Tuesday, September 15, 2009

VNL's Innovation Supports India's Rural Mobile Market

VNL's solar-powered base station for cellphone networks was judged as leading the wireless category of the Wall Street Journal Technology Innovation Awards 2009.

The speed and depth of the mobile phone penetration in the developing countries, such as India, Bangladesh and Pakistan, has been the subject of a lot of discussion in business and marketing circles. The fact that the poor people in these developing nations are willing to spend several months' wages to purchase mobile phones has established that the poor do represent a significant market opportunity to sell products that offer value to them. Though most major multi-nationals have not caught on yet, mobile service carriers like Telenor and Digicel are already laughing all the way to the bank. Telenor was drawn to Bangladesh and Pakistan, and Digicel to Haiti, by low-wage workforces and the potential for creating local consumer markets, despite poverty. Both companies refused to accept the low-purchasing-power status quo and have been systematically building up local consumer markets. They are now boosting economic growth by creating jobs, rising tax revenue, and growing investment, according to a study published in Harvard Business Review.

The HBR study says that both "Norway-based Telenor and Jamaica-based Digicel have fared well: Telenor’s Grameenphone joint venture, which has been doing business in Bangladesh since 1997, became profitable in 2000 and is now the country’s largest telecom firm. Telenor Pakistan, a more recent initiative, increased its revenues 265% in 2007 and saw a nearly 200% jump in its customer base, to 15 million. Digicel doesn’t break down its profits by country, but Haiti represents the company’s largest market, and the corporation’s profits doubled to roughly $450 million for the year ending March 2008. The phenomenal growth in all three markets suggests significant improvements in local purchasing power. In Bangladesh, another indicator of increased purchasing power is a recent decline in the profits of the 280,000 “phone ladies,” who offer access to Telenor’s services, as more and more people in remote villages can now afford their own phones".

It is now clear that mobile-phone service can deliver huge benefits to the poor consumers in developing nations. But getting cellphone coverage to remote, rural parts of India and other developing nations is hindered by high installation and operating costs, as well as the specialized knowledge needed to set up and run a cellular station. As a result, few operators have taken advantage of these communities. The award winning solution from Vihaan Networks Limited is an attempt to enable wider rural coverage in India and other developing nations.

Here is a description of the innovation in the Wall Street Journal:

VNL is looking to overcome this obstacle with a low-power cellular base station that requires little capital expense and has almost no operating costs. The base stations can be powered by a small solar panel in daylight; batteries provide backup power for up to 72 hours.

Another challenge was making the device so simple that it can be installed at low cost by villagers.

The solution was inspired by the Scandinavian retailer Ikea: The entire base station comes delivered in six boxes, small enough to all fit in an ox cart. Simple illustrated instructions show how to put the pieces together using color-coded cables.

Even turning the station to the right microwave signal is easy—it emits a continuous beeping sound when the signal is strongest.

The technology may not be much of a technical breakthrough, but "it's worthy because of what it might bring to developing countries," says William Webb, head of research and development at Ofcom, the U.K. communications regulator, and one of the Innovation Awards judges.

Related Link:

Rural India's Mobile Phone Growth

Pakistan's Telecom Boom

Pakistan Tops Text Messaging Growth

Even the Poorest Can Be a Thriving Market

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