According the LIRNEasia’s 2011 Telecom Regulatory Environment (TRE) survey, stakeholders in India, Pakistan and Indonesia have identified the telecom regulatory environments in their countries as improved since 2008, the last time the survey was carried out.   In contrast, Bangladesh, Sri Lanka, the Philippines have seen the regulatory environments decline in effectiveness, while Thailandremains more-or-less the same.

The TRE Survey asks senior level stakeholders to evaluate the effectiveness of the telecom regulatory environment in the fixed, mobile and broadband subsectors along a Lickert scale of 1 to 5 (1 being highly ineffective and 5 being highly effective, with the mid-point of 3 being considered average performance).  Seven different dimensions of regulation (market entry, tariff regulation, interconnection, universal service, anti-competitive-practices, quality of service) are evaluated by the stakeholders.    This year, 349 responded participated in the 7 countries.

Within a country, scores for each of the dimensions reflect specific issues: for example, in India, the lowest score (of 2.3 out of 5) was received by the Access to Scarce Resources dimension in the mobile-sub-sector.  This is perhaps not surprising given the 2G scandals in India.  However, India did finally get around to allocating 3G spectrum in 2010, and did so by having its first ever spectrum auctions. Perhaps because of this, or because stakeholders believe that that the 2G scandal has finally paved way for transparency in allocation, the score of 2.3 this year is still an improvement, though marginal,  over the 2008 score of 2.2.   India’s USD 4 billion+ undisbursed Universal Service Fund and related policies are responsible for its biggest TRE score decline: the TRE for USO drops from 3.1 in 2008 to 2.4 this year.  In contrast, tariff regulation in the mobile sub-sector continues to be the top performer with a score of 3.9 out of 5.0, indicating stakeholder satisfaction at TRAI’s policy of forbearance which has enabled Indian consumers to enjoy extremely low prices thanks to competitive forces.

Pakistan saw an increased in almost all dimensions, with the exception of 3 (fixed market entry, mobile access to scarce resources and mobile interconnection) which showed minor declines.   In contrast, Bangladesh saw scores in all seven fixed-subsector dimensions decline, in some cases by as much as 1 point.  The scores are perhaps reflective of the issues related to the cancellation of several fixed licenses.  Overall only seven dimensions showed improvements in Bangladesh, and even these were marginal.   Thailand, whose overall performance is unchanged, has however seen significant declines in its Market Entry scores due the uncertainties caused by the concession contracts granted to the mobile operators and what their status would be when they expire starting next year.

Detailed analysis of the scores is available in the draft country reports for Pakistan, India, Thailand, Philippines, Sri Lanka, Indonesia, and Bangladesh.

A comparative country analysis is also available online.

All reports and analysis is in draft form at present. We hope you will comment on the country reports and cross country comparisons so that we may improve our analysis.

The paper entitled, “M-money for the BOP in the Philippines” is authored by Erwin Alampay, LIRNEasia Research Fellow, and Gemma Bala.

Abstract

This paper explores the reach and use of m-money among the bottom of the pyramid (BoP) in the Philippines using survey data from LIRNEasia’s 2008 Mobile 2.0 surveys. It looks at m-money’s potential and actual use for remittance among internal and external migrant workers and their families. The results are triangulated with focus group data and literature on mobile and electronic money, and framed using Van Dijk’s (2006) Stages of Access to digital technologies. Although usage of m-money among the BoP remains low, the ICT infrastructure for this is in place. Compared to other Asian countries where the survey was also conducted, Filipinos are more familiar and have higher trust in mobile electronic transactions. Managing their resistance to change from current offline remitting practices remains a challenge.

Read the full paper here.

For practical reasons, we mostly limit our dissemination to English. This is a workable strategy in South Asia as policy makers read English than local languages. Still local languages are vital in all countries we work. In Bangladesh we gave equal priority to Bangla and English. Research findings of two LIRNEasia’s mobile 2.0 researchers, Erwin Alampay PhD., and Tahani Iqbal recently received a good coverage in Bangla media; both in print and electronic.

