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Broadband Can Help Low-Income Populations

By Federico Mazzella ,
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Broadband can help companies who are targeting the base of the population pyramid to improve the effectiveness of their operations and their services to their clients. Companies that started using broadband in their operations increased their productivity by 10% on average, according to the McKinsey Global Institute.

There are many such cases around the world. In 2014, the Inter-American Development Bank (IDB), published The Broadband Effect: Enhancing Market-based Solutions for the Base of the Pyramid. The book, which was created by the consulting firm Hystra for the Opportunities for the Majority initiative, includes case studies and stresses the importance of this technology for creating opportunities for low-income populations in Latin America and the Caribbean.

Broadband helps commercially viable business models become more efficient in terms of access to goods and services and the development and delivery of these to the base of the pyramid in areas such as agriculture, health, education, and financial services. Some examples and success stories:

  • Better information at lower costs: broadband minimizes transportation costs and provides users with better information and connections. Urban Planet Mobile, for example, has 250,000 daily subscribers who receive English lessons on mobile phones in audio or video format; in India, eKutir connects farmers with experts who give them advice on business- and harvest-related decisions.
  • Increased competitiveness and accessibility: broadband enables small franchises and businesses to improve the diversity, quality, and competitiveness of their products. Small stores offering Barared’s broadband-based services in Mexico typically double their revenues through commissions. It has also made banking services more accessible, as an average of 35 transactions per day are carried out in these small stores. In this way, clients from lower-income groups can make these transactions closer to their homes and at a lower cost than what a local commercial bank would charge them.
  • Greater efficiency: broadband empowers employees, entrepreneurs, and intermediaries to perform complex tasks more efficiently, including by hiring lower-skilled workers from the base of the pyramid. Connectivity generally allows complex tasks to be standardized, simplified, and monitored, and provides real-time technological support for those carrying them out. In Kenya, Kilimo Salama uses GPRS weather stations to determine which farmers will receive payouts, replacing costly field visits. This simplified payout process significantly reduces operational costs. Narayana Health leverages its most costly resources, specialists, who can be called via Skype to diagnose a patient in another location.
  • Empowerment of providers: at Bridge International Academies, connectivity provides teachers with all the tools they need to teach and follow up on pupils’ learning every day. This helps students to acquire new skills educators to provide better teaching and while giving them time to build relationships with pupils and families, which increases their motivation.

Although these cases are examples of the benefits of using broadband, the report also warns of the challenges this entails: in most cases, the greatest obstacle is the investment in infrastructure that is required.

The IDB defines broadband as connections with a minimum speed of 256 Kbps (a quarter of a megabyte). This minimum speed has direct implications on the type of services and applications that can be provided. The greater the bandwidth and speed, the greater the quality associated with the service.

Broadband adoption by companies that serve the base of the pyramid can help them to reach their objectives and serve users more efficiently and effectively. The cases highlighted in this study demonstrate that there are opportunities for those who are interested in leveraging connectivity for development.

REFERENCES

Kayser, O.; Klarsfeld, L.; and Brossard, S. 2014. The Broadband Effect. Enhancing Market-based Solutions for the Base of the Pyramid. Hystra for Opportunities for the Majority, Inter-American Development Bank.

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