Role of Private Sector Communications Companies in the Socio-economic Development of Rural Areas

Department of Management Science

Role of Private Sector Communications

Companies in the Socio-economic

Development of Rural Areas

Presenter: Dina El Tabey

Submitted in Partial Fulfillment of the Requirements of the Degree of

Masters in Communications Management of the University of Strathclyde

November 2009

Role of Private Sector Communications Companies in the Socio-economic Development of Rural Areas

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DECLARATIONS

AUTHOR'S DECLARATION

This dissertation is wholly and exclusively my own work, I have referenced

all documents (paper, electronic and interviews) used according to the

University rules, and I have not copied the work of another person, whether

student or published author in any way.

The number of words used from the first chapter till the last chapter of the

dissertation is: 24, 857 words.

AUTHOR'S RIGHTS

The copyright of this dissertation belongs to the author under the terms of

the United Kingdom Copyright Acts as qualified by University of

Strathclyde Regulation 3.49.

Due acknowledgement must always be made of the use of any material

contained in, or derived from, this dissertation. ©


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Table of Content

CHAPTER 1: Introduction

1.1 Preface

1.2 Significance of the Research

1.3 Motivation

1.4 Aim of the Research

1.5 Scope of research

1.6 Methodology of Research

1.7 Structure

CHAPTER 2: High Cost, Low Revenue Customers

2.1 Preface

2.2 Digital Divide

2.3 Universal Service Obligation

2.4 Information and Communications Technology for Development (ICT4D)

2.4.1 Concerns on ICT4D role

2.5 Role of Government Policies and TRA‟s

2.6 Conclusion

CHAPTER 3: How Can Technology Help?

3.1 Preface

3.2 New Wave of Technology

3.2.1 Wi-Fi

3.2.2 Wireless Local Area Networking (WLAN)

3.2.3 Voice over Internet Protocol (VoIP)

3.2.4 CorDECT

3.2.5 Rural Automatic Exchange RAX

3.3 Advantages of the New Wave Wireless Technologies

3.3.1 Cost Advantage of New Wave of Technology – Samples and Details

3.4 Open Standards

3.5 Other Advantages of New Wave Technologies

3.6 Sample of Creative Technology Solution

3.7 Conclusion

CHAPTER 4: Community Communications projects

4.1 Preface

4.2 Definitions of Different Models of Community Communications Projects

4.3 Essentials of Community Communication Project

4.4 Ownership of Community Communications Projects

4.5 Management of Community Communications Projects

4.6 Factors Leading To Successful Community Projects

4.7 Role of Community Projects in the Socio Economic Development of the Rural Areas

4.8 Sustainability of Community Driven Communications Projects

4.8.1 Meaning and Definition of Sustainability

4.8.2 Factors Leading To Sustainability

4.8.3 Challenges Facing Sustainability of Community Projects

4.8.4 Funding Options to Reach Sustainability in Community Projects


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4.9 Conclusion

CHAPTER 5: Case Study – Grameenphone

5.1 Preface

5.2 Grameen Phone

5.3 Grameen Foundation and Grameen Bank

5.4 Grameenphone Corporate Social Responsibility Strategy

5.4.1 Poverty Alleviation Program - Village Phone

5.4.2 Poverty Alleviation Program - Grameenphone Community Information

Centre

5.4.3 Poverty Alleviation Program - CellBazaar

5.5 Grameenphone Success Factors

5.6 Replicability of the Grameenphone Model

5.7 Conclusion

CHAPTER 6: Research Findings and Data Analysis

6.1 Preface

6.2 Interviews

6.2.1 Ministry of Communication and Information Technology

6.2.2 National Telecom Regulatory Authority

6.2.3 Private Sector Operators

6.2.4 Internet Service Providers

6.2.5 Private Sector Consultant on the Issues of USO

6.2.6 Private Sector Company

6.2.7 Microtelco Project Manager

6.2.8 Local NGO

6.2.9 Multinational NGO

6.2.10 Costs and Timelines

6.3 Conclusion

CHAPTER 7: Conclusion and Recommendations

7.1 Preface

7.2 Answering the Dissertation Primary Question

7.3 Recommendations

7.4 Future Research

7.5 Conclusion


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CHAPTER 1

Introduction


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1.1 Preface

In an extremely fast moving industry, expectations from the Information and

Communications Technologies (ICT) are taking different forms and shapes throughout

the years. While at first, expectations were basic and simple including the ability to

communicate between two or more individuals through a medium. Now the expectations

are getting more sophisticated and complicated including prevention and reduction of

sufferings caused by natural disasters by means of telecommunication applications such

as remote sensing and early warning systems (Ernberg, 1998b).

Throughout this evolution of expectations, other expectations arose from the ICT sector,

such as the need for an effective ICT role in the socio economic development of

countries, which is the focus of the dissertation.

Though the subject matter seems similar to previous researches, yet the angle that the

dissertation will focus on is novel. The focus of the dissertation is the role of the private

sector telecommunications companies in the socio-economic development of rural areas

in developing countries through financing/sponsoring sustainable community driven

communications projects from their corporate social responsibility (CSR) budget. This

will help the development of rural areas socio economically through the creation of some

work opportunities as well as through opening doors to the outside world for them

through accessing communication tools. Also it will help the telecommunications

regulatory authorities in achieving their universal service obligation in a novel way. Also

it will help the private sector telecommunications companies efficiently invest their CSR

budgets.

The research will be looking at the economic aspects, technological aspects, policy and

regulatory aspects as well as the social aspects related to the creation of those community

driven communications projects in the rural areas.

Currently, ICT is viewed by the world as a medium for development; it has attracted the

attention of the nations towards its crucial role in development, urging them to endorse it

in their agendas. The eight major industrial nations (the G-8), in year 2000, recognized

ICT as one of the most potent forces in shaping the twenty-first century; as well as they


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recognized ICT revolutionary impact on the lives of people, the way they receive their

learning, the way they do their work, and the way government interacts with civil society

(Colle & Roman, 2002 and 2001).

Emerging from this discussion was the Okinawa Charter on the Global Information

Society. The initiators of the charter announced that “this Charter represents a call to all,

in both the public and private sectors, to bridge the international information and

knowledge divide.” The Charter also renewed a commitment of the G-8 nations “to the

principle of inclusion: everyone everywhere should be enabled to participate in and no

one should be excluded from the benefits of the global information society” (Colle &

Roman, 2001).

The importance of telecommunications for economic, social and cultural development is

clearly established (ITU/BDT, 1994b cited in Ernberg, 1998b). On average around the

world, it has been demonstrated that people spend approximately 2-3% of their income

on telecoms (Moonesinghe, et al, 2007 cited in Mahan & Melody, 2007).

Telecommunications and information technology account for more than 5 percent of the

GDP globally. The ICT sector generates new business opportunities and jobs, not least in

rural and remote areas (ITU/BDT, 1994b cited in Ernberg, 1998b). These facts highlight

the importance of the ICT sector worldwide as an engine for development.

Since most of the populations of developing countries live in rural and isolated areas,

where, access to information and telecommunications is essential for their development,

but is still non-existent due to two major reasons: 1- perceived lack of profitability of

rural telecommunications where people are poor and only few can afford

telecommunication services and it becomes a vicious circle - few customers means high

price, which further reduces the number of potential customers, and, 2- the lack of

appropriate policies and strategies to provide Universal Access (Ernberg, 1998a). A

proposed solution to tackle this problem is raised to solve the digital divide and

technology gap arising between rural and urban communities: this solution is

community-driven projects for both network extension and service provision (Siochrú &

Girard, 2005). This concept will be the focus of the dissertation.


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To conclude the introduction, as stated by Johan Ernberg in his article

Telecommunications for sustainable development "Telecommunications are only tools

for development– not an end in itself" (Ernberg, 1998b)

1.2 Significance of the Research

The research findings should be beneficial to the Telecom Regulatory Authorities (TRA)

of developing countries, as well as, to the commercial department of the private sector

telecommunications companies, and rural areas local governorates.

Regarding the research significance for the TRA's of developing countries; TRA's can

use the research as a framework to encouraging and enforcing the concept of private

sector telecommunications companies‟ participation in socio economic development of

rural areas as well as a step towards achieving universal service obligation goals.

Regarding its significance for the commercial departments of the private sector

telecommunications companies: they can use the research as a reference for using their

corporate social responsibility budgets on financing small telecoms projects in rural

areas.

Regarding the significance of the research for the rural areas local governorates; they can

use it as a reference to encourage private sector telecommunications companies to spend

their corporate social responsibility budgets on the financing of small telecoms project in

rural areas.

On another note the research findings could help as reference for further research studies

conducted in the field of sustainable development, corporate social responsibility budget

usage and effects, and ICT role for the development of rural areas in the developing

countries.


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1.3 Motivation

The motivation behind choosing this research topic is to provide a useful and practical

framework that could benefit the underserved communities in developing countries.

Myself, coming from a developing country I would very much like to encourage the

private sector telecommunications companies to take an effective role in reducing the

digital divide between rural and urban areas. As well as I would like to encourage private

sector companies contribution in the socio economic progress of the rural areas.

Also with a background of 9 years of experience in the commercial department of private

sector telecommunications companies' of developing countries, our main concern was

always to find and introduce new and creative ideas to remain top-of-mind awareness in

the minds of our customers and potential customers.

This research will benefit both purposes: 1- achieve universal service access goals,

decrease the digital divide between rural and urban areas in developing countries, and

improve the socio economic status of the rural areas through the contribution of the

private sector, 2- provide a useful, creative idea to the commercial departments of

telecommunications companies operating in the developing world.

1.4 Aim of the Research

The research aim is to recommend a novel way NTRA's can fulfil universal service

access through encouraging the private sector to invest their corporate social

responsibility budgets.

Primary research question:

a. Can private sector telecommunications companies contribute in the socio-

economic development of the rural areas through financing microtelco

sustainable projects, by using the budget allocated for their corporate

social responsibility programs?


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1.5 Scope of Research

The scope of the research will focus on presenting from previous researches, all possible

current alternatives and options related to community driven communications projects,

that private sector telecommunications companies operating in developing countries

could apply in order to help TRA reach its universal service obligation goals as well as

help in the development of those rural areas socio economically. It includes presenting

access to different types of communications and telecommunications, from basic

telephony services to more advanced types of connectivity.

The scope also includes presenting a replicable model of community driven

communications project that proves that serving rural and poor areas is financially

rewarding to operators, helps in the socio economic development of the rural and poor

areas as well as achieves the goals of universal service obligation (USO).

The scope of the research covers the what –which are the different options of

community driven communications projects-, as well as the how –how to apply a

successful replicable model-. All dealt with in sufficient details that cover the subject

clearly as well as respects the word count limits.

And in order to produce an integrated research in that area, the research scope will tackle

various subjects including:

1- Community driven communications projects with their different types and scopes

of services

2- The different approaches that studies Universal Service Obligation and role of the

regulator regarding Universal Service Access

3- Information and Communication Technology used for Development of rural

areas of developing countries

4- Corporate Social Responsibility concept and usage within the

telecommunications companies, including the budget usage

5- Sustainable development concept and how is it applied in microtelco projects

6- Technologies options that could be used to fulfil the gap in the rural areas


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1.6 Methodology of Research

The research methodology will include: 1- data gathering methods, and 2- data analysis

methods.

The data needed for the completion of the dissertation research will be gathered

employing two interrelated methods:

1- A data collection through questionnaire addressing:

a. The Ministry of Communications and Information Technology

b. Private sector telecommunication companies in Egypt (operators and

internet service providers)

c. The National Telecom Regulatory Authority of Egypt

d. Nongovernmental (NGO) development organization

e. Community driven project managers of rural areas in other developing

countries

f. Other private sector entrepreneurs dealing with the issue of USO and

connecting the last billion

g. Academics and professors that conducted research on that subject matter

2- An exploratory desktop research including:

a. Analysis of existing reports from academic journals

b. Analysis of recently published reports and articles

c. Analysis of one case study from a developing country sharing some

attributes qualities with Egypt (GDP, population, or others)

d. References to official websites of TRA‟s, ITU, WB and IMF reports

e. References to private sector telecommunications companies published

annual reports and review of press releases related to the subject of

interest

As for the data analysis methods, the research will use:

1- Qualitative data analysis

a. Dealing with the survey questionnaire


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1.7 Structure

Chapter 1: Introduction

The introduction which is the above introductory section, including an overall

introduction and brief of the concepts and ideas discussed in the dissertation.

Chapter 2: High Cost, Low Revenue Customers

This chapter deals with definitions, concepts and theories related to the issue of serving

high cost, low revenue customers. The chapter will discuss the digital divide problem,

the universal service obligation (USO) concept, and the role of Information and

Communication Technology in the Development (ICT4D) of individuals/areas and

nations. The crucial role of telecom regulatory authorities (TRA) will be discussed and

their role as enablers to create the suitable environment for solutions that would solve the

digital divide problem and achieve the universal service goals.

Chapter 3: How Can Technology Help?

This chapter is dedicated to introducing the new wave of technology that leads to

cheaper and faster to deploy options that could better serve the poor/rural and remote

communities. The advantages and disadvantages of these technology options will be

discussed.

Chapter 4: Community Communications projects

This chapter is dedicated to reviewing and presenting all possible available alternatives

types and models of community driven communications projects along with their

definition, and roles.

Chapter 5: Case Study - Grameenphone

This chapter is dedicated to presenting one detailed case study: the Grameenphone model

of private sector participation in the socio economic development of rural areas in

Bangladesh.


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Chapter 6: Research Findings and Data Analysis

This chapter is dedicated to analysing the data collected, and presenting the findings of

these data collected through personal interviews, phone interviews and emails.

Chapter 7: Conclusion and Recommendations

This chapter should: present the answer to the question posed, present recommendations

for the TRA‟s, and provide a base for further studies in this specific area.


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CHAPTER 2

High Cost,

Low Revenue Customers


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2.1 Preface

This chapter deals with definitions, concepts and theories related to the issue of

rural/poor and remote areas communications services provision. The goal of this chapter

is to familiarise the reader with the topics and subjects that are related to the issue of

rural/poor and remote areas communications services provision. The flow of the chapter

will be as follows: the first section of the chapter will discuss the digital divide problem,

followed by highlights on the universal service obligation (USO) concept, then followed

by a discussion on the role of Information and Communication Technology in the

Development (ICT4D) of individuals/areas and nations. The part on ICT4D will be

counter argued by opinions raising some concerns on the over optimism of the role of

information technology in the development of the poor. The crucial role of telecom

regulatory authorities (TRA) will be discussed and their role in creating an enabling

environment for the rise of solutions that would solve the digital divide problem and

achieve the nation‟s universal service goals.

By covering these topics the reader will be able to understand some foundation to the

problems of marginal customers and the digital divide, as well as, the reader will get a

broad idea on how these problems could be tackled.

This chapter serves as the base of the dissertation. The coming chapters will provide the

reader with more detailed solutions and options to the issue rural/poor and remote areas

communications services provision.

2.2 Digital Divide

Digital divide is a current problem facing rural areas and poor people. Both the

governments and the private sector companies should share the responsibility of this

problem. This part will cover the definition of digital divide, the causes of digital divide

and the interpretations of both - the public and private sector - to investment in rural

areas. Introducing the role of private sector in that early stage is crucial to the focus of


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this dissertation which revolves around the role that the private sector companies could

play to serve the rural/remote and poor areas.

Other concepts are also introduced in this part such as the marginal customer,

uneconomical service areas, and the needs versus demand concept. As well as some

proposed solutions to tackle the digital divide problem will be presented.

As per Rothenberg-Aalami, The gap between people who are able to use and benefit

from technologies and those who are not is referred to as the “digital divide” (Aalami, J.

2005). In another more elaborate interpretation of the digital divide concept presented in

Community-based Networks and Innovative Technologies article, “There is justified

concern that the ICT revolution is bypassing the poor – especially the rural poor.

