The reasons cited in favor of MNP were classified into advantages to subscribers and regulators. The former were benefited by an increase in choice (of packages) and the eliminated costs of having to inform third parties of a number change, while the latter saw MNP as an approach to attract new investment and generate healthy competition. Operators on the other hand, were split in their views; new entrants and operators with smaller market share were of the view that it would create fair play in the industry, but larger operators with significant market power were, unsurprisingly, against the implementation of MNP.

High implementation costs were the main reasons against number portability. Mr. John Horrocks, an MNP consultant who spoke at the Workshop, demonstrated that a basic costs-benefit analysis of the portability process showed that implementing this service in smaller countries with populations of less than 10 million was not a feasible option, as the costs outweighed the benefits significantly. Instead, he suggested a few alternatives for these countries that would make number changes easier for subscribers (e.g.: operators send free SMS to all contacts on SIM, low cost for maintaining old number in parallel, etc), and ensure quality of service and competition among operators.

Figure 1: MNP implementations by country

Source: Presentation slides, MNP Workshop, August 2007

Mr. Horrocks also talked about the results of MNP implementations and lessons learnt in the countries listed in Figure 1. The success of MNP implementation is measured by the percentage of ported numbers, and it is evident that in countries with higher mobile phone penetration, competition and awareness, porting rates are high (e.g. Hong Kong and Australia). It was interesting to note though, that in some cases where MNP was implemented successfully, it proved to be an economic failure (e.g. Ireland, Finland, Malta, etc), while the implementations in UK and Netherlands were failures in all respects.

These varied results can be attributed to a number of reasons. Hong Kong’s MNP implementation, built on an already implemented solution set in place for fixed-line services, was driven heavily by the regulator; in addition, a highly competitive market structure in a technologically-aware community, and the fact that the introduction coincided with the entry of four new operators into the market, ensured portability a success there. The Australian regulator persistently promoted number portability to the public, while maintaining porting times of less than 3 hours on average, which eventually led to the successful implementation of MNP.

On the other hand, in the Irish case where MNP implementation was a success, the lack of competition (two incumbents and one weak new entrant) proved porting to be an economic failure. The same happened in Finland, where implementation was a success, but due to the absence of minimum contract periods and the provision of high incentives to port (from one operator to another), operators started losing heavily. This resulted in the introduction of minimum contract periods which, in turn, reduced the porting rate from 40% to 10% leading to economic failure. In the UK, Oftel (regulator at the time) pushed for MNP hoping it would increase competition, but did not play a hands-on role in the implementation phase. Additionally, only one operator in the UK was in favor of portability, and these factors collectively played a large role in the resulting failure.

A number of lessons can be learnt from these situations. Mr. Horrocks explained that it was essential for both regulators and operators to be in favor of and have heavy involvement throughout the porting process. The success of MNP depended greatly on competition and awareness and therefore it was the duty of both regulator and operator to keep subscribers informed of all things related to porting. He also said that it was important for regulators to understand that MNP did not create competition, but only improved it. Furthermore, for number porting to be successful it was necessary for a clear goal to be established, with a good set of rules (technical and legal) laid down from the start of the MNP process. He also stressed that porting time (i.e. time taken to port a number from operator A to operator B) had to be minimal, ideally one day at most, to ensure a successful MNP implementation.

The Workshop also covered the technicalities involved in number porting. Various features such as the number portability database configurations (centralized, distributed and hybrid), the call/SMS routing schemes (direct and indirect), and payment mechanisms were presented over the course of three days. The use of ENUM and NGN systems to make the porting process simpler were also discussed.

In light of these technical developments, call forwarding as a low-cost solution to number portability was not seen as the most efficient way to deploy MNP, although it was implemented in Singapore. Over 10 years ago, when the Telecommunication Authority of Singapore (TAS) discussed MNP as a means to lower number switching costs for subscribers and increase competition among operators, they explored three alternatives: 1. call forwarding, 2. originating re-route, and 3. Intelligent Network (IN) solutions. While Option 2 deviated from the GSM standard and affected services such as international roaming, Option 3 was not technologically mature yet, and therefore they settled for Option 1. They did not, however, rule out the possibility of implementing Option 3 at a later date. (Read more about MNP in Singapore)

The technical specifications employed in the number portability process in Pakistan were also described in detail. Similarly, the regulatory framework (including operator rights and obligations, charging schemes, best practices, and policy implications) required for the successful implementation of MNP was communicated by members of the PTA who were engaged in the Pakistani MNP process.

