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Cellphones and Development

April 28, 2008


One of the recurring themes of this blog is connectivity. I have written about connectivity within organizations as well as connectivity between nations. The most important connectivity, however, is between individuals. Over the course of the past couple of years I’ve provided numerous examples of how connectivity has improved the lives of individuals. Most of this connectivity takes two forms, the Internet and cellphones. Of the two, cellphones have been the most important because they have penetrated more deeply into most societies than have computers. A recent New York Times Magazine article by Sara Corbett asks the intriguing question, “Can the Cellphone Help End Global Poverty?” [13 April 2008] Corbett begins her article by introducing us to Nokia employee named Jan Chipchase.

“Chipchase is 38, a rangy native of Britain whose broad forehead and high-slung brows combine to give him the air of someone who is quick to be amazed, which in his line of work is something of an asset. For the last seven years, he has worked for the Finnish cellphone company Nokia as a ‘human-behavior researcher.’ He’s also sometimes referred to as a ‘user anthropologist.’ To an outsider, the job can seem decidedly oblique. His mission, broadly defined, is to peer into the lives of other people, accumulating as much knowledge as possible about human behavior so that he can feed helpful bits of information back to the company — to the squads of designers and technologists and marketing people who may never have set foot in a Vietnamese barbershop but who would appreciate it greatly if that barber someday were to buy a Nokia.”

I have written about before about the importance of culture when it comes to selling international products on local markets. Businesses from Wal-Mart to McDonalds have to adapt to local conditions in order to make their brands appealing. One might think that a cell phone is a cell phone, but one would be wrong. In some cultures, it is the talking that is important, in others it is the texting, in still others it is the ability to make financial transactions.

“What amazes Chipchase is not the standard stuff that amazes big multinational corporations looking to turn an ever-bigger profit. Pretty much wherever he goes, he lugs a big-bodied digital Nikon camera with a couple of soup-can-size lenses so that he can take pictures of things that might be even remotely instructive back in Finland or at any of Nokia’s nine design studios around the world. Almost always, some explanation is necessary. A Mississippi bowling alley, he will say, is a social hub, a place rife with nuggets of information about how people communicate. A photograph of the contents of a woman’s handbag is more than that; it’s a window on her identity, what she considers essential, the weight she is willing to bear. The prostitute ads in the Brazilian phone booth? Those are just names, probably fake names, coupled with real cellphone numbers — lending to Chipchase’s theory that in an increasingly transitory world, the cellphone is becoming the one fixed piece of our identity. Last summer, Chipchase sat through a monsoon-season downpour inside the one-room home of a shoe salesman and his family, who live in the sprawling Dharavi slum of Mumbai. Using an interpreter who spoke Tamil, he quizzed them about the food they ate, the money they had, where they got their water and their power and whom they kept in touch with and why. He was particularly interested in the fact that the family owned a cellphone, purchased several months earlier so that the father, who made the equivalent of $88 a month, could run errands more efficiently for his boss at the shoe shop. The father also occasionally called his wife, ringing her at a pay phone that sat 15 yards from their house. Chipchase noted that not only did the father carry his phone inside a plastic bag to keep it safe in the pummeling seasonal rains but that they also had to hang their belongings on the wall in part because of a lack of floor space and to protect them from the monsoon water and raw sewage that sometimes got tracked inside.”

Culture and circumstance determine how phones are used, who has access to them, how minutes are paid for, and how they are kept charged. It was a big day in Cuba, for example, when local citizens (not just government cronies and foreigners were provided access to cell phones). For some people, the cell phone is their business. They rent it out by the call to others who cannot afford to own a phone. Some people make a living in areas without electricity by recharging cellphones using everything from car batteries to bicycle-powered generators. These are the kinds of things that Chipchase discovers as he travels the world taking pictures.

“This sort of on-the-ground intelligence-gathering is central to what’s known as human-centered design, a business-world niche that has become especially important to ultracompetitive high-tech companies trying to figure out how to write software, design laptops or build cellphones that people find useful and unintimidating and will thus spend money on. Several companies, including Intel, Motorola, and Microsoft, employ trained anthropologists to study potential customers, while Nokia’s researchers, including Chipchase, more often have degrees in design. Rather than sending someone like Chipchase to Vietnam or India as an emissary for the company — loaded with products and pitch lines, as a marketer might be — the idea is to reverse it, to have Chipchase, a patently good listener, act as an emissary for people like the barber or the shoe-shop owner’s wife, enlightening the company through written reports and PowerPoint presentations on how they live and what they’re likely to need from a cellphone, allowing that to inform its design. The premise of the work is simple — get to know your potential customers as well as possible before you make a product for them. But when those customers live, say, in a mud hut in Zambia or in a tin-roofed hutong dwelling in China, when you are trying — as Nokia and just about every one of its competitors is — to design a cellphone that will sell to essentially the only people left on earth who don’t yet have one, which is to say people who are illiterate, making $4 per day or less and have no easy access to electricity, the challenges are considerable.”