Progress during the 1990s in fixed line telephony, the explosion of mobile telephony, and

the widespread emergence of internet cafés and telecentres have begun to extend beyond

urban areas and towards poorer communities. Yet the majority of poor across the world

are still beyond affordable reach of ICTs” (ITU, 2003 cited in Siochrú & Girard, 2005).

With the concept of digital divide arises another concept which is the “marginal

customer”: defined as “one that gets excluded from market transactions under a given

market setting” (Knight-John, et al., 2007).

Uneconomical is the key word when it comes to rural and poor areas coverage. Subsidy

calculations and plans for the network development that would be provided were based

on the assumptions that the poor will spend a lower percentage of their income on

telecom services because of their need to spend a higher proportion on necessities such

as food and shelter. So, their usage will be minimal, and uneconomical, as it would have

to be confined only to the most urgent calls. As a result national networks in developing

countries have been poorly developed or undeveloped (Melody, 2007 cited in Mahan &

Melody, 2007). The fact that governments paid less attention to serving those

„uneconomical areas‟ by neglecting to develop their infrastructure, caused a bigger

challenge to the private sector to serve those areas, as investing in networks is highly

costly.

On the other hand, private sector companies share the responsibility of the existence of

the digital divide. Since the perception is that marginal customers are unable to afford the


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services that are provided, if they need them at all. Operators believe that the costs

associated with providing telecom access to marginal customers are too high, particularly

given that marginal customers are often located in rural areas where the cost of installing

infrastructure is usually higher than in urban areas. The cost not only includes the

infrastructure cost, but extends to transaction and operation costs incurred for example

from collection. Second, demand for telecom services amongst marginal customers has

traditionally been perceived as too low to make serving them a viable commercial

operation. Operators believe that potential revenue from these customers would not be

sufficient to cover the high costs associated with installing infrastructure and collecting

payments (Knight-John, et al., 2007).

With these assumptions it became important to distinguish between two concepts: needs

and demand. Demand is related to affordability and perceived benefits. One could argue

that there is hardly any demand for ICT in poor rural villages. The vast majority of the

people have little money and no idea about what benefits they could derive from access

to ICT. However, there is a need for such tools in rural areas, considering people‟s

isolation and the lack of public services (Ernberg, 1998a).

The proposed solutions to solve the digital divide and start serving the marginal

customers tackle two major angles: the first is the policy angle along with the enabling

environment, the second is the community driven solutions relying on low cost business

models and technologies such as micro telco‟s, telecenters, multipurpose community

centers. As per Proenza et al., telecenters can help bridge the digital divide (Proenza, et

al., 2001). As per Dumas, he proposes Multipurpose Community Telecenter (MCT) as a

solution to narrow the gap between the information rich and the information poor

nations. He further argues that policy consideration can facilitate development of those

(MCT‟s) (Dumas, 1999). The community driven solutions will be further discussed in

chapter four of this dissertation - Community Driven Communications projects. And the

technology factors that helped the community driven projects to rise, will be the focus of

chapter three of this dissertation.

The above section of the dissertation should assist the reader in understanding the base of

the problem of digital divide and sheds the light on some solutions that will be further

discussed on the coming chapters three and four. Moving on to the role of the


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governments towards the digital divide and marginal customer problems, the coming part

will discuss the universal service obligation concept. What is it? Who is responsible to

achieve it? And how?; will be the main focus of the coming part

2.3 Universal service obligation

This section will start with a background on the concept of USO, its importance for

developing countries. The role of the private sector will be highlighted in their financial

contribution to the USO budget of the countries they operate in.

In his article, Dumas states that the concepts of universal service and universal access

refer to the equal provision of a common need to members of the society. Education,

health care, transportation and communications access are universal service provisions

(Dumas, 1999).

Townsend et al., state that the directive of universal service policies is to supply citizens'

needs for information and communications services, and the money from the Universal

Service Fund is intended to support this objective (Townsend, et al, 2001).

In a more elaborate interpretation of USO, Galperin and Girard, state that public services

can be delivered in a variety of ways. While, it has been the trend for many decades, that

most countries relied on the state-owned utilities to provide infrastructure services such

as electricity, water and telecoms; this fact has changed with this last decade especially

with the rise of privatization. This shift was particularly noticeable in the telecom

industry. And it became clear that large private operators are not willing to serve high

cost or low income customers due to lots of factors such as: low incomes, low population

density, lack of reliable information about customers and their preferences, and lack of

other infrastructures such as electricity and roads. Therefore while large private utilities

are well suited to building network backbones and retailing services in wealthy urban

areas, their advantages diminish as they approach the last-mile segment in high cost or

low income communities. Those large utilities lack the flexibility and the incentives to

seek innovative solutions to serve poor customers (Galperin, & Girard cited in Mahan &

Melody, 2007). This resentment to serve those marginal customers from the part of


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private sectors has in part directly contributed to the rise of the concept of USO in the

communications industry.

In a study by Intelcom, the authors argue that the resources for meeting the Universal

Service Obligation (USO) are to be generated through a Universal Service Levy (USL),

which would be a percentage of the revenue earned by the operators. This concept is

being adopted by governments in many developing countries, with the aim of improving

access to telecommunications. Levy contributions from mobile and fixed operators, are

used to subsidize the rollout of telecommunications networks in rural areas. The

percentage of the levy is typically 1-2% of gross or net revenues, though this percentage

would very rarely reach 5% of gross revenues. The study recommends that universal

service funds should only be used as a short to medium term policy tool, which should be

phased out over time, as, there is no justification to continue using this funding

mechanism in markets where universal service goals have been achieved. The universal

service funds should be spent on the lowest cost access technology, typically mobile

networks, which have been demonstrated to be the most efficient way to extend access to

telecommunication (Intelcom, 2007).

In an attempt to list the possible funding sources to reach USO goals De Silva, and

Tuladhar state: government budgets; development agencies such as the World Bank;

license fees and spectrum auctions; operator revenue contribution, and interconnection

levies. “The final act is to distribute the funds to bridge the access deficit through a well-

defined program” (De Silva & Tuladhar, 2007 cited in Mahan & Melody, 2007)

This part of the dissertation should have shed the light on the concept of universal

service obligation as being a part of the government‟s promise towards the rural/remote

and poor areas inhabitants.


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2.4 Information and Communications Technology for Development

(ICT4D)

Using information and communication technology for development purposes is a topic

that is being focused on worldwide currently. Though some views are still skeptical of

the effect of information and communications technology on the development, yet some

other opinions are more optimistic about it. This section will focus on the interpretation

and definition of ICT4D with some examples of ICT contributing positively to the lives

of the poor, as well as will highlight some less optimistic opinions.

Information and Communications Technologies for Development (ICT4D) is a:

“movement involving a broad spectrum of “stakeholders” that links increased access to

ICTs to economic and social development”. In a more elaborate interpretation of ICT4D

by Rothenberg-Aalami: “The ICT4D movement involves an array of interested public

and private players, including every agency of the United Nations, the World Bank

Group, and the International Monetary Fund (IMF), development donor aid

governmental agencies including Canada (CIDA), the Netherlands (NORAD), and the

United States (USAID), governments at all levels, international non-governmental

organizations, private organizations with the purpose of bridging the digital divides and

business leaders who are increasingly acting as development agents” (Aalami, 2005).

Telecommunications access contributes to social, political and economic development by

facilitating access to economic, employment and political topics through communication

and information exchange processes. Therefore, economic growth and participatory

democracy development require expansion of Information and Communications

Technology (ICT) literacy and telecommunications access for all, as per Dumas, 1999.

Also telephones have their crucial role in socio economic development, where providing

access to a telephone to communities in areas where hitherto there has been none, even if

it means having to walk a mile or two to use it, provides people with opportunities to

improve their lives in many ways. For example, a factory worker located four to five

hours away from her home can talk to her family in her village everyday, and work an

extra few hours on the weekend, rather than spending almost ten hours traveling to see

them for just a few hours and returning to the town for work the next morning exhausted.


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This is possible if both she and her family have access to a phone. The cost of a trip to

the city ranges from 2 to 8 times the cost of a single phone call,” claim Richardson et al,

2000: 2 cited in Knight-John, et al, 2007.

2.4.1 Concerns on ICT4D role

Though and from the previous literature the reader would easily conclude that

information and Communications Technology is the way to development, yet and from

another more sceptical view on the role of ICT4D, other researchers raise a flag in order

not to get carried away with over optimism on the role of ICT4D.

“Literature on information and communication technologies (ICTs) is filled with rising

optimism about the contribution of these technologies to economic and social

development and their potential to transform developing countries into “modern” and

knowledge-based societies”. Yet, very little, however, is known to date about the truth

and reliability of these claims, much less about the long-term impact that ICTs may have

on a country‟s social and cultural systems. “It is unlikely that quantum leaps will result

from technology transfer to the developing world”, say Gómez and Melesse, 1998.

As per Gomez and Melesse they see that governments of developing countries and

international agencies should take a more accurate analysis of the social and cultural

dimensions of ICTs in order to be able to design appropriate policies and programs

which will enable countries harness ICTs for development in their own context (Gómez

& Melesse, 1998).

In his article, Next Generation Community-Driven Networks, Siochru, goes further and

questions the importance of ICT to the poor. “The question is whether such coverage is

meaningful in the first hand: What does it mean to be able to access a mobile telephony

signal if you cannot afford a handset? Or if you have a handset, but cannot afford to

charge the battery as there is no mains electricity? Or a high-speed data link if you have

never seen a computer? How many rural areas suffer from this same problem? Only a

small proportion of the population, inevitably the wealthiest, can actually afford to use

even telephony to its maximum advantage, leaving the majority of people at best with


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emergency use, or carefully counting the seconds. While mobile phone companies

continue to reap huge profits, are they really enhancing access for everyone, or are they

merely reinforcing existing inequalities within the population?” (Siochrú, 2007).

The above raised concerns are presented in the dissertation in order to create an objective

document far from over optimism. Yet on the other hand these concerns should not lead

to pessimism and under statement of the role of ICT4D. The aim is to provide both

opinions in order for the reader and future researchers to put both opinions in

consideration.

As earlier mentioned in the role of ICT4D, the reader can conclude that all types of

communications, from basic telephony to more sophisticated connectivity services, all

have their important role in the socio economic development of the marginal customers.

2.5 Role of Government policies and TRA’s

This section will stress on a much discussed concept, government policies and regulatory

enabling environment, and their role in supporting rural/remote and poor areas

communications projects. The aim of this part is to showcase how the TRA‟s should act

in order to encourage investment in areas of „high cost, low revenue customers‟.

Roman, 2007 offers an integrated solution for NRA‟s to become an enabling agent in the

success of USO. He sees that it is essential for NRAs to review their policies regarding

license awarding, in accordance with their specific country conditions, to allow for the

development of initiatives by small companies willing to provide services in underserved

areas, and especially in rural areas. These procedures that entrepreneurs need to follow to

provide telecom services legally should be explained on NRA websites. NRAs should

have rules to facilitate interconnection terms set by incumbents and dominant companies

on small entrepreneurs. Finally, NRAs should promote public-private partnerships so

that service can be provided to un-served and underserved communities through joint

efforts (Roman, 2007). The integrated review offered by Roman earlier provides a strong

starting point to encourage investments in „high cost, low revenue customers‟ yet this

approach is missing the financial aspect that NRA‟s could contribute in such investment.


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Further researches conducted by Galperin and Bar, found that small companies and

microtelcos face regulatory barriers that discourage entry, limit scalability and constrain

experimentation with new technologies and business models better suited to service the

poor. They further explain each barrier starting with license issue where they see that

access to unlicensed spectrum for the deployment of Wi-Fi and other low-cost WLAN

technologies is still limited and not widely accepted. A second regulatory constraint is

the lack of technological neutrality. In the name of consumer protection, ICT services are

too often subject to overly strict quality of service and engineering standards that prevent

microtelcos from deploying low-cost solutions. This discourages seeking price/quality

combinations better suited for the poor; the case of VoIP is illustrative. Galperin, 2005 in

his research discovered that of 18 countries, only 38% have authorized the use of IP

networks to provide telephony services. A third constraint relates to licensing rules

which often discriminate against microtelcos, either implicitly by requiring

administrative procedures that microtelcos are unable to follow, or explicitly by

preventing non-traditional operators from supplying services. A fourth constraint is the

limited access to public subsidies that traditional carriers enjoy through universal service

and telecom development funds. In some cases, the administration of these funds

discriminates against microtelcos. The result is that only large operators with a regional

or national presence are able to compete for subsidies (Galperin & Bar, 2007). So the

need for a regulatory regime that supports the small companies willing to invest in

rural/remote and poor areas is necessary.

In their article Colle and Roman, state that “besides the direct funding available and the

administrative push, a national policy can also be instrumental in providing a favourable

regulatory and tariff climate, and in producing the human resources that are vital to a

telecenter movement” (Colle & Roman, 2002). They give the example of two developing

countries experiences, India and Egypt, in order to support their policy goals of

becoming an Information Society superpower, the Indian government doubled the

number of persons it would graduate from its technology training institutes. As for

Egypt, the Egyptian government‟s plan is to incorporate ICT in its business and socio-

economic development by: creating Technology Access Community Centres in rural

areas, as well as, by creating training facilities in 27 provinces that can train 30,000

people annually in computer uses (Kamel, 2000, & Hashem, cited in Colle, & Roman,


24

2002). The argument here stresses the importance of the national policies role that

directly translate into goals to be achieved by the regulatory authorities.

This section will conclude with a recommendation by World Bank in its report of year

2005: “where network extension into poorer areas is needed, the emphasis is on

regulation to render these areas more attractive and profitable to major telecom

operators, in recent times through for instance technology-neutral licenses or the use of

universal service funds and „smart subsidies‟ to attract commercial operators. The focus

has traditionally been on attracting investment and inducing existing telecoms operators

to address poorer areas, if necessary using public and donor funding to spur private

initiatives” (World Bank 2005 cited in Siochrú & Girard, 2005).

This part started with highlighting some recommendations to the national

telecommunication regulatory authority, then moved on to present some cases where

TRA‟s can render servicing rural/remote and poor areas impossible for small private

companies. The aim of this part is to convey to the reader the important role that the

TRA plays when it comes to servicing „high cost, low revenue customers‟.

2.6 Conclusion

The aim of this chapter was to familiarise the reader with the concepts related to the

issue of servicing the high cost, low revenue customers. The chapter covered topics on

digital divide, uneconomical areas, need versus demand concept and marginal customers.

As well as it covered the governments‟ role in providing communications services to the

entire nation through the concept of universal service obligation. It also discussed the

role of information and communication technology in the development, and concluded

with the crucial role of telecommunications regulatory authority.

The roles of both the private as well as public sectors in creating the digital divide gap,

and how both sectors should have a role in diminishing this gap was covered.

The role of the private sector was further tackled in relation to each of the topics

presented. It was tackled in relation to digital divide, where the private sector companies


25

refrain from investing in high cost, low revenue customers. It was also tackled in relation

to universal service obligation, as financially contributing with a percentage of their

revenue to achieve the USO national goals.

All the above concepts discussed aim to pave the way to the reader to the coming

chapters that will be rather detailed in providing solutions to the high cost, low revenue

customers. The coming chapter will focus on technology role in servicing those

underserved areas.


26

CHAPTER 3

How Can

Technology Help?


27

3.1 Preface

This chapter should answer the question of how can technology help in servicing the

high cost, low revenue customers. It will discuss the importance of technology choices

on the success of the small projects servicing rural/remote and poor areas. As well as,

what are the currently available technology options that would lead to the success of the

small communications projects?

Wi-Fi, WLAN, and VoIP will be discussed in details along with two other locally

developed technologies emerging from India –CorDECT and RAX-, their importance,

their benefits, and how can each serve the small communications projects servicing

rural/remote and poor areas.

The coming part will present the „new wave of technology‟ that should facilitate

servicing those rural areas. Since those areas suffer from lack of proper infrastructure as

well as unwillingness of any party to invest in dramatically high cost infrastructure.

