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- Hiro Protagonist, Snow Crash

Articles tagged 'Mobile phone'

Advanced economies.

Ethan Zuckerman
Image by whiteafrican via Flickr

So the internet destroyed distance.  It took a few years but the death of ‘long-distance’ fixed line telecoms pricing but, helped along by the entrepreneurs and engineers behind things like Skype, it was inevitable that the historical business model of telecom monopolies were destined for the dustbin.  Yeah, yeah, yeah…ten year old story…so what, boring.

Ok.  But why on earth does the parallel extortionate business model live on in the world of mobile telephony?  International roaming charges are a joke,  especially if you are using the same provider on both sides of a border, but even if you are not;  ie they don’t make any economic sense (there is very little incremental underlying costs, at least not any that aren’t artificial) and they are extremely annoying and unfriendly to what are generally these companies best customers.  I don’t know anyone who is happy with their mobile phone provider;  it goes from grudging indifference through to outright hatred.  And yet these companies continue to be successful.  How long can this last?

As a frequent traveller within Europe, and a cost-conscious entrepreneur, I find myself very frustrated and limited by this state of affairs and often find myself using texts and missed calls to arrange for later calls (via skype) rather than bleed money to take a roaming call.  So when I heard of a new mobile offering that would allow me to use one number, one account, fungible credits across 21 countries, I had to sit up and take notice (via NetworkWorld):

The service allows prepaid subscribers travelling between participating countries to recharge or top up their accounts using airtime vouchers from any participating country. Pre- and post-paid customers will be charged the local rate in the country from which they are calling, and travelers will receive free incoming calls.

Wow sign me up. Vodafone? Orange? T-mobile? O2? Yeah, right… Try MTN! And its just playing catch up with the competition (Zain’s One Network.) MTN’s tag line?

One Africa. One Rate. That’s the Spirit.

Gee, good thing I live in the EU…where I guess the equivalent would be along the lines of:

One Europe. Many Rates. Eat Shit.

But don’t mistake me, it’s not a problem that the bureaucrats in Brussels should be responsible for solving, and I’m not so naive to think that the incumbents will be able to adopt disruptive business models, but where are the entrepreneurs??? There has to be an opportunity here – the number of people who live “in Europe” (as opposed to just withing one European country) is large and growing and will continue to grow.

The challenges faced by entrepreneurs in Africa and elsewhere in the developing world are often formidable and extend beyond the usual (already tough) stumbling blocks that ‘western’ entrepreneurs struggle with. However, the ‘developing’ entrepreneurs sometimes have a small but important advantage – in the markets in which they hope to operate, there often isn’t a “way it is supposed to be done.” They have lots of ways of failing (and lots of people telling them they will) but usually it is not because they are seen to be taking an innovative (read: dangerous) approach to business. I was reminded of all this when I finally got a chance over the past couple days to listen to this great presentation/discussion by Ethan Zuckerman and Eric Osiakwan given last fall at the Berkman Center. (Unfortunately the Berkman website does not offer an embed code, so you can’t watch it here but worth clicking on the link above.) Thanks to my friend Juliana – who is also a newly minted TED Fellow (well done!) – for sending me the link (several months ago!)

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Africa: the new new (new?) thing.

I have to admit it’s always exciting to see validation points for strongly held convictions. As you know I firmly believe that the confluence of technology and emerging – or in the new jargon more precisely ‘frontier’ – markets will generate significant and exciting new innovations and opportunities, and I remain convinced that fundamentally new and robust business models will emerge as a result. The fact that this might improve the human condition in some of the world’s heretofore least fortunate corners is of course icing on the proverbial cake. And so I was happy to read that Google, for example seems to share (at least some of my) sentiments on this:

We believe that the Internet is a transformational force for societies. And it’s making us all much more powerful as individuals, regardless of whether one is in New York, Stockholm, Bujumbura, Ouagadougou, or Cape Town. Regardless of background, education, social status, gender, age or economic situation, online access to information enables people to create opportunities for themselves. Seeing a student in a cybercafe doing his research using a search engine, a businessman chatting with a colleague abroad with instant messaging, or a young woman posting her photos to a social networking site – it’s clear the extent to which academic, business and social life is fundamentally changing all over Africa.”

