Sustainability First - In search of telecentre sustainability

In search of telecentre sustainability

|Harsha Liyanage, Ph.D|

Research Publication by Sarvodaya Fusion, in collaboration with telecentre.org

Harsha Liyanage, Ph.D.


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This book and the telecentre.org program are supported by the following social investors:

Sustainability FirstIn search of telecentre sustainability

ISBN No: ISBN 978-955-599-507-8

Sustainability First

Table of Contents Page no

Word from Telecentre.org 04

Acknowledgements 06

Preface – Sustaining Telecentres in Development Landscape 09

Introduction 12

Research Methodology 17

Chapter 1 25

Sustainability Dream – Why is it Unsustainable?

Chapter 2 52

Sustainability – What Makes it Possible?

Chapter 3 74

The Silver Lining of the Sustainability Cloud

Building partnerships for telecentre sustainability, case study – ATN, Brazil

Tapping the bottom of the pyramid, case study – Drishtee, India

Exploring the knowledge market at grassroots, case study – D.Net, Bangladesh

Telecentres as a corporate social responsibility, case study – Grameenphone CIC,

Bangladesh

Evolution of a social enterprise, case study – Sarvodaya-Fusion, Sri Lanka

Chapter 4 141

Social Enterprise Approach to Telecentre Sustainability

Conclusion and Recommendations 164

Bibliography 165

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Word from Telecentre.org | �

Word from Telecentre.org

As we started the fabulous telecentre.org journey back in 2005, we invited hundreds of grassroots

leaders from all around the world to define collectively what were the key challenges for the

future of the telecentre movement.

Some clear needs and opportunities emerged from those debates: a better organization and

knowledge exchange among them; a research agenda for the future of the telecentre movement;

a capacity-building effort among grassroots practitioner; and above all, ways to ensure long-term

financial sustainability for those initiatives without jeopardizing their main social purposes.

As a result of this process, we engaged in supporting the creation of open telecentre networks

in more than 50 countries; we launched a vibrant online community and resource center (www.

telecentre.org); we undertook a global effort to train and certify operators (The telecentre.org

Academy); we engaged in broad research initiatives focused on understanding the social impact of

public access; and we started tackling the challenging issue of financial sustainability.

The former was for sure a difficult challenge, as the whole meaning of sustainability was also

mutating as a result of an evolving, knowledge economy, a changing technological field, and the

disparity of realities across the globe. We assumed that our approaches must also consider this

complexity by being open to diverse points of view, without prejudgments or the pretension of

finding a one-fits-all definitive formula. We then started a process of research and experimentation,

Word from Telecentre.org | �

looking at different contexts and experiences, and bringing together skilled—and intellectually

generous—partners with different backgrounds. Dr. Harsha Liyanage was one of them.

Interesting responses emerged from that effort in places as diverse as Sri Lanka, the USA, Chile,

Brazil, Uganda, and India. We realized that sustainability models depended on context, but also

on the entrepreneurial and innovative capacity of local leaders. We became inspired by the social

entrepreneurship movement as well as by the emerging focus on new services to be offered at the

bottom of the pyramid.

Within that framework, Dr. Liyanage started a passionate research on identifying paths, models,

and successful cases of sustainability, principally within South Asia—the most vibrant scenario on

this particular field—and tried to organize it in a comprehensive framework. This book is the

result of that effort, which includes nearly two years of hard work, where dozens of people were

interviewed and experiences scrutinized. Nevertheless, it is - as any possible research on this field

would be - a work in progress.

It is also the proof of how the telecentre movement is learning how to build together a better

future for itself and for the millions of people it serves in a changing era.

Florencio Ceballos

Program Manager

telecentre.org, IDRC / CRDI

Acknowledgements | �

Acknowledgements

Sustainability First is a product of a long journey, across four continents, over a two-year period.

Two interesting incidents mark the birth of this journey. One was a dinner table at Gallery Café

in Colombo, Sri Lanka, and the other was a train journey from Ottawa to Toronto, Canada. The

individual who sat in front of me at both occasions was Mark Surman, whom I gratefully recall for

his vision, energy, and convincing power that formed the foundation to undertake this project.

Dr. Richard Fuchs is the next most important individual, who made important decisions to

accommodate me as a Visiting Fellow at the International Development Research Centre (IDRC)

- the very unique organization whose staff I appreciate mostly for investing in individuals like me

to experiment, learn, and contribute to the world. I remember gratefully the contributions of

Florencio Ceballos and the lovely team at telecentre.org for providing me leadership, logistics, and

warm friendship at every turn of the research.

I am ever grateful to the five organizations—ATN of Brazil, Drishtee of India, Grameenphone CIC

of Bangladesh, D.Net of Bangladesh, and Sarvodaya-Fusion of Sri Lanka—for allowing me to carry

out in-depth studies into often sensitive institutional data. José Avando and Fernando Portella

of ATN, Satyan Mishra and Swapna Mishra of Drishtee, A.M.M Yahya and Sultanur A.H.M. Reza of

Grameenphone CIC, Dr. Ananya Raihan and Mahmud Hasan of D.Net, and Isura Silva and Ravindra

Ariyawickrama of Sarvodaya-Fusion were key individuals of the respective organizations who have

devoted their precious time to answer lengthy interviews, and who subsequently directed me to

the important sources to carry out further studies. It was a great opportunity to witness the tireless


contributions of these individual leaders to their respective organizations, and I was fortunate to

enjoy their warm-hearted hospitality, friendship, and humanity that helped to shape the content

of the research.

Although I cannot list the enormous number of telecentre leaders whom I met all across Africa,

Latin America, Asia, and North America, I recall them with utmost respect. Their passion and

contributions articulate the content of this book. I remember friends of UgaBYTES and other

telecentre leaders in Africa fondly, though I was not fortunate enough to capture much depth in

that territory.

During the articulation of academic thinking, a few individuals and organizations contributed

immensely. Professor Michael Clarke of IDRC, Canada, the research team at LIRNEasia, Sri Lanka,

and Akhtar Badshah, and the research team at Microsoft Unlimited Potential Group, Seattle, are all

remembered for their intellectual contributions at various occasions. Loic Comolli and Eva Varga of

Nonprofit Enterprise and Self-sustainability Team (NESsT) are remembered with gratitude for their

open-hearted contributions at formulating case study models. I am grateful for NESsT for sharing

their survey formats to carry out case study interviews. More importantly, Karishma Kiri of Microsoft

Unlimited Potential Group, Frank Tulus of telecentre.org, Helani Galpaya of LIRNEasia, and Ravi

Gupta of CSDMS, all have my grateful appreciation for their contributions. Their reviews have

helped me a great deal to fine-tune the final write-up. I also fondly remember Dr. Abhaya Induruwa

of Canterbury Christ Church University, UK, for helping me at formulating research methodology.

Contributions of John Zoltner and Christine Prefontaine are remembered with great affection

and gratitude. John has done tremendous work as an English language editor and I am thankful

for his critique of the book. I am also grateful to Prasantha Dematage, Shorab Kareem, and the

team of Mudra, Sri Lanka, for contributing their wonderful design skills, which have enhanced the

attraction of the book.


If there is pain associated with continuous global travel, while adding endless carbon miles, there

was a team who shared that pain with me, who wrote letters to me, and tolerated my lengthy

absence. My loving wife, Anandika, and three lovely daughters, Devni, Savani, and Asini were the

victims of those lengthy stretches of my absence. My heart goes to each of them in appreciation

of their tolerance.

It is always wonderful to see the end of seemingly never-ending research work and book writing.

It is almost impossible to note all the names of wonderful human beings who had immensely

contributed to this endeavor. Telecentre operators, taxi drivers, rickshaw riders, village leaders,

and poor mothers and fathers who shared a moment to tell their story—I salute them all at this

moment of ending this journey.

Harsha Liyanage,

Managing Director (Honorary), Sarvodaya-Fusion

April, 2009

Preface – Sustaining Telecentres in Development Landscape | �

Preface Sustaining telecentres in development Landscape

The last 20 years have seen a great deal of excitement about computers and the Internet.

Governments, businesses, consumers, and the media around the world have spent huge amounts

of time, money, and words heralding a shiny, networked future full of nifty gadgets. In the context

of emerging economies, this shiny future is more often than not linked with jobs, prosperity, and

development.

While much of this is hype, there are actually very good reasons for our love affair with computers

and the Internet. They are flexible, general-purpose tools that people can use in any way that

their imaginations fancy. As such, they are—or at least can be—what Canadian pacifist and thinker

Ursula Franklin calls “holistic technologies”: open-ended systems that lend themselves to human

creativity, innovation, and generativity. It is these properties that have allowed people with little

power and few resources to use computers and the Internet in surprising ways to create wealth,

topple governments, and change the ways in which we communicate as human beings. This

potential for generativity and innovation is at the root of our love affair.

It is exactly in this context that telecentres emerged. They came from the idea that computers

and the Internet are raw material for innovation, and the instinct that people would learn, invent,

hack, and generally improve their lives if given access to these tools. This isn’t to say that the

government and foundation bureaucrats who have funded large telecentre programs were thinking

Preface – Sustaining Telecentres in Development Landscape | 10

this way. In fact, these people more often than not brought rigid, over-engineered ideas along with

their telecentre projects. However, if you talk to the pioneers and entrepreneurs, it was exactly

this spirit of generativity and innovation that has fueled them. They have always seen telecentres

as a way for people to enter the knowledge society creatively, and on their own terms.

Despite a great deal of skepticism, telecentres have in many ways lived up to this promise. Local

entrepreneurs, activists, and community animators around the world have slowly—and sometimes

in bumbling and painful ways—evolved the telecentre into something very much like a computer

itself: a general-purpose tool that people can shape into whatever they need. Some people use

these tools to sell their crops at better prices so they can remain in the village. Others use them

to learn the skills that will get them a job in the city. And still others use them to express their

ideas and make their voices heard. The point is this: People have found ways to use telecentres to

make their lives better.

With well over ten years of telecentre history behind us, the challenge is now one of sustainability.

This is partly about the social and financial sustainability of individual centers at the local level.

The people running centers need to find ways to engage and excite their neighbors. They also

need to generate income - or motivate others for outside support - to keep the doors open and

the Internet connection running. In more cases than not, this kind of sustainability is near at hand.

And, where it is not, centers will close, which is natural and fine.

The deeper challenge is one of continued innovation and creativity. Telecentres need to continue

to evolve with the cultures, economies, and technologies that surround them. They need to find

useful ways to weave themselves into a world connected by mobile phones. They need to invent

new social enterprise models that balance mission and market. And, most importantly, they need

to give regular users free reign to evolve, improve, and invent the products and services offered

through the telecentres. It is sustained innovation that will keep telecentre alive and vibrant.

Preface – Sustaining Telecentres in Development Landscape | 11

The path to this kind of sustainability is most likely through telecentre networks. When they work,

telecentre networks are like peripheral vision: they provide a way for people who run telecentres

to see what’s going on in other places. This, in turn, makes it possible for innovative ideas about

products, services, management, community, and technology to move quickly from place to

place. There may not yet be many telecentre networks that are succeeding in this role of being

“innovation channels,” but such networks are certainly possible, and needed.

Leaning into the future, there is no question that we will see successful and sustainable telecentres.

They will certainly not be the large, expensive telecentres that first emerged in the late 1990s.

They likely won’t even look like the telehuts, kiosks, or village information centers of today. Just

like situations where computers and the Internet are the fuel, telecentres will create new ideas

from anywhere and everywhere, and become what the people who run and use them want them to

be. That is the essence of sustainability.

Mark Surman

Executive Director

Mozilla Foundation, USA

April 2009

Introduction | 12

Introduction

“Imagine a rural village, where women flock around the public water tap to collect the trickling

daily water ration, children run to the public school held under a tree canopy, and youth acquire

vocational skills by pulling a cart alongside their father’s while they remain hopeful that tomorrow

will somehow be different. Despite the gravel roads and broken lampposts, their aspirations

remain set on the hope for economic prosperity. The nearest telecentre to their village is a magical

place that nurtures this hope and keeps it alive. Computers are fashionable and the internet is

powerful.”

As “shared-access facilities,” telecentres provide Information and Communication Technology

(ICT) access to disadvantaged communities that can hardly afford access otherwise. Often known

by different names, such as kiosks, telehuts, community multimedia centers, or rural knowledge

centers, telecentres exist in almost every country in the world. Equipped with basic ICT equipment,

such as computers, printers, and photocopiers, and often with an Internet connection, these

shared-access facilities have a common objective, which is to facilitate the development of local,

disadvantaged communities. People access these fee-based or free-of-charge facilities for learning,

communication, or business purposes.

The concept of shared-access facilities took shape in the “telecottage” or “community technology

center” movement in Europe, Canada, and the US in the 1980s. Aiming to bridge the emerging

digital divide, during the 1990s, telecentres were started as pilot experiments in developing

countries, mostly carried out by civil society organizations with the support of donor agencies.

Introduction | 13

Focusing on disadvantaged communities (i.e. bottom of the pyramid) as the primary target

group, these telecentres aimed to facilitate community development above all else. Thus, the

initial models were mostly service delivery channels providing ICT services to communities that

were being supported by donor agencies, charities, or public institutions. During this period of

telecentre evolution, attention was mostly focused on recognizing appropriate models to install

the handle-with-care equipment (such as computers) in harsh, low-infrastructure, unskilled, rural

environments.

Towards the mid-2000s, such pilots had expanded, diversified, or been scaled-up to national

networks in multiple countries, including Sri Lanka, Brazil, and India, among others. The intervention

of national governments, the corporate sector, and academic institutions contributed to such

expansions. Such progress has been linked to new terms, such as “telecentre 2.0,” “telecentre

ecosystem,” and “telecentre movement,” which are associated with up to thousands of telecentres

working as a network under different partnership arrangements. By 2007, telecentre.org had

suggested that there were over 60,000 telecentres functioning worldwide, of which approximately

35,000 were being installed in Latin America.

The growth of telecentres and their associated networks triggered alarms about their long-term

economic sustenance. How can telecentres be sustained beyond their initial funding cycles? Are

these cost-intensive facilities viable in the poverty-ridden environments? What are the appropriate

business models?

Another parallel development in this new era (in early 2000) was marked by the emergence of

a new profit-seeking ICT for development (ICT4D) “industry,” which tended to collaborate with

public or nonprofit partners, but engaged the private sector as the driving force.

The primary drive behind this new industry is the untapped potential market within “bottom of

Introduction | 1�

the pyramid” communities. Major players in the ICT industry, including Microsoft Corporation,

and chipmakers Intel and AMD, have recognized the bottom of the pyramid as a major target

market segment, and have started conducting market research on this segment, building diverse

philanthropic programs, and creating alliances with civil society organizations and national

governments around the world. Microsoft’s Unlimited Potential (Microsoft UP) project, Intel’s

leadership of the United Nations Global Alliance for Information and Communication Technologies

and Development (GAID), and AMDs 50x50 initiative are just a few examples by major technology

companies aimed at addressing “bottom of the pyramid” markets through socially responsible

business efforts.

The Microsoft UP program, along with two well-known development institutions—the International

Development Research Centre (IDRC) of Canada, and the Swedish Development Corporation

(SDC)—were the founding partners that established telecentre.org, the sponsor of this book.

Telecentre.org is a global community of people and organizations committed to increasing the

social and economic impact of grassroots telecentres. The program is based at IDRC, but operates

throughout the world. The organization provides the resources that telecentres need to succeed:

locally relevant content and services, support and learning opportunities, and networks that

help telecentre activists connect to each other. This book is an example of the extensive work

telecentre.org is supporting in order to uncover and study field practices that work (or fail) to

make telecentres more effective and sustainable.

The emergence of the ICT4D industry is marked by another development that involved corporate

partners in country-level initiatives. Between 2002 and 2005, Drishtee, Nlogue, eChoupal of India,

and Grameenphone Bangladesh, invested in telecentre models with the objective of earning profits

by targeting “bottom of the pyramid” communities. Civil society organizations, such as Sarvodaya

of Sri Lanka, Development Alternatives of India, and D.Net of Bangladesh made similar efforts with

the same target communities, yet these efforts were organized as nonprofit social enterprises.

Introduction | 1�

Sustainability First is a research project carried out to capture the key sustainability lessons

emerging from this mix of dynamic and evolving efforts, which is unique due to the involvement

of such varied participants, which include grassroots leaders, corporate executives, bureaucrats,

and politicians. Although the word “sustainability” implies broader social, cultural, political, and

environmental aspects, the attention of the current research was focused mainly on economic

sustainability. The research was carried out over nearly two years, beginning in January 2007,

and involved a deeper cross-section of the telecentre ecosystem, which started with telecentre

operators from individual telecentres in South Asia, Africa, and South America and extended

through the senior managers of selected corporate, civil society, and government institutions in

Brazil, India, Bangladesh and Sri Lanka.

Although this book derives its main lessons from five key case studies, which feature ATN (Brazil),

Grameenphone CIC (Bangladesh), D.Net (Bangladesh), Drishtee (India) and Sarvodaya-Fusion

(Sri Lanka), the overall content of the book was not limited to those lessons, but was derived from

the broader spectrum of telecentre experiences studied in Africa, Asia, and South America. This

book attempts to capture the rich lessons of that relatively complex larger research study in order

to uncover the key constraining factors that work against telecentre sustainability, and then to

derive key strategies for success from selected telecentre networks.

This book has been organized and written to appeal to a diverse group of readers; thus, it does

not follow a traditional research style. The target audience includes telecentre activists, ICT for

development project designers, government policymakers, academic researchers, and the staffs of

civil society organizations and donor agencies. Above all, the book may provide a background on the

innovative methods being used by social entrepreneurs around the world to support telecentres.

The first chapter presents the underlying social, economic, and institutional constraints that work

against the economic sustainability of telecentres. The content of the chapter is derived from the

overview gathered from scoping study carried out with multiple telecentre networks.

Introduction | 1�

The second chapter presents the best practices by the sustainability champions. While the chapter

derives most of its content from the five case studies, it showcases some positive sustainability

efforts by a variety of additional organizations as well. These two chapters were organized

and presented so that they may provide a basic picture into the factors that affect telecentre

sustainability, both negatively and positively.

Chapter three contains the in-depth case studies for five key organizations. The cases present

organizational background, key lessons learned, business model innovations, financial performance,

and human resource aspects in great detail.

Chapter four provides an analysis of the five case studies. This chapter discusses the scale, stability,

strategy, and profitability of the five organizations, while scrutinizing their business models to

demonstrate how each organization’s experience can contribute to the sustainability of other

telecentres and telecentre networks.

Research Methodology | 1�

Research Methodology

Telecentre sustainability is a broad and complex topic, echoed throughout the history of the

evolution of telecentres, beginning in the 1980s (Fillip & Foote, 2007). It is important to note

that, although the word “sustainability” is often used as a synonym for an organization’s financial

ability to continue operations, it should include the social, cultural, political, technical (Stoll,

2003) and environmental dimensions that support—or work against—an organization’s ability to

survive (Fillip & Foot, 2007). The research featured in this book, however, was motivated by plight

of the telecentre operators around the world who have complained of their inability to generate

sufficient revenue to cover their expenses.

The telecentre sector has been evolving from telecentre pilots to telecentre networks—often

referred to as telecentre 2.0 (Harris, 2007). A diverse set of ownership models has emerged,

that includes entrepreneurs, community-based organizations, religious organizations, and state

bodies (Proenza, 2008). They are organized through a variety of operational models, such as public

access service providers, private enterprises, and social enterprises (Fillip & Foot, 2007), and

are reported to stimulate desired outcomes, such as developing human skills, social capital, and

knowledge capital (Kapadia, 2005; Heeks & Molla, 2009). Nevertheless, they are often associated

with undesired outcomes as well. Socio-anthropological aspects, such as gender, cast, ethnicity, and

religion, at times tend to downplay the desired degree of community engagement with telecentres

in rural, poor communities (Raihan, 2007; Atukorala, 2007).

Telecentres are in operation, more often, with a development objective (Gomez & Hunt, 1999;

Heeks & Molla, 2009) in rural and grassroots settings in developing countries (Proenza, 2001).

Research studies conducted in pro-poor development context is complex, due to vulnerabilities

that the people are exposed to, in an environment where livelihood resources are scarce, and

which also plagued by less-developed policy strategies and weak institutional structures (DFID,

1999; Heeks & Molla, 2009). Understanding telecentre sustainability in such a dynamic, diverse

context presents a complex and subtle challenge.


This research was commissioned by telecentre.org, a program of the International Development

Research Centre (IDRC) dedicated to promoting telecentre innovation, effectiveness, and

sustainability. The underlying objective of telecentre.org’s work is to recognize and address the

factors that constrain telecentre sustainability, while highlighting the key elements that telecentre

sustainability champions have mastered. As with any research, there are certain restrictions

associated with this investigation, including both the limited availability of resources to visit and

interview partner telecentre networks and the limited availability of those networks to participate

in the research being conducted.

Research Framework and Strategy

With the key objective being “exploratory” research (Ryan, 2005) to surface the complex reasons

and emerging patterns of the telecentre sustainability question, qualitative research models were

chosen as the main methodology, supplemented with limited quantitative research (Ryan, 2005,

Denscombe, 2007). Thus, more attention was paid to the breadth than the depth of the issues.

The case study method enables the researcher to employ a flexible set of investigative tools,

depending on the circumstances (geographical, institutional) and specific needs of the situation

(Ryan, 2005), resulting in a book more likely to be useful to the telecentre practitioners and

advocates that make up the core of telecentre.org’s family of stakeholders, which is the major

target group of this book.

Martyn Denscombe (2007), in “The good research guide, for small-scale social research projects,”

explains that primary case study research focuses on:

Depth, rather than breadth, of the material studied

Relationships and processes, rather than end products and outcomes

A holistic view, rather than isolated factors

Natural settings (explaining the complexities and subtleties present in real life

situations), rather than artificial situations

Multiple sources, rather than one research method

(to capture the complexities of reality)

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The literature survey was carried out to study the existing knowledge about the telecentre

sustainability and to identify the telecentre operations where reasonable sophistication and

experiences are present (representing the multiple regions of Asia, Africa, and Latin America).

Findings had been verified with the team of telecentre.org who has been supporting 13 telecentre

networks (globally) at the time of research planning. Accordingly, the research was carried out at

two stages, initial scoping study and subsequent in-depth case studies.

a). Scoping study; this study was carried out with telecenter networks in Asia, Africa, and Latin America.

The objective was to gather an overview of the constraining factors of telecentre sustainability.

Empirical observations were made by visiting the telecentre facilities (five to ten telecentres per

country) in Benin, Bangladesh, Brazil, Chile, India, and Sri Lanka. Semi-structured interviews were

carried out one-to-one with the telecentre operators, and group interviews with the telecentre

users. Seven to ten participants were in each group. Documentary evidence, such as financial

records, progress reports, published news material, and image records (photographs) were studied

to gather additional data. Additionally, third party accounts (anecdotal) were utilized to validate

the evidence.

b). In-depth case studies were carried out with selected sustainability champions to identify the

models they adapted to overcome those constraints.

For the in-depth studies, five network champions were selected using the attributes given below:

Uniqueness

Potential replicability of the projects studied

Presence of credible economic practices

Presence of social enterprise characteristics

Scale of operation and/or potential for further scalability (if not scaled up).

Six network organizations out of 13 were initially qualified. One was subsequently disqualified

during the detailed due diligence process; thus, five were eventually selected for the research.

In-depth studies were carried out regarding their operational sustainability. One-to-one, semi-

structured interviews were conducted with senior executives, which helped to access the “privileged

information.” Furthermore, semi-structured group interviews were conducted with junior staff.

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Research Methodology | 20

Written questionnaires used for the interviews were developed with the support of the Nonprofit

Enterprise and Self-sustainability Team (NESsT), a non-profit consulting group with twelve years

of experience in supporting social enterprises that strengthen civil society organizations’ financial

sustainability (NESsT, 2008). The interviews had investigated into organizational information,

financial information, and challenges confronted with respect to social enterprising, legal aspects

and impact.

One case study - Sarvodaya-Fusion - involved a detailed analysis of the 24-month ongoing

organizational transformation from a donor-dependent organization to a revenue-generating social

enterprise. Following this unique evolutionary process required regular, close observations over a

lengthy period of time. “Participant Observation” (Denscombe, 2007) was adopted to document

the change. It should be noted that the researcher is an honorary (unpaid) administrator of the

organization, and, therefore, had first-hand experience of the organizational restructuring process

as well as access to privileged information that would otherwise be difficult to obtain. In order

to minimize any potential personal bias, the researcher employed “Documentary Data Analysis”

(Denscombe, 2007) to establish research findings in an objective way, utilizing other research

publications, audited financial documents, donor progress reports, and printed as well as online

publications.

For all five case studies data triangulation was carried out with quantitative investigations and

additional secondary interviews. Organizational annual reports, audited financial reports and

progress reports were the resources for quantitative investigations. Secondary interviews were

carried out with five telecentres that had been operated under each case study organization.

Face-to-face, semi-structured interviews were conducted with telecentre owners and operators.

Questions were designed to study the ownership, governance, initial investments, products and

services, promotions, user patterns, business plans, pricing structures, and revenues. Additionally,

financial and user records were extracted from their financial accounts and log books.


