On 29 June 2011, the Humanitarian Centre, with the kind support of Cambridge Wireless, welcomed Mr M Swaminathan and Mr Shiv Kumar Narayan to speak about the effects of wireless communication on poverty reduction in India. Wireless communication is having a major impact on poverty in India, and especially mobile phones are being used by poor people for mobile banking, to engage in markets, find jobs and access health and education services. During this seminar, the speakers outlined the main lessons learned in using wireless communication to promote economic development and poverty reduction in India, and they also identified the key technical, business and social challenges to scaling up these efforts.
Mr Swaminathan is the Senior Vice-President of Reliance Communications Ltd, the largest mobile provider in India. In his talk, Mr. Swaminathan outlined the current situation of wireless communication in rural India. 60% of the Indian population lives in rural areas, accounting for 870 million people. However there is only a 33% penetration of telecoms in these areas. Despite significant differences in current telecoms penetration rates between rural and urban areas in India, it is forecast that urban penetration will slow down and that the rural penetration rates will exceed urban ones by 2015. According to Mr Swaminathan, it is an encouraging sign that rural markets are adopting technologies to increase their connectivity. Rural wireless communication technologies are used for a wide variety of purposes, such as personal communication, tele-medicine, entertainment, education, commerce and e-governance. However, Mr Swaminathan stressed that such technologies need to be customised specifically for rural markets if they were to benefit the rural populations.
Furthermore, Mr Swaminathan highlighted some key drivers behind the growth of rural telecoms penetration; which include the increase of mobile operators- stimulating competition and thus driving down prices, multiple products offering affordable tariff packaging, the introduction of segmented products as a way to reduce costs for users, proactive regulation, stakeholder cooperation, expanded rural electrification and telecoms equipment that requires less power and maintenance. Most significantly, by reducing entry costs for rural penetration by 95%, mobile phone usage has become much more affordable for rural populations.
The increase of rural penetration has had significant impacts on the socio-economic development of rural areas. According to Mr Swaminathan, the socio-economic impacts include improved social status and thus a better personal identity, improved family relationships through communication, reduction in costs as a result of better negotiation skills and lessened need to travel, and ultimately higher incomes for rural producers. These benefits rely on various key factors that enable the success of mobile penetration in rural areas. The most important factors include partnerships between all stakeholders, the development of technologies that have a ‘human touch’ and that are user-friendly, the customisation of these technologies to local needs and conditions and the implementation of low cost business models.
Nonetheless, there are also considerable challenges- such as the continued problem of energy supply, lack of necessary infrastructure, high operating costs and less purchasing power in rural areas. Thus it becomes evident that the rural markets require different distribution strategies than their urban counterparts, which in turn requires a good understanding of rural needs and local conditions. For Mr Swaminathan this means that the success of rural networks will depend on the development of low capex, low power and zero maintenance network equipment.
The next speaker, Mr Shiv Kumar Narayan, is from Catalyst Management Services, a leading development consultancy company in Bangalore. His talk was focused on the future of mobile telephony in rural India, specifically looking at the ‘on-the-ground situation’ there. From a supplier’s perspective, rural markets represent big numbers, but low margins that require expensive and long-term investments. On the other hand, the rural consumers associate the mobile phone with luxury products and wonder how they can benefit from this technology instead of becoming poorer. Such views and thinking about the mobile phone are just a few of the barriers to adoption of wireless communication technologies. Other barriers to adoption include a lack of understanding of the technologies, limited purchasing power, practical issues such as carrying and storing the devices, as well as maintenance and repair of these, signal quality, power and literacy. Another big problem is the fact that in general, mobile technologies and applications are developed by urban men, who often do not understand the requirements of rural areas, especially the rural poor and women. In addition, the reality in rural areas is often very confusing, as in one village you can find both highly competent mobile users and at the same time people who have never used a mobile phone.
Thus, in light of the above barriers to adoption, Mr.Shiv Kumar Narayan looked at what is needed to make wireless communication work in rural areas. Firstly, mobile ecosystems need to be created that acknowledge the importance of making mobile networks both accessible and affordable. Secondly, mobile phones and related services need to be developed to be rural specific, making use of voice, icons and special applications- not menus and resets. Thirdly, actions need to be taken that will break the barriers to adoption, e.g. by giving away mobile phones to women, as the benefits will far outweigh the initial costs.
Once these barriers have been overcome, what are the benefits and potentials then? According to Mr Shiv Kumar Narayan, wireless communication devices can improve incomes by at least 5%. They can also reduce social costs and expenditures and increase participation in democratic processes. They tend to break down power structures and thus reduce layers and middle-men and enhance people’s identities. Examples where these devices have been used include projects in ante-natal care, migration tracking and education programmes.
The two talks were concluded by a lively interactive session with participants. Some of the questions from the audience directly questioned the assumptions that mobile phones could lead to development, or that they are a ‘silver bullet’ for addressing poverty. Other questions were centred on the importance of developing specific applications that targeted women, and that addressed literacy barriers. Whether you agreed with the conclusions made by the speakers or not, the evening was extremely informative and thought-provoking, and heated debates could be heard around the room during the reception that followed the talks.
By Elke Matthaei / The Humanitarian Centre
6th July 2011
