Bettina Hammerich and Jim Forster both make useful points. Of course,
markets don't attend well to everything. But the core of providing
useful services at prices people will pay--and the market discipline of
listening to customers that Forster underscores--is a strength of the
business approach, one that might be usefully incorporated further into
development strategies even in very poor communities.

I'd like to share some analysis that pertains to this question. We have
been analyzing income structure in developing countries, using a cut-off
of $6000 per household/y as a working definition of the level below
which the "bottom of the pyramid" or poorly-served market exists. This
is not absolute poverty, but it is still very low income, a few $ per
day per person. In China, there are 286 million households below this
cutoff with a collective income of $691 billion/y--67% of the total
income in China. For India, the figures are 171 million households, $378
billion, 75% of the total income. Across some 18 countries, the BOP
market has more than $1.7 trillion in income--about the size of
Germany's GDP. This is a substantial market. From a number of detailed
case studies, we can document that low-income households are willing to
spend 4-7% of their income on communications and access to information
(because it often substitutes for more expensive travel). Thus the
potential ICT market in developing countries exceeds $100 billion per
year, most of it larely untapped. 

The size of the market means that substantial investment to tap it might
be warranted. It's dispersed character (much of it in rural areas) means
that wireless systems may have an advantage in aggregating that demand
up to commercially viable levels. And it means that the market
opportunity is for services (including the infrastructure and device
cost) that cost $50-$300 per household per year. That in turn means a
strong advantage for shared use models or other approaches that spread
network and device costs over a large number of users or concentrate
them in local entrepreneurs serving pre-paid or pay-per-use customers,
as well as for services that can be bought in increments of a few cents
up to a few dollars.

Not surprisingly, we find that most of the successful models we have
documented in case studies have one or more of these characteristics. A
few examples, some well-known, others perhaps less so. GrameenPhone's
rural village phones generate an average of $96/m each--they are very
profitable. Smart Telecommunications in the Philippines has built a
profitable cellular phone business with over 14 million customers on the
strength of selling pre-paid text-messaging units to low income
customers at units as small as $.03. They use a network of some 500,000
local entrepreneurs to sell those units; the business grew 40 % last
year. ITC's e-choupal network in India reaches 4 million poor farmers
via an Internet-connected PC network, more than recouping the cost of
the system by savings on the price of the grain it buys over the network
and other sources of value. 

Similar imbedded systems can be found in health care, education, and
banking enterprises aimed at BOP markets. We do not believe that these
examples, and others we have documented, though limited, are unique or
due to special circumstances. The underlying business models are quite
robust and, we believe, replicable; indeed, the GrameenPhone model is
now being successfully adapted to Uganda, and many of the elements of
the ITC model are being adapted by Pride Africa to Kenya. So we conclude
that there is enormous untapped scope for market-driven ICT services
that confer significant benefits on the customers and communities

Allen L. Hammond
Vice President for Innovation & Special Projects
World Resources Institute
10 G Street NE
Washington, DC 20002 USA
V (202) 729-7777 
F (202) 729-7775

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