Table 1: Criteria-based Selection of Case Study Institutions

Organization Study details Features & attributes

ATN,

Brazil

Case study carried out in May 2008

with in-depth interviews with the

director general and two other di-

rectors, interviews with five tele-

center operators, and two partner

institutions.

South American state-driven initiative, building multi-

ple partnerships to support telecentre sustainability.

Uniqueness: partnership models to achieve

telecentre sustainability

Replicability: replicable for most national or

state-driven initiatives

Credible economic practices present

Social enterprise characteristics present

Scale: national scale operation

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D.Net,

Bangladesh

Case study carried out in May 2007

with in-depth interviews with ex-

ecutive director, finance director

and other senior members. Inter-

views with five telecentre staff,

and one partner institution.

South Asian, non-governmental research initiative,

capitalizing on knowledge services and products to be

offered through telecentres.

Uniqueness: innovative “knowledge for develop-

ment” application as a social enterprise

Replicability: some components replicable


Social enterprise characteristics present.


•

•

•

•

•

Grameen-

phone CIC,

Bangladesh

Case study carried out in May

2007 with in-depth interviews

with director and two other sen-

ior members. Interviews with five

telecenter operators, and one

partner institution.

South Asian, corporate organization, corporate social

responsibility (CSR) initiative implemented through

telecentres

Uniqueness: CSR application in telecentre

context

Replicability: replicable for multiple contexts


Social enterprise characteristics present


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•

•

•


Validation exercises

Data were validated through field verifications, interviews with third parties and competitors, and

published documents, including annual reports, and printed and online publications. Financial data

were verified using published annual records, audited accounts, and privileged information.

Beginning in December 2006, when the research was conceived, and continuing through the pub-

lication date, research data and interpretations were periodically presented to telecentre practi-

tioners, policymakers, and donors for their input and critiques, in order to establish the validity,

reliability, and objectivity of the overall research. At the beginning, the research concept was

presented and tested in a participatory workgroup called the Telecentre Leaders Forum, sponsored

by telecentre.org in Benin, West Africa (December 2006). Since July 2007, research findings were

Drishtee,India Case study carried out in July

2007 with in-depth interviews

with co-founder / director, and

one senior manager, preceded by

field visits to five telecenters in

2006. Interviews also carried out

with one competitor institution.

South Asian, corporate initiative with strong commit-

ment to building telecentres in “bottom of the pyra-

mid” communities.

Uniqueness: innovative “services and products”

based on sustainability model

Replicability: replicable for multiple contexts



Scale: multiple-state operation

•

•

•

•

•

Sarvodaya

Fusion,

Sri Lanka

Continuous in-depth observations

carried out from December 2006

to October 2008, with six field vis-

its, interviews with a manager and

two senior staff, five field staff,

and ten telecentre operators.

South Asian, national NGO initiative, which has evolved

from donor dependence to a social enterprise.

Uniqueness: Social enterprise evolution from

a donor dependant NGO

Replicability: replicable to NGO context



Scale: national-scale operation

•

•

•

•

•


shared through a monthly online newsletter (seven issues from July 2007 to April 2008), which was

circulated to 180 selected global telecentre practitioners representing multiple stakeholders in

the telecentre sector. Another online discussion took place in November 2007 through Uganda’s

UgaBYTES online telecentre support network, where about 600 telecentre activists, mostly repre-

senting Africa and South Asia, are active.

With the objective of further establishing factual accuracy, “respondent validation” (Denscombe,

2007) was carried out by presenting the data and findings to multiple telecentre stakeholders at

three international gatherings:

1) the international conference sessions at eIndia, Delhi, India (2007)

2) telecentre.org’s Telecentre Leaders Forum in Malaysia (2007)

3) “Global Knowledge Conference 3” (GK3) in Malaysia (2007)

A colloquium was also organized to share the findings with the research team of LIRNEasia,

Sri Lanka in 2008 and a subsequent presentation was made to the research group at Microsoft’s

Unlimited Potential, Seattle, USA (2008) to further refine the research insights of the overall

research documented in the book.

Table 2: Validation exercises carried out at multiple stages of the research

Event Time Participants Objective

Telecentre Leaders

Forum, telecentre.

orgcentre.org,

Benin, Africa

Dec 2006 Telecentre leaders

(Africa and South Asia)

Participatory workshop with

local telecentre leaders to

test the initial research con-

cept and gather insights

Presentation, IDRC,

Canada

April 2007 telecentre.org team at IDRC Presentation of the initial re-

search concept and plan to

telecentre.org team


eIndia Conference,

Delhi, India

August 2007 Broader forum of telecentre

and ICT4D experts, activists,

academics, and telecentre

leaders

Presentation of the interim re-

search findings for validation

of research methodology, anal-

ysis and data interpretations

Telecentre Leaders

Forum, telecentre.

org, Malaysia

December 2007 Global telecentre leaders rep-

resenting Africa, Asia, South

America, and Europe

Participatory discussions about

the research findings in order to

validate the data interpretations

and the relevance of findings to

the local telecentre leaders

Global Knowledge

Conference 3 (GK3),

Malaysia

December 2007 Sustainability First panel

discussion; broader forum

of telecentre and ICT4D ex-

perts, telecentre sustainabil-

ity champions, academics,

and telecentre leaders

Presentation of the research

findings to the global audi-

ence in order to validate data

analysis and interpretations.

Colloquium, LIRNEa-

sia, Sri Lanka

February 2008 Researchers at LIRNEasia Presentation of the research

methodology, context and

findings to deepen research

insights, refine analysis, and

interpretations

Presentation at Micro-

soft Unlimited Poten-

tial, Seattle, USA

March 2008 Research team at Microsoft UP

Event Time Participants Objective

Sustainability Dream! Why is it unsustainable? | 2�

Community development is not about technology but about people. It is more than double clicking and fiddling with a remote control. It is about improving the quality of life,

adding an extra slice of bread on the table.

Damas Ogwe, Ugabytes Online discussion on telecentre sustainability, 25/10/2007

The Sustainability Dream… Why is it unsustainable?

Chapter 1

Box : 7

Mapping the reasons for telecentre non-sustainability

Policy reasons

Institutional

reasons

Economic

reasons

Social

reasons

No clear

vision

Lesser respects

at bottom of the

pyramid

Leadership

deficienciesEthos

Deficiencies in

management

systems

Legal systems

not supportive

Competition

Planning

difficulties

Scarcity of

value - added

products/

services

Seed capital

scarcity

Absence

of

motivation

Non-conducive

national policy

environment

Absence of

entrepreneurial

skills



Box 1.2: A day at an (economically unsustainable one) telecentre

Date: 15 July, 2007

Place: Telecentre, Shelabunia, Bangladesh.

Background: Two years into operation. Owned by an NGO founded by a wealthy family, which

continues to support the telecentre.

Management: one operator, one extension staff (Mobile Lady) supported by D.Net, Bangladesh.

Average number of visitors to the telecentre (reported by operator) : 10 - 25 people / day

Visitor record for the day: Only four people arrived:

1. Student: browsed Internet to search university addresses and visa application procedures

2. Woman: requested legal advice from help desk

3. Fish farmer: accessed databases to search for recommended treatments for his fishery problems

4. Fish farmer: requested support to find treatment for dying fish. Help desk first prescribed some medicines that were not locally available and then helped the farmer to locate the medicine.Revenue: The telecenter earned only US $0.3 (Taka 20) for the day, though their earnings target is US $2 – 3 (Taka 150 – 200) per day.

Telecentre Income / expenditure records from September 2006 – March 2007

Month Income Expenditure Profit / loss

September,2006 50 70.5 (20.5)

October,2006 20.7 102.6 (82)

November,2006 64.4 94.6 (30.2)

December,2006 35.8 60 (24.2)

January, 2007 44.3 51.8 (7.5)

February*,2006 173 159.2 (13.8)

March,2006 38.5 81.4 (43)

* In February, additional income reported US$ 146 (Taka 10,000) & expenditure US$ 87.6 (Taka 6,000) from

computer training classes. Accumulated loss over 7 months –US4 193 (Taka 13,242) (Note: 1 Taka = US$ 0.0146)


Time: November 2006,

Benin, West Africa

Place: Center Songhai Farm

& Training Facility

Event: East Africa Telecentre Forum

Alan Gunnar, the event-facilitator, started drawing a straight white line on the uneven cement

floor, symmetrically dividing the huge circle of 90 Pan African telecentre leaders participating in a

three-day telecentre leaders forum. The event started with Alan’s spectrogram exercise.

“We need your opinion for one more question.”

Alan eloquently presents the next question.

“African telecentres must embrace entrepreneurship to survive.”

He repeats the statement.

“If you agree, please line up at the ‘Yes’ sign posted at the left corner of the room; otherwise,

queue up at the ‘No’ sign posted at the right corner. Please express your opinions by standing on

either side of the spectrum – yes side or no side.”


Eighty-seven (87) participants flocked to the “Yes” corner, making the three at “No” sign post look

very lonely.

“We all agree – we must embrace entrepreneurship!”

Later in the day, 12 participants chose telecentre sustainability for their “break-out” theme

discussion. The resulting brainstorming session caused a particular outbreak of emotion and

frustration by participants, yet scattered ideas filled the white flip-chart sheet:

“What would sustainability look like?”

“My telecentre is serving hundreds of poor people. Am I sustainable?”

“Sustainability means living beyond the donor cycle!”

“We charge a reasonable fee for services. But our budget doesn’t add up at the end of the day!”

“Business plan. How do we create one? We are not business people.”

“We are socially responsible operations. Should we follow the same models of for-profits?”

“How do we ensure a social mission while introducing economic priorities?”

After 90 minutes of brainstorming and debate, as his peers nodded their approval, one telecentre

leader summed up the common concern: “We all have the desire to become sustainable. But none

of us has a good visual picture of what sustainability looks like or how to build that picture.”

Key learning: Despite their intense interest, not many telecentre operators had a clear idea what

exactly they meant by sustainability. In the meantime, some had a false complacency that they

are already sustainable.

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•

•

•

•

•

•

Sustainability Dream! Why is it unsustainable? | 30

Competition

Sao Sabastião is a satellite town located a few miles from Brazil’s capital. Seeing Brasilia’s

fascinating skyline in the distance is always inspirational to the 135,000 people of this small town.

Four telecentres in the township provide services to residents of the low-income communities

earning less than US $600 a month, who compose 80 percent of the population.

Mara (Maria dos Reis Pereira de Souza), elected president of the Low Income Workers Association

(LIWA), a small community-based organization, runs one of the telecentres as a community

development project to serve the poor. Her major challenge is sustaining the ten computers and

other equipment provided by the Ministry of Industry and Foreign Trade. They offer IT Courses in

basic MS Office at a marginal price of US $6.30 per month for a three-month course, and generate

a total of about US $462 (R $1100) per month to barely cover the utility bills and staff salaries,

which add up to US $464 (R $1105) a month.


“We have constant pressure from cybercafés in the area. They complain that our services are

cheap and not legitimate. We have only one software license for ten computers. Unfortunately,

we cannot afford to pay for more.” Mara’s voice is commanding, though her eyes and cheeky smile

imply fear and guilt.

There are 15 cybercafés in the area. Though the cybercafés do not offer IT courses, they are very

attractive to youth, whose primary interests include playing games and using Internet-based social

networking tools. Mara recognizes the potential of IT skills courses to attract more customers

to her telecentre, but she feels constrained from openly promoting telecentre services due to

competitor pressure.

Key learning: Vey often, telecentres are not operating in isolation, and operators are exposed

to a reasonable degree of competition from the open market place. Their competitors can be

a cybercafé, communication center, or another telecentre operating in a nearby town. Action

towards economic sustainability often triggers intense competitor tactics.

“We have a constant pressure from Cybercafes in the area.

They complain that our services are cheap and not legitimate.

We got only one software license to offer at all 10 computers.

Unfortunately, we cannot afford to pay more “


Box 1.3: Income/expenditure assessment of 15 telecentres.

Following is a monthly income / expenditure assessment carried out during a workshop for 15

Sri Lankan telecentre operators. These telecentres were located in four districts, and were funded

by a donor project as part of reconstruction efforts after a tsunami disaster in December 2004. The

first ever cost analysis done with the team revealed the significant deficit that they were accumu-

lating over the operation, which was expected to be sustainable after a two-year funding cycle.

District Location Expenses(US$)

Income(US$)

Deficit (US$)

Hambanthota District 479 35 -444

Madilla 339 32 -307

Andaragasyaya 263 15 -248

Wanduruppuwa 301 35 -266

Ampara District 278 43 -235

Karathiwu 238 5 -233

Kalmunai 214 18 -196

Galle District 393 5 -338

Brahmanawaththa 234 18 -217

Pathegama 257 55 -218

Welhengoda 228 7 -221

Mathara District 308 86 -222

Thallala 191 64 -127

Bathigama 295 13 -282

Palena 324 42 -282

(Source: Business plan development workshop by Telecentre Family, March 2008 TCF project reports, Sarvodaya, Sri Lanka) (Note: 1SLRS = 0.0087 US$)


Lesser Prospects at Bottom of the Pyramid

In Godakawela, Sri Lanka, Janith Jeewanda is a 19-year-old boy, in a community with an average

income of less than US $2 a day. An early childhood polio victim, he impatiently waits in his wheelchair

until his parents call a tuk-tuk (taxi) to carry him to the telecentre located several miles away.

With every visit, Janith comes closer to his dream - an ICT carrier that can bypass his immobility.

Back in the telecentre, W.A.M.K. Priyangani, the passionate telecentre owner, recognizes Janith’s

ambition and, knowing the financial hardships of the family, provides his telecentre services to

the young man free of charge. Janith takes full advantage of Mrs. Priyangani’s generosity. During

every visit, he occupies one of the telecentre’s four computers for a minimum of two hours of its

marketable time slots.

A few miles away, in Thimbolketiya, Godakawela, Viraj Thushara Ekanayake and Deepika Ekanayake,

a brother and sister team, run another telecentre at the Walawa Junction, a transit town to the

popular, wild elephant tourist attraction at the Uda-walawa Sanctuary. “Computer education is


part of the curriculum, and students are highly motivated to study. But the local school does not

have the facilities to accommodate the computers. And the families cannot afford to pay. But, we

try to allocate at least few hours to the students, free of charge, every day.” – Viraj Ekanayake.

In Shelabunia, Bangladesh, Nayan Mondal—popularly known as Mobile Lady—begins the day at 8:30

a.m. visiting the Shelabunia Polithathya Kendra (telecentre). Mobile Lady checks the latest news

updates from the help desk maintained by D.Net at Dhaka, 370 kilometers away; then she starts

her routine journey, peddling the bike through rugged terrain to sell uniquely mobile services. On

demand, she measures the water pH of a shrimp pond (farm) and connects the farmer with the help

desk through her mobile phone to sort appropriate water treatments. Services are fee-based.

She is given a monthly target of connecting 75 villagers with the help desk, which she meets

without a problem. Every day, Mobile Lady travels a distance of between five to seven kilometers

as she moves from village to village. Yet, on average, she meets only four clients.

“The demand is relatively high, but not everybody can afford to pay for the services,” Nayan

admits.

Key learning: Telecenters operating in a rural environment with high incidences of poverty are

exposed to a complex set of problems. They are constrained by limited resources (e.g. natural,

financial), possess limited assets (e.g. homeless), exposed to shocks (e.g. drought), often living

in no- infrastructure environments (e.g. no roads and electricity). Telecentre operators have to

make to emotionally demanding judgments and struggle to design business models.


Scarcity of Value-added Products and Services

Every day, 18-year-old Prayagraj Chauhan of Taricher, a small village in the Tikamgarh district

in Madhya Pradesh, India, walks several miles along dusty roads, under the burning sun to meet

villagers. As the promotional assistant for the village telecentre, his goal is to cover the daily

target of selling the telecentre services to at least six people.

The handful of posters and printed material that he carries with him help to illustrate the services

and their benefits to the villagers, most of who are illiterate. Prayagraj’s shrewd eyes always

remain watchful to gauge the potential for marketing his service to every individual he comes

across. He strikes up a conversation with villagers effortlessly and is quick to understand their

needs.

Prayagraj is a walking promoter of TARAhaat, a telecentre network created by Development

Alternatives in India that primarily offers vocational training programs for rural youth. His primary

responsibility is to meet people face-to-face and explain the services available to them in the

telecentre in order to convince them to visit the center.

“It is not that difficult to grab the attention of people. Every person I meet gets excited when I say

ICTs. But I feel a bit uncomfortable at times, especially, when farmers, artisans, and women ask

what I can offer specifically for them at my telecentre.”

He tries to emphasize the fact that the portfolio of services that are being offered are not broad

enough to meet the diverse needs of many clients.

Key learning: The rural population is composed of all age groups, ethnic and religious groups, and

diverse occupations. Most of them are illiterate or not sufficiently educated. The ICT demands

and expectations of such a diverse community are broad, where telecentre operations are not

equipped with sufficient products and services to match the demands.


Box 1.4: A bitter experience providing value-added services via telecentres

In mid 2006, Sarvodaya-Fusion had started experimenting with Business Process Outsourcing (BPO)

as a new value-added service to be introduced at telecentres. The plan was to help telecentres

offer BPO services to businesses in order to provide opportunities to local residents. Telecentres

would therefore be able to: a) provide micro-enterprises to their local communities, and b) raise

additional revenue to support telecentre’s operational costs.

With a very limited track record of BPO in Sri Lanka, the project has been considered a high-risk

pilot. To mitigate this risk, Fusion partnered with a corporate sector partner (CSM Pvt. Ltd.), which

screened potential BPO service providers and negotiated on Fusion’s behalf.

The first step was a three-month pilot test involving three telecentres. The objectives of this step

were to determine the feasibility of BPO operations at telecentres and to identify the appropriate

business model.

The first two months of the pilot generated encouraging results. With the help of CSM, Fusion

was able to identify and negotiate contracts for the less sophisticated services sought in the BPO

marketplace, such as webpage translations, the creation of Excel spreadsheets or PowerPoint

presentations, etc., that its telecentre partners could perform without engaging in substantial

training or other investments beforehand. More importantly, telecentre operators had embraced

the provision of BPO services as a feasible way to achieve their revenue goals.

Yet, the third month ended in chaos. Telecentre operators suddenly realized they were not

receiving the daily communications the BPO service provider usually sent them every morning.

The BPO service provider was becoming increasingly inaccessible to the telecentres and Fusion

Management. CSM, still acting as the middleman, nevertheless convinced Fusion that they were

resolving these operational problems.


Yet, one morning, Fusion was shocked to learn that the BPO service provider had disappeared

into thin air. The company’s clients throughout Sri Lanka were too late to realize that the country

had been cheated by a notorious fly-by-night BPO service provider. The pilot experience was

very painful for the telecentre operators as well as for Fusion. The experience was particularly

frustrating because much of the pilot showed that BPO through telecentres can work, providing

jobs that support local economies while helping to sustain telecentres.

Blog extract from http://www.sustainabilityfirst.blogspot.com/

Leadership Deficiencies

Mr. Wijewickrama, a 59-year-old retired schoolteacher is a highly respected elder in Ambaraluwa,

a suburban village of 1,400 families in Gampaha District, Sri Lanka. The village library, community

hall, and pre-school are a few landmarks that demonstrate his remarkable ability to drive village

volunteers to mobilize resources towards village self-empowerment. A village telecentre is the

latest addition to the long list of Mr. Wijewickrama’s accomplishments. By using a variety of

community-based fundraising activities, the village managed to buy four refurbished computers to

expand the original village information center (VIC), which was established years ago. The scaled-

up telecenter was a dream come true to many youth and parents who could not afford to pay

private institutions for computer classes.

Yet, two years into operation, the dream seems difficult to fully materialize.

“There are about 25 youth seeking computer training, but we don’t have a teacher to train the

youth. So far we have trained two village youth (as teachers), and both left the village for new


jobs. The moment they get the training, they are attracted by outside private companies offering

higher salaries. Now we are wondering whether we should train another one,” Wijewickrama says

with frustration.

The telecentre is currently operated by a village committee, which is influenced and heavily

guided by the charismatic leader. The majority of committee members barely know how to turn

on the equipment, yet they make the majority of key day-to-day decisions regarding how the

center operates. As a temporary arrangement, Miss Nelka Wijesignhe, a telecentre assistant from

the Sarvodaya district telecentre, visits the village once a week to assist with training, but she

struggles to cope with the village’s over-dependency on her.

“Village leaders expect the telecentre to be run by volunteers. Thus, on regular occasions, I find

that new faces come and go. Two trained village youth left the place as they were not remunerated.

The biggest problem is the absence of financial resources. They are not ready to charge a fee for

the services. With persistent efforts, leaders agreed to charge 600Rs (US $5.20) for a student. But

that is only a third of the cost.”

The village leadership has consistently fought against the idea of charging a fee for the telecentre’s

services.

“Their fathers and mothers contributed to put up this building and even to buy these computers.

Now . . . how can we ask them to pay fees for us to teach their own children?”

In Chile, the busy charismatic leader of the Maule Activa telecentre network, Leonel Rojas Urrutia,

has a different approach to sustainability. He counts on volunteerism and partnerships, spending

much of his energy encouraging them. After successful negotiations with the Chilean Ministry of

Economy, seven municipalities of Chile’s Maule region and Telefónica, one of Chile’s largest Internet

service providers, Maule Activa’s telecentres receive Internet access at a 40 percent discount.


Mr. Rojas has furthermore convinced the municipalities to provide reasonably attractive locations

for the telecentres, free of rent and utility charges. These negotiations have managed to effectively

cut 78 percent of the financial needs of each telecentre.

“Telecentro San Rafael” is one of the centers under Mr. Rojas’s leadership. The four-computer

telecentre, located in a mixed community of 6,000 people in a small village in the Maule region,

is managed by a young girl. The place is busy with local children, youth, and home-bound mothers

seeking Internet, printing, and photocopying services.

The young telecentre operator’s eyes grow wide, and her arms wave in the air in excitement when

she speaks about the passionate service that she delivers to the community most of whom she

knows personally. When questioned about her personal finances, she shrugs her hands and begins

to look down, searching for answers. Telecentro San Rafael generates about US $270 a month. But

her monthly salary alone is US $280.

Key learning: Community ownership is often considered as an important ownership model for

telecentres. Such models are subject to decision-making processes imposed by the governing

structures and leadership. More often, those leaders are not driven by economic objectives; thus,

they overlook the economic realities of the telecentre operation.

Sustainability Dream! Why is it unsustainable? | �0

Box 1.5: Leader-centric networks; are they sustainable?

Leaders have a great deal of vision and ambition. Their vision set the path and the ambition fuels

the mission, generating human and capital resources to translate that vision into action. Thus,

telecentre networks, under such leadership, continue to survive.

Leaders succeed by:

Maintaining a circle of influence within their target group

Maintaining profile and visibility within their landscape

Frequently altering their strategies to adapt with the changing environment

Always searching for emerging opportunities

Sufficient evidence could not be found to suggest that leader-centric telecentres are not

sustainable. But most leader-centric organizations fail to translate in-kind resources into financial

revenues that may balance the books consistently.

Another quite common characteristic observed was that they often failed to provide reasonable

welfare packages to their subordinates, who agree to join the organization based on the personal

charisma of the leader. That, in turn, deprives their ability to attract professional staff.

(Blog extract from – http://www.sustainabilityfirst.blogspot.com)

•

•

•

•


Ethos Digana Nenasala is located in a scenic environment, surrounded by a massive lake and neighboring

green forest. The telecentre holds four computers in an attractively designed room. The occasional

wind blowing from the lake carries the subtle aroma of burning incense, reminding the busy Internet

surfer that he is sitting inside a Buddhist temple, though his mind is in cyberspace.

Rev. Katakumbure Dammarama, is the young, enthusiastic Buddhist monk whose interest in ICTs and

passion to serve his community convinced Sri Lanka’s ICT Agency (ICTA) to provide the telecentre

package. The temple’s “caretaker” committee (Dayaka Sabhawa) generated resources from the

devoted local community to construct the building within the temple complex to accommodate

the telecentre.


Buddhika Adikari, a 26-year-old volunteer manager of the Nenasala, was approached by the monk.

He was touched by Rev. Dammarama’s passion and also by the idea of teaching the community to

use modern technology. He agreed with the monks’ offer to provide his food and lodging along with

occasional fuel allowances to ride his new motor bike, to become a full-time volunteer manager

at Nenasala.

About 30 youth regularly visit the telecentre. Most of them are busy downloading local music. The

place has become an attraction because the center encourages them to develop their technical

skills freely, through their own exploration. One youth managed to develop a local website, on his

own, to further support the music interests of the group.

“The Buddhist temple is a place to donate for the benefit of other people. We consider the

technology services offered in the Nenasala a technological donation to those people who hardly

can afford to touch a computer. So this is a place of donations, not a place for charging fees,” Rev.

Dammarama explains.

Key learning: When Telecentres operate inside another institution, such as a public institution,

community development organization, or religious temple, their operations are influenced by

the policy context of the mother institution. They are often exposed to a high degree of ethical

concerns, and are confronted by customer expectations that can be counterproductive to economic

sustainability.


Box 1.6: Temple telecentres in Sri Lanka

In a country where 72 percent of the population is Buddhist, monks command a unique influence

on politics and culture. Temples play a vital role in rural communities, as they are interwoven

in the social and cultural fabric. Temples are resourced by community donations and managed

by elected caretaker committees (dayaka sabha), as Buddhist monks are not supposed to handle

money. Monks live as spiritual advisers.

