Unplanned Obsolescence

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Hot Phones At Dhaka's Eastern Market, one floor is packed with vendors selling handsets, many of which have been smuggled into the country.

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That success reflects a radically different way of doing business, geared to the poor: efficient and low-cost carrier networking, billing, and customer-service systems and methods. "The efficiency involved in this makes or breaks a mobile service," Paul Budde, an authority on the telecommunications industry in South Asia, explained in an email. But it goes deeper than that. Grameen, for example, signs up most new customers these days without even supplying handsets. Vendors need only provide SIM cards, the small, plastic memory circuitry that enables the network to identify a handset; where a customer gets the phone is his affair. And Grameen saves itself the cost of carrying all that phone inventory.

In much the same way, the Village Phone Program has served as a lever to efficiently expand GrameenPhone's very lucrative market. GrameenPhone's employees and managers also seem genuinely convinced of their duty to reduce poverty in Bangladesh. It is encouraging Village Phone operator-enterpreneurs to supplement incomes by selling SIM cards and over-the-air calling credits. In pilot projects, customers are paying utility bills over the phone and buying and selling goods via text messages. The company has provided more than 70,000 street beggars with interest-free loans, handsets, and wireless accounts, encouraging them to earn money by reselling airtime.

For now, GrameenPhone is pinning most of its follow-on hopes on what it calls Community Information Centers, small kiosks--561 established already--in outlying villages that, for fees of 42 cents an hour, will offer such services as online browsing, agricultural and health-care information, digital photography, video telephony via Web cams, and electronic access to government reports and forms.

Such kiosks have met with little success in other countries, and GrameenPhone concedes its plan is ambitious. "The business is similar to renting phones, but more difficult," said Mohammed Shafiqul Islam Sikdar, a deputy manager in the program. "With voice, the need was obvious; people want to talk to each other. With computer kiosks, it's not as clear what villagers will pay for and whether they will pay enough. Also, our entrepreneurs in this case have to be literate and have some technical skills. The capital requirements are greater, and as the sponsor, we're going to have to spend much more time and effort in marketing, support, and training. But we are in no hurry. We will make it work."

Meantime, GrameenPhone is cooperating with nonprofits and other companies to expand the Village Phone Program beyond the borders of Bangladesh. Pilot programs are under way or being considered in Cambodia, Cameroon, Senegal, Mali, and the Democratic Republic of Congo. The Grameen Foundation, on whose board Muhammad Yunus sits, has reproduced the program in Uganda and Rwanda, and is encouraging microfinance institutions elsewhere to clone more.

The effort is noble--and surely, the Village Phone Program has helped create a telecommunications infrastructure that supports economic development and greater prosperity for folks like Taiyeb Ali and Noor Alam. But the expansion effort is also disingenuous. In Grameen's promotional material for such programs, Yunus proclaims, "If a poor woman gets hold of one mobile phone in the village, then this is a sure bet that her entire family can move out of poverty in two or three years." In some indigent backwaters, that may still be true. But it's misleading, at best, to pretend that Bangladesh is among them.

Richard Shaffer writes about technology and economics from New York.

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