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ICT ADOPTION AND SOCIAL CHANGE IN RURAL SOUTH ASIA: A CASE STUDY ON GRAMEEN TELECOM IN BANGLADESH SHIB SHANKAR DASGUPTA A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF ARTS COMMUNICATIONS AND NEW MEDIA PROGRAMME NATIONAL UNIVERSITY OF SINGAPORE 2005 Acknowledgements My mother was very happy when she learnt that i was planning a new career in academics after more than two decades of not so successful engineering business endeavours But unfortunately she didn’t live to see me submitting this thesis She passed away on March 25, 2004 after a brief illness I dedicate this research to her It was Dr Habibul Khondkar (Sociology Department, NUS) who first suggested to me that NUS has a program called Information and Communications Management (ICM) which might accommodate some of my wild (coffee shop) thoughts of combining technology and sociology in a well-guided course Dr Govindan Parayil, past Co-ordinator of ICM impressed me on the very first meeting An Engineer by training who prefers to talk more about social shaping of technology: exactly the person i would love to follow the foot steps of “Without the active support of both of you, i would not have dared to make such a big change in my career” A man is respected for his humble nature and not by his arrogance Dr Sreekumar reminded me this adage every time we met for discussions This research would not have taken this shape without his love for strict details and appreciation for freedom in work Everything good in this research is his contribution “It was a great opportunity to have a personality like you as my Supervisor” CNM Faculty was great Dr Millie, Dr, Lim, Dr Irena had their helping hands outstretched every time i had asked for it “i am really grateful to you all for all the tips and guidance that you offered me during the last two years” ii While my professors have been an ideal guide in my research pursuit, my classmates were no less enthusiastic in accepting this old man Cindy, in fact taught me how to use the library portal The intimacy in friendship that i enjoyed with Sean, Nandini, Jaya, Manjari, Shansi and others never for any single moment allowed me to think that i belonged to a different generation “You were all a nice source of inspiration for this piece of research and i’ll cherish every bit of my associations with all of you during the two years of my study at NUS” i also take this opportunity to thank all Grameen Bank and Grameen Telecom members of the staff in Bangladesh who made great efforts to make my fieldwork at Dhaka a memorable experience “Grameen dirghajibi hok (Long live Grameen)” Oli enjoyed every bit of her Baba going back to school once again “It’s so cool to have a student dad”, she would boast to her friends “You are my greatest inspiration, my little darling” Sukanya does not get any scope to talk these days Her college-going husband does most of the talking In the vast field of Science, Technology and Society, big words abound For an empty vessel husband sounding much is a natural outcome “You have been a wonderful friend and partner all throughout This thesis owes a lot to your greatness” And finally, my gratitude to the black Toyota Corolla , SDY 1950Y It has offered great service these two years by providing us hassle -free commuting in Singapore This thesis is a synthesis of contributions from all of you I am grateful to all of you for giving me this opportunity to work and take lessons from all of you Let good things happen to your lives and let the future be as good as those wonderful days that we were all together Thank You iii Summary Convergence among telecommunication, computing, the media and the development of technologies associated with the Internet have brought Information and Communications Technologies (ICT) in the forefront of social decision making Public policy makers in order to foster private investments prefer to join the bandwagon by deregulating existing telecommunication systems But in this race, as usual, some countries have fallen back and being marginalised from the prospects of growth and development due to lack of access These wide ranging disparities in access to ICT services, popularly known as ‘Digital Divide’ are concern for policy makers througho ut the world While development of road and transport system has been well documented as economic facilitators, telecommunication as a tool for poverty alleviation is still to get into the right limelight The interdependence between telecommunication and social development in the rural sector along with the equitable distribution of benefits of telecom services were the two main objectives of this research The rural telecom service in Bangladesh, pioneered by Grameen Telecom, is the main focus of this research The village phone (VP) system organized by Grameen Bank through its micro-credit schemes is claimed to be the first instance of any NGO involved in rural telecom development through a franchisee system The objectives of the Grameen VP system were mainly twofold First, franchise members, predominantly iv women, will earn their living by