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Nokia economics: Cellphones in the developing world
by David Yip on Nov 13, 2007 - 4:47 PM EST

If you are one of the billion people in the world who get by on less than a dollar a day, what consumer product would you most likely save your hard-earned rupees or yuan to buy?

Westerners might guess an electric light, a steel plow or a bicycle.

I think this is a great example of people knowing what's best for themselves. The article's too long to cut and paste; I attached the pdf.

The Globe and Mail (Canada)
July 7, 2007 Saturday

Nokia economics: This poverty remedy may ring a bell




If you are one of the billion people in the world who get by on less than a dollar a day, what consumer product would you most likely save your hard-earned rupees or yuan to buy?

Westerners might guess an electric light, a steel plow or a bicycle. But if you ask the people who are living in one-room shacks in rural villages and urban slums across Asia, Africa and South America, they are most likely to name something quite unexpected - the Nokia 1110.

This basic cellphone, which costs about $35 new (all figures Canadian) and half that much on the thriving second-hand market, has become the must-have device for the poorest people in the world.

Here is where the cellphone industry is making all its money these days: In the past two years, a billion phones have been sold, almost all of them to the poorest 20 per cent of the world's population. Nokia's dirt-cheap unit has led the way, and the other companies are racing to follow, sending sales vans to remote places that lack electricity, toilets or running water, but have been wired with strong cellular signals to meet this race for the bottom.

Some people in the cellphone business refer to these cheap devices, with their waterproof plastic keypads and extra-loud speakers, as "slum phones." It used to be a term of derision, but it has turned into an envious expression following the 1110's amazing rise to global ubiquity.

You can't help noticing its sleek rectangular shape in crowded streets and hardscrabble fields across Asia, in the hands of people who are still sleeping on dirt floors and using fields for toilets. It has become the basic status symbol for people emerging from destitution, much as the two-door car is the badge of middle-class arrival.

Just ask Rajesh Kushwah, a 32-year-old man who lives in a one-room hut in a fetid slum in northern Mumbai. Each morning for the past dozen years, he has bought a few basketloads of vegetables, headed to his hard-fought perch on a teeming sidewalk outside a train station and offered his wares for a few pennies each.

Two years ago, he used all his savings to buy this basic Nokia for $47.50 (it was pricier then). He now uses one of the innovative calling plans that have made cellphones so popular among slum-dwellers: For $3.50 a month, he can receive all the calls he wants, but he can't make any.

This is fine for him. "The phone has completely changed my business - it's doubled the amount I can make," he says, returning from a delivery of vegetables costing $3.75, which gives him a dollar's profit, the sort of money he never could have made before. "During these monsoon months, old ladies don't want to come out of their houses to buy a few vegetables. So they call me, and I come to their place."

Down the street, Ashok Kumar Goan, 35, and his 13-year-old nephew Ramji Vaghry are offering a big pile of mangos. They have taken the train here from Dharavi, famous for being Asia's largest slum with its population of 600,000. Their cellphone plan costs 200 rupees ($5) per month, most of which they use on text messages rather than voice calls, but unlike Mr. Kushwah, their communication is all on the supply side.

"We spend all day getting text messages from wholesalers," Mr. Goan says, squatting on the dirty Mumbai street as his son weighs a mango purchase. "I now know where the best prices are for mangos, which saves me half a day of rushing around and allows me to sell more."

Article continues please see attached .pdf
Nokia economics.pdf

Jonathan VanderSteen, Nov 14, 2007 - 9:18 AM EST
Good article. I guess the key question here is 'are the phone merchants offering a life-transforming new technology to the world's poor, or are they offering yet another form of exploitation?'

There is no doubt in my mind that the cell phone has created great opportunities for many vendors and business folks in low income countries; it has made making arrangements and meeting times easier. But, I think the scary thing with cell phones is that they have become a must have in many low income communities. One's options are to get a cell phone or to become marginalized. I do not have any statistics on this, but I imagine that the number of people who benefit economically from their cell phone are out numbered by those who have one because they like Western technology or see them as a status symbol.

And I can't help think of how much money is leaving the African continent as a result of the cell phone.