Most temples offer schools for preschool children during weekdays, and religious schools on Sundays

(known as “Sunday schools”). All the services are offered free of charge.

Many NGOs carry out their activities in affiliation with the temples, and maintain community

libraries and community halls. The temples are regarded as regular meeting places for their target

communities. Thus, the Buddhist temple has long been regarded as an effective nucleus for rural

community mobilization.

The e-Sri Lanka program carried out by the government of Sri Lanka, had recognized temples as

potential nuclei for technology dissemination to remote rural communities, and thus introduced

a temple-based telecentre model. The model provides between two and four computers, plus

Internet access to selected temples, expecting the temples to organize operations. As of mid

2008, there were 217 telecentres set up by the ICTA inside temples and other religious locations,

including mosques, scattered across the country.

Sustainability Dream! Why is it unsustainable? | ��

Absence of Profit Motivation

“100 Dimensao” of Riacho Fundo, Brasilia, is a cooperative society with 200 members. Their

dedication and passion for recycling is seen all over the place, with heaps of plastic Coke bottles,

metal scraps, and tin cans nicely sorted out from piles of garbage collected from nearby townships.

100 Dimensao sells about 80 tons of plastics, metal, and computer parts every month, generating

about US $6,300 (R $15,000) per month, which provides an additional monthly income of US $200

to $350 (R $500 – 800) for 200 part-time workers in the low-income neighborhood.

The organization’s office complex itself is an inspiring demonstration facility to any visitor, where

children can play with toys made of recycled, plastic, fizzy-drink bottles, while mothers learn

paper recycling techniques. Inside the complex is a small telecentre equipped with ten Internet-

connected computers.

‘Most welcoming schools were the least prospective places as the

majority students were coming from poorest families. Their parents

hardly can afford to pay, even if the kids were keen.’


There are 20 students from a nearby public school being provided three hours of training per day

by two volunteer instructors. Osmero Pereira, coordinator of the technology recycling project,

emphasizes their criteria for selection:

“The students showing the poorest performances at school are given the chance to learn ICTs

together with environmental education. Most of them are not motivated for their studies due to

complex reasons. But, we offer them an opportunity to learn computers and the Internet, free

of charge. In exchange, they have to engage with waste collection projects and environmental

campaigns.”

Key learning: Occasionally, the telecentres are operated as a supplementary service to support

the major activities of the core organization. When the major objective is not financial, they can

contradict the telecentres economic sustainability ambitions.

Poor Entrepreneurial Skills

In April 2006, when the ten-year-old telecentre network of Sarvodaya-Fusion, of Sri Lanka, made

the crucial decision to use social enterprise strategies as a way to reach sustainability, program

manager, Ravi Ariyawickrama, accepted the challenge of developing the business plans and

executing the new enterprise activities. Ravi handpicked 11 telecenters he felt were prepared

to switch from the familiar free-service mode into enterprise (fee-for-service) mode and ran a

participatory workshop to develop the business plans. The team recognized IT courses as the

telecentres’ primary service to achieve their targeted revenues.

The team used to operate in a social service delivery model to help poor rural communities. They

had strong experience and skills at mobilizing poor communities, recognizing pockets of poverty,

identifying community leaders, and convincing them to consider ICT as a new option.


School children had been the primary target group for the ICT courses the organization offered.

Every telecentre operator had the choice of national schools and provincial schools in the target

area. Provincial schools were generally less prosperous and national schools were relatively better

resourced. Operators constantly visited schools to promote the ICT courses available at their

telecentres.

“Some school principals are welcoming, while most others are not when we seek permission to

carry out telecentre promotion during school assemblies. Every time we were asked to carry out

promotions, we would naturally tend to visit welcoming schools to carry out repetitive promotions.

But, one day at a review meeting, somebody asked how many students attended the telecentre

from that school. The answer was none.”

As explained by Ravi, most telecentre operators are good at promotions but fail to analyze the

effectiveness of their efforts.

“Most welcoming schools were the least prospective places as the majority of their students were

coming from the poorest families. Their parents could hardly afford to pay, even if the kids were

keen. Sometimes poor parents were not educated enough to judge the value of the courses.”

At the end of the year, only two telecentres managed to reach 100 percent of their financial goals,

while the overall performance of the network reached only 32 percent of the targeted social

enterprise income.

Key learning: Telecentres are installed as donor-funded operations, with a development objective

as the primary objective. Operational staff are recruited with development qualifications and

often trained to deliver development services. They do not carry the required entrepreneurial

skills for sales and marketing.


Deficiencies in Institutional Management Systems

José Avando, the Director General of ATN, spends more time traveling across the vast geography of

Brazil than sitting at his office at Brasilia. He travels to visit the buzzing metropolitan areas of Sao

Paulo and Rio de Janeiro to meet with senior managers of major institutions. His intensive travel

for the last two years paid off with his success at negotiating eight contractual agreements with a

major bank (Caixa Economica Federal), universities (University of Metropolitan Santos, University

of Brazil), and corporate giants such as AMD and Microsoft. As a bureaucrat at the Ministry of

Development, Industry and Foreign Trade, he also engages in negotiations with other ministries of

the federal government and with local governments (e.g. the Science and Technology Ministry of

Minas Gerais State).

All of these executive engagements are focused on a single task, which is to generate products and

services that can support the development and sustainability of 14,000 telecentres across Brazil.


These diverse partnerships provide multiple services via telecentres. An agreement with Caixa

enables telecentres to become legitimate local bank agents to provide selected financial services.

A partnership agreement with Gera Negocios enables telecentres to provide online courses. A

Microsoft agreement provides 40,000 Microsoft Windows and Office 2003 licenses to telecentres.

GetNET enables telecentres to sell the prepaid calling cards of four major mobile operators.

ATN manages all of these institutional partnerships, which involves organizing delivery and

distribution of refurbished computers, organizing training programs, tracking business performance,

and negotiating with multiple stakeholder institutions, while maintaining accountability to the

58 member organizations that comprise the governing body of ATN. To help him carry out such

demanding work, Jose has only two full-time staff members and two other part-time supporters.

The team agrees that they need more staff, but policymakers (the Fiscal Council and Executive

Board) are not in favor of expanding the staff.

Key learning: When telecenters and network operations are funded by public institutions and

donors (NGO), the administrative structures are designed for a development service operation, and

are often led by governing bodies comprising a majority of professionals from non-entrepreneurial

backgrounds. They overlook the required administrative changes when such networks are

transformed into sustainability-oriented operations.

Planning Difficulties

Winning the Global Gender and ICT Award at the World Summit on Information Society in 2005 was

an exciting moment for Ananya Raihan and his D.Net team in Bangladesh. Together, they had spent

a tremendous amount of energy carrying out a countrywide survey in 2004, to recognize the needs

for knowledge products at grassroots level.


Three years into operation, Dr. Ananya Raihan, Executive Director of D.Net, recalls the challenges

they faced while designing their programs.

“We were keen on integrating sound sustainability models into the overall design from the

beginning. Community-need surveys proved the demand for multiple components of the project

- Pallitathya, help desk, knowledge databases. Yet, in the absence of models to refer to, we had

to work on too many assumptions.”

Dr. Raihan emphasizes that his team’s first assumption turned out to be wrong:

“We felt the stakeholders (i.e. grassroots communities) would recognize the value of Pallitathya

Kendra, and assumed there would be a quick demand, but stakeholders took too much time to

recognize the value (of knowledge products).”

And the second assumption also failed.

“To design the help desk, we assumed that a corporate call-center model would work, yet later

realized that ground demands were not consistent.”

“We could develop quality databases, with 30,000 web pages on nine areas of livelihood. But, in

the absence of a critical mass of demand and a varying degree of ‘willingness to pay’, achieving

financial sustainability remained a challenge.”

Key learning: When the network operators try to design new business models or business plans, more

often than not, they have to follow trial and error models, due to the scarcity of published material

on the subject. Sometimes, following corporate sector models can lead to negative outcomes.


Seed Capital Scarcity

“Investing in economic sustainability requires different kinds of financial resources: quantity,

diversity, flexibility and longevity.” Lee Davis, et al. (Non-profit Enterprise and Self-sustainability

Team, 2004).

D.Net was able to take the initial step toward its social enterprise dream with its Pallitathya project,

utilizing the grants it received from Global Knowledge Partnership (GKP) as a seed investment.

They ran initial surveys, recognized partners and grounded the four-pilot Pallitathya Kendras with

a small fund. Realizing the market potential for its services, the organization planned a detailed

business strategy to develop a separate division of D.Net, called Multimedia Content Ltd. (MCCL)

as social enterprise, with the objective of expanding the operation. The lack of venture capitalists

or other entities to fund their model became a major hurdle.

Shilpa Sayura is another award-winning educational package, developed by eFusion with US

$50,000 in grant assistance that was provided by the ICTA of Sri Lanka in 2006. The local language

software package was a unique product for supporting digital self-guided learning by rural school

children, bypassing the barrier of competent teacher scarcity. With the collaboration of the

Ministry of Education, eight educational packages were made available for students to pilot-test

at 26 telecentres and nine schools. The program won an i4D award and a GKP Stockholm Challenge

Award in 2007.

After two years of dedicated efforts, Niranjan Meegammana, the founder of the program, explains,

“The product needs further technical improvement. Besides, if we are to offer this product to the

wider telecentre market, it is essential to provide advanced training to telecentre operators. We

have a small team, and it is a big task to provide training to over 500 telecentre operators and


1,000 school labs scattered all over the country. But, we are ready to take that challenge if we can

raise sufficient funds to carry out the operation.”

Key learning: When the telecentres and telecentre networks attempt to convert their operations

into sound business models, they require flexible funding for reasonably long time frames with

sufficient volumes. But, telecentre being an emerging industry, not many finance operations

offer finances to the sector. On the other hand, most telecentre operators are only familiar

with philanthropic funding sources; thus, they tend to overlook the corporate sector financing

models.

Sustainability: What makes it possible? | �2

‘For a profit maximising company, the bottom line is how much money you make. But when you run a social business, it’s about (social) impact’,

Muhammad Yunus, Nobel peace prize winner of 2006

Sustainability: What makes it possible?Chapter 2

Policy reasons

Institutional

reasons

Economic

reasons

Social

reasons

Economic

visson & mission

Exploring un-tapped martket

bottom of pyramid

Partnership with

diverse leaders

Social

enterprising the

ethical answer

Exploring

social investors

Enabling

management

environment

State lead

ICT promotion

Systematic

planning

Focus on

marketable

services &

products

Entrepreneurial

focus

Leveraging

economic

resources

Economic

motivation

Telecentres as

accepted

rural outreach

model

Box 2.1:

Summary of the factors contributing to telecentre sustainability, as

identified during the study with telecentre networks.

This chapter summarizes the key learning extracted from the overall study, which illustrates

the ways and means, tools, and techniques that are being applied by different telecentres and

networks to achieve economic sustainability.


Sustainability: What makes it possible? | ��

Box 2.2: What does a sustainable telecentre look like?

Following is a list of characteristics that are indicative of sustainable telecentres, according to

the thoughts and perceptions offered by multiple stakeholders consu lted throughout the study;

A sustainable telecentre, at the very least, is a community-friendly ICT facility outfitted with

computers and related equipment configured to serve the needs of the local community, that

is operated in an economically sound, technically up-to-date and socially appropriate manner.

More specifically a sustainable telecentre will likely to have:

Equipment and Skills:

• Functional, yet modest, technical equipment that can amply serve the demands of

the local community, while adapting successfully for the limitations of the local infra-

structure.

• Capacity to update with frequent technology improvements.

• Presence of customer support skills.

Management:

• A minimum of a single, dedicated, full-time manager / operator, who operates the

equipment and manages volunteers or full-time staff to provide services smoothly.

• Transparent management policies and accountability to its stakeholders.

Operation:

• Reasonable influence to the local community satisfying educational and devel-

opment needs.

• Provision of appropriate products and services.

• A welcoming, community-friendly attitude and atmosphere.

Finances:

• The ability to consistently generate sufficient resources, through fee-based opera-

tions, fund-raising, or in-kind resources, to support:

o Operational expenses, such as rent, utilities, and Internet access

o Decent remuneration for the staff

o The maintenance and upgrading of its assets, including, but not

limited to, computer hardware.


Social Enterprising – the ethical answer

Centro de Ensino a Distancia (Center for Long Distance Learning) of Socorro in Sao Paulo, Brazil, is a

very busy (large) e-learning center. About 400 students—both young people and adults—travel long

distances, organizing chartered buses in groups, both day and night. The center offers 17 courses

at the graduate and post-graduate levels in affiliation with the University of Metropolitan Santos

(UNIMES), including the subjects of business administration, accounting, pedagogy, and history.

About 90 percent of the students are school teachers between 25 and 44 years of age. In the

absence of sufficient higher education capacity in Socorro City, the telecentre provides immense

help for students and teachers who are eager to improve their teaching skills and educational

qualifications.

Sarvodaya-Fusion’s Village Information Centers (VIC) save significant time and money by offering

consolidated livelihood information under one roof inside the village. The villagers would otherwise

be required to visit distant townships to access the same information. School children use VICs to

get extra help for their school projects, such as the creation of the herbariums or seed collections

because their rural schools are deprived of facilities. Kamal Kapadia, a Ph.D. candidate from the

University of Berkeley, disclosed in her research report that “People learn about child rights and

negative aspects of corporal punishment through their exposure to VICs.” (Kapadia, 2005)


The elected president of the Bogahawella Sarvodaya Village Society, of Nuwara Eliya, Sri Lanka,

bought a Pentium 4 computer, spending his own money that saved over a period of time. Months

later, his 15-year-old son managed to develop a database single-handedly, that can track

information on each and every family in the village. The president claims that this system is

extremely helpful for him when establishing village development priorities, as with a few clicks he

can aggregate information by individual family or by family needs (wells, toilets, etc.). As Kamal

Kapadia emphasizes, there is a little doubt that the VIC serves as a catalyst for this process to

occur (Kapadia, 2005).

On average, Fusion spends about US $60 (6,500 Rs. SL.) to provide initial training and follow-up

guidance for each VIC. VICs are set up by village communities, which spend village resources (in-kind

as well as financial resources) to the estimated value of US $75 (7,500 Rs. SL.). Over a three-year

period, their accumulated average assets—in terms of furniture, shelves, and building material—

are estimated at over US $200 (20,000 Rs.SL.), which is gathered mostly from donations.

Key learning: The social enterprise approach provides a practical modal to answer the ethical and

social concerns associated with economic sustainability. Already some telecentre networks adapt

this model.


Entrepreneurial Focus

“We started our business as a computer repair center three years ago, but we wanted to open a

telecentre, as there is a good demand for Internet and computer services, and we are proud that

we could become a part of Grameenphone, a very big brand name in the country.” Muhammad,

the co-owner of Ecom Cybercafé, Gazipursadar, Bangladesh, was ambitious and hopeful that they

would generate a profit, even it was still not earning much revenue at the time.

There was hope and optimism, yet also anxiety and a feeling of urgency, behind the entrepreneurial

drive of the telecentre operator. Support organizations, such as Grameenphone CIC, Drishtee make

every effort to maintain such entrepreneurial drive across their networks. As for-profit operations,

they depend on entrepreneurship and have created institutional structures and supporting tools to

encourage that drive (See case studies in chapter 3.).

Nevertheless, non-profit organizations, such as Sarvodaya-Fusion and D.Net, have also learned

to support entrepreneurial characteristics in their centers and staff. This evolution took nearly a

decade for Sarvodaya-Fusion, as it made the journey from a philanthropic mindset to a socially

entrepreneurial one. Sarvodaya-Fusion has attempted various trial and error efforts to develop

appropriate telecentre models, then to design business models around them, and finally to

incorporate value-added service packages to increase customer flow and revenue (Box 2.3).

Key learning: Developing an economic focus (in addition to a social focus), and its consistency

throughout the operation, is essential to ensure economic sustainability.


Box 2.3: Sarvodaya-Fusion’s social enterprise evolution

From 1997 until 2000, telecentre services were mostly unstructured and driven by local demand. The

major services offered were photocopying, ICT hubs for youth newspapers, bio-diversity databases,

and the creation of PowerPoint presentations, all offered free of charge (Kapadia, 2005).

In 2000, the organization experimented with multiple trial and error efforts aimed at achieving

sustainability. These efforts ranged through innovations in policy and management structures,

revenue generation and business models, and telecentre service packages. As an example of

service experimentation, ICT courses were tested as a fee-based, value-added service. In order

to accommodate disadvantaged communities, a scholarship program was designed, which enabled

697 students from deprived communities to receive the courses at a 60 percent discounted rate.

The discount was paid for by a philanthropic donor (Progress Report, 2007).

In 2004, Sarvodaya undertook a major assignment to develop a Subsidy Voucher for the Information

and Communications Technology Agency (ICTA). Research conducted for the project provided

valuable lessons regarding the social dynamics of the rural communities around the telecentres.

(Liyanage, 2005; Sarvodaya Consultancy Report, 2004).

From 2004 to 2005, eight well-structured IT course modules were developed for children, youth, and

unemployed rural communities. Such courses were offered, for a fee, at 12 selected telecentres.

In 2006, the Sarvodaya telecentre network was decentralized, and an organization (a specialized

program branded as Sarvodaya-Fusion) began working more closely with non-Sarvodaya telecentres,

forming a telecentre alliance (Aka: Telecenter-family).

In 2007, Sarvodaya-Fusion designed core services (ICT education) to be offered through a network of

telecentres that supports revenue generation to member telecentres as well as core organizations.

(See Case Study- Sarvodaya-Fusion, Chapter 3).


Leveraging Economic Resources

For Mara of San Sabastiao, Brazil, the primary motivation to create a telecentre was to support

the ailing micro-enterprises of 200 poor families of the Low Income Family Association (LIFA). As

youth tended to dominate the ten computers donated by the Ministry of Development, Industry

and Foreign Trade of Brazil, she began to realize that there was another need to be fulfilled.

“We did not realize that we were breaking the law until we received the notification from a

regulatory body reminding us to comply with proprietary software regulations. Subsequently,

we learned that there are four other privately operated cybercafés that felt threatened by our

presence,” explains Mara regarding the challenges that made her more conscious of the economics

of her telecentre operation. She finished her story with a sigh of relief:

“Thanks to ATN, we are now receiving licensed software. No more troubles to offer ICT classes!”

She refers to Microsoft software donations arranged by ATN, which have helped make it possible for

the telecentre to offer ICT classes as a major fee based service to sustain its operations.


In Nuwara Eliya, Sri Lanka, the volunteers in one VIC were keen to buy a public phone for their

village because no such phone existed in the entire village. To raise money for the telephone, they

organized a raffle, offering a fan and an iron as prizes. Though tickets sold at for US 10 cents (10

Rs.SL.), the raffle generated a mere US $50 (5,000 Rs.SL.), which was insufficient to buy the phone.

Still, the group was clever enough to make another attempt, convincing the town telecentre

operator to lend them a projector and laptop computer to show popular movies in their village and

others nearby to earn the remainder of the funds necessary to buy the phone (Kapadia, 2005).

Key learning: All available resources (financial as well as in-kind) need to be leveraged effectively

and efficiently toward an economically sensitive objective (i.e. revenue).

Partnerships with Diverse Leaders

Nandasiri Wanninayake, widely known as Wanni, is a popular name in Sri Lanka due to his unique

leadership in connecting Mahawillachchiya—one of Sri Lanka’s most remote rural villages—into

the digital age. Over 50 of the 500 families in Mahawillachchiya, along with two schools, owned a

computer in 2008, and they were all connected through a wireless mesh network. The project has

been widely documented for its ability to empower diverse populations, including school children,

farmers, and stay-at-home mothers. Wanni introduced a number of service innovations aimed at

achieving sustainability for the telecentres he supported in Mahawillachchiya for more than a

decade, including offering BPO services to outside institutions.

“I responded to the call by ICTA to replicate the Mahawillachchiya success story in other villages

in the country – just because we have a common goal, that is to provide ICT facilities to the poor

communities,” Wanni explains about his decision to take the lead responsibility of the e-village, a

project supported by ICTA.


ICTA managed to convince many unlikely leaders to take up its cause, including popular Buddhist

monks, who command an unprecedented respect among the predominantly Buddhist population

in Sri Lanka. Villagers go to the monks for advice on critical decisions and they send their children

to temple for religious education at Sunday School. Technology introduction for rural communities

had never been on the agenda until ICTA convinced the majority of temples to open telecentres

within the temples themselves. Out of 570 telecentres, 217 are operated in temples and other

religious locations as of mid-2008.

Sonia Maria da Silva is an award winner in the field of environmental activism, as demonstrated

through the “100 Dimensao” project in Riacho Fundo, Brasilia. Revenues are not a motivational

factor, as her goals are mostly philanthropic and results-based. Yet Jose Avando and Fernando

Portella, ATN’s key leaders, managed to convince the leadership to partner with ATN’s telecentre

network agenda.

Shared goals and mutual understanding were the primary strategies that had motivated community

leaders to become partners in a common agenda. Sonia was motivated by her desire to serve more

children and communities through her environmental programs. Wanni was driven by his desire

to replicate his success in Mahawillachchiya, while the Buddhist monks seized the opportunity

to deepen their connection to local communities by offering educational services. Both ICTA of

Sri Lanka and ATN of Brazil managed to build successful partnerships with such diverse leaders to

achieve their institutional missions.

Key learning: It is important to consider mutually beneficial, inclusive partnerships with multiple

leaders operating at diverse communities and ecosystems in order to seek the overall economic

sustainability of the network operation.


Economic Vision and Mission

“Integrating ICT with development, culture, nature, and spirituality” is the grand vision statement

of Sarvodaya-Fusion, ICT4D program of the 50-year-old national NGO of Sri Lanka, Sarvodaya.

Drishtee, a for-profit Indian ICT4D organization, states that its vision is to, “create and implement a

sustainable, scalable platform of entrepreneurship for enabling the development of rural economy

and society through the use of Information and Communications Technologies.”

All the organizations in the study have broad visions that convey optimistic, ambitious goals that

have the capacity to inspire their staff as well as external stakeholders.

Mr. A.M.M. Yahya, Director of Grameenphone, emphasizes that, “We focus, re-focus and ultra-

focus ‘till we get the clarity in our minds.” In other words, they strive to seek clarity and focus in

what they are doing, why they are doing it, and with whom or to whom they are doing it.

Regarding to whom: Disadvantaged rural communities that do not have access to ICTs are the

common target of four1 out of five organizations studied in this research, including D.Net, Drishtee,

Sarvodaya-Fusion, and Grameenphone-CIC.

As to with whom projects are implemented, the organizations recognize “telecentres” and

“telecentre operators” as the common delivery window and delivery agents for their projects.

What do they do? The organizations deliver diverse services, from ICT education to e-governance,

and mobile phone sales to online trading, that meet the needs of the “target group” through

multiple models.

1 ATN’s target is ‘telecentres’.


Why do they do it? The reasons were echoed in the key words that were repeated in their mission

statements: “education,” “development,” “entrepreneurship,” “poverty alleviation,” and “em-

powerment.”

In order to achieve its mission, Grameenphone CIC had set an initial goal to create at least one

telecentre in each of the 462 upazillas (sub districts) in the country. The organization managed

to set up 500 telecentres in 450 upazillas by mid-2008. Drishtee plans to found more than 2,000

telecentres by 2007 and is expanding at the rate of almost 1,000 new telecentres annually.

All the networks studied in this research have a major focus on revenue generation to support

sustainability for their member telecentres. Code-named “Mission 6K” in 2000, Drishtee set a

goal to develop a package of services that would generate a monthly income of 6,000 Rs Ind.

(US $125) by the average telecentre, which would generate a profit of 1,500 Rs Ind. (US $31) for

the telecentre owner after settling general expenses of approximately 4,500 Rs. Ind. (US $93).

Drishtee’s model demonstrates its commitment to facilitate the economic sustainability of its

franchisee telecentres. Drishtee reported achieving this milestone in 2004. Sarvodaya-Fusion

offers services, provides help desk support, and guides its telecentre operators toward reaching

economic sustainability. ATN works with diverse organizations to arrange a package of services that

helps its 4,000-member national telecentre network pursue economic sustainability.

Key learning: Incorporation of economic sustainability as an integral element into the organizational

vision and mission is essential for a telecentre network to materialize sustainability.


Enabling Management Environment

After spending almost ten years improving its telecentre model, Sarvodaya-Fusion turned to the

Nonprofit Enterprise and Self-sustainability Team (NESsT), a social enterprise capacity-building

organization, for expert assistance. Fusion simultaneously hired a dedicated Business Development

officer to work as NESsT’s counterpart in order to develop new social enterprise activities that

would help to sustain Fusion’s telecentre network. The process took nearly two years to develop

business plans that begun execution since early 2008.

Shared goals and mutual understanding were the primary

strategies ATN used to motivate community leaders to

become partners in a common agenda.


Drishtee enjoys more support, employing a cadre of 84 staff members to execute its action plans,

and its executive staff and board members have substantial professional and business experience.

Grameenphone CIC ensures it will have a competent staff by requiring at least graduate-level

qualification in telecom, ICT, or business management disciplines. Furthermore, the organization

taps into the expertise of its mother organization, GrameenPhone, to help it carry out effective

promotional campaigns.

