In search of telecentre sustainability |Harsha Liyanage, Ph.D|
Research Publication by Sarvodaya Fusion, in collaboration with telecentre.org
Sustainability First In search of telecentre sustainability
Harsha Liyanage, Ph.D. Research Publication by Sarvodaya Fusion, in collaboration with telecentre.org
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Sustainability First Table of Contents
Word from Telecentre.org
Preface – Sustaining Telecentres in Development Landscape
Sustainability Dream – Why is it Unsustainable? Chapter 2
Sustainability – What Makes it Possible? Chapter 3
The Silver Lining of the Sustainability Cloud •
Building partnerships for telecentre sustainability, case study – ATN, Brazil
Tapping the bottom of the pyramid, case study – Drishtee, India
Exploring the knowledge market at grassroots, case study – D.Net, Bangladesh
Telecentres as a corporate social responsibility, case study – Grameenphone CIC, Bangladesh
Evolution of a social enterprise, case study – Sarvodaya-Fusion, Sri Lanka
Social Enterprise Approach to Telecentre Sustainability Conclusion and Recommendations
Word from Telecentre.org |
Word from Telecentre.org As we started the fabulous telecentre.org journey back in 2005, we invited hundreds of grassroots leaders from all around the world to define collectively what were the key challenges for the future of the telecentre movement.
Some clear needs and opportunities emerged from those debates: a better organization and knowledge exchange among them; a research agenda for the future of the telecentre movement; a capacity-building effort among grassroots practitioner; and above all, ways to ensure long-term financial sustainability for those initiatives without jeopardizing their main social purposes.
As a result of this process, we engaged in supporting the creation of open telecentre networks in more than 50 countries; we launched a vibrant online community and resource center (www. telecentre.org); we undertook a global effort to train and certify operators (The telecentre.org Academy); we engaged in broad research initiatives focused on understanding the social impact of public access; and we started tackling the challenging issue of financial sustainability.
The former was for sure a difficult challenge, as the whole meaning of sustainability was also mutating as a result of an evolving, knowledge economy, a changing technological field, and the disparity of realities across the globe. We assumed that our approaches must also consider this complexity by being open to diverse points of view, without prejudgments or the pretension of finding a one-fits-all definitive formula. We then started a process of research and experimentation,
Word from Telecentre.org |
looking at different contexts and experiences, and bringing together skilled—and intellectually generous—partners with different backgrounds. Dr. Harsha Liyanage was one of them.
Interesting responses emerged from that effort in places as diverse as Sri Lanka, the USA, Chile, Brazil, Uganda, and India. We realized that sustainability models depended on context, but also on the entrepreneurial and innovative capacity of local leaders. We became inspired by the social entrepreneurship movement as well as by the emerging focus on new services to be offered at the bottom of the pyramid.
Within that framework, Dr. Liyanage started a passionate research on identifying paths, models, and successful cases of sustainability, principally within South Asia—the most vibrant scenario on this particular field—and tried to organize it in a comprehensive framework. This book is the result of that effort, which includes nearly two years of hard work, where dozens of people were interviewed and experiences scrutinized. Nevertheless, it is - as any possible research on this field would be - a work in progress.
It is also the proof of how the telecentre movement is learning how to build together a better future for itself and for the millions of people it serves in a changing era.
Florencio Ceballos Program Manager telecentre.org, IDRC / CRDI
Acknowledgements Sustainability First is a product of a long journey, across four continents, over a two-year period. Two interesting incidents mark the birth of this journey. One was a dinner table at Gallery Café in Colombo, Sri Lanka, and the other was a train journey from Ottawa to Toronto, Canada. The individual who sat in front of me at both occasions was Mark Surman, whom I gratefully recall for his vision, energy, and convincing power that formed the foundation to undertake this project.
Dr. Richard Fuchs is the next most important individual, who made important decisions to accommodate me as a Visiting Fellow at the International Development Research Centre (IDRC) - the very unique organization whose staff I appreciate mostly for investing in individuals like me to experiment, learn, and contribute to the world. I remember gratefully the contributions of Florencio Ceballos and the lovely team at telecentre.org for providing me leadership, logistics, and warm friendship at every turn of the research.
I am ever grateful to the five organizations—ATN of Brazil, Drishtee of India, Grameenphone CIC of Bangladesh, D.Net of Bangladesh, and Sarvodaya-Fusion of Sri Lanka—for allowing me to carry out in-depth studies into often sensitive institutional data. José Avando and Fernando Portella of ATN, Satyan Mishra and Swapna Mishra of Drishtee, A.M.M Yahya and Sultanur A.H.M. Reza of Grameenphone CIC, Dr. Ananya Raihan and Mahmud Hasan of D.Net, and Isura Silva and Ravindra Ariyawickrama of Sarvodaya-Fusion were key individuals of the respective organizations who have devoted their precious time to answer lengthy interviews, and who subsequently directed me to the important sources to carry out further studies. It was a great opportunity to witness the tireless
contributions of these individual leaders to their respective organizations, and I was fortunate to enjoy their warm-hearted hospitality, friendship, and humanity that helped to shape the content of the research.
Although I cannot list the enormous number of telecentre leaders whom I met all across Africa, Latin America, Asia, and North America, I recall them with utmost respect. Their passion and contributions articulate the content of this book. I remember friends of UgaBYTES and other telecentre leaders in Africa fondly, though I was not fortunate enough to capture much depth in that territory.
During the articulation of academic thinking, a few individuals and organizations contributed immensely. Professor Michael Clarke of IDRC, Canada, the research team at LIRNEasia, Sri Lanka, and Akhtar Badshah, and the research team at Microsoft Unlimited Potential Group, Seattle, are all remembered for their intellectual contributions at various occasions. Loic Comolli and Eva Varga of Nonprofit Enterprise and Self-sustainability Team (NESsT) are remembered with gratitude for their open-hearted contributions at formulating case study models. I am grateful for NESsT for sharing their survey formats to carry out case study interviews. More importantly, Karishma Kiri of Microsoft Unlimited Potential Group, Frank Tulus of telecentre.org, Helani Galpaya of LIRNEasia, and Ravi Gupta of CSDMS, all have my grateful appreciation for their contributions. Their reviews have helped me a great deal to fine-tune the final write-up. I also fondly remember Dr. Abhaya Induruwa of Canterbury Christ Church University, UK, for helping me at formulating research methodology.
Contributions of John Zoltner and Christine Prefontaine are remembered with great affection and gratitude. John has done tremendous work as an English language editor and I am thankful for his critique of the book. I am also grateful to Prasantha Dematage, Shorab Kareem, and the team of Mudra, Sri Lanka, for contributing their wonderful design skills, which have enhanced the attraction of the book.
If there is pain associated with continuous global travel, while adding endless carbon miles, there was a team who shared that pain with me, who wrote letters to me, and tolerated my lengthy absence. My loving wife, Anandika, and three lovely daughters, Devni, Savani, and Asini were the victims of those lengthy stretches of my absence. My heart goes to each of them in appreciation of their tolerance.
It is always wonderful to see the end of seemingly never-ending research work and book writing. It is almost impossible to note all the names of wonderful human beings who had immensely contributed to this endeavor. Telecentre operators, taxi drivers, rickshaw riders, village leaders, and poor mothers and fathers who shared a moment to tell their storyâ€”I salute them all at this moment of ending this journey.
Harsha Liyanage, Managing Director (Honorary), Sarvodaya-Fusion April, 2009
Preface – Sustaining Telecentres in Development Landscape |
Preface Sustaining telecentres in development Landscape The last 20 years have seen a great deal of excitement about computers and the Internet. Governments, businesses, consumers, and the media around the world have spent huge amounts of time, money, and words heralding a shiny, networked future full of nifty gadgets. In the context of emerging economies, this shiny future is more often than not linked with jobs, prosperity, and development.
While much of this is hype, there are actually very good reasons for our love affair with computers and the Internet. They are flexible, general-purpose tools that people can use in any way that their imaginations fancy. As such, they are—or at least can be—what Canadian pacifist and thinker Ursula Franklin calls “holistic technologies”: open-ended systems that lend themselves to human creativity, innovation, and generativity. It is these properties that have allowed people with little power and few resources to use computers and the Internet in surprising ways to create wealth, topple governments, and change the ways in which we communicate as human beings. This potential for generativity and innovation is at the root of our love affair.
