and small >> transactions and movement of cash. Hawala are used for personal >> transactions as well as commercial ones, i.e. between individuals who are >> related, as well as companies that are carrying out normal business >> transactions. Many hawala 'stores' exist and compete with each other. For >> example, in a city like Washington, some three or four-dozen hawala operate. >> I'm not clear why you say it isn't scalable? >> And then there are the numerous financial transfer organizations -- >> store-fronts -- that labor immigrants in the US use to remit funds to >> central and south America, among others. In Washington, I would guess that >> these number in the many hundreds, though I imagine that there is >> considerable aggregation behind the store-fronts. >> >> It is true hawala exist on trust, and those that fail this disappear pretty >> quickly. The key here is that a hawala's success depends on repeat business, >> e.g. bi-weekly or monthly transfers. Any failure to transfer the money will >> be immediately noticed and the word would go out throughout the community >> using the hawala very rapidly. Don't all banks operate on a basic level of >> trust? As did the Templar system. As does, the system described by >> Friedman. The only difference, as far as I can tell, is the use of mobile >> phones to register and track the transactions, and the software needed to >> support the phone transactions. >> >> Western Union is another example of this kind of geographically dispersed >> financial network. The corporate brand that stands for Western Union's >> reliability is no greater than that of a hawala, and for the same reason: it >> works, works quickly, easily, and well. Like hawala, any failure of Western >> Union to deliver the commissioned funds will be immediately noticed by the >> depositors and this ensures that Western Union maintain its reliability or >> lose its business. >> >> Using mobile phones is a nifty improvement (as is mobile phone banking) but >> I don't see it as the grand innovation that Friedman posits. The use of >> mobile phones to process transactions does not diminish the need for trust, >> nor does it create a larger or more 'scalable' system than that already >> provided by the hawala . >> >> Perhaps Friedman doesn't appreciate the size, flexibility, reach, and >> reliability of hawala, as he dismisses it as a 'hand-to-hand' operation, >> when it is, as I hope I've been able to explain here, far from that. >> >> Cheers, >> Lawry >> >> >> On Nov 3, 2010, at 3:13 PM, Keith Hudson wrote: >> >>> Hi Lawry, >>> >>> The EKO system that Friedman describes is a different beast from hawala. >>> It's scalable, while hawala isn't. Hawala only operates in small networks >>> where the individuals can trust one another completely -- usually between >>> relatives or via a village elder, but they don't spread much wider than >>> that. The money flowing through the EKO system is recordable at every stage >>> and doesn't depend on personal trust so it could spread very widely indeed >>> -- as it is already showing signs of doing. >>> >>> Western governments have been able to lean on the phone companies in order >>> to prevent this development so far. Over here, it could greatly stimulate >>> the grey economy developing more widely. >>> >>> Keith >>> >>> At 11:35 03/11/2010 -0400, you wrote: >>>> Friedman entirely misses the point. The system he describes is quite old. >>>> It is the hawala system -- which in this article he mischaracterizes as >>>> "hand-to-hand" -- pure and simple, with transactions recorded via mobile >>>> phones. Hawala was always a "virtual bank." His larger speculation may >>>> have merit, but his example doesn't support his speculation. >>>> >>>> Interestingly, the Knights Templar created for Europe a similar system >>>> and, together with what could be considered one of the world's first >>>> institutionalized, non-governmental intelligence networks, became >>>> extremely powerful. The Templars in creating their "virtual" banking >>>> system, copied the Muslim hawala system, which predated it by some >>>> centuries. >>>> >>>> Had I read the Hindustan Times article Friedman cites, I would instead >>>> have ruminated on the significance of mobile access at the top of Everest, >>>> and what it symbolizes for humankind. >>>> >>>> Cheers, >>>> Lawry >>>> >>>> >>>> On Nov 3, 2010, at 7:26 AM, Keith Hudson wrote: >>>> >>>>> Here is one of the most interesting articles I have read in a long time >>>>> -- from today's NYT. >>>>> >>>>> Keith >>>>> >>>>> <<<<< >>>>> DO BELIEVE IN HYPE >>>>> >>>>> Thomas L. Friedman >>>>> >>>>> The Hindustan Times carried a small news item the other day that, >>>>> depending on your perspective, is good news or a sign of the apocalypse. >>>>> It reported that a Nepali telecommunications firm had just started >>>>> providing third-generation mobile network service, or 3G, at the summit >>>>> of Mount Everest, the world's tallest mountain, to allow thousands of >>>>> climbers and trekkers who throng the region every year access to >>>>> high-speed Internet and video calls using their mobile phones. >>>>> >>>>> I can hear it already: Hi, mom! You'll never guess where Im calling from >>>>> . . . >>>>> >>>>> This is just one small node in what is the single most important trend >>>>> unfolding in the world today: globalization -- the distribution of cheap >>>>> tools of communication and innovation that are wiring together the >>>>> world's citizens, governments, businesses, terrorists and now >>>>> mountaintops -- is going to a whole new level. In India alone, some 15 >>>>> million new cellphone users are being added each month. >>>>> >>>>> Having traveled to both China and India in the last few weeks, here's a >>>>> scary thought I have: What if -- for all the hype about China, India and >>>>> globalization -- they're actually underhyped? What if these sleeping >>>>> giants are just finishing a 20-year process of getting the basic >>>>> technological and educational infrastructure in place to become >>>>> innovation hubs and that we haven't seen anything yet? >>>>> >>>>> Heres an example of why I ask these questions. It's a typical Indian >>>>> start-up I visited in a garage in South Delhi, EKO India Financial >>>>> Services. Its founders, Abhishek Sinha and his brother Abhinav, began >>>>> with a small insight -- that low-wage Indian migrant workers flocking to >>>>> Delhi from poorer states like Bihar had no place to put their savings and >>>>> no secure way to send money home to their families. India has relatively >>>>> few bank branches for a country of its size, so many migrants stuff money >>>>> in their mattresses or send cash home through traditional hawala,or >>>>> hand-to-hand networks. >>>>> >>>>> The brothers had an idea. In every Indian neighborhood or village there's >>>>> usually a mom-and-pop kiosk that sells drinks, cigarettes, candy and a >>>>> few groceries. Why not turn each one into a virtual bank? So they created >>>>> a software program whereby a migrant worker in Delhi using his cellphone, >>>>> and proof of identity, could open a bank account registered on his >>>>> cellphone text system. Mom-and-pop shopkeepers would act as the friendly >>>>> neighborhood local banker and do the same. >>>>> >>>>> Then the worker in New Delhi could give a kiosk owner in his slum 1,000 >>>>> rupees (about $20), the shopkeeper would record it on his phone and text >>>>> receipt of the deposit to the systems mother bank, the State Bank of >>>>> India. Then the workers wife back in Bihar could just go to the >>>>> mom-and-pop kiosk in her village, also tied into the system, and make a >>>>> withdrawal using her cellphone. The shopkeeper there would give her the >>>>> 1,000 rupees sent by her husband. Each shopkeeper would earn a small fee >>>>> from each transaction. Besides money transfers, workers could also use >>>>> the system to bank their savings. >>>>> >>>>> Since opening 18 months ago, their virtual bank now has 180,000 users >>>>> doing more than 7,000 transactions a day through 500 branches-- >>>>> mom-and-pop kiosks -- in Delhi and 200 more in Bihar and Jharkhand, the >>>>> hometowns of many maids and migrants. EKO gets a tiny commission from the >>>>> Bank of India for each transaction and two months ago started to turn a >>>>> small profit. >>>>> >>>>> Abhishek, who was inspired by a similar program in Brazil, said the kiosk >>>>> owners are already trusted people in each communityand are already in the >>>>> habit of extending credit to their poor customers: So we said, "Why not >>>>> leverage them?" We are the agents of the bank, and these retailers are >>>>> our subagents.The cheapest cellphone today has enough computing power to >>>>> become a digital mattress and digital bank for the poor. >>>>> >>>>> The whole system is being run out of a little house and garage with a >>>>> dozen employees, a bunch of laptops, servers and the Internet. The core >>>>> idea, says Abhishek, is to close the last mile -- the gap where >>>>> government services end and the consumer begins.There is a huge business >>>>> in bridging that last mile for millions of poor Indians -- who, without >>>>> it, can't get proper health care, education or insurance. >>>>> >>>>> What is striking about the small EKO team is that it includes graduates >>>>> from India's most prestigious institutes of technology who were working >>>>> in America but decided to come home for the action, while the chief >>>>> operating officer,Matteo Chiampo, is an Italian technologist who left a >>>>> good job in Boston to work here where the excitement is, he said. >>>>> >>>>> India today is this unusual combination of a country with millions of >>>>> people making $2 and $3 a day, but with a growing economy, an increasing >>>>> amount of cheap connectivity and a rising number of skilled technologists >>>>> looking to make their fortune by inventing low-cost solutions to every >>>>> problem you can imagine. In the next decade, I predict, we will see some >>>>> really disruptive business models coming out of here -- to a neighborhood >>>>> near you. If you thought the rate of change was fast thanks to the garage >>>>> innovators of Silicon Valley, wait until the garages of Delhi, Mumbai and >>>>> Bangalore get fully up to speed. I sure hope we're ready. >>>>> >>>> >>>>> >>>>> Keith Hudson, Saltford, England >>>>> _______________________________________________ >>>>> Futurework mailing list >>>>> [email protected] >>>>> https://lists.uwaterloo.ca/mailman/listinfo/futurework >>>> >>>> Keith Hudson, Saltford, England >>> >>> Keith Hudson, Saltford, England >>>
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