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My 5 Pennies Opinion: How Grameen Telecom and "Village Phone" principles works for Indonesia Telecommunication

In Grameen, Manajemen, Pemikiran, Telekomunikasi, Telematika on 7 Agustus 2008 by djadja

As you read in on the news paper or Internet; Grameen Foundation, Bakrie Telecom and Qualcomm has Join Efforts to Enable Affordable Telecommunications Access to Rural Indonesia. As person which have enough knowledge on Grameen Telecom with their “Village Program” (My Thesis recently is on “Stakeholders Role on Grameen Telecom Strategic Management”); I have several view, idea and suggestions for Indonesia Telecommunication as follows:

  1. What, Why, When & How is Grameen Telecom & Village Phone:
  1. Grameen Telecom:

Grameen Telecom (GTC) is a company dedicated towards extending the benefits of the information revolution amongst the rural people of Bangladesh. Currently GTC provides the GSM 900 cellular mobile phones to the villagers. Our corporate vision is to provide telecommunication services to the 100 million rural inhabitants in the 68,000 villages in Bangladesh.

Grameen Telecom is a not for profit company set up at the initiative of Professor Muhammad Yunus. Grameen Telecom holds 35% share of GrameenPhone Ltd., the company which was awarded a nationwide license for GSM 900 cellular mobile phone services. The Company is entrusted with the responsibility of providing telecommunication services in the rural areas in Bangladesh and also acts as a sales agent for mobile phones for individual urban subscribers. Our basic objective are to ensure universal telecommunication access for the villagers and provide other value added services.

Grameen Bank plays a vital role in implementing and expanding the Village Phone program. It provides necessary organizational & infra-structural support to Grameen Telecom towards selecting the Village phone operators from amongst its members and also by collecting the phone bills. GB happens to be the first ‘point of contact’ towards problem resolution related to the “Village phone program ” by acting as the conduit between the Village phone operators and Grameen Telecom, on as and when required basis. Based on this available infra- structural support, Grameen Telecom plans to establish one unit Office to support and service 300 Village phones.

    1. Village Phone (VP) : The Basic Concepts:

    The “Village Phone” concept was developed by combining Grameen Bank’s experience with the village based micro-enterprises and the latest digital wireless technology and the well tested/ proven idea of Public Call Offices (PCOs) and the privately operated phone centers.

    Village Phone (VP) is a unique idea that provides modern telecommunication services to the poor people in Bangladesh. A Grameen Bank member obtains ownership of the phone under the lease-financing program of the bank and provides the services to the people in the adjoining area, covering both outgoing and incoming calls. The VP bills along with its other dues are collected by Grameen bank. It is our belief that very soon, VP will attain the position of being the largest wireless pay phone project in the World. Our desire is to install 40,000 village phones by the year 2004.

    Each Village phone remains under the custody of a village pay phone operator, who is responsible for extending the services to the customers for both incoming and outgoing calls, collection of call charges according to prescribed rates and proper maintenance of telephone set. The operator’s income is derived from the difference between the air time charges paid by customer/s and the billed amount required to be paid by the VP operator along with a flat charge for each incoming call.

      1. Business Structure:

        1. Business Model:



        1. In My Humble Opinion (IMHO): Why is Indonesia need to involve on “Village Phone” Strategy?

          1. Vision & Mission:

          Untuk mengatasi masalah rendahnya ketersediaan fasilitas telekomunikasi di perdesaan, pemerintah melaksanakan program Universal Service Obligation (USO) sejak tahun 2003. Program ini bertujuan untuk membangun fasilitas telekomunikasi di daerah-daerah yang secara ekonomi kurang menguntungkan termasuk daerah perintisan, perbatasan, pedalaman, pinggiran dan terpencil. Pada tahap pertama (tahun 2003) dan kedua (2004) telah dilakukan pembangunan masing-masing di 3.016 dan 3.500 desa di Jawa, Sumatera, Kalimantan dan wilayah Indonesia timur dengan menggunakan dana APBN. Saat ini pemerintah masih menyelesaikan revisi Peraturan Pemerintah Nomor 14 Tahun 2000 tentang Tarif Atas Jenis Penerimaan Negara Bukan Pajak yang Berlaku pada Departemen Perhubungan yang mengatur kontribusi penyelenggara telekomunikasi sebesar 0,75 persen dari pendapatan kotor sebagai sumber pembiayaan program USO. Dengan demikian, pelaksanaan program USO sejak tahun 2005 diharapkan tidak lagi didanai dari APBN.”