At the same time, a couple of days ago, a very interesting article in the NYTimes also leant support to my thesis that the infrastructural constraints and challenging business environment of sub-Saharan Africa would engender innovative and resourceful approaches and a unique approach to harvesting the potential of information and communications technologies:

Still, Nairobi is home to a digital brew that invites optimism about its chances for creating unusual innovations. The city has relatively few wired phone lines or networked personal computers, so mobile phones are the essential digital tool. Four times as many people have them as have bank accounts. Text messages are far more popular than e-mail. Safaricom, the dominant mobile provider, offers a service called M-pesa that lets customers send money with text messages. Nokia sells brand-new phones here for as little as $33.

While engineers in the United States lavish attention on expensive phones that boast laptoplike features, in Kenya there are 10 million low-end phones. Millions more are used elsewhere in Africa. Enhancements to such basic phones can be experimented with cheaply in Nairobi, and because designers are weaned on narrow bandwidth, they are comfortable writing compact programs suited to puny devices.

“Applications are heavy in America,” says Michael Wakahe, a Nairobi code writer. “Here we have to make them light,” because simpler hardware requires smaller programs. These can have advantages in wireless systems…

…The prospect of marrying low-end mobile phones with the Internet is earning Nairobi notice from outsiders, who wonder whether the city might emerge as a test-bed for tomorrow’s technologies. One intriguing possibility is broadcasting local television programs on mobile phones.

In Nairobi’s highest-profile validation, Google opened a development office here last September. “Africa is a huge long-term market for us,” Eric E. Schmidt, Google’s chief executive, said by e-mail. “We have to start by helping people get online, and the creativity of the people will take care of the rest.”

One of the most obvious – yet no less powerful or potentially transformational for it – themes is the combination of mobile communications, internet and geo-location technologies to disseminate information and increase connectedness from the bottom up. This emergent collective intelligence is all the more remarkable, given the typical history of entrenched ‘top-down’ politico-economic structures in place in these countries. Much of the early innovation is centered around information gathering and crisis management with tools like Ushahidi (quickly developed in response to the post-election political unrest in Kenya earlier this year) and FrontlineSMS being quickly adopted by citizens and NGOs and having an immediate positive impact on the ground. It doesn’t take much imagination to start dreaming up additional – more commercial – potential applications for these kinds of platforms. Ken Banks, the man behind FrontlineSMS describes his view as developing the ‘long-tail’ of mobile applications as the right approach for not-for-profit “social mobile”:

low-end, simple, appropriate mobile technology solutions which are easy to obtain, require as little technical expertise as possible, and are easy to copy and replicate. From my own experiences the number of NGOs present in this space is by far the greatest, making it the area to focus on if we want to create the highest amount of mobile-enabled social change. Add up all the value here, and it easily outweighs the rest along the higher (more lucrative) parts of the tail.

I would suggest that this approach might work equally well to enable commercial, for-profit, applications as well. Indeed on the other side of the continent you find Mark Davies esoko/TradeNet: Africa’s first mobile2mobile peer2peer trading platform and market information network:

…designed to provide the very latest agricultural market information to stakeholders. Accessed via SMS, fax, web, PDAs, farmers and traders can get daily price information, download video/audio files, access research documents, post buy/sell offers to the community, and contact other market participants. The concept is to make african markets more transparent and efficient, improve intra-regional trading, and provide stakeholders with enough recent and accurate information to make better decisions on bringing products to market and at what price.

I’m sure it won’t be easy or without enormous challenges but the opportunity is vast. Africa: it just might be the new new new thing.

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Mobile computing will fundamentally change the economy.

The new Apple iPhone
Image by Victor Svensson via Flickr

I’ve been mulling this over for years, but with the release of the iPhone 18 months ago, it became easier to start to imagine the outlines of this future.

Broad reaching changes will emerge from the bottom up – this recent article from Macworld illustrates some possible examples:

…there’s incredible power in a device that knows where it is and that can purchase stuff based on its location…We already have an example of this power in the form of iPhone-friendly Starbucks outlets. Walk into such a Starbucks and a new Starbucks entry appears within the phone’s iTunes application. Tap it and you can learn what’s recently been played in the store and then purchase one of these tracks simply by tapping a Buy button…

It’s 11 a.m. and time for your coffee break. Leave the office and stroll the 14 steps to the café next door. Your iPhone vibrates and asks if you’d like the usual double-wet cappuccino. Of course you do, so you tap Yes. Within a minute your name is called and you have your caffeine-rich libation in hand. Again, no cash or credit card necessary because your iPhone automatically picked up the tab.

