Strategies for the Next Billion Operator Strategies.pdf

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Strategies for the Next Billion: Operator Strategies (OT00034-005)

Ovum (Published 12/2011) Page 1

This report is a licensed product and is not to be photocopied

Strategies for the Next Billion:

Operator Strategies

Decreasing the speed of network expansion

Reference Code: OT00034-005

Publication Date: December 2011

Authors: Angel Dobardziev and Shiv Putcha

SUMMARY

In a nutshell

Most of the next billion mobile connections will come from remote rural areas in emerging markets.

This will pose significant technological and business challenges for vendors and operators alike.

This report examines the strategies that operators should adopt for successful network rollouts and

marketing to these users. It also looks beyond simple voice and SMS services, outlining

possibilities in utility, health, education, government, and mobile money services.

Ovum view

Most of the next billion mobile connections will come from the rural and remote areas of Africa,

Asia, and to a lesser extent Eastern Europe and Latin America. These prospective subscribers not

only have low incomes; they also live at the periphery of physical and social infrastructure,

especially for utility and communications services. The further that operators go into these sparsely

populated areas, the higher the cost of network coverage per customer. In addition, average

incomes in rural and remote areas are substantially lower than in urban centers, which leads to

ARPU that can be as low as $12 per month. As a result, the business case for network

investment in these areas is highly pressured in terms of both revenues and costs.

Emerging market service providers are moving cautiously to expand their network coverage into

rural and remote areas, with many operators decreasing the speed of their network rollouts. Many

service providers consider the return on investment (ROI) on the next billion connections as

insufficient for a large-scale investment. Instead, emerging market operators have shifted their


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focus to upgrading their existing networks to 3G in urban and suburban areas, which has yielded

strong mobile data revenue growth rates of 3040%. In addition, policy frameworks in many

emerging markets are unhelpful, and in some cases actually hinder service providers from

expanding into rural areas.

Ovum believes that the current mix of technology, business models, policy tools, and

improvements make it possible for service providers to make attractive returns on rural network

expansion. We expect services among the next billion to evolve from shared services and devices

to personal ones, meaning that operators need to include shared access voice and data services

in their marketing strategies for rural users. While voice and SMS will be the primary services

among the next billion users, we expect a number of other services to also be popular. Agricultural

utility services will be extremely important, as will education, health, government, and mobile

money services.

Recommendations for mobile operators

Be the first to launch or look to share rural networks

Service providers must regain their focus on rural network expansion as there are many areas that

make good economic sense to cover with the latest low-cost solutions. It is easy to neglect rural

expansion amid the current rush towards 3G and mobile broadband. However, operators need tobe aware that many rural areas will not support more than one or two physical networks, meaning

that they have to launch first, or be willing to share network infrastructure with other operators.

Pick coverage areas carefully

As some areas are more attractive than others, it is critical to deploy services in these areas first in

order to maintain the financial and organizational momentum behind rural expansion. Whether

operators take helicopter rides to seek out tin roofs or rely on the insights of local agricultural

cooperatives, they need to choose carefully and focus on areas that will provide immediate

returns. Operators must also be prepared to adapt and move away from areas that turn out to be

unsustainable.

Adapt marketing

Operators must adapt their existing marketing and service offerings, placing a greater emphasis on

shared services, recalibrating dealer commissions, and engaging with local entrepreneurs for

marketing and promotions.


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Adopt dynamic pricing for network capacity

Ovum believes that rural areas are excellent candidates for dynamically adjusted pricing models

based on network capacity. This involves offering discounts to subscribers when a cell is under-

utilized in an effort to drive traffic and avoid the wasting of network capacity.

Channel local entrepreneurial energy

Local entrepreneurs are essential to the success of operators rural strategies. They can play a

variety of roles such as basic airtime distributors, shared service operators, mobile money agents,

or be responsible for network maintenance and security.

Localize data services mix

All services that go beyond basic voice and SMS must be localized and calibrated to ensure that

they are suitable for the language, cultural, and literacy requirements of local populations. There

are already some excellent examples of agricultural, health, and educational services that

operators can learn from.

Lobby policymakers for policy improvements

Operators must let local policymakers know what needs to be done to improve the policy

framework for rural investment. Operators should not only lobby for passive infrastructure sharing

in rural areas; they should also push for active network sharing. Providers also need to inform

policy agencies of the sites that are economically unviable so that they can be made more

attractive through policy tools such as universal service obligation funding, tax incentives, and/or

subsidies.


