By Mónica Fernández Alvarez de Lugo, Opportunities for the Majority at IDB; and Lucie Klarsfeld, Hystra.
In the past year, MIT and NASA have been working hard to make broadband connectivity available on the moon. The results have been so positive that your connectivity on the moon is actually better than in many countries on Earth, including the United States. And this same year, Mark Zuckerberg, founder of Facebook, created internet.org, with the goal of providing connectivity to every single person around the world.
Broadband has proven to not only increase economic development, but also to have a positive impact on the productivity of private firms. And while aliens could greatly benefit from improved connectivity, here on earth we still have a long way to go.
Today, around five billion people still lack access to connectivity. A great effort from both the public and the private sectors is needed to overcome this gap, by developing the necessary infrastructure and providing access, in particular to those companies targeting the people at the base of the socioeconomic pyramid (BOP), so that each one can take advantage of these benefits.
The Broadband Effect: Enhancing Market-based Solutions for the Base of the Pyramid, a new study by the Opportunities for the Majority at the Inter-American Development Bank (IDB) and prepared by Hystra, makes the case for broadband adoption and more efficient and productive value chains serving the BOP. The report presents impressive results that show how broadband has allowed new business models to develop, ones that are more effective and efficient accessing the BOP, and then creating and distributing goods and services to that population.
Bridge International Academies become the world’s largest chain of nursery and primary schools, delivering high-quality education at low cost. It currently serves 80,000 students and employs 2,700 teachers in 259 academies. Bridge aims to break even in 2016 and to operate in at least four countries serving 4.5 million pupils by 2022.
In Mexico, Barared has invested in broadband infrastructure with Wi-Fi antennas in order to set up service booths equipped with tablets and located in mom-and-pop shops, providing low-cost telecommunications, financial transactions and other services to the BOP. Narayana Health, a group of private hospitals in India, leverages ICT and broadband to increase its efficiency and provide quality healthcare at affordable prices.
Three findings stand out from the report:
- By allowing large-scale data transfers, broadband gives the BOP access to key information and higher-quality goods and services (e.g., in education, for Enova in Mexico, or Urban Planet Mobile in several countries). It also enables real-time interactivity with the digital community (e.g., for Skype medical consultation at Narayana Health hospitals), or real time financial services (e.g., FINO business correspondents going door to door with a device allowing remote Indian rural clients to conduct financial transactions).
- Broadband empowers BoP intermediaries, employees and entrepreneurs. By providing support for complex tasks, broadband allows hiring and training lower-skilled BoP workers. For example, franchised entrepreneurs or small shop owners in India (e.g., with eKutir) and Mexico (e.g., with Barared) have been able to double their revenues thanks to the provision of broadband-enabled services.
- Broadband and data connectivity make businesses more efficient at serving poorer customers by optimizing organizational processes and lowering costs through centralized process management. For example, Kilimo Salama offers low-cost yet sustainable crop insurance to small farmers thanks to weather data gathered via satellite technology, overcoming the high cost of policies that were too costly due to the need for in-person due diligence.
The report is a must-read for those interested in learning more about broadband and how it can benefit the BOP. It makes the case that broadband is a determinant tool to improve and leverage current and potential business models looking to serve the BOP and that a proactive public policy is necessary in order to set in motion broadband penetration. If you want to go beyond the report, attend the BASE III International Forum in Mexico City on June 29-July 1 for a panel on broadband and BOP markets.
Follow Opportunities for the Majority for more on BOP markets @MajorityMarkets