It is exactly in this context that telecentres emerged. They came from the idea that computers and the Internet are raw material for innovation, and the instinct that people would learn, invent, hack, and generally improve their lives if given access to these tools. This isn’t to say that the government and foundation bureaucrats who have funded large telecentre programs were thinking
Preface â€“ Sustaining Telecentres in Development Landscape | 10
this way. In fact, these people more often than not brought rigid, over-engineered ideas along with their telecentre projects. However, if you talk to the pioneers and entrepreneurs, it was exactly this spirit of generativity and innovation that has fueled them. They have always seen telecentres as a way for people to enter the knowledge society creatively, and on their own terms.
Despite a great deal of skepticism, telecentres have in many ways lived up to this promise. Local entrepreneurs, activists, and community animators around the world have slowlyâ€”and sometimes in bumbling and painful waysâ€”evolved the telecentre into something very much like a computer itself: a general-purpose tool that people can shape into whatever they need. Some people use these tools to sell their crops at better prices so they can remain in the village. Others use them to learn the skills that will get them a job in the city. And still others use them to express their ideas and make their voices heard. The point is this: People have found ways to use telecentres to make their lives better.
With well over ten years of telecentre history behind us, the challenge is now one of sustainability. This is partly about the social and financial sustainability of individual centers at the local level. The people running centers need to find ways to engage and excite their neighbors. They also need to generate income - or motivate others for outside support - to keep the doors open and the Internet connection running. In more cases than not, this kind of sustainability is near at hand. And, where it is not, centers will close, which is natural and fine.
The deeper challenge is one of continued innovation and creativity. Telecentres need to continue to evolve with the cultures, economies, and technologies that surround them. They need to find useful ways to weave themselves into a world connected by mobile phones. They need to invent new social enterprise models that balance mission and market. And, most importantly, they need to give regular users free reign to evolve, improve, and invent the products and services offered through the telecentres. It is sustained innovation that will keep telecentre alive and vibrant.
Preface – Sustaining Telecentres in Development Landscape | 11
The path to this kind of sustainability is most likely through telecentre networks. When they work, telecentre networks are like peripheral vision: they provide a way for people who run telecentres to see what’s going on in other places. This, in turn, makes it possible for innovative ideas about products, services, management, community, and technology to move quickly from place to place. There may not yet be many telecentre networks that are succeeding in this role of being “innovation channels,” but such networks are certainly possible, and needed.
Leaning into the future, there is no question that we will see successful and sustainable telecentres. They will certainly not be the large, expensive telecentres that first emerged in the late 1990s. They likely won’t even look like the telehuts, kiosks, or village information centers of today. Just like situations where computers and the Internet are the fuel, telecentres will create new ideas from anywhere and everywhere, and become what the people who run and use them want them to be. That is the essence of sustainability.
Mark Surman Executive Director Mozilla Foundation, USA April 2009
Introduction | 12
Introduction “Imagine a rural village, where women flock around the public water tap to collect the trickling daily water ration, children run to the public school held under a tree canopy, and youth acquire vocational skills by pulling a cart alongside their father’s while they remain hopeful that tomorrow will somehow be different. Despite the gravel roads and broken lampposts, their aspirations remain set on the hope for economic prosperity. The nearest telecentre to their village is a magical place that nurtures this hope and keeps it alive. Computers are fashionable and the internet is powerful.”
As “shared-access facilities,” telecentres provide Information and Communication Technology (ICT) access to disadvantaged communities that can hardly afford access otherwise. Often known by different names, such as kiosks, telehuts, community multimedia centers, or rural knowledge centers, telecentres exist in almost every country in the world. Equipped with basic ICT equipment, such as computers, printers, and photocopiers, and often with an Internet connection, these shared-access facilities have a common objective, which is to facilitate the development of local, disadvantaged communities. People access these fee-based or free-of-charge facilities for learning, communication, or business purposes.
The concept of shared-access facilities took shape in the “telecottage” or “community technology center” movement in Europe, Canada, and the US in the 1980s. Aiming to bridge the emerging digital divide, during the 1990s, telecentres were started as pilot experiments in developing countries, mostly carried out by civil society organizations with the support of donor agencies.
Introduction | 13
Focusing on disadvantaged communities (i.e. bottom of the pyramid) as the primary target group, these telecentres aimed to facilitate community development above all else. Thus, the initial models were mostly service delivery channels providing ICT services to communities that were being supported by donor agencies, charities, or public institutions. During this period of telecentre evolution, attention was mostly focused on recognizing appropriate models to install the handle-with-care equipment (such as computers) in harsh, low-infrastructure, unskilled, rural environments.
Towards the mid-2000s, such pilots had expanded, diversified, or been scaled-up to national networks in multiple countries, including Sri Lanka, Brazil, and India, among others. The intervention of national governments, the corporate sector, and academic institutions contributed to such expansions. Such progress has been linked to new terms, such as “telecentre 2.0,” “telecentre ecosystem,” and “telecentre movement,” which are associated with up to thousands of telecentres working as a network under different partnership arrangements. By 2007, telecentre.org had suggested that there were over 60,000 telecentres functioning worldwide, of which approximately 35,000 were being installed in Latin America.
The growth of telecentres and their associated networks triggered alarms about their long-term economic sustenance. How can telecentres be sustained beyond their initial funding cycles? Are these cost-intensive facilities viable in the poverty-ridden environments? What are the appropriate business models?
Another parallel development in this new era (in early 2000) was marked by the emergence of a new profit-seeking ICT for development (ICT4D) “industry,” which tended to collaborate with public or nonprofit partners, but engaged the private sector as the driving force.
The primary drive behind this new industry is the untapped potential market within “bottom of
Introduction | 14
the pyramid” communities. Major players in the ICT industry, including Microsoft Corporation, and chipmakers Intel and AMD, have recognized the bottom of the pyramid as a major target market segment, and have started conducting market research on this segment, building diverse philanthropic programs, and creating alliances with civil society organizations and national governments around the world. Microsoft’s Unlimited Potential (Microsoft UP) project, Intel’s leadership of the United Nations Global Alliance for Information and Communication Technologies and Development (GAID), and AMDs 50x50 initiative are just a few examples by major technology companies aimed at addressing “bottom of the pyramid” markets through socially responsible business efforts.
The Microsoft UP program, along with two well-known development institutions—the International Development Research Centre (IDRC) of Canada, and the Swedish Development Corporation (SDC)—were the founding partners that established telecentre.org, the sponsor of this book. Telecentre.org is a global community of people and organizations committed to increasing the social and economic impact of grassroots telecentres. The program is based at IDRC, but operates throughout the world. The organization provides the resources that telecentres need to succeed: locally relevant content and services, support and learning opportunities, and networks that help telecentre activists connect to each other. This book is an example of the extensive work telecentre.org is supporting in order to uncover and study field practices that work (or fail) to make telecentres more effective and sustainable.
The emergence of the ICT4D industry is marked by another development that involved corporate partners in country-level initiatives. Between 2002 and 2005, Drishtee, Nlogue, eChoupal of India, and Grameenphone Bangladesh, invested in telecentre models with the objective of earning profits by targeting “bottom of the pyramid” communities. Civil society organizations, such as Sarvodaya of Sri Lanka, Development Alternatives of India, and D.Net of Bangladesh made similar efforts with the same target communities, yet these efforts were organized as nonprofit social enterprises.
Introduction | 15
Sustainability First is a research project carried out to capture the key sustainability lessons emerging from this mix of dynamic and evolving efforts, which is unique due to the involvement of such varied participants, which include grassroots leaders, corporate executives, bureaucrats, and politicians. Although the word â€œsustainabilityâ€? implies broader social, cultural, political, and environmental aspects, the attention of the current research was focused mainly on economic sustainability. The research was carried out over nearly two years, beginning in January 2007, and involved a deeper cross-section of the telecentre ecosystem, which started with telecentre operators from individual telecentres in South Asia, Africa, and South America and extended through the senior managers of selected corporate, civil society, and government institutions in Brazil, India, Bangladesh and Sri Lanka.
Although this book derives its main lessons from five key case studies, which feature ATN (Brazil), Grameenphone CIC (Bangladesh), D.Net (Bangladesh), Drishtee (India) and Sarvodaya-Fusion (Sri Lanka), the overall content of the book was not limited to those lessons, but was derived from the broader spectrum of telecentre experiences studied in Africa, Asia, and South America. This book attempts to capture the rich lessons of that relatively complex larger research study in order to uncover the key constraining factors that work against telecentre sustainability, and then to derive key strategies for success from selected telecentre networks.