3.2 New Wave of Technology

Siochrú, 2007, considers technology as an enabling factor that directly affects the

existence and sustainability of the projects servicing the high cost, low revenue

customers. He sees that technology with its ongoing growth in wireless technologies and

lower prices will mean that building high-speed local networks will cost a fraction of

what it used to. As well as he sees that using new VoIP stand-alone handsets or blending

it with low-cost analog sets also contributes to offering better services with lower prices

to the rural areas (Siochru, 2007).

Agreeing on that same concept Galperin and Bar, they state that serving rural areas does

not need large infrastructure projects anymore, or big upfront investments, since the

recent innovations in wireless communication (Galperin & Bar, 2007).

In their article, Microtelcos in Latin America and the Caribbean, Galperin and Girard,

state that laying telecom wires is exactly similar to paving roads. It requires large upfront


28

investments, economies of scale, and the architecture of the network has to be carefully

planned in advance because resources are not easily redeployed. As a result, ICT

networks were typically built by large operators -public in the past, private nowadays-

who can finance and manage the risks involved in network development. But with the

rise of recent innovations in wireless communication and service applications these

premises were challenged. These innovations are significantly reducing the scale of

telecom providers, allowing a variety of new actors, from small entrepreneurs to

municipalities to user cooperatives, to enter the market (Galperin & Girard, 2007 cited in

Mahan & Melody, 2007).

The section below will further explain each of these new wave technologies, aiming to

convey to the reader what are these new wave technologies and why they would better

serve the purpose when it comes to servicing rural/remote and poor areas.

3.2.1 Wi-Fi

Chief among these new wave technologies is the Wi-Fi. Wi-Fi, a wireless networking

platform based on the use of spectrum range 2.4 GHz and 5 GHz -a spectrum that is

unlicensed in many countries- and built around 802.11 standards. Aiming to avoid the

cost of running cables, Wi-Fi was developed to enable wireless local area networks

(LAN) within buildings. Soon following the first Wi-Fi (LAN) wave of implementations,

the technology was used outdoors, first by a wave of computer enthusiasts and later by

businesses and local governments, extending connectivity to „hotspots‟ used publicly

(Siochrú & Girard, 2005).

The cost advantages of using Wi-Fi can be significant in rural areas, especially those

areas with difficult terrain. A basic point-to-multipoint wireless network can provide

VoIP telephony and broadband data access to a village with a 1-2 kilometer radius.

Individual users can be reached up to a 20 km distance with directional antennas at both

ends. An infinite number of these networks can be easily interconnected. Each network

addition extends the range and utility of the entire network. A series of point to- point

„backhaul‟ antennae can interconnect longer distances and help plug the local network


29

into a regional or national grid. Developing and African countries have experience with

the deployment of Wi-Fi technology (Neto, 2004 cited in Siochrú & Girard, 2005).

On another note Wi-Fi technology has some limitation such as: 1- with larger numbers of

concurrent users, interference grows; and 2- quality of service over a sustained period

can limit VoIP services. Yet, these limitations are being tackled and will not pose long-

term obstacle (Siochrú & Girard, 2005).

3.2.2 Wireless Local Area Networking (WLAN)

WLAN is built around 802.16 standards. WLAN technologies take advantage of a

natural resource underutilized in many poor areas: the radio spectrum. Therefore market

entry is less defined by firm size than by spectrum management policies. The new mesh

networking which is an emerging architecture, is based on end-users both receiving and

relaying data from peer users, resulting in a cooperative network that can span a large

area with only a few broadband links. This type of architecture is well suited in cases

where backhaul links are scarce and expensive, as is the case in many rural areas, as well

as where spectrum is congested e.g., in urban slums, since each network node need only

transmit as far as the next node which also minimizes power requirements, another

concern in many poor areas (Galperin & Bar, 2007).

They see that the much flatter cost curve of wireless local area networking (WLAN)

technologies undermines the comparative advantages of large operators in the

deployment of local networks. While upfront costs are reduced, WLAN networks are

also more easily scalable or redeployed, allowing for modest initial investments and

scale up later following community demand when servicing the high cost, low revenue

customers to make (Galperin, & Bar, 2007).


30

3.2.3 Voice over Internet Protocol (VoIP)

Another leading example in the new wave of technology is Voice over IP (VoIP), which

refers to a family of technologies that allow packetization and routing of voice

communication over an Internet Protocol (IP) network instead of a traditional circuit-

switched network. There are many advantages to IP telephony, including lower costs,

more efficient use of facilities, less regulatory overhead, simple configuration and

maintenance, scalability, and support for multiple applications (Galperin & Bar, 2007).

Yet the „less regulatory overhead‟ is a debatable issue.

3.2.4 CorDECT

CorDECT was designed at Institute of Technology in India, aiming to provide cost-

effective, high-quality voice and data connectivity for rural areas. Some of CorDECT‟s

features are designed to overcome some of the Wi-Fi technology problems. CorDECT

offers up to 35 km radius using a relay base station which is a better range than the

currently available Wi-Fi option. CorDECT‟s advantages include low cost, strong

performance and full connectivity to the PSTN without the quality of service problems

that plague VoIP. CorDECT operates in the 1880 - 1935 MHz frequency range, which

requires a license in most countries unlike the Wi-Fi technology. CorDECT is being used

by some of the telecom cooperatives in Argentina and there are some installations in

other countries such as: Egypt, South Africa, Nigeria, Tunisia, Russia, Iran, and Brazil


3.2.5 Rural Automatic Exchange RAX

Rural Automatic Exchange (RAX) is another example of a technology developed locally

in India aiming to enable the extension and appropriation of the telecom network to rural

communities. RAX is developed by the Centre for Development of Telematics (CdoT) in

India in the mid-1980s (Siochrú & Girard, 2005).


31

Rural telephony was not economically viable in India prior to the introduction of RAX.

RAX is now used in 600,000 phone booths in India, 20 million telephone lines, and

40,000 rural exchanges, for providing telephone service for millions of people in India‟s

most remote, poor and rural areas. RAX also helped in the creation of employment

opportunities for one million people (Siochrú & Girard, 2005).

3.3 Advantages of the new wave Wireless Technologies

As for the new wave of wireless technologies advantages; quoting Siochrú and Girard,

2005, they mention:

1. Low cost and flat cost curves that are changing the economics and investment

requirements of rural networks.

2. Open standards and architecture making them readily scalable with expansion

paths that can adjust to suit needs and network density. As new networks appear

in a given region they can seamlessly join existing ones. As network density

increases „mesh networks‟ are created, improving service and reliability for all

users.

3. They are increasingly simple to configure, operate, maintain, and adapt, thus

reducing costs enabling rural networks to be operated largely with locally-

available expertise.

4. Their adaptability means that the networks they support are also highly

adaptable in terms of the services and applications they are able to offer, meeting

user needs and capabilities and readily connecting to a wide variety of other

networks and terminals.

5. They can avoid regulatory and bureaucratic hurdles that have previously

encumbered the emergence of locally-owned networks.


32

3.3.1 Cost Advantage of new wave of Technology – Samples and Details

A World Bank report comments that “the costs of wireless technology have been

declining, and in many cases with low subscriber density it is now cheaper than wireline”

(World Bank 2004:40). A study of Micro Telephone Operators using GSM technology in

underserved rural areas concluded that micro telephone operators could then provide

service at a lower cost than national operators (Engvall & Hesselmark, 2004 cited in

Siochrú & Girard, 2005). With the rise of the new wave of wireless technologies, the

national scale networks can not anymore offer meaningful economic advantages over

locally-owned networks (Siochrú & Girard, 2005).

Best, 2003 claims that voice and high bandwidth service could cover hundreds of

kilometers in rural and dispersed areas, for a cost of about US$300 per subscriber -

excluding the cost of the end user terminal-. “This is compared with the $20,000 to

$40,000 per kilometre cost of laying conventional fibre and copper wire, which even in

urban areas results in a per subscriber cost of US$1,000” claim Siochrú and Girard,

2005. Chapter six of this dissertation will present first hand information taken from two

different sources on cost calculations of fibre laying versus using wireless technologies

in Egypt.

Up to 120 Mbps can be cheaply shared among hundreds of villages within a radius of 50

km. at the cost of around USD$20,000, with 802.11 networks and one 802.16 base


A „micro operator‟ can establish a rural GSM network covering an area of up to 4,000

square kilometres with a population of 200,000 for $250 to $300 per subscriber

(Hesselmark & Engvall, 2004 cited in Siochrú & Girard, 2005).

For a total cost of US$33,600 for network equipment (transmitters, routers, towers,

antennae, cables and VoIP equipment and a cost of US$25,000 for computers, printers

and other hardware equipment for the telecentres, a Wi-Fi network of community access

points for twelve villages was established in the Chancay-Huaral valley of Peru. Where

each village has a small telecentre with 3-5 computers providing internet connectivity,


33

voice, video conferencing and email services to those villages that did not possess one

single line of connectivity prior to this telecentres project (Siochrú & Girard, 2005).

Another factor contributing to the cost edge of wireless technologies is reduced

maintenance requirements. As the maintenance of every 200 lines of landline telephone

network, require one employee, whereas every 2,000 subscribers of GSM network only

one employee is required (Hesselmark & Engvall, 2004 cited in Siochrú & Girard,

2005). This is due to the fact that there is no equipment to maintain other than the radio

base stations (Siochrú & Girard, 2005).

Even on the hardware side, the cost advantages of the new wave of wireless technologies

are clear. Wi-Fi enabled PDAs prices is about US$250 and the prices are decreasing

rapidly. And another cost advantage of PDAs and portable devices is that their

consumption of power is much lower than computers (Siochrú, & Girard, 2005).

3.4 Open Standards

The issue of open standards should be highlighted as another success factor to last mile

connectivity –rural/remote and poor areas servicing. The open standards option means

that neighboring networks should be compatible with each other. As a result, network

development becomes easier and faster. As new networks rise in specific areas, they can

easily join the existing networks. Thus, „mesh networks‟ can be created (Siochrú, &

Girard, 2005).

3.5 Other Advantages of new wave Technologies

From another point of view discussing the effect of technology on the concept of

ownership, Siochrú and Girard state that technologies can plays a role in determining

who can own them, how can they be used, whether their operation and management will

be centralised or decentralised , and who can set them up. Certain technologies can


34

decentralise networks and allow for local communities to play a role in shaping the

services and applications they offer (Siochrú & Girard, 2005).

3.6 Sample of Creative Technology Solution

To conclude the technology section, the coming part will discuss a creative solution

applied using various technologies joined together in innovative combinations to make

maximum use of and extend existing infrastructure (Siochrú & Girard, 2005).

The „drive-by‟ networks developed by First Mile Solutions a US-based company. The

„local‟ node is a Wi-Fi equipped bus that connects with computers and hand-held devices

located in schools, kiosks, businesses, local government buildings, and other places. As it

travels along its daily route, it shuttles emails, voicemails, between communities as well

as passengers. At the end of the day, the bus connects with a VSAT or other broadband

connection to exchange messages with the rest of the world. Building the local network

on top of an existing transportation infrastructure greatly reduces costs. In a country with

an extensive bus network, users can be reached at less than $0.04 each (Siochrú &

Girard, 2005).

3.7 Conclusion

The claim here is that emerging „new wave‟ technologies, may become a far more

important factor in the future and significantly enhance the potential for the applicability

of the projects aiming to serve rural/remote and poor areas, both in terms of the extent to

which it becomes generally feasible and of the types of environment in which they can

be deployed (Siochrú & Girard, 2005). However, whether those small projects aiming to

serve the rural/remote and poor areas are able to take advantage of these innovations

depends to a large extent on an enabling policy and regulatory environment (Galperin &

Bar, 2007).


35

By now the reader should have a clearer perception of the effects of the „new wave‟ of

technologies that will revolutionize servicing the rural/remote and poor areas or the so

called high cost, low revenue customers. Since „high cost‟ will not be a true statement

with the rise of the wireless technology. The rural/remote and poor customers will be

served with wireless technologies at a fraction of the cost of laying cables to service

them. Servicing those areas will move from being an unattractive investment to

becoming a competitive and attractive investment to both private sector and public sector

companies. The argument here goes far beyond the low cost of deploying the network, to

other advantages such as low cost of maintenance, extremely fast deployment time which

also will mean less money investment, infinite large areas coverage as seen in the last

paragraph with the „drive by‟ creative solution.

The case with the „new wave‟ technologies is that possibilities are infinite. Creativity

with these wireless technologies can open the door to investment in the so called

uneconomical areas.

We can conclude that wireless technologies will soon abolish terms such as:

uneconomical service areas, marginal customers, and „high cost, low revenue

customers‟. And on the contrary, these areas will be served by any willing party to invest

in them like any other urban area. From another point of view these new wireless

technologies could in while also abolish the concept of universal service obligation, and

universal service levy imposed on the communications companies. It will also decrease

the effort exerted by the TRA‟s to service those areas.

In a nutshell, wireless technologies will revolutionize the way stakeholders view

servicing the rural/remote and poor areas.

The coming chapter will present some options of projects aiming to service those areas

and the reader will see how technology plays a central role in those community projects,

among other factors such as the community itself, the financing of the projects, and the

TRA role. All detailed in community communications projects chapter.


36


37

CHAPTER 4

Community

Communications Projects


38

4.1 Preface

The preceding chapter covered the researches and reviews on new technology wave and

its role in revolutionizing perceptions towards servicing the rural/remote and poor areas.

This chapter will focus on the current alternative in community communications projects

aiming to solve the digital divide problem and serve the marginal customer of rural and

poor areas.

Many approaches have tackled this problem trying to reach a solution. Some solutions

were kept non-for-profit while others were profit based businesses. The common factor

in all the solutions was the community involvement. These solutions whether non-for-

profit based or for-profit based have been given different names such as micro telco‟s,

telecentres, multi purpose telecommunications centre, and others which will be covered

and defined early on this chapter. All of them serve a common purpose of availing access

to information and communications means to the less privileged underserved areas.

Till now there is no single fit-for-all-model, each model is based on its community

needs. Some serve to provide basic services such as telephony access and internet access

while others have more elaborate roles and provide content relevant to the community

along with other government services. This chapter will highlight different definitions

and interpretations of different models available.

The chapter will start with identifying the different models of community projects, then

will move on to identify the essentials needed to create a community projects, followed

by the different ownership types and the different management types. Later on this

chapter the reader will be introduced to how can these community projects thrive and

succeed, what are the effects of such projects on the socio economic development of the

communities and the chapter will conclude with a discussion on the sustainability issue

of these projects.


39

4.2 Definitions of Different Models of Community Communications

Projects

In their article, Colle, and Roman, on the subject of shared access claims that in the

1990s, the Internet became an integral part of the routine communication activities and

while many were able to get their own individual computers and connections to the

digital world, many others depended on shared access. In the latter, governments, non-

governmental organizations (NGO), and the private sector played significant roles. By

2002 three principal tracks of shared access had emerged: the cybercafé, the information

access point (IAP), and the telecentre. Frequently telecentre is used as a generic term for

all three of these approaches (Colle & Roman, 2002).

To further familiarise the reader with the different projects options that could be used to

serve the rural/ remote and poor communities, the section below will provide an

integrated list of different available types of community centres taken from different

reviewed sources and researches and presented together below:

Microtelcos: defined by Galperin and Bar, as small-scale telecom operators that combine

local entrepreneurship, innovative business models, and low-cost technologies to offer

ICT services in areas of little interest to traditional operators (Galperin & Bar, 2007).

Microtelcos, thrive on creative entrepreneurship, because their core business is to serve

customers unattractive to large operators, they should actively seek combinations of

capital, labour and technology that maximise returns based on their knowledge of local

conditions and demand preferences. This should involve deploying low cost

technologies, bundling ICTs with related services such as training, financial, and legal

services, taking advantage of related infrastructure such as roads and water systems, and

finding business models including payment collection mechanisms appropriate to local

conditions. Labor for infrastructure building and maintenance can often be contributed

by customers themselves. There are examples of community members volunteering to

set up towers, string cables, and construct facilities necessary for community network

projects (Watson 1995; Foster and Irusta, 2003 cited in Galperin & Girard cited in

Mahan & Melody, 2007).