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TABLE OF CONTENTS

SUMMARY 1

In a nutshell 1

Ovum view 1

Recommendations for mobile operators 2

IDENTIFYING THE NEXT BILLION 7

Who are the next billion? 7

Ovums definition of the next billion 7

A harsh revenue and cost equation 8

SERVICE PROVIDER STRATEGIES FOR THE NEXT BILLION 10

Service providers are decreasing the speed of rural expansion 10

Strategies for effective network coverage 11

Prioritize coverage in areas with the greatest potential 12

Deploy lean, shared, and managed network equipment 13

Adopting lean and local marketing and distribution strategies 14

Local engagement: from distribution to network management 15

Track, learn, and adapt to improve performance 16

Policy imperatives for increasing rural network coverage 17

SERVICES FOR THE NEXT BILLION 19

From shared to personal voice and data 19

Beyond voice and SMS: service mix must be localized 21

Productivity-enhancing services will be crucial 22

Educational services 23

Health and wellness services 24

Government services 25

Mobile money services 26


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TABLE OF FIGURES

Figure 1: The next billion in the global socioeconomic pyramid 8

Figure 2: The next bill ion ROI challenge 9

Figure 3: The two opposing forces pressurizing operator capex 11

Figure 4: Six key success factors 12

Figure 5: Local engagement levels 16

Figure 6: From shared to personal services 20

Figure 7: Mobile money feature design for the next billion 27


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IDENTIFYING THE NEXT BILLION

Who are the next billion?

The next billion is a powerful metaphor that conjures up images of users in emerging markets,

usually based in remote and rural areas, that are un-served or under-served by telecoms services

(as well as often by basic utilities such as water and electricity). The promise of the vast number of

underprivileged people around the world being able to meet their aspirations through the power of

mobile communications is a topic that makes for impassioned debate, innovative zeal, and

sometimes cliches and platitudes.

However, the next billion means different things depending on ones perspective. Governments

present a vision of rural and remote communities that are in need of infrastructure and connectivity

to improve their economic positions. Mobile operators refer to the next billion in terms of the next

billion mobile connections, which doesnt align exactly with the number of active users due to multi-

SIM usage. Equipment vendors view the next billion as an opportunity for an incremental revenue

stream from a new wave of strategic investments. Device vendors speak of the next billion in terms

of mobile phone shipments, either to entirely new user segments or through replacement sales to

existing users. Software, services, and platform providers define the next billion as the next wave

of users that they connect to the Internet.

Ovums definition of the next billion

As shown in Figure 1, Ovum defines the next billion as the one billion people currently without

access to telecoms services, most of which are near or at the bottom of the global socioeconomic

pyramid. In simple terms, there are currently 6 billion mobile connections globally and 7 billion

people on Earth. Taking into account that many people have multiple connections, a rough

estimate would be that there are 4 billion connected people. Therefore, the next billion will be the

additional billion people that mobile operators, vendors, and governments manage to expand

network coverage to and connect to mobile services. Considering the growth of multi-SIM and

multi-device ownership around the world, these people will form part of the additional 23 billion

connections that service providers add to their networks around the world.


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Figure 1: The next billion in the global socioeconomic pyramid

1 billionMore than $60 a day

Mostly urban

2 billion$1060 a dayFairly urban

3 billion$210 a dayMostly rural

1 billionLess than $2 a day

Rural/remote

Networkcoverage

Source: World Resource Institute, Ovum O V U M

A harsh revenue and cost equation

Most of the next billion will live in rural and remote areas in Africa, Asia, and to a lesser extent

Eastern Europe and Latin America. These prospective users not only have incomes of less than

$5 a day; they also live at the periphery of physical and social infrastructure, particularly for utilityand communications services. This combination of low-income users living in sparsely populated

remote regions poses a significant challenge for operators that are looking to connect and serve

these customers profitably.

The further operators go into sparsely populated areas, the higher the cost of network coverage

per customer. In addition, average incomes in rural and remote areas are substantially lower than

in urban centers, leading to ARPU that can be as low as $12 per month. As a result, the business


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case for network investment in these areas is highly pressured in terms of both revenues and

costs.

Figure 2: The next billion ROI challenge

Low to

mediumdensity area

Sub-urbanarea

Rural/remotecommunity

High LowAverage revenue per subscriber

Average cost per subscriber HighLow

Urban

Low tomedium

density area

Suburbanarea

Rural/remotecommunity

Urban

Source: Ovum O V U M

The standard mobile equipment, backhaul, power, and distribution approaches taken by operators

are often over-provisioned, too expensive, and unsuitable relative to the revenues on offer in

remote communities. This study looks at the challenges facing operators, network equipment

vendors, and device manufacturers. The study is presented in the following three reports:

Strategies for the Next Billion: Operator Strategies (this report)

Strategies for the Next Billion: Technology Solutions

Strategies for the Next Billion: Devices.