It’s not (yet) as sophisticated, but the success of mobile-based payment systems like M-Pesa in Kenya is not only very exciting but is a precurser to much much more. (I first wrote about M-Pesa in November 2006; seeing opportunities like this with no way to ‘participate’ was a significant motivator in developing my current venture.)

(from the CGAP technology blog:)

Since its introduction in March of 2007, the M-PESA application has had great success all over Kenya. There are currently over 2.3 million registered users. Over 18 Billion Ksh had been moved through the system, via person-to-person transfers.

Some of the work that I have been doing makes several arguments as to why M-PESA has become so popular. Firstly, it is the young, male, urban migrants who are driving the uptake of services – customer adoption. These migrants are what innovation researchers call ‘early adopters’ of a technology. They are usually better educated and earn higher incomes than those in the village. Because these migrants are the senders, they can choose the channel for money transfer…

…Despite these cash float problems, the majority of customers in both the urban and rural areas assert that they prefer M-PESA over other money transfer services. This means that M-PESA must be offering them some kind of substantial benefit. In Bukura, this benefit comes in the form of savings on transport. Customers do not need to travel into Kakamega, the nearest town, to access the service. One elderly farmer commented that “I can just walk from my shamba (farm) and get money. I don’t have to spend and go into town. If the agent does not have cash today, then I will come back tomorrow. It is cheaper to wait”. Finding strategies to manage the cash float problem will undoubtedly be one of the greatest challenges for Safaricom. For now, however, it seems like customers are willing to accept the inefficiencies of the service. It is, after all, cheaper to wait.

One of the revelations (to me at least) of this year’s Supernova conference was Ken Banks of kiwanja.net. For anyone interested in the innovative use of mobile communications in developing markets, his essay “Mobiles in Africa: A Travellers Perspective” is a must read. (Sadly, I didn’t get the chance to meet him as I had to rush off but hopefully I will get a future opportunity.) An exerpt:

When it comes to mobile innovation, the gap between developed and developing countries is not much of a gap at all. Mobile innovation in the West, largely technology-lead, sits in contrast to that in the developing world where combating the geographic, economic and cultural constraints of users is considered a more sensible way to go. This explains the emergence of the torch phone, for users who live in areas with little or no regular light, or multiple phone books for users who share their phones with family members. On the heavyweight side, a plethora of financial applications have hit the streets, with Safaricom’s m-Pesa service getting by far the biggest press to date…

…Innovation is not always as official or formalised as this, however. People in developing countries are rarely simple, passive recipients of a technology, and rarely wait for outsiders to provide solutions to their problems. The entrepreneurial spirit is alive and well, evident by the masses of thriving small businesses you find on the street corners of every village, town and city.

Many developing countries for all intents and purposes have ‘skipped’ the fixed-line telephony paradigm. Wanna bet that they ‘skip’ the branch banking/atm paradigm in retail financial services?

I know it’s not their typical market target, but I’d love to see Apple (or RIM) develop a ‘rugged’ iPhone (analogous to ‘rugged’ mobile hard drives), targeting emerging markets. Not as a competitor / replacement for existing mobile phones, but as a substitute to personal computers: effectively giving traders and business people an effective web appliance (ideally with Skype pre-loaded!)

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Mobiles+Emerging Markets+Markets=The Future of Finance

In case you still aren’t convinced, have a read of what the Consultative Group to Assist the Poor has to say on the subject:

Banking regulators still don’t get it: The best candidate for making access to finance truly universal in a developing country is the mobile phone.

…Globally, mobile phones will handle $587 billion in financial services by 2011, UK. consulting firm Juniper Research Ltd says. In many developing countries, mobile-phone companies are miles ahead of banks in using technology to cut the cost of processing a transaction. In India, for instance, phone companies have a 100-fold cost advantage…

…Real breakthroughs in financial inclusion may only occur when telecommunications companies lead the effort and regulation promises smooth running.

Why do you think I encouraged my friend JP to go ‘get some experience’ at a phone company? ;)



Update – a couple interesting links via CGAP:


“The pinstripes chase the poor.”