The key lesson learnt from the Workshop was that there was no standard MNP solution for a country. Every solution was unique with success riding on a number of factors.

SAN MIGUEL, Philippines–It’s Thursday, so 18-year-old Dennis Tiangco is off to a bank to collect his weekly allowance, zapped by his mother–who’s working in Hong Kong–to his electronic wallet: his cell phone.

Sauntering into a branch of GM Bank in the town of San Miguel, Dennis fills out a form, sends a text message via his phone to a bank line dedicated to the service.

In a matter of seconds, the transaction is approved and the teller gives him P2,500 (US$54), minus a 1-percent fee. He doesn’t need a bank account to retrieve the money.

More than 5.5 million Filipinos now use their cell phones as virtual wallets, making the Philippines a leader among developing nations in providing financial transactions over mobile networks.

Mobile banking services, which are also catching on in Kenya and South Africa, enable people who don’t have bank accounts to transfer money easily, quickly and safely. It’s spreading in the developing world because mobile phones are much more common than bank accounts.

The system is particularly useful for the 8 million Filipinos–10 percent of the country’s citizens–who work overseas and send money home, like Dennis’ mother, Anna Tiangco. Previously, she sent money via a bank wire transfer, which costs HK$20 (US$2.50, â‚1.83) and takes two days to clear. The cell phone method costs only HK$1 (13 U.S. cents, 9 euro cents) and is nearly instantaneous.

“The good thing here is, wherever my children are, they can text me and I can send money immediately,” she said by telephone from Hong Kong.

Consumers also can store limited amounts of money on their cell phones to buy things at stores that participate in the network–although this practice isn’t yet widespread in the Philippines.

Many more Filipinos use their phones to send airtime values called “loads” to prepaid subscribers. A parent, for example, can send a 60-peso load to replenish a child’s cell phone, charged to the parent’s account.

While Japanese and South Korean consumers have been using cell phones as virtual wallets for several years, those systems use a computer chip implanted in handset that allows people to buy things by waving the phone in front of a sensor. The Philippine system relies on simple text messages, which cost just 1 peso (2 US cents) to send.

The 41 million cell phone users in the Philippines are avid texters. The electronic connections have fostered a culture of quick greetings and forwarded jokes. Text messages also played a key role in mobilizing crowds that fueled the 2001 “people power” revolt that ousted President Joseph Estrada.

The Philippines’ two biggest mobile service providers, Globe Telecom and Smart Communications, have harnessed this penchant for text messaging to enable consumers to enter the world of e-commerce.

Tapping into the cash flow from overseas Filipinos–who sent home US$12.7 billion last year–Globe and Smart forged partnerships with foreign mobile providers and banks, as well as with local banks and merchants, to create a network that allows users to send and receive cash internationally.

When Anna Tiangco wants to send cash home, for example, she goes to a branch of her local provider, Hong Kong CSL Ltd., where a clerk credits her cell phone with the amount she has brought with her. She then transfers the money to family members via text messages–in essence instructing her providers to deduct money from her balance to the recipients she indicates.

If a cell phone loaded with cash values is lost or stolen, the money can’t be tapped as long as the personal identification number isn’t revealed. Control over the funds can be restored with a replacement SIM card from either mobile provider.

The system was “built for remote payments and for the unbanked markets,” said Rizza Maniego Eala, president of G-Xchange, Globe’s subsidiary in charge of its G-Cash money transfer service.

Eala said her company’s 500,000 G-Cash users transfer about US$100 million monthly (â‚73 million), but she declined to say how many transactions involve remittances from overseas.

Smart offers a slightly different money transfer system, used by about 5 million Filipinos, that links cash or a debit card to a cell phone.

Users load up their phones with money via text messages. The card–which costs P200 but does not require a bank account–can then be used to purchase goods in establishments that accept MasterCard, or to withdraw cash from an ATM machine.

Smart Communications spokesman Ramon Isberto said each time the recipient spends the money, the sender receives a transaction message. That allows the sender to see how the funds are used.”The added value there now is that Filipinos overseas have greater control over their funds. Believe me, that is important to them,” he said.

Smart and UAE’s leading telecommunications operator, Etisalat, have agreed to provide money transfer service to hundreds of thousands of Filipinos in the Middle East. Smart also will soon launch a remittance system in Bahrain in partnership with MTC-Vodafone and Ahli United Bank there, and Banco de Oro in the Philippines, Isberto said.