40

Telecentres: As defined by Colle and Roman, telecentres offer a broad range of

communication services related to the needs of the community, some of which are free or

subsidized by external bodies such as governments or NGOs. These might include:

desktop publishing, community newspapers, sales or rental of audio and videocassette

and DVDs, book lending, training, photocopying, faxing, and telephone services (Colle

& Roman, 2002). According to Colle and Roman, 2001, a telecentre is a rather loosely

used word to describe places that offer the public connectivity with computers and

networks (Colle & Roman, 2001). They are a means to increase access to

telecommunications services as well as to the broader range of information and

communication technologies (ICTs). Telecentres may differ in terms of size, services

offered, technology used, and available infrastructure, as well as location, ownership,

and relationship with other public facilities. It is because of this flexibility that

telecentres are attractive as a tool for economic development, especially in rural

communities (Townsend, et al, 2001). As per Proenza et al, telecentre may be defined as

a “shared site that provides public access to information and communications

technologies.”(Proenza, et al., 2001)

Proenza, et al., 2001 list down different types of telecentres:

Commercial telecentres: (identified and explained in the above telecentres

definition)

University telecentres: The universities have on their premises laboratory

classrooms equipped with computers, which are not, for the most part, connected

to the Internet. These facilities are intended primarily for the students but are also

open to the public and attract a diverse clientele.

NGO-sponsored telecentres: NGO-sponsored telecentres present a very broad

range of modalities and innovations in how they operate and the services they

offer. Most NGO telecentres are directly operated by the promoting NGO, though

in several cases the intention is to transfer responsibility for telecentre

management to the community at a later stage.

And from a different angle, Townsend, et al., list down different types of telecentres:


41

Tele-shop or Micro-telecentre: Tele-shop is a micro-business providing access to

an individual phone for community use, comparable to a public payphone. The

tele-shop is modeled after the successful micro-enterprise business model

developed by the Grameen Bank in Bangladesh (Townsend, et al, 2001). Chapter

five of this dissertation will reveal more data and information on the Grameen

model.

Mini-Telecentre: is a one-person micro-business operation. The mini- Telecentre

consists of a wooden console which contains several ICT accessories, including

one or two telephone lines and instruments (wireline or fixed wireless); one full

service personal computer, plus dial-up Internet access; one 3- in-1 or 4-in-1

device for printing, faxing, photocopying and/or scanning; an operational system

and software for several services (Townsend, et al, 2001).

Standard Telecentre: A Standard Telecentre is a small business offering a variety

of services in the community. A standard telecentre facility consists of the

following: 4 to 6 telephone lines; 4 to six computers with software; one dedicated

fax line; one dedicated Internet access line; an overhead projector; a large

production printer/photocopier, in some cases colour; and/or cash register

machine (Townsend, et al, 2001).

Cybercafés: these are referred to as the commercially-oriented cybercafés that are

normally found on streets. They are usually in the private sector and focus primarily on

providing customers with the use of computers and connections to the Internet and the

Worldwide Web. Their clients tend to be more urban, more educated, and more

economically well off than the clients of telecentres. In comparison, telecentres tend to

be in the public sector and focus on more isolated people (like villagers), and lower

income and less educated people (Colle & Roman, 2002).

IAP: Information Access Points (IAP) by definition fall between the cybercafé and

telecentre approach. They have the narrow focus on the Internet, but tend to have a

public service mandate (Colle & Roman, 2002).

Multi-purpose Community Telecentre: is a medium to larger size business operation. An

MCT is a full service telecentre facility that includes, at the very least: all of the services

of the standard telecentre; additional capacity (telephone lines, computers, human


42

resources, physical space, etc.) to expand the scope of usage; and potential additional

facilities for local broadcasting, tele-health, tele-education, electronic commerce, tele-

government information systems, and other value added services.One significant

difference between an MCT and the above described variations of “telecentres” is that

the “Multipurpose” aspect (Ernberg, 1998).

ICT Cooperatives: the notion of an ICT Cooperative is based upon the model of rural

telephone cooperatives that exist in several developing countries. The main

characteristics to be explored should include: some degree of community/customer

ownership of the business; provision of advanced ICT services, such as those

contemplated for MCTs; connection of local businesses, institutions, and eventually

private homes to the network, as an extension of basic telecentre services toward a true

Universal Service model (Townsend, et al, 2001).

Following this integrated list of different types and models of community driven

communications projects, Siochru and Girard argue that there is no single fit for all

model when it comes to local ICT network and service development. Varied outcomes

resulted from transplantation (Siochrú, & Girard, 2005).

Agreeing on that same concept and further adding to the idea are Townsend et al., saying

that it is important to keep in mind that any telecentre model can evolve into another

model or into a new model all together. This flexibility allows telecentre projects to be

viewed as business cases that can change with changing economic and technological

conditions and community needs. As businesses, telecentres will respond to market

trends, demand, and innovation (Townsend, et al, 2001).

4.3 Essentials of Community Communication Project

On another note, essentials of any community driven telecommunication project as cited

by Townsend, et al. in their article Telecentres and Telecommunications Development:

Options and Strategies, are:


43

Hardware or physical infrastructure, including telecommunications access and

backbone connectivity; electrical power; physical buildings; and technical

equipment such as telephones, computers, and faxes.

Software infrastructure, including available services and applications for users

(interfaces, programs, as well as training materials), and also business

management methods and materials for the telecentre managers.

Human resource infrastructure, meaning the personnel who operate the telecentre,

their degree of skills and resources, and the roles that they play in managing the

telecentre, providing service to users, and contributing to training.

Stakeholders another essential element when dealing with community projects: these

community projects involve multiple stakeholders listed below as per Singh and Heller:

1- Rural Communities and Households

2- Rural Service Providers

3- Policy Makers and their Advisors

4.4 Ownership of Community Communications Projects

Ownership of community driven communications projects varies dramatically based on

the type of project, the type of the country as well as the type of the project funding

entity. As per Siochrú, and Girard, Community ownership can be mapped along the

below presented continuum:

Local government ownership: implementing the project as a service for local

people and organizations.

Non-profit enterprises: in which a majority of shareholders are people,

organizations or firms within the community served.

User cooperatives: in which the users are also shareholders.

Community cooperatives: in which all members of for instance a village,

irrespective of whether they are actual or potential users, may be members.


44

Worker cooperatives: in which the workers in the project are also the owners and

managers.

A community ownership: a larger consortium that might include public and

private interests, and non-profit and for-profit components.

4.5 Management of Community Communications Projects

In terms of management and member participation, a number of approaches are also

adopted. Siochrú and Girard, 2005 lists them below:

Management can be similar to that of conventional firms, where there is a board

of directors appointed by elected officials, and professional staff is hired.

Advisory committees should exist to ensure that the voice of the community is

heard and that services are tailored to their specific needs.

Community control can be exerted without ownership, for example the

community and the owners (public or private) have to agree on the important

issues of the initiative, such as tariffs, services, reach, etc.

Management can be elected, by all the community members without

discrimination of any sort.

Community members can take a role in the activities of the enterprise, through

voluntary or non-voluntary work.

4.6 Factors Leading To Successful Community Projects

For community projects to thrive and succeed as per Siochrú and Girard in their article

Community-based Networks and Innovative Technologies: New models to serve and

empower the poor; they stress on the below major factors:

Factor # 1: A Supporting National Policy


45

A national policy that would support the emergence of local community owned

enterprises including:

a) Identification of Areas of Need, or „ICT Development Zones‟: Research could

identify areas that are currently underserved.

b) Legal Structure: A suitable legal and institutional structure for community

ownership.

c) Tax Exemptions: Exemption from taxes, such as corporate tax, might be

appropriate to enable maximum reinvestment into the community.

d) A National Support Unit: The creation of a national support unit of some kind,

preferably already working with cooperative and community development

interests.

Factor # 2: Regulation for Local and Community Networks

a) Technology neutral licenses: Technology to be used in delivering particular

services should not be specified; on the contrary incentives should be offered to

encourage innovative solutions, as well as, encouraging open source software for

network management.

b) Special License conditions: Competitive processes should be abolished when it

comes to awarding licenses to operate in unserved or underserved rural

communities. And in cases of competitive situations, community owned

enterprises should be given preferential treatment.

c) License-exempt spectrum: many countries have not yet fully exempted the Wi-

Fi spectrum, 2.4 GHz and 5 GHz, from licenses and fees (Neto, 2004 cited in

Siochrú, & Girard, 2005).

d) Favorable Interconnection Pricing: Regulation should support minimal

connection fees for non-profit community owned networks to gain access to

national and international connections and bandwidth.


46

e) The use of Universal Service Funds: Funding should be available for

community owned networks. The focus should be on connectivity as well as on

applications and services that are crucial to the community. Content development

should be encouraged and should be based on the community needs.

Factor # 3: Resources and Capacity Building

a) Training and Capacity Building: Building the caliber that will be responsible

of operating and running these facilities through constant training. These

trainings should be varied to encompass each and every function in those

community owned projects; starting with building management skills to the

managers, to building technical skills for the technical staff as well as other

knowledge such as financial management, marketing and promotion skills.

b) Networking on Experience and Expertise: Seeking expertise from other

experienced calibers. Though, it is worth noting that the direct transfer of

knowledge is considered impossible, as each project is considered unique with its

specific needs and operation conditions.

Proenza, et al., from their side set some rules and guidelines in order to build successful

telecentres economically and socially, telecentre initiatives should:

Target a low-income population (at least part of) as its clientele

Remain strongly committed to self-sustainability and adopt a business model

consistent with that commitment

Be run by someone that is: personally committed to the project, willing to

contribute his or her own capital and time, backed by the community in which the

centre operates, willing to address the community‟s objectives and needs, and be

knowledgeable of the initiative‟s technical and financial requirements.

Another factor leading to the success of community communications projects is by

constantly listening to the needs of the community. As per Ernberg: “‟Needs surveys‟,


47

should be carried out before a project is implemented, as one way of involving the

community and sensitizing the people to the potential of ICT” (Ernberg, 1998a).

4.7 Role of Community Projects in the Socio Economic Development of

the Rural Areas

While still difficult to quantify the exact impact of telecentres on the economic

development of specific communities, it is clear that telecentres can have a vastly

positive impact at the community level. Some of these benefits are presented in the

coming section.

As per Siochrú, 2007, he sees that the impact of community driven communications

project potentially goes far beyond the mere provision of communications and

information technology services. A community-driven ICT enterprise can:

1. Create employment locally through the provision of services.

2. Enhance networking and knowledge-sharing activities of locals.

3. Build the capacity of the local community in enterprise development and

institution building.

4. Enhance the provision and transparency of government services in the area.

5. Retain significant income in the area.

6. Harness local private entrepreneurial skills through joint community/private

service provision.

7. Reinforce overall community development efforts, through reinvesting the

surplus.

Effects of community driven communications projects on development, seen from a

different angle, by Siochrú and Girard, that through the experience itself of building and


48

running the community enterprise, the community develops skills and organizational

capacities that it can then apply to other economic and social uses, encouraging a process

of community empowerment (Siochrú & Girard, 2005).

And from another angle Siochrú and Girard, see that the benefit of community driven

project may extend to national and/or dominant telecoms companies. As they become

relieved of the burden of building and operating networks in what they perceive as

marginal or non-economic areas. Further, they also boost their own income, by collecting

revenues for the completion of national and international calls for traffic originated by

cooperative subscribers, and from their own subscribers originating calls to the local

network (Siochrú & Girard, 2005).

In their article, Townsend, et al., state that telecentre projects, on one hand, are a mean to

increase universal access to telecommunications services, and on the other they provide

an economic development opportunity to the communities and population they serve

(Townsend, et al, 2001).

Confirming that same point of view and according to the International Development

Research Centre in Canada, hundreds of rural telecentre projects exist worldwide with

the explicit aim of providing benefits of social and economic development such as ICT

literacy and training, access to indirect medical services, information exchange to

improve job creation among others (Aalami, J. 2005).

For example, a telecentre can provide access to basic telephones and ICTs, and also

facilitate other services, such as computer training classes or health education seminars.

As a multipurpose business, telecentres can help increase employment opportunities,

cultural awareness, political participation, and overall empowerment of disadvantaged

groups (Townsend, et al., 2001).

In another more conservative point of view, Ernberg, states in his article,

Telecommunications for sustainable development, that in order to have a real impact on

development in rural and remote areas, telecentres must be “an integral part of a cross-

sectoral, multi-disciplinary effort of community development” (Ernberg, 1998b).

Agreeing with that same concept, Proenza et al., argue that a telecentre can be a powerful

instrument but to be effective it must be part of a comprehensive economic and rural


49

development strategy that includes investment in other sectors. Along with other

institutional reforms must also be instituted to broaden the work opportunities and social

and economic participation of traditionally excluded sectors of the population (Proenza,

et al., 2001).

Yet and in order for a telecentre to improve the welfare of low income users, as per

Proenza, et al., they claim that a telecentre must provide services that:

i) Enable access to the new information and communication technologies by a

low income target population.

ii) Are valued by the target group, otherwise it will fail to keep them for a

sufficient period of time to effect a change in their lives.

iii) Bring about concrete economic, social or cultural benefits and actually

improve the living conditions of the target group.

4.8 Sustainability of Community Driven Communications Projects

A major issue currently in highlight when it comes to development projects: is the issue

of sustainability. This section will discuss the meaning of sustainability, why is it

important to reach sustainability, the agents and factors leading to sustainability, and

problems facing community driven communications project not allowing them to reach

sustainability.

4.8.1 Meaning and Definition of Sustainability

Starting with the meaning of sustainability for community communications projects,

Peter and Franco, argue in their article Achieving Sustainable Community Online Access

Centres, that financial sustainability implies that an Online Access Centre is able to meet

all its costs from the revenues it generates in the provision of services. “A centre is

financially sustainable if its revenue from all sources is at least equal to the operational


50

costs (wages, rent, maintenance, supplies including telecommunications services, etc)

plus a contribution to the cost of the equipment (either for expansion of services or

replacement of existing equipment).” They go further to argue that while the ability to

meet operational costs only will not be sufficient for sustainability as equipment will

eventually need to be replaced and a centre will need to fund this replacement.

Consequently, to achieve sustainability an Online Access Centre must be in a position to

fully maintain itself as a going concern after an initial period of financial assistance.

Inability to achieve self-reliance would place a centre under a constant threat of failure

(Peter & Franco, 2004).

4.8.2 Factors Leading To Sustainability

As per Siochrú in his article, Next Generation Community-Driven Networks, he states

that generic sustainability of the community-driven enterprise is based on a number of

factors, the key ones are:

1. Research and experience have shown that demand for telephony is very strong

in rural areas, even to a point of significant sacrifice of income.

2. Considerable capital and current costs savings can be made by utilizing public

and community resources for building the networks. Such resources range from

the provision of premises for the hub, to transmission towers and public rights of

way, to voluntary labor.

3. Aggregating bandwidth usage between a larger number of social and economic

actors within the community, linked together into a network, reduces the cost to

each.

He even goes further to recommend treating the enterprise as a business from the outset,

rather than a development program that must transform itself into a business. This is a

key factor reaching sustainability (Siochrú, 2007).


51

On another note, Peter and Franco stress on the importance of community preferences

and demands for the sustainability of the projects saying that “community‟s demand for

services is unlikely to remain constant, so operators of a centre need to be attuned to

shifts in demand for services as well as be pro-active in the development of programs

likely to increase the familiarity of community members with existing services as well as

developing services likely to be of benefit to the community” (Peter & Franco, 2004).

Agreeing with that same opinion is Townsend et al., they see that it is crucial to allow

telecentre models to be flexible, so as to shape them according to the needs and demands

of the community where they are located. Telecentres can offer services that customers

are willing to pay to receive, and thereby generate profits for their owners and economic

development within the community, they will be much more viable and self-sustaining

operations (Townsend, et al., 2001).

From another view on how to reach sustainability in community communications

projects: Siochru and Girard in their article, state that generated surplus from the centres

should be kept within the community and applied to further ICT-related or development

activities (Siochrú, & Girard, 2005).