          – Bappenas : “Rencana Kerja Jangka Menengah 2004-2009 di bidang Sarana dan Prasarana”.

            1. Resources:

            <!– –>· Indonesia<!– –> has good economic fundamental which including binding to capability for nation building that have good opportunity, and trust to creditor (in-country or overseas), customers, partners and other stakeholders.

            <!– –>· <!– –>Have Many Experienced Expert which can handle Telecommunication business for Rural and “market of the bottom of pyramid” population.

            <!– –>· <!– –>Infrastructure which can be co-exist/co-partner with other Indonesia Group of Companies which easier for sharing infrastructure, asset management and distribution channel.

              1. Technology:

              Refer to APT REPORT on Aug-2007, The advantage for cellular technology using lower frequency bands is broader coverage, which means less base stations are required for the network. Thus the cost of infrastructure development is much lower. For example, CDMA-450 coverage is 16 times than the deployment in 2.1GHz. BTS number is 1/16 of 2.1GHz and 1/12 of 1800MHz. For the operators, it brings on minimal initial investment and reduces total cost of the network. Not only it is commercially viable for the existing available network but also means the new chances to operators.


              Frequency

              (MHz)

              Cell radius

              (km)

              Cell area

              (km2)

              Relative

              Cell Count

              450

              48.9

              7521

              1

              850

              29.4

              2712

              2.8

              950

              26.9

              2269

              3.3

              1800

              14.0

              618

              12.2

              1900

              13.3

              553

              13.6

              2100

              10.0

              312

              24.1

              Source: Qualcomm ITU 8/F Submission, June 11, 2001,

              “COVERAGE COMPARISON OF IMT-2000 SYSTEMS AT VARIOUS FREQUENCY RANGES, INCLUDING 450 MHZ”

                1. Market:

                <!– –>· <!– –>From Vision/Mission, Resources and Technology which Indonesia have good foundation, its clear that the market goal of his portfolio is to serve “market of the bottom of pyramid” of Indonesia population which still un-deserved by existing wireless operator as Prahalad suggest the strategy as follows:

                <!– –>· <!– –>Iqbal Quadir, CEO of Grameen Phone has straight forward about “market of the bottom of pyramid” as follows:

                He started from the assumption that “Connectivity is productivity,” describing a couple of examples where he observed the converse. The high-tech example was when the network went down at his investment banking job. The low-tech example was when he was asked to walk to the next village to get medicine, only to discover the apothecary had done some traveling of his own, and was not there to provide the medicine. A simple phone call would have saved the 10-mile roundtrip on foot. He argued that connectivity enables specialization (in order to aggregate a sufficient market to support the specialization) and that as Adam Smith claims, “Specialization is the path to increased productivity.”


                To demonstrate the insatiable need for telecom services, he showed a chart from The Economist (10/11/2003) of Household Spending Growth from “Rich” (OECD) countries over 1990 – 2000: spending on communications was the fastest growth among the categories (1.5X over 1990-2000), even though cost per call decreased significantly.

                This lead to a number of observations and demolished “objections”:

                • If telephones generate income, “poverty” is not really an excuse.

                • Does increased productivity pay for the equipment?

                • Do they have initial income to afford? Share access, share expense. And fund the equipment with a microcredit loan. If a cow is a fundable productive asset, why not a cell phone?

                • If primary needs are not met, do they need telecom? Who are we to decide–give them the choice and let them decide, esp. when options increase income.

