Mobile mania

• Opportunities, threats and challenges

In 2011, Sri Lanka had an estimated eighteen million, three thousand, four hundred and forty seven (18,003,447) mobile phone subscribers. By the end of December 2012 the number was 20.3 million. This is for 20.8 million people!

Usage and penetration of mobile phone connectivity has a humongous effect on economic activity. The upside is obvious. Generating more business opportunities for micro, small and medium entrepreneurs, for example. Providing services and support to mobile phone users is another sector which is rapidly expanding.

An expanding market for suppliers of goods and services is the stuff of legend, whether it be fishermen returning with their catch who phone in to their home and other ports to find out the best price, to the driver/guides of tourist jeeps at the Yala National Park who alert their brethren on the presence of a tusker, leopard or a herd of elephants. The ubiquitous three-wheel driver, who drops you off with a cheery “just give me a missed call when you need to be picked up,” is another modern day icon.

There is also a downside. Construction site supervisors complain of workmen being disturbed by calls on their mobile phones while on the job, resulting in a drop in quality and productivity. Most schools confiscate mobile phones from students at the entrance which can be collected on the way out after school.

Managers of production lines complain of disruption due to workers getting text messages and scooting off to the rest rooms to take calls or respond; this where mobile calls are banned on the work floor. The over-visitation at Yala National Park and harassment of wildlife by being surrounded by gawking tourists is also a problem. Notwithstanding all this, ‘mobile mania’ is today a given and coping mechanisms are what all of us are compelled to resort to!

There are also revenue implications for the State. Like Sri Lanka other states have been quick to see the revenue implications of mobile connectivity and have imposed a wide variety of taxes on callers, while ensuring that the supply chain for hardware is not too overburdened with revenue constraints. The phones come in unimpaired, but usage is heavily taxed. This is an imposition of a limitation on connectivity, but if there is an inelastic commodity – it is an upgraded mobile telephone call and usage goes up and up.

Eliminating isolation

One major area where the mobile phone has had an impact is on what has been described as ‘the Poverty of Isolation,’ the lack of capacity to integrate into a society or a community, is an aspect and cause of poverty, which is often overlooked. The dictionary meaning of isolation is the state of being separate, the state of being alone or lonely. Isolation is often caused by inadequate infrastructure, no road access, no connection to the national power grid, inability to receive a radio or television signal, not being within a mobile phone footprint or not having a land line wire connection, etc.

About four decades ago, an unemployed graduate from a remote part of Monaragala District explained to me that he was unable to get in his application for a Government job in before the closing date, as the only Government Gazette that came to their village was in the Sub Post Office and the Sub Post Master’s son, who was also a job-seeking graduate, used to tear out all the pages from the Gazette which had notices of vacancies for government jobs for graduates, so that only his application could be sent from that locality!

He further said that the only reason he was able to bring this late application and appeal for it to be accepted, notwithstanding it being out of time, was a casual meeting with a university batch-mate who had told him that this institution was recruiting graduates. This aspect of the consequences of isolation must be repeated in thousands of communities in pre-mobile phone days.

Solutions provider

Mobile mania, which has swept the world in the last few years, has in some ways provided solutions. In Sri Lanka there is the story of mobile phone companies angling their antenna on the west coast out to sea so that the signal can be picked up out at sea, to enable fishermen approaching the west coast with their call, the thotupola (landing points) at say, Chilaw, Negombo, Wattala, Janelle, Madera, to find out prices to enable them to find out selling prices, to bargain for the best price from the mudalalis (wholesale buyers) at their home thotupola.

In India, on the west coast in Kerala too such activity is recorded. Thanks to the mobile phone, no longer is the fisherman at the mercy of the buyer, the fisherman need not sell for the asking price but is empowered to bargain on the basis of prices in adjacent markets, and a competitive price for his catch.

India has become the classic role model for such bottom-up successes. The top-down requirement of the State providing efficient public services, law and order, education, pure water and health services, the Indian State has fared miserably. But people-driven bottom-up successes abound and are the stuff of legend. Mobile connectivity and the communication and information technology revolution have created a whole new economic scenario.

Commentator and author Gurcharan Das, has commented that “the Indian economy grows only at night, when the politicians and bureaucrats are asleep, and the people are up and about cutting deals on their mobile phones!”