In another opinion stated by Proenza et al., they stress on the importance of a sound

business plan as being needed as an agent for the sustainability of the telecentre

(Proenza, et al., 2001).

Colle and Roman argue the crucial importance of finding creative solutions for the

sustainability of rural telecommunication services. Advertising, value-added services,

and reselling of network services to government bodies and large organizations are some

ways to create the revenue needed to keep the network running (Colle, & Roman, 2001).

4.8.3 Challenges Facing Sustainability of Community Projects

Proenza, et al., discuss the challenges faced by the rural telecentres and how difficult it is

to keep the telecentres sustainable with these challenges. These challenges include:

energy source, connectivity and telecommunications technology. Even when it comes to


52

operating costs, they are higher in rural areas such as telecommunications costs;

computer equipment maintenance, even skilled operating and maintenance personnel are

practically nonexistent. And since rural telecentre users are different from those in urban

centres, because of their low income capacity, sustainability of these projects is

challenging (Proenza et al., 2001).

Proenza et al., further proceed stating that achieving a sustainably profitable rate of use

of equipment in sparsely populated rural areas is not an easy task. They claim that rural

residents may have to travel many kilometers, often through rugged terrain and poor

roads, walking or using limited public transportation services, along with the small

population makes it hard for rural areas community driven communications projects to

reach sustainability (Proenza, et al., 2001).

From another point of view and in his article, Dumas, mentions that the economic

sustainability of the community driven communications projects is an important issue,

yet the design of these projects is not geared to high profits as much as it is geared to the

generation of small revenues (Dumas,1999).

4.8.4 Funding Options to Reach Sustainability in Community Projects

In order to reach sustainability some community projects rely on funding agents and

donors. From their views Fuchs 1999 and Norton 2000 cited in Proenza et al., 2001

stated that it is not essential for a telecentre to be able to pay for itself so long as

government is willing and able to bear part of its costs. It has been suggested that it is

unnecessary for telecentres be self-sustaining if they “are purposefully set up not for their

own sake, but rather to trigger socioeconomic development based on the knowledge

economy” (Fuchs 1999, Norton 2000 cited in Proenza, et al., 2001).

And in their article Peter and Franco, they conclude that rural and remote communities

generally are unable to fully fund the operations of telecentres and require some form of

ongoing financial support. This financial support is related to the funding of

infrastructure and other overhead costs such as facilities rental, manager‟s salary and

central support services that are not related to the level of demand for services. They


53

further highlight that since revenue is likely to cover the variable cost of providing

services as well as make some contribution to overheads; developing partnerships with

organisations and agencies would contribute to solving both the deficit issue and

consequently the sustainability issue (Peter & Franco, 2004).

Further tackling the issue of donors‟ involvement in community driven communications

project, Colle and Roman argue that most telecentres operate in a not-for-profit mode,

but that does not mean not-for-income. Typically donor agencies reduce or discontinue

financial support for telecentres after an initial incubation period. “In this issue Dagron

argues that telecentres that have a mandate to contribute to a community‟s welfare

should not be responsible for their own full financial support any more than a community

library is.” And on the contrary Proenza suggests that telecentres should be more

rigorous about adopting self sustaining business models. Their article, Colle and Roman

proposes a compromise answer, that telecentres need to have a financial plan for

whatever the sources of support will be (Colle & Roman, 2002).

To conclude this section, a leading survey on the sustainability of European telecentres

shows that the main challenge presently facing the development of telecentres is the

uncertain sustainability. Qvortrup, 1995 notes that 70% of the first wave of telecentres

set up in Europe failed in the first two years of operation. A 1998 survey in the United

Kingdom and Ireland found that only 26.8% of the telecentres were generating surpluses,

39% were barely breaking even, and 34.1% were operating at a loss (Murray & Cornford

cited in Proenza, et al., 2001). This could help as leading figures yet more surveys should

be conducted on the sustainability of the community communications projects in the

developing countries.

4.9 Conclusion

From the above literature reviewed, we can see that more than one form of community

project could exist each form should be tailored to the specific needs of the community it

serves. There is no one size fits all model that could be generalized on all projects. And

that is what is unique about community projects: the tailoring factor. The tailoring factor


54

plays a major role in the success and sustainability of the project as well as plays a major

role in maximizing the benefits the project brings to the specific community. When the

model is tailored to the needs of the community it ensures that the inhabitants will use

the facility, generate revenue, ensures sustainability and continuity through feedback and

may be grow its activities and become a multi purpose centre.

Like a rock thrown in the water; the benefits of the community projects starts in small

circle that keeps growing; as it starts with the inhabitants of a certain community, then

moves on to affect the entire community which in turn reflects on the overall

development of an entire nation. These benefits encompass: more informed individuals,

more job opportunities, and less burden on the governments to create jobs or financial

subsidies to those small underprivileged communities. More research is needed in this

domain, as very little research has been done on the effects of communications

community projects.

In the conclusion, and stressing the importance of community communications project,

in 2001 UN Secretary General Kofi Annan adopted guidelines to help governments to

create legislative and policy environments conducive to the establishment of

cooperatives. And in 2003 Annan said in acknowledgment of the role of cooperatives in

poverty reduction and in supporting the Millennium Development Goals: “The adoption

of those goals expressed the resolve of the international community to free all people

from the abject and dehumanizing conditions of extreme poverty and hunger. As models

of self-help and solidarity, cooperatives understand better than most that, while such

high-level political support is welcome and necessary, progress does not happen by

itself, but rather through sustained individual and collective action” (Siochrú & Girard,

2005).


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CHAPTER 5

Case Study –

Grameenphone


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5.1 Preface

This chapter will focus on presenting a case study of applied community based

communications project. The case study is taken from a developing country –

Bangladesh-, where the operator Grameenphone used its corporate social responsibility

resources in sponsoring sustainable communications projects aiming to have an effect on

the socio economic development of the poor rural areas.

The first section will be a brief background on Grameenphone, and Grameen Bank;

followed by a discussion of the programs Grameenphone sponsors, with a detailed focus

on the Village Phone program; followed by the factors that led to the success of those

programs as part of Grameenphone corporate social responsibility goals and the last

section will contain a discussion on the replicability of the Grameenphone programs in

other developing countries.

5.2 Grameen Phone

In November 1996; Grameenphone (GP) was offered a cellular license in Bangladesh by

the Ministry of Posts and Telecommunications. In March 1997; GP launched its service.

In September 2007: GP announces 15 million subscribers. Currently GP is the leading

telecommunications service provider in the country with more than 20 million

subscribers as of June 2008 in a country where there are about 30 million telephone

users, of which, a little over one million are fixed-phone users and the rest mobile phone

subscribers (Grameen Phone website, 2009).

GP; is a joint venture enterprise between Telenor 62%, the largest telecommunications

service provider in Norway with mobile phone operations in 12 other countries, and

Grameen Telecom Corporation (GTC) 38%, a non-profit sister company of the

internationally acclaimed micro-credit pioneer Grameen Bank (GB). The international

shareholder (Telenor) brings technological and business management expertise while the

local shareholder GTC provides a presence throughout Bangladesh and a deep

understanding of its economy. Both are dedicated to Bangladesh and its struggle for

economic progress and have a deep commitment to GP and its mission to provide


58

affordable telephony to the entire population of Bangladesh (Grameen Phone website,

2009).

5.3 Grameen Foundation and Grameen Bank

Grameen Foundation works in partnership with the Grameen Bank, pioneer of small

loans to the poor, to fight poverty all over the world. The Grameen Bank started in

Bangladesh in 1976 as an attempt to provide tiny loans to very poor people to allow them

to start "micro-businesses." Twenty-eight years later, Grameen Bank has 3.96 million

borrowers, 96% of them are women, and has loaned more than $4.57 billion in amounts

averaging less than $200. Grameen Foundation USA, was established in 1997 to provide

financing, technical assistance and technology support to the growing numbers of

grassroots institutions that are successfully replicating Grameen Bank's success in

countries as diverse as Malaysia, India, Uganda, Mexico and the United States. The

mission of Grameen Foundation USA is to empower the world's poorest people to lift

themselves out of poverty with dignity through access to financial services and to

information (Keogh & Wood, 2005). As per Dr. Mohamed Yunus the initiator of

Grameen Bank “an individual poor person is an isolated island by himself and herself. IT

can end that isolation overnight" (Grameen Foundation website, 2009).

5.4 Grameenphone Corporate Social Responsibility strategy

GP strategy has been based on hand in hand with the Bangladesh government for its

development. Connectivity has been viewed as a peripheral tool rather than a genuine

factor towards development,” GP realized that this should not be the case and argue that

when a rural farmer purchases a SIM card, he has purchased more than just a means of

communication. What he has actually done, is to open up a gateway of hope and

possibilities. The „mere‟ SIM card offers the farmer a level of connectivity that can steer

him out of poverty (Grameen Phone website, 2009).


59

GP has been using its corporate social responsibility budget in achieving its strategy of

developing the country socio economically with the help of ICT. They consolidated their

social investment initiatives in four core areas related to the Millennium Development

Goals:

Poverty alleviation

Healthcare

Empowerment

Education

Each one of those four goals has its own programs, goals, partners, and milestones.

Below is a description of those programs with a special focus on the poverty alleviation

goal and specifically the Village Phone program which is the focus of this dissertation.

Healthcare, empowerment and education will be briefly introduced.

5.4.1 Poverty Alleviation Program - Village Phone

As part of the poverty alleviation goal, GP created the Village Phone program, The

Village Phone Program is a unique initiative to provide universal access to

telecommunications service in remote, rural areas. Administered by GTC, it enables rural

people who normally cannot afford to own a telephone to avail the service while

providing the Village Phone (VP) operators an opportunity to earn a living. The Village

Phone Program, started in 1997, the same day commercial service of Grameenphone was

launched, aiming to provide a good income-earning opportunity to more than 210,000

mostly women Village Phone operators living in rural areas (Grameen Phone website,

2009).

The Village Phone (VP) initiative has made tremendous social and economic impact in

the rural areas of Bangladesh, creating an income-earning opportunity for the VP

operators, mostly poor women and borrower members of Grameen Bank (Grameen

Phone website, 2009).


60

The Village Phones work as an owner-operated pay phone. A member of Grameen Bank

takes a loan to buy a handset and a GP subscription and she is trained by Grameen

Telecom on how to operate it. The VP operators then retails the mobile phone service

among her fellow villagers, thus earning an income (Grameen Phone website, 2009).

Project Milestone:

270,000 Village Phone Operators in 50,000 villages.

Replicated in a number of countries including Uganda and Rwanda.

Received 'GSMA in the Community Award' in 2000.

Received 'Commonwealth Innovation Award' in 2003.

Received "Petersburg Prize" awarded by the Gateway Foundation in 2005.

From the perspective of, Knight-John, et al., in their article, An Investigation of the

Replicability of a Microfinance Approach to Extending Telecommunications Access to

Marginal Customers, they further detailed the VP program operation, stating that VP is

dealt with as “one customer” by GP, where GP treats the entire program as a bulk buyer

of airtime, issuing a single summary bill at the end of the month to Grameen Telecom for

the aggregated airtime of all the VPOs. GTC then makes out airtime bills in Bengali for

each Grameen Bank (GB) branch office. The GB branch makes out individual bills for

each Village Phone Operator (VPO), and the actual collection of monies from VPOs is

carried out by the GB branch at the village level; monthly bill collection is tied together

with that of loan repayments, including that for the initial package. The branch pays the

bill to GTC which bears all marketing and advertising costs of the VP program, supplies

handsets, provides support, training, service and repair of handsets, and overall

management of the VPO network. GP only incurs costs related to: communication

infrastructure; technical support; provision of airtime; provision of summary bill to GTC;

government licensing and regulation compliance and liaison; and government financial

and taxation liaison (Knight-John, et al., 2007).

The result is that in year 2004, the 3.85% of GP‟s subscribers that constituted the total

number of VPOs accounted for 15.5% of all GP airtime revenue (Alauddin, 2005), while

incurring less costs than associated with a regular subscriber. As at June 2005, the

average revenue per user generated by VPO connections was twice that of GP‟s regular


61

subscribers. Although each of these connections may serve an entire village and thus

cannot be compared with a regular single- user subscriber, the point to note here is that

from the perspective of GP, “twice the amount of revenue is generated from a smaller

base of costs” (Knight-John, et al., 2007).

To ensure success of the program, the VPOs are selected from the larger pool of GB

borrowers. These borrowers must have been members of the Bank for a certain period of

time, and must have a good repayment record in order to be eligible to become a VPO.

The selection process is run by GB at the village level, and ensures that reliable

borrowers are selected to operate the village phone. Some of the criteria include that the

VPO should have at least one literate member in her household, if she isn‟t; have access

to electricity; and live in a central location within the village. GTC only comes into the

picture for the final approval and subsequent issue of the phone to the selected VPO

(Knight-John, et al., 2007).

Overall, Grameen‟s level of repayment is 98.95%.21. Administration of the entire VP

program is carried out by GB at the village level. GB is the first point of contact for

VPOs, with GB staff permanently located in the village and regularly meeting with

borrowers; GTC staff visit the GB centres in the villages less regularly. This model, with

its regular meetings with VPOs, works well to avoid problems such as unwillingness to

pay back. An additional factor that enhances the prospects of repayment and

sustainability is the different approach to microfinance that characterises the VP

program; the VPO is provided with a livelihood – a means of generating a steady income

by reselling telecom services – rather than just a meal (Knight-John, et al., 2007).

Quoting Muhammad Yunus, Nobel Prize winning founder of GB: “The quickest way to

get out of poverty right now is to have one mobile telephone, and you will see how

quickly she is changing her life. Come back in two years and you will not recognize what

she was before.” By giving a poor villager micro-credit to buy a phone under the VP

program, the income that is generated by the villager as VPO puts her in a better position

to make loan payments as well as pay monthly usage bills, as opposed to providing

micro-credit to a villager to buy a phone for her personal use (Knight-John, et al., 2007).


62

The selected VPOs are provided a loan package from GB to purchase a handset and start

their VP business. This basic package consists of an activated Grameen Phone SIM card,

one handset, a battery, a fast charger, a user guide in Bengali and a price list for different

destinations (national and international calls). The cost of the handset is also subsidised

by GTC. The total package typically costs USD133. The VPO pays back this loan in

installments usually over a period of two years; the loan repayments are added to a

monthly bill, which includes airtime charges, line rental, etc., issued to the VPO by her

GB centre. Grameen also provides loans to selected VPOs to purchase solar panel cells

and DC batteries if the VPO does not have access to electricity to charge the handset

battery. This means that the VP program is feasible even in areas where there is no

available electricity. The fact that VPOs can obtain the loan as well as the device all from

one organisation also lowers their overall transaction costs (Knight-John, et al., 2007).

GP provides airtime for VPO customers at a discounted rate of approximately 50%. This

was initially part of GP‟s business strategy embodied in the principle of „good

development is good business‟. The tariffs charged to the VPO are less than what regular

GP customers pay plus the discounted rate allows GTC to cover its costs that‟s how the

VPOs makes a profit (Knight-John, et al., 2007).

As per their book, Keogh and Wood, state that the most obvious benefit of the Village

Phone program is the economic impact that this communications tool brings to the entire

village. A family is able to save the expense of sending a productive member to deliver

or retrieve information by travelling great distances in person. The technology also

serves to link regional entrepreneurs with each other and their clients, bringing more

business to small enterprises (Keogh & Wood, 2005).

In a Canadian International Development Agency (CIDA) commissioned study, it was

concluded that the Grameen Village Phone program yields “significant positive social

and economic impacts, including relatively large consumer surplus and immeasurable

quality of life benefits” (Keogh & Wood, 2005).