Box 2.4: A model experimented by Drishtee made an effort to improve location and entrepreneur selection process to set up telecentres

Location selection and entrepreneur selection involve a meticulous process. Drishtee had

experimented a model called the “ICT segmentation model” to identify feasible kiosk locations. The

model considers multiple variables under three themes: (1) rural dynamics, (2) rural economics and

(3) rural infrastructure. The values given to each variable assess the locations based on a viability

scale. The scale categorizes each location as unsustainable, sustainable, viable, or profitable.

Entrepreneurs are selected based on the following set of criteria:

Above 18 years of age

Minimum education through 10th year of school

Demonstrated entrepreneurial skills

Ready to sell Drishtee’s services to rural populations

Has a drive for community development

Self-motivated and a personal goal-setter

A proven multi-tasker

Is a good human being who believes in “Service before Self”

(Source: www.drishtee.com)

•

•

•

•

•

•

•

•


Financing the operations through diverse sources is a constant priority for the telecentre networks

studied. Successful networks tend to avoid dependency on a single financial source, instead

maintaining diverse financial resources. For instance, Drishtee derived its core capital from equity

investments, yet, they also tapped into philanthropic donors to carry out research activities.

Likewise, Grameenphone CIC was supported by the GSM Association during the pilot stage of

its telecentre initiative. ATN was set up by spending state resources, but tapped into corporate

donations in order to expand the programs it offers.

Spending sufficient time and resources for research and improvement was another common

characteristic found among the networks studied. One typical research project took place in

2005 when Drishtee created the “ICT Segmentation Model” to assess the viability of potential

telecentre locations. Similar research carried out in 2007 lead Drishtee to introduce Business

Process Outsourcing (BPO) into its telecentre network, as discussed earlier. Sarvodaya-Fusion used

a strategic alliance with Sri Lanka’s leading ICT university, the University of Colombo’s School of

Computing, to lead its telecentre design process and, subsequently, to test the viability of Wi-Fi

applications in rural settings.

Key learning: Systematic improvement of the management environment (resources, structure,

competencies, and capabilities) of the operation is essential to seek sustainability.

Exploring Untapped Market at Bottom of the Pyramid

The typical mid-sized village in India has a population of about 6,200, 60 percent of whom depend

on agriculture. Only 26 percent of such villages have electricity and, of those, electricity was so

limited that it was available for as few as three hours per day in some places. The average adult

literacy rate in the villages is 52 percent and only about 10 percent of the community holds bank


accounts. Average village households earn less than US $50 per month, 40 percent of which is spent

on food. Despite these severe challenges, Drishtee strongly believes rural India is still an untapped

market for low-cost telecentre services, having a US $10 to $12 billion market potential (Drishtee,

2007).

In 2006, after six years of hard work, Drishtee reached the cash flow break-even point for the

core organization. Drishtee generates its revenue via its network of more than 1,000 kiosk-based

telecentres operating in eight estates, by delivering services to rural village communities.

Karishma Kiri of Microsoft Unlimited Potential Group led a team of researchers between 2004 and

2006 to study the business potential of for-profit rural kiosks (telecentres) in India. At the time

more than 9,000 customers had been surveyed by 300 kiosks belonging to n-Logue and Drishtee in

13 districts. Among them 77 (88 percent) of operators reported profits of less than US $40 (2,000

Rs. Ind.). The project’s major revenue driver had been ICT education while other services, such

as digital photography, e-governance services, web browsing and emailing, also generated some

income. Development services offered by kiosks, such as e-governance and healthcare services,

are reported to be popular with farmers, housewives, and unskilled laborers. Research reported

the participation by low-income households earning less than US $40 (2,000 Rs. Ind.) per month,

though a gradual increase was seen by households earning more than US $165 (8,000Rs. Ind.). The

average kiosk customer spent US $2 to $4 (100 – 200Rs. Ind.) per month (Kiri & Menon, 2007).

In Sri Lanka, 80 percent of the population lives in rural areas, which accounts for the 88 percent

of the poor (World Bank, 2008). The population living below US $2 a day is estimated to be four

million. Yet, 41 percent of these poor people own a phone, and 22 percent of them are on mobile

phones (Samarajiva, 2007).


Such hidden resourcefulness at the bottom of the pyramid is evident in the voluntary contributions

made to develop Village Information Centers by rural communities. Sarvodaya-Fusion estimates that

the average VIC generates about US $100 for each US $66 spent by Fusion to train leaders to set up

VICs. Such resources are raised by leveraging ongoing development programs (e.g. microfinance),

encouraging local donations, and tapping into community savings.

Key learning: Sustainability champions recognize the hidden opportunities within the bottom of

the pyramid communities, despite the lesser resourcefulness of the sector, and strive to convert

such opportunities into financial revenues.

Systematic Planning

“Select the right entrepreneur with the right location, train and supervise him/her well, facilitate

a fair loan, provide the right services and business tools – and there is a good chance that the

entrepreneur will have a profitable business. A profitable business is a sustainable business.”

Quoted by Dwight Wilson of the OneRoof (telecentre network), San Francisco, USA, in Telecentre

Magazine (September 2008).

The telecentre models developed by Drishtee, Grameenphone CIC, and OneRoof are all heavily

reliant upon entrepreneurial telecentre ownership. To become a telecentre franchisee under

Grameenphone CIC, each telecentre owner undergoes financial due diligence checks covering three

years of operating records and then must pass two rigorous interviews. A selection committee uses

the interviews to gauge leadership qualities, entrepreneurial qualities, aptitude, self-motivation,

experience, strategic priorities, life issues, and delivery capacity, among other factors that may

affect the candidate’s suitability for the position.


The market potential of the location where the telecentre would be installed is the second most

important factor that champions seriously consider. During the vetting process for ICTA’s Sri Lankan

Rural Knowledge Centers (an entrepreneurial telecentre model), the organization checks four

specific criteria:

a) Size of the local population (a minimum of 2,000 to 5,000 people)

b) Availability of a fixed market within a five-kilometer radius (as an indication of economic activity

in the zone)

c) Presence of a school with a minimum of 300 students

d) Availability of electricity (ICTA, 2007; Liyanage, 2005).

Drishtee tested a comprehensive analytical tool called the “ICT Segmentation Model,” developed

by their research team to assess the viability of a particular location for a telecentre. In the model,

key variables are grouped as a) Rural dynamics, b) Rural economics, and c) Rural infrastructure.

Between zero and ten points were then awarded to each variable, categorizing them as profitable,

viable, sustainable or unsustainable, in order to judge the suitability of the location (Drishtee,

2007). In the estate of Assam, the assessment classified only 11 locations as profitable and 600 as

sustainable out of the 2,468 villages (gram panchayats) surveyed in 2005 (Drishtee Foundation,

2008).

Key learning: Planning is an integral part of the operation. Sustainability champions carry out

systematic planning and continue to review them.


Box 2.5: Telecentre equipment package and monitoring

The telecentre equipment package is another important factor decided by each champion

after meticulous planning based on multiple review processes. One common choice among the

organizations surveyed is a limit of two to four computers per telecentre, except for a handful

(for example, ICTA’s Distance Education & Learning centers, where ten computers are offered).

Internet provision, however, differed among the networks. Sarvodaya-Fusion notes little demand

for the Internet among its clients and therefore does not offer Internet access. Grameenphone CIC,

however, considers providing Internet access an important element, as its revenue model is built

on the Internet.

OneRoof, Drishtee, and Grameenphone CIC have created or adapted online monitoring systems

to monitor the performance of their telecentres. Drishtee has a Management Information System

along with the Drishtee Portal, which provides access to the franchisees. Fusion monitors the

performances of its telecentres on a weekly basis—though not online—tracking visitor attendance,

the delivery of telecentre services, revenues, and outstanding balances.

Focus on Marketable Services and Products

“Typesetting, word processing, Excel account sheets – all these services were not available

to our communities before we set up the telecentre. Computers and Internet already provide

them something new. Why do we need any more services?” – telecentre leader at workshop, in

Sri Lanka.

“Are you sure those are the needs of the community you serve?”

The question raised by the workshop facilitator opened the eyes of a group of telecentre operators,

who were quite frustrated with the fact that their services were not earning the revenues

expected.


Ananya Raihan and his team at D.Net carried out extensive research surveys showing that poor

Bangladeshi communities, with basic educational skills at best, nonetheless required information

services to protect their health and improve their agricultural practices. The Mobile Lady concept

had been an innovative response to overcome the barriers posed by lack of literacy and technical

knowledge. Mobile Lady traveled from village to village offering tailor-made information services,

such as pH measuring, crop treatments, and medical information, extending tailor-made ICT

services way beyond those offered by traditional telecentres.

Box 2.6: Subsidy vouchers to promote community participation at telecentres

In 2004, Sarvodaya had undertaken a consultancy project to design a subsidy voucher for ICTA, with

the goal of attracting more rural customers to telecentres. The design resulted in two vouchers:

the SPV (Specific Purpose Voucher) and the APV (All Purpose Voucher), targeting two different

community groups (the SPV for school children and the APV for adults and unemployed youth). The

vouchers were designed to offer different services available at the same telecentre.

The vouchers proved capable of attracting multiple customer categories (school children,

unemployed youth, adults) to use the center during different time periods of the day (Figure 2.1).

Due to the voucher system, the total customer number increased fourfold. By 2008, the design had

been rolled out around the country in about 100 Nenasala.

Figure 2.1: distribution of customer attendance of telecentres throughout the day on both weekdays

and weekends.

(Source: Sarvodaya Consultancy Report, 2004)


Satyan Mishra and his team at Drishtee relentlessly searched for appropriate services for rural

communities in India when creating their model. An example of one of their innovations is a

web-based matrimonial service package (Vaivahiki) designed to find appropriate marital partners.

“Gram Daak” (village mail) was an e-mail-based “postal” service designed to speed message

delivery beyond that available by the inefficient “snail mail.” “Gram Haat” (online auction place),

was a specialized online marketplace to sell domestic animals, bicycles, etc. (Drishtee, 2008).

Though such services were designed to cater to community needs, Drishtee recognized that they

were not profitable enough on their own to meet the substantial expenses of telecentre operations.

Such services alone could not meet the US $125 (6,000 Rs Ind.) revenue target that was estimated

as the reasonable monthly revenue for a Drishtee telecentre. With persistent efforts to improve

profitability, in 2007 Satyan’s team identified more than 12 unique new products and services.

Key learning: Services and products are expected to serve the needs and wants of the target

communities, and in turn, provide an opportunity to earn revenue for the operation. Sustainability

champions make continuous efforts to improve the package of services and products.

Exploring Social Investors

“Eight years ago, there were so few large-scale telecentre models that it could be argued that

subsidies or philanthropic donations were needed to jumpstart the field. We are well beyond that

argument today. While rural telecentres remain a challenging business, there have been enough

successes. And there is a deep enough body of knowledge regarding services, infrastructure, training,

selection of entrepreneurs, etc., which is why we need to focus on improving access to loans rather

than focus on subsidies and donations”- Dwight Wilson, CEO, OneRoof, San Francisco, USA, quoted

in ‘Telecentre Magazine in Sept. 2008. Such conviction helped OneRoof open telecentre networks

in India and Mexico.


Telenor is a Norwegian telecommunications organization providing mobile connectivity in twelve

countries across Europe and Asia. In 2005, Telenor held a competition among its internal staff

to search for new business ideas. One leading idea that captured the eye of senior managers

was to introduce Internet services to rural communities by establishing cyber-centers using newly

introduced EDGE technology (Enhanced Data Rates for Global Evolution). Grameenphone CIC, the

biggest corporate sector telecentre network in the country, is the result of Telenor’s investments

(along with GSM2 Foundation) to pilot test this idea.

Acumen Fund, is a non-profit global venture fund that employs entrepreneurial approaches to

solve the problems of global poverty. Concentrating on the health, water, housing, and energy

sectors, Acumen makes investment decisions based on social impact, scalability and sustainability.

A product or service is deemed to have social impact if it addresses a critical need at the bottom

of the pyramid. Sustainability implies a clear business model that shows potential for financial

stability within a five-to-seven-year period. Scalability denotes the capacity of a business to reach

approximately one million end users within a five-year period (Acumen, 2008).

Acumen’s involvement in the telecentre sector began in 2006 when they invested US $1 million in

equity so that Drishtee could develop health services to be provided through telecentres. In 2007,

they made US $600,000 of further investments in a Drishtee subsidiary.

Key learning: More investors are recognizing the telecentre market and bottom of the pyramid

market as places of potential economic promises. Hence, investors are entering into this industry

sector, which in turn provides more options for the telecentre and network operators to seek

financial resources.

2 GSM - Global System for Mobile communications, originally known as Group Special Mobile

The Silver Lining of the Sustainability Cloud | ��

The silver lining of the Sustainability cloud

CASE STUDIES

ATN – Brazil:

Building partnerships for telecentre sustainability

Drishtee – India:

Tapping the bottom of the pyramid

D.Net – Bangladesh:

Exploring the knowledge market at grassroots

Grameenphone CIC – Bangladesh:

Telecentres as a corporate social responsibility

Sarvodaya-Fusion – Sri Lanka:

Evolution of a social enterprise

Chapter 3


Building Partnerships for Telecentre Sustainability

ATN – Brazil

Abstract

Telecentre Association for Information and

Business (Associação Telecentro de Informação

e Negócios), popularly known as ATN of Brazil,

is a public interest civil society organization

created to support a telecentre network

formed by Brazil’s Ministry of Development,

Industry and Foreign Trade. The association

was set up in 2006 with a mission to serve

for the development and sustainability of

telecentres throughout the country.

Box 3.1: Country fact sheet

Total Population – 191.6 million

Urban population – 85%

Literacy (% population age 15+) – 89%

Poverty (% population below national poverty line) – 22%

Primary school enrolment – 137%

Major issues: Reduction of poverty and inequality

GDP growth (2006 – 2007) – 5.4

GDP per capita growth – 4.2


Capitalizing on its close affiliation with influential entities within the federal government, ATN

explore alliances with local government authorities, corporate sector partners, and NGO partner

institutions all around the country. Then the organization systematically facilitates win-win

partnerships between multiple stakeholder institutions, with the goal of developing a package

of services and products to be delivered by telecentres. Such partnerships are brokered through

a diverse set of business models; thus, both telecentres as well as partner institutions generate

revenues while delivering services to their local communities.

During the past two years, ATN has managed to influence 4,000 telecentres belonging to ten partner

organizations, including both private and non-profit institutions as well as state governments and

the military3. ATN continues to expand its network with the aim of reaching all 15,000 telecentres

currently functional in the country.

Background

As early as 2001, the Ministry of Development, Industry and Foreign Trade launched a project titled

“Telecentres for Business and Information” with the participation of private sector institutions.

The project started with donations of “end-of-life” (used) computers from private companies and

banks to entrepreneurial grassroots leaders. The objective was to provide digital opportunities to

poor communities, which rarely benefited from e-governance advances widely offered by state

institutions.

The project spurred the creation of 45 entrepreneur-owned telecentres at the initial stage, which

subsequently scaled up to more than 1,000. The telecentre model was based on a basic business model

requiring the telecentre owners to invest in part of the package, such as a server, the location, and the

cost of management, while ten computers, Internet access, and training were provided by the ministry. As

of early 2008, there were more than 15,000 functioning telecentres in 5,553 municipalities in Brazil.

Note: statistics and contextual notes documented in this case study, unless otherwise stated, are current as of

May 2008, when the final interviews were carried out with ATN senior officials.

3 Every Brazilian has to undergo one year of military training. There are 132 telecentres in these military bases;

thus, citizens automatically get exposure to ICTs during their military training.


In the meantime, public exposure to ICTs has been widely increased by the growth of cybercafés

across the country. In 2008, there were about 50,000 cybercafés, popularly branded either as LAN

houses or Internet cafés. LAN houses are known for computer games, entertainment, and chat

services, whereas Internet cafés are popular with more advance Internet users for their focus

on information services, such as providing access to online newspapers and information searches

for students to research school projects. Cybercafés are a thriving business in Brazil, with an

estimated 20 to 22 million people using them per year and minimum annual revenues of US $15-

$20,000 per café. Given the profitability and relatively small investment cost, small private owners

continue to add to their numbers in local townships, while two major corporate partners dominate

the market.

These cybercafés are equipped with state-of-the art equipment, and run by very competitive

business models, attracting youth and computer-literate adults as their primary customers.

Cybercafés currently outnumber telecentres and are thus becoming a heavy competitor against

telecentres. In Sao Sabastião, Brasilia, there are about 15 cybercafés within the community

of 135,000 people where 80 percent earn less than 600R$ (US $252) a month. Within the same

environment, four telecentres set up by the state government, aiming to support the development

of poor communities, struggle to market their services under heavy competition by cybercafés.

Problem they Addressed

There are approximately 15,000 telecentres in Brazil’s 5,553 municipalities. Most of them were set

up within rural communities since 2001 by the federal government or by state governments. The

primary objective of these telecentres is to serve poor communities, provide access to digital tools,

and facilitate empowerment. These telecentres have local ownership models with diverse forms of

ownership structures. Some telecentres are operated by NGOs whose core competency and primary

goals are neither ICT nor enterprise development. As these telecentres struggle to sustain their

operations, their owners have complained to the ministry about the difficulties they face.


On the other hand, many rural communities do not have sufficient access to IT-based educational

and other e-services offered by the state and other institutions. For instance, fewer than 200

universities serve 5,565 cities of Brazil. The city of Socorro has one university, yet its offerings

were limited to only two courses. Yet, on the other hand, the University of Metropolitan Santos

(UNIMES - based in São Paulo) offers 14 online courses for the undergraduate level and nine courses

for the post-graduate level. Despite the fact that telecentres were well-positioned as a potential

connecting point between these two entities, the connection has never been made.

The ATN ModelSince its inception, ATN focused on three major aspects:

a) Policy improvements

b) Capacity-building for telecentres

c) The addition of marketable services and products.

The ATN served as a broker between multiple institutional partners with the potential to influence

the sustainability equation of telecentres, thereby redirecting the revenue streams, which were

already existing in the vast Brazilian market.

Policy Improvements

In January 2007, just six months into operation, ATN capitalized on its relationship with its founder—the

Ministry of Development, Industry and Foreign Trade—with a groundbreaking technical cooperation

agreement. The agreement empowered ATN to provide a two percent tax benefit to donor organizations

and corporate institutions that supported telecentres (as micro and small enterprises).

In April 2007, ATN signed an agreement with Caixa, the second largest public bank of Brazil that enabled

ATN to become a master representative of the bank. Through the agreement ATN was able to enter

into contractual agreements with telecentres on behalf of the bank to deliver potential services via

telecentres.


Capacity-building

The Technological Development Support Center (CDT) of the University of Brasilia signed an

agreement with ATN in October 2006 to provide capacity-building programs for telecentre operators

in the subjects of entrepreneurship, planning, monitoring, and network management.

After a year-long negotiation process with Microsoft’s Unlimited Potential community affairs

team, ATN signed agreements worth US $33 million in December 2007, to donate 40,000 software

licenses for Windows, Office 2003, and SharePoint. These donations removed a liability and helped

telecentres to offer legitimate computer services, which otherwise had been under condemnation

by the Brazilian Software Engineering Association—Brazil’s software intellectual property

watchdog—due to the telecentres’ heavy use of pirated software.

Networking and Partnership Building

As early as 2006, ATN started an institutional partnership with the Brazilian branch of the US computer

chip maker, AMD, to support the company’s “50 X 15 strategy.4” This partnership was not based on

any particular financial agreement, but was rather designed to promote the mutual interests of both

organizations. The high-profile partnership helped ATN attract new partners, such as The Bradesco

Foundation5, Microsoft Unlimited Potential, and Peabirus6. Furthermore, the partnership provided

ATN with access to expert AMD advisors who helped the ATN team formulate business models to

secure subsequent partnership engagements. In return, the chip maker was able to include ATN’s

large scale initiatives as evidence of its progress toward AMD’s “50 X 15” mission.

4 AMD’s 50 X 15 program is a global initiative to extend the internet accessibility to 50 percent of the global population by 2015. The initiative is carried out in partnership with multiple stakeholder institutions around

the world. 5 Bradesco Foundation is the philanthropic arm of the country’s largest bank, Bradesco. The foundation has

provided 10,000 refurbished computers to ATN’s telecentres. 6 Peabirus is a social networking site in Brazil.

The Silver Lining of the Sustainability Cloud | �0

ATN has signed various partnerships with state government institutions with existing telecentre

projects that have helped to expand the ATN telecentre network. For instance, the Minas Gerais

state government struck a deal to provide its 300 telecentres with access to the suite of ATN services

in order to support the sustainability of the telecentres. Such agreements expand the number of

telecentres under ATN’s influence, increasing its clout when striking service partnerships.

ATN also competes for government bids, in order to provide service opportunities for its member

telecentres. For instance, ATN won a project bid worth US $250,000 (598,000 R$) from the Youth

Secretariat of the State of Pernambuco, to offer 10,000 youth scholarships for IT training to be

offered at 40 telecentres.

Services and Products

With the contract agreement entered in September 2007 with the University of Metropolitan Santos

(UNIMES), most of the telecentres located countrywide were able to become affiliated units of

the university, thereby offering accredited e-learning courses. These services attract hundreds of

school children and teachers.

ATN’s agreements with Caixa enable affiliated telecentres to offer bank-affiliated services, otherwise

only available in bank branches via rural telecentres. Two types of services are offered:

a) Transactional services: enabling consumers to conduct financial transactions, such as paying

utility bills at telecentres

b) Banking services: enabling telecentres to provide official documentation on current accounts,

accept loan applications, and provide other services on the bank’s behalf


ATN’s partnership with Gera Negocios (Generate Business), a private institution, provides

online courses on informatics and entrepreneurship via telecentres. The courses are relatively

inexpensive and consist of less sophisticated self-learning material. They allow telecentres to

target a different segment of the community, including rural artisans, small entrepreneurs, small

traders, etc. Students register with Gera Negocios through their local telecentres and receive

electronic passwords to access the services from the telecentre.

Another partnership with GetNet, the private organization that offers prepaid card services for

four mobile operators in Brazil, was due to be signed in 2008. The outcome would make telecentres

prepaid card-selling agents, positioning them to serve the 100 million existing prepaid card users in

the country. GetNet places a prepaid card sales machine registry at each telecentre, which records

each sale so that ATN can monitor card sales on behalf of GetNet.

Multiple Business Models

ATN negotiated commission-based business models for each business partnership, which had the

potential to generate substantial revenues. In each negotiation, the agreement was designed to

pass the major portion of the financial benefit to the telecentre, while also keeping a portion for

ATN to ensure its own institutional sustainability.


7 The partnership agreement between GetNet and ATN was about to be signed at the time of the interview carried out with ATN (March 2008). The services are expected to begin at the end of 2008

Table 3.1 provides a detailed account of the variety of business models ATN negotiated with each

partnership.

Table 3.1: ATN negotiated various partnership models, services, and fee structures

Partners

• UNIMES

• CAIXA

• Gera Negocios

• State Govern-ment of Pernam-buco & Gera Negocios

• GetNet

Services offered

23 types of university courses (online) through telecentres

1. Transactional modality: consumers pay utility bills at telecentres

2. Banking services modality: telecentres carry out various bank services

Offering online training courses through telecentres. Student registers online (at telecentre), and receives a password from Gera Negocios.

State Government offers grants to train 10,000 youth, on basic IT & internet ser-vices. Courses designed by Gera Negocios, offered at 40 telecentres

Selling prepaid cards (for mobile phones) at telecentres.

Fee structure

For each student, UNIMES will pay 20% of commission to telecentre, 5% to ATN.

Telecentre receives 20 cents for each transaction and ATN receives 5 cents.

Various models: For bank account opening, telecentre re-ceives US $1.5 (4 R$) & ATN receives US $0.40 (1 R$) / account.

For accounts for business operation, tel-ecentre receives – US $6 (14.40 R$) & ATN US $1.50 (3.60 R$)/ act.

For loan application processing, telecentre receives – 1.6% of total value & ATN re-ceives 0.4%.

Gera Negocios – provides the overall ac-count (on each course and students) every month,.17.5% of commission goes to tel-ecentre and ATN receives 7.5%.

Revenue divided between parties on the basis of 25% to ATN, 45% to Gera Negocios, 15% to telecentre. (Balance of 10% to buy training material & 5% for taxes).

Telecentre receives 5% of the commission and ATN receives 0.5%.


Financial performanceAs ATN is affiliated with the state, the organization does not have the same familiarity with phil-

anthropic donors as NGOs do. During 2007, ATN generated only three percent of its annual revenue

from donors. Interestingly, 58 percent of resources were generated from the corporate sector

during that year, compared to 38 percent from state sector funds (Table 3.2).

Table 3.2 – Financial performance of ATN

Note: Figures are approximated at the rate of 1R$ (Brazil Reais) = US $0.42

Source: ATN Account records, (provided during interviews) Data updated in March 2008

Sources of Financing 2007 2008 (current) 2009 (Next year fiscal forecast)

External revenue

Foreign / international donors US $5,000 0 (no projection)

Public sources (Federal + localstate gvt.)