                That all of my 5 Pennies Opinion: How Grameen Telecom and “Village Phone” principles works for Indonesia Telecommunication


                Yahoo Finance:

                Grameen Foundation, Bakrie Telecom and Qualcomm Join Efforts to Enable Affordable Telecommunications Access to Rural Indonesia
                Tuesday July 29, 8:30 am ET

                – World-Recognized Village Phone Program Launches in Indonesia as Uber ESIA Using 3G CDMA Wireless Technology –

                NUSA DUA, Bali, July 29 /PRNewswire-FirstCall/ — Grameen Foundation, Bakrie Telecom and Qualcomm Incorporated (Nasdaq: QCOMNews) through its Wireless Reach(TM) initiative, today announced the launch of the first Village Phone Program in Indonesia, branded as Uber ESIA, using 3G CDMA technology to provide affordable wireless telecommunications services for rural communities. The launch was held at the Asia-Pacific Regional Microcredit Summit held in Bali, Indonesia.

                Uber ESIA, which means joint cooperation, aims to facilitate affordable telecommunications access in a sustainable, profitable and empowering way to rural Indonesia. Uber ESIA is one of many similar programs around the world already launched by Grameen Foundation as Village Phone Program. However, this is the first program using 3G CDMA, so users can access higher quality voice services and more advanced mobile applications, including high-speed data.

                Grameen Foundation, Bakrie Telecom and Qualcomm will be working with local Indonesian microfinance institutions to enable microfinance clients to borrow the money needed to purchase a Village Phone “business in a box,” which consists of a wireless 3G CDMA-based phone and charger, marketing materials, tariff posters, business cards and training materials. The Village Phone Operators (VPOs) will operate their businesses in rural villages where telecommunications services did not previously exist, renting the use of the phone within their communities on a per-call basis.

                “Building on the visionary leadership of Grameen Telecom, Grameen Foundation is committed to ensuring that the rural poor are not left behind in this rapidly changing information and communications technology environment,” said Alex Counts, president and CEO of Grameen Foundation. “Microfinance helps to put technology within financial reach of the poor and we are pleased to work with Qualcomm and Bakrie Telecom to help Indonesia’s rural microentrepreneurs build self-sustaining businesses that also enhance the socio-economic development of their wider communities.”

                The Village Phone model enables everyone to benefit. Microfinance institutions provide financial services and earn income on the loan interest, as well as commissions from the sale of prepaid airtime to their clients. They also attract new clients who are drawn by the opportunity to start a technology-oriented business. Telecommunications companies benefit by tapping a new market. VPOs have strong, thriving businesses, and most importantly, individuals living in impoverished communities gain access to affordable telecommunication and information services linking them to their friends, family, business contacts and the world.

                The VPOs provide affordable rates to their customers, while earning enough to repay their loan and earn a profit that will allow them to make investments in their family’s health, nutrition and education, and in other business ventures. The project aims to empower underserved communities in rural Indonesia with mobile communications using Bakrie Telecom’s Uber ESIA service based on 3G CDMA wireless technology.

                “Bakrie Telecom is proud to partner with Qualcomm and Grameen Foundation to provide enhanced communication and information access to remote communities in Indonesia. From the beginning, we believe that telecommunication is a birthright for every Indonesian citizen. Based on our competency, we try to implement reliable and affordable telecommunication services,” said Anindya N Bakrie, president director, PT Bakrie Telecom Tbk. “Uber ESIA is a breakthrough in Indonesia’s telecommunication industry and for Bakrie Telecom, as well as a valuable instrument to help Indonesia’s rural communities to enhance the economic and social livelihoods of those who are underserved.”

                Another positive point of this program is empowering women who live in rural area, since the main target is household community. Women have a significant role in helping the family’s income, but they still have limited positions and access to economic resources. Central Statistics Agency data shows that out of a population of 97.5 million, only 35.4 million women (36.3 percent) are recorded as emplo
                yed, of which 59.9 percent or 21.2 million graduated from elementary schools. Also, 26.3 million (74.28 percent) employed women work in an informal sector. Uber ESIA will facilitate them to gain additional income for their family.

