Three reasons why M4D may be bad for Development

Fair warning, this post is a slightly intemperate and possibly ill-advised rant but sometimes you just have to get something off your chest if only to enable someone else to tell you how wrong you are. I have previously raised my “issue” with the theme of Mobiles for Development or M4D as it has come to be known, in the form of a twisted parable but it is still bugging me so I am going to say what’s on my mind a little more clearly. I hope to inspire some pushback and discussion. Here are three reasons why I think M4D may actually be bad for development.

1) Repeating the Lessons of History

Do you remember ICTs for Development in 1999? ICT4D in 1999 looked a lot like an Alexander McCall Smith novel in that there was a complete absence of cell phones. In 1999, we were still talking about modems and getting a good quality dial-up connection and even telecentres. I only woke up to the impact that mobile phones were having in about 2002 and then finally it became an official reality when, in March of 2005, the Economist announced that mobile phones were the real bridge to the digital divide. And how right they were. I don’t think even then they would have predicted how cheap and how powerful mobile phones would become.

However, it is worth trying to put technology in context. Let’s look at a little recent history. From an ICTs and development perspective, here are some things we didn’t talk about in:

Year Not in the conversation
2001 Mobile phones
2003 WiFi Hotspots
2005 Mobile Broadband
2007 LTE
2009 Tablet computing
2011 TV White Spaces technology

Now of course some of you are thinking right now, hey, I was talking about technology Y in 20XX, and perhaps you were, but what I am referring to is the dominant dialogue in technology and development. As William Gibson famously said, “the future is already here, it is just unevenly distributed.”

So what can we learn from this? Just this, that the future is going to be a surprise and tying the notion of development to a particular mode of technology is as bad an idea now as it was in 1999.

2) Player, you are being played

Yes, that’s right Mr. mobile 4 development, I’ve got an app for that, incubator, mobile app challenge, startup, mobile entrepreneurship, etc.  You are being played by the mobile operators who “join forces” with development agencies to solve the critical problems facing Africa. Well, news flash, the critical issue around mobile technology is not an app, it is price. The cost of access is the real barrier to innovation. In fifteen years of explosive mobile growth in Africa prices have not come down substantially. Why? Because mobile operators through their de facto control of mobile spectrum and because of  the muddy position governments play as both investor and regulator, competition hasn’t bitten in most African countries, Kenya being a notable exception.

So when the foundation from a mobile operator or an aid agency subsidises the cost of access in an m4d project, are they doing it out of the goodness of their hearts?  Well, that is no doubt part of it but the real bonus is that providing subsidies reduces the pressure that people with influence might bring to bear for lower prices in the market. Fewer voices that speak out with indignation about the high cost of access combined with the high profits being made by the mobile operators. The poor have no voice on this. If they did they might say that reducing the price of voice and SMS was a bigger priority for them than mobile broadband right now.

Mobile operators have entrenched themselves with development agencies as the saviours of access and give generously to m4d development programs. Development agencies have rushed to embrace mobile operators. Why? Because good business is now good development and although it may sound odd in the context of this post, I too believe this to be true.  However, what the mobile operators have achieved through this embrace is the effective sidetracking of debates about competition and affordability. The mobile operators opine that the invisible hand of the market will bring down prices and there is a grain of truth to this in the same sense that it is true that I am mortal and will die one day… just not any time soon (insh’allah).

Finally, it is worth pointing out that mobile operators do not have an economic model for rural broadband access for the poor.  LTE is not going to be economically viable for sparsely populated, poor, rural areas.  If that matters to you then we should be thinking about broadening the discussion a little.

3) Resilience

If we have learned anything in the last three years, it is that monolithic, tightly linked industries are dangerous. They are dangerous because when they fail, they do so catastrophically. What we want is an ecology of technologies that will:

  1. increase the resilience of networks, making it difficult for any one entity to interfere wholesale with access; and,
  2. break the lock that mobile spectrum has on the market opening up new avenues of competition for access and through that driving down the cost of access.

So while Africa is busy embracing its mobile future, the United States appears to be embracing its WiFi future. According to this Comscore report

“In August 2011, more than one third (37.2 percent) of U.S. digital traffic coming from mobile phones occurred via a WiFi connection. This percentage grew nearly 3 points in just the past three months.”

And here is what telecom giant AT&T have to say:

  • Users now make 100 million AT&T Wi-Fi connections per month. Wi-Fi connections in a single month now exceed the total connections made in all of 2009 and are five times the total connections made in 2008.
  • Data carried on the AT&T Wi-Fi network more than doubled versus the third-quarter 201

But I am not advocating WiFi for Development, I am saying we should be thinking and talking about the whole access ecology. By failing to do that we are likely to miss important new trends.

Now, before you mention it, yes, I fully admit that there is a healthy amount of self-interest in what I’m saying. As a WiFi startup social enterprise, Village Telco, is often excluded from “mobile” challenges.  But the reason I invest my time in Village Telco is because I believe all of the above.  Development agencies could do a great deal of good by investing in policy advocacy around competition and access ecologies.  Sadly it may be left to industry once again to figure this out as well.  Kudos to Google for hiring a policy team in Africa.

