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 served. 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 [EMAIL PROTECTED] www.wri.org www.digitaldividend.org ------------ This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: <[EMAIL PROTECTED]> To subscribe or unsubscribe, send a message to: <[EMAIL PROTECTED]>. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: <http://www.dot-com-alliance.org/archive.html>