This report looks at the business models and services that operators are deploying or will need to

deploy to address the next billion users. To deliver services to the next billion, operators will need

to make the economics of delivering communications services to remote and rural areas work.


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SERVICE PROVIDER STRATEGIES FOR THE NEXT BILLION

Service providers are decreasing the speed of rural expansion

Service providers are moving very cautiously to expand their network coverage into rural and

remote areas, with many operators decreasing the speed of their network rollouts to these areas.

Fewer operators are willing to outline their strategy for the next billion, and those that are willing

have suggested that the pace of network expansion into rural and remote areas has slowed over

the last year, with most expansions occurring on a small scale or as part of pilot programs. The

lack of a large and sustained investment in the expansion of rural networks is underlined by

network equipment vendors, which have not seen much interest in their rural network solutions.

Ovum believes that there are three key factors for the reluctance to rapidly expand networks into

rural and remote areas. Firstly, operators consider the ROI on the next billion insufficient for a

large-scale investment. Operators clearly believe that the incomes of the next billion users will not

provide adequate revenues to justify the considerable investment that will need to be made.

However, there has been significant progress made in reducing the cost of deploying networks to

the next billion, with a number of vendors launching solutions that enable network coverage for

significantly lower capex and opex (for more information see Strategies for the Next Billion:

Technology Solutions).

Secondly, in the past year, many emerging market operators have invested in 3G spectrum and

embarked on 3G upgrades of their existing networks in urban and suburban areas. While this has

put significant pressure on their capex growth, it has yielded mobile data revenue growth rates of

3040% for many operators. As a result, it has been an easy choice for operators to slow or stop

expanding their networks in rural areas to focus on the more attractive ROI from 3G expansion, as

outlined in Figure 3.

Finally, policy frameworks in many emerging markets are unhelpful, and in some cases actually

hinder service providers from expanding into rural areas. For example, mobile devices and airtime

purchases are still subject to substantial luxury taxes in many markets in Africa and Asia, which

adds to operators costs and hinders affordability. In addition, active network sharing which we

think will be essential in rural areas is still banned in many markets, while subsidies and

incentives for rural coverage (e.g. use of government land) are rare.


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Figure 3: The two opposing forces pressurizing operator capex

Urban Low density/

rural areas

Suburban Remote rural

areas

2G/2.5G

3G/3.5G

Capacity/

networkupgrades

Expandedcoverage

Urban

2G/2.5G

3G/3.5G

Capacity/

upgrades


Strategies for effective network coverage

Ovum believes that the technological, business model, and policy improvements that have taken

place over the last few years have made it possible for service providers to make attractive returns

from rural network expansion. Nevertheless, the difficult economic factors mean that service

providers will still need to focus on effective execution in six key areas (as shown in Figure 4).

Carefully select coverage areas. Some remote areas are more attractive than others,

and operators must focus on picking the best ones first to maintain continued

momentum and support within the organization.

Adopt network technology that offers the lowest total cost of ownership per potential

customer.

Align marketing and distribution strategies with network expansion.


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Engage with local entrepreneurs at both a network and service-delivery level.

Ensure there is a favorable policy framework that contributes to, rather than hinders,

positive ROI on rural strategies.

Adopt processes that closely track, refine, and adapt rural expansion strategies.

Figure 4: Six key success factors

Coverage:

user insight

and priority

Services and

marketing: loaded

and local

Perform:

track, learn,

and adapt

Technology:

lean andshared

Local

entrepreneurial

engagement

Favorable policy framework


Prioritize coverage in areas with the greatest potential

Prioritizing coverage in areas that have the greatest potential is easier said than done, and gettingit wrong can rapidly drain support for further rural expansion as the losses flow back to

headquarters. But, how do operators choose which areas to prioritize out of thousands of villages

and communities that are currently without mobile coverage?

There are no definite answers as to which areas operators should prioritize as there are

considerable differences between local markets. Service providers must use every local tool at

their disposal to determine local population density, incomes, and the potential ARPU of their


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target areas. One African operator stated that its method is to fly a helicopter over rural

communities and seek out tin roofs. When they are present in a village, this operator has found

that there is usually enough disposable income for mobile services. Another operator in Asia

stated that it studies rural clusters of communities to determine the villages that are at the centers

of those clusters, and then targets those villages first. Others suggested using data and insights

from agricultural cooperatives to determine income and wealth in given communities as agriculture

is often the only source of income for people in remote or rural areas.