Walk out of a upmarket Mumbai hotel and reject the option of an overcharged hotel limousine or a bashed-up street taxi with a fixed meter, you only have to press ‘Book Now’ on your mobile phone screen, and access a network of taxis using satellite positioning, cheap Chinese made mobile phones, souped-up Google maps and credit cards, which will have you picked up by their nearest connected taxi in a couple of minutes.

Ola-cabs, a firm started up in 2010 by 26-year-old engineer Bhavish Aggarwal providing the service, is growing by 30% a month. Emerging economies need a million Ola-cab clones, start-ups that use technology to overcome everyday problems, mostly brought about or aggravated by Government-regulated inefficiencies or corruption.

India’s technology revolution

India has already had one technology revolution. In the early 1980s middle class engineers, from dirt poor socialist India, like Narayan Murthy of Infosys, somehow persuaded Western firms to outsource their back office functions and bits of their IT operations to India. They also managed to convince the Indian regulators, politicians and bureaucrats, to let them carry on undisturbed, without throwing every obstacle in the book at them.

Indeed, wags have it that the Indian regulator bureaucrats had no understanding whatever of the communication and information technology sector and its rent-seeking potential, and thus had no idea how to get into the obstructionist mode in which they revel, and which is such a massive source of black revenue for the political class and their acolytes!

These technology services have saved India from bankruptcy, like Sri Lanka’s foreign employment, those unsung heroes toiling away in the deserts of Arabia. In India technology exports were 4% of GDP in 2012, helping to keep the balance of payments in passable shape, as is the case in our own billions earned from foreign employment.

Simple services

Like the missed call on which Sri Lankan three-wheel drivers generate so much of their work, Ken Banks, founder of kiwanja.net, which helps non-profit organisations exploit mobile phone technologies in the developing world, points out that simple services based on text messages are likely to predominate for some time to come.

All mobile phones, however cheap, can send text messages, which cost very little. Imagine the empowerment if rice farmers located in Sri Lanka’s rice bowl, Anuradhapura, Polonnaruwa and Ampara, could get a daily text message at harvest time, giving the purchase prices being quoted by a variety of wholesale buyers; they would not be at the mercy of itinerant buyers who come to the threshing floor and offer them a pittance for their crop.

Or if the symptoms of kidney disease which is taking such a heavy toll on these very same farmers and the preventive measures are made available through a text messaging system, prevention, early diagnosis and treatment, would be possible. The same would apply to vegetable and fruit farmers, if they could have information of prices at the Dambulla and Colombo Manning market by text message.

This need not be limited to the sale of primary producer outputs only; it could apply to procurement of inputs, seed material, fertiliser, insecticides, tractor and water pumps and spare parts, etc., for farmers, ice, nets, outboard engines and spare parts for fishermen too.

The potential is enormous and it may be happening here, already. The Government of the Brazilian State of Parana is using text messages to notify farmers about agricultural prices and the unemployed about job opportunities, descendants of that unemployed graduate from Monaragala, referred to earlier, need not now be limited to the Government Gazette and the tyrannies of the Sub Post Master’s son!

Internet empowerment

The internet is also being utilised to overcome this isolation. In India, the Indian Tobacco Company Ltd. (ITC) as set up e-Chaupal, which leverages the internet to empower small and medium farmers – who constitute 75% of the population below the poverty line in that country. e-Chaupal provides the farmer with knowhow and services, timely and relevant weather information, transparent price discovery and access to wider markets, thereby enabling economic capacity to proliferate at the base of the rural economy, Prof. Prahalad’s ‘Bottom of the Pyramid,’ which is otherwise exploited due to isolation from economic information.

Today over four million farmers use e-Chaupal – bargaining as a sellers cartel, adopting best practices, matching up to food safety norms. Being linked to futures markets is helping small farmers to better manage risk. e-Chaupal has been cited in the Government of India’s Economic Survey of 2006-07 for its transformational impact on rural life.

ITC’s strategic intent is to develop e-Chaupal as a significant two-way multidimensional delivery channel, efficiently carrying goods and services out of and into rural India. By progressively linking the digital infrastructure to a physical network of rural business hubs and agro extension services, it will transform the way farmers do business in India.

Internet accessibility in Sri Lanka may not be sufficient to replicate e-Chaupal, but surely, given the popularity of mobile phones which all have text messaging capacity, a system can be developed to enable primary producers to access basic market information? The cost factor and the ability of users to pay will be a limitation, but surely this is an advertising medium which can be exploited to cover costs?

Myanmar

The last frontier for mobile mania to take hold in South Asia is Myanmar. The Government has begun a formal process of selecting two telecom groups to build and improve its national mobile network. Over 20 telecom groups are in competition.