Getting back to the question posed in Corbett’s headline, how can all this effort aimed toward designing cellphones help people emerge out of poverty? Corbett’s answer begins with the concept of saving time and effort. She talks about meeting with Chipchase in Accra, India.

“From an unseen distance, Chipchase used his phone to pilot me through the unfamiliar chaos, allowing us to have what he calls a ‘just in time’ moment. ‘Just in time’ is a manufacturing concept that was popularized by the Japanese carmaker Toyota when, beginning in the late 1930s, it radically revamped its production system, virtually eliminating warehouses stocked with big loads of car parts and instead encouraging its assembly plants to order parts directly from the factory only as they were needed. The process became less centralized, more incremental. Car parts were manufactured swiftly and in small batches, which helped to cut waste, improve efficiency and more easily correct manufacturing defects. As Toyota became, in essence, lighter on its feet, the company’s productivity rose, and so did its profits. There are a growing number of economists who maintain that cellphones can restructure developing countries in a similar way. Cellphones, after all, have an economizing effect. My ‘just in time’ meeting with Chipchase required little in the way of advance planning and was more efficient than the oft-imperfect practice of designating a specific time and a place to rendezvous. He didn’t have to leave his work until he knew I was in the vicinity. Knowing that he wasn’t waiting for me, I didn’t fret about the extra 15 minutes my taxi driver sat blaring his horn in Accra’s unpredictable traffic. And now, on foot, if I moved in the wrong direction, it could be quickly corrected. Using mobile phones, we were able to coordinate incrementally. … To someone who has spent years using a mobile phone, these moments are common enough to feel banal, but for people living in a shantytown like Nima — and by extension in similar places across Africa and beyond — the possibilities afforded by a proliferation of cellphones are potentially revolutionary.”

It is exactly because of the efficiencies created by telephone connectivity, especially cellphones, that one of the first capacities my company, Enterra Solutions®, is helping build in Iraq is a call center. That call center will become a touchstone of commerce in Iraq.

“Today, there are more than 3.3 billion mobile-phone subscriptions worldwide, which means that there are at least three billion people who don’t own cellphones, the bulk of them to be found in Africa and Asia. Even the smallest improvements in efficiency, amplified across those additional three billion people, could reshape the global economy in ways that we are just beginning to understand.”

The Development-in-a-Box™ approach that I often write about is focused on helping countries that have little to no infrastructure. By designing and implementing a call center in Iraq, we can then “box” that solution and use it elsewhere with a few tweaks to adapt it to local conditions. In effect, that is what Chipchase is doing. He is helping Nokia adapt the basic cellphone design to local conditions. Many people believe that cellphone technology is unique among technologies in that it allows people to leapfrog older telephone technology. It’s hard to argue with the numbers.

“To get a sense of how rapidly cellphones are penetrating the global marketplace, you need only to look at the sales figures. According to statistics from the market database Wireless Intelligence, it took about 20 years for the first billion mobile phones to sell worldwide. The second billion sold in four years, and the third billion sold in two. Eighty percent of the world’s population now lives within range of a cellular network, which is double the level in 2000. And figures from the International Telecommunications Union show that by the end of 2006, 68 percent of the world’s mobile subscriptions were in developing countries. As more and more countries abandon government-run telecom systems, offering cellular network licenses to the highest-bidding private investors and without the burden of navigating pre-established bureaucratic chains, new towers are going up at a furious pace. Unlike fixed-line phone networks, which are expensive to build and maintain and require customers to have both a permanent address and the ability to pay a monthly bill, or personal computers, which are not just costly but demand literacy as well, the cellphone is more egalitarian, at least to a point.”

Cellphones empower the poor new ways. For example, farmers or miners living in rural communities can check commodity prices so that they don’t get cheated on the price of their goods. In one post, I wrote about a woman in Africa who catches fish in a river and keeps them alive on a string until a customer calls. Because she has no refrigeration capability, she used to catch fish and then wander about trying to sell them — often wasting time and fish. Her cellphone, which provides “just in time moments,” changed her life for the better. Others are learning that lesson as well.

“Last year, the World Resources Institute, a Washington-based environmental research group, published a report with the International Finance Corporation entitled ‘The Next Four Billion,’ an economic study that looked at, among other things, how poor people living in developing countries spent their money. One of the most remarkable findings was that even very poor families invested a significant amount of money in the I.C.T. category — information-communication technology, which, according to Al Hammond, the study’s principal author, can include money spent on computers or land-line phones, but in this segment of the population that’s almost never the case. What they’re buying, he says, are cellphones and airtime, usually in the form of prepaid cards. Even more telling is the finding that as a family’s income grows — from $1 per day to $4, for example — their spending on I.C.T. increases faster than spending in any other category, including health, education and housing.”