This book has been organized and written to appeal to a diverse group of readers; thus, it does not follow a traditional research style. The target audience includes telecentre activists, ICT for development project designers, government policymakers, academic researchers, and the staffs of civil society organizations and donor agencies. Above all, the book may provide a background on the innovative methods being used by social entrepreneurs around the world to support telecentres.
The first chapter presents the underlying social, economic, and institutional constraints that work against the economic sustainability of telecentres. The content of the chapter is derived from the overview gathered from scoping study carried out with multiple telecentre networks.
Introduction | 16
The second chapter presents the best practices by the sustainability champions. While the chapter derives most of its content from the five case studies, it showcases some positive sustainability efforts by a variety of additional organizations as well. These two chapters were organized and presented so that they may provide a basic picture into the factors that affect telecentre sustainability, both negatively and positively.
Chapter three contains the in-depth case studies for five key organizations. The cases present organizational background, key lessons learned, business model innovations, financial performance, and human resource aspects in great detail.
Chapter four provides an analysis of the five case studies. This chapter discusses the scale, stability, strategy, and profitability of the five organizations, while scrutinizing their business models to demonstrate how each organizationâ€™s experience can contribute to the sustainability of other telecentres and telecentre networks.
Research Methodology | 17
Research Methodology Telecentre sustainability is a broad and complex topic, echoed throughout the history of the evolution of telecentres, beginning in the 1980s (Fillip & Foote, 2007). It is important to note that, although the word “sustainability” is often used as a synonym for an organization’s financial ability to continue operations, it should include the social, cultural, political, technical (Stoll, 2003) and environmental dimensions that support—or work against—an organization’s ability to survive (Fillip & Foot, 2007). The research featured in this book, however, was motivated by plight of the telecentre operators around the world who have complained of their inability to generate sufficient revenue to cover their expenses. The telecentre sector has been evolving from telecentre pilots to telecentre networks—often referred to as telecentre 2.0 (Harris, 2007). A diverse set of ownership models has emerged, that includes entrepreneurs, community-based organizations, religious organizations, and state bodies (Proenza, 2008). They are organized through a variety of operational models, such as public access service providers, private enterprises, and social enterprises (Fillip & Foot, 2007), and are reported to stimulate desired outcomes, such as developing human skills, social capital, and knowledge capital (Kapadia, 2005; Heeks & Molla, 2009). Nevertheless, they are often associated with undesired outcomes as well. Socio-anthropological aspects, such as gender, cast, ethnicity, and religion, at times tend to downplay the desired degree of community engagement with telecentres in rural, poor communities (Raihan, 2007; Atukorala, 2007). Telecentres are in operation, more often, with a development objective (Gomez & Hunt, 1999; Heeks & Molla, 2009) in rural and grassroots settings in developing countries (Proenza, 2001). Research studies conducted in pro-poor development context is complex, due to vulnerabilities that the people are exposed to, in an environment where livelihood resources are scarce, and which also plagued by less-developed policy strategies and weak institutional structures (DFID, 1999; Heeks & Molla, 2009). Understanding telecentre sustainability in such a dynamic, diverse context presents a complex and subtle challenge.
Research Methodology | 18
This research was commissioned by telecentre.org, a program of the International Development Research Centre (IDRC) dedicated to promoting telecentre innovation, effectiveness, and sustainability. The underlying objective of telecentre.org’s work is to recognize and address the factors that constrain telecentre sustainability, while highlighting the key elements that telecentre sustainability champions have mastered. As with any research, there are certain restrictions associated with this investigation, including both the limited availability of resources to visit and interview partner telecentre networks and the limited availability of those networks to participate in the research being conducted.
Research Framework and Strategy With the key objective being “exploratory” research (Ryan, 2005) to surface the complex reasons and emerging patterns of the telecentre sustainability question, qualitative research models were chosen as the main methodology, supplemented with limited quantitative research (Ryan, 2005, Denscombe, 2007). Thus, more attention was paid to the breadth than the depth of the issues. The case study method enables the researcher to employ a flexible set of investigative tools, depending on the circumstances (geographical, institutional) and specific needs of the situation (Ryan, 2005), resulting in a book more likely to be useful to the telecentre practitioners and advocates that make up the core of telecentre.org’s family of stakeholders, which is the major target group of this book. Martyn Denscombe (2007), in “The good research guide, for small-scale social research projects,” explains that primary case study research focuses on: •
Depth, rather than breadth, of the material studied
Relationships and processes, rather than end products and outcomes
A holistic view, rather than isolated factors
Natural settings (explaining the complexities and subtleties present in real life situations), rather than artificial situations
Multiple sources, rather than one research method (to capture the complexities of reality)
Research Methodology | 19
The literature survey was carried out to study the existing knowledge about the telecentre sustainability and to identify the telecentre operations where reasonable sophistication and experiences are present (representing the multiple regions of Asia, Africa, and Latin America). Findings had been verified with the team of telecentre.org who has been supporting 13 telecentre networks (globally) at the time of research planning. Accordingly, the research was carried out at two stages, initial scoping study and subsequent in-depth case studies. a). Scoping study; this study was carried out with telecenter networks in Asia, Africa, and Latin America. The objective was to gather an overview of the constraining factors of telecentre sustainability. Empirical observations were made by visiting the telecentre facilities (five to ten telecentres per country) in Benin, Bangladesh, Brazil, Chile, India, and Sri Lanka. Semi-structured interviews were carried out one-to-one with the telecentre operators, and group interviews with the telecentre users. Seven to ten participants were in each group. Documentary evidence, such as financial records, progress reports, published news material, and image records (photographs) were studied to gather additional data. Additionally, third party accounts (anecdotal) were utilized to validate the evidence. b). In-depth case studies were carried out with selected sustainability champions to identify the models they adapted to overcome those constraints. For the in-depth studies, five network champions were selected using the attributes given below: •
Potential replicability of the projects studied
Presence of credible economic practices
Presence of social enterprise characteristics
Scale of operation and/or potential for further scalability (if not scaled up).
Six network organizations out of 13 were initially qualified. One was subsequently disqualified during the detailed due diligence process; thus, five were eventually selected for the research. In-depth studies were carried out regarding their operational sustainability. One-to-one, semistructured interviews were conducted with senior executives, which helped to access the “privileged information.” Furthermore, semi-structured group interviews were conducted with junior staff.
Research Methodology | 20
Written questionnaires used for the interviews were developed with the support of the Nonprofit Enterprise and Self-sustainability Team (NESsT), a non-profit consulting group with twelve years of experience in supporting social enterprises that strengthen civil society organizations’ financial sustainability (NESsT, 2008). The interviews had investigated into organizational information, financial information, and challenges confronted with respect to social enterprising, legal aspects and impact.
One case study - Sarvodaya-Fusion - involved a detailed analysis of the 24-month ongoing organizational transformation from a donor-dependent organization to a revenue-generating social enterprise. Following this unique evolutionary process required regular, close observations over a lengthy period of time. “Participant Observation” (Denscombe, 2007) was adopted to document the change. It should be noted that the researcher is an honorary (unpaid) administrator of the organization, and, therefore, had first-hand experience of the organizational restructuring process as well as access to privileged information that would otherwise be difficult to obtain. In order to minimize any potential personal bias, the researcher employed “Documentary Data Analysis” (Denscombe, 2007) to establish research findings in an objective way, utilizing other research publications, audited financial documents, donor progress reports, and printed as well as online publications.
For all five case studies data triangulation was carried out with quantitative investigations and additional secondary interviews. Organizational annual reports, audited financial reports and progress reports were the resources for quantitative investigations. Secondary interviews were carried out with five telecentres that had been operated under each case study organization. Face-to-face, semi-structured interviews were conducted with telecentre owners and operators. Questions were designed to study the ownership, governance, initial investments, products and services, promotions, user patterns, business plans, pricing structures, and revenues. Additionally, financial and user records were extracted from their financial accounts and log books.
Research Methodology | 21
Table 1: Criteria-based Selection of Case Study Institutions Organization Study details
Features & attributes
Case study carried out in May 2008
South American state-driven initiative, building multi-
with in-depth interviews with the
ple partnerships to support telecentre sustainability.
director general and two other di-
rectors, interviews with five telecenter operators, and two partner
Uniqueness: partnership models to achieve telecentre sustainability
Replicability: replicable for most national or state-driven initiatives
Credible economic practices present
Social enterprise characteristics present
Scale: national scale operation
Case study carried out in May 2007
South Asian, non-governmental research initiative,
with in-depth interviews with ex-
capitalizing on knowledge services and products to be
ecutive director, finance director
offered through telecentres.
and other senior members. Inter-
views with five telecentre staff, and one partner institution.