Deploy lean, shared, and managed network equipment

As outlined in our report Strategies for the Next Billion: Technology Solutions, there are some

excellent rural mobile solutions available from a number of equipment vendors. Ovum believes that

the rural mobile solutions currently available present significant reductions in operator capex and

opex compared to the alternatives that were on the market a few years ago. The current solutions

are usually micro base stations that address the challenges of power, backhaul, site and radio

equipment cost, and performance very well. Most of these solutions run on solar power, and have

built-in compression and local switching capabilities that reduce backhaul costs. In addition, most

of these solutions no longer require a tall tower with extensive concrete foundations as the

equipment can be mounted on a single pole that does not require much space or deep

foundations.

A recent development is the option to have fully managed services in rural areas. For example,

Ericssons Managed Rural Connectivity product is a managed services offering where Ericsson

operates cell sites, and then sells capacity (typically bundles of minutes and SMSs) to operators.

Under this model, Ericsson manages the site installation, operation, management, and

maintenance for a monthly fee per site.

We believe that most rural areas will only be able to support one or two physical networks. As a

result, operators will need to focus on two key issues.

They need to be the first to deploy networks in the most attractive areas.

Where a competitor is already in an attractive area, they need to consider active

network sharing rather than rolling out their own network. As this option is not always

available within a given regulatory framework, operators need to work with regulators

to facilitate active network sharing.


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Adopting lean and local marketing and distribution strategies

Marketing for rural users needs to be centered on a carefully focused, value-led strategy in order

to fit the income constraints of the target market and ensure service provider profitability. There are

four key elements that we believe are central to this strategy.

Local high-impact promotion. The core focus of promotional campaigns must be to

demonstrate the value of the service to users and stimulate usage. Ovum believes

that the best approach to this is through a combination of local demonstrations and

shared access phones. Encouraging village heads or religious leaders to take up

services is another tactic that falls in the low-cost, high-impact category. Dynamic pricing. Services such as MTN Zone price mobile services (typically voice)

according to available network capacity. Solutions such as these are well suited to

rural areas, where there is likely to be substantial network capacity. Rather than waste

capacity, network operators should dynamically discount their services during low

traffic periods to stimulate usage among rural users. For more information on dynamic

pricing, see our report Dynamic Pricing: Yield Management Solutions and Strategies.

Tightly managed customer acquisition costs. Service providers need to make sure

that they optimize subscriber acquisition and retention costs in order to ensure that

low ARPU customers remain profitable. The key factor in keeping acquisition costs

low is managing the level of dealer commissions. Some operators in Asia and Africa

have managed to reduce dealer commissions to $1, and have agreements that

commissions will not be paid if a subscriber leaves the network within a certain period.

This is the approach that operators need to carefully consider for the next wave of low

ARPU users, particularly those based in remote and rural areas.

Local distribution network. An effective local distribution network is one of the most

important parts of operators marketing strategies for low ARPU users. As these users

typically earn small sums of money frequently (often daily), they regularly top up their

phones with small amounts. For low-income users, purchasing a phone is a smaller

challenge than regularly topping it up locally and in small, affordable increments. Ifthere isnt a local agent to serve rural users, operators will miss out on considerable

revenues. Service providers must expand their distribution networks in conjunction

with their network expansion. As a result, optimizing, incentivizing, and providing

promotional support to the network of agents and airtime resellers are crucial

elements of operators marketing strategies.


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Local engagement: from distribution to network management

Engaging the local community in the operation of rural solutions is critical to the success of rural

expansion initiatives. In our report Low ARPU Users: Best Practice Strategies, we envisaged four

progressively greater steps of local engagement in rural solutions, as outlined in Figure 5.

Airtime distributor. This is the easiest role to perform as it requires very little skill or

investment on the part of the local community.

Shared service enabler. They provide a shared service to members of the local

community that dont yet have access to a personal service.

Local network management and maintenance. Operators can employ local people to

provide security and maintenance for some of their infrastructure.

Local service provider. This occurs when a local entrepreneur effectively leases the

cell site to provide services to the local community. Nokia Siemens Networks (NSN)

Village Connection solution envisaged this type of local engagement, which requires

substantial entrepreneurial and technical skill to execute effectively.


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Figure 5: Local engagement levels

Local engagement

Local skill andinvestment requirements

Airtimedistributor

Shared serviceenabler

Local network

manager

Local serviceprovider

Local engagement


Local engagement



The failure of NSNs Village Connection solution to gain significant traction highlights the fact that

the local service provider model will be extremely difficult to execute. If an investment in rural

coverage is a challenge for operators with substantial financial and technical resources, it will be

an even greater challenge for people in a local community. As a result, it appears that the only

form of local engagement that vendors and service providers can rely on will be local network

management and security.

Track, learn, and adapt to improve performance

Service providers must carefully track the progress of each stage of their rural expansion in order

to learn from best and worst practices, address underperforming areas, and refine their strategies.