  • http://ictworks.org Wayan

    Steve,

    I am so annoyed with this post. You beat me in publishing my rant about M4D! Now I have to look like I am an echo of you again. Oh well, at least I am in good company and now have a better lead in than before. Look for my post on this topic at http://ICTworks.org in the next week or so. Overall, I agree with you but with subtle differences.

  • Steve Song

    Heh.. well it is either “Great minds think alike” or “Fools seldom differ” :-)

  • http://ictworks.org Wayan

    Oh, you might like this data in relation to your cost rant:

    “The regional price trends highlight that while ICT prices are falling in all regions of the world, the greatest price drops occurred in Africa, where fixed broadband prices fell by over 55% and mobile cellular prices by 25%.”

    From Highs to Lows – Africa has world’s greatest broadband price decreases in 2010

  • Steve Song

    Fixed broadband was always more competitive than the telco market. It took getting rid of the undersea cable bottleneck and to some extent the national backbone bottleneck, both typically maintained by incumbents, to get that 55%.

    As for 25% drop, I agree that things are starting to happen but I would like to unpack that statistic. Outside of Kenya, I haven’t seen voice and sms charges drop that much. South Africa prices show movement on data costs but not voice and SMS. See http://manypossibilities.net/2011/05/fair-mobile-two-years-on/ I’ve already said why I think that is true.

  • http://ictworks.org Wayan

    I think the difference in the price drop is telling. Less than half the drop in mobile prices. I really want to see a price drop in SMS, which costs almost nothing for mobile operators and is a pure profit center at whatever they’re charging.

  • Renier Engelbrecht

    It seems in South Africa huge monopolies exist in charging customers large amounts. With the government and other stakeholders having interest in cell companies I cannot see this situation changing soon.
    It is a pity, because as you have said, without competition there will be stagnation.
    It is very frustrating, but it seems in Africa, doing business is always doing business with the chief of the village only, and no one else. Seems since then, nothing has changed in Africa. This is the way business gets done in Africa.

  • Steve Song

    Hi Renier. This is by no means unique to South Africa or Africa in general. North America suffers from exactly the same problem. It just doesn’t matter as much because people are wealthier and can afford to pay for telecommunications. Tim Wu’s book The Master Switch illustrates how this problem has been going on for some time. Industries subject to network effects tend towards monopoly and we have to work hard to avoid this.

  • http://ictworks.org Wayan

    Renier, you point out and issue that is more unique in the African context – governments having an ownership stake in telcom companies. The US government does not have investments in ATT or Verizon (though one could say that have a vested interest in both companies maintaining a large, well-paid workforce).

    Another issue at play is the outsize revenues African governments get from telco taxes and payments. While its a tiny percentage in the US government budget, more than a few African governments get a large share of tax revenue from the mobile operators, reducing the government’s desire to push for lower tariffs.

  • Steve Song

    Heh… yes, in the U.S. it is the other way round :-) AT&T and Verizon have large investments (also known as lobbies) in the government.

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  • http://www.lirneasia.net Rohan Samarajiva
  • http://ictworks.org Wayan

    And here it is:

    Where are the Mobile Operators in Mobiles for Development Projects?

    That would my response to Steve’s post here.

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  • Sam Christie

    Hey Steve. You are on the money ….

    I think the problem is with the “for development” part. Intentional/contrived “development” in this space just does not have the speed to to keep up with the pace of the market and the tech. Most M4D is clumsy, slow and often duplicates existing commercial enterprise that might well offer the same developmental outcomes.

    If you recall in 1997 Telkom (South Afican fixed line operator) was granted an extension of its monopoly on condition it extend its network to better service the poor (developmental logic at play). I would say that even at this stage one could see the scope for mobiles to penetrate these markets more quickly and cheaply – all driven by purely commercial motives.

    In my view the “dev” more or less comes for free in this space.

    Nice post.

  • http://www.chaincapital.com Thomas Schmidt

    Hi Steve,

    I think you point to an important blind spot: “Once you have a hammer, every problem starts looking like a nail”. Mobile telephony in Africa came out of nowhere, and suddenly it is the answer to everything. Instead one might surmise, as you have illustrated, that every “eventually” obvious answer originates in the hinterland of general consensus. There are very hard cost limitations that prevent mobile technology from reaching much further, or put another way it creates massive potential for other solutions. Go Village Telco!

    Best,
    Thomas

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  • Henrii Nwanguma

    Thomas brings a perspective I like to the discussion. Is our developmental challenge (in Africa) food security, increasing access to qualitative education, healthcare, and transport infrastructure (to mention a few) or cheaper mobiles, ubiquitous broadband, etc? Our development agenda should be people-centred and all-inclusive: government, development partners and private business.

    Where does patents and intellectual property fit into all these? Remember their broader implication for cheaper medicines, food, and communications?

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