“The bank products remain clearly bank products. We positioned ourselves as an enabler for banks and other financial institutions to provide products and services to their customers in ways they would otherwise not have been able to,” he said.

Aside from transferring cash and making purchases, both Globe and Smart also allow their users to pay bills with their phones. Anna Tiangco said she pays her family’s electric bills in San Miguel from Hong Kong via text messages, just like she sends money.

“Even if we are far apart, it’s like we are still together,” she said. “This is like my wallet now.”

Nokia sold 100 million mobile devices in the period, an increase of 29 percent over 2006, while the overall industry growth was about 14 percent, with 262 million mobile devices sold globally, Nokia said.

But the group again warned about the performance of its troubled network operations, describing market conditions as challenging because of heavy competition.

“We shall have to increase the amount and speed of cost cutting,” the chief executive, Olli-Pekka Kallasvuo, said, giving no details.

The greatest growth in Nokia’s handset sales, 37 percent, was in the Middle East and Africa, it said. But at 36 percent growth, sales were also strong in the Asia-Pacific region and in China.

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March 08 (LBO) – Indonesia, like Sri Lanka, sends its women to foreign lands to work as housemaids. The numbers may be larger, though the proportion is smaller. 
 
Telecom networks are expanding fast in both countries, Indonesia faster. The telecom sector is attracting massive investments in both countries as operators scramble to meet the burgeoning demand.

Generally, politicians and officials responsible for a sector are happy when it grows. Therefore, I was surprised to hear several senior telecom officials in Indonesia express concern about lowered gold sales supposedly caused by excessive use of calling cards by expatriate housemaids.

I could understand concern from those in charge of gold sales, but this was telecom.

I thought this was an Indonesian peculiarity, until I heard it in a different form from a Sri Lankan journalist. “The westerners had given us phones,” he said, “but not taught us how to use them: our people are wasting their money on phone calls.”

“What is waste,” I asked. I did not receive an answer.

Beneath both statements lay a concern about “wrong” uses of technology by people lacking the good judgment that the speaker was endowed with. But let us see what the evidence is on how poor people use phones.

How do people actually use telephones?

LIRNEasia recently conducted a five-country sample survey, involving almost 9,000 respondents, of how people at the bottom of the pyramid (BOP) use information and communication technologies (ICTs). AC Nielsen affiliates in the five countries conducted the field research in July-August 2006.

This study, which used quantitative methods including a diary in which people recorded each call made in a two-week period including purpose, duration, and cost, provides unique insights on teleuse at the bottom of the pyramid, defined as the two lowest (D and E) socio-economic classification (SEC) groups in each of the five countries.

In Sri Lanka, the study accurately represents teleuse by 4 million Sri Lankans, ages 18-60 in SEC D and E, with a margin of error less than 3 percent.

Ninety two percent of those approached had used a telephone in the past three months. Of the users at the BOP in Sri Lanka, 41 percent owned the phone they had used. The others relied on friends, relatives, neighbors, and communication bureaus.

Both numbers are unexpectedly high. An overwhelming majority of people in these countries (that include a substantial part of South Asia, the largest concentration of poor people in the world), are familiar with the telephone. This allows one to infer that many of the world’s people are indeed familiar with, and have used, telephones.

This is a sea change from the claim made just eight years ago that half the world’s people have never made or received a phone call by then UN Secretary General Kofi Annan in a speech at an International Telecommunication Union event. (Read Speech)

The number that owned mobile phones or had a fixed phone within the house in Sri Lanka (41 per cent) was also high; in India, the comparable number was 19 per cent.

As recently as in 2004, the Central Bank’s consumer finance survey showed that 25 percent of the households had some kind of phone, fixed or mobile. The LIRNEasia survey shows that, just two years later, 41 per cent of the poorest households had some kind of phone in the house, indicating that the percentage of households with phones overall has to be even higher.

Sixty five percent of those at the BOP in Sri Lanka could reach a telephone within five minutes. Over 95 percent could reach a phone within one hour.

These people used the phone sparingly: 13 outgoing calls a month on average and 10 incoming. Obviously, those who owned a phone made/received more calls than those who had to go to a neighbor’s house or a communication bureau for that purpose.

Their calls were of short duration, 80 percent being less than three minutes long.