Electronic coverage in ETV (If you cannot see the video clip above)

Mobile 2.0 describes the use of mobiles for “more‐than‐voice”. Mobiles are increasingly becoming payment devices which can also send/process/receive voice, text and images; it is envisaged that in the next few years, they will also be fully capable of information‐retrieval and publishing functions, normally associated with the Internet.

Mobile 2.0@BOP has been researched from two aspects: vertical and horizontal issues. Horizontal issues are the basic competitive and regulatory conditions that affect the emergence of Mobile 2.0@BOP. The vertical components explore how particular aspects such as micro‐payments and remittances, agriculture applications, voting applications, e‐government services, disaster warning, etc are taking shape and form.

The research findings will be disseminated by the respective researchers as follows.

New Delhi, India on March 4 and 5, 2010

Payal Malik – Issues in licensing and Spectrum allocation
Tahani Iqbal – Mobile Number Portability

Dhaka, Bangladesh on March 28-29, 2010

Erwin Alampay, PhD – Mobile payments
Tahani Iqbal – Mobile Number Portability

Nirmali Sivapragasam – Mobiles, payment and logistics, based on a case of study of CellBazaar, Bangladesh

Bangkok, Thailand on March 30, 2010

Erwin Alampay, PhD – Mobile payments
Puree Sirasoontorn, PhD – Mobile value-added services, based on Buzzcity case study

Media coverage will be added here as they happen.

Over the past month, I’ve had the opportunity to present my research on mobile money for remittances in two different conferences, with different audiences (the paper and PPT presentation can be downloaded here and here).

On October 10, I presented my research on the use of mobile money for remittances in a panel on Mobile Adoption and Economic Development. This was for a conference held in New Brunswick on Mobile Communications and Social Policy, hosted by the Rutgers School of Information and Communication.  Harsha de Silva also presented his paper in the same panel on the “Role of social influence on mobile phone adoption: Evidence from the BOP in emerging Asia.” His paper and presentation can be downloaded here and here.

On October 23, I then presented the same research, this time to a Filipino audience in the 2nd Living the Information Society conference at the Ateneo de Manila University in Quezon City

The audiences for both conferences were academic in composition. Their reactions, however, were different. Those in the largely Northern audience, still had an abstract understanding of how it all worked, and their questions  tended to focus more on the methodology, and notions of how it would impact on social capital and community relationships. With the Filipino audience, I was fortunate to find people who were able to relate their own personal experiences in using mobile cash. One shared how he learned to use it regularly to send money to his relatives. Despite the initial apprehension, he vouched that it was safe, reliable and costed much less. On the other hand, another person said that she first used the service to purchase something online. Enrolling, and the process of changing money to mobile currency for her was a complete hassle, although she did say that for the seller/vendor, this would have been very convenient.

All in all, the audiences were quite different from the regulators, I previously had to present to TRE research to, and different from the IT and Development group and IDRC network I’ve been meeting with in recent months, and much different from the people at the LIRNEasia colloquia I’ve had the privilege of first discussing this research with.

The good thing about moving around your usual circles is the chance to expand your network, and getting new perspectives about your own work.  Interestingly, it was the serendipitous encounters I had with people not directly connected with the conferences that I discovered greater interest in what I was doing.

In New Jersey, I bumped into Gil Lacson, who works for the Women’s World Banking in New York. He told me this was the very same technology that someone presented to his group the previous week. Likewise, when I got back to Manila, I receieved an email from Grameen Foundation. Apparently, Grameen wanted to put together a conference in December, focused specifically for technologies that microfinance institutions can utilize in their services. They were able to attend the last day of the conference, but due to an error in my email, they missed my presentation by a few minutes.  However,  I did end up giving them a personalized presentation of my paper.