We believe that metrics such as users, traffic, revenues, costs, and profitability per base station or

site can provide enhanced insight into the success of a service providers rural strategy. These

indicators will enable operators to identify poorly performing areas, address them with a

concentrated marketing push, and provide lessons for further refinements of their rural strategies.


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Bharti Airtel tracks profitability per base station in its rural areas. When it identifies a poorly

performing base station it concentrates marketing efforts through mobile promotional teams that

demonstrate its services to local villages.

Operators must be prepared to adapt to the inevitable mistakes they will make along the way. With

the smaller size of rural base stations, it is now much easier to decommission a site in an

unprofitable area and move it to a site with better prospects

Policy imperatives for increasing rural network coverage

Governments across the world are keenly aware of the role that ICT can play in improving theireconomic growth and governance. In emerging markets, one of the key policy imperatives is the

expansion of rural networks, with a particular focus on reducing the digital divide and boosting rural

incomes. There are several policy tools available to governments for furthering this objective.

Universal service obligation (USO) funding

USO directives and funds are common across the world, although they have different provisions in

mature and emerging markets. In emerging markets, they tend to focus on extending basic

coverage and access to rural and remote areas. While USO funds are collected and made

available in many countries, the implementation of USO funding policies has been patchy. In many

emerging markets, and particularly those with intense competition, mobile operators target the

most lucrative segments in the early phases of deployment in an effort to build sufficient market

share to ensure their survival. Operators will then typically build out the basic level of coverage

required to qualify them for USO funds.

Spectrum refarming

In many emerging markets, operators have spectrum in higher bands. While this is sufficient for

the coverage of urban areas and ensures a decent quality of service, using the same frequencies

for rural coverage doesnt usually make for a sound business case. The better propagation

characteristics of lower frequencies such as those in the 900MHz, 800MHZ, and 700MHz bandsmake them attractive for the purpose of extending network coverage to rural areas, not to mention

significantly more cost effective. However, these bands are often used for other services such as

terrestrial TV, meaning that policymakers will need to refarm it to make it available for mobile

services.


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Network sharing

Policymakers are beginning to come around to the prospect of network sharing, although most of

them have only allowed passive network sharing (the sharing of sites, towers, and in some cases

power infrastructure) to date. We believe that active network sharing, including the sharing of

spectrum, will be very important for rural coverage. As many remote and rural areas will only be

able to support one or two physical networks, network sharing will become a necessity for

operators.

Taxes, subsidies, and incentives

In addition to USO funding, operators should lobby for tax breaks, subsidies, and incentives to

support rural expansion. Operators in a number of African and Asian markets are subject to

punitive luxury taxes on airtime and devices, which operators should lobby to get reduced or

removed in rural areas. In addition, policymakers could offer incentives such as lower cost

spectrum and access to government land for network sites. They could also provide easier access

to international cable stations as an incentive for rural network expansion.


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SERVICES FOR THE NEXT BILLION

From shared to personal voice and data

The service mix for populations in rural and remote areas is a completely different proposition to

the traditional approach taken by mobile operators. Besides the primary demand for voice and

SMS communications, persuading these users to adopt other value-added services (VASs) and

content is not straightforward. Unfortunately for operators, it is not as simple as extending existing

VASs and content from urban areas.

We expect mobile services among the next billion to evolve from shared services and devices to

personal ones. As shown in Figure 6, this will initially occur for basic voice and data services, and

then be repeated for more complex mobile data, content, and Internet services.


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Figure 6: From shared to personal services

Time

Service utility/productivity

Shared voice

experience

(e.g. family/village

phone)

Personal mobile

data, content and

Internet access

Personal voice

and SMS

service and

device

Shared

Internet access

experience

(e.g. Internet kiosk,

shared smartphone)




Service providers need to include shared access voice and data services in their marketing

strategies for rural users. These services already exist in some markets, including Grameen

Telecoms Village Phone service in Bangladesh that has also been adopted by MTN in Africa,

Bharti Airtels public call offices, and Grameenphones Community Information Centers. All of

these solutions bridge the gap between non-consumption and personal connectivity.

Besides the fact that they are very attractive to low-income rural users, shared services providethree key advantages to operators in rural environments.

Aggregate demand. Shared access solutions aggregate demand from users that are

unable to afford a personal connection.

Act as an introduction to personal services. Shared services allow users to get a first-

hand view of the value of mobile services, which can work as an extremely effective

promotional tool.


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Provide local employment opportunities. Shared access services promote

employment opportunities for local entrepreneurs in rural communities. This

strengthens local economies and increases purchasing power for communications

services.