Uniqueness: innovative “knowledge for development” application as a social enterprise
Replicability: some components replicable
Credible economic practices present
Social enterprise characteristics present.
Scale: national scale operation
Case study carried out in May
South Asian, corporate organization, corporate social
2007 with in-depth interviews
responsibility (CSR) initiative implemented through
with director and two other sen-
ior members. Interviews with five
telecenter operators, and one partner institution.
Replicability: replicable for multiple contexts
Credible economic practices present
Social enterprise characteristics present
Scale: national scale operation
Research Methodology | 22
Case study carried out in July
South Asian, corporate initiative with strong commit-
2007 with in-depth interviews
ment to building telecentres in “bottom of the pyra-
with co-founder / director, and
one senior manager, preceded by
field visits to five telecenters in
Uniqueness: innovative “services and products” based on sustainability model
2006. Interviews also carried out
Replicability: replicable for multiple contexts
with one competitor institution.
Credible economic practices present
Social enterprise characteristics present.
Scale: multiple-state operation
Continuous in-depth observations
South Asian, national NGO initiative, which has evolved
carried out from December 2006
from donor dependence to a social enterprise.
to October 2008, with six field vis-
its, interviews with a manager and
Uniqueness: Social enterprise evolution from a donor dependant NGO
two senior staff, five field staff,
Replicability: replicable to NGO context
and ten telecentre operators.
Credible economic practices present
Social enterprise characteristics present.
Scale: national-scale operation
Validation exercises Data were validated through field verifications, interviews with third parties and competitors, and published documents, including annual reports, and printed and online publications. Financial data were verified using published annual records, audited accounts, and privileged information. Beginning in December 2006, when the research was conceived, and continuing through the publication date, research data and interpretations were periodically presented to telecentre practitioners, policymakers, and donors for their input and critiques, in order to establish the validity, reliability, and objectivity of the overall research. At the beginning, the research concept was presented and tested in a participatory workgroup called the Telecentre Leaders Forum, sponsored by telecentre.org in Benin, West Africa (December 2006). Since July 2007, research findings were
Research Methodology | 23
shared through a monthly online newsletter (seven issues from July 2007 to April 2008), which was circulated to 180 selected global telecentre practitioners representing multiple stakeholders in the telecentre sector. Another online discussion took place in November 2007 through Uganda’s UgaBYTES online telecentre support network, where about 600 telecentre activists, mostly representing Africa and South Asia, are active.
With the objective of further establishing factual accuracy, “respondent validation” (Denscombe, 2007) was carried out by presenting the data and findings to multiple telecentre stakeholders at three international gatherings: 1) the international conference sessions at eIndia, Delhi, India (2007) 2) telecentre.org’s Telecentre Leaders Forum in Malaysia (2007) 3) “Global Knowledge Conference 3” (GK3) in Malaysia (2007)
A colloquium was also organized to share the findings with the research team of LIRNEasia, Sri Lanka in 2008 and a subsequent presentation was made to the research group at Microsoft’s Unlimited Potential, Seattle, USA (2008) to further refine the research insights of the overall research documented in the book.
Table 2: Validation exercises carried out at multiple stages of the research Event
Participatory workshop with
(Africa and South Asia)
local telecentre leaders to
Forum, telecentre. orgcentre.org,
test the initial research con-
cept and gather insights
Presentation, IDRC, Canada
telecentre.org team at IDRC
Presentation of the initial research concept and plan to telecentre.org team
Research Methodology | 24
Broader forum of telecentre
Presentation of the interim re-
and ICT4D experts, activists,
search findings for validation
academics, and telecentre
of research methodology, anal-
ysis and data interpretations
Global telecentre leaders rep-
Participatory discussions about
resenting Africa, Asia, South
the research findings in order to
America, and Europe
validate the data interpretations and the relevance of findings to the local telecentre leaders
Presentation of the research
findings to the global audi-
of telecentre and ICT4D ex-
ence in order to validate data
perts, telecentre sustainabil-
analysis and interpretations.
Conference 3 (GK3),
ity champions, academics, and telecentre leaders
Researchers at LIRNEasia
Presentation of the research methodology,
sia, Sri Lanka
findings to deepen research Presentation at Microsoft Unlimited Potential, Seattle, USA
Research team at Microsoft UP
insights, refine analysis, and interpretations
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The Sustainability Dreamâ€Ś Why is it unsustainable?
Community development is not about technology but about people. It is more than double clicking and fiddling with a remote control. It is about improving the quality of life, adding an extra slice of bread on the table. Damas Ogwe, Ugabytes Online discussion on telecentre sustainability, 25/10/2007
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Box : 7 Mapping the reasons for telecentre non-sustainability
Non-conducive Policy reasons
national policy environment
Legal systems not supportive
Deficiencies in management systems
at bottom of the
Scarcity of value - added products/ services
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Box 1.2: A day at an (economically unsustainable one) telecentre Date: 15 July, 2007 Place: Telecentre, Shelabunia, Bangladesh. Background: Two years into operation. Owned by an NGO founded by a wealthy family, which continues to support the telecentre. Management: one operator, one extension staff (Mobile Lady) supported by D.Net, Bangladesh. Average number of visitors to the telecentre (reported by operator) : 10 - 25 people / day Visitor record for the day: Only four people arrived: 1. Student: browsed Internet to search university addresses and visa application procedures 2. Woman: requested legal advice from help desk 3. Fish farmer: accessed databases to search for recommended treatments for his fishery problems 4. Fish farmer: requested support to find treatment for dying fish. Help desk first prescribed some medicines that were not locally available and then helped the farmer to locate the medicine. Revenue: The telecenter earned only US $0.3 (Taka 20) for the day, though their earnings target is US $2 – 3 (Taka 150 – 200) per day. Telecentre Income / expenditure records from September 2006 – March 2007 Month September,2006 October,2006 November,2006 December,2006 January, 2007 February*,2006 March,2006
Profit / loss
* In February, additional income reported US$ 146 (Taka 10,000) & expenditure US$ 87.6 (Taka 6,000) from computer training classes. Accumulated loss over 7 months –US4 193 (Taka 13,242) (Note: 1 Taka = US$ 0.0146)
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Time: November 2006, Benin, West Africa Place: Center Songhai Farm & Training Facility Event: East Africa Telecentre Forum
Alan Gunnar, the event-facilitator, started drawing a straight white line on the uneven cement floor, symmetrically dividing the huge circle of 90 Pan African telecentre leaders participating in a three-day telecentre leaders forum. The event started with Alan’s spectrogram exercise.
“We need your opinion for one more question.”
Alan eloquently presents the next question.
“African telecentres must embrace entrepreneurship to survive.”
He repeats the statement. “If you agree, please line up at the ‘Yes’ sign posted at the left corner of the room; otherwise, queue up at the ‘No’ sign posted at the right corner. Please express your opinions by standing on either side of the spectrum – yes side or no side.”
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Eighty-seven (87) participants flocked to the “Yes” corner, making the three at “No” sign post look very lonely.
“We all agree – we must embrace entrepreneurship!”
Later in the day, 12 participants chose telecentre sustainability for their “break-out” theme discussion. The resulting brainstorming session caused a particular outbreak of emotion and frustration by participants, yet scattered ideas filled the white flip-chart sheet:
“What would sustainability look like?”
“My telecentre is serving hundreds of poor people. Am I sustainable?”
“Sustainability means living beyond the donor cycle!”
“We charge a reasonable fee for services. But our budget doesn’t add up at the end of the day!”
“Business plan. How do we create one? We are not business people.”
“We are socially responsible operations. Should we follow the same models of for-profits?”
“How do we ensure a social mission while introducing economic priorities?”
After 90 minutes of brainstorming and debate, as his peers nodded their approval, one telecentre leader summed up the common concern: “We all have the desire to become sustainable. But none of us has a good visual picture of what sustainability looks like or how to build that picture.”
Key learning: Despite their intense interest, not many telecentre operators had a clear idea what exactly they meant by sustainability. In the meantime, some had a false complacency that they are already sustainable.
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Competition Sao SabastiĂŁo is a satellite town located a few miles from Brazilâ€™s capital. Seeing Brasiliaâ€™s fascinating skyline in the distance is always inspirational to the 135,000 people of this small town. Four telecentres in the township provide services to residents of the low-income communities earning less than US $600 a month, who compose 80 percent of the population.