One of those who came with them was Mr. Eric Severino, whose company called ENCASH is doing some interesting work in providing rural ATMs where the unbanked can also encash money from. I haven’t personally seen how this works, but as he explains it, the transactional fees are based on the distance the ATM is from the nearest urban center (the farther it is, the higher the fee—although he says it will still be much cheaper than the transportation cost), and non-account holders get to withdraw money using Mobile PINs that are texted to them along with the amount that they can withdraw.   I see this as a potentially good complement to m-remittances, as the problem of converting mobile money to actual cash is one of the major issues that came out in my research.

In the end, these conferences and chance encounters show that many people are looking to reach the unbanked. Hopefully, with the aid of innovations in mobiles that go beyond voice, the benefits reach them soon.

***

In addition to the above two papers presented, LIRNEasia research on m-health, led by Nuwan Waidyantha, was presented by Dr. Gordon Gow at the conference. The paper can be downloaded here.

Presentation began by looking at the potential for M-money.

Why should we use m-money?

Improving efficiency: Improve services, financial services. BOP a target.

BOP (migrants) relies on various forms of remittances

Looking at Filipinos, 9% of BOP had a relative living abroad, and 13% in another part of the country, so there is a vested interest in m-money.

At present about 5% is going through informal channels according to the Filipino central bank. According to respondents about 80% sent through banks.

Workers need access to bank accounts in both the remitting and remitted country for remittances through banks. This is a limitation. M-money may not necessarily need an account in the remitting country.

Filipino workers generally prefere formal channels. Todays presentation will focus on m-money channels such as smart money of g-cash.

ADB: Transaction costs about 2.5%-3.5% of remittances.

For local remittances: Pawn shops used. Roughly remits around Php 500-1000. These are potential targets for m-money.

RS: How does the Pawn shops work? Pawn shops have a wide network, usually works through a call or SMS. A transaction number will be given to the person sending the money. The number will be given to the person who is due to receive the money. Identification is required for acquiring the cash. This is with regards to local remittances.

HG: Do the pawn shops work together, or is there a network that belong to one company. There is one network which has about 12,000 pawn shops.

Vasana: Are they licenced? EA: They are regulated by the central bank to a certain extend.

Central bank regulation is due to Anti Terrorism laws. Pawn shops charge a higher rate of interest. Technology is a catalyst for changing remittance landscape.

M-banking is one component of electronic money according to Circular 649 of Filipino Central Bank. M-Money is E-money stored in a mobile.

Electronic money defined as stored value or pre-paid payment mechanisms.

RS: can money loaded to the a pre-paid mobile account be refunded? EA: It is one of the issues which is going through regulatory process now.

3 modes of e-money issuers in Philippines: Bank (Smart money), Non bank financial institution recognised by BSP (Central Bank), Non bank registered with BSP as a money transfer agent (Example, GLOBE)

Registration is easier with Globe. Can do through SMS.

Looking at potential of M-money at the BOP the following method was used:
Method of access, Material access, skills access, Usage access

Method of access
Using LIRNEasia survey data, re-method of access, 566% of those who didnt use it said didnt know how to use it. According to focus group discussions, even though they were aware, they needed proof of efficiency, price.

With e-loading, familiarity with the Roman script is an advantage. If a person is familiar with transferring e-loads then using m-money will be easier.

Trust issues, Central bank looking at some of the issues. Security mechanisms such as PIN codes. At present Php 100,000 is the limit for any type of e-money. Same for M-money. Even if you have four m-money accounts, the total should be 100,000.

Material Access:
Only 13% of BOP have access to Bank accounts

On avearge there were 1.36 mobiles per household. More access to a mobile phones so there fore more potential for m-money.

Identification documents and physical access to cash in are seen as barriers to M-banking.

Individuals can get there m-money (Gcash) out from ATMs and cash in cash out venues. Therefore accessibility is an issue. There are already some Pawn shops being used as cash in cash out venues.