Beyond voice and SMS: service mix must be localized

Basic network coverage of elementary services such as voice and SMS will continue to be the top

priority for operators. Once these basic needs are met, operators can consider moving up the

value chain by offering data and content services. The most important issue facing operators is

that content and services for the next billion must be customized for the local population and their

specific needs. Beyond basic communication functions, services deployed for the next billion must

be designed to solve practical issues. This approach will attract users looking to purchase

solutions that increase their productivity and earning power or their knowledge and awareness of

local issues.

Local language support is essential for any service deployment

Literacy is one of the key challenges in reaching the next billion with services beyond voice and

SMS. The lack of access to quality education is a significant issue in rural and remote

communities. This means that even if they are able to afford a mobile phone, many remote and

rural users do not have the ability to use the device for anything other than basic voice calls. The

reluctance to use mobile devices among these users is related to both their lack of education and

the fear of something going wrong. However, this is a challenge that can be overcome. With the

increasing prevalence of group ownership and shared usage models among emerging market

users, more people are becoming familiar with mobile phone usage through their family and

friends.

Content and application developers are increasingly looking to add local language capabilities to

target the next billion users. For example, a farmer may be interested in subscribing to a farming

productivity or agricultural service and be able to afford it. However, he may not be able to read or

write, and so would be dependent on voice recorded messages or would need to speak to a live

person. The majority of the next billion users will reside in rural areas, and will only be able to

speak their local languages. This makes it critical for operators to offer local language support,

either in text or speech form.


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VASs, content, and apps must be multi-platform

With so many of the next billion users in remote and rural areas, there can be no guarantee of

basic cellular coverage, let alone data capabilities. As such, any VASs, content, or applications

must be designed to work on multiple platforms. In addition, they must be able to work effectively

with basic SMS, unstructured supplementary service data, and even voice so that they can be

offered to the widest possible audience.

In areas with a low level of literacy, voice services assume even greater importance. For example,

voice recording and authentication technologies are being introduced to help connect emerging

market users to essential services. Studies in India have shown that many users in remote villagesare reluctant to send a basic SMS to access their bank account balances. A pilot program initiated

and run by the Indian Institute of Technology in Chennai is focused on a use case for voice-only

mobile banking. There are only two levels of authentication required: a mobile number and the

users voice. Once the users voice is recorded and authenticated, they can listen to their bank

balances and use other options. These are the kind of initiatives that can help the next billion users

overcome their lack of literacy and reluctance to use more advanced services.

Productivity-enhancing services will be crucial

One of the major areas of innovation for remote and rural users is to use ICT devices,technologies, and tools to improve productivity. Most of these users are employed in agriculture,

and their yields are often erratic and unreliable, especially for those with small land holdings.

Increased productivity will have a direct impact on the amount of income that these users can

generate. While there are several examples of productivity enhancements targeted at remote and

rural users, we have highlighted one specific example of a product, and several other information

services that are designed to improve agricultural productivity.

Nano Ganesh: remote irrigation service

Nano Ganesh is a product developed and promoted by the Ossian Group, an Indian company

based in Pune. Ossian developed Nano Ganesh to tackle the issue of farmers in rural India having

to manually operate the water pumps across their agricultural holdings. Without automation,

farmers suffer losses from excess water seepage that can ruin crops, insufficient irrigation from

delayed pump operation, erratic electricity supply, and the risk of personal injury.

Nano Ganesh has been designed to eliminate these issues by enabling remote operation of water

pumps using a mobile or fixed-line phone. The product includes an instrument that connects to the

electrical starter on a water pump. Each instrument has a unique number that the farmer can dial


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using a standard mobile or fixed-line phone. Once the number is dialed, the farmer has to enter an

on/off code to operate the water pump remotely. The Nano Ganesh instrument also alerts farmers

about the availability of a power supply or if there is an attempt of theft, either of cables, panel

instruments, or the pump itself.

IFFCO Kisan Sanchar Limiteds (IKSL) farmer information service

IKSL is one of many initiatives that seek to empower farmers and improve their productivity by

providing them with agricultural information through their mobile phones. Other initiatives in India

include Reuters Market Light and Fisher Friend, while Manobi and Esoko are examples of similar

services in West Africa.

IKSL is a joint venture between Indian Farmers Fertiliser Cooperative Limited (IFFCO), Bharti

Airtel, and Star Global. IFFCO is an Indian cooperative organization that consists of over 40,000

cooperative societies, and has a user base of approximately 60 million farmers. IFFCO has

partnered with Bharti Airtel and Star Global (a financial institution) to offer Airtels telecoms

services to its large base of members. By providing farmers with an Airtel SIM card, IFFCO can

send valuable information directly to its members in a cost-effective manner. After a series of pilot

projects, IKSL now covers IFFCO members in 18 Indian states across 60 designated zones. The

zones are marked so that IFFCO can provide relevant local content to its members. The basic

service portfolio includes five free voice messages sent to farmers mobile phones every day ontopics such as soil management and disease prevention. Farmers have a call-back facility that

allows them to listen to their messages when convenient. Farmers also have access to a

dedicated support line that gives them access to a panel of experts that can answer their questions

in local languages. IKSL experts also conduct regular phone in programs to clarify and redress

issues.