                “The Uber ESIA program strengthens our commitment towards good corporate governance. As a national company, we believe that we have to contribute to our community. Nevertheless, moving together with the community is also our priority, which can be achieved through Uber ESIA,” added Bakrie. “We always consider the poor communities as a productive because they also have the rights for telecommunications access. But in fact, most of them do not have the necessary purchasing power. Thus, Bakrie Telecom, through Uber ESIA, is providing the opportunity for the poor to improve their purchasing power. This is a challenge for Bakrie Telecom, not only to help raise the poor’s income but also to deliver the right product to them.”

                “Qualcomm believes access to advanced wireless voice and data services bring social and economic opportunities to all communities, regardless of where they may be,” said John Stefanac, president of Qualcomm Southeast Asia-Pacific. “Today’s announcement of the Uber ESIA reinforces our commitment to support our partners, customers and the government of Indonesia’s common goal of providing world-class communications services to all parts of the country, including rural areas.”

                About Qualcomm

                Qualcomm believes access to advanced wireless voice and data services improves people’s lives. The Company’s Wireless Reach initiative supports programs and solutions that bring the benefits of connectivity to developing communities globally. Wireless Reach projects create new ways for people to communicate, learn, access health care and reach global markets. For more information, please visit http://www.qualcomm.com/wirelessreach.

                Qualcomm Incorporated (http://www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., Qualcomm is included in the S&P 100 Index, the S&P 500 Index and is a 2008 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.

                About Grameen Foundation

                Grameen Foundation is a global non-profit organization that combines microfinance, technology, and innovation to empower the world’s poorest people to escape poverty. Grameen Foundation was founded by Alex Counts, who began his work in microfinance with 2006 Nobel Peace Laureate Dr. Muhammad Yunus, the founder of Grameen Bank. Dr. Yunus is a founding and current member of Grameen Foundation’s board of directors. For more information on Grameen Foundation, please visit http://www.grameenfoundation.org.

                About Bakrie Telecom

                Bakrie Telecom has been one of the pioneers in Indonesia’s telecommunication industry and the fastest growing wireless telecom operator in Indonesia and a leader in providing affordable fixed wireless services to customers. In the latest report, number of subscribers grow 149.5 percent year on year in quarter 1, 2008 or become 4.49 million subs. Having adopted the more spectrum efficient Code Division Multiple Access (CDMA) technology, Bakrie Telecom is now becoming as a nationwide operator with its Esia, wifone and Wimode brand. After delivering services in three existing provinces, Bakrie Telecom has expanded to more than 50 national cities on this year. Meanwhile, the corporate has awarded new international long distance license from government. Now doubt that Bakrie Telecom gained the best CDMA operator in succession, 2007 & 2008. Bakrie Telecom provides fixed wireless, limited mobility and wireless data services to individuals and corporations. For more information on Bakrie Telecom, visit http://www.bakrietelecom.com/.

                Qualcomm is a registered trademark of Qualcomm Incorporated. Wireless Reach is a trademark of Qualcomm Incorporated. All other trademarks are the property of their respective owners.

                     Qualcomm Contacts:
                     Emily Kilpatrick, Corporate Communications
                     Phone:  1-858-845-5959
                     Email:  corpcomm@qualcomm.com
                 
                     John Gilbert, Investor Relations
                     Phone:  1-858-658-4813
                     Email:  ir@qualcomm.com
                 
                     Grameen Foundation Contacts:
                     Rebecca Booker, Marketing
                     Phone:  +202-628-3560 ext 129
                     Email:  rbooker@grameenfoundation.org
                 
                     Bakrie Telecom Contacts:
                     Nadia Diposandjoyo
                     Phone:  6221-926-17-509
                     Email:  nadia.diposandjoyo@bakrietelecom.com

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