GrameenPhone has a dual purpose: to receive an economic return on its investments and to contribute to the economic development of Bangladesh where telecommunications can play a vital role. This is why GrameenPhone, in collaboration with Grameen Bank, is aiming to place one phone in each village to contribute significantly to the economic uplift of those villages.
Grameen Phone’s basic strategy is coverage of both urban and rural areas. In contrast to the “island” strategy followed by some companies, which involves connecting isolated islands of urban coverage through transmission links, GrameenPhone builds continuous coverage, cell after cell. While the intensity of coverage may vary from area to area depending on market conditions, the basic strategy of cell-to-cell coverage is applied throughout GrameenPhone’s network.
Innovation
The Village Phone (VP) Program was implemented by Grameen Telecom (GTC) in cooperation with Grameen Bank, the internationally renowned micro- credit lending institution. The program connects women borrowers of Grameen Bank to the GSM technology through the village phones. They become effectively mobile public call offices. This not only provides rural poor with new, exciting income-generating opportunities, but it also helps to enhance the social status of women from poor rural households.
The VP works as an owner-operated pay phone. It allows the rural poor who cannot afford to become a regular subscriber, to avail themselves of the service with loans from Grameen Bank. The loan usually is for BDT 12,000 and pays for a handset, the subscription and incidental expenses. The VP operator receives training from GTC about mode of operation, user charges etc.
GrameenPhone’s Global System for Mobile or GSM technology is the most widely accepted digital system in the world, currently used by over 300 million people in 150 countries. GSM brings the most advanced developments in cellular technology at a reasonable cost by spurring severe competition among manufacturers and driving down the cost of equipment. Thus consumers get the best for the least.
GrameenPhone Ltd. has recently introduced the EDGE (Enhanced Data Rates for Global Evolution) service, an advanced high-speed mobile Internet and data service for the first time in Bangladesh.
The EDGE will enable valued subscribers to enjoy advanced mobile services such as the down-loading of video and music clips, full multi-media messaging (MMS), high-speed color Internet access and e-mail on the move. It is being launched on a test basis for the time being in Dhaka and Chittagong and it will be launched commercially very soon. The EDGE coverage will also be gradually expanded around the country within this year. It is an advancement over the GPRS or General Packet Radio Service system and is a third generation mobile phone technology. It is up to 8 times faster than an ordinary GPRS network and, due to its increased network capacity and speed, customers can download contents (video clips, pictures) and communicate much faster.
Impact
Telephony helps people work together, raising their productivity. This gain in productivity is development, which in turn enables them to afford a telephone service, generating a good business. Thus development and business go together. Here is an example:
Laily Begum and her husband Atiqullah, a day labourer, started their lives in poverty, like millions of other people in Bangladesh. They did not have enough to eat and lived in a tiny house, in Patira, a village in Dakshin Khan, on the outskirts of Dhaka city.
Laily Begum was encouraged by her husband to join Grameen Bank (GB). At first she took a BDT 4,500 loan from GB for buying a cow. By selling milk, she earned some extra cash, but it was still not sufficient to meet her family's subsistence needs. Laily took a further BDT 6,000 loan for buying a second cow.
In 1997, with encouragement from the local Grameen Bank branch manager, Laily Begum applied for a mobile phone to become the first Village Phone Lady of Grameen Telecom (GTC). GB provided her loan financing and GTC gave her the basic instructions, so that she knew how to operate the mobile phone.
Laily Begum and her husband were both apprehensive as well as excited about this new business venture, but business grew very fast. Initially the number of customers was very large. As she had no competitors, her income was BDT 20,000 to BDT 26,000 per month. More recently, local people started using the fixed line phones of BTTB and other mobile phones in the area, so her income decreased BDT 7,000 to BDT 8,000 per month. She saves up to BDT 3,000 per month and the income has remained stable.
By increasing her earnings and investing the monthly savings, Laily Begum and Atiqullah have now set up five shops including two grocery stores, one laundry shop, one shop used as a pharmacy and a village phone booth. Laily and Atiqullah look after the restaurant they own. From these businesses, she now earns approximately BDT 13,000 per month. The extra income enables her to make a decent living and plan ahead for a better and brighter future. Her children are studying in schools. They live in a brick-built home, with two beds, two color TVs, one refridgerator, one cassette player, and reflect a comfortable living standard and solvency.
The VP service of GTC elevated Laily Begum's social, economical and family status. To improve their position further, Laily Begum and her husband plan to diversify their IT business and have already applied for an Internet line from GTC. Laily Begum has become a role model for the people of Bangladesh as well, demonstrating clearly how information and communication technology can help the poor to come out of poverty.
By bringing electronic connectivity to rural Bangladesh, GrameenPhone delivers the digital revolution to the doorsteps of the poor and unconnected. By being able to connect to urban areas or even to foreign countries, a whole new world of opportunity is opening up for the villagers in Bangladesh. Grameen Bank borrowers who provide the services are uplifting themselves economically through a new means of income generation while at the same time providing valuable phone service to their fellow villagers. The telephone is a weapon against poverty.
Initiated in 1997, the VP Program has continued to grow at a robust pace over the years. As of August 2005, there are more than 165,000 VP subscribers. The average revenue per user (ARPU) of VP subscribers is double that of the average GP business user. The revenue growth has been significant over the years. Beginning with BDT 0.53 million in 1997, the figure has risen to BDT 1,114 million in 2002 and to BDT 2,070 million at the end of 2003. The VPs in operation now provide access to telecommunications facilities to more than 60 million people living in rural areas of Bangladesh.
This unique venture has gained widespread global recognition and has been featured extensively in international media. The success of the program won it the "GSM in the Community Award" given by the GSM Association in 2000. Former U.S. President Bill Clinton also lauded the innovative VP Program during his visit to Bangladesh in the same year. According to some research studies, the introduction of VPs has made a tremendous social and economic impact in the rural areas, creating a "substantial consumer surplus" for the users.
Inspiration
The Village Phone Program began from a social commitment made by the shareholders of GrameenPhone that "good development is good business".
The World Inquiry editorial team edited this profile from the original submission of the interviewer or other source. The views expressed do not necessarily represent Case Western Reserve University, the Weatherhead School of Management or the Center for Business as an Agent of World Benefit. More >>
