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Teleuse on a Shoestring: Expenditure and perceptions of costs amongst the financially constrained

Avanti Moonesinghe, Harsha de Silva, Neluka Silva & Ayoma Abeysuriya
April 2006, Version 2.2 Version 3.0
The latest in the series of Teleuse on a Shoestring papers is now available for comment.
 It is often claimed that access to telecommunication facilities is a propeller of economic prosperity in developing countries.  Mobile phones in particular are considered pivotal in encouraging growth.  Prahalad (2004), in Fortune at the Bottom of the Pyramid asserts that defining change in the world’s poorest economies will be led by access to communications and not through the evolution of IT as was the case in the advanced countries of the world.  A study by the London Business School has also found that, in a typical developing country, an increase of 10 mobile phones per 100 people would boost GDP growth by 0.6 percentage points (Waverman et al., 2005).  However, despite the positive benefits of telephony, many people in developing nations are held back by a diverse set of factors – such as connectivity in rural locations, duties and taxes imposed by governments, the costs of handsets and the cost of services. Once the hurdle of access to communication is overcome, people in developing nations still have to contend with the costs of services.  Usage costs can play a large role in determining the purposes for which, and the frequency with which, people use their phones.
This paper examines perceptions of affordability amongst low income telecommunication users in India and Sri Lanka and the effects of changes in service costs on their usage patterns…

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