Educational services

A lack of education is a considerable issue for people living in rural and remote areas. Despite the

significant advances made by governments in increasing the reach and effectiveness of primary

education, users in remote and rural areas are at a significant disadvantage when it comes to

accessing quality education. This makes it far more difficult for these people to learn skills that can

be used to gain employment. While there are many initiatives and programs focused on

developing education around the world, we have highlighted one specific educational area, the

learning of English. English is widely accepted and viewed to be upwardly mobile. People with

English language skills are more likely to be employed, and this fact has caught the attention of

people in emerging markets, particularly those in lower income segments or rural and remote


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areas. The following are examples of innovative services that offer English language lessons to the

next billion users.

BBC Janalas English lessons

BBC Janala is an education service that was launched in Bangladesh in November 2009. With

over 50 million mobile subscribers in Bangladesh, the opportunity for educational services

delivered through mobile phones is considerable. BBC Janala offers English lessons across

multiple platforms including mobile, TV, and the Internet. The service was created through a

partnership between the BBC World Service Trust, BBC Learning English, and mobile operators in

Bangladesh. Calls to the service are subsidized by mobile operators to make them affordable forlow-income users. This approach has been successful, with over 15 million calls logged as of

September 2011. The service has been used at least once by 26.3 million people, while the

number of regular active users is approximately 7.5 million.

To access English lessons and quizzes, users only have to dial 3000. The English lessons follow

a curriculum set by English in Action, a project sponsored by the Bangladesh Government with

grants from the UK. Each English lesson is three-minutes long and costs BDT3 (approximately

$0.04). There are hundreds of lessons available in a tiered curriculum that is designed to help

users gradually improve their English language skills. There is also the option for users to register

their profiles on BBC Janalas website, which gives them access to additional resources andcommunity forums for interactive learning.

English Seekho

English Seekho was developed by the education division of Indian company Infrastructure Leasing

& Financial Services Limited. The service has been rolled out by Tata Teleservices, Airtel, and a

number of other Indian mobile operators. It is similar to BBC Janala, with the major difference

being that subscribers are charged a monthly subscription fee in addition to the prevailing call

rates. For example, users pay INR2030 per month as well as the prevailing per second or per

minute tariff, which is typically INR0.01 per second. Once a user calls the service, they are

directed through an interactive voice response system to their lesson of choice. Each lesson runs

for approximately five minutes. The service is also designed to allow users to practice the English

words and work on their pronunciation.

Health and wellness services

The lack of access to basic healthcare facilities is well documented in emerging markets, and is

particularly acute in rural and remote regions. In most cases, the lack of healthcare infrastructure


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in remote areas mirrors the lack of other physical infrastructure such as roads, electricity, and

water. Significant advances have been made in improving healthcare in emerging markets, despite

the significant challenges of rapidly increasing populations, dire poverty, a lack of finance, and the

remoteness of many areas. Governments have managed to launch successful drives aimed at

vaccinating against diseases such as polio and smallpox.

In recent times, there has been a noticeable shift towards prevention-based techniques for

healthcare. As access to a mobile phone is often far easier than access to quality healthcare,

mobile healthcare solutions are particularly well suited to awareness programs aimed at prevention

and wellness. Mobile phones are also very economical and efficient for the input and relay of

health-related field data for non-governmental organizations (NGOs) and government agencies.

The following examples are some of the more prominent recent developments in the provision of

healthcare services using mobile technology.

Arogya Worlds health information service

Arogya World is a US-based NGO that focuses on reducing the impact of chronic non-

communicable diseases. It has partnered with Nokia Life Tools (NLT) to provide information on

diabetes via SMS. The content is offered as part of NLTs heath category. Arogya and NLT plan to

distribute diabetes awareness and prevention messages using this service to approximately 1

million Indian users in rural and remote areas over the next two years. Given the literacychallenges involved with delivering services to these users, a basic text-only service is likely to be

the only way to ensure that the information is delivered effectively to these users.