US $27,400 US $97,000 US $147,000

Corporate grants US $42,100 US $105,300 US $126,400

In-kind Donations

1. Software licenses from Microsoft US $521,000 US $4,261,000 US $28 million

(7,150 licenses ) (31,000 licenses)

2. Refurbished computer donations from Bradesco Foundation

US $1.7mil (4 mil R$) (8,000 computers)

Self-Financing (Internal Revenue Generation)

Fees for service(s)

1. UNIMES (Online courses) US $17,000 US $25,200 US $37,900

2. Contracts with various state governments and ministries

US $18,500 US $63,100 US $84,100

3. Contracts with Ministry of Development, Industry & Foreign

- US $33,600 US $67,300

4. Dividends from investments (invested in Bank of Brazil as a fixed saving)

US $5,500 US $6,700 US $7,600


ATN generated US $35,500 (84,000 R$) by delivering services, raising nearly equal proportions from

the public and private sectors. Ironically, despite five contractual agreements in place to generate

significant proportions of revenue, ATN’s 2009 revenue projections were weighted heavily towards

the state sector (80 percent) rather than the corporate sector (20 percent). This is in large part due

to the fact that most of the service contracts signed with corporate sector partners were still at the

pilot level of implementation; thus, ATN did not have sufficient data for future projections.

Staff

ATN is governed by a general council of 58 members representing public, corporate, and academic

sector institutions that are actively involved in digital inclusion projects in Brazil. A fiscal council

and executive board is elected by the general council for four-year terms. The executive board is

formed by a director general, an administration and finance director, and an operational director.

The executive board, together with another three additional members, forms the fiscal council,

which was currently composed of an ex-ambassador, the president of a research institution, and

the president of a library workers’ union (Table 3.3).

The executive board manages the overall operation. Although there are only two ATN staff members

to support them, they are able to derive support from their own staff at the ministries where they

hold their primary jobs.

Table 3.3: Human resource capacity of ATN during 3 consecutive years

2008 2007 2006

Full-time paid staff 2 6 2

Members (organizations) 58 58 58

Trustees/Board members 3 3 3


ATN’s ChallengesOver-reliance on Key Individuals

ATN’s operation heavily depends on three individuals: José Avando, the Director General, Fernando

Portella, the Administrative Director, and Renato Júnir, the Operational Director. All three hold key

responsibilities for ATN, while carrying out their other responsibilities in the government ministries

they report to. Yet, their passion and devotion to ATN drives its overall success. A fourth individual,

Professor José Rincon Ferreira, the visionary leader and Director of Technological Articulation in

the Ministry of Development, Industry and Foreign Trade continues to play a critical visionary role

behind the overall institution and its performance. Thus, ATN seemed to be depending too much on

influential, high-performing individuals rather than its institutional strength at the time of study.

Entrepreneurial Capacity: ATN’s human resource pool is heavily composed of executives whose

primary experience is in the state sector. Though the organization has performed well with its current

management team, recruiting a more balanced assortment of talent may help spur entrepreneurial

capacity. Furthermore, given the scale of revenue generation and financial performance related

to current contractual agreements, more performance monitoring structures may be required in

order to support organizational performance in the future.

Case Studies of Brazilian TelecentresCase study 1: The Low-income Family Association

The non-profit Low Income Family Association’s (LIFA) telecentre of Sao Sabastião, Brasilia started

in 2006 with the help of the Ministry of Development, Industry and Foreign Trade. LIFA’s main

objective is community development for low-income families earning less than 600R$ (US $252) per

month. In order to achieve that objective, LIFA carries out micro-enterprise programs with about

200 families.


LIFA’s telecentre was a result of their request to ministry, upon the realization that the low-income

communities it served were eager to access the Internet and IT services, but could not afford to

visit the 15 cybercafés available in the city of 135,000 people.

LIFA used the ten computers donated by the Ministry to offer ICT skill-building programs through its

newly-founded telecentre. The organization offered a three-month basic MS Office course for US

$6 (15 R$/ month) and use of a computer with Internet access for US $0.4 (1 R$) per hour. There

were about 65 students enrolled in the courses at any one time and a daily average of 10 people

accessing the Internet for about one to two hours each.

Table 3.4: Income/expenditure analysis for a 1-month operation of the telecentre

IT training (65 Students – 65 x US$ 6.3) US $410

Internet – 10 people / day 1-2 hours avg. (22 days X 10 X 1 R$) US $93

Total income US $503

Staff salaries US $190

Utility bills US $25

Rent US $168

Water US $10.5

Internet and Telephone US $71.5

Total expenses US $465

Gross Profit US $38

Note: Figures are approximated at the rate of 1R$ (Brazil Reais) = US $0.42


After deducting utility bills and staff salary for one full-time telecentre operator, the telecentre

barely makes a monthly profit of US $38 (90 R$).

Although there is a constant demand for the IT training courses, like many telecentres, the

organization was under pressure from regulatory bodies for its failure to comply with proprietary

software agreements. The organization found itself in a catch-22 situation, as it was unable to

afford legitimate licenses, given its poor financial revenues, and was therefore unable to offer

more courses based on the same software, which would otherwise allow it to pay for the necessary

licenses.

Microsoft software donations, being arranged by ATN, are expected to make a big difference to

their business model. They would enable them to offer courses to many more students, thus

generating more revenue at no extra cost.

Furthermore, with the support of ATN, LIWA was about to receive the training and resources

necessary to offer financial services in partnership with Caixa Bank. LIWA believes the services

would attract more customers to their telecentre, thereby considerably increasing revenue across

operations.

Case Study 2: Centro de Ensino a Distancia

Centro de Ensino a Distancia (Center for Long Distance Learning) of Socorro, São Paulo is a busy

medium-scale e-learning operation. The organization has a telecentre equipped with 11 computers,

4 lecture rooms equipped with state-of-the-art satellite-based distance learning facilities, and a

small administration space. The place is full day and night with 400 students—both young people

and adults—coming from long distances in order to connect to their online education classes.

These include 17 courses, through the graduate and post-graduate levels, offered by the center in

affiliation with the University of Metropolitan Santos (UNIMES).


On average, students pay a monthly course fee of about US $82 (195 R$), and a single course

lasts for three to four years. Thirty-five percent of the fee for each course is paid to the center,

generating an average of about US $11,492 (27,300 R$) in monthly income for the telecentre. After

settling the utility bills, rent, and staff payments, the telecentre was able to earn a gross profit of

US $6,315 (15,000 R$) from offering the courses.

The story is a great example of the importance of value-added services to achieve reasonable

profits for a telecentre. Although the telecentre was initially set up in 2005 by the town’s Chamber

of Commerce and the original 11 computers used were still kept busy providing Internet and

IT services, the center’s only real economic success was generated by the introduction of the

distance learning courses.

Centro de Ensino a Distancia is one of the 132 telecentres that collaborated with UNIMES to start the

virtual university three years ago. Since then, the courses have served over 10,000 students. About

90 percent of these students are school teachers between 25 and 44 years of age, who are intent

on improving their teaching skills and educational qualifications. The virtual university offers 29

courses in all, including classes in business administration, accounting, pedagogy, and history. The

university has a monthly target of 3,000 students in order to break even with its operational costs,

and recognizes agreements with telecentres as one of its strongest outreach models.

Case Study 3: LAN House at Sao Joao

Located at the end of a small town of Sao Joao Da Alialiance, in the State of Goiás, LAN house is a cybercafé,

not a telecentre. A private investor living in Brasilia started LAN house with an initial investment of US

$12,000. The investor owns a number of LAN houses, which now form a small network.

The cybercafé is colorfully designed and illuminated and is equipped with ten computers—all are


the latest flat-screen models—connected through a local area network with Internet access. A small

cafeteria sells coffee and snacks in addition to CDs and other IT accessories needed by clients.

Services offered are limited to Internet browsing, word processing, and printing. Given the high

demand for music downloads, CD burning is allowed for no extra charge, but it is compulsory to

buy CDs from the café. A set of popular games (downloaded from the Internet) are available for

children and youth to play. All the services are priced with two different rates for day and night.

Most users reportedly enjoy chatting and networking using Brazil’s most popular social network

site—Google’s ORKUT application—which far outperforms Facebook in Brazil.

The entire operation is managed by one youth, a feat that is possible because no training or

assistance is provided to the customers, other than occasional technical help.



Total Population – 1,123 million



(World Bank, 2008a)

Poverty (% population below US $1 a day) – 33.5%


Major issues: maternal and infant mortality

GDP growth (2006 – 2007) – 8.4%

GDP per capita growth – 7.7%

(Sources: World Bank, 2008a; UNDP, 2008)

Tapping the Bottom of the Pyramid

Drishtee, India8

Abstract

“Bottom of the Pyramid” (BOP) communities

have historically been regarded as poor

potential markets because they are comprised

of families living below US $2 per day. Such

perceptions drive away potential investments

in these communities, thus depriving them of

economic opportunities. Drishtee Development

and Communication Ltd. is a for-profit

organization with a social objective, clearly

focused on exploring win-win partnerships

that stimulate economic growth. Since 2001,

Drishtee has invested in Internet kiosks as rural

centers for creating employment opportunities and providing advanced access to services


for rural populations. Drishtee’s network reached nearly 4,000 kiosks by 2008. More importantly,

Drishtee mastered the art of delivering value-added services and products relevant to the

communities where it placed its kiosks, thereby helping to improve the income, savings, and buying

power of the rural towns. In turn, the value-added services and products provided a strategy for

sustaining both its kiosk-based telecentres and the core organization itself.

Background

India, the largest democracy in South Asia, grabs global attention with its impressive development

growth rate of 8.4 percent. The ICT sector contributes to its growth, helped by the country’s

unique ability to capture the global outsourcing (BPO) market. Nevertheless, the United Nations

Development Program’s Human Development Index (HDI), which measures the relationship between

income and human wellbeing, ranks India 132nd among 179 countries, with an HDI of 0.0609 (UNDP

2008). The poor rating was attributed, among other factors, to low life expectancy, low adult

literacy (61 percent) and high poverty (UNDP, 2008).

Nearly 80 percent of India’s population live in rural areas composed of 600,000 villages with an

average population of 6,000. About 26 percent have access to electricity, although in some places

access is limited to three hours a day. The majority earns below US $2 per day, while agriculture

provides employment for nearly 60 percent of the population.

India has made persistent efforts to bridge its “digital divide.” Large-scale initiatives using ICT4D

tools and training to improve the lives of poor communities have been implemented at the state and

national levels by both governmental and non-governmental organizations. Among the telecentre-

affiliated initiatives, ITC eChoupal, NLogue, Tarahaat (by Development Alternatives), and the MS

Swaminathan Research Foundation (MSSRF) are some distinguished projects to note.

Note: Statistics and contextual notes documented in this case study article are updated only through August 2007,

when the final interviews were carried out with Drishtee senior officials. Some specific data were updated (eg. kiosk

numbers and revenue performance) via follow-up discussions with the same officials in December 2008.


Drishtee’s Institutional Evolution

Drishtee Development and Communication Ltd. was a for-profit company, with a socially-oriented

mission centered on developing India’s rural economy. To achieve this mission, it set up ICT kiosks

in rural villages. The presence of kiosks provided local populations with access to a range of ICT-

based products and services. In addition, the availability of an Internet connection allowed rural

artisans to interact with outside markets. As locally owned and operated centers, kiosks were also

able to provide employment opportunities to rural youth.

Drishtee was initiated as Drishtee.com Ltd. in 2000 as a limited public company designed to deliver

rural services based on its proprietary technological solution. The company’s turning point was

a highly successful online e-governance software consultancy project called “Gyandoot” that it

developed in Dhar, Madhya Pradesh, India, which subsequently won a Stockholm Challenge Award.

Since that project, Drishtee has focused on investing its ICT expertise for the benefit of rural

communities. In 2001, Drishtee managed to set up three kiosks as pilots, which had subsequently

grown to a network of more than 4,000 by 2008.

During its evolution, Drishtee recognized the importance of concentrating on value-added services

and products to be delivered through kiosks, in addition to the traditional core services offered at

telecentres. The company partnered with multiple organizations for that purpose while setting up

its own subsidiary (Quiver InfoServices Ltd.) to develop some specific rural services. As a result,

Drishtee was able to launch telecentre-based services in finance, healthcare, and livelihood

generation through e-commerce. An example of such service is the Drishtee Haat website (www.

drishteehaat.com), an e-commerce online marketplace for rural products. Such value-added

services and products together formed the sustainability model for kiosks.


The Problem They Addressed

Out of 222 million households in India, about 35 million (15.6 percent) fit the “bottom of the

pyramid” category (NCAER, 2008). The group spends an estimated US $8 billion a year on products

and services. Drishtee estimates a US $10-12 billion market across rural India (Drishtee, 2007).

This market segment remains largely untapped due to geographical, social, economic, and

developmental constraints. For instance, rural artisans were connected to the markets through a

chain of “middlemen” who aggregated and sold their goods. Such inefficient middlemen absorbed

the better part of the profits generated through the value chain. Further, the system undermined

the technology transfer, market exposure, and bargaining power of the rural consumer. Thus, the

average household income remains stagnant at US $50 a month despite the hard work done by rural

artisans.

Drishtee’s vision was to explore this untapped market through ICT-based strategies to materialize

win-win partnerships with the poor communities that other companies ignored.

Proposed Alternative

Drishtee’s proposed solution tried to strengthen the existing value chain by increasing its efficiencies.

It did this by implementing a model focused on the following three components:

Rural kiosks

Value-added services and products to be delivered through the kiosks

An e-commerce portal

1.

2.

3.


Rural Kiosk:

The Drishtee kiosk is a small, rural telecentre facility, usually equipped with a minimum of two

computers, an Internet connection, and other basic IT equipment, such as a printer, a digital

camera, and a backup battery (UPS). The kiosks are placed in rural villages, thus enabling the

consumer to interact directly with the kiosk operator. There were over 2,200 kiosks operational

in eight estates of India by the end of 2007, and the company was reportedly adding almost 1,000

kiosks annually into the overall network.

Value-added Services and Products:

Many kiosks deliver traditional telecentre services, including basic computer education, computer-

based English education, communication services, and photo printing.

There are about 12 value-added services and products designed and developed by Drishtee to

be delivered through kiosks. They include education, health, communications, agriculture, and

e-governance services. The company also provides micro-finance services for local enterprise

development.

The range of value-added services offered at kiosks is subject to local demands. In places where

Drishtee can successfully compete with the local market, kiosks sell agricultural products, such

as seeds, pesticides, and fertilizers. In areas where access is remote, Drishtee enables kiosks to

sell an assortment of products known to be of interest to its target clients, such as insurance

packages (life, motor, and crop), mobile phones, mobile recharge vouchers, eyeglasses, and

battery-powered lights.


e-Commerce Portal:

Kiosk operators are eligible to access the online portal (http://ind.dristee.com) that opens up a

broad array of services. It is a user-friendly online service delivery network built upon a dynamic

database, run in both the Hindi and English language. The portal is uploaded regularly with new

services.

The other portal, Drishtee Haat9 (www.drishteehaat.com), is an online marketplace to showcase

rural artisan goods to metropolitan and international markets. Producers are invited to upload

images and information about their products, enabling the artisans to reach worldwide buyers

online.

The Business Model and its Evolution

Drishtee’s business model was a complex one due to its evolving nature and the innovative

experiments carried out by the company on an ongoing basis. Within this evolving context, their

business model for kiosk operation was founded mainly on two revenue sources:

A one-time franchise fee (when the kiosks went into service)

Transaction fees (commissions) from the value-added services offered by the kiosks

The franchise arrangement was such that the kiosk owner would pay the license fee to access

Drishtee brand name, promotions, value-added services, capacity-building support, and micro-

finance arrangements.

9 Drishtee Haat was designed, developed, and managed by a subsidiary of Drishtee - Quiver InforServices Ltd

1.

2.


In the initial stages, kiosk owners had to pay a US $310 (15,000RS. Ind.) initial down-payment,

on a total package worth US $1,445 (70,000Rs. Ind.), which included the basic equipment for the

kiosk’s setup. The balance could be paid in three-year installments. Since April 2006, the model

was changed to a one-time license fee (US $206; 10,000 Rs. Ind.), allowing the kiosk owner to

purchase hardware.

Transaction Fees from Value-added services:

Prior to 2006, kiosk operators did not have much choice of value-added services, other than

traditional telecentre services, such as photo printing and e-governance. Since 2006, Drishtee

invested heavily to improve its service package. The process involved a needs assessment, demand

assessment, mapping of alternative services, pilot testing, and partner identification and rollout.

Drishtee provides services at a fixed price to its kiosk operators, while maintaining variable revenue

sharing models with third-party service providers. Kiosk operators offer those services at a nominal

fee, which generates revenue for overall kiosk profitability.

In order to provide value-added services to kiosks, Drishtee partners with well-reputed organizations

such as ICICI, Amaron, Bajaj, and Microsoft Corporation. (Table 3.5).


Table 3.5: Some examples of value-added services offered and the partner institutions

that make them possible

Service provider Services

Amaron Batteries and related equipment

Bajaj General Insurance Various insurance products

Cyber InfoDev e-governance and various services

ICICI Prudential Various finance products

Kotak Bank & Life Insurance Various insurance and finance products

Microsoft Software

Nokia & Motorola Mobile phones

Oxigen Recharge coupons and bill payments

Quiver Infoservices Ltd. English, computer services, e-commerce

Scojo Reading glasses and eyesight screening

Naveen gram Agricultural products

Prepaid Wallet

The concept of a “prepaid wallet” was introduced in early 2007. A wallet was a fixed amount of

money (about US $83 or 4,000 Rs Ind.) to be paid ahead of time by each kiosk owner for services

to be rendered. The wallet could be used to pay for a menu of Drishtee services and products. The

kiosk owner agreed to top-up the wallet when the amount was depleted by use.

After pilot-testing the model with ten kiosks, approximately 1,300 kiosk telecentres had subscribed

to it by mid 2007. A centrally regulated management information system monitored the wallets,

and a call center provided a help desk to provide assistance with wallet operation.


While the average value of the wallets ranges between US $63 and $83 (3,000 - 4,000 Rs. Ind.), the

value can be altered according to the individual’s transaction volume.

This prepaid model ensures the purchase of services for the short-term future, providing better

financial leverage for Drishtee to organize bulk-service purchases from larger vendors, thus enabling

the company to offer services to the kiosk user at an affordable price.

“Mission 6K” – Telecentre Sustainability Model

With all its services and business products, Drishtee’s primary aim was to ensure the kiosk owners’

sustainability. “Mission 6K” had been one of its institutional missions to build up a robust package

of services enabling kiosk owners to earn minimum monthly revenues of US $124 (“6K” or 6,000

Rs. Ind.). The figure was based on calculations of the expenditures necessary for operating the

average kiosk, including rent, utility bills, loan repayments, and salaries, totaling US $93 (4,500

Rs. Ind.). The US $124 (6,000 Rs. Ind.) gross income target was calculated to include a profit of US

$31 (1,500 Rs. Ind.).

In 2000, Drishtee set itself a target to reach the “Mission 6K” milestone—the date by which its

set of products and services could reliably earn 6,000 Rs. Ind. per month in revenues for kiosk

owners—by 2005. The organization met its goal in 2004. By August 2007, Drishtee’s new kiosk

operators were taking 6 to 12 months to reach the break-even point.

Financial Performance

As with any private company, Drishtee’s major capital investments were derived from shareholders.

The company’s capitalization reached a value of 1.5 mil Rs. Indian (US $30,970) in 2000.

Nevertheless, since 2004, Drishtee also channeled philanthropic funds (including funds donated by

telecentre.org), and venture capital funds (for example, The Acumen Fund) to carry out research


and development activities. For instance, Drishtee pilot-tested the introduction of Business Process

Outsourcing to its operations in 2005 with the financial support of telecentre.org. Such donor

revenues accounted for 26 percent of Drishtee’s overall revenues in 2006 (Table 3.6).

The year 2006, six years into its operation, was a financial turning point for Drishtee. In August

2006, the managing director’s comments on the annual report stated that the “financial year

ending 2006 has been particularly important, because the company reached the (cash flow) break-

even10 point on one hand, and the total kiosk number surpassed the 1,000 mark on the other

hand.”

Overall revenue grew from US $28,000 to US $789,000 over a two-year period from 2004 to 2006.

This growth was attributed to the enhanced revenues from both the kiosk franchise fee and the

value-added services and products. Franchise revenues were expanded from US $7,600 in 2004 to

US $263,000 by 2006.

Nevertheless, Drishtee made a serious strategic shift to reduce its dependence on franchise

fees, by shifting the focus into value-added services. Results of the efforts were reflected in its

proportionate revenues. While overall contributions from franchise fees decreased from 73 percent

to 41 percent between 2004 and 2006, revenue contribution from value-added services increased

from 27 percent to 33 percent during the same period (Table 3.6). The percentage contribution

from value-added services was reported to increase to 56 percent by 2007. These services were

expected to generate 75 percent of overall revenue by 2008.

10 Note: statistics in this case study article are updated only through July 2007 when the original interviews

were carried out with Drishtee senior officials. Some contextual notes, however, were updated via follow-up

discussions, which took place in mid-2008.

The Silver Lining of the Sustainability Cloud | 100

Table 3.6: Drishtee’s institutional revenue performance over 3 consecutive years

(in US$)

Income 2005/2006 2004/2005 2003/2004

Value-added services and product income 263,205 58,893 7,662

Franchise fees 320,900 51,608 20,600

(Donor) Project** income 204,915 261,818 -

Total Revenue 789,020 372,319 28,262

Total Expenditures 746,927 507,804 185,910

Profit / Loss 42,093 (135,485) (157,648)

(Source: Drishtee Annual Reports 2003 - 2006)

**Project Funds include donor funding and equity investments by outside donors: Acumen Fund (equity), tel-

ecentre.org, International Finance Corporation (grants), eBay, Chambal Fertilizer and Chemical Ltd.

Note: figures are approximated at the rate of 1Rs. Indian = 0.0206$US

Human Resources

There are about 84 staff members working full-time for the overall Drishtee operation, including

staff members in 46 field offices. The company’s headquarters is located in Noida, Uttar Pradesh,

and is staffed with 25 people, including five sales staff, four account staff, and two call center

staff (Table 3.7).

Table 3.7: Drishtee’s human resource allocations over 3 consecutive years

2006 2005 2004

Full-time paid staff 84* 108 73

Part-time paid (consultants) 5 3 2

Drishtee business associates 12 0 0

Trustees/Board members 4 4 4

* Some staff members were moved to a newly opened subsidiary.


The member of the four-person board of directors had a mix of corporate sector experiences and a

social enterprise perspective, set on serving poor communities. Satyan Mishra, the founding champion

and currant Managing Director of the organization, had a master’s in business administration (MBA)

and extensive experience in the field of software development. His contributions had been highly

acclaimed with multiple global awards, including an Ashoka Fellowship in 2004 and participation in

the Clinton Global Initiative in 2005.

Challenges

Selecting competent ground-level entrepreneurs remains the biggest challenge for Drishtee. During

the early stages, people had been recruited based on their financial capacity to run a business

focused on the “Bottom of the Pyramid.” Additionally, psychometric tests had been carried out

to select appropriate personalities. But over the years such models had been shifted to more

pragmatic approaches. Now prospective entrepreneurs are given a chance to reach out to the

communities where they hope to do business and show results. Community acceptance, dedication,

passion, and a focus on results are measured in the selection processes.

Nearly 10 percent of kiosks closed down during the company’s early phases. The situation has been

reportedly improved with continuous improvements in site selection, entrepreneur selection, and

the effectiveness of service packages.

Rural infrastructure deficiencies, such as electricity, remain a constant challenge. Uninterrupted

power supplies (UPS) overcome the problems to a considerable degree by protecting hardware

and customer documents, but are not a solution for long periods without electricity. The problem

requires more innovative solutions in areas without reliable access to electricity.


Exploring the knowledge market at the grassroots

D.Net, Bangladesh

Abstract

Development Research Network, widely

known as D.Net, is a registered non-profit,

non-governmental research institution in

Bangladesh. Formed in 2001, the organization

primarily engages in applied research in ICT

for development, poverty alleviation, and

human rights. Based in the capital city, Dhaka,

D.Net implements activities around the entire

country, with a special focus on partnerships

with multiple stakeholder institutions. Although

85 percent of the organization’s financial needs

are still funded by external donors, D.Net is

striving to grow its social enterprise base, expanding from its current 15 percent internal revenue





Poverty (head count rate in year 2000) –

50% (upper poverty line),

34% (lower poverty line)


Major issues: high incidence of poverty & child malnutrition

GDP growth (2006 – 2007) – 8.4%


(Sources: World Bank, 2002; World Bank,

2008c; UNDP, 2008)


towards self-sustainability of the core institution. Such entrepreneurial ambition is conceived with

the help of the devoted core inventors of the organization, who have created unique, award-

winning programs, such as the Pallitathya model and a for-profit subsidiary, Multimedia Content

and Communications Ltd.

Background

Bangladesh, neighboring India in South Asia, is one of the world’s most densely populated nations.

The country’s population is evenly distributed throughout 64 districts, except for three hill tract

districts. With only four metropolitan cities, urbanization is limited to 27 percent of the population,

while 73 percent population live in rural areas, most of whom depend on agriculture for survival.

Among the population of 158 million, 55 percent over the age of seven cannot read or write (World

Bank, 2008c). With a Human Poverty Index11 value of 36.9 percent, Bangladesh is ranked 110th

among the 135 developing countries in the world (UNDP, 2008). In particular, the country has a high

child malnutrition rate, which, at 48 percent, is regarded as the second highest in the world.