It was probably access to a cellphone that helped families increase their income, but it is not just economic benefits that accrue from having such access.

“A ‘just in time’ moment afforded by a cellphone looks a lot different to a mother in Uganda who needs to carry a child with malaria three hours to visit the nearest doctor but who would like to know first whether that doctor is even in town. It looks different, too, to the rural Ugandan doctor who, faced with an emergency, is able to request information via text message from a hospital in Kampala. Jan Chipchase and his user-research colleagues at Nokia can rattle off example upon example of the cellphone’s ability to increase people’s productivity and well-being, mostly because of the simple fact that they can be reached. There’s the live-in housekeeper in China who was more or less an indentured servant until she got a cellphone so that new customers could call and book her services. Or the porter who spent his days hanging around outside of department stores and construction sites hoping to be hired to carry other people’s loads but now, with a cellphone, can go only where the jobs are. Having a call-back number, Chipchase likes to say, is having a fixed identity point, which, inside of populations that are constantly on the move — displaced by war, floods, drought or faltering economies — can be immensely valuable both as a means of keeping in touch with home communities and as a business tool. Over several years, his research team has spoken to rickshaw drivers, prostitutes, shopkeepers, day laborers and farmers, and all of them say more or less the same thing: their income gets a big boost when they have access to a cellphone.”

To brush aside criticism that she might simply be pushing the agenda of cellphone makers, Corbett reports that individuals involved in development programs are just as enthusiastic about the benefits of cellphones as their makers.

“It may sound like corporate jingoism, but this sort of economic promise has also caught the eye of development specialists and business scholars around the world. Robert Jensen, an economics professor at Harvard University, tracked fishermen off the coast of Kerala in southern India, finding that when they invested in cellphones and started using them to call around to prospective buyers before they’d even got their catch to shore, their profits went up by an average of 8 percent while consumer prices in the local marketplace went down by 4 percent. A 2005 London Business School study extrapolated the effect even further, concluding that for every additional 10 mobile phones per 100 people, a country’s G.D.P. rises 0.5 percent. Text messaging, or S.M.S. (short message service), turns out to be a particularly cost-effective way to connect with otherwise unreachable people privately and across great distances. Public health workers in South Africa now send text messages to tuberculosis patients with reminders to take their medication. In Kenya, people can use S.M.S. to ask anonymous questions about culturally taboo subjects like AIDS, breast cancer and sexually transmitted diseases, receiving prompt answers from health experts for no charge.”

Corbett goes on to report that cellphones have even gained support from people who have a bias against government agendas and foreign aid programs.

“Some of the mobile phone’s biggest boosters are those who believe that pumping international aid money into poor countries is less effective than encouraging economic growth through commerce, also called ‘inclusive capitalism.’ A cellphone in the hands of an Indian fisherman who uses it to grow his business — which presumably gives him more resources to feed, clothe, educate and safeguard his family — represents a textbook case of bottom-up economic development, a way of empowering individuals by encouraging entrepreneurship as opposed to more traditional top-down approaches in which aid money must filter through a bureaucratic chain before reaching its beneficiaries, who by virtue of the process are rendered passive recipients. For this reason, the cellphone has become a darling of the microfinance movement. After Muhammad Yunus, the Nobel-winning founder of Grameen Bank, began making microloans to women in poor countries so that they could buy revenue-producing assets like cows and goats, he was approached by a Bangladeshi expat living in the U.S. named Iqbal Quadir. Quadir posed a simple question to Yunus — If a woman can invest in a cow, why can’t she invest in a phone? — that led to the 1996 creation of Grameen Phone Ltd. and has since started the careers of more than 250,000 ‘phone ladies’ in Bangladesh, which is considered one of the world’s poorest countries. Women use microcredit to buy specially designed cellphone kits costing about $150, each equipped with a long-lasting battery. They then set up shop as their village phone operator, charging a small commission for people to make and receive calls. The endeavor has not only revolutionized communications in Bangladesh but also has proved to be wildly profitable: Grameen Phone is now Bangladesh’s largest telecom provider, with annual revenues of about $1 billion. Similar village-phone programs have sprung up in Rwanda, Uganda, Cameroon and Indonesia, among other places. ‘Poor countries are poor because they are wasting their resources,’ says Quadir, who is now the director of the Legatum Center for Development and Entrepreneurship at M.I.T. ‘One resource is time, another is opportunity. Let’s say you can walk over to five people who live in your immediate vicinity, that’s one thing. But if you’re connected to one million people, your possibilities are endless.’ During a 2006 field study in Uganda, Chipchase and his colleagues stumbled upon an innovative use of the shared village phone, a practice called sente. Ugandans are using prepaid airtime as a way of transferring money from place to place, something that’s especially important to those who do not use banks.”

