Village Phone facing obsolence in Bangladesh

Posted on August 18, 2007 / 3 Comments

Grameen’s famous Village Phone Program lifted thousands out of poverty– and helped Muhammad Yunus win the Nobel Peace Prize. The problem: It’s not working anymore.

According to Grameen Telecom, the GrameenPhone affiliate that manages the program, profits per operator have been declining for years and in 2006 averaged less than $70. “The program is not dead,” says its manager, Mazharul Hannan, chief of technical services at Grameen Telecom, “but it is no longer a way out of poverty.”

The reason is simple: Technology and GrameenPhone itself have made the village phone obsolete. Access to cell phones has expanded rapidly across Bangladesh, as in other developing nations. GrameenPhone, largest of the nation’s six cellular providers, has more than 13 million subscribers, with yearly revenues of nearly $700 million. In all, perhaps one in seven Bangladeshis owns a phone, and ownership is expected to reach as high as one in three in a year or so.

Ten years ago, Begum provided the sole telephone in Patira and the surrounding area, the only connection for nearly 10,000 people. Today, she must vie with 284 other Village Phone operators nearby, plus all the cell phones her neighbors have bought for themselves as prices have come down.

As a result, Begum’s phone rentals these days bring in monthly profits of only $22. “If I didn’t have so many other businesses,” she told me, “I couldn’t afford to be in this one.” Says her loan officer, Salim Khan, general manager of a Grameen Bank branch: “She is fortunate that she began when she did. Today, poor women who go into the phone business stay poor.” Read more.

3 Comments

harsha de silva
August 18, 2007, 5:33 pm
i interviewed prof yunus yesterday for our biz1st in focus show on mtv sri lanka to be airred on friday 24 august. and this issue was discussed at length. he was under no illusion that the importance of the village phone ladies was diminishing as the article points out and for the same reasons given therein.

the question is no longer about phone ladies. that story happened in a different era and helped prof yunus win the well deserved nobel. the question now is how will the newfound access to information via mobile phones transfrom the lives of the billions at the bottom of the pyramid in bangladesh and the rest of the world. how will the mobile phone bring money to the pockets of those who have a device? what has to happen in the content arena, what has to happen in the policy and regulatory arena and so on. we at LIRNEasia plan to get in to research in this space in our next cycle; what does it mean to convert the mobile phone from what we use it today to what it will be used for tomorrow as a transaction device.

prof yunus had some very intersting observations about this discussion calling it [mobile plus device] an aladin’s lamp! i will figure out a way to link the show to our site after the 24th.

before i close back to the village phone program. a LIRNEasia study by zainudeen and knight-john in 2005 indicated that there were several [braodly speaking] institutional reasons that helped the program succeed besides micro-credit; these included a massive bulk discount to the the village phone program by the network operator grameen phone, without which success at replicability was not guaranateed.
chanuka
August 20, 2007, 8:39 am
If the Village Phone model is obsolete in Bangladesh because more Bangladeshis can now afford their own phones, let it be. The project had served its purpose in Bangladesh and now the time is may be to discontinue.

In development, there is nothing like ‘free sizes’. The projects should be designed according to the requirements of the environment. Timing too is an important factor. It is not a surprise a model designed few years back is no more relevant. It is not the fault of the model. Just we need a different solution.

I am sure, there are so many other places in the world where Village phone model would still be a success.
samarajiva
September 24, 2007, 5:00 pm
Good story: http://groups.yahoo.com/group/bangla_ict/message/5032