Though Bangladesh has made reasonable progress since the early 1990s, with an average of 5 percent

GDP growth and almost 100 percent primary school enrolment (World Bank, 2008c), its political

instability and poor regulatory policies still undermine its well being. A vibrant Bangladeshi NGO

sector, with an estimated 2,000 NGOs functional in the country, is making progress against negative

social indicators. Some of Bangladesh’s NGOs, such as BRAC, ASA, and Proshika, are among the

largest such organizations in the world. These organizations’ innovative anti-poverty experiments

are often expanded into nationwide programs, impacting the micro-finance, education, and health

sectors, while also facilitating advocacy and women’s empowerment (World Bank, 2006).

Note: statistics and contextual notes documented in this case study article are updated only through July 2007,

when the final interviews were conducted with the D.Net senior officials.11HPI – 1; Human Poverty Index for developing countries, reported by the UNDP Statistical Update, 2008.

The Silver Lining of the Sustainability Cloud | 10�

D.Net’s EvolutionIn 2001, a team of university academics engaged in a research project to measure Bangladesh’s

“e-readiness.” The results awakened them to the need of rural communities to have access to

information and knowledge. This realization led to the formation of D.Net, with a core group of

18, including seven expatriates, who remain founding directors.

The Problem They Respond toHigh incidences of poverty, low literacy amid corruption, political instability, and poor regulatory

policy environments, prevent access to critical information on livelihood and human rights for the

majority of the population. Thus, this hinders the efficiency of poverty alleviation of more than 40

percent of the poor population in the country.

While electricity reaches only 28 percent of the country, mobile phone networks rapidly expanded

since 2000 to reach 100 percent of the territorial area by 200812. Such progress has provided an

opportunity to build relatively low-cost technological infrastructures to improve access to critical

information regarding livelihood and human rights to poor communities. Pallitathya is the model

D.Net developed to capitalize on this opportunity window, in order to serve poor communities

throughout the country.

What is Unique?

In early 2004, a needs assessment survey was carried out in 22 of 64 districts in Bangladesh. The

survey’s goal was to better understand the information needs of poor communities and to select

the villages to pilot-test D.Net’s Pallitathya model. After selecting four villages, further intensive

surveys were carried out to identify various information service providers in specific thematic

areas, including agriculture, health, education, appropriate technology, and human rights.

12 Three hill-tract districts were excluded from mobile communication networks due to state policy decisions.

This policy has since been altered, recently allowing 100 percent territorial mobile phone network coverage.


The Pallitathya model has three components; Pallitathya Kendra (the telecentre), the Pallitathya

helpline and the Jeeon-IKB (Information and Knowledge Base).

The Pallitathya Kendra was a conventional telecentre equipped with three to five computers,

a digital camera, a printer, and Internet access (GPRS technology). In addition, the center was

equipped with soil testing equipment, a nebulizer, and other equipment to help centers offer

both knowledge-based services (information) and income generating services (e.g. computer

services).

The Pallitathya helpline was a mobile phone-based counseling operation created by linking

“Mobile Lady” and the “call center.” Mobile Lady is essentially a female “informediary” who

visits rural communities equipped with a mobile phone and a few other mobile tools (e.g. a

handheld pH meter). Mobile Lady visits door-to-door and connects information seekers with

the Pallitathya Call Center, a help desk located in Dhaka.

The Jeeon-IKB is a customized livelihood information and knowledge base, created in a local

language (Bangla) offline database13.

In the Pallitathya helpline model, Mobile Lady serves as the “last mile” of connectivity, visiting village

households on a bicycle with a cell phone, traveling five to seven kilometers a day, to meet village

people who seek livelihood or other information. She also provides specialized services, such as

water pH measurement at shrimp farms. The Mobile Lady relays customers’ queries to the Pallitathya

help desk (or call center) where additional information is generally requested.

The Pallitathya help desk was situated in D.Net headquarters. It was equipped with a phone line,

headsets, a computer, a voice recorder, Internet access, and a printer. Six subject specialists were

employed in two shifts, who were given the heavy task of receiving and answering calls, while

accessing knowledge databases as required. All the research tasks were expected to be completed

in the shortest possible timeframe, ensuring minimum phone bills to the customers.

13 It is currently available online at www.jeeon.com.bd. The original database was split and is available on two new websites: www.jeebika.com.bd, a job portal, and www.jeeon-thikana.com.bd, an information directory service.

•

•

•


Business Models

Pallitathya Kendra was hosted by a local NGO, carefully selected by D.Net. The NGO contributed

the location, set-up, and management of the telecentre. D.Net provided two computers, initial

training, and access to the Pallitathya model.

D.Net does not charge a license fee to the hosting NGO, which operates as an independent body.

A Memorandum of Understanding (MOU) signed between D.Net and the local host held both

organizations accountable for carrying out Pallitathya activities. D.Net believes that such a shared

responsibility model better serves the self-sustainability interests of the local host organization.

Since knowledge products were the value-added core service of D.Net, revenue generation was

concentrated on Mobile Lady and the Pallitathya help desk components. As illustrated in Table

3.8, a variety of fee-based service packages were offered. If the villagers sought quick answers,

the prices they had to pay were relatively high, whereas free services were available if the village

accepted the “snail mail” option.

There were 924 queries generated from four pilot villages during first six months of operation, of

which 75 percent were generated during the “free time” (Table 3.8). Housewives were the biggest

customer group, and major topics of questions raised were health and agriculture related (Raihan

et. al., 2005).

After the pilot phase, D.Net expanded the Pallitathya helpline services to an additional 50 villages

and plans were underway to expand the service countrywide. Revenue for D.Net was based on the

revenue sharing models it had negotiated with its original mobile operators.


Table 3.8 – Types of services provided via the mobile lady and their corresponding

business models

Service type Question Answer Duration to receive answer

MediaRate Taka/ min Media

Rate Taka/ min

Mobile to mobile (instant reply): villager calls to help desk seeking instant information, answers provided instantly via mobile.

mobile 5 mobile 5 instant

Mobile to mobile (late reply): villager asks a question, and answers are provided via mobile within 3 days.

mobile 1 mobile 2 3 days

Mobile to letter: villager asks the question via mobile, but answers are sent by post within 7 days

mobile 1 letter free 7 days

Letter to letter: villager asks question through post, and answers are provided through post

letter free letter fee 20 days

Free time: two times a week villagers can ask questions and answers are provided instantly using both mobile and post options.

mobile free mobile/letter free

sunday9-11 amwednesday 5-7 pm

Note: 1 Bangladesh Taka = US $0.0145 (Source: Raihan et. al., 2005)


Social Enterprise Learning Curve

The major objective of D.Net’s social enterprise engagements was to seek alternatives in order

to reduce financial over-dependence on donor funds. Since the inception of the organization, its

social enterprise interest went through three stages:

a) various development-related consulting engagements

b) revenue generation based on knowledge products

c) re-formation as a social enterprise institution.

Consultancy-based revenue generation was carried out by the multi-disciplinary expert body of

D.Net’s founding members. This team offered consultancy services for a variety of projects (within

and outside of D.Net) and donated a minimum of 20 percent of the revenues14 to D.Net. For

instance, in 2006 about 23 percent of D.Net’s revenue (US $88,000) had been generated from

such contributions (Table 3.9). In addition to the financial gains, such consultancy engagements

provided wider opportunities to network with new partner institutions, expand the organization’s

knowledge pool, and build the organization’s profile.

With the inception of its Pallitathya program in 2004, D.Net recognized an opportunity window to

market tailor-made “knowledge products” to cater to grassroots community needs. The program

gradually developed into the “Jeeon-IKB” knowledge base with 30,000 local language web pages

in nine thematic areas. The subsequent integration of animated audio-visual content (e.g. “Moni”

- www.moni.com) further added the value.

14 In some cases, 100 percent of the revenue was retained by D.Net, and used to support programs like BORN

(Bangladesh Online Research Information Network: www.bdresearch.org).


Recognizing the market potential for the product, D.Net explored two avenues: an individual sub-

scription model and a wholesale model. Under the individual subscription model, individual sub-

scribers accessed the content for a fee, via telecentres or other methods of Internet access. In the

wholesale model, a third party, which may be a donor, can buy the content as a wholesale product

and make it available to local telecentres.

After relentless efforts over several years, in 2008, D.Net successfully negotiated with the United

Nations Development Programme (UNDP) to purchase a portion of the audio-visual content avail-

able in the database. The organization further continues to explore market opportunities, despite

some bitter experiences with corporate partners, who reportedly abandoned negotiations half-

way.

In parallel, D.Net developed its own multimedia unit and produced a number of documentary films,

which were acclaimed at home and abroad by development practitioners. Further, they gained

significant experience in developing and maintaining dynamic websites and portals, which started

to catch the attention of various organizations.

Taking all this into account, in July 2007, the D.Net governing body decided to form a separate

commercial subsidiary named Multimedia Content and Communications Ltd. (MCCL) that was en-

tirely focused on knowledge-based income generation to raise revenue in order to support the

organization’s general operations. The organization began offering services in July 2008.

The impact of these sustained efforts towards institutional sustainability was visible in D.Net’s rev-

enue patterns in 2005 and 2006. The overall revenues doubled in just over a year, from US $183,000

to US $381,000. The positive gain was due in part to expanded fee-based revenues, which climbed

from 8 percent in 2005 to 16 percent in 2006 (Table 3.9). D.Net’s target is to raise 50 percent of

overall revenues from fee-based services in upcoming years.


Table 3.9: Revenue performance of D.Net in 2 consecutive years ($US)

Sources of Revenue 2006 2005

External revenue including philanthropic donors

Donor funds + expatriate income* 1,70,225 1,23,197

Donations from local foundations 63,470 31,966

Individual donations (staff contributions as % of consultancy work)** 88,711 14,065

Generated revenue

Fees for service(s) 29,487 13,671

Knowledge product sales 1,969 170

Misc. income 27,302 459

Total 381,164 183,528

* ‘Voluntary Association for Bangladesh’ is a US-based non-profit organization (www.vabonline.org/vabnj) that collaborates with D.Net on a regular basis. The organization carries out fundraising events and chan-nels funds to D.Net. These funds are used mainly for computer learning programs

**These reflect the contributions from seven of the 18 founding members who contributed a minimum of 20 percent of their income from consultancy engagements that they carried out for a variety of academic projects

Governance

Overall, D.Net’s operation was run by 70 full-time employees and six part-time employees as

of 2007. Of these, ten staff members worked for Pallitathya help desk services and seven were

engaged in content development activities. There were 18 founding members, who were engaged

as consultants in various projects to provide expert services (Table 3.10).

The governing body, which is D.Net’s highest policy-making body, is elected every two years at

a general meeting. The governors appoint an executive committee, consisting of three founding

members and two staff members. An executive director executes the policies designed by the

executive committee.


About 17 full-time staff members are directly involved with social enterprise activities. Another

three staff members and four founding directors spend part of their time on social enterprise

activities, including the design of the MCCL. Four founding directors had had previous entrepreneurial

experience, such as developing business models for the CSR Institute of Bangladesh, the software

industry, and the banking sector. Since 2006, a consultant had been employed to carry out the

overall design of MCCL.

Table 3.10: Human resource capacity of D.Net over 3 consecutive years

2007 2006 2005


Part-time paid staff 6 2 2

Founding Members 18 18 18

Governing Body members 11 13 13

Case study

Mobile Lady: Nayan Mondal

Nayan Mondal joined Sehlabunia Pallitathya Kendra in September 2003 as a volunteer and in 2005

qualified as a “mobile lady” after passing an interview designed by D.Net.

Nayan’s day begins at 8:30 a.m. at Pallitathya Kendra, studying the day’s information updates.

After spending some time with telecentre staff, she begins her bicycle journey to nearby villages.

By early afternoon, she returns to the telecentre to carry out her follow-up work before leaving

office at 5 p.m.

Her travels follow a monthly village visit plan, which is occasionally adjusted based on demand.

She carries a water testing kit, enabling her to test the pH level of shrimp ponds. pH testing is a


popular service; she averages six tests a month, although she can do as many as 27 tests during

peak periods. If the pH falls outside the acceptable range, Nayan often connects to the help desk

to request technical help for the client.

The mobile lady has a monthly target of 75 villagers to be linked to the Pallitathya help desk

through her mobile phone. She meets this target by connecting an average of four people, as she

travels five to seven kilometers in an average day.

Nayan moves door-to-door, and finds familiar people waiting for her arrival. She generally keeps

moving, but occasionally spends extra time for an extended chat with a family she knows well. The

mobile lady’s constant face-to-face contact with villagers is helpful beyond her specific task. For

instance, when the Pallitathya introduces a new service, she carries leaflets and other material to

promote it.

When she finds potential customers, Nayan first listens carefully in order to understand the person’s

queries, as often they are not explicit questions. Then she assesses the urgency of the request and

decides whether to refer the person to the help desk immediately. If the issue is not urgent, she

takes the query back to Pallitathya and follows up.

The Pallitathya Kendra manager checks the mobile lady’s progress against her monthly targets and

a log book that records every mobile phone call. During the past six months (February to July 2007),

she had failed to meet her target twice. The primary reason for the failure was reported as having

to sit for her final graduation exams at the university.

As per the records, 95 percent of help desk calls were completed, meeting the customer satisfaction.

Nevertheless, for the five percent of the answers that were not deemed satisfactory, the mobile

lady was never refused payment. Villagers appreciate her hard work in trying to deliver better

service. For some queries she calls the help desk four or five times in search of a better answer,

though the client does not pay extra.


When she first started work as a mobile lady, Nayan found that people would make fun of her,

asking sarcastic questions, such as the personal phone number of the Bangladesh Prime Minister,

and celebrities. That attitude changed as people began to realize the seriousness of the help desk

approach and saw its gain for themselves or their neighbors. Though circumstances often caused

her to travel late in the evening, she never felt that her personal safety was threatened because

she is known throughout the territory.

Gender sometimes plays a role in the operation. Males in urban settings occasionally show some

irritation at receiving her services, but Nayan reports that gender hardly seems to matter in the

villages. She feels that this service should be carried out by females, as it gives a chance for

females to move around - an activity that normally might be frowned upon.

Challenges

Despite having a market potential for knowledge products, D.Net could not move quickly to convert

the opportunity into a financial gain. Its biggest challenge was the infusion of internal business

capacity in the absence of an in-house business champion.

D.Net’s grassroots user base is slowly recognizing the value of knowledge products. Yet, the group

has very little buying power. About 75 percent of the 924 queries generated during six months of

the pilot operation had utilized “free time” service. This will continue to make it difficult for D.Net

to expand its revenues, unless it changes its business model.

Designing appropriate pricing models for the help line was a constant challenge. In the absence

of previous examples from similar organizations, D.Net applied a corporate sector “call-center”

model. The inconsistent information demand patterns, the diversity of the query topics, and the

need for multitasking required highly competent—and therefore expensive—people to work at the

help desk. Existing business strategies could not afford such expensive professionals.


Telecentres as a Corporate Social Responsibility (CSR)

Grameenphone CIC

Abstract

Established in February 2006, Grameenphone

Community Information Center, widely known

as Grameenphone CIC, is one of the youngest

units in Grameenphone Ltd. The roots of the

businesses can be traced back to Grameen

Bank, Bangladesh’s renowned microfinance

agency, whose founder, Mohammed Yunus, was

awarded the Nobel Peace Prize for his efforts to

eradicate poverty through microfinance.

Grameenphone Ltd. is the leading telecom-

munications service provider in Bangladesh, with more than 10 million subscribers as of January

2007. The company was established in 1996 as a joint venture15 between Telenor ASA of Norway

and Grameen Telecom, another member of the Grameen family.

Though registered as a “for profit” organization, Grameenphone CIC is dedicated to establishing

and delivering telecentre-based services across Bangladesh. The organization considers its efforts

to work with telecentres as a manifestation of its Corporate Social Responsibility (CSR) philosophy,

rather than a profit-oriented operation. The company therefore operates at a marginal profit—al-

though it could command more in the marketplace—in order to ensure the sustainability of the

program.





Poverty (head count rate in year 2000) –

50% (upper poverty line),

34% (lower poverty line),


Major issues: high incidence of poverty

& child malnutrition

GDP growth (2006 – 2007) – 8.4%


(Sources: World Bank, 2002; World Bank,

2008c; UNDP, 2008)

Note: statistics and contextual notes documented in this case study article are updated only through July 2007, when the final interviews were conducted with the Grameenphone CIC senior officials.

15 In the joint operation, Telenor ASA held 62 percent of the company shares while Grameen Telecom held 38 percent of the shares.


The Grameenphone venture is unique for its optimistic engagement in the telecentre sector, while

the world was questioning the ability of telecentres to stand as economically sustainable units.

The project has demonstrated promising results to date, as it has scaled up operations from 16

pilots in 2006 to 568 CICs within a one-year period.

Background

The original concept for CIC was submitted by the Fibre Optic Network Division of Grameenphone

and then refined in a new business idea competition carried out by Telenor ASA16. One leading idea

that emerged was to “introduce Internet services to rural communities, establishing cyber centers

using newly introduced EDGE17 technology.” The concept was subsequently further refined to build

telecentres instead of cyber centers, because of the much stronger social impact that telecentres

make in the communities they serve.

In 2006, Grameenphone was tasked to carry out a preliminary study with the support of the Global

System for Mobile Communications Association (originally Groupe Speciale Mobile Association;

GSMA). The team had visited telecentres in Bangladesh and evaluated existing models. The result

was the design of the first pilot to test the telecom services in 16 telecentres located in different

areas of the country. During the exercise, GSMA provided technical assistance and enterprise

development skills as free services, exploring the future potential for business.

A positive evaluation of the six-month pilot gave Grameenphone CIC the confidence necessary to

scale up the operation, setting an initial target of 500 CICs by the end of 2006. The joint venture

16 Telenor ASA is a Norwegian telecom company with a strong international reputation as a corporate

sector organization working on mobile telephony in 12 European and Asian countries.

17 EDGE - Enhanced Data Rates for Global Evolution - an advanced mobile connectivity protocol.


A positive evaluation of the six-month pilot gave Grameenphone CIC the confidence necessary to scale

up the operation, setting an initial target of 500 CICs by the end of 2006. The joint venture reached

that goal, which placed at least one in each sub-district (upuzila) of the country, without much

difficulty. Since then, the scale up operation has been deliberately slowed to optimize operations and

ensure quality of service. Despite the slow down, by June 2007, it reached 568 CICs.

The operation is estimated to provide over 20 million rural people the chance to use the Internet and

email for the first time, as each telecentre provides state-of-the art EDGE (Enhanced Data Rates for

Global Evolution) technology, an advanced mobile technology enabling high-speed mobile Internet

and data services. As the first and only provider of EDGE technology in Bangladesh, and in the country

at the time, Grameenphone became the default Internet service provider (ISP) for CICs.

The Network Business ModelThe Grameenphone CIC model is a franchise system, where the company teams up with local

entrepreneurs (the franchisees) to set up telecentres (CICs) according to detailed franchise rules.

The total cost of establishing a CIC franchise is estimated to be US $1,000. Local entrepreneurs are

asked to invest in the location (rent), build-out costs, furniture, and equipment. Grameenphone

CIC provides the brand name, including the logo, designer sign boards, and look and feel of the

store, promotion materials (hanging poster, wall posters, pamphlets, and T-shirts), and initial

value-added services and capacity-building opportunities.

Value added services include Grameenphone’s public line phone connections and its e-top up services

(FlexiLoad18) and EDGE mobile Internet services. A 12-month gestation period was provided before

due payment for Internet services, and FlexiLoad and franchise fees, thus allowing the telecentre

owner to have a marketable service to offer from day one, without a significant cost to pay during

18 The FlexiLoad e-top up service is being offered by Grameenphone to retailers upon their request. This service is such a

popular product that entrepreneurs need to qualify for it via both financial and non-financial criteria, and stay on waiting

lists for over six months to acquire the service. A lower bar was set for CIC owners to qualify and they were assured

that they would receive the service as soon as they requested it if they qualified.


the first year of operation. Grameenphone CIC estimates that the one-year period is sufficient for

local owners to reach break-even point.

The contract agreement between the local telecentre owner and Grameenphone CIC was

established initially for a three-year period, with room for the owner to cancel the agreement with

three months prior notice, while sharing the profit or loss between the two parties. The idea was

primarily to foster the growth of entrepreneurship among the rural unemployed while eliminating

the digital divide through ICT services.

In order to finance the venture’s start-up costs, Grameenphone invested US $50,000 to cover

administration and program activities for the operation. Of 16 pilot CICs, 15 received credit from

Grameen Bank19 while the remaining CIC was self-financed by a local entrepreneur.

The Grameenphone operation was expected to break-even by the end of the first year (early

2008), when franchise fees 20 were due. The product sales (FlexiLoad, etc.) were being paid to

Grameenphone (table 3.11).

The CIC Business Model

The business model of the Grameenphone CIC was based on three key objectives:

Economically self-sustainable telecentre (CIC) model

Entrepreneur-centered local ownership

Supporting local communities to connect with ICTs

•

•

•

19 Grameen Bank is the microfinance arm of the Grameen family of businesses.

20 The franchise fee still awaits legal clearance from government authorities. Furthermore, there is no revenue

expected during the first year as a12-month grace period has been offered to CICs.


Table 3.11: Estimated revenue21 from the overall Grameenphone CIC network operation (including commissions to CICs)

Sources of Revenue 2006/ 07 2007/08 2008/09 Remarks*

(projected) (projected)

Franchise fee 0 US $100,000 US $100,000 For Grameenphone CIC

Product sales 1: US $3 mil US $6 mil. US $12 mil GP & CIC

FlexiLoad $US owner

Product sales 2: US $250,000 US $500,000 US $1 mil GP & CIC

Public phone owner

TOTAL US $3.25 mi US $6.7 mil US $13.1 mil

* Figures include total revenue projected collectively for Grameenphone and CIC entrepreneurs (Note: figures

were only projected, as the proper accounts were not in place by the time research interviews were conducted

in July 2007).

Grameenphone had set economic milestones to reach these three objectives:

Ensure each CIC earns a minimum of US $5 per day.

Achieve CIC brand and store recognition by 20 percent of the local community

Quickly reach extensive scale of operation (i.e. all the sub-districts of the country will have at

least one CIC by the end of the initial year)

21 Revenue calculated only for 568 CICs. Potential network expansion is not taken into account.


The local CIC entrepreneur had four major products to generate revenue:

FlexiLoad (e-top up22 service)

Phone services

Internet services

Other ICT services, such as computer use, photocopying, photo printing, laminating, etc.

Of the services available, the joint venture expected the majority of income to be generated by

FlexiLoad and phone services, for which the market was already established. The sales of Internet

and computer services were expected to catch up gradually over the one-year period.

Enabling the Environment to Carry out Business Operations

Grameenphone CIC pays serious attention to the following factors in order to ensure the smooth

operation of its business plans:

Selection of CIC operators (with willingness to invest)

Local promotions

Capacity-building and training of CIC operators

Help desk services available for CIC operators

Value-added services

22 FlexiLoad is a prepaid mobile phone system introduced by Grameenphone. Using the system, prepaid phone

holders can make payments at FlexiLoad dealers in order to charge their phones electronically. A commission

is paid to the dealer (in this case Grameenphone CIC) for each transaction.

1.

2.

3.

4.

1.

2.

3.

4.

5.


Operator Selection:

Operator selection is one of the prime areas of attention. Most local owners have prior experience

in small enterprise management, computer or network administration, digital photography, mobile

telephony, and “scratch card” selling. Grameenphone recruits prospective local CIC owners

through systematic pre-promotions. Due to the established brand name of Grameenphone, local

entrepreneurs look forward to becoming partners. Grameenphone representatives carry out

financial due diligence to short list the potential candidates and then finally subject them to a

rigorous interview process to ensure that they fully meet the organization’s high standards for

entrepreneurship.

Local Promotions:

Promotion of the CIC among the local communities begins before the launch of the CIC. Inauguration

of the CIC is a highly promotional exercise, where organization makes every effort to ensure the

participation of political, religious and community leaders at the ceremony. Such high profile

support builds the credibility of the CIC operation within the locality.

Additionally, Grameenphone takes advantage of its 4,000-person nationwide staff by inviting staff

members whose hometowns are close to new CIC venues to attend to the CIC opening ceremonies

as “ambassadors of Grameenphone.” These occasions provide staff with recognition in front of

their relatives and peers for contributing to the development of their hometown.

Capacity-building and Training:

CIC operators are provided with regular and consistent capacity-building and training programs.

This includes building the capacity of the operators to recognize and respond to ground demands,

community mobilization techniques, and entrepreneurial strategies.


Help Desk Services:

CIC operators require technical and other help as they engage with day-to-day operations. To

support them, Grameenphone has a countrywide network of more than 600 “service desks’’ that

offer technical assistance to its mobile customers. This network was engaged to offer on-demand

help services to CIC operators as well.

Additionally, Grameenphone CIC has mobilized the help of multiple NGO partners to help CIC

operators mobilize the community.

Value-added Services:

Grameenphone CIC concentrates on expanding the value-added services available in the CICs by

offering diverse thematic services, including those related to agriculture, health, and education,

in addition to ICT services. For instance, they aim to offer updated market information, pest

and disease decision-making support through its CICs. In order to provide this information, the

organization builds partnerships with state, private and NGO sector organizations. In one such

effort, Grameenphone CIC has started negotiations with Katalyst and D.Net (two other prominent

NGOs operating in the country) to provide access to their knowledge services (help desk and

databases). Telemedicine is another area of interest for Grameenphone, which is already piloting

experiments to test how telemedicine services could be delivered via CICs.