Mara (Maria dos Reis Pereira de Souza), elected president of the Low Income Workers Association (LIWA), a small community-based organization, runs one of the telecentres as a community development project to serve the poor. Her major challenge is sustaining the ten computers and other equipment provided by the Ministry of Industry and Foreign Trade. They offer IT Courses in basic MS Office at a marginal price of US $6.30 per month for a three-month course, and generate a total of about US $462 (R $1100) per month to barely cover the utility bills and staff salaries, which add up to US $464 (R $1105) a month.
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“We have a constant pressure from Cybercafes in the area. They complain that our services are cheap and not legitimate. We got only one software license to offer at all 10 computers. Unfortunately, we cannot afford to pay more “
“We have constant pressure from cybercafés in the area. They complain that our services are cheap and not legitimate. We have only one software license for ten computers. Unfortunately, we cannot afford to pay for more.” Mara’s voice is commanding, though her eyes and cheeky smile imply fear and guilt.
There are 15 cybercafés in the area. Though the cybercafés do not offer IT courses, they are very attractive to youth, whose primary interests include playing games and using Internet-based social networking tools. Mara recognizes the potential of IT skills courses to attract more customers to her telecentre, but she feels constrained from openly promoting telecentre services due to competitor pressure.
Key learning: Vey often, telecentres are not operating in isolation, and operators are exposed to a reasonable degree of competition from the open market place. Their competitors can be a cybercafé, communication center, or another telecentre operating in a nearby town. Action towards economic sustainability often triggers intense competitor tactics.
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Box 1.3: Income/expenditure assessment of 15 telecentres. Following is a monthly income / expenditure assessment carried out during a workshop for 15 Sri Lankan telecentre operators. These telecentres were located in four districts, and were funded by a donor project as part of reconstruction efforts after a tsunami disaster in December 2004. The first ever cost analysis done with the team revealed the significant deficit that they were accumulating over the operation, which was expected to be sustainable after a two-year funding cycle.
(Source: Business plan development workshop by Telecentre Family, March 2008 TCF project reports, Sarvodaya, Sri Lanka) (Note: 1SLRS = 0.0087 US$)
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Lesser Prospects at Bottom of the Pyramid In Godakawela, Sri Lanka, Janith Jeewanda is a 19-year-old boy, in a community with an average income of less than US $2 a day. An early childhood polio victim, he impatiently waits in his wheelchair until his parents call a tuk-tuk (taxi) to carry him to the telecentre located several miles away. With every visit, Janith comes closer to his dream - an ICT carrier that can bypass his immobility. Back in the telecentre, W.A.M.K. Priyangani, the passionate telecentre owner, recognizes Janith’s ambition and, knowing the financial hardships of the family, provides his telecentre services to the young man free of charge. Janith takes full advantage of Mrs. Priyangani’s generosity. During every visit, he occupies one of the telecentre’s four computers for a minimum of two hours of its marketable time slots. A few miles away, in Thimbolketiya, Godakawela, Viraj Thushara Ekanayake and Deepika Ekanayake, a brother and sister team, run another telecentre at the Walawa Junction, a transit town to the popular, wild elephant tourist attraction at the Uda-walawa Sanctuary. “Computer education is
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part of the curriculum, and students are highly motivated to study. But the local school does not have the facilities to accommodate the computers. And the families cannot afford to pay. But, we try to allocate at least few hours to the students, free of charge, every day.” – Viraj Ekanayake.
In Shelabunia, Bangladesh, Nayan Mondal—popularly known as Mobile Lady—begins the day at 8:30 a.m. visiting the Shelabunia Polithathya Kendra (telecentre). Mobile Lady checks the latest news updates from the help desk maintained by D.Net at Dhaka, 370 kilometers away; then she starts her routine journey, peddling the bike through rugged terrain to sell uniquely mobile services. On demand, she measures the water pH of a shrimp pond (farm) and connects the farmer with the help desk through her mobile phone to sort appropriate water treatments. Services are fee-based.
She is given a monthly target of connecting 75 villagers with the help desk, which she meets without a problem. Every day, Mobile Lady travels a distance of between five to seven kilometers as she moves from village to village. Yet, on average, she meets only four clients.
“The demand is relatively high, but not everybody can afford to pay for the services,” Nayan admits.
Key learning: Telecenters operating in a rural environment with high incidences of poverty are exposed to a complex set of problems. They are constrained by limited resources (e.g. natural, financial), possess limited assets (e.g. homeless), exposed to shocks (e.g. drought), often living in no- infrastructure environments (e.g. no roads and electricity). Telecentre operators have to make to emotionally demanding judgments and struggle to design business models.
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Scarcity of Value-added Products and Services Every day, 18-year-old Prayagraj Chauhan of Taricher, a small village in the Tikamgarh district in Madhya Pradesh, India, walks several miles along dusty roads, under the burning sun to meet villagers. As the promotional assistant for the village telecentre, his goal is to cover the daily target of selling the telecentre services to at least six people.
The handful of posters and printed material that he carries with him help to illustrate the services and their benefits to the villagers, most of who are illiterate. Prayagraj’s shrewd eyes always remain watchful to gauge the potential for marketing his service to every individual he comes across. He strikes up a conversation with villagers effortlessly and is quick to understand their needs. Prayagraj is a walking promoter of TARAhaat, a telecentre network created by Development Alternatives in India that primarily offers vocational training programs for rural youth. His primary responsibility is to meet people face-to-face and explain the services available to them in the telecentre in order to convince them to visit the center.
“It is not that difficult to grab the attention of people. Every person I meet gets excited when I say ICTs. But I feel a bit uncomfortable at times, especially, when farmers, artisans, and women ask what I can offer specifically for them at my telecentre.”
He tries to emphasize the fact that the portfolio of services that are being offered are not broad enough to meet the diverse needs of many clients. Key learning: The rural population is composed of all age groups, ethnic and religious groups, and diverse occupations. Most of them are illiterate or not sufficiently educated. The ICT demands and expectations of such a diverse community are broad, where telecentre operations are not equipped with sufficient products and services to match the demands.
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Box 1.4: A bitter experience providing value-added services via telecentres In mid 2006, Sarvodaya-Fusion had started experimenting with Business Process Outsourcing (BPO) as a new value-added service to be introduced at telecentres. The plan was to help telecentres offer BPO services to businesses in order to provide opportunities to local residents. Telecentres would therefore be able to: a) provide micro-enterprises to their local communities, and b) raise additional revenue to support telecentreâ€™s operational costs.
With a very limited track record of BPO in Sri Lanka, the project has been considered a high-risk pilot. To mitigate this risk, Fusion partnered with a corporate sector partner (CSM Pvt. Ltd.), which screened potential BPO service providers and negotiated on Fusionâ€™s behalf.
The first step was a three-month pilot test involving three telecentres. The objectives of this step were to determine the feasibility of BPO operations at telecentres and to identify the appropriate business model.
The first two months of the pilot generated encouraging results. With the help of CSM, Fusion was able to identify and negotiate contracts for the less sophisticated services sought in the BPO marketplace, such as webpage translations, the creation of Excel spreadsheets or PowerPoint presentations, etc., that its telecentre partners could perform without engaging in substantial training or other investments beforehand. More importantly, telecentre operators had embraced the provision of BPO services as a feasible way to achieve their revenue goals.
Yet, the third month ended in chaos. Telecentre operators suddenly realized they were not receiving the daily communications the BPO service provider usually sent them every morning. The BPO service provider was becoming increasingly inaccessible to the telecentres and Fusion Management. CSM, still acting as the middleman, nevertheless convinced Fusion that they were resolving these operational problems.
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Yet, one morning, Fusion was shocked to learn that the BPO service provider had disappeared into thin air. The company’s clients throughout Sri Lanka were too late to realize that the country had been cheated by a notorious fly-by-night BPO service provider. The pilot experience was very painful for the telecentre operators as well as for Fusion. The experience was particularly frustrating because much of the pilot showed that BPO through telecentres can work, providing jobs that support local economies while helping to sustain telecentres.
Blog extract from http://www.sustainabilityfirst.blogspot.com/
Leadership Deficiencies Mr. Wijewickrama, a 59-year-old retired schoolteacher is a highly respected elder in Ambaraluwa, a suburban village of 1,400 families in Gampaha District, Sri Lanka. The village library, community hall, and pre-school are a few landmarks that demonstrate his remarkable ability to drive village volunteers to mobilize resources towards village self-empowerment. A village telecentre is the latest addition to the long list of Mr. Wijewickrama’s accomplishments. By using a variety of community-based fundraising activities, the village managed to buy four refurbished computers to expand the original village information center (VIC), which was established years ago. The scaledup telecenter was a dream come true to many youth and parents who could not afford to pay private institutions for computer classes.