The principal purpose of calls for 65 percent of users at the BOP was to keep in touch with friends and family. Except in Thailand (29 percent), very few at the bottom of the pyramid used the phone for explicit business or instrumental purposes. In Sri Lanka, only eight percent reported this as the principal purpose.

Of course, the task of differentiating a call to friends and family from a business call in a not-fully monetized economy is not an easy one. Unlike in developed countries where roles are clearly demarcated and the division of labor is sharply defined, in countries like Sri Lanka, especially at the bottom of the pyramid, the roles are intermixed.

For example, maintaining good relations with one’s brother-in-law may be no different at the BOP than making a call to one’s insurance agent, because in a society lacking insurance, the reliance has to be on friends and family.

Compared to other South Asian BOP teleusers, the Sri Lankans made more international calls, explainable both by the large number of expatriate workers and the low international call prices. Four percent of the calls made at the Sri Lankan BOP were international, just below the Philippines (six percent)

A 2005 study conducted during the window of opportunity created by the MOU in 2002-2004, showed that the inhabitants of Jaffna were the heaviest users of international calls among the four districts (Badulla, Colombo, Hambantota and Jaffna) surveyed.

Seventy five percent of Jaffna mobile users made calls to family and friends abroad. Fifty five percent of public-phone users in Jaffna called abroad.

Teleusers at the BOP used a variety of cost-saving techniques. Sixty percent use texting (SMS) though the levels of use are less than in the SMS capital of the world, the Philippines, where everyone texts and almost everyone texts at least once a day.

In 2006, calling off-peak and missed calls (ringcuts) were among the most popular cost-minimizing strategies at the Sri Lankan BOP, used by 40 percent and 35 percent users respectively.

When asked the reasons for owning a phone, the highest weight was given to its utility in an emergency, 4.58 on a scale of 5. The phone was seen as improving the efficiency of day-to-day lives, 3.98 on a scale of 5.

However, the value assigned to allowing one to make money or save was the lowest in Sri Lanka (3.19/5 as against 3.97/5 for India, for example), possibly an artifact of the RPP [Receiving Party Pays] regime that remains only in Sri Lanka among the countries surveyed.

Only one per cent at the BOP used the Internet. Seventy percent had heard of the Internet but never used it, a much higher number than India (28 percent).

So this is the portrait of teleuse at the BOP. These people appear to be using the phone most frugally and intelligently, though they do spend a higher proportion of their limited income on telecom services.

So what could be the concern about gold and waste?

Obviously, the rapid growth of telecom is pulling time (attention) and money away from other industries. But why do officials in one case and a journalist in the other think that money and time spent on telecom is misdirected?

It could be that the critics consider telephone calls, lacking tangibility, as ephemeral and lacking in value. But they should just look at the Stock Market and the entertainment industries: ephemeral products, but a great deal of value changing hands.

It may not be the phone that is drawing their ire, but the users. In the “bad old days” of government-owned integrated monopoly, one had to be somebody to get a phone; either you knew the right people or had a lot of money.

This is no longer the case with over 5 million mobiles in use and almost 2 million households connected; nobodies are using mobile phones think the self-appointed somebodies. The phone is no longer a factor that differentiates somebodies from nobodies.

The objection to phones could be a remnant of paternalistic thinking. Perhaps the thinking goes that a call from a mother in the Middle East to the children left behind is not the best use of limited Dirhams. Better to use that money to buy gold to bring home and bury in the garden for use in a time of need.

These people have obviously not heard of consumer sovereignty. The poor, as much as the rich, have a right to spend their money as they see fit.

The fact remains that the BOP in the Asia Pacific (South Asia in particular) is teaching the whole world about the value of connectivity. They are talking and texting more for less, forcing the adoption of new business models that allow profits to be made with very low average revenues per user.

In India, a mobile is used for over 400 minutes a month (incoming and outgoing) and generates around USD 7 in monthly revenue. In Sri Lanka the equivalent numbers are 200 minutes and USD 6.

In the rich countries represented in the OECD, the minutes of use per month is as low as 65, for a much higher payment. And yet, the companies in emerging Asia are investing massively and making more than respectable profits.

Globalization and mismanagement of national economies are making all people more mobile. Even those at the bottom of the pyramid have been compelled to abandon their settled ways and migrate to distant parts, within and outside their countries. Telecom provides an invaluable link with loved ones in this turbulent time. 

Relationships are more valuable than gold. They are built and sustained by talk, on the phone and in person. Talk of this kind is definitely not a waste. 
 