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5.4.2 Poverty Alleviation Program - Grameenphone Community

Information Centre

Another poverty alleviation program is the Grameenphone Community Information

Center, which is a shared premise where rural people may access a wide-range of

services such as Internet, voice communications, video conferencing and other

information services. Set up with technical assistance from the GSM Association,

Grameenphone Community Information Centers (GPCICs) are equipped with the

minimum of a computer, a printer, a scanner, a webcam and an EDGE-enabled modem,

to access the Internet (Grameen Phone website, 2009).

The pilot project started in February 2006 with 16 CICs; today the project has become a

massive operation with over 500 CICs. The short-term plan of this initiative is to

establish at least one CIC in each of the 462 village (Grameen Phone website, 2009).

GP CICs are designed to be run independently as small businesses by local

entrepreneurs. The entrepreneurs are trained and are provided with continuous support

from Grameenphone. To help the entrepreneurs earn a living, Community Information

Centres also provide other Grameenphone services, such as payphones, using

Grameenphone's mobile network, and electronic recharges for prepaid and post paid

mobile accounts (Grameen Phone website, 2009).

CICs are a creative business model that has won appreciation from the International

community, such as from the Washington Post, from UNDP, Katalyst and the GSMA.

The services available in the GPCICs include: internet surfing and e-mailing, content on

health, agriculture, locally relevant customized and open content, chatting with voice,

and picture, video conferencing, typing, scanning, and printing, commercial mobile call,

E-governance services, E-Fax, CD Writing, Multimedia education for children.

Grameenphone has united with different organizations and institutions, in various

categories, as strategic partners to successfully run this program (Grameen Phone

website, 2009).


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5.4.3 Poverty Alleviation Program - CellBazaar

CellBazaar; launched in 2006; is the third program of the series of programs targeting

poverty alleviation. In Bangladesh, the isolated and uninformed farmers and traders have

little bargaining power with exploitative middlemen. Using Grameenphone, CellBazaar,

buyers and sellers are able to trade goods (e.g. rice, motorcycle, electronics, etc.) through

their mobile phones, bringing the benefits of information exchange, community

networking and one-to-many trading to a previously unwired rural population. It

facilitates the system of trading, so that the traders can gather market information for

smart and informed decision-making while staying at home and grow their business

(Grameen Phone website, 2009).

The project is about using the mobile phone to create an electronic market place.

CellBazaar users register via a simple procedure and can then post items for sale via the

mobile phone or a computer. For buyers interested in purchasing items or services, the

process is just as easy. A search through an SMS or browsing with WAP and WEB, or

even through IVR gives access to the listed available items with their respective price

and the address of purchase (Grameen Phone website, 2009).

Project Milestone:

Over a million subscribers have accessed its service since its inception.

On an average, there are 600 new postings and 90,000 hits per day.

Received 3GSMA Global Mobile Award 2008 for "Best Use of Mobile for Social

and Economic Development".

Voted "Asian Telecom Innovation of the Year" in the Telecom Asia Awards

2008.

GP corporate social responsibility sponsorship extends to health care programs dedicated

to the rural poor areas. GP sponsors and develops programs related to motherhood and

infant care, eye care program, AIDS/HIV fight programs, cancer management programs

and a blood bank program (Grameen Phone website, 2009).

The empowerment programs come as the contribution of GP to empower the

disempowered. The programs included sponsoring the Bangladesh Special Olympics


65

team, which won 71 medals in the Special Olympic Games 2007 in Beijing, China, the

rehabilitation process of six acid survivors with granting them employment opportunities

in Grameenphone, and third is the Information Boat project with Care Bangladesh,

which aims to empower river rural communities with digitized livelihood contents and

internet access and a fourth CSR partnership aiming to support treatment and

rehabilitation of economically-disadvantaged drug addicts (Grameen Phone website,

2009).

The education is one of the four focuses of GP corporate social responsibility programs.

Their aim is to work with the Government and development agencies, to achieve the

Millennium Development Goal of ensuring universal „primary education for all‟. GP

provides scholarship to 100 underprivileged students at different academic levels through

a scholarship fund annually as well as other activities encouraging better education

(Grameen Phone website, 2009).

5.5 Grameenphone success factors

From their point of view Knight-John, et al., in their article An Investigation of the

Replicability of a Microfinance Approach to Extending Telecommunications Access to

Marginal Customers, discussed and analysed the Grameenphone solutions for providing

communications services to the less privileged, identifying the incentives that drove the

organisation to innovate in the access network as well as the factors that contributed to

the success and sustainability of this particular approach (Knight-John, et al., 2007).

A significant incentive for Grameenphone‟s innovating in the way it did connect the

rural areas, is the hostile conditions and limited interconnection facilities – offered by the

incumbent fixed operator, Bangladesh Telegraph and Telephone Board (BTTB). These

unfavourable conditions gave Grameenphone the push to seek other means of penetrating

the countryside, resulting in GP entering into a network sharing agreement with

Bangladesh Railway (BR), with the acquisition of 1800 kilometre fibre optic network

(FON). This arrangement gave GP access to a nationwide network corresponding in size

to that of the incumbent (Knight-John, et al. 2007).


66

In their article, Knight-John, et al. argue that in some ways the fact that BTTB was

hostile to GP, agrees with Mueller‟s thesis, based on US experience, that non-

interconnection of competing networks creates three incentives to enlarge the scope of

the network (Mueller, 1997):

1. Incentive to be the first mover to attract new user groups in unserved markets.

2. Incentive to lower the price of access to entice new users, even if temporarily.

3. Incentive to interconnect users in non-competing networks and increase network

footprint.

These incentives, driven by access competition, have promoted universal service in the

US, and can also be applied to the case of GP‟s network expansion strategy (Knight-

John, et al., 2007).

5.6 Replicability of the Grameenphone model

As per Knight-John, et al., a key factor for replication is access to network infrastructure.

Another factor to be taken into consideration in the discussion of replicability is the

importance of a design/organizational structure that is capable of overcoming higher

transaction costs generally associated with serving marginal customers. The key issue,

thus, is to identify and develop a cost-effective business model ensuring access to

telecom for marginal consumers, whilst also ensuring sustainability (Knight-John, et al.,

2007).

“Grameen approach is by no means a universal remedy with guaranteed success under

changing market and technological conditions or implementation in countries with

different regulatory policies” (Knight-John, et al. 2007). Agreeing on that same concept

are Keogh and Wood in their book, Village Phone Replication Manual, where they state

that no two implementations of Village Phone will be identical. Each country will have

unique features that call for variants in the division of roles, responsibilities and

operations to be consistent with the local environment (Keogh & Wood, 2005).


67

They proceed saying that in February 2002, the Grameen Technology Center, which is

an initiative of Grameen Foundation USA, working to eliminate poverty by leveraging

the power of microfinance coupled with information and communication technology,

launched an initiative to replicate the success of the Village Phone program outside of

Bangladesh (Keogh & Wood, 2005).

Uganda, with its flourishing micro-finance organizations and strong mobile

telecommunications infrastructure, was identified as the first country for replication. This

innovative initiative had four simultaneous goals: 1) to provide the rural communities of

Uganda with valuable communications services to enable them to break the cycle of

poverty; 2) to validate, measure, and document the Village Phone model in a single

country outside of Bangladesh; 3) to establish a generalized replication model for the

Village Phone program; 4) to disseminate this learning to the commercial

telecommunications sector and the worldwide development communities so as to

establish a global Village Phone movement (Keogh & Wood, 2005).

The Grameen Technology Centre approached MTN Uganda, Uganda‟s leading mobile

telecommunications provider, in March of 2002 to propose working together to extend

telecommunication services to rural Uganda. In November 2003, MTN Village Phone

was formally created and launched as an independent company, “a sustainable initiative

that aims to alleviate poverty and empower rural Ugandans through the provision of

communications services.” Twelve months into formal operations, Village Phone

operators in Uganda were selling an average of six times more airtime than is consumed

by a typical MTN Uganda subscriber (Keogh & Wood, 2005).

Although cellular phone network coverage extends into a majority of rural Uganda, very

few people in rural areas can afford to purchase a mobile phone. The teledensity in

Uganda is approximately 1.72 (1.72 telephones for every 100 people). These telephones

are concentrated in urban areas, making rural access to telecommunications difficult and

costly; this despite the fact that only 14% of the Uganda‟s population lives in urban

centers (Keogh & Wood, 2005).

The model developed for Uganda is not a „cookie cutter‟ template; however, this

particular incarnation of Village Phone and the environment in which it exists will most


68

probably be closer to any future replication than the original Bangladeshi program.

Nevertheless, a common set of basic steps set by Keogh and Wood, 2005, is presented

below:

Step 1: Identify a Target Country

There are a number of complimentary components that feed into this selection. These

can be broken down into three broad categories: Fundamentals, Drivers and Other

Factors:

Fundamentals

Fundamentals are necessary elements which MUST be present in the target country.

They are:

1. Enabling regulatory environment

2. Willing and enthusiastic partners

3. Market potential where at each level of operations, sustainability and profitability

must be assured. If one component of the model falls short, the system does not

support itself.

Drivers

Drivers are elements that determine the potential and success of Village Phone.

Specifically:

1. Telecommunications coverage in the target rural areas

2. Microfinance outreach in the target rural areas

3. Correlation between these two primary drivers

4. Population density

5. Rural telecommunications demand

Existing Teledensity

Poverty demographics

Viable options to Village Phone (Competition)

Cost of phone calls


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Other Factors

Other factors which will influence the potential and success of Village Phone are:

1. Telecom policy which may dictate network interconnection rates, independence

of the regulating body, and tariff structures.

2. Design of Universal Access Fund which may create access to funds.

3. Taxation.

4. Collective Social and Cultural Factors which may include social cohesion, the

culture of payment, trust between organizations, literacy and numeracy.

5. Expatriate population: International calls are typically higher margin and more

expensive than domestic calls and hence assist in sustainability at all levels.

As per Keogh and Wood, 2005, that this is not an exhaustive list, but is intended to

provide a starting point for analysis and suitability for a potential Village Phone

initiative.

Some of the above factors are aligned with Siochru and Girard proposed success factors

of community projects presented in chapter four of this dissertation.

Step 2: Business Analysis and Financial Model Development

Before making any investment in establishing partnerships, it is important to validate that

a Village Phone program can create a „win‟ scenario for all constituents over the course

of multiple years. This „win‟ scenario is often discussed in terms of financial

sustainability or profitability. To complete an early financial analysis, it is important to

determine certain variables:

Cost of mobile phone equipment.

Financing Costs: A survey of the microfinance sector will determine what

average financing costs will be for the Village Phone Operators.

Average number of minutes per day sold. In Bangladesh, the average Village

Phone Operator sells 57 minutes of incoming and outgoing calls. In Uganda, 20

min/day was used for early financial models as only outgoing calls are charged in

the country.


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Estimated number of Village Phone businesses to be created. Based on the

number of microfinance clients and the population of the country.

Operational expenses for Village Phone Company. The number of staff and

vehicles required.

Wholesale and retail tariffs and margins for partners.

These numbers are the basis for revenue and sustainability projections. From these

numbers, spreadsheets should be created that model the entire business for all of the

parties involved.

Step 3: Identify Stakeholders and Relationships

Multiple stakeholders need to come together for the Village Phone program, each with

specific roles and responsibilities. The effort must initially be conceived and driven by

an individual or organization to bring the concept before the stakeholders. This provides

the catalytic action necessary to launch a Village Phone initiative. Such a person could

be within a Telecommunications Company, a telecommunications service organization, a

microfinance institution, a Non-Governmental Organization, or an individual

entrepreneur. The catalyst will typically forge partnerships with the microfinance

institutions and the Telecommunications Company and other stakeholders including the

village phone company, the microfinance institutions, and the village phone operators

themselves. A major challenge for all these stakeholders is sharing a common vision.

Step 4: Structuring the Company

In Bangladesh and Uganda, a separate company was created to “carry the flame” for

Village Phone. Each company should endorse the model that best suits the country.

Major changes between the companies established in Bangladesh versus those

established in Uganda. Some of those changes are: using pre paid versus post paid

model, ownership model, for profit versus non for Profit Company.

Step 5: Financing Village Phone

Each organization or individual who wishes to replicate the Village Phone model will

have to approach the financing and funding question in their own way.


71

Step 6: Establish Operational Foundation

It is important to establish a strong operational foundation for the Village Phone

business. Village Phone is a business with responsibilities to its investors, shareholders,

and partners as well as the end users who will come to rely upon the communications

services offered through the community of thousands of Village Phone Operators.

Creation and documentation of detailed procedures is essential for smooth operations.

The Operations Manual is the most environment specific document describing Village

Phone and as such Grameen Foundation cannot guide the detail.

Step 7: Equipment Selection and Sourcing

Before a pilot program can be launched, all of the appropriate equipment must be

defined, suppliers identified, and channels established. These pieces are essential for

pricing to be determined. In general, the equipment needs to be durable enough to

survive heavy use in rural environments while also being affordable to keep the total cost

of the loan needed to start the Village Phone business as low as possible.

Step 8: Developing a Training Curriculum

Prior to beginning the pilot program, training the Village Phone Operators to maximize

their ability to establish a strong business; individual or group training sessions can be

held and should be conducted by the microfinance loan officers (who have a relationship

with the borrowers) – who themselves will need to be trained prior to starting the pilot.

Step 9: Pilot Program

The pilot program serves to put all of the pieces into place that are necessary to operate a

Village Phone program on an ongoing basis. It also allows for the collection of “real

world” data to validate financial and operational assumptions about the program to

determine if it should be taken to a larger scale.

Step 10: Hire Staff

The success of the Village Phone project is ultimately a function of how strong the

individuals that form the team are. It is important to keep the total number of people


72

hired to a minimum and to take the time to find the highest caliber individuals possible.

In Uganda, four staff members were hired to start the MTN Village Phone Company: a

manager, two field officers, and an administrative assistant.

Step 11: Formal Launch

When all of the pieces of the Village Phone program are in place, a formal marketing

event is a great mechanism to generate awareness in the country about the program and

recognize the efforts of all of the partners. The launch event should be appropriate for the

country – there is no “one size fits all” solution for introducing Village Phone.

Step 12: Marketing

Marketing should initially focus on three things:

Village Phone and its purpose (education, sensitization, awareness)

Creating demand for microfinance institution partnerships

Generating interest for individuals to become Village Phone Operators

Step 13: Ongoing Operations

An ongoing process that includes: identifying and resolving problems, documenting

business processes, continuously improve efficiency.

Step 14: Sharing Best Practices

Share lessons learned so that Grameen can continue to serve as an international

knowledge centre for Village Phone best practices, facilitating current and future Village

Phone initiatives.

5.7 Conclusion

This case study is the life version of this dissertation concept and main idea, where the

private sector telecommunications company used its corporate social responsibility


73

budget in financing sustainable micro projects with the aim of reaching the universal

service access goals and in the same time developing the less privileged communities‟

socio economically.

The success of the Grameenphone model in Bangladesh along with its successful

replication in Uganda could mean that the model could be successfully replicated in

other developing countries bearing in mind the replication model presented above. As

well bearing in mind that each model should be flexible enough to meet the community

needs it serves and that copying the Grameen model will not necessarily be successful

without this flexibility.

On a broader scale, other programs than the Village Program could be implemented to

reach the same goal. As earlier presented, Grameenphone, has more than one poverty

alleviation program aiming to raise less privileged individuals life standards through the

use of communications and telecommunications means such as the CellBazaar and the

community information centres.

As a concluding note, the Grameen model is a live experience on the successful role of

private sector (for profit company) in the development of a nation.


74

CHAPTER 6

Research Findings

and Data Analysis


75

6.1 Preface

This chapter will be dedicated to presenting the data collected through personal

interviews, emails and phone interviews, and analysing the findings of these data

collected. The aim of this section of my dissertation is to get more firsthand data from

organizations or individuals that have direct relation with policies and goals of universal

service obligation, corporate social responsibility goals or rural and poor community

development programs.