Yet, two years into operation, the dream seems difficult to fully materialize.
“There are about 25 youth seeking computer training, but we don’t have a teacher to train the youth. So far we have trained two village youth (as teachers), and both left the village for new
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jobs. The moment they get the training, they are attracted by outside private companies offering higher salaries. Now we are wondering whether we should train another one,” Wijewickrama says with frustration.
The telecentre is currently operated by a village committee, which is influenced and heavily guided by the charismatic leader. The majority of committee members barely know how to turn on the equipment, yet they make the majority of key day-to-day decisions regarding how the center operates. As a temporary arrangement, Miss Nelka Wijesignhe, a telecentre assistant from the Sarvodaya district telecentre, visits the village once a week to assist with training, but she struggles to cope with the village’s over-dependency on her.
“Village leaders expect the telecentre to be run by volunteers. Thus, on regular occasions, I find that new faces come and go. Two trained village youth left the place as they were not remunerated. The biggest problem is the absence of financial resources. They are not ready to charge a fee for the services. With persistent efforts, leaders agreed to charge 600Rs (US $5.20) for a student. But that is only a third of the cost.”
The village leadership has consistently fought against the idea of charging a fee for the telecentre’s services.
“Their fathers and mothers contributed to put up this building and even to buy these computers. Now . . . how can we ask them to pay fees for us to teach their own children?”
In Chile, the busy charismatic leader of the Maule Activa telecentre network, Leonel Rojas Urrutia, has a different approach to sustainability. He counts on volunteerism and partnerships, spending much of his energy encouraging them. After successful negotiations with the Chilean Ministry of Economy, seven municipalities of Chile’s Maule region and Telefónica, one of Chile’s largest Internet service providers, Maule Activa’s telecentres receive Internet access at a 40 percent discount.
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Mr. Rojas has furthermore convinced the municipalities to provide reasonably attractive locations for the telecentres, free of rent and utility charges. These negotiations have managed to effectively cut 78 percent of the financial needs of each telecentre.
“Telecentro San Rafael” is one of the centers under Mr. Rojas’s leadership. The four-computer telecentre, located in a mixed community of 6,000 people in a small village in the Maule region, is managed by a young girl. The place is busy with local children, youth, and home-bound mothers seeking Internet, printing, and photocopying services.
The young telecentre operator’s eyes grow wide, and her arms wave in the air in excitement when she speaks about the passionate service that she delivers to the community most of whom she knows personally. When questioned about her personal finances, she shrugs her hands and begins to look down, searching for answers. Telecentro San Rafael generates about US $270 a month. But her monthly salary alone is US $280.
Key learning: Community ownership is often considered as an important ownership model for telecentres. Such models are subject to decision-making processes imposed by the governing structures and leadership. More often, those leaders are not driven by economic objectives; thus, they overlook the economic realities of the telecentre operation.
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Box 1.5: Leader-centric networks; are they sustainable?
Leaders have a great deal of vision and ambition. Their vision set the path and the ambition fuels the mission, generating human and capital resources to translate that vision into action. Thus, telecentre networks, under such leadership, continue to survive.
Leaders succeed by: •
Maintaining a circle of influence within their target group
Maintaining profile and visibility within their landscape
Frequently altering their strategies to adapt with the changing environment
Always searching for emerging opportunities
Sufficient evidence could not be found to suggest that leader-centric telecentres are not sustainable. But most leader-centric organizations fail to translate in-kind resources into financial revenues that may balance the books consistently.
Another quite common characteristic observed was that they often failed to provide reasonable welfare packages to their subordinates, who agree to join the organization based on the personal charisma of the leader. That, in turn, deprives their ability to attract professional staff. (Blog extract from – http://www.sustainabilityfirst.blogspot.com)
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Ethos Digana Nenasala is located in a scenic environment, surrounded by a massive lake and neighboring green forest. The telecentre holds four computers in an attractively designed room. The occasional wind blowing from the lake carries the subtle aroma of burning incense, reminding the busy Internet surfer that he is sitting inside a Buddhist temple, though his mind is in cyberspace.
Rev. Katakumbure Dammarama, is the young, enthusiastic Buddhist monk whose interest in ICTs and passion to serve his community convinced Sri Lanka’s ICT Agency (ICTA) to provide the telecentre package. The temple’s “caretaker” committee (Dayaka Sabhawa) generated resources from the devoted local community to construct the building within the temple complex to accommodate the telecentre.
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Buddhika Adikari, a 26-year-old volunteer manager of the Nenasala, was approached by the monk. He was touched by Rev. Dammarama’s passion and also by the idea of teaching the community to use modern technology. He agreed with the monks’ offer to provide his food and lodging along with occasional fuel allowances to ride his new motor bike, to become a full-time volunteer manager at Nenasala.
About 30 youth regularly visit the telecentre. Most of them are busy downloading local music. The place has become an attraction because the center encourages them to develop their technical skills freely, through their own exploration. One youth managed to develop a local website, on his own, to further support the music interests of the group.
“The Buddhist temple is a place to donate for the benefit of other people. We consider the technology services offered in the Nenasala a technological donation to those people who hardly can afford to touch a computer. So this is a place of donations, not a place for charging fees,” Rev. Dammarama explains.
Key learning: When Telecentres operate inside another institution, such as a public institution, community development organization, or religious temple, their operations are influenced by the policy context of the mother institution. They are often exposed to a high degree of ethical concerns, and are confronted by customer expectations that can be counterproductive to economic sustainability.
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Box 1.6: Temple telecentres in Sri Lanka
In a country where 72 percent of the population is Buddhist, monks command a unique influence on politics and culture. Temples play a vital role in rural communities, as they are interwoven in the social and cultural fabric. Temples are resourced by community donations and managed by elected caretaker committees (dayaka sabha), as Buddhist monks are not supposed to handle money. Monks live as spiritual advisers.
Most temples offer schools for preschool children during weekdays, and religious schools on Sundays (known as â€œSunday schoolsâ€?). All the services are offered free of charge.
Many NGOs carry out their activities in affiliation with the temples, and maintain community libraries and community halls. The temples are regarded as regular meeting places for their target communities. Thus, the Buddhist temple has long been regarded as an effective nucleus for rural community mobilization.
The e-Sri Lanka program carried out by the government of Sri Lanka, had recognized temples as potential nuclei for technology dissemination to remote rural communities, and thus introduced a temple-based telecentre model. The model provides between two and four computers, plus Internet access to selected temples, expecting the temples to organize operations. As of mid 2008, there were 217 telecentres set up by the ICTA inside temples and other religious locations, including mosques, scattered across the country.
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Absence of Profit Motivation “100 Dimensao” of Riacho Fundo, Brasilia, is a cooperative society with 200 members. Their dedication and passion for recycling is seen all over the place, with heaps of plastic Coke bottles, metal scraps, and tin cans nicely sorted out from piles of garbage collected from nearby townships. 100 Dimensao sells about 80 tons of plastics, metal, and computer parts every month, generating about US $6,300 (R $15,000) per month, which provides an additional monthly income of US $200 to $350 (R $500 – 800) for 200 part-time workers in the low-income neighborhood.
The organization’s office complex itself is an inspiring demonstration facility to any visitor, where children can play with toys made of recycled, plastic, fizzy-drink bottles, while mothers learn paper recycling techniques. Inside the complex is a small telecentre equipped with ten Internetconnected computers.
‘Most welcoming schools were the least prospective places as the majority students were coming from poorest families. Their parents hardly can afford to pay, even if the kids were keen.’
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There are 20 students from a nearby public school being provided three hours of training per day by two volunteer instructors. Osmero Pereira, coordinator of the technology recycling project, emphasizes their criteria for selection:
â€œThe students showing the poorest performances at school are given the chance to learn ICTs together with environmental education. Most of them are not motivated for their studies due to complex reasons. But, we offer them an opportunity to learn computers and the Internet, free of charge. In exchange, they have to engage with waste collection projects and environmental campaigns.â€?
Key learning: Occasionally, the telecentres are operated as a supplementary service to support the major activities of the core organization. When the major objective is not financial, they can contradict the telecentres economic sustainability ambitions.