 
 

LANKA BUSINESS ONLINE – LBO

Making affordable phones and targeting consumers with smaller budgets have now become priorities for the largest companies in the sector who were all present at this week’s 3GSM trade show in Barcelona.

“There are between 2.5 and 2.8 billion people who have a mobile phone: the next billion will come from the high-growth market,” said David Taylor, strategy director for Motorola.

The areas representing the most opportunity are Asia, Africa and the Middle East, he said.

According to European telecommunications institute Idate, the average spending per user is about 26.50-37.50 euros (34.8-49.2 dollars) per month in industrialised countries, but this figure falls to about 8.20 euros in the newly targeted emerging countries.

“Income matters, but public policy shapes the conversion of income into human development,” said the report, entitled “Beyond Scarcity: Power, Poverty and the Global Water Crisis.”

“India may outperform Bangladesh as a high growth globalisation success story, but the tables are turned when the benchmark for success shifts to sanitation: despite an average income some 60% higher, India has a lower rate of sanitation coverage. Similar gaps between wealth and coverage are observed for water,” the report revealed.

Since 1975, Bangladesh has steadily improved life expectancy, education, and the standard of living. The nation moved into the medium developed countries’ category in the Human Development Index from 2003, which ranks 177 countries according to achievements.

In 2006, Bangladesh again ranked among the world’s medium developed countries at 137, which is two steps up than last year’s. Ten years ago, Bangladesh was at the lowest level in the world so far as access to proper sanitation in its rural areas was concerned.

Despite being one of the world’s poorest countries, it is now close to achieving nationwide sanitation coverage by 2010, thanks to a ‘total sanitation campaign’ promoted by NGOs and local authorities.

According to the report, poor farmers face a potentially catastrophic water crisis from the combination of climate change and competition for scarce water resources. Intense competition for water is now one of the gravest threats to sustained human development.

Rising industrial demand, urbanisation, population growth and pollution were placing unprecedented stress on water systems —and on agriculture. There is a substantial group of countries that stand to be affected by climate change.

Bangladesh, Egypt, Nigeria and Thailand have large populations living in delta areas threatened by saline intrusion. The low-lying regions of Bangladesh support more than 110 million people in one of the most densely populated regions of the world, and more than half of Bangladesh lies at less than 5 metres above sea level.

The World Bank has estimated that by the end of the 21st century sea levels for the country could rise by as much as 1.8 metres, predicting worst scenarios with land losses of 16%.

The probable affected area supports 13% of the population and produces 12% of GDP.

Challenging predictions that increasing competition for water will inevitably provoke armed conflicts, the HDR said that cross-border cooperation over water resources had already been far more pervasive and successful than been commonly presumed, offering many models for the resolution of future international water disputes.

In the past 50 years, there have been 37 cases of reported violence between states over water; all but seven incidences took place in the Middle East.

Yet over the same period, more than 200 treaties on water were negotiated between countries, said the Report.

For countries like Bangladesh, which depends on India for 91 percent of its water to irrigate crops and replenish aquifers, the report said that the case was clear for cross-border cooperation on water.

The report recommended that everyone should have at least 20 litres of clean water per day and the poor should get it for free.

“Governments should aim to spend a minimum of one percent GDP on water and sanitation, and enhance equity,” it recommended.

It also called for an extra US$3.4 billion to $4 billion annually as the development assistance has fallen in real terms over the past decade. To bring the MDG on water and sanitation into reach, aid flows will have to double, said the report.

The 2006 HDR estimates the total additional cost of achieving the MDG on access to water and sanitation—to be sourced domestically and internationally—at about $10 billion a year.

“The $10 billion price tag for the MDG seems a large sum —but it has to be put in context. It represents less than five days’ worth of global military spending and less than half what rich countries spend each year on mineral water,” said the Report.

The report was launched from Cape Town of South Africa Thursday at 7 pm (BST). Kevin Watkins is the Lead Author of the 2006 report, which includes special contributions from U.K. Chancellor Gordon Brown, Nigeria’s Finance Minister Ngozi Ok onjo-Iweala, President Lula of Brazil, former US President Carter, and UN Secretary -General Kofi Annan.

I think the talk provides the "big picture" of the necessity of telecom reforms of the type that we at LIRNEasia are involved in. If we are to go beyond simply giving people phones, to giving them "money in the pocket and hope in the heart" this big picture is essential.

_note_: For those reluctant to read Word Documents online (ie me) I’ve added the talk as HTML on the following page.