“Microfinance to provide cheap handsets to poor”
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A Trinity, Part 2: Finance, Mobile Phones & Africa

In a leader this week on banking in Africa, the Economist asks the question “A bank in every pocket?” making the point that “banking on mobile phones holds promise, provided regulators are willing to be flexible”:

Leonard Waverman of the London Business School has estimated that an extra ten mobile phones per 100 people in a typical developing country leads to an extra half a percentage point of growth in GDP per person. To realise the economic benefits of mobile phones, governments in such countries need to do away with state monopolies, issue new licences to allow rival operators to enter the market and slash taxes on handsets. With few exceptions (hallo, Ethiopia), they have done so, and mobile phones are now spreading fast, even in the poorest parts of the world.

I wholeheartedly agree with their point – indeed my post a year ago (!) A Trinity: Finance, Mobile Phones & Africa (from November 11, 2006) made many of the same observations:

It seems clear that mobile phones (as opposed to personal computers) will be the most important device for access and connectivity in the developing world, and probably everywhere eventually. But access to the internet and computing will become more and more common everywhere, with many different initiatives – both technological and financial – focused on bringing down the cost and expanding the market for computing in the developing world.

As has been written many many times before, mobile phones are changing everything. From politics to business to culture. The digital generation is but a subset of the connected generation, a worldwide phenomenon. Again, this is probably being felt more strongly in developing countries – not so much because the effect is greater or different – but because the contrast with what came before is that much more marked. This extension of connectedness enabled by mobile telephony taps into something that is inate in humans; it extends our ability to form communities unbounded by geographical or even political constraints.

The Economist goes on to highlight the flexible, adaptive regulatory approach to mobile banking being taken in the Philippines (something I was not aware of) as a model to emulate:

Rather than trying to work out the best rules in advance, which could hamper innovation, the regulator is working closely with the banks and operators behind the country’s two m-banking schemes. That way the regulator can see what is going on, so the schemes’ operators get more flexibility. The experience will feed into new banking regulations. Rules that are too tight will hinder adoption; rules that are too lax could allow fraudsters to bring the whole idea of branchless banking into disrepute. But if regulators strike the right balance, m-banking may provide the next example of the mobile phone’s transformational power.

In the same edition, “On the frontier of finance” gives a good overview of the state of the banking industry on the African continent, highlight that while recent growth and investment is encouraging, the opportunity remains vast with most of African’s – even in the richest countries like South Africa – remaining unbanked and having no or poor access to even basic financial services.

A couple weeks ago, in a special report in the FT on Tanzania, Tom Burgis wrote a very good article “Crops are starved of lending” on how the lack of access to basic financial services, working capital and markets hold back improvements in agricultural productivity and essentially trap much of Tanzania’s population in a vicious cycle of poverty:

Four in every five Tanzanians live in rural areas; most are subsistence farmers. Eighty-five per cent of cultivated land is still worked with hand-held tools, 10% with animals and just 5% with machines. For a decade, the sector’s growth has failed to match the overall expansion of the economy. Without a transformation in agriculture, Edward Lowassa, prime minister, admitted in a recent speech, there will be no escape from poverty.

…[in a village dependent upon cashew farming] The 1,006 vilagers are unable to bypass what officials say are illegal cartels of traders who keep prices cripplingly low, depriving farmers of capital to reinvest in raising quality and productivity. Their predicament is worsened by the near impossibility of borrowing.

I know that solving problems like these is not easy; that there are many social, cultural, institutional hurdles to overcome (on top of the operational and technological challenges) but it would seem to me that in the next decade or so, there really is a chance to ‘leapfrog’ using cheap, ubiquitous mobile communications and devices as a substrate and deliver the power of modern financial services and markets to every corner of the planet. Even the poorest. Especially the poorest. Indeed the maxim “go where the pain is highest (with respect to introducing new products and services)” means that it is not ridiculous to think that some of the earliest adopters of sixth paradigm markets and techology may well be found in some of the poorest and challenging regions on the globe.

Imagine these villagers armed with mobile phones giving them access to markets, risk management tools (weather, commodity risk), payment systems, and ultimately capital – breaking free from the bottlenecks and information barriers currently trapping them in a vicious circle of poverty. How is that for a big idea? We’re (I’m!) not quite there yet (in terms of being at the inflection point) but we are getting very close. Hey maybe this is worthy of a TED Prize wish in 2 or 3 years from now! ;)

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Learning from less.