Phones for Health

Phones for Health is a public-private partnership between the GSMA Development Fund,

Accenture, Motorola, Voxiva, and MTN. The program allows health workers in remote and rural

areas to enter health-related field data using a downloadable app on a mobile phone. The system

by Voxiva is called TRACNet, and is a software application that is used to analyze field data for

HIV/AIDS. Based on a pilot program in Rwanda launched by MTN, Phones for Health aims to

expand to 10 African countries in its first phase.

Government services

Many governments around the world have invested in e-governance initiatives in an effort to

provide efficient and cost-effective services to their citizens. However, most of these services are

based on fixed broadband and narrowband Internet connections. This framework doesnt work well

in emerging markets, where the penetration of broadband is much lower than mobile penetration.


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As a result, many emerging market governments are looking at ways to offer their services on

mobile phones to enable wider and more cost-effective reach. The following are examples of

mobile governance solutions rolled out by governments in emerging markets.

Indias National e-Governance Plan

The Department of Information and Technology (DIT) in India plans to extend its existing e-

governance framework to a mobile platform in order to reach citizens in remote and rural areas.

The DIT is keenly aware of the low broadband penetration in India, and the inability of users in

remote and rural areas to afford Internet connectivity and computing devices. The DITs proposed

plan is to build a mobile service delivery gateway (MSDG) that will integrate seamlessly with theexisting e-governance infrastructure already built out across the country. The services provided

over the MSDG will include information- and transaction-based services covering a wide range of

areas such as agriculture, health, education, banking, status tracking, and alerts. Examples

include m-health awareness campaigns, passport application tracking, and mobile banking and

transfer services.

MFoods

MFoods is a program developed by the Indian state government of Andhra Pradesh (AP). The AP

state government has long been at the forefront of using ICT to improve service availability,

delivery, and efficiency for its citizens. MFoods was initiated in 2000 by Andhra Pradesh Foods, a

state government enterprise. It is designed to enhance the efficiency of the supplementary nutrition

program (SNP) for children under six years of age and pregnant women in lower income

segments. The SNP provides nutrition through its network of anganwadis (day-care centers), but

the program has faced issues with implementation and delays in the procurement of supplies.

MFoods allows workers at the day-care centers to place orders through SMS, and these orders

are then processed through a centralized server. Deliveries are then coordinated through the state

governments network of warehouses and transportation. Workers can also track the status of their

orders via SMS, and the supply chain is integrated with Google Maps so that orders can be

tracked in spatial views. The MFoods program has been developed in conjunction with the

National Informatics Center of the Indian government.

Mobile money services

Mobile money is a critical service for users in rural and remote areas. As outlined in our studies

Making Money from Mobile Moneyin Emerging Markets and Mobile Money in Emerging Markets:

201015 Outlook, mobile money is already a strategic priority for many emerging market service


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APPENDIX

Methodology

This report was written using extensive briefings with all of the equipment vendors included in this

report. Ovum also conducted briefings with a number of vendors and service providers operating in

emerging markets. The report also utilizes secondary research, and Ovums ongoing analysis of

telecoms services in emerging markets.

Further reading

Dynamic Pricing: Yield Management Solutions and Strategies. OT00031-001 (March 2011)

GCash: Mobile Money Case Study. OVUM052313 (May 2010)

Low ARPU Users: Best Practice Strategies. OVUM050381 (February 2009)

Making Money from Mobile Moneyin Emerging Markets. OT00030-011 (August 2011)

Mobile Money in Emerging Markets: 201015 Outlook. OVUM052840 (December 2010)

M-Pesa and Vodafone: Mobile Payments Case Study. OVUM050150 (December 2008)

MTN MobileMoney Uganda: Mobile Payments Case Study. OVUM052573 (August 2010)

Rural Mobile Strategies: Five Key Success Factors. OVUM050553 (March 2009)

Strategies for the Next Billion: Devices. OT00034-006 (December 2011)

Strategies for the Next Billion: Technology Solutions. OT00034-005 (December 2011)

Author

Angel Dobardziev, Practice Leader, Emerging Markets

[email protected]

Shiv Putcha, Principal Analyst, Emerging Markets

[email protected]
mailto:[email protected]:[email protected]


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Ovum Consulting

We hope that the analysis in this report will help you make informed and imaginative business

decisions. If you have further requirements, Ovums consulting team may be able to help you. For

more information about Ovums consulting capabilities, please contact us directly at

[email protected].

Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any

form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the

prior permission of the publisher, Ovum (an Informa business).

The facts of this report are believed to be correct at the time of publication but cannot be

guaranteed. Please note that the findings, conclusions, and recommendations that Ovum delivers

will be based on information gathered in good faith from both primary and secondary sources,

whose accuracy we are not always in a position to guarantee. As such Ovum can accept no

liability whatever for actions taken based on any information that may subsequently prove to be

incorrect.
mailto:[email protected]

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