Myanmar, with its large and youthful population of about 60 million and an economy growing at 5.5% annually, with mobile phone usage currently below 10%, is an attractive market. The two licenses being tendered are to build, own operate national mobile networks for a 15-year timeframe. The Government sees mobile telecom services as crucial to the country’s future social and economic development.

There will also an ‘unexpected consequence’ on Myanmar’s hitherto repressed political environment, which is slowly opening up, showing growing tensions between Buddhist Burman extremists and Muslim Rohingya people, in the western most state of Rakhine, bordering Bangladesh.

Mobile connectivity is a way by which anti-social elements can set up disruptive ‘rent a mob’ opportunities and move people around to outwit the police and security forces law enforcement operations. Its potential was seen a few years ago in London during the street riots, when Blackberry’s messaging system was used by mobs to inform their fellow looters on the deployments of Riot Police units.

Indian example

For the potential of the internet, the Indian example is a track which others can follow. The internet is becoming increasingly popular. Penetration is now just 3-4% of the population, if judged by the number of moderately-fast fixed internet lines and smart phones that use 2.5G and 3G services. About two-thirds of these connections are mobile.

But if you include people who access the internet through communication centres, at work, through friend’s computers and through basic phones with small screens, penetration shoots up to 10%. Most of these surfers are young, a part of India’s burgeoning youth population. The 10% figure in absolute terms is 122 million people, and the number will rise as Chinese-made smart phones get cheaper.

For a mobile internet revolution, as in South Korea of Japan and other developed economies, India’s entrepreneurs must overcome three problems. The first is a payments system. Only a fifth of Indians have credit or debit cards and many are scared to use them for online purchasers. This will change as confidence builds up. The second bottleneck for the industry is money. The Indian internet entrepreneurs will need billions of rupees in investments to grow. This also is to a great extent a confidence factor for investors. The Indian attitude to FDI is ambivalent as can be seen for the reaction to FDI is the domestic retail trade by the Walmarts and Ikeas of this world.

The third impediment is India’s telecom industry itself. Once a high flier, it is today-indebted, loss making and fragmented, mainly due to a price war, corruption and bureaucratic licensing rules which prevent consolidation and roaming. The political will to de regulate and release the competitive forces of the industry is an imperative. The mobile internet boom will follow the arrival of a more competent state – not only in India, but also in all South Asian states such as Myanmar, Sri Lanka Pakistan, Nepal and Bangladesh, to name a few.

A competent state, in this context, is one that unshackles online payment systems, regulates telecoms sensibly and does not throttle everything with bureaucratic red tape. Wags say that unfortunately, unlike the early days of the industry in India, the Indian babu bureaucrats now understand the industry – and know how to block development to milk graft for their political masters, witness the ongoing 2G spectrum allocation scandal!

All the other ingredients for a mobile mania revolution are in place – entrepreneurs brimming with ideas, customers hungry for change, only a state with a negative controlling, nanny mindset is holding the potential of mobile mania back. Change is an urgent imperative.

Logical future

The logical future of mobile mania can be seen today in the USA’s ‘We the people,’ a website which permits internet-savvy citizens to draft e-petitions to mobilise support for political causes they support. Since its launch in 2011, citizens have created nearly 180,000 petitions, the numbers of signatures on these petitions have reached 12 million.

In Finland successful e-petitions result in a Parliamentary vote. In Germany, in the state of Friesland, e-citizens e-petition their legislators on issues like location of speed cameras for vehicle speed traps, spending of local school budgets, etc. In Latvia, the law requires that any online initiative on a website called ManBalss.lv, which translates as ‘My Voice,’ that gathers the support of 10,000 citizens, must be taken up by the Latvian Parliament for consideration for enactment into law.

The White House in the USA has a Digital Director, to handle e-petitions for President Obama. The present incumbent Macon Phillips says e-citizens appreciate the opportunity to have a dialogue with the government on issues which concern them.

These innovations will help mobile mania to bring people closer to their governments through internet mobile connectivity. The isolation which separates people from the government will cease to be a problem.

Government, politicians and bureaucracies must realise this and move forward now. There is no space here to deal with the humongous potential in mobile banking, like Safaricom’s M-Pesa in Africa, towards achieving total financial inclusion in the provision of financial services to the poor and marginalised, its promise dwarfs the reality of things mentioned.



(The writer is a lawyer, who has over 30 years experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)