BOP mobile phone expenditure findings presented at PTC conference

Posted on February 5, 2010  /  0 Comments

By Aileen Aguero, former Research Intern, LIRNEasia

As an intern at LIRNEasia, I had the opportunity of working with Harsha de Silva in writing a paper called Bottom of the Pyramid  (BOP) Expenditure Patterns on Mobile Phone Services in Selected Emerging Asian Countries. I presented this paper at the Pacific Telecommunications Conference, held on 17 – 20 January in Honolulu, Hawaii. The 2010 edition of this conference tried to emphasize the benefits innovation provides as well as the challenges faced by developing economies in connecting the unconnected and the adequate provision of systems and services.
Our paper was part of Breakout Session 7: Building for Sustainability – ICTs in the Developing World, held on 19 January (paper and slides available here). Elizabeth Fife, Bruce Baikie, Laina Reveendran and Laura Hosman were also part of this panel. The presentation included a discussion of the importance of mobile phone services in developing countries as well as the justification and objectives of this paper:
  • To study BOP mobile service expenditure patterns in Bangladesh, Pakistan, India, Sri Lanka, Thailand and the Philippines.
  • To determine if this service is a luxury or a necessity in economic terms.
The basic concepts of economics used in the analysis included  Engel’s Law, the Engel curve and income elasticity. Along with the literature survey, the empirical analysis was explained, which included a graphical analysis of the Engel’s Law and the estimation of income elasticities. We showed that mobile phone services in the six countries had the characteristics of a necessary good, or in other words, the poorer the consumer, the larger the share of mobile expenditure relative to personal income. Findings revealed that income elasticities were below one for all countries under study, implying mobile services were regarded as necessities. The Philippines recorded the lowest income elasticity (0.1782) and India the highest (0.2640).
In conclusion, it was noted that mobile phone services were a part of everyday lives among the selected consumer group, and as such, authorities should try to limit the degree of taxation, which could hinder mobile use, particularly among the poorest poor. I also highlighted the need for more accurate data on expenditures and income to aid measurement of elasticities.
Questions were raised on the sample size used and the applicability of such an analysis in the context of small islands. I explained that our analysis could be applied to any country, and that the only issue would be data availability.
An important challenge this type of conference faces is catering to a diverse audience  of  operators and researchers with different interests. In this sense, our findings were highlighted as an example of what type of research needs to be done, as they are relevant from different perspectives.
The other panelists presented findings on project implementations in Haiti, Senegal (Laura and Bruce) and around the world (Laina). Laura and Bruce have been involved in OLPC projects while Laina currently works on Green ICTs.
PTC organizers look forward to more collaboration and interaction with LIRNEasia in future work.

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