selling telecom services and second, villagers would benefit by purchasing these services It is also a step outside the conventional empowering mechanisms of farm related activities prevalent in most of the development projects in south Asia The VP system propelled by the village women thus is another positive deviation from conventional methods of rich growing richer by taking advantage of new technologies The decentralization of wealth and power in the rural sector of Bangladesh initiated by the VP system forms a part of this research as well The phone income was a substantial amount compared to other family incomes The VP system has improved the status of these women, particularly in family and social decision- making Village Phone system saves its users both time and money resulting in a consumer surplus gained with the introduction and adoption of ICT through this shared mechanism The Village Phone system has offered its members access to negotiate and control positions in the household They maintain some level of control over their assets and incomes as well Many of the franchisee members confirmed that the phone has brought them more respect in society these days From almost a zero identity these ladies are getting a special identity in their own localities They are all better known to the people in the locality Politicians and local elites initially also created some problems They as usual, wanted their pie of the cake If Grameen had given them the franchisee based on conventional v franchisee systems it would have been the greatest blunder The normal franchisee model would have widened the digital divide that is already prevalent in most of the developing world The VP system is definitely not the final step in fighting gender subordination Raising consciousness or organizing platforms for women’s rights are important issues in any rural movement but shifting the source of income in favour of women is definitely a step in the right direction Grameen is not a political organization It is only a development initiative; an intervention into the lives of the rural women In post Industrial society telephones are no more considered as consumer goods but tools for facilitating private and commercial communications It is no more a utility reserved for the rich and the wealthy only Technology has brought it down to the rugged hands of the poor as well Decision makers throughout the world, therefore, need to rethink and restructure various policy related issues Rural development projects targeted towards poverty alleviation are possible if we can bring the rural poor from the fringes to the centre of the activity Interestingly, instead of giving subsidies, the concept of shared resources seems a better option Finally, the research shows some distinct departures from traditional rural development projects The benefits of technological developments all these days have put the wealthy in commanding positions But with proper planning and efforts in implementations telecom projects can empower the poor as well vi Table of Contents Acknowledgements ii Summary iv Table of Contents vii List of Tables ix List of Figures ix Chapter 10 Introduction 10 1.1 Introduction 10 1.2 Research Questions 14 1.3 Analytical Issues 15 1.4 Research Methodology 16 1.5 The Study Region 21 1.6 Chapter Scheme 24 Chapter 27 Digital Divide: A Global Phenomenon 27 2.1 Introduction 27 2.2 Digital Divide: Some Analytical Issues 28 2.3 Digital Divide: Some Policy Issues 32 2.4 Telecommunication as a Development Priority 38 Compound Annual Growth Rate (CAGR) 47 2.5 Digital Divide: Some Global Issues 49 2.6 Telecom Access Indicators 54 2.7 Conclusion 57 Chapter 60 Grameen Telecom and Universal Access 60 3.1 Introduction 60 3.2 Emergence of Village Phone Programme 61 3.3 Cellular Phone Context in Bangladesh 63 3.4 Interconnection Facilities 64 3.5 The Village Phone Operation 67 3.5.1 The Business Model 67 3.5.2 Roles and Responsibilities for the VP Business 70 3.5.3 Business Competition 71 3.5.4 Selection Process 73 3.5.5 Franchisee Income 76 3.6 Conclusion 81 vii Chapter 85 Social Impacts of Village Phone System 85 4.1 Introduction 85 4.2 Change of Status of VP Operators 86 4.2.1 Empowerment of Members 86 4.2.2 Potential Users of VP System 89 4.2.3 Gender Analysis 92 4.3 Benefits of VP System 96 4.3.1 Business Development Facilitator 96 4.3.2 Strengthening Community Ties and Channels of Information Flow 99 4.3.3 Change in Lifestyle 101 4.3.4 Change in Social Positions 102 4.3.5 Aspects of Poverty Alleviation 105 4.3.6 Coping with Rural Power Structure 106 4.3.7 Patriarchy and a “Booth of One’s Own” 107 4.3.8 Service Providers as Agents for Rural Development 110 4.4 Conclusion 112 Chapter 117 Conclusion 117 Chapter 126 References 126 Annexure A 135 viii List of Tables Table 2.1 Relationship between ICT and Gross National Income (GNI) per capita of Selected Economies Table 2.2 Distribution of Telephone Subscribers by Region, Percent Table 2.3 Mobile Phone Penetration in Asia 40 43 44 Table 2.4 Network Readiness Index Rankings 2004 49 Table 3.1 Backlog for Fixed-Line Telephone in Selected South Asian