Can register from a distance but need to go to the bank to cash in. No identification cards in Philippines. Propoer identification is a problem in the Philippines.

Skills Access
40% of those surveyed in the LINREasia survey are familiar with e-loading.

99% of surveyed mobile users use SMS.

Filipinos top up small values at shorter time frames. Use to exchanging mobile top ups. This is consistent with remittance patterns.  Comparatively, Filipinos send money often in smaller amounts

GCASH and Smart are accepted as forms of payment in Philippines, but this maybe more common among the more affluent users.

GLOBE (2006): Transacting USD 117 Million on average.

SMART (2006) Transacting USD 257,200 average daily transactions.

HG: How much is charged for Transactions? EA: Basic of SMS cost, plus 1% of transaction cost or minimum of Php 10.

HG: Transmission takes one or multiple SMS? EA: Have to confirm but it maybe a minimum of 2 SMSs.

Challenges and Policy issues:

1) Developing mental access: Increasing awareness, better financial advantages.

2) Developing Material access: Making services that work with the kinds of phones used by BOP, making cash in/cash out more accessible.
Regulating GCASH and SMART:

100% reserve requirement

HG: 100% reserve requirement for just e-money or any transfer? EA: Thats for e-money.

HG: Is there a time limit on the money put in the e-money account? a 100% RR is very high. EA: They do not work as banks. Money is earned through transactions.

Policy Issues:
Security of the systems

prevention of fraud

Interoperability

Tracking users

Increasing access

RS: Comparisson with M-Pesa in Kenya will be useful.

HG: Comaprison with the regular banking transactions will also be useful.

Helani Galpaya, COO of LIRNEasia, and Dr. Erwin Alampay, Associate Professor at the National College of Public Administration and Governance (NCPAG), University of Philippines presented findings from the 2008 TRE study at an event organized by LIRNEasia, in association with the NCPAG on the 3rd of February, 2009.

Helani presented results from the regional study while Erwin presented results from the TRE study of the Philippines.

Reacting to the results, and participating in the panel discussion were National Telecommunications Commission (NTC) Deputy Commissioner Jorge V. Sarmiento and Former Chairman of the Commission on ICTs (CICT), Virgilio Pena. Also in attendance were the ICT Undersecretary (and former NTC Dep.Comm), Consuelo S. Perez; Deputy Commisioner, Kathy Heceta; National Computer Center Director, Tim Diaz de Rivera and NTC Director, Edgardo Cabarios. 

Click here for information on Virgilio Pena’s response to the study.

***

The 2008 TRE survey was conducted among over 300 informed stakeholders across eight countries (Bangladesh, India, the Maldives, Pakistan, Sri Lanka, Indonesia, the Philippines and Thailand) with the aim of exploring several dimensions of the regulatory environment, including market entry, allocation of scarce resources, interconnection, regulation of anti-competitive practices and tariff regulation.

The special issue is edited by Subash Bhatnagar, an acknowledged expert on e government who provides a good summary, marred unfortunately by the use of wrong data in Table 1 (p. xvi), where

• the per capita income in USD for India is given as 3,100; Pakistan as 2,200 and Sri Lanka as 4,000 (obviously calculated on a PPP basis, but this has to be stated; year not given);
• “Telecom penetration percentage” is given as India 4.63; Pakistan 2.66 and Sri Lanka 4.42 (without specifying that this is only fixed phones and giving a year, which is extremely important in this fast growing field.  Not including mobiles in this day and age is a serious error); and
• No source is given for the data (or dates)

The special issue also carries an article by Erwin Alampay, a colleague associated with LIRNEasia and a comment by Emmanuel C. Lallana, the keynote speaker at CPRsouth1 in Manila, in January 2007.

The article itself is not on web, but is likely to be placed on the web at some time in the future, aligned possibly with the lag between publishing in August 2007 a journal issue for Autumn 2006.   We received the invitation to write and responded without delay in 2007, so we’re really confused.