Staff

Twenty full time staff members and one part-time intern run Grameenphone CIC’s overall operation

(Table 3.12). The senior managers all have experience in telecom and ICT-related business

management, and the rest are recent university graduates.


Grameenphone’s (mother organization) staff subsidizes some management tasks that would

otherwise have to be performed by Grameenphone CIC staff. For instance, promotional campaigns

were designed by Grameenphone’s marketing department.

Table 3.12: Human resource allocations for Grameenphone CIC operation

2007 2006

Full-time paid staff 20 6

Part-time paid staff 1 2

Corporate Social Responsibility (social mission)

Grameenphone had multiple reasons to be seriously conscious of its social responsibility. As a

leading mobile service company in Bangladesh, it serves over ten million customers. And as a

partner of a world-renowned social development organization – Grameen Bank – it had a reasonable

responsibility to demonstrate tangible social impact from its profit-making enterprise.

Among Grameenphone’s earlier CSR engagements, its “village phone” project,23 where over 191,000

poor women were given mobile phones through micro-credit programs offered by Grameen Bank,

received the widest recognition. The program had reportedly been able to boost the income of rural

poor families, promote rural healthcare, develop agricultural businesses and, more importantly,

empower the status of rural women.


Grameenphone CIC was the latest CSR model. A Grameenphone research team had already evaluated

the model against few other CSR pilot programs and identified the CIC model as the promising one

to satisfy the organization’s CSR objectives. The CIC model was designed, on a very large scale,

to help students, adults, artisans, and women in rural or semi-urban communities, gain the access

and knowledge to use ICTs competently. For many clients, CICs helped them save time and money,

by cutting down on distant travel to townships.

The model itself was financially self-sustainable and thus would not need a continuous channeling

of outside resources (i.e. donor funds or company funds). Furthermore, the model provided more

income-generating opportunities to local entrepreneurs – the CIC owners – than did any alternative

model studied.

Grameenphone considers the money it invested in the CIC program as an investment in the

community. For instance, at one CIC, the company provided a one-year grace period on its fee for

Internet access (worth US $12 or 850tk per month) and franchise fee (worth US $14.5; 1,000tk per

month). The company does not expect to run the CIC program as a major profit-making venture;

instead, the money generated will be reinvested in the expansion to more CICs.

23 The Village Phone program offered mobile phones on credit to rural women. The mobile component of the

program was offered by Grameen Telecom (of Grameenphone) and the micro-credit financing was provided by

Grameen Bank (parent organization of the Grameen Family).


Case Study:

Grameenphone CIC – “E-com Cybercafé”, Gazipursadar, Dhaka.

The “E-com Cybercafé” in Gazipursadar, Dhaka, was founded more than three years ago as store-

front computer hardware repair business, but added a CIC operation six months earlier. The CIC

is located on the second floor of a building complex, situated next to a busy main street in a

marketplace inside Dhaka city. The CIC faced heavy competition by many other shops offering the

FlexiLoad service in its neighborhood.

The CIC is equipped with three computers with Internet connectivity to offer basic computer and

Internet services to customers on a fee-for-service basis (e.g. US $0.30 or 20 taka per hour of In-

ternet use). About 15 customers visit the center on an average day, mostly in the afternoon hours.

The center is mostly empty during morning hours. Most users of the CIC are journalists editing their

articles and uploading them to their respective newspapers.

As the CIC service was still new to the area, not many people were aware of its existence; thus,

it planned to engage in a number of local promotions. The CIC was managed by the owner him-

self (who was busy with his computer repair shop as well) and an assistant. The owner presented

himself confidently, demonstrating his entrepreneurial skills with financial projections and clearly

articulated future business plans. According to his business plan, the initial target group was local

school children, to whom he would offer computer training programs. His market strategy recog-

nized children as the entry point to promote the CIC among adults. He believes that, in the long

run, adults will tend to buy the refurbished computers he makes, too.

“Having the Grameenphone brand name was a big value to my business, and their help (capacity-

building and promotional activities) in many ways helped my operations significantly” – states the

owner, for whom it was quite difficult to qualify for CIC ownership.


Though the CIC wasn’t making reasonable revenue at this moment, the owner anticipated a good

financial future. He was subsidizing the CIC operation from the income generated from his compu-

ter repair shop, but had plans to gain a reasonable profit starting from next six-month period.

Table 3.13: Income / expenditure analysis of the CIC

Income; 3000Tk (US $44) / month

Expenses: 700tk (US $10) / month – electricity

1500tk (US $22) / month – maintenance and other expenses

2500tk (US $36) / month – wages for assistant

Loss: 1700tk (US $25) / month

Projected income in 6 months: 10,000tk (US $146) / month (maximum potential would be

15,000tk (US $219))

Challenges

The biggest challenge for the Grameenphone CIC was the lack of computer and ICT awareness

among the communities. This challenge was anticipated from the beginning, and the organization

has therefore designed promotional campaigns to raise general public awareness about CICs and

their available services. Yet, this may require persistent promotions.

Another challenge was a lack of confidence among CIC owners, particularly about their CIC’s abil-

ity to sustain itself as an economically sound operation. Grameenphone CIC carried out continuous

monitoring while providing capacity-building, help desk services, and other support systems to

build owners’ confidence and ensure the sustainability of individual CICs to reach their anticipated

break-even point during a one-year period.


Evolution of a Social Enterprise

Sarvodaya-Fusion

Abstract

Sarvodaya is Sri Lanka’s most renowned NGO,

widely regarded as one of the largest in South

Asia, working in more than 15,000 villages

across Sri Lanka. The organization pioneered

telecentres in Sri Lanka during 1997. Toward 2006, as multiple organizations, including the govern-

ment’s e-Sri Lanka program scaled up telecentres across the country, Sarvodaya shifted its focus

to the sustainability of its initiatives and thus formed Sarvodaya-Fusion as a specialized ICT4D

program. Fusion, from its inception, was a social enterprise, pursuing double bottom lines. The

organization’s social bottom line included setting up zero-cost Village Information Centers (VICs) to

support marginalized village communities. Its economic bottom line aimed at revenue generation

by delivering ICT services through telecentres



Urban population – 15 %

Literacy (% population age 15+) – 91 %

Poverty (% population below national poverty line) – 23%


Major issue – Long-running armed conflict in Northern Province

GDP growth (2006 – 2007) – 6.8%

GDP per Capita growth – 6.5%

(Source: World Bank, 2008)


Background

Sri Lanka’s continuing strong economic growth (about 6 percent), is a paradox given the continuing

ethnic war in the country’s North-East theatre. Despite its economic growth, however, 22 percent

of the country’s 20 million inhabitants live below the poverty line. Seventy-seven percent of the

population live in rural areas, though unlike the trend in many countries around the world, Sri

Lanka exhibits relatively low rural-urban migration.

Despite a high adult literacy rate (91 percent), computer literacy in Sri Lanka is limited to 10

percent of the population and Internet penetration is reported to be as low as 3.7 percent (ITU,

2008). Sri Lanka’s capital, Colombo, and the mostly urban southwestern region of the country

enjoy high technology penetration, while the rural majority is deprived of most development

opportunities. Poor infrastructure, such as the lack of electricity, which is limited to 68 percent

of households, hampers access to the technology opportunities of the digital age for the majority

of the community.

Since 2003, Sri Lanka’s government has implemented a national ICT program e-Sri Lanka, which

aims to mainstream ICTs into the national development process, empower citizens, and bridge

the digital divide. To date, the program has invested US $80 million with the help of international

donors, including The World Bank. e-Sri Lanka is implemented by ICTA—the ICT Agency of Sri

Lanka—which plans to set up 1,000 telecentres (branded Nenasala) in rural locations. Five hundred

and seventy of the telecentres were in operation by mid-2008.

Sarvodaya, the country’s pioneering telecentre initiative since 1997, also collaborates closely with

the e-Sri Lanka initiative. As the country’s largest development NGO, started in 1958, Sarvodaya

continuously channels substantial resources to improve livelihood in 15,000 villages (about half

of all villages in the country). The Sarvodaya Economic Enterprise Development Services (SEEDS)

program—Sarvodaya’s micro-enterprise arm—delivers US $34.7 million in micro-credit to nearly


180,000 grassroots entrepreneurs. There are over 3,900 self-empowered village communities,

which manage US $30 million in community savings in multiple community-driven enterprises

(SEEDS, 2008).

In 2006, Sarvodaya launched a specialized ICT4D program called Sarvodaya-Fusion, which

consolidated the organization’s decade-long ICT4D experiences. Sarvodaya-Fusion’s mission was

to empower rural communities using ICTs. As an emerging social enterprise, Sarvodaya-Fusion

leverages the diverse resources of its parent organization, Sarvodaya, as well as the multiple state

(and other) resources in the country.

Problem They Addressed

As of mid-2008, there were over 600 functional telecentres across Sri Lanka that were created by

multiple organizations, with the majority being set up by ICTA. Most of these telecentres were

installed in rural locations where reasonable infrastructure24 facilities were available. These

telecentres struggled to reach economic sustainability.

An additional 3,000 rural communities, most of which lacked the proper technical infrastructure,

though they actively participated in Sarvodaya’s development programs, were looking forward to

digital advancements (connectivity and training). Those infrastructure impediments, along with

computer illiteracy and the absence of appropriate technical assistance made it difficult to install

telecentres in these communities.

24 For instance, site selection criteria for telecentres sponsored by the ICTA (www.icta.lk) were:

a) Size of the population (2,000 – 5,000 people)

b) Availability of a fixed market within a five km. radius (as an indication of economic activity)

c) Presence of a school with a minimum of 300 students

d) Availability of electricity. Sarvodaya’s telecentres were located in its district offices, where electricity,

phones, and transport facilities were already available.


Key Program Elements

Sarvodaya-Fusion’s strategy rests upon two major key program elements:

Village Information Centers (popularly known as VICs)

Telecentres

Built upon the social capital and resources deployed by Sarvodaya programs within marginalized rural

villages across Sri Lanka, VICs, are basic forms of libraries, and do not have computers or Internet

connectivity. The majority of villages targeted for the VIC program were located off the connectivity

grid because of their low market potential for telecommunications and other service providers.

Fusion facilitates the education and preparation of poor, rural communities through the VIC

model, then expects them to interact with telecentres as an ICT window available in nearby

townships. Figure 3.1: Rural communities access basic information at VICs and are

expected to interact with telecentres for ICT services.

1.

2.

TelecentreVIC

Economic sustainability of telecentre offering services

at an affordable price ‘Zero Cost’ village initiatives VIC at rural,

disadvantage communities


Village Information Centers (VIC):

Village Information Centers take the form of libraries designed to cultivate an information culture

at the rural village level. Each VIC maintains files with about 60 categories of information directly

connected to livelihood issues (see VIC case study below). On average, 30 people per week access

information via the average VIC.

About 177 VICs had been set up by Fusion between 2000 and 2005. In general, 78 percent of VICs

are able to financially sustain their operations and 10 percent reach telecentre status. As of 2008,

121 VICs in 11 districts were reported to be functional. Among them, 21 had become small-scale

telecentres.

Telecentres:

The telecentre network that the Fusion operates with is a “network alliance,” thus characterized

by multiple telecentre models with diverse ownership and management schemes. Some of the

telecentres are owned by local community organizations (including religious bodies, such as

Buddhist temples), while local entrepreneurs own others.

The smallest telecentres, which are mostly set up by the village communities themselves, have

only one to two computers and no Internet access. The majority—more than 500 telecentres of

the alliance—set up by the ICTA, were equipped with four computers and broadband connectivity.

Finally, a few sophisticated telecentres were equipped with more than ten computers, broadband

Internet access, and video conferencing facilities.


Social Enterprise Approach

Sarvodaya-Fusion’s sustainability model was focused on double bottom lines: an economic and a

social bottom line.

Economic Bottom Line:

Decentralized network operation

In search of economic sustainability, Sarvodaya moved away from the centralized telecentre

network model it had created since 1997, to a decentralized model in 2006 (see Box 2.3 in chapter

2). From 2006 to 2008, Sarvodaya-Fusion restructured its own 34 telecentres, limiting its direct

ownership to only six telecentres. These centers served as experimental units designed to pilot-

test the services and products designed for the larger telecentre network. They were also operated

as revenue centers where services were offered for a fee.

Fee-based products (value-added services)

In 2008, Fusion began offering ICT courses through the telecentres in its network. The decision to

provide these fee-based services was based on a two-year business product development process

that involved the expert support of the Nonprofit Enterprise and Self-sustainability Team (NESsT),

a non-profit social enterprise consulting organization (Box 3.6).

Basic ICT courses were offered at telecentres. Fusion designed and developed course material,

educational supplements, and exams that were administered at the end of the course.


Fusion’s business model provides standardized course material to be sold by operators for US $3.50

(400Rs.SL.) per book, with a ten percent commission for operators. Courses were conducted by

telecentre operators with free guidance from Fusion staff as needed. At the completion of the

courses, Fusion administered national examinations and offered a Fusion-branded certificate for

a fee.

Fusion projects that these value-added services can improve its current revenue intake by 20 percent

and can increase the number of students served by about 15 percent. Beyond solely increasing

the commercial success of telecentres, Fusion supported the telecentre network in a number of

ways. In order to promote knowledge sharing between telecentres, Fusion implemented various

workshops to support peer learning and skill development exchanges. These efforts expanded the

number of telecentres in the network from 34 to 400 telecentres during the period from 2006 to

2008. Starting in mid-2007, Fusion also fostered a partnership to organize the telecentres into

seven regional networks in order to promote regional peer-support.

Social Bottom Line:

“Zero-cost” Village Information

Fusion’s “Zero-cost” strategy ensured that VICs do not financially depend on Fusion for their

operations. VICs were owned by the villages in which they were located and were managed by local

volunteers. Fusion spent about US $60 (6,500 Rs.SL.) on initial training and follow-up guidance for

each VIC. In return, VICs were set up by the village community at a cost of about US $75 (7,500

Rs.SL.) each. Over a three-year period, the accumulated average asset value for VICs averaged

more than US $200 (20,000 Rs.SL.) (Table 3.14).

Required resources were mobilized through village savings and local fundraising. Some VICs carried out

fundraising events; for instance, borrowing multimedia projectors from nearby telecentres to show popular

films in the village in order to raise capital to install new phone lines or buy refurbished computers.


The VIC model is designed to serve the less sophisticated information needs of rural, disadvantaged

communities. Since its emphasis is on information rather than technology (i.e. not having comput-

ers and Internet), the VIC model bypasses the infrastructure impediments, which usually prevent

ICT technology transfer in rural areas.

Villagers are able to access information in VICs, which would otherwise require visits to multiple

offices in sometimes distant locations. In one research assessment, 56 percent of the respondents

reported indirect economic benefits and travel time savings due to the diverse information avail-

able to them via their neighborhood VIC (Kapadia, 2005).

Table 3.14: Resource mobilization and performance of 5 VICs in 3 districts (values in Rs.SL)

VIC name VIC 1 VIC 2 VIC 3 VIC 4 VIC 5

Initial investment in village by Fusion

Training community leaders(1,500Rs/ person)

4,500 10,500 9,000 6,000 3,000

Investments by Village community

Setting up VICs (in-kind and financial contributions)

Follow up work (in-kind contributions)

Event organizing

Value of assets

No. of information categories

Computers (donations)

Visitors / week

Outcome

17,000 6,500 3,000 5,000 5,000

50,000 0 4,000 3,000 1,000

5,000 2,000 1,000 2,000 1,000

10,000 45,000 15,000 10,000 8,000

115 63 48 45 30

2 1 1 2 2

40 40 30 20 25

VIC 1 – Maharathenna, Kandy District, VIC 2 – Hippola, Kandy District, VIC 3 – Akurumulla, Gampaha, VIC 4 – Divurumgama, Badulla District, VIC 5 – Wekada, Badulla.


In addition to providing information, VICs catalyze a range of community development processes.

For instance, by mapping local population data, VICs are able to determine the number of disabled

people living in the village so that the community may provide them with greater attention. VICs

were also used as centers for distributing social marketing or public service messages for topics

such as HIV, child labor, and corporal punishment (Kapadia, 2005).

Telecentre capacity-building

Capacity-building was carried out as an ongoing development process for telecentre operators.

The Telecenre Family Project of Sarvodaya-Fusion was designed as a dedicated program that helps

telecentre operators:

Build their overall skills

Foster alliances with other organizations

Create awareness and advocacy in and around the network of telecentres

The program offered telecentre operators opportunities to develop English language skills,

strengthen management and marketing skills, and hone communication and leadership skills

through a series of workshops, campaigns, and online tools (e.g. www.tcf.lk) that were offered

free of charge.

The program initially concentrated on 200 telecentre operators, but by 2008 had expanded to

focus on 400 operators. These operators were networked into provincial forums of telecentre op-

erators, thus building further telecentre alliances.

Combined impact of VIC and telecentres

The VIC – telecentre combination allows rural communities without roads, electricity, fixed-line

phones, or sometimes even mobile telephony, to interact with ICTs. For instance, during the Asian

tsunami, some communities received government warnings and instructions from their VICs, which,

in turn, had received the information from their respective telecentres (Kapadia, 2005). While VICs

•

•

•


prepare their communities for the information age, they subsequently prepare them to interact

with telecentres located in nearby townships. In turn, telecentres act as ICT skill development

centers to augment rural ICT literacy.

Financial Performances

Table 3.15: Financial performances of Sarvodaya - Fusion (in $US)

Sources of Funding 2007 2008 2009

(projected) (projected)

Revenue from outside sources

Foreign/international sources 121,800 99,789 96,120

In-Kind Donations 1,305 1,740 2,001

Revenue from Self-financing

Product sales (ICT Course books & exams) 0 1,456 9,396

Use of hard assets (rental of equipment/facilities) 2,040 4,048 4,655

Revenue centres (6 telecentres) 20,094 17,685 20,338

Workshops 117 44 50

Miscellaneous income 17,307 14,230 16,365

Computer repair services 675 0 0

TOTAL** 163,338 138,992 148,926

** excluding in-kind contributions (Note: exchange rate calculated at 1Rs.Lk = US $0.0087) (Source: An-

nual financial accounts, Sarvodaya-Fusion) (Note: exchange rate calculated at 1Rs.Lk = US $0.0087)


From its first year, Fusion has managed to demonstrate social enterprise gains. As indicated in the

2007 budget, 25 percent of overall revenue was generated internally by the organization during its

first year of operations.

Half of Fusion’s revenue was generated from the six telecentres that operated as revenue centers.

However, from 2008 onwards, their value-added product sales (i.e. ICT courses) were projected to

begin revenues, with gradual increments towards 2010.

Its shift from an entirely donor-dependent operation to dual revenue (donor and internal revenue)

mode, was reflected by a significant reduction of donor contributions to the major revenue stream.

Funds contributed fell from 75 percent of major revenues in 2007 to 65 percent (projected) in

2009. In turn, contributions from internal revenues were projected to increase from 25 percent to

35 percent (Table 3.15).

Their eagerness to generate revenue during the first year is reflected in the miscellaneous income

the organization earned (US $17,000). The majority of those funds were reported to be derived

from delivering expert services to other projects. These technical assistance and consulting en-

gagements were expected to be reduced as other revenue streams started to grow.

Fusion plans to continue fundraising from donors to expand the free services it offers to meet its

“social bottom line” goals, such as VIC training and telecentre operator capacity-building. Addi-

tionally, Fusion plans to use donor funding to pay for its new research and development activities.

For example, in January 2009, the organization started researching mobile-based solutions as a

new value-added service for telecentre networks. Research was commenced, with the support of

new donor funds.


Human Resources

Since 2006, Fusion adopted the following initiatives in its transition to becoming a social enter-

prise:

Introduced a new organizational structure

Recruited and incorporated experienced professionals with more entrepreneurial back-

grounds

Sought expert advisers to provide external support for staff

Introduced a governing structure incorporating professionals with more entrepreneurial ex-

pertise as the governors

Table 3.16: Fusion’s human resource capacity over 3 consecutive years

1.

2.

3.

4.

2008 2007 2006


Part-time paid staff 4 6 -

Non-paid volunteers 130 130 127

Trustees/Board members 9 9 -

Fusion dramatically changed its overall administrative and human resources structure. The full

time cadre was cut from 61 in 2006 to 38 in 2008, while the management structure was simplified

in order to clarify the organization’s focus on both social and business responsibilities, which were

moved into separate departments (Table 3.16).

Its management structure was reinforced with more corporate sector expertise. For instance, a new

manager with CIMA (Chartered Institute of Management Accountants) professional qualifications

was hired. A dedicated business executive was recruited to carry out the business product planning


process. NESsT was hired to provide non-profit sustainability coaching over a two-year period.

The NESsT consultants directly supported Fusion’s business promotion executive and the manager

through the process of designing pre-feasibility and feasibility studies and then subsequently

writing the business plans associated with new services.

Furthermore, at the governance level, Fusion introduced six new board members in April 2007,

consisting of three corporate senior executives, two development sector executives, and one

academic executive.

Case Study:

Village Information Center (VIC) Divurumgama

Village name Divurumgama

District Badulla

Distance from Colombo 250km (approximately)

Nearest town Keppatipola (2.5km)

Population 2092 (Male- 962, Female- 1,130)

Youths – 817

Adults – 677

Children - 598

The Divurumgama Village Information Center serves information needs of a rural community of

2,092 people. In a typical day, about five people visit the center to access basic information that

may be travel, banking, or education related; or to inquire about obtaining an appointment with

a medical specialist in the town, or to access a birth certification application form for newly born

child. (For additional information refer to Table 3.17).

The center was managed by two village youth, whom were paid a monthly allowance of Rs 1500

by the Village Shramadana Society (Sarvodaya affiliated community-based organization) from their

own village savings.


In 2005, the village community initiated the VIC during a village shramadana camp, where people

collectively share free labor to carry out common purpose development activities. Specialist

training on collecting, organizing, filing, and maintaining information material were given to two

village youth by the telecentre staff at the Badulla Sarvodaya District Center (about 20km away).

Subsequent visits by the telecentre coordinator helped to add more skills to the VIC team.

In 2006, VIC received a laptop donated by Sarvodaya-Fusion, which triggered community enthusiasm

to interact with computers. Since then, youth members have started composing a village handbook

gathering information related to special interests. There have been six handbooks produced, and

the Shramadana Society purchased another computer recently, which enables VIC to assist the

Society’s development activities, especially to compile project information in relation to micro-

finance deliveries by Sarvodaya Economic Enterprise Development Services (SEEDS). Also, the VIC

carries out basic computer training to village youth.

Table 3.17: Information categories of a typical VIC

Type of information No. entry categories Examples

Village related 9 Village maps, resource maps

District related 9 Public transportation,

demographics

Government related 18 Welfare services, application forms

Social 6 Women’s rights, family life

Economic development & agriculture 17 Crop cultivation practices,

Market information

(Source: Kapadia, 2005)

The Silver Lining of the Sustainability Cloud | 1�0

Challenges

Attention to VICs has been depleted under the pressure created by the overwhelming demands

of social enterprise targets. Hence, the VIC program tends to suffer from a shortage of human

and financial resources.

Reporting and monitoring systems have not yet been developed to provide managers to gather

an accurate picture about the state of revenue and operations in the VIC and telecentre

networks.

The diversity of telecentre models in the network made it difficult or impossible to execute

uniform business plans, posing a challenge for business revenue generation models. For

instance, temple-based telecentres were much less able to act in entrepreneurial ways than

were telecentres operated by skilled business operators.

•

•

•

Social Enterprise Approach to Telecentre Sustainability | 1�1

Social Enterprise Approach to Telecentre Sustainability

Chapter 4

A Critical Analysis of the Case Studies

At a time when the economic sustainability of telecentres was regarded by many as a remote

possibility, the case studies documented in this study are likely to reverse that prejudice. The five

case studies represent corporate, state, and non-profit approaches to social enterprise – with both

“for profit” and “not-for profit” objectives – in Bangladesh, Sri Lanka, India, and Brazil.

Each case study targets the “bottom of the pyramid” market, by using telecentres as the “outreach

window.” With the equal pursuit of social and economic returns—double bottom lines—all the

cases studied demonstrate the characteristics of social enterprises (Chell, 2007); that is, applying

market-based strategies to achieve a social purpose.


This chapter sheds light onto the scale, stability, strategy, and profitability of the five organizations,

while scrutinizing their business models to recognize how they support individual telecentre

sustainability.

Common Characteristics in the Organizations

Five organizations demonstrate common characteristics in important aspects, such as their:

a) profit orientation

b) “bottom of the pyramid” approach

c) use of a telecentre 2.0 model (a network approach to telecentres)

Profit Orientation:

Table 4.1: Organizational status and financing structure of each organization

Name Organizatonal Status

Donor funds/corporate grants/

public funds

Self investments

Annual expenditure budget (USD)

ATN, BrasilNot-for profit, Public interest Civil Society Org.

