GrameenPhone’s Success, Phone Ladies’ Loss

Who has not heard of Grameen phone ladies? In 1997, GrameenPhone (a for-profit affiliate of Grameen Bank) piloted an innovative concept called the Village Phone Program. GrameenPhone would lend money to village women under this program. Women buy a cell phone and airtime from GrameenPhone to become phone ladies. They start a service business renting out their phone and airtime to other villagers. Villagers talk to their friends and family dispersed all over the world. Villagers pay money to phone ladies. Phone ladies make a handsome profit. Phone ladies buy more airtime from GrameenPhone. GrameenPhone makes a good profit. And everyone lived happily ever after.

Or may be not.

This month’s issue of FastCompany.com has an intriguing story, Unplanned Obsolescence, on how GrameenPhone’s increasing success has translated into Grameen phone ladies’ loss.

Bangladesh Phone LadyGrameenPhone has invested $1.2 billion in creating a communications infrastructure that covers all of Bangladesh. Cell phone handsets have also become cheaper over the years. These two had combined to increase the number of cell phone users in the country which then resulted in lesser business for the phone ladies. The article highlights Laily Begum, an enterprising entrepreneur who was one of the first phone ladies.

Start in 1997 – Laily Begum takes out a loan of $580 to buy a cell phone. She is the only person with a cell phone in her entire village (pop: 10,000). Business is good. She makes $800 profit per month. Cut to 2007 – She competes with 284 other phone rentals around her. And that is not counting the users who have their own phones. Now she makes about $22 a month.

Thankfully Laily Begum’s story does have a happy ending. She has used her profits in the intervening years to diversify into other areas. As a testament to her enterprising spirit, she now is the owner of a house, a barn, and a shop. She is also the landlord from whom five families rent temporary housing.

The story is not as rosy for other phone ladies who want to get into the business in the current times when the shared access model of usage is declining. The Village Phone Program can no longer make the same promise as ten years ago that “village phone ladies can make anywhere from $750 to $1,200 a year.” Profit per operator is less than $70 in 2006. Quoting from the article:

“The program is not dead,” says its manager, Mazharul Hannan, chief of technical services at Grameen Telecom, “but it is no longer a way out of poverty.”

This is not a dire story by any means. Cell phones have been called a transformational technology, especially for the connectivity-constrained countries in the Global South. The article has some great stories of people who acquired cell phones, sometimes even at unaffordable costs, and are finding it to be extremely beneficial. There is hard proof too. A research study by London Business School found that a 10% increase in cell phone use translates to .006% increase in GDP per capita in developing countries.

Cell phone use is booming in Bangladesh. GrameenPhone alone has 13 million subscribers. The telecommunications infrastructure is growing. There are five other service providers in the country. People are getting connected. All causes for celebration. So, why then is there this twinge of sadness for the phone ladies?

Source:
Unplanned Obsolescence by Richard Shaffer, photos by Daniel Pepper (FastCompany, September 2007)

Tags: ,
Categories: asia, regions, resources

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Featured Posts
  • Krishi Janani: Stepping Out Into the Great Unknown

    Krishi Janani: Ag Tech Network

    So…Appropriate IT is working on a new sustainable agriculture technology platform – Krishi Janani. We have been at it for a while now, launching a partially working prototype earlier this year. Before I go into the ‘Great Unknown’ parts of the story, a quick summary:

    Krishi Janani is an ag tech network (online platform + young women-led rural ag tech centers) enabling organic and sustainable

  • Pay It Forward: A Training in Namakkal

    Namakkal Training 6

    A three day technology training in building websites with WordPress at PGP college in Namakkal, Tamil Nadu

    By Alexandra de Vogel, Assistant Trainer

    With a background in Industrial design and innovation management, being part of this training was a first experience for me. But now I know that it will definitely not be my last experience in this field. These three days in Namakkal

  • Learning is a Mindset

    AIDA Inauguration 5

    (Guest blog by Heather A. Moore)

    Usha recently invited me to share some words of advice with the inspiring young women that had recently graduated from the pilot program of AIDA, Appropriate IT’s Development Academy, and with those from the community. Having gathered some sage advice from a few wise and generous mentors throughout my career, as well as the hard earned wisdom that comes

Archive