Poor Entrepreneurial Skills In April 2006, when the ten-year-old telecentre network of Sarvodaya-Fusion, of Sri Lanka, made the crucial decision to use social enterprise strategies as a way to reach sustainability, program manager, Ravi Ariyawickrama, accepted the challenge of developing the business plans and executing the new enterprise activities. Ravi handpicked 11 telecenters he felt were prepared to switch from the familiar free-service mode into enterprise (fee-for-service) mode and ran a participatory workshop to develop the business plans. The team recognized IT courses as the telecentresâ€™ primary service to achieve their targeted revenues.
The team used to operate in a social service delivery model to help poor rural communities. They had strong experience and skills at mobilizing poor communities, recognizing pockets of poverty, identifying community leaders, and convincing them to consider ICT as a new option.
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School children had been the primary target group for the ICT courses the organization offered. Every telecentre operator had the choice of national schools and provincial schools in the target area. Provincial schools were generally less prosperous and national schools were relatively better resourced. Operators constantly visited schools to promote the ICT courses available at their telecentres.
“Some school principals are welcoming, while most others are not when we seek permission to carry out telecentre promotion during school assemblies. Every time we were asked to carry out promotions, we would naturally tend to visit welcoming schools to carry out repetitive promotions. But, one day at a review meeting, somebody asked how many students attended the telecentre from that school. The answer was none.”
As explained by Ravi, most telecentre operators are good at promotions but fail to analyze the effectiveness of their efforts.
“Most welcoming schools were the least prospective places as the majority of their students were coming from the poorest families. Their parents could hardly afford to pay, even if the kids were keen. Sometimes poor parents were not educated enough to judge the value of the courses.”
At the end of the year, only two telecentres managed to reach 100 percent of their financial goals, while the overall performance of the network reached only 32 percent of the targeted social enterprise income.
Key learning: Telecentres are installed as donor-funded operations, with a development objective as the primary objective. Operational staff are recruited with development qualifications and often trained to deliver development services. They do not carry the required entrepreneurial skills for sales and marketing.
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Deficiencies in Institutional Management Systems JosĂŠ Avando, the Director General of ATN, spends more time traveling across the vast geography of Brazil than sitting at his office at Brasilia. He travels to visit the buzzing metropolitan areas of Sao Paulo and Rio de Janeiro to meet with senior managers of major institutions. His intensive travel for the last two years paid off with his success at negotiating eight contractual agreements with a major bank (Caixa Economica Federal), universities (University of Metropolitan Santos, University of Brazil), and corporate giants such as AMD and Microsoft. As a bureaucrat at the Ministry of Development, Industry and Foreign Trade, he also engages in negotiations with other ministries of the federal government and with local governments (e.g. the Science and Technology Ministry of Minas Gerais State).
All of these executive engagements are focused on a single task, which is to generate products and services that can support the development and sustainability of 14,000 telecentres across Brazil.
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These diverse partnerships provide multiple services via telecentres. An agreement with Caixa enables telecentres to become legitimate local bank agents to provide selected financial services. A partnership agreement with Gera Negocios enables telecentres to provide online courses. A Microsoft agreement provides 40,000 Microsoft Windows and Office 2003 licenses to telecentres. GetNET enables telecentres to sell the prepaid calling cards of four major mobile operators.
ATN manages all of these institutional partnerships, which involves organizing delivery and distribution of refurbished computers, organizing training programs, tracking business performance, and negotiating with multiple stakeholder institutions, while maintaining accountability to the 58 member organizations that comprise the governing body of ATN. To help him carry out such demanding work, Jose has only two full-time staff members and two other part-time supporters. The team agrees that they need more staff, but policymakers (the Fiscal Council and Executive Board) are not in favor of expanding the staff.
Key learning: When telecenters and network operations are funded by public institutions and donors (NGO), the administrative structures are designed for a development service operation, and are often led by governing bodies comprising a majority of professionals from non-entrepreneurial backgrounds. They overlook the required administrative changes when such networks are transformed into sustainability-oriented operations.
Planning Difficulties Winning the Global Gender and ICT Award at the World Summit on Information Society in 2005 was an exciting moment for Ananya Raihan and his D.Net team in Bangladesh. Together, they had spent a tremendous amount of energy carrying out a countrywide survey in 2004, to recognize the needs for knowledge products at grassroots level.
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Three years into operation, Dr. Ananya Raihan, Executive Director of D.Net, recalls the challenges they faced while designing their programs.
“We were keen on integrating sound sustainability models into the overall design from the beginning. Community-need surveys proved the demand for multiple components of the project - Pallitathya, help desk, knowledge databases. Yet, in the absence of models to refer to, we had to work on too many assumptions.”
Dr. Raihan emphasizes that his team’s first assumption turned out to be wrong:
“We felt the stakeholders (i.e. grassroots communities) would recognize the value of Pallitathya Kendra, and assumed there would be a quick demand, but stakeholders took too much time to recognize the value (of knowledge products).”
And the second assumption also failed.
“To design the help desk, we assumed that a corporate call-center model would work, yet later realized that ground demands were not consistent.”
“We could develop quality databases, with 30,000 web pages on nine areas of livelihood. But, in the absence of a critical mass of demand and a varying degree of ‘willingness to pay’, achieving financial sustainability remained a challenge.”
Key learning: When the network operators try to design new business models or business plans, more often than not, they have to follow trial and error models, due to the scarcity of published material on the subject. Sometimes, following corporate sector models can lead to negative outcomes.
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Seed Capital Scarcity â€œInvesting in economic sustainability requires different kinds of financial resources: quantity, diversity, flexibility and longevity.â€? Lee Davis, et al. (Non-profit Enterprise and Self-sustainability Team, 2004).
D.Net was able to take the initial step toward its social enterprise dream with its Pallitathya project, utilizing the grants it received from Global Knowledge Partnership (GKP) as a seed investment. They ran initial surveys, recognized partners and grounded the four-pilot Pallitathya Kendras with a small fund. Realizing the market potential for its services, the organization planned a detailed business strategy to develop a separate division of D.Net, called Multimedia Content Ltd. (MCCL) as social enterprise, with the objective of expanding the operation. The lack of venture capitalists or other entities to fund their model became a major hurdle.
Shilpa Sayura is another award-winning educational package, developed by eFusion with US $50,000 in grant assistance that was provided by the ICTA of Sri Lanka in 2006. The local language software package was a unique product for supporting digital self-guided learning by rural school children, bypassing the barrier of competent teacher scarcity. With the collaboration of the Ministry of Education, eight educational packages were made available for students to pilot-test at 26 telecentres and nine schools. The program won an i4D award and a GKP Stockholm Challenge Award in 2007.
After two years of dedicated efforts, Niranjan Meegammana, the founder of the program, explains, â€œThe product needs further technical improvement. Besides, if we are to offer this product to the wider telecentre market, it is essential to provide advanced training to telecentre operators. We have a small team, and it is a big task to provide training to over 500 telecentre operators and
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1,000 school labs scattered all over the country. But, we are ready to take that challenge if we can raise sufficient funds to carry out the operation.â€?
Key learning: When the telecentres and telecentre networks attempt to convert their operations into sound business models, they require flexible funding for reasonably long time frames with sufficient volumes. But, telecentre being an emerging industry, not many finance operations offer finances to the sector. On the other hand, most telecentre operators are only familiar with philanthropic funding sources; thus, they tend to overlook the corporate sector financing models.
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Sustainability: What makes it possible?
‘For a profit maximising company, the bottom line is how much money you make. But when you run a social business, it’s about (social) impact’, Muhammad Yunus, Nobel peace prize winner of 2006
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Box 2.1: Summary of the factors contributing to telecentre sustainability, as identified during the study with telecentre networks.
State lead ICT promotion
Telecentres as accepted rural outreach model
Economic visson & mission
Exploring un-tapped martket bottom of pyramid
Partnership with diverse leaders
Enabling management environment
Exploring social investors
Social enterprising the ethical answer
Focus on Systematic
services & products
Leveraging economic resources
This chapter summarizes the key learning extracted from the overall study, which illustrates the ways and means, tools, and techniques that are being applied by different telecentres and networks to achieve economic sustainability.
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Box 2.2: What does a sustainable telecentre look like? Following is a list of characteristics that are indicative of sustainable telecentres, according to the thoughts and perceptions offered by multiple stakeholders consu lted throughout the study; A sustainable telecentre, at the very least, is a community-friendly ICT facility outfitted with computers and related equipment configured to serve the needs of the local community, that is operated in an economically sound, technically up-to-date and socially appropriate manner. More specifically a sustainable telecentre will likely to have: Equipment and Skills: •
Functional, yet modest, technical equipment that can amply serve the demands of
the local community, while adapting successfully for the limitations of the local infra-
Capacity to update with frequent technology improvements.
