Sunday, August 5, 2007

All Hail the Mighty Cell Phone

One interesting thing about travelling in the developing world is that it makes it much clearer which products are worth paying for and which ones are expensive luxuries. There is nothing like an income of $5.00 per day to make you into a shrewd consumer. Of all the technologies that could improve the life of the poor which ones do they spend their money on first? We’ve travelled three months in Guatemala and we have the answer. Cell phones.

It seems absurd at first, but upon closer examination it makes a lot of sense. Most of us live in cities and have never known life without a telephone. It is hard for us to imagine just how different life would be if we lived in a remote mountain village in a developing country. There are no doctors, no pharmacies, and no places to buy basic supplies like farming tools or seeds. Getting something from a store involves spending an entire day on a bus travelling to the nearest town and back.

Coordinating activities also becomes much harder when there are no phones. Imagine you want to get your brother to help you fix the roof on your farm. You pretty much have to go to his house to find him. If he lives in the next village and travels a lot, this may be a time-consuming exercise in luck. Is he going to be around, or will you have to come back? People in the developing world spend a lot of time sitting around waiting for stuff. We sometimes romanticize this as a slower pace of life, but in reality it simply wasted time.

Cell phones change all that. You can call ahead to find out if the people you need to talk to are available. In an emergency you can phone your family in the city and ask them to put something onto the bus for you. If you own a car you can call people when you go into town to see if they need anything. Everything becomes a little bit easier.

In Guatemala we saw cell phones in the unlikeliest places. We saw farmers in traditional clothing standing in their fields with their wooden planting sticks talking on cell phones. We saw ladies in the markets selling weavings and talking on their phones. Our friends even had a bus who simultaneously driving, filling out paperwork, and talking a cell phone. He was driving with his knees. Almost everyone had a cell phone.

In some parts of the world cell phones have created entirely new industries. For example, in many villages there are people who rent out their phones by the minute. This is a great business simply because it increases communications. Improbably, it also improves banking. If I live in CityVille and want to send money to my friend in Farmville, cell phones allow me to do it. I simply buy a $5.00 phone card. Then I can call the person who runs the public phone in Farmville and tell her I want to give money to my friend. I then read out the phone card number. The Farmville phone operator can now put $5.00 worth of minutes on her telephone, and pay my friend the cash (minus a healthy commission). With clever uses like this it is no wonder that cell phones are one of the first things financed by many micro-credit lenders. Cell phone actually decrease poverty in dramatic ways!

Of course, if the big western companies provided cell phone services nobody would be able to afford them. In the developing world the pricing structures for cell phones are completely different than we are used to. Poor people can’t afford to pay the same ludicrous prices and surcharges that the phone company adds to my phone bill every month.

In the developing world phones themselves are extremely cheap. It costs about $15.00 to buy a phone in Guatemala, and it comes with $10.00 worth of minutes. The handsets are basic, but they work well. They have voice mail, caller ID, and call history. They come pre-activated with a phone number written on the back so you don’t need to do anything to start using one. No one year contracts and signup fees.

In another concession to poor owners, the phones are pay as you go. In Guatemala it costs around 15 cents a minute to call anywhere in the country or North America. Phone cards are available in amounts as low as 50 cents so everyone but the poorest person can afford to buy a few minutes. Lots of people buy minutes only when they need to make a phone call. Twice I borrowed a cell phone to make a call, and both times I had to buy a 50-cent phone card because the owners had no minutes.

To grow market share rapidly incoming calls are always free. This means that even if your phone is out of minutes you can still receive calls. This is very important because a telephone becomes much more useful when more people have one. If you had the only phone in the country it wouldn’t do you any good. By making incoming calls free the phone company increases the base of subscribers enormously. For instance, if you live in the city you can buy a handset for your parents in the countryside and call them at your expense.

In the developed world many people feel their cell phones as highly personal fashion statements (iPhones). Others see their cell phones as the best way of staying connected to their friends. More than once I’ve sat in a movie watching teenagers ahead of me texting their friends every 5 minutes. In the developing world, cell phones are much more significant then that. They are one of the best tools for fighting poverty. The cell phone has improved the lives of billions.

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