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Mobile Data at the BOP

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ICT4D Uganda
Posted on October 29, 2011

Luke Kyohere is Senior Technology Manager, at Grameen Foundation

There was a time when all that handsets could do was make calls and send SMS.

Then mobile data arrived, the first versions of which simulated an analog modem/landline setup. These gave way to GPRS, 2G and finally 3G. In Uganda today, mobile data is available almost everywhere that GSM connectivity is.

This fast proliferation of 2G and 3G has been influenced, in part, by recent MNO competition and price wars, as well as last year’s drastic drop in internet prices upon go-live of the Seacom and EaSSY cables. It can also be partly attributed to the fact that competition in the sector has led to a steep reduction in voice costs and a matching erosion in MNO ARPU, causing MNOs to focus more on mobile data as the next big cash cow.

Historically, most mobile applications targeting the poor were SMS based. SMS worked on any handset. Its store and forward mechanism meant that even if the handset was off, or in a network-weak area, the SMS would get delivered sooner or later. The UI was something that people were used to, some thing that they interacted with daily. And technically, SMS based services weren’t that complex to set up.

It had its drawbacks, however, the first of which was the need for a short-code. A short-code made it easier for people to use one’s application but, in Uganda at least, this meant shelling out money to the regulator yearly, and begging each MNO for connectivity to their SMSC. Most short-codes were also premium charged, which made them un-ideal for services aimed at the poor. One could get a toll free short code, but that required even deeper integration with the MNO, was often a slow bureaucratic process and usually resulted in MNO lock-in.

Secondly, despite the fact that on-net SMS has virtually no incremental costs to the MNO and anything charged is almost pure profit, SMS was, and still is, one of the most expensive forms of data transfer. If you’re lucky, for 50 UGX (0.02 USD), you get to exchange 160 characters of data. That’s 0.128 USD (320 UGX) per kB. Comparatively, mobile data will typically cost less than 0.7 UGX per kB, which means that one can send almost 500 times the amount of data for the same cost.

These drawbacks were, in large part, the reason we chose mobile data as the channel for our latest applications. One of the things we knew from the onset of the Applab project in Uganda was that the applications were going to be data intensive. We needed to exchange not only text-based data but images, video and audio too. And we wanted to do this regularly. We knew some information would change daily, and needed to be updated over the air.

The choice to use mobile data meant that we needed to use higher end handsets, which would cost more, but these higher-end handsets gave us much needed functionality like multimedia and GPS support, which greatly increased their value for money. Also, we were purchasing the handsets at USD 450 each. If each handset exchanged just 500kB of data per month, that’d have cost UGX 160,000 (USD 64) via SMS per month, or UGX 1,120,000 (USD 448) over a 7 month period – The savings from using mobile data rather than SMS would pay back the cost of the handset within half a year.

Since then, the cost of such handsets has fallen considerably. In just over a year, the price of higher end handsets has fallen by over 65%. We now purchase at $150 per handset, which means the pay-back time is much faster today. With the recent announcements of a soon-to-be-released sub $100 dollar smartphone, the future is looking even brighter.

The choice meant we had to develop applications for the handsets, but while doing that, we could simulate the store and forward capabilities of SMS by supporting offline access with local data caches.  In addition, with good usability testing, we could also develop user interfaces that even surpassed SMS-based Uis’ ease of use.

Mobile data presents a new choice to the application developer, even when targeting the bottom of the pyramid. The choice depends on a number of things including how data intensive the applications will be and whether the other advanced features provided by the higher end handset add value to the application. SMS applications will no-doubt continue to dominate the apps for development sphere, however, the savings on data charges combined with the rapidly falling cost of these handsets and the ability to develop production level applications with no MNO integration requirements & lock-in are quickly making mobile data a more viable choice for the BOP application developer.

 

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