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Teleuse at the bottom of the pyramid
Non-owner teleusers at the BOP:

Removing the barriers to ownership
Ayesha Zainudeen, Harsha de Silva & Rohan Samarajiva

PTC ’08, Honolulu, USA
13-16 January 2008
Teleuse@BOP
Relevance of the BOP

Bottom of the Pyramid
 Emerging markets are ‘where the action is’

 The next billion...
 Untapped potential at the ‘bottom of the pyramid’
www.lirneasia.net
Untapped potential at the ‘bottom of the pyramid’ is large
500
450 436
400
Population aged 15-60 (millions)
350
300 282
250
200
150
www.lirneasia.net
100 85
44
50 32
12 10 12 16
5
0
Pakistan * India Sri Lanka ** Philippines Thailand
Middle & top' of the pyramid (SEC A, B, C) Bottom of the pyramid (SEC D, E)
*excluding FANA/FATA Tribal Areas; **excluding North & East Provinces
Overview
 Background & Methodology

 Everyone has access, but not ownership
 Non-owner users: Who are they?
 Non-owner users: What do they use?
 The unconnected…the next billion(s)?
 What is to be done?
www.lirneasia.net
Teleuse@BOP
Background & Methodology

Five emerging Asian countries surveyed
Emerging Asia
 5 countries
Pakistan
 6,269 respondents
India surveyed
www.lirneasia.net
Philippines  50% completed
Thailand diaries
 30 focus groups
Sri
Lanka conducted
 11 languages
Target respondents: Those who have used a phone in the preceding 3 months at the bottom of
the pyramid (18-60 year olds)
Bottom of the Pyramid (BOP) = SEC D & E
 Many definitions of poverty, but this

study uses SEC D and E; between ages
18-60
 SEC does not take into account income,
but it is closely related to income levels
 BOP segment is representative of the SEC A, B & C

BOP population
 Diary respondents also representative of
BOP SEC D & E
 Small (non-representative sample) taken

of SEC groups A, B & C
www.lirneasia.net
Philippin
Pakistan India Sri Lanka Thailand
es
Population (million) 165 1,095 20 89 64
Target population of
77* 260 4** 41 15
study (million)
*excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces

Teleuse@BOP
Everyone has access, but not ownership

Access is high…
 Most have used a phone in the last 3 months
South Asia South East Asia
Pakistan India Sri Lanka Philippines Thailand
Used phone in
98% 94% 92% 93% 95%
last 3 months
www.lirneasia.net
…But less than one third own their own phone
Own a phone
116.5 million
(29.4%)
Don't own a
phone
280.1 million
(70.6%)
www.lirneasia.net
Don’t own a
63.6% 80.7% 59.0% 38.0% 18.0%
phone
Teleuse@BOP
Non-owner users: Who are they?

Non-owners earn less than owners
 Less skilled occupations (farm/agricultural workers or trained or

untrained laborers; housewives in Philippines)
200
200
180 Average monthly household
income - Owners
180
160
160
Average monthly household
income - Owners
140
120 income - Non-owners
USDUSD
120
100
100
80 Average monthly personal
income - Owners
www.lirneasia.net
80
60
60
Average monthly personal
income - Non-owners
40
20 income - Non-owners
200
0 Pakistan India Sri Lanka Philippines Thailand

Larger % of rural population are non-owners
90%
80%
70%
% of non-owners at the BOP
60%
50%
40%
30%
www.lirneasia.net
20%
10%
0%
Urban Rural
No gender divide in non-ownership
100%
90%
80%
70%
60%
Female
50%
Male
40%
30%
www.lirneasia.net
20%
10%
0%
Non-owners are older than mobile owners on average…
 …but younger than fixed phone owners
60
50
Mean age (years)
40
30
20
www.lirneasia.net
10
0
Fixed phone owners Non-owners Mobile owners

Teleuse@BOP
Non-owner users: What do they use?

Public phone use prevails in S Asia; communal use in SE Asia
 South Asians rely more on public phones

 public call offices (PCOs), public payphones, telecenters, etc
 Southeast Asians rely more on household phones
100%
90%
80%
Public phone
70%
60% Relative / friend's phone
50%
Neighbor's phone
40%
Mobile of another household
www.lirneasia.net
30%
member
20%
10%
0%
Non-ow ners
Most can get to a phone in less than 30 minutes
 Rural-urban divide in Pakistan and India

Time it takes to reach nearest phone
100%
90%
80%
70%
60%
50%
>60 minutes
40%
45-60 minutes
30% 30-45 minutes
20% 15-30 minutes
www.lirneasia.net
10% 10-15 minutes
5-10 minutes
0%
3-5 minutes
< 3 minutes
 Small % of rural Pakistanis & Indians at BOP incur additional

transport cost
Non-owners make/receive almost half the number of calls that
owners do
 Non-owners receive less calls (%) than owners

 Calls mostly to ‘keep in touch’ (primary purpose)
 Most likely includes other elements
 Mostly local and national
 On average 2-3 minutes long
80
Number of calls per month
70
60
50
Outgoing
40
Incoming
30
www.lirneasia.net
20
10
0
owners
Owners
owners
Owners
owners
Owners
owners
Owners
owners
Owners
Non-
Non-
Non-
Non-
Non-
Teleuse@BOP
The unconnected…the next billion(s)?

