MobileActive.org

A new report, Perceived economic benefits of telecom access at the Bottom of the Pyramid in emerging Asia, takes a new look at the effect of mobile phones on the lives of people at the so-called 'bottom of the pyramid.' The report, published by LIRNEasia, states that although anecdotal evidence shows that mobile phones are economically beneficial to base-of-the-pyramid users, there is little empirical evidence to reinforce this claim. The authors conducted a study on mobile phone usage in five Asian countries and used the results to analyze the benefits -- economic and otherwise -- of mobiles on users at the bottom of the pyramid.

There is a plethora of small studies and anecdotal evidence that show the economic impact of mobile phones on small groups or communities of users, such as studies of fisherman in Porto da Manga, Brazil, and Moree, Ghana. There, mobiles allowed the fisherman to increase their living standards. In a project in Sri Lanka an automated voice system allowed farmers to obtain accurate market prices and farmers in Northern Indian villages who accessed agricultural advice via mobile phone. But, the authors note:

On the whole, there appears to be a dearth of empirical evidence of the economic benefits of access to telecom among the wider populace in developing countries, as well as developed countries, at least available in the English language. Aside from empirical studies reported here, it is difficult to find substantial empirical evidence of benefits of telecom access on income; much of the evidence of income impacts at the BOP is anecdotal.

In order to fill this gap, the authors conducted a study in five Asian countries -- Pakistan, India, Sri Lanka, the Philippines and Thailand -- to measure the effects of mobiles on base of the pyramid users. The authors found that mobile phones benefited these users in several ways:

1. Emergency use -- People could immediately call for help in the event of sickness, injury, and accidents like a broken bicycle.
2. Social use -- People used mobile phones to stay connected to family and friends. The authors write, "Except for Sri Lanka, around two-thirds of all telephone owners in the five countries seemed to feel that ownership of a telephone has enhanced their social status and recognition in their community."
3. Economic benefit -- People used mobile phones to monitor market prices, sell and exchange goods, and coordinate trade.

Users were given a survey and asked to rate the effect of mobile phones on "the efficiency of their daily activities" and "their ability to earn more using the phone or save a certain expense that would have been incurred without the phone." The survey didn't measure "direct income" but rather indirect income, which would include income attributable to communicate with buyers or to check market prices to negotiate a higer price.

Survey results showed that respondents felt that phones resulted in efficiency gains but only minor financial gains. The authors concluded, "There appears to be a ‘disconnect,’ in people’s perceptions between efficiency gains (for e.g. saving travel time and cost) and financial gains, which at the outset seems counter-intuitive."

The authors offer three theories on the causes of this disconnect. One possibility is that the phones were not directly used for business purposes. They write, "It appears that people may prefer other modes for their business communication, for example, Souter et al. (2005) found that face-to-face communication is ‘overwhelmingly’ the preferred mode for specific information relating to farming, business, education, and political or government matters."

Secondly, the authors note that business and social contacts often overlap substantially because of the nature of the barter economies in some of the countries where the study was conducted. They give the following example: "It may be implicit that one’s brother looks after you when times are hard and although your brother is effectively your insurer, one may not assign a positive economic value to a weekly call to ‘keep in touch’ with one’s brother; instead, one may only see it for the direct cost that is incurred." The majority of survey respondents said that mobiles "enhanced their family and social relations," which may be closer to their economic interests than they perceived.

The third possibility is that people perceive economic benefits to be lower because of the high cost of phone service. The authors write, "This could be the case in Sri Lanka, where startlingly, a quarter of phone owners felt that having access to a telephone had in fact worsened their ability to increase their incomes or make savings." The fact that the person receiving the call, and not just the caller, pays in Sri Lanka may add to the lack --either real or perceived -- of economic benefit.

The report also found that base-of-the-pyramid users' access to mobile phones was much higher than expected:

One of the most significant findings of this study is that accessibility in all five countries, was extremely high; that is of all those contacted (through the random selection process), more than 90 percent in all countries had used a phone at least once during the preceding three months...If this is the case for the whole country, then accessibility at the BOP can not be much lower. This finding therefore brings under scrutiny the real dimensions of the digital divide, that is said to exist; if almost 90 percent have access, then perhaps the ‘have nots’ in fact have some kind of reasonable access, but not necessarily ownership.

However, they did find a "substantial gap" between those who use mobile phones and those who own them, and estimate a "vast potential for greater ownership of telephones in the region."

Overall, the report offers a somewhat-contrasting perspective to other similar reports we've reviewed, such as Going Wireless: Dialing for Development. At times, the authors give not much credit to the ability of bottom of the pyramid phone users to understand possible economic benefits. For example, the authors write, "For instance, users at the BOP do not seem to see how instant access to important information might be helpful in making decisions that could enhance one’s earning capacity or how gaining an hour (otherwise spent personally conveying a message by foot) could help reduce transactions costs." It seems that perhaps they are underestimating the intelligence or perceptiveness of their survey respondents, as these same users seem to be fairly aware of the economic advantages of access to information in other studies. Despite this, the report is a solid look at the growing segment of bottom-of-the-pyramid mobile users in Asian developing countries.