65% 35% $91,000

Drishtee, India For-profit 25% 75% $747,000

Grameephone CICBangladesh For-profit - 100% $600,000

Sarvodaya-Fusion, Sri Lanka Not-for profit, NGO 75% 25% $205,000

D.net, Bangladesh* Not-for profit, NGO 85% 15% $340,000*

* 2006 figure (Source: Annual reports, Financial reports)


Among the five organizations, two (Grameenphone CIC and Drishtee) were “for-profit” and three

were “not-for profit” organizations. Of the non-profits, ATN was a public interest civil society

organization set up by the federal government of Brazil. D.Net and Sarvodaya-Fusion were non-

governmental organizations (NGOs). (Table 4.1).

In 2007, annual budgets among the institutions varied between US $90,000 and $747,000 (Table

4.1). One noteworthy shared characteristic was the use of both philanthropic and corporate finan-

cial resources to finance the organizations’ cash flows. Four out of five institutions tapped into

both philanthropic funds, such as grants25 and donations, as well as traditional capital, such as

private monies and commercial lending (Figure 4.1).

Figure 4.1: Financial composition of the operating budgets of each organization

Three non-profit organizations (D.Net, ATN and Sarvodaya-Fusion) derived their initial capital in-

vestments from philanthropic grants. Yet, their annual financial records demonstrated their com-

Philanthropicfinancial resources

(donor funds, grants)

Financial operations

D.NetSarvodaya-Fusion

ATN(Drishtee)

Grameephone CIC Drishtee

Traditional corporate resources

(loans, equity, shares)

25 Grants included funding provided by international donor organizations, government funding, corporate

grants, or individual contributions. In-kind contributions were not included in this analysis.

Social Enterprise Approach to Telecentre Sustainability | 1��

mitment to generate revenue from their own sales of products and services. For instance, in 2007,

65 percent of ATN’s financial resources (cash flow) were contributed by grants, and 35 percent were

derived from internal revenues 26 . The case was similar with Sarvodaya-Fusion, where 75 percent of

its revenue was received through philanthropic grants and the balance was from internal revenues

(Table 4.2). D.Net derived 15 percent of its funds from internal revenue.

Nevertheless, the two “for-profit” organizations predominantly tapped into traditional corporate capi-

tal. For instance, all of Grameenphone CIC’s capital requirements were contributed by its parent or-

ganization, Grameenphone. Drishtee derived 75 percent of its 2006 cash flow from internal revenue.

However, the remaining 25 percent was raised from philanthropic institutions (Table 4.2).

Table 4.2: Detailed analysis of sources of cash flow finances by each “non-profit”

organization (percentage)

Outside donor funds Self/internal funds

Name InternationalDonors

State funding

Local donors**

Individual donations

Sales of Products /services

Franchise /License

Assets/ divi-dends

Miscel-laneous

ATN 3 24 37 - 31 - 5 -

Sarvodaya -Fusion

75 - - - 13 - - 12

D.net * 45 - 17 23 8 - - 7

* 2006 / 2007 figures ** Corporate and local donor organizations (Source: annual reports, financial reports)

26 Internal revenues (ie. earned revenue) were derived from the sales of products and services, license fees,

membership fees, dividends from investments, assets, and ancillary business ventures.


Bottom of the Pyramid (BOP) – the target market:

All five organizations recognize the market potential at the “bottom of the pyramid” communities;

thus, they target these communities as their key customer segment. Drishtee believes there is a

market potential of US 10 to 12 billion dollars spread over 600,000 villages across India. Sarvodaya-

Fusion has identified a target market for ICT services of four million people earning below US $2

per day over 30,000 villages across Sri Lanka. Grameenphone CIC estimates a potential market of

20 million rural people who do not yet have access to the Internet or email facilities (Table 4.3).

Table 4.3: Target markets of each organization

Name Potential market Market size

ATN Telecentres and e-learning 15,000 telecentres in 5,563 municipalities

Drishtee Overall rural market US $10 – 12 billion in 611,000 villages

Grameenphone CIC, Connectivity; Internet & email based ICT market 20 million people

Sarvodaya - Fusion ICT access, skills and education 4 million people in 36,000 villages

D.net * Livelihood and human rights information 14 million people

Furthermore, three of the five organizations (Table 4.4) highlight community development as one

of their primary areas of activity. They all recognize community empowerment as one of their

major goals, and thus seek to engage women, children and youth in their operations, as well as

promote rural entrepreneurship. For instance, the mission of Drishtee, despite being a for-profit

organization, was to empower rural artisans. Similarly, D.Net aims to impart knowledge through

ICT intervention to empower underdeveloped communities.


Table 4.4: Activity areas, ground presence, and ownership patterns of each

organization

Name Primary area(s) of activity Presence Ownership

ATN Community development, Public policy, Education

Rural & suburban Local entrepreneurs

Drishtee Delivering services using ICTs Rural Local entrepreneurs

Grameenphone CIC Community development, Education, Health

Suburban & urban Local entrepreneurs

Sarvodaya -Fusion

Community development Rural & suburban Community leaders / local entrepreneurs

D.net ICT for development, Applied research, Human rights

Rural Local entrepreneurs

Telecentre 2.0 model:

The core strategy of each organization recognizes the telecentres as an integral component of

overall operation, and the strategy is founded on:

a) the telecentres’ ability to serve as an outreach window

b) the telecenters’ ability to scale up the operation-forming networks


Telecentres as Outreach Windows

Figure 4.2: All the organizations recognize telecentres as an outreach window

Telecentre

Grameenphone CIC

Drishtee

ATN

D.Net

Sarvodaya - Fusion

Knowledge products

e - governance

e - learning

ICT education

Bank services

Trading

Potential market

Telecentres form the outreach window for all five organizations to reach out to the BOP market

(Figure 4.2). In Brazil, ATN targets the support of low-income communities by targeting the tel-

ecentres set up by local government authorities. In India, rural villages (panchayats), where the

average monthly household income is less than US $50, are targeted by locating Drishtee’s kiosk

at rural locations. In that respect, telecentres are treated as a distribution channel for diverse

ICT-related products and services targeted at rural communities (Figure 4.2).

Figure 4.3: Illustration of the Telecentre Network Model

Marketable

services

Coreorganization

Village informationcentre

Telecentreowned by local

enterpreneur

Telecentreset up byGovernment

Telecentrefranchisee

Revenue

Telecentreowned by NGO


The Telecentre as a Scalable Network

Another attractive feature has been the scalability of telecentre networks. The number of

telecentres has continued to expand rapidly across regional boundaries throughout each country

in which they operate.

In Sri Lanka, there were 570 telecentres established by the state government over a period of four

years since 2004, and another 400 are planned for upcoming years. And there were other NGOs and

corporate partners, such as Easy-seva, setting up additional telecentres. In Brazil, 14,000 telecentres

have been set up by NGOs and local entrepreneurs with the support of federal and local governments

since 2001. D.Net plans to collaborate with more than 2,000 telecentres that have been set up all

over Bangladesh by NGOs and corporate organizations (Table 4.5).

None of the networks studied has identified an optimal number of telecentres, although

Grameenphone CIC plans to temporarily stop its initial expansion at the 500-telecentre mark in

order to carry out an assessment before expanding further.

Such network approaches follow the “telecentre 2.0” concept, where partnerships, scale,

collaboration, and networking lead to the co-existence of telecentres that would otherwise

attempt to survive as individual entities (APDIP, 2007).

Table 4.5: Scale and type of telecentre networks

Name Number of Telecentres Partnering networks

ATN, Brazil 14,000 Local governments, Military institutions, NGOs, Private owners

Drishtee, India 4,000 Own

Grameenphone CIC 500 Own

Sarvodya - Fusion 600 ICTA, Sarvodaya

D.net, Bangladesh 2068 Multiple NGOs


Business Models

While there were similarities in each organization’s network approach, there were differences

observed in their business models, especially in the aspects of:

a) Partnership structure

b) Service offering

c) Revenue structure

Partnership Structure:

There were three partnership structures presented by the five organizations in the study.

Franchise model: Setting up telecentres as franchises. (Grameenphone CIC and Drishtee)

Partnership model: Partnering with telecentres set up by outside organizations.

(D.Net, ATN)

Hybrid model: Setting up proprietary telecentres and creating partnerships with others.

(Sarvodaya-Fusion)

Franchise Model:

Two organizations, Grameenphone CIC and Drishtee, use a franchise model. Local entrepreneurs

provide the start-up investments to found the telecentres, and the central organizations arrange

for financial assistance if required. Location selections are based strictly on objective criteria,

such as infrastructure availability and market potential. Both organizations carry out a rigorous

procedure to select the entrepreneurs, and expect them to invest in hardware and other equipment,

management costs, and the build out of the telecentre. Branded services are then offered through

contractual agreements. In the model, each telecentre pays a license fee, and thus becomes a

source of revenue to the core organization.

1.

2.

3.


Partnership Model:

In this model, the core organizations are not involved in setting up the telecentres, selecting

the entrepreneurs who will run them, or choosing the center’s location. Instead, they establish

partnerships with the organizations that own or sponsor existing telecentres, and provide support to

build the capacity of telecentres and telecentre operators. In Brazil, ATN partners with telecentres

that were set up by local organizations with the sponsorship of local and federal governments.

Similarly, D.Net partners with local NGOs that invest in telecentres. None of these partnership

models generate direct revenue from the partnership engagement, nor do the organizations charge

a membership fee or attach their brand name to the service.

Hybrid Model:

In this model, the core organization uses a hybrid

of both models - both own telecentres as well as

partnerships. Sarvodaya-Fusion set up telecentres

at Sarvodaya district coordinating centers, where

it contributes the total equipment package, the

manager, and a set of services, and centrally

coordinates all the telecentres. In the meantime,

Sarvodaya-Fusion signed on as a partner with ICTA—

the state body that set up telecentres (branded

as “Nenasala”)—and began carrying out capacity-

building programs for telecentre operators.

Different Models of Revenue Channeling:

In order to channel the revenues generated by the

“service offerings” of the core organization, there

were three different models adapted by the five organizations in the study.

Figure 4.4 : Business Model 1

Own services

Brand name

Telecentre

Revenue

Grameenphone CIC


In one model (Figure 4.4 : Business Model I), the core organization (e.g. Grameenphone CIC)

directly set up a franchise operation with the telecentre. The core organization shared both its

brand name and a set of services designed for telecentres to offer, and the revenue stream was

directly channeled back to the core organization. Sarvodaya-Fusion also uses this model for its

own telecentres.

Figure 4.5: Business Model II

In the second model (Figure 4.5

: Business Model II), in addition

to its direct partnership with

the telecentres, the core

organization involves third-

party service providers with the

telecentre. In Drishtee’s case,

services were offered by third-

party organizations as well as

by the core organization. Yet,

in ATN’s model, only third-party

organizations offered services,

and the core organization only

carried out a coordination role.

Revenue streams in this case were

channeled through third-party

institutions as well as the core

institution. Nevertheless, the core

institution closely coordinated all the services and revenue streams.

Revenue

Drishtee

Third partyinstitutions

Telecentre

Brand name

Comm

issio

n

Own servicesThird partyservices

Figure 4.5: Business Model 11


The third model (Figure 4.6 :Business

Model III) was a unique one adapted

by D.Net. In this model, though core

organizations worked closely with the

telecentres, revenue streams were not

involved with the telecentre. The main

services offered by the core organization

were channeled through an extension

of the telecentre (via the Mobile Lady).

For instance, knowledge services were

offered by the Mobile Lady to the rural

communities, and for additional services

they were directly connected to the help

desk at the core organization. In this

model, the core organization directly

engages with the community to offer services and generate revenue, using telecentres as outreach

points. When a community member makes a phone call from a telecentre to acquire help desk

services, the fee is automatically charged to the phone bill.

Service Offering:

All the organizations under study made a remarkable effort to build new services on top of the core

traditional ICT services offered by telecentres, such as computer rental, photocopying, printing,

and communication services. The type of services offered varied from e-governance to e-commerce,

or from life insurance to e-learning. Among the five organizations, Drishtee developed the most

diverse offering (Table 4.6).

D.Net

Telecentre

Revenue

Mobile lady

Community

Information services

Figure 4.6: Business Model III


Yet, all the organizations paid a great deal of attention to expanding the service spectrum offered

by telecentres. The range of value-added services offered by the telecentres were generally

decided by the primary objectives of the core organization, the needs of the target community, the

demands of the telecentre operators in the network, and the readiness of third-party institutions

(Figure 4.7).

Figure 4.7: Key elements at designing products and services

In Sri Lanka, Sarvodaya-Fusion spent nearly two years to develop one value-added service: ICT

courses to be offered at telecentres. The process started through a participatory workshop with

telecentre operators that listed at least ten potential value-added services that could be purveyed

by telecentres. Subsequent market analysis and competency analysis singled out ICT courses as the

most feasible one (discussed in Box 3.6).

Core organizationobjectives

Product & service design

and development

Telecentreneeds

Communityneeds

Third partyservice

providersavailability


Table 4.6: Services offered by different organizations

DrishteeGrameenphone CIC

ATNSarvodya-Fusion

D.net

e-larning X

speicialized ICT training X X X

Basic IT services (including internet)

X X X

Mobile phone/card selling X X X

Financial/Banking services X X

Information services X

eGovernance X

Online trading X

Non-ICT services

Grocery Products? X

Agricultural servies X X X

ATN recognizes e-learning, specialized ICT training, and banking services as key potential telecentre

services. An example of ATN’s unique ability to broker win-win partnerships is the deal it negotiated

between the University of Metropolitan Santos (UNIMES) in São Paulo, a modern university with

an e-learning focus that offered 14 online undergraduate and nine post-graduate courses. The

partnership enabled all 23 e-learning courses via telecentres, allowing students and teachers to

access the courses in their own neighborhoods for the first time.


ATN’s partnership with Caixa, Brazil’s second largest public bank, enables its affiliated telecentres

to offer remittance services, such as paying utility bills or processing bank account applications,

which were otherwise limited to the bank branches located in townships.

D.Net’s Pallitathya Kendra’s (telecentre) Mobile Lady travels five to seven kilometers a day and

visits about 75 villages a month, connecting rural women and farmers to a telecentre and help

desk information services. Shrimp farmers use her to obtain their water pH measurements to sort

out appropriate treatments with the expert support of D.Net’s help desks. The help desks draw

on information organized in nine thematic areas, including health, human rights, and education,

which are offered through 30,000 local language web pages at telecentres.

In Sri Lanka, Sarvodaya-Fusion recognized that 89 percent of the telecentres in the country were

offering ICT courses as one of their major services, but that they were not meeting appropriate

standards set by the state body, the Tertiary and Vocational Education Commission. Fusion thus

developed standard course materials and certifications, which included the national examination,

to add value to ongoing programs.

Third-party Institutions:

In order to offer the spectrum of services they provide, four of the organizations in the study

mobilized the expertise and resources of third-party institutions. For instance, ATN entered into

contractual agreements with six institutions that included two banks, two educational institutions,

a mobile operator, and multiple local government institutions.

In order to provide 12 services that could be provided by kiosks, Drishtee worked with ten reputed

organizations, such as ICICI, Amaron, HCL, CEEP, Quiver Infoservices Ltd, Microsoft Corporation,

and Intel.


Sarvodaya Fusion partnered with the Ministry of Tertiary Education and the Ministry of Agriculture

to provide ICT courses and agricultural information via telecentres, most of which were sponsored

by ICTA, the governmental ICT institution.

Grameenphone CIC was screening potential partner institutions to provide services at the time of

the research interview.

Fee Structures:

Drishtee and Grameenphone CIC both charge franchise fees from telecentres in their networks.

All the organizations use relatively complex fee structures, rather than flat fee structures. Such

fee structures reflect the effort to generate revenue for the core organization while passing on a

reasonable benefit to the telecentre. The fees also reflect a greater understanding of the capacity

of telecentres and related third-party institutions to provide services in “bottom of the pyramid”

ecosystems (Table 4.7).


Table 4.7: Multiple partnership structures, services and fee arrangements designed by

each organization

Partnetship Services offered Fee structure

Roy

alty Drishtee vs

telecentre

Offer brand name, of the abil-

ity to offer 23 services, access

to the online portal

Telecentre pays royalty fees for use of brand

C

omm

issi

on

UNIMES & ATN

23 types of University courses

(online) through telecentres

For each student, UNIMES will pay 20% of its standard commission to the telecentre and 5% to ATN.

CAIXA & ATN 1.Transactional modality: con-sumers pay utility bills at tel-ecentres

Telecentre receives 20 cents for each trans-action and ATN receives 5 cents.

2.‘Negocial’ modality:telecen-tre carry out documentations for various bank services

Various models: For each new bank account opened, the telecentre receives 4R$ and ATN receives 1R$ per account. For every business account opened, the telecentre receives –14.40R$ and ATN receives 3.60R$. For every loan application processed, the telecentre earns 1.6% of the total loan value and ATN receives 0.4%.

Revenue is divided between parties, with 25% going to ATN 45% to Gera Negocios, and 15% to the telecentre. (The balance of 15% is used to purchase training materials (10%) and to pay taxes (5%).

The telecentre pays a fixed charge for each student to take final exams at the end of the course.

Reve

nue

shar

ing State

Government of Pernambuco, GERA NEGOCIOS & ATN

Fusion &

telecentres

State Government offers grants to train 10,000 youth, on basic IT & internet services. Courses designed by Gera Negocios, offered at 40 telecentres

Providing value added ICT cours-

es.


The commission-based fee structures designed by ATN for e-learning courses (with UNIMES) channel

20 percent of commissions to the telecentre while the core organization receives five percent. For

each bank transaction (e.g. paying a utility bill) completed, the telecentre receives 20 cents, while

ATN receives five cents.

The revenue sharing model adapted by ATN shared 15 percent of revenue with telecentres, 45

percent with the third-party institution, and 25 percent with ATN, with bulk IT skills-training

programs for local communities being funded by local government institutions. The payment to the

third-party institution was required because it provided specialized educational material for the

courses (software, curriculum, etc.). A similar model was adapted by Fusion, when it offered value-

added ICT courses through Nenasala, the partner telecentre network.

Are They Profitable?

Given the relatively short life span of each organization, they are still at an early stage of the

organizational growth cycle, and are reporting reasonable revenue growth. Within the first year

of the operation, ATN recorded a revenue of US $21,000 by charging a five percent commission27

for providing e-learning services through telecentres, which was projected to reach US $47,000 in

two years’ time. Grameenphone CIC reported a revenue of US $250,000 by offering phone services

and US $3 million through the sale of FlexiLoad prepaid mobile phone cards by telecentres in the

2006-2007 budget period. Drishtee earned US $275,000 in revenue from products and services and

US $335,000 from franchise and subscription revenues during the 2005-2006 budget period.

Drishtee, the longest serving social enterprise among the study group, showed incremental revenue

gains over a three-year period. Importantly, such increments were forecasted to be concentrated

on products and services offered through telecentres rather than on license or franchise fees earned

from new telecentres (Figure 4.8). Similar upward trends were projected by both Grameenphone

CIC and ATN.

27 Twenty percent of the commission goes to telecentres.


How Does This Help Telecentre Sustainability?

The common assumption held by every organization was that basic ICT services offered at a

telecentre alone would not be sufficient to make a reasonable surplus. Thus, the strategy was to

offer value-added services in addition to existing basic ICT services in order to boost revenues to

secure reasonable surpluses (Fig 4.9a & b).

The models employed were targeted to expand target customer groups (e.g. youth, women,

and adults) by offering diverse services, and also to improve customer volumes. The subsidy

vouchers distributed by Sri Lanka’s “Information and Communication Technology Agency (ICTA)“

had managed to stimulate more rural visitors to telecentres. More importantly, different voucher


types stimulated the adult population in addition to the children and youth (see Box 2.6 in chapter

2). In Bangladesh, services such as the provision of FlexiLoad mobile prepaid cards28, e-governance

services, and basic grocery sales (such as agricultural inputs) stimulated a diverse set of customer

groups to visit the telecentres.

Another feature was the systematic value addition (i.e. increase the revenue potential of the

service) (Figure 4.9a & b). Premium services, such as certified e-learning ICT courses tended to

generate better revenues. With the provision of ATN’s 23 online courses, one telecentre reported

an increase of 400 students (mostly school teachers) spread over both day and nighttime periods,

boosting its revenue by US $15,000, and securing a gross profit of US $8,000.

28 Note: Nevertheless, in some townships, they add up to high revenues. As reported by Grameenphone CIC,

some CICs draw over 25,000 taka a month just by selling FlexiLoad phone cards and Internet services, though

such places are not very common.

Figure 4.9 a: Combined service offerings to improve telecentre revenues

Basic IT services(Printing, Photocopy, Photo-printing, Laminating, Type setting) & Internet

Business process outsourcingWeb development

e- learningSpecialized ICT educationOnline tradingKnowledge products

Vouchers,Mobile prepaid cardsBank servicese-Governance Insurance services

Low

Organizations who offer the service : ATN, Drishtee, Grameen, D.net, Fusion

High

Low

Rev

enu

e

Customer volume

Hig

h


Drishtee estimates that an average monthly revenue of US $150 per month would be sufficient

for a telecentre to break even, assuming the monthly operational cost to run a telecentre is

approximately US $100, allowing for a US $50 surplus. Drishtee states that since 2004, their service

package has been capable of generating that target amount within six to 12 months of the initial

operation of a telecentre.

Grameenphone CIC states that by using its model, including phone line connections, FlexiLoad

phone cards, and EDGE mobile Internet services, telecentres can reach the break-even point in

one year. The package includes a one-year free subscription service.

oFigure 4.9b: Overall strategy to impr ve telecentre revenues

Telecentre

Improvedincome

Buildingenterpreneurial

capacity

Buildingfinancialcapacity

Premium valueproduct & services

Low value -product & services

Basic IT services


Other Support Services:

Table 4.8: Packages offered by core organizations to telecentres

Grameenphone CIC Drishtee ATN DNet Sarvodaya-

Fusion

Membership fee for

use of brand nameNO NO NO

Free capacity-

building services

Fee-based services

Support services

In addition to a marketable service offering, telecentre operators received other support services

from core organizations. For instance, as a result of ATN’s negotiations with the Microsoft

Unlimited Potential29 program, the company donated 40,000 Microsoft Windows software licenses

to telecentres participating in the ATN network. For the many telecentres that operated using

pirated software prior to the donations such support made a dual impact: On one hand they

became legitimate operators, not subject to restrictions posed by unlicensed software; On the

other, they were able to raise their market prices for ICT courses offered at their telecentres.

Fusion offered leadership and social enterprise capacity-building programs to its member telecentres

and facilitated provincial and national alliances of telecentre operators. Such alliances formed peer

networks that sometimes helped generate additional resources. For instance, the telecentre forum

of the Southern region, reportedly secured US $4,000 from a local donor (Chamber of Commerce

in Hambantota District of Sri Lanka) to provide training scholarships and hardware donations, in

March 2007.

29 Microsoft Unlimited Potential is an initiative of Microsoft Corporation to enable sustained social and economic

opportunities across the world.


Limitations:

Nevertheless, as observed with Drishtee, ten percent of telecentres failed to survive due to

complex reasons, especially during their early years of operation. After one year of operation,

Fusion decided not to run three of its ten telecentres as revenue centers when the core organization

recognized that those telecentres were not installed in the right locations. Although sufficient

evidence could not be materialized, the core organization’s studies reported that a significant

number of telecentres failed to sustain themselves.

While such failures were attributed to complex reasons, discussed in chapter 1, following are some

additional observations made during the research:

Financial resources were either not sufficient or not flexible enough to support the incubation

periods of these telecentres - as observed by Sarvodaya-Fusion, for example.

Service packages offered by the organizations were not sufficient to generate the revenues in

the required volume at the desired speed. With the exception of Drishtee, all the organizations

offered three to four general services, which were not necessarily popular or lucrative enough

to meet revenue goals. For instance, in a competitive environment, where FlexiLoad mobile

prepaid cards were easily available in grocery stores, some Grameenphone CICs struggled to

reach their financial targets.

Capacity-building programs and help desk programs were not strong enough to overcome

the acute deficiencies attributed to initial telecentre selection procedures (e.g. Sarvodaya-

Fusion).

Some business models—for instance, the D.Net model—were not strong enough to draw the

required volume of customers to the telecentres; thus, they failed to generate sufficient

revenues.

•

•

•

•


Conclusions and Recommendations

During the two-year period of this study the telecentre ecosystem has continued to evolve. The

five organizations that were extensively studied, themselves had undergone multiple changes in

their progressive growth curve. However, this research has carried out a snapshot analysis of

a frozen picture that provided some fundamental understanding into the question of economic

sustainability.

Key conclusions of the research findings can be summarized into following three groups:

1. Feasibility of telecentre sustainability:

As observed with all five case studies, research findings provide evidence that telecentres

have the feasibility to be profitable “bottom of the pyramid” social-enterprises.

The economic sustainability of telecentre is an outcome of the fulfillment of multiple factors.

Entrepreneurial capabilities of telecentre operators and the presence of sufficient products

and services to be delivered via telecentres are two important factors among them.

2. Being a part of telecentre network:

Being a part of a telecentre “network” provides a better chance for individual telecentres

to meet sustainability. There is a strong likelihood that receiving a package of support

services helps telecenters to reach sustainability. However, we cannot dismiss the individual

•

•

•


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This book and the telecentre.org program are supported by the following social investors:

Sustainability FirstIn search of telecentre sustainability

ISBN No: ISBN 978-955-599-507-8

Harsha Liyanage, Ph.D.


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