Several mobile phones
Image via Wikipedia

I am fascinated by the application of modern information and communications technologies to help improve the lives of some of the world’s poorest and ‘infrastructurally challenged’ (don’t know if this term has been used before but seems to encompass the fundamental problem that holds back the people in developing countries from improving their economic prospects.) To be able to succeed (in providing meaningful, affordable, services) in such challenging environments to my mind offers great insights into how improvements can be made to how services are designed and sold in any environment – including the developed and wealthy western markets. A variation on the New York, NY theme of – ‘if you can make it here, you can make it anywhere’…

While I have written previously on the impact of mobile telephony on the developing world, and I will try not to repeat myself too blatantly, I thought it was worth highlighting a few more initiatives that have caught my attention over the last few weeks.

Bruno (a prolific source of new and interesting people and ideas) in reporting on the recent TED 2007 conference pointed me in the direction of Jan Chipchase’s post on the Village Phone initiative in Uganda:

the Village Phone extends regular base station cellular coverage from around 15 kilometers to around 30 kilometers through the use of a village phone kit – an antenna and ten meter cable (shown above) and a coupler (shown below) connected to a regular Nokia 1100 mobile phone plus of course, a micro-finance loan. The net result? In a number of cases it provides the first convenient, reliable and affordable connectivity to the outside world for many rural communities as well as providing a stable income for the local entrepreneur that takes out the loan.

He also goes on to mention the development of essential services facilitated by access to mobile communications:

One example of the benefits of connectivity? Sente – the transfer of money via mobile phone that essentially also extends regular banking services such as the remittance of cash to these communities.

Another exciting initiative I stumbled accross (at the excellent Timbuktu Chronicles) is Sevak Solutions “commitment of developing the product specifications, business plans, and financial requirements to create an open architecture transaction system [for microfinance institutions.]” Rather than paraphrase, Sevak Solutions describe themselves as follows:

Sevak Solutions is a start-up initiative that has emerged from a consortium of microfinance institutions seeking to understand the role technology could play in scaling microfinance. Early work demonstrated a need for alternative, low-cost transaction solutions and business models that addressed the needs of microfinance institutions that do not have the client volumes required to afford, or piggy-back on, existing payment systems. Sevak Solutions is focused on interoperability, open architecture systems that can connect to cell phones, point-of-sale terminals, ATMs, or any other access devices available in the market. The company performs its own in-country research and development, supports technology innovators that are attempting to enter the market, and provides strategic and implementation consulting on a global basis. Sevak Solutions is interested in promoting a set of technologies and migratory path for microfinance institutions and microfinance banks to expand their reach to the unbanked.

Sevak

So here is a non-profit organization focused on developing open-source solutions in order to open access to the formal global financial system to anyone, anywhere, irrespective of their wealth. Bringing banking to the unbanked. Historically one of the great impediments to economic progress has been the lack of a cost-effective and robust financial infrastructure, Sevak seems to be taking direct aim at contributing significantly to solving this problem. I hope they succeed. Will they build the equivalent of Linux or WordPress for banking/transaction processing? I hope so, I will certainly try to follow their progress and they are definitely on my ‘find out more’ list.

As if it weren’t long enough already, another initiative that bounced on to my ‘find out more’ list earlier this year when I read about it in the Economist is TradeNet, a new mobile2mobile trading platform for farmers and traders in Africa founded by Mark Davies:

TradeNet, a software company based in Accra, Ghana, will unveil a simple sort of eBay for agricultural products across a dozen countries in west Africa. It lets buyers and sellers indicate what they are after and their contact information, which is sent to all relevant subscribers as an SMS text message in one of four languages. Interested parties can then reach others directly to do a deal.

TradeNet FlowerTradeNet.biz

Listing offers is free, as is receiving the texts. TradeNet plans to earn revenue by putting advertisements in the messages, though it hopes the service will become so useful that recipients will eventually want to pay. For the moment, though, the company is busy signing up users and swallowing the cost of sending the messages.

I have to admit this is one of those ‘I-wish-I-had-done-that’ companies. The potential for this kind of platform seem to me to be enormous. I’ll leave it at that for now. Very exciting stuff.

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