Countries 55 Table 3.2 Start up cost of subscription for fixed line (South Asia) Table 3.3 Private Telecommunication Operators in Bangladesh 56 58 Table 3.4 Roles and Responsibilities in VP Business Mode 65 Table 3.5 Age, Education Level and Duration of Membership (N=41) Table 3.6 Statistics on the Village Phone Booths Table 3.7 Basic Characteristics of Sample Villages 68 68 69 Table 3.8 District-wise Listing of Franchisee Members 70 Table 3.9 Family Income and Franchisee Income of Members 72 Table 3.10 Income Chart for VP Franchisee Members Table 3.11 GB Zone wise Distribution of bills (Highest bill, average bill and others (28/12/2004 to 27/01/2005) Table 4.1 Various Occupations in Dhaka City, Bangladesh 74 75 87 List of Figures Fig 2.1 Digital Divide Statistics in 1992 Fig 2.2 Digital Divide Statistics in 2002 Fig 2.3 Fixed Telephone Lines per 100 Inhabitants from 1992 to 2002 Fig 2.4 Mobile Telephone subscribers per 100 Inhabitants from 1992 to 2002 Fig 3.1 Mobile Phone Market Share in Bangladesh in 2005 Fig 4.1 Franchisee Women’s Role in Decision Making related to Family Expenditure 46 46 47 47 66 82 ix Chapter Introduction 1.1 Introduction The developments in the diffusion and application of Information and Communication Technologies (ICTs) have a massive impact on the global economy New technologies in the fields of product miniatur ization, powerful software and affordable prices have contributed much in the diffusion of ICTs in all the developed countries According to some experts, however, the sluggish growth in economy for many of the developing countries has been due to lack of specific ICT strategies, low- levels of personnel, poor infrastructure and meager investments (ATAS, 1995) But for many of the developing countries for the first time ICT is considered as an opportunity to leapfrog by investing judiciously and pursuing some pragmatic policies in implementing necessary infrastructure, providing the necessary institutional support and in building up the right manpower (ATAS, 1995) According to a report from World Bank (2002) “Countries with pervasive information infrastructures that use innovative information technology applications, possess advantages for sustained economic growth and social development” The report further 10 traditional and conventional franchisee business favours the rich Had Grameen opted that route the extent of digital divide would have increased further But in selecting a Village Phone franchise member level of education, status in the community, entrepreneurial capability or any such criteria did not come in the way Only Grameen Bank membership for two years with some sense of commitment to the Grameen cause was the main criterion for the selection Through its own micro-credit system Grameen has built up a client base among the poor in Bangladesh and the VP system was structured around that human capital This is a unique experimentation whereby a technology initiative is planned around an existing social infrastructure The issue of unemployment and under-employment is a major concern for policy makers in Bangladesh Reports suggest that the labour absorption potential in agriculture for Bangladesh is very low In view of this it is of paramount importance to consider the rural non-farm activities as an important sector in employment generation and income earning opportunities The Grameen Village Phone is definitely an important endeavour in this direction It had been observed that the mobile phone market in developing countries was predominantly urban The high density of high- income subscribers in urban locations justifies the ROI (return on investment) on modern cellular technology Recently it has been observed that service reliability and ease of getting the connections have prompted a huge number of middle-income urban users to switch on to mobile phones In countries, like Bangladesh, where fixed- line telephone systems remain still dominated by state 121 monopoly, waiting time for fixed- line phones is horrendous As a result, cellular phones often become a suitable substitute for fixed- lines Like most other developing countries fixed- location telephone service, popularly known as public call offices (PCOs) operating through tele-shops, tele-kiosks or multi-purpose tele-centres could have been the right choice to offer universal access in Bangladesh also Studies have shown that PCO model of rural telecommunication is commercially viable for both the franchisee as well as the service provider But in Bangladesh, majority of the PCOs are located in urban areas only due to lack of connection facilities in the rural sector The mobile alternative which functions wireless, therefore, became a better alternative for reaching out to the village poor The Village Phone system has the potential to contribute to the economic regeneration of the rural sector in Bangladesh • First, with this VP system village wo men get an opportunity to earn their living It has been estimated that the average earning of VP franchisee member is more than double the national per-capita income of Bangladesh It has been also observed that other members of