No big surprises: Key barrier is affordability
Reasons for not owning a phone
2%
100%
7% 8% 7% 7%
90% 16%
% of non-owners at BOP
18% 15% 15%

80% 19%
70%
60%
50%
40% 82% 77% 77%
75% 72%
30%
20%
www.lirneasia.net
10%
0%
I cannot afford it Don't need one Other

Getting connected: Gap in expectations and affordability
 70% of non-owners at BOP in Sri Lanka believe that the cost to
www.lirneasia.net
get connected will be greater than USD56
 Only 11% can afford more than USD50
 Can get new mobile and connection for USD 33; lower with
second-hand phone
Potentially 115 million new connections at BOP by mid-2008
 Even more connections if second connections are included
Already own a
Don't own phone Prospective owners:
and don't 29.4 %
(% of non-owners)
plan to buy: (116 m)
41.7% Pakistan : 53%
(165 m) India : 38%
Sri Lanka : 53%
Don't own but Philippines : 42%
www.lirneasia.net
plan to buy:
Thailand : 38%
28.9 %
(115 m)
Some don’t plan to get connected
Already own a
Don't own phone Not planning to get
and don't 29.4 % connected:
plan to buy: (116 m) Majority rural, older and
41.7% from poorer households
(165 m)
Make fewer calls
Males & females
Don't own but
www.lirneasia.net
plan to buy:
28.9 %
(115 m)
Potentially 115 million new connections at BOP by mid-2008
Already own a
Don't own phone Prospective owners:
and don't 29.4 %
Pakistan : 53%
plan to buy: (116 m)
41.7% India : 38%
(165 m) Sri Lanka : 53%
Philippines : 42%
Don't own but Thailand : 38%
www.lirneasia.net
plan to buy:
28.9 %
(115 m)
 Even more connections if second connections are included

Potentially 50% penetration at BOP in India?
% of households at BOP with a telephone

150 100%
86%
Connections at BOP (millions)
125
78% 80%
77%
70% 72%
100
62% 60%
75 50%
41% 40%
36%
50
19% 20%
25
www.lirneasia.net
0 0%
Already own something Don't own but plan to buy

Current ownership at BOP (%) Penetration at BOP by mid 2008
Most would use phone for emergency communication & keeping in
touch
What respondent would use the phone for if given one at an affordable
rate
90% 84%
80%
69% To keep in touch with family and
70% friends
58%
% of respondents
60% 57% Only in an emergency

52%
50%
50% 44% For networking
40%
To enhance my income
30% 26%
21%
www.lirneasia.net
18% 17%
20% 13%
Other
10% 11%
10% 5% 3%
2% 1% 2% 1%
0%
Pakistan India Sri Lanka Philippines
The future is mobile… except in rural Sri Lanka
Type of phone prospective owners would buy
100% 4% 1%
9% 7%
90%
80%
70% 40%
60% 67%
68% Not decided yet
91%
50% Mobile
40% Fixed phone
30%
52%
20%
29%
10% 23%
8%
0%
www.lirneasia.net
Pakistan India Sri Lanka Philippines
 More than 90% at BOP are currently prepaid

 60-70% at BOP are using brand new mobile handsets
 Most can afford up to USD5 per month on communication
 Operators can still make high margins
Prospective owners are heavier users
Average number of calls for the month: prospective owners

vs. non-owners
45
40.0
average number of calls
40 35.8
35 31.6 30.4
30
25 21.6
20 16.3 15.0 15.3
15
8.7 9.3
www.lirneasia.net
10
5
0
Planning to obtian phone Not planning to obtain phone

Teleuse@BOP
What is to be done?
What is to be done?
Breaking the affordability barrier

 Policymakers
 Create enabling environment
 Reduce mobile-specific taxes (usage & handset)
 Consider innovative approaches to permit service providers to
provide/facilitate more-than-voice applications (m-banking, sms-
based remittances, etc)
 Reduce distortionary USO policies
 Service providers
 Solve the connection charge problem: better marketing of
packages/options? installment plans?
 Also, Collaborate on meaningful ‘content’ and applications for BOP;
www.lirneasia.net
e.g.,
 SMS-based remittances
 Agricultural information, etc.
 Handset manufacturers
 Ultra low-cost phones with warranty

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Teleuse at the bottom of the pyramid

Non-owner teleusers at the BOP:

Ayesha Zainudeen, Harsha de Silva & Rohan Samarajiva

Relevance of the BOP

 Emerging markets are ‘where the action is’

 Background & Methodology

Background & Methodology

 Many definitions of poverty, but this

 BOP segment is representative of the SEC A, B & C

 Small (non-representative sample) taken

Population (million) 165 1,095 20 89 64

*excluding FANA/FATA – Tribal Areas; **excluding N&E Provinces

Everyone has access, but not ownership

 Most have used a phone in the last 3 months

South Asia South East Asia

Pakistan India Sri Lanka Philippines Thailand

Non-owner users: Who are they?

 Less skilled occupations (farm/agricultural workers or trained or

0 Pakistan India Sri Lanka Philippines Thailand

 …but younger than fixed phone owners

Fixed phone owners Non-owners Mobile owners

Non-owner users: What do they use?

 South Asians rely more on public phones

60% Relative / friend's phone

 Rural-urban divide in Pakistan and India

 Small % of rural Pakistanis & Indians at BOP incur additional

 Non-owners receive less calls (%) than owners

The unconnected…the next billion(s)?

Reasons for not owning a phone

18% 15% 15%

I cannot afford it Don't need one Other

 70% of non-owners at BOP in Sri Lanka believe that the cost to

 Even more connections if second connections are included

 Even more connections if second connections are included

% of households at BOP with a telephone

Already own something Don't own but plan to buy

60% 57% Only in an emergency

Type of phone prospective owners would buy

 More than 90% at BOP are currently prepaid

Average number of calls for the month: prospective owners

Planning to obtian phone Not planning to obtain phone

Breaking the affordability barrier

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