The initial plan was to interview the Egyptian Ministry of Communication and

Information Technology to better understand what is their USO goals, the Egyptian

National Telecom Regulatory Authority to understand how they act upon achieving the

USO goals and policies set by the ministry, the three operators in Egypt (Vodafone,

Mobinil and Etisalat) to understand their role in USO as well as to get a closer look at

how they use their CSR budgets, the two leading ISP‟s in Egypt (LINKdotNET and TE

Data) to get the same understanding about their role in USO as well as to get a closer

look at how they use their CSR budgets, a consultancy company working in the field of

telecentres promotion, a private company that developed a product that would suit the

rural and remote poor individuals, and a community driven project manager to better

understand the feasibility and logistics of running a microtelco project in developing

countries, and a local NGO working on the development of small communities and the

UNICEF working on the youth development, the opinions of professors that conducted

researches on the topic was also seeked, and finally, two interviews to gather first hand

information on costs and timelines needed to connect the non connected areas.

Some problems and limitations faced while trying to successfully get first hand data

were: 1- inability to meet with the right person, 2- time restriction limiting the number of

questions that could be asked during the interviews, 3- the answers received were aimed

at promoting certain ideas and does not represent a real answer to the questions posed

(i.e. politically correct answers).

On another hand, I was unable to meet with the ministry of communication and

information technology and all I could get is a document identifying the areas in Egypt

that do not enjoy communication services. The National Telecom Regulatory Authority,


76

though I reached more than one key responsible, all I got was a referral to the website

section on USO. Vodafone contact person kept promising to send the replies but did not.

I could not get meeting with responsibles in neither Telecom Egypt nor TE Data. I have

also tried to contact Grameephone and Grameen Bank responsibles yet I got no response.

And, I did not get any replies from the professors that researched and published articles

on the subject.

6.2 Interviews

6.2.1 Ministry of Communication and Information Technology

As earlier mentioned though I did not get the opportunity to meet a responsible figure, all

I could get is a document detailing the non served areas in Egypt. The document was sent

on confidentiality basis.

Egypt non served areas-: the document contains the names of the non served areas in

terms of communications: Matrouh, Menya, Al Wadi Al Gadid (New Valley), North

Sinai and Qena. These areas contain 145 small villages with number of inhabitants

ranging from as small as 300 inhabitants to as big as 8000 inhabitants. Out of these 145

villages only 14 have communications services and 131 do not have one single line of

communications.

Since the document was sent on confidential basis, in order to double check the

information and data that it contains, I reverted to the NTRA website and discovered that

“the NTRA has released a Request for Information (RFI) for the provision and operation

of telecommunications services to the un-served areas in five governorates namely;

Menya, Qena, Matrouh, New Valley and North Sinai, as a preliminary step towards the

Universal Service tender put forth by the NTRA. The company that submits the best

offers, technically and economically will win (taking into consideration the lowest

subsidy needed and the provision of services to the end-users at economical price). Eight

companies applied for the RFI for the provision and operation of telecommunications

services to the un-served areas mentioned in the Handbook” (NTRA website, 2009),

which matches exactly the areas mentioned in the document.


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6.2.2 National Telecom Regulatory Authority

As for my interview with the NTRA, I did reach the right person to answer the questions,

yet he refused neither to talk to me nor to meet me, so the questions were sent via mail.

The questions sent were:

1. What is the budget available for USO? And how do you collect it?

2. How do you achieve the USO targets and goals?

3. What is the role of private sector in achieving USO?

4. What type of private sector companies contributes in USO (operators, ISP, …)?

5. Did you consider microtelco projects as part of USO solutions?

6. Would you restrict usage of technology to specific technologies for microtelco

Eng. Ramy Ahmed, Universal Service Policy Manager, referred me to the Egyptian

National Telecom Regulatory Authority (NTRA) website

(http://www.tra.gov.eg/english/DPages_DPagesDetails.asp?ID=226&Menu= 1) to get

the information needed on USO. As per the NTRA website, the Universal Service

Obligation policy and goals can be defined as the provision of affordable public

telecommunication services to all citizens especially in the economically non-feasible

regions. The beneficiaries of the USO should be the inhabitants of low-income remote

areas, the low-income citizens, who can not afford telecommunication service, citizens

with special needs, and public establishments such as: schools, libraries and hospitals.

Four stages mark the achievements of those goals: 1- choosing low income areas and

prioritizing to areas with more than 300 inhabitants, 2- increase the average penetration

rate to 20% (they didn‟t mention a time span nor a specific year for accomplishing their

plan), 3-narrowing the digital divide (no specific measures mentioned) and 4- reaching a

tele density of 100% „when measured by the number of fixed lines per family‟ (again no

specific time span nor specific year).

The role of NTRA in Universal Service projects is setting regulations for provision of

telecommunication services in those unprivileged and remote areas, monitoring the

implementation of universal service projects to ensure their compatibility to time frames

http://www.tra.gov.eg/english/DPages_DPagesDetails.asp?ID=226&Menu


78

as well as to technical and economic specifications. And finally take the necessary

actions in case the universal service operators and providers do not abide by the set

standards or timetables.

6.2.3 Private Sector Operators

On another hand and addressing the private sector mobile operators in Egypt with the

below question:

1. What is the importance of Corporate Social Responsibility Programs for your

organization as operator?

2. Does CSR affect positively your goals (financial and corporate branding)?

3. What is the type of CSR programs you consider funding?

4. And why do you prefer funding these specific programs?

5. Did you ever consider funding sustainable projects? (And why yes or why not?)

6. What is your organization role in the Universal Service Obligation?

7. Did you hear about microtelco projects? Did you ever consider funding

microtelco project with your CSR budget?

8. The budget allocated to CSR in your organization (percentage from total

marketing budget, not necessarily a figure)?

Both operators (Mobinil and Etisalat Misr) agreed to answer when assured about

confidentiality of the information they presented.

Shaimaa Abdel Azim – Corporate Social Responsibility Expert – in Mobinil

www.mobinil.com the first mobile operator in Egypt; stated that corporate social

responsibility programs for Mobinil is a crucial concept as it consists part of Mobinil

mission statement.

Shaimaa sees that investing in corporate social responsibility programs has its direct

positive effects on the company‟s brand image as well as sales, due to the fact that

Egyptians are emotional individuals and when they realize that a certain company has

http://www.mobinil.com/


79

development activities towards its citizens, they prefer this brand and prefer buying the

products of this brand.

Mobinil sponsors four different corporate social responsibility concepts: 1-Health, 2-

Environment, 3- Community and 4- Education. The main reason for choosing these

programs is based on their positive impact on the Egyptian society, as well as based on

the needs of the Egyptian society.

On the issue of sponsoring sustainable programs, Shaimaa states that it was not of core

importance previously, as Mobinil preferred to invest in programs needed by the society

at this specific period of time with little concern to the sustainability issue. Yet in year

2009 and in the month of August, Mobinil started its first campaign that it considers

sustainable. The program falls under the umbrella of community development where a

sum of money deducted from the revenue of Mobinil will be given to the Social Fund for

Development for the purpose of funding small-scale projects for the underprivileged.

And when asked about Mobinil role in achieving USO goals, Shaimaa replied that this is

not part of the responsibility of the CSR team.

On that same issue and from the perspective of another private sector operator- Etisalat

Misr, www.etisalat.com.eg, – the third and last entrant in the Egyptian market, Mr.

Mohamed Khalil, CSR Manager and Mr. Hazem Mohamed, from the CSR team, they

both stressed on the importance of CSR to Etisalat Misr, as being a “core activity”

especially that Etisalat UAE-the mother company of Etisalat Misr- is an award winning

company in the CSR front, as well as, Etisalat UAE is very much interested in the

concept of development.

On the issue of programs choice: Etisalat Misr sponsors programs that are of core

importance to the Egyptian less privileged communities stress Mr. Khalil. Their

programs‟ choice strategy is based on helping people with basic needs, and currently the

programs sponsored are:

1- Ro‟ya: which is based on creating a special tariff for users of sign language, the

hearing impaired and those with special needs, can use video calls at reduced prices.


80

2- Origin: is a program devised to counter Egypt‟s water dilemma. This initiative is in

partnership with the "CARE" organization, as well as other renowned Egyptian non-

governmental organizations. It is estimated to directly aid hundreds of thousands of

beneficiaries in 7 governorates in its first year. The initiative has four main fronts:

starting with bringing clean water to underprivileged homes, water purification,

minimizing water waste from irrigation and lastly a dialysis program for the sick less

privileged people.

From their point of view both Mr. Khalil and Mr. Mohamed see that all the programs

sponsored by Etisalat Egypt are based on some sort of sustainability where the projects

run by themselves following the initial funding.

In terms of effect, no formal researches have been conducted so far, yet in his view Mr.

Mohamed sees that the programs direct beneficiaries and humanitarians feel the

importance of those programs yet on the level of average individuals, they still do not

feel it affects them.

When asked about their role in USO, Mr. Mohamed said that this part is not related to

CSR in any ways, and does not fall in the scope of the CSR department interests.

Mr. Mohamed concluded by saying that by end of October 2009 Etisalat Misr is

launching a sustainable CSR program. From Al Ahram newspapers and on Wednesday

Oct. 28th

, 2009, the press release was launched in page 19; stating that Etisalat Misr

along with the Social Fund for Development, will fund entrepreneurs with the amount of

10.000 Egyptian Pounds (1.200 GBP) to be used to create a small kiosk to sell mobile

services such as top up cards, and cheap handsets with good margin that would enable

them to pay the initial fund and still have some profit. This should create work

opportunities to one thousand individual, as well as it should generate sustainable

revenue to the owners of those kiosks. Those kiosks will be branded by Etisalat Misr for

free (as part of their deal with the Social Fund for Development). Etisalat Misr could win

them as resellers later on if they can successfully sustain their businesses.


81

6.2.4 Internet Service Providers

From another perspective Eng. Shahir Boshra – Chief Government Affairs Officer- in

LINKdotNET, www.link.net, a leading Internet Service Provider (ISP) company in

Egypt, with the majority market share proceeds in that topic saying that the NTRA in

order to fulfil its universal service obligation goals, takes a cut from the annual revenue

of LINKdotNET and all other certified ISP‟s to fund the projects necessary in order to

reach their USO goals.

One of the programs that were aimed to fulfil USO goals, was an attempt from the

NTRA to expand the reach of the broadband access among the poor and less privileged,

the NTRA subsidises the cost of the 256 Kbps. Speed. This initiative started in 2007 as

part of the Ministry of Communications and Information Technology initiative to avail

some sort of broadband connectivity with a minimal cost to the poor people. The initial

price of the 256 Kbps. was 65 Egyptian Pounds (8 GBP) per month, the NTRA

subsidises 20 Egyptian Pounds (2.5 GBP) paid directly to the ISP, and the customer pays

45 Egyptian Pounds (5.6 GBP) monthly. This Eng. Shahir, proceeds, represents one of

the programs where the NTRA as well as the private sector ISP companies cooperate to

fulfil the USO goals. Yet Eng. Shahir sees that the private sector companies could have a

bigger role in fulfilling the USO goals especially by providing consultancy and

knowhow from their experts.

And when asked if LINKdotNET would sponsor cybercafé‟ in rural/remote areas, he

proceeded saying that he never thought of this idea, yet the marketing department of

LINKdotNET would be better qualified to address that issue through their corporate

social responsibility programs.

6.2.5 Private Sector Consultant on the Issues of USO

David N. Townsend, President of DNTA, http://www.dntownsend.com/dnta/, an

international communications policy consulting group, taking the role of the

development of telecentre ideas and initiatives, and the redefinition of universal service

policies. He stresses on the difference in definition between microtelco and telecentres

http://www.link.net/

http://www.dntownsend.com/dnta/


82

by saying that a microtelco would be a small, local telephone "company" that provides

service to a single area, likely a village or group of villages in a remote region, where no

other telecommunications service is available. This telco would obviously have to

connect to the outside world by means of a link to another network, either via satellite or

some available backbone network that is within range of the microtelco's service area.

This particular concept of a microtelco is not very common in most of the world,

“although I am aware of some interesting examples, for instance in Peru, Bolivia, and

also even in parts of the United States.” In most developing countries, however, rural

telephone services are still provided mostly just by the large operators, where they either

decide to set up service or sometimes they are mandated to do so.

On the other hand, there is a very widespread movement around the world in the

establishment and operation of so-called "Telecentres". These are not exactly the same

as the notion of microtelcos described above. A basic telecentre is a local public facility

where residents of a village or other community can go to make phone calls, use

computers and the Internet, etc., usually for a fee, although sometimes services are free

of charge. Most telecentres do not provide services outside of the particular facility, e.g.,

connections to nearby homes, businesses, or other locations. The idea of extending

telecentres connections to such outside locations is something that I have actually

promoted for a long time, but it is not (yet) particularly prevalent, to my knowledge.

Thus, the actual telecommunications network that connects to a given telecentre usually

remains a large, national or regional operator, and the telecentre itself is just a link on

that network, rather than a true "microtelco" concluded Mr. Townsend.

6.2.6 Private Sector Company

From the perspective of a for-profit organization offering telecommunications solutions

for rural poor individuals, Nigel Waller - CEO, Movirtu Limited – started by presenting

himself as the Founder and CEO of Movirtu, www.movirtu.com, a technology company

which works with mobile operators to provide them the infrastructure and business

models to help them service the 1 billion people who cannot afford a handset, living on

less than $2 a day but who still spend 5-30% of their income on mobile phone services.

https://nemo.strath.ac.uk/owa/redir.aspx?C=8669cd3403644b44a7b5fa93919e017f&URL=http%3a%2f%2fwww.listmanagerservices.com%2flink.php%3fM%3d48246787%26N%3d13191%26L%3d2508%26F%3dH

http://www.movirtu.com/


83

Mr. Waller stated that the mobile operators in the emerging markets have been looking

for solutions specifically aimed at people living below the poverty line, who earn less

than $2 a day. “The operators cannot simply take phones and services designed for US

and Western European markets and reduce the price, they needed devices and services

specifically designed for this market.” He said.

“Since we can access email and cloud computing services from any thin client PC in the

world, why can we not do the same with a phone. Why does a phone number have to be

tied to a phone, why not make it device independent. So with that we re-mortgaged the

house and set up Movirtu” said Waller. Movirtu created MXShare which enables cloud

computing for the mobile phone; it is a technology which provides device-independent

mobile services, allowing users a virtual mobile phone number and account that can be

accessed via a PIN from any phone.

Movirtu considers itself a social enterprise, and need to address both their CSR goals and

their goals of having a profitable business for their shareholders. Yet when Movirtu

addresses the operators, their focus is mainly on profit; they want to see a service

addressing Base of the Pyramid (BoP) which is profitable for them and a service which is

not just a CSR mandate. “That is where we have to work hard on building and defining

the business models, and providing the right technology to ensure this works,” added Mr.

Waller.

On another note Mr. Waller ensures that the Microtelco users are decreasing every year,

so other creative ideas should start prevailing. He also urges TRA's get involved to push

private sector to get directly involved in achieving the country USO.

6.2.7 Microtelco Project Manager

And getting first hand information from the manager of microtelco project in Nigeria,

Dr. John Dada, Program Director, says that the lesson of Fantsuam Foundation (FF) is

that sustainability and growth are challenges which Microtelcos have to address very

early in their existence. To this end, rural based Microtelcos have additional challenge of

ensuring that their services meets identified needs are “needs-led”. FF operates an


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integrated development model, this model is dynamic demanding constant awareness of

and consultation with the host communities to be sure that services being offered are in

consonance with the communities' development priorities As long as a Microtelco makes

their services needs-led, they will always have a demand to meet, and that will be their

sustainability strategy. “This is what we do at FF” said Dr. Dada.

And when asked about his opinion on the participation of private sector

telecommunications companies in funding sustainable microtelco, Dr. Dada said that

microtelcos typically work in the last mile of connectivity. This area has very little

financial profits for private sector telcos. Most Governments offer incentives and

subsidies for private sector telcos to provide communication services in this last mile.

This model works for people-responsive governments who see ICT's role in reaching

their remote and rural populations. Where such attitude is „ABSENT‟ in government,

microtelcos are very much on their own. And they have to depend on the second way of

participation which is private sector who is willing to support microtelcos in the Last

Mile, as part of their own corporate social responsibility. It is up to the Microtelco to

convince such private sector that it is a worthwhile investment which will create future

markets. “But for example this idea, is a hard sell in Nigeria” concluded Dr. Dada.