I get excited about concepts like “inclusive commerce” and the effective use of resources like time and opportunity. The Business-to-Business Trading Exchange Enterra Solutions is establishing in Iraq is focused on creating inclusive commerce there. The Kurdistan Business Center, on the other hand, is focused on helping regional businesses better use time and opportunities. Corbett spends a good deal of time talking about how mobile phones are changing the face of finance in many developing countries. I previously wrote on that topic in the post Financial Services in Africa. Interestingly, Corbett reports that Chipchase cautions communities to implement technologies only after considering potential consequences.

“When he is not doing his field work, Jan Chipchase goes to a lot of design conferences, where he gives talks with titles like ‘Connecting the Unconnected.’ He also writes a popular blog called Future Perfect, on which he posts photographs of some of the things that amaze him along with a little bit of explanatory text. ‘Pushing technologies on society without thinking through their consequences is at least naïve, at worst dangerous … and IMHO the people that do it are just boring,’ he writes on his blog’s description page. ‘Future Perfect is a pause for reflection in our planet’s seemingly headlong rush to churn out more, faster, smaller and cheaper.'”

Of course for the world’s poor, a better future cannot come fast enough. Chipchase’s warning is well-taken but it is unlikely to be heeded if the only alternatives the poor see are hope on one hand (brought about by technology) and more grinding poverty on the other. Hope will always win — even if that hope may bring with it unintended consequences. Corbett goes on to report that Chipchase is not against the spread of technology, quite the opposite; as is shown from the following exchange between Corbett and Chipchase.

“This is when I voiced a careless thought about whether there might be something negative about the lightning spread of technology, whether its convenience was somehow supplanting traditional values or practices. Chipchase raised his eyebrows and laid down his spoon. He sighed, making it clear that responding to me was going to require patience. ‘People can think, yeah, monks with cellphones, and tsk, tsk, and what is the world coming to?’ he said. ‘But if you wanted to take phones away from anybody in this world who has them, they’d probably say: “You’re going to have to fight me for it. Are you going to take my sewer and water away too?” And maybe you can’t put communication on the same level as running water, but some people would. And I think in some contexts, it’s quite viable as a fundamental right.’ He paused a beat to let this sink in, then added, with just a touch of edge, ‘People once believed that people in other cultures might not benefit from having books either.'”

Clearly, Chipchase believes that everyone who wants it should have access to cellphone technology. He continues to travel the globe to discover what they need from that technology.

“People in the mobile-handset business talk about adding customers not by the millions but by the billions, if only they could get the details right. How do you make a phone that can be repaired by a streetside repairman who may not have access to new parts? How do you build a phone that won’t die a quick death in a monsoon or by falling off the back of a motorbike on a dusty road? Or a phone that picks up distant signals in a rural place, holds a charge off a car battery longer or that can double as a flashlight during power cuts? Influenced by Chipchase’s study on the practice of sharing cellphones inside of families or neighborhoods, Nokia has started producing phones with multiple address books for as many as seven users per phone. To enhance the phone’s usefulness to illiterate customers, the company has designed software that cues users with icons in addition to words. The biggest question remains one of price.”

Corbett writes about walking through the streets of the Nima neighborhood of Accra with a Nokia designer named Duncan Burns.

“Each time the group stopped to chat with someone, Burns pulled out several prototypes — or ‘physical sketches,’ as he called them — for potential phones, handing them over one by one for examination. These were elegant, futuristic-looking things, just odd enough to seem as if they’d arrived not from California but from outer space. One was long and wandlike, looking something like an aluminum version of a thick vanilla bean. Another was a slimmer rendering of an everyday phone but with no keypad and no screen, just a single unmarked button. A third did not look at all like a phone but rather like a credit card. There were a couple of small digital photos of people’s faces stuck to the front of the card, and it came with a small stylus that could be used, Burns said, to touch a face on the card, which would then dial that person’s number — a pictorial address book for someone who was illiterate. A fourth had a camera that took pictures and deposited them right into the phone’s address book. … [One woman who examined the prototypes asked,] ‘Brudda, how do you charge it?’ … From his bag, Burns pulled another still-conceptual design, this one a thin metal cylinder with a whirlybird antenna on top. He showed the corn seller how to rotate the cylinder in small circles, causing the antenna to swing, which, he explained, in 15 minutes or so would generate enough power to charge her phone battery. The woman picked up the futuristic gizmo and began to swing it; the antenna whipped around and around. She let out an enthusiastic whoop.”

Corbett admits that most of the evidence leading people to believe that cellphones can play a significant role in poverty reduction is anecdotal. More study is clearly needed. Nevertheless, the evidence is mounting and is it seems to bear out the theory that connectivity is beneficial.

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