the families have lent their helping hands to these ladies in successfully doing the business Women can make good use of economic opportunities if they get some minimal support It is the lack of employment opportunities that is the hindrance and policy makers can definitely take a note of it 122 • Second, the VP proliferation in rural Bangladesh enables certain new economic activities based on new business methods, efficient client-servicing techniques and other value added propositions generally not very common in a rural environment As a result, proper ICT facilities in the rural sector have wide ranging impacts on social and economic developments Changes in the attitudes and behaviour of some rural women; social relations between men and women and changes in the ways of accepting new technologies in doing business were observed in this research through the interview of some franchisee members of Village Phone system The general consensus after interviewing the respondents was that being aware of different market prices gave an individual a better position to bargain Improving overall efficiency and growth along with better delivery of public services and creating new resources for employments are some of the projected results of ICT projects Poor access to communications networks between developed and developing countries as well as the rich and the poor in individual countries poses the greatest challenge to universal access Technological developments along with all its various innovations in making access to communications network are becoming affordable to bridge digital divide Cheaper digital equipment, convergence between telecom and computing and business innovations like, payphone and virtual telephony are becoming increasingly available today where fixed- lines have failed to connect the people earlier In order to bridge this ‘market efficiency gap’ different countries are trying with different 123 programmes But the ‘access gap’ still remains with certain groups of people in every society who cannot be reached through commercial telecom initiatives Grameen Village Phone with its shared resource concept is a venture to minimize this access gap only Community participation of the ladies has markedly improved with the Village Phone system People now show respect to these members for offering services, which they otherwise could not have availed so far Grameen Bank provides all the necessary financing for starting this business for rural village women It has been a major issue throughout the world for poor villagers to have the initial capital for running any business not to mention a top notch ICT business Grameen has solved this global problem wonderfully The loans offered by Grameen Bank for starting the business have been a great help in building this franchisee business model targeting the poor women in Bangladesh All the franchisee members confirmed that they never had any problem in returning the phone loan as telephone is a lucrative business It is therefore a matter of trust and co-operation between both the parties that is important in such business propositions This is an interesting observation that if business proposals are commercially viable and sustainable then the initial push to come out of poverty becomes an easier option Control in lending and receiving money can also raise the self-respect of individuals who in turn, on their own, will run the business competitively and return the borrowed money as a gesture of self respect Finally, it would not be out of place to mention here that geographical conditions are more suited to the mechanism through which the Village Phone has developed The base 124 station costs, if protected from natural disasters, is expected to decline and should have long-term benefits to the users It is a relatively inexpensive method of offering universal access to information resources to the poor communities in Bangladesh so far excluded and isolated from the developments of voice communications It has been observed in the study that these poor people are capable of taking advantages of information and knowledge through the Village Phones to augment their status and strive for better living in future In many of the villages in South Asia universal literacy is still a distant dream, but the Village Phones should offer voice communication through wireless hand phones to the people who need to be part of the information revolution of the present age What is fundamentally important for 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Polynesia China Korea (Republic) Mongolia Macao, China Fiji Philippines New Caledonia Indonesia Singapore New Zealand Japan Taiwan, China Thailand Lao PDR Maldives Sri Lanka Source: ITU World Telecommunication... than accessing a ne (Mathur and Ambani, 2005) 42 Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka, collectively called as South Asia, have a combined population of over 1.3... broadband users in the world Taiwan, Japan and Singapore have their own positions as well in the world map of ICT adoption But Asia 12 also includes countries like Afghanistan, Myanmar and North