6.2.8 Local NGO

Looking at another angle, come the role of nongovernmental development efforts made

by individuals or by communities, Mr. Hazem Hashad – a board member of a

nongovernmental community development association.

His NGO is focusing on a rural farming area named Kafr Hashad, where originally his

family owned and farmed. He stated that the main reason that pushed him to go by

himself and not wait for other NGO to help this rural community is his belief that he

should give back to the community something to benefit from. And that the role of the

educated people is to help less privileged communities. He stated that the goal of his

NGO is to raise the level of knowledge and skills of the youngsters falling in the age


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group 7-23 years by raising their mental skills through training courses. His aim is to

move them from non productive easily distracted minds to productive minds.

Religion plays a great role in rural poor societies in Egypt and that‟s why the choice of

training and session revolve around religious messages urging productivity and work and

pushing them away from falling in non productivity and crimes.

In terms of sustainability he sees that talking to the minds of these youngsters is the core

of sustainability, because his NGO encourages them to think for themselves and act

positively and productively to themselves and to their communities.

For the time being communications projects is not of core importance, because his NGO

needs first to concentrate on raising the mental capabilities of these youngsters and

communications can come on a later stage. Now if communications is introduced, it can

have bad effect on their minds where they can waste their times on non productive

activities such as games, Mr. Hashad concluded.

6.2.9 Multinational NGO

On a greater development scale, and on the youth front comes the role of the UNICEF,

www.unicef.org/egypt/index.html. Mrs. Salma Wahba – Adolescence Officer – states

that the role of the UNICEF in Egypt is to work with national systems on sustainable

basis and build national capacities to implement the programs based on institutional

sustainability.

In terms of sustainable communication projects, she stated that UNICEF partnered with

LINKonLINE in a project aiming to provide the youngsters 12-21 with a channel to

express themselves and get information and knowledge that they will not get anywhere

else, through an online page in one of Egypt‟s major news portals

www.masrawy.com/unicef/Default.aspx?ref=home.

UNICEF interest in technology is based on “mean to an end and not an end in itself”

which means that UNICEF will not consider sponsoring communication projects unless

http://www.unicef.org/egypt/index.html

http://www.masrawy.com/unicef/Default.aspx?ref=home


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it serves their purpose of developing the youth. That‟s why this partnership with

LINKonLINE serves the purpose, where they use the technology in delivering messages

to their target group, Mrs. Wahba concluded.

6.2.10 Costs and Timelines

And in order to give a further practical perspective to the project; this part of the

dissertation will be dedicated to unveiling primary costs and timelines required to

connect rural and non connected areas.

In order to reach the costs required, an interview was conducted with Mr. Beshr Chamsy,

Sales Director, LINKdotNET. Mr. Chamsy, proceeded saying that rural connectivity is a

special case when it comes to costing as it heavily depends on proximity to the exchange

(central) in case of wired connectivity, and depends on proximity to the tower in the case

of point to point connectivity (combining Wimax and Wi-Fi technologies).

Though with LINKdotNET connectivity of non connected areas have always been on a

for-profit- basis, yet the costs will remain the same in a for-profit or a non-for-profit

case. In the case of wired connectivity, and from previous experience with wired

connectivity to a resort, Telecom Egypt, Egypt incumbent,

www.telecomegypt.com.eg/English/index.asp, was contracted to connect the resort,

Telecom Egypt chose fibre wiring and invoiced the resort 2.7 millions Egyptian Pounds

(300.000 GBP) for 20 Kilometres of fibre wirings, which means that per one Kilometre

of fibre wiring the cost is (15.000 GBP). Fibre wiring in rural areas makes internet

connectivity pricing equivalent to the normal commercial prices in urban areas.

Another option that could be used to connect the rural areas, added Mr. Chamsy, is the

wireless technologies option. Yet this option will require that the area is GSM covered.

This option relies on wireless technologies; a combination of Wimax and Wi-Fi, where a

Wimax unit is installed in the GSM tower and this unit is responsible to the next station

and then to the Wi-Fi unit that is next to the designated location. This solution hardware

costs from 70.000 (7.700 GBP) to 100.000 Egyptian Pounds (11.100 GBP) for the

installation of the whole system (both way transformers- sender and receiver


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equipments) and an amount of 50.000 Egyptian Pounds (5.550 GBP) paid annually for a

bandwidth of 2 Mbps. The time needed for installing the Wimax system depends upon

the availability of the towers. In case of their existence the installation will need one

week, yet in the case of their non existence, the installation will need three to four weeks,

concluded Mr. Chamsy.

In another solution proposed by Eng. Alaa Khalil, , Director of Sales of ALKAN CIT,

www.alkan.com, is connectivity via VSAT, where the receiving device costs 2950 USD

and would need two hours for installation. Added to that amount is an amount of 405

USD invoiced monthly for a 512 Kbps connectivity. This package also includes a voice

number concluded Mr. Khalil.

6.3 Conclusion

The aim of this part is to give the reader first hand information on the topics discussed on

the earlier chapters such as:

1- Corporate Social Responsibility (CSR): where the two operators interviewed –

Mobinil and Etisalat Misr- stated that CSR is a crucial activity for them, yet the

budget allocated for CSR is not spent on communications projects. The CSR

budget is spent on other community activities based on specific community

needs.

2- Telecom Regulatory Authority Role: from their website, we can see that the

NTRA published a Request for Information (RFI) for the provision and operation

of telecommunications services to the un-served areas in five governorates in

order to reach the Universal Service Obligation (USO) goals set by the Ministry

of Communications and Information Technology. And from the ISP,

LINKdotNET, the TRA sponsors the lowest speed of broadband connectivity

with an amount of money paid to the ISP, in order help promote and spread the

broadband among low income individuals.

3- Universal Service Obligation (USO) - Role of Private Sector-: both operators –

Mobinil and Etisalat Misr- did not have an idea about this issue. Yet the Internet

http://www.alkan.com/


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Service Provider (ISP), LINKdotNET, stated that their role in USO is straight

forward, which is a percentage of its revenue paid annually to the Telecom

Regulatory Authority.

4- Non Government Organization Role in Development: from the UNICEF, the

information and communications technologies are a mean to an end and not an

end in itself, yet sponsoring small communications projects will revolve around

promoting certain content to a specific target group.

5- Telecentre Project Manager: the Fantsuam Foundation project manager stressed

on the importance of sustainability of the telecentres and that in order to reach

such sustainability it is important to involve the community early on all services

offered i.e. become a „need led‟ organization. Yet having private sector

companies invest in such projects is not an easy task to do.

6- Digital Divide: from a private entrepreneur that created a solution targeting the

rural/remote and poor areas; investing in these areas with creative solutions could

be financially rewarding. And from the NTRA side their goal is to decrease the

digital divide in Egypt.


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CHAPTER 7

Conclusion and

Recommendations


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7.1 Preface

The aim of this chapter is to pull all the information together from the previous chapters,

and present an integrated document that would benefit TRA‟s of developing countries

reach their universal service access through encouraging the private sector to invest their

corporate social responsibility budgets, as well as, recommend a framework for the

private sector telecommunication companies operating in developing countries, to

positively contribute in the socio economic development of underserved rural areas

through the use of their budget allocated for corporate social responsibility.

The content of this chapter is all based on the previous researches, articles, case studies

and interviews presented in chapter one till chapter six of this dissertation. This chapter

have used all the mentioned material to deduct the recommendation steps to the TRA‟s,

as well as, to answer the initial question posed.

First part will be dedicated to answering the primary question posed: Can private sector

telecommunications companies contribute in the socio-economic development of the

rural areas through financing microtelco sustainable projects, by using the budget

allocated for their corporate social responsibility programs?

The second part will be dedicated to recommending a guideline to the „what and how‟ to

implement such a solution in developing countries; in terms of technology use,

regulatory environment and other factors.

7.2 Answering the Dissertation Primary Question

The answer derived from all the previous researches done either desktop research or

gathering first hand information would say YES private sector telecommunications

companies can contribute in the socio-economic development of the rural areas through

financing microtelco sustainable projects, by using the budget allocated for their

corporate social responsibility programs and thus contributing to fulfil the TRA‟s goals

of USO. Below are the factors that lead to positively answering the question above:


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1- The success of the Grameenphone case, shown in Chapter five is one of the arguments

we could use to argue why we could answer YES to private sector telecommunications

companies contribution in the socio-economic development of the rural areas through

financing microtelco sustainable projects, by using the budget allocated for their

corporate social responsibility programs and thus contributing to fulfil the TRA‟s goals

of USO. As earlier shown in the Grameenphone case, we can see that Grameenphone is a

private sector telecommunication company operating in a developing country –

Bangladesh-, and has an allocated budget for corporate social responsibility programs,

where they use their CSR budget to fund sustainable telecommunication programs in the

rural and poor areas. These programs aim to raise the socio economic standard of living

of the poor living in less privileged rural areas by providing them with an income

generating project. As well as, these programs have helped in spreading the

communications services all over the country through Grameenphone agreement with

Bangladesh Railway to cover Bangladesh.

2- The second reason that would lead us to respond with YES to the question posed is the

fact that the Grameenphone model was replicated in Uganda, though the replication is

not a carbon copy yet it is an adaptation of the original Grameenphone model applied in

Bangladesh.

3- The third reason is the fact that all private sector telecommunications companies

operating in Egypt have an allocated budget for CSR programs as well as the CSR

concept is getting central importance for both operators interviewed –Mobinil and

Etisalat Misr-.

4- The fourth reason that would lead us to respond YES to the question posed is the fact

that NGO development agencies need to use communications and telecommunications as

medium to reach their target group. This was derived from the interview with UNICEF

where they need to use the World Wide Web to convey certain messages to certain target

groups.

5- The fifth reason will be derived from Mr. Hany Mouafy- CEO Nielsen Egypt,

presentation in Oct. 16th

, 2009 during the presentation of Professor Philip Kotler on:

What is Next in Marketing, in Cairo, Egypt; where he stated that currently in Egypt there


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are 12.6 million Internet subscribers which will reach 18 million by year 2011. And in a

survey conducted by Nielsen Egypt, 58% of non Internet users wish to get connected

within one year. So this survey proves that the ones that are not connected wish to get

connected which proves that the need exists and the demand exist.

6- The sixth reason derived from the NTRA website proves that there is a need for

private sector contribution in achieving USO goals. The NTRA released a Request for

Information (RFI), for the provision and operation of telecommunications services to the

un-served areas in five governorates; Menya, Qena, Matrouh, New Valley and North

Sinai, as a step towards the Universal Service.

All the above would lead to the conclusion, that in order to achieve the USO goals, the

private sector companies should be involved with more than a levy paid annually from

their revenues.

7.3 Recommendations

This part will constitute of the guidelines that the NTRA could follow in order to reach

its USO goals through the participation of the private sector with their CSR budgets.

These steps are taken from the previous research done in the previous chapters of this

dissertation, and listed down:

Step 1: NTRA to plan on decreasing the digital divide through using Information and

Communications Technology in Development (ICT4D)

From its side the NTRA should endorse the belief that in order to achieve its USO goals,

the role of the private sector companies should exceed the current role of just paying a

sum of their revenue to the TRA. On the contrary the TRA should endorse the belief that

to achieve its USO goals, this should happen in full cooperation between TRA‟s and

private sector companies in terms of financial contribution, as well as, business and

technical knowhow and experience transfer.


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TRA‟s should set their annual strategic plan for achieving USO goals and should: 1-

decides upon certain locations each year to be covered in terms of communications and

telecommunications services. 2- Then they should decide on which type of

communication is needed is it basic telephony only? Or telephony and internet

connectivity? Or a hybrid of telephony, internet connectivity and targeted content? For

each of the planned locations. 3- NTRA should publicly announce its USO plan in the

main newspaper as well as on its website in order to trigger the interest of the private

sector companies.

Step 2: NTRA to create the enabling environment for the private sector contribution

On another hand NTRA should create the right combination of factors that would trigger

the optimum functioning of the private sector companies in these remote/rural and/or

poor areas and bundle all those tips in one booklet that should include: 1- Some

alternatives of optimum business model that the private sector companies should follow

in order to contribute in achieving USO goals, where the word sustainability should

prevail. These models should include previous case studies from other developing

countries such as Grameenphone Bangladesh and Grameenphone Uganda and others.

Yet it should still give the private sector company the option to choose the model that

best suits the company‟s plans. 2- The NTRA should remain technology neutral, and

should leave the choice of technology to the private sector company itself be it Wi-Fi,

WiMax and WLAN or even other locally developed technologies such CorDECT and

RAX or others. 3- The NTRA should exempt the private sector companies that operate in

the rural and poor areas from the license fees, and should consider this fees exemption as

part of TRA obligation towards universal service.

Step 3: NTRA choice criteria

The NTRA should then choose the right offer and allocate it to the area most needed, i.e.

NTRA role should be, to assign the suitable territory to the most convenient private

sector company. For example, assign internet connectivity projects to ISP‟s, and assign

content focused projects to content management companies, as well as assign basic

telephony projects to operators of fixed or mobile telephony. By doing this the NTRA

will give space to each private sector company to excel in its area of expertise as well as


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the private sector company will excel in transferring the knowledge and know how to the

community to operate it, minimizing the chances of something going wrong since the

expert company is the one that set up the project operation manual.

Step 4: Private sector companies to manage the creation of the project till its operation

On the role of the private sector companies, since the moment the company is assigned a

project, it should: 1- establish strong relationship with the community, 2- understand all

needs of the community from communications services in order to cater for these needs,

3- choose from the community a board that will be responsible of the project, 4- train the

board on how to run such projects, 5- assist the board in appointing the human resources,

6- provide the board with all hardware and software needed for the project, 7- assist in

the marketing of the project, 8- create a hotline to assist these projects if they face any

troubles, 9- monitor the project quarterly to check if they are on the right track, 10-

report the experience to the NTRA and report quarterly on the activities done as well as

the problems faced.

Step 5: NTRA to monitor the operation of the project

From their side the NTRA should monitor the projects through the reports of the private

sector companies, as well as through field visits by their teams to the locations of the

projects. These field visits should aim at surveying the inhabitants on the services

offered, how useful are these services for their lives?, did these services improve their

lives either socially or economically? What other services could improve their lives?

These answers should be analyzed and presented in workshops to the private sector

companies to get a view on how to better serve these areas.

7.4 Future Research

This dissertation creates a vast field for future research on the role of private sector

telecommunications companies in achieving the TRA‟s universal service goals. For

developing countries where the governments balance sheet is in deficit, and where it is


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always expected of the utilities to create revenue and some sort of profit in the balance

sheet, it becomes imperative that the private sector contributes to take some burden off

the shoulders of the government. Especially that this contribution will not harm nor

create an extra burden on those private sector companies, since these companies already

allocate some sort of budget for social responsibility. The researches needed should aim

to encourage the private sector to contribute with the TRA‟s to reach USO goals. As well

as, they should aim to create detailed frameworks for TRA‟s to push for the private

sector contribution.

Further researches will also be needed in detailed and indentifying specific timeframes

and costs of implementation of such projects, which further open the door to more

specific researches on the effects of these projects addressed to the socio economic

development of less privileged areas.

7.5 Conclusion

The aim of this dissertation was mainly to try to offer novel solution for the telecom

regulatory authorities of developing countries to reach their universal service obligation

goals, and at the same time offer the private sector companies a novel solution to invest

their corporate social responsibilities budget in sustainable development

telecommunications project that would directly and indirectly lead to some positive steps

in the socio economic development of non connected areas.

The reader by now should have a wide base of knowledge on the topic and could by now

develop his own views on the topic as well as could answer the primary research

question. The above material gathered is an attempt from the author to positively

contribute in the socio economic development of less privileged areas of developing

countries.


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Role of Private Sector Communications Companies in the Socio-economic Development of Rural Areas

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