Presence of customer support skills.
A minimum of a single, dedicated, full-time manager / operator, who operates the
equipment and manages volunteers or full-time staff to provide services smoothly.
Transparent management policies and accountability to its stakeholders.
Reasonable influence to the local community satisfying educational and devel-
Provision of appropriate products and services.
A welcoming, community-friendly attitude and atmosphere.
The ability to consistently generate sufficient resources, through fee-based opera-
tions, fund-raising, or in-kind resources, to support:
Operational expenses, such as rent, utilities, and Internet access
Decent remuneration for the staff
The maintenance and upgrading of its assets, including, but not
limited to, computer hardware.
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Social Enterprising – the ethical answer Centro de Ensino a Distancia (Center for Long Distance Learning) of Socorro in Sao Paulo, Brazil, is a very busy (large) e-learning center. About 400 students—both young people and adults—travel long distances, organizing chartered buses in groups, both day and night. The center offers 17 courses at the graduate and post-graduate levels in affiliation with the University of Metropolitan Santos (UNIMES), including the subjects of business administration, accounting, pedagogy, and history. About 90 percent of the students are school teachers between 25 and 44 years of age. In the absence of sufficient higher education capacity in Socorro City, the telecentre provides immense help for students and teachers who are eager to improve their teaching skills and educational qualifications. Sarvodaya-Fusion’s Village Information Centers (VIC) save significant time and money by offering consolidated livelihood information under one roof inside the village. The villagers would otherwise be required to visit distant townships to access the same information. School children use VICs to get extra help for their school projects, such as the creation of the herbariums or seed collections because their rural schools are deprived of facilities. Kamal Kapadia, a Ph.D. candidate from the University of Berkeley, disclosed in her research report that “People learn about child rights and negative aspects of corporal punishment through their exposure to VICs.” (Kapadia, 2005)
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The elected president of the Bogahawella Sarvodaya Village Society, of Nuwara Eliya, Sri Lanka, bought a Pentium 4 computer, spending his own money that saved over a period of time. Months later, his 15-year-old son managed to develop a database single-handedly, that can track information on each and every family in the village. The president claims that this system is extremely helpful for him when establishing village development priorities, as with a few clicks he can aggregate information by individual family or by family needs (wells, toilets, etc.). As Kamal Kapadia emphasizes, there is a little doubt that the VIC serves as a catalyst for this process to occur (Kapadia, 2005).
On average, Fusion spends about US $60 (6,500 Rs. SL.) to provide initial training and follow-up guidance for each VIC. VICs are set up by village communities, which spend village resources (in-kind as well as financial resources) to the estimated value of US $75 (7,500 Rs. SL.). Over a three-year period, their accumulated average assetsâ€”in terms of furniture, shelves, and building materialâ€” are estimated at over US $200 (20,000 Rs.SL.), which is gathered mostly from donations.
Key learning: The social enterprise approach provides a practical modal to answer the ethical and social concerns associated with economic sustainability. Already some telecentre networks adapt this model.
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Entrepreneurial Focus â€œWe started our business as a computer repair center three years ago, but we wanted to open a telecentre, as there is a good demand for Internet and computer services, and we are proud that we could become a part of Grameenphone, a very big brand name in the country.â€? Muhammad, the co-owner of Ecom CybercafĂŠ, Gazipursadar, Bangladesh, was ambitious and hopeful that they would generate a profit, even it was still not earning much revenue at the time. There was hope and optimism, yet also anxiety and a feeling of urgency, behind the entrepreneurial drive of the telecentre operator. Support organizations, such as Grameenphone CIC, Drishtee make every effort to maintain such entrepreneurial drive across their networks. As for-profit operations, they depend on entrepreneurship and have created institutional structures and supporting tools to encourage that drive (See case studies in chapter 3.). Nevertheless, non-profit organizations, such as Sarvodaya-Fusion and D.Net, have also learned to support entrepreneurial characteristics in their centers and staff. This evolution took nearly a decade for Sarvodaya-Fusion, as it made the journey from a philanthropic mindset to a socially entrepreneurial one. Sarvodaya-Fusion has attempted various trial and error efforts to develop appropriate telecentre models, then to design business models around them, and finally to incorporate value-added service packages to increase customer flow and revenue (Box 2.3). Key learning: Developing an economic focus (in addition to a social focus), and its consistency throughout the operation, is essential to ensure economic sustainability.
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Box 2.3: Sarvodaya-Fusionâ€™s social enterprise evolution From 1997 until 2000, telecentre services were mostly unstructured and driven by local demand. The major services offered were photocopying, ICT hubs for youth newspapers, bio-diversity databases, and the creation of PowerPoint presentations, all offered free of charge (Kapadia, 2005).
In 2000, the organization experimented with multiple trial and error efforts aimed at achieving sustainability. These efforts ranged through innovations in policy and management structures, revenue generation and business models, and telecentre service packages. As an example of service experimentation, ICT courses were tested as a fee-based, value-added service. In order to accommodate disadvantaged communities, a scholarship program was designed, which enabled 697 students from deprived communities to receive the courses at a 60 percent discounted rate. The discount was paid for by a philanthropic donor (Progress Report, 2007).
In 2004, Sarvodaya undertook a major assignment to develop a Subsidy Voucher for the Information and Communications Technology Agency (ICTA). Research conducted for the project provided valuable lessons regarding the social dynamics of the rural communities around the telecentres. (Liyanage, 2005; Sarvodaya Consultancy Report, 2004).
From 2004 to 2005, eight well-structured IT course modules were developed for children, youth, and unemployed rural communities. Such courses were offered, for a fee, at 12 selected telecentres.
In 2006, the Sarvodaya telecentre network was decentralized, and an organization (a specialized program branded as Sarvodaya-Fusion) began working more closely with non-Sarvodaya telecentres, forming a telecentre alliance (Aka: Telecenter-family). In 2007, Sarvodaya-Fusion designed core services (ICT education) to be offered through a network of telecentres that supports revenue generation to member telecentres as well as core organizations. (See Case Study- Sarvodaya-Fusion, Chapter 3).
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Leveraging Economic Resources For Mara of San Sabastiao, Brazil, the primary motivation to create a telecentre was to support the ailing micro-enterprises of 200 poor families of the Low Income Family Association (LIFA). As youth tended to dominate the ten computers donated by the Ministry of Development, Industry and Foreign Trade of Brazil, she began to realize that there was another need to be fulfilled.
“We did not realize that we were breaking the law until we received the notification from a regulatory body reminding us to comply with proprietary software regulations. Subsequently, we learned that there are four other privately operated cybercafés that felt threatened by our presence,” explains Mara regarding the challenges that made her more conscious of the economics of her telecentre operation. She finished her story with a sigh of relief:
“Thanks to ATN, we are now receiving licensed software. No more troubles to offer ICT classes!”
She refers to Microsoft software donations arranged by ATN, which have helped make it possible for the telecentre to offer ICT classes as a major fee based service to sustain its operations.
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In Nuwara Eliya, Sri Lanka, the volunteers in one VIC were keen to buy a public phone for their village because no such phone existed in the entire village. To raise money for the telephone, they organized a raffle, offering a fan and an iron as prizes. Though tickets sold at for US 10 cents (10 Rs.SL.), the raffle generated a mere US $50 (5,000 Rs.SL.), which was insufficient to buy the phone. Still, the group was clever enough to make another attempt, convincing the town telecentre operator to lend them a projector and laptop computer to show popular movies in their village and others nearby to earn the remainder of the funds necessary to buy the phone (Kapadia, 2005).
Key learning: All available resources (financial as well as in-kind) need to be leveraged effectively and efficiently toward an economically sensitive objective (i.e. revenue).
Partnerships with Diverse Leaders Nandasiri Wanninayake, widely known as Wanni, is a popular name in Sri Lanka due to his unique leadership in connecting Mahawillachchiya—one of Sri Lanka’s most remote rural villages—into the digital age. Over 50 of the 500 families in Mahawillachchiya, along with two schools, owned a computer in 2008, and they were all connected through a wireless mesh network. The project has been widely documented for its ability to empower diverse populations, including school children, farmers, and stay-at-home mothers. Wanni introduced a number of service innovations aimed at achieving sustainability for the telecentres he supported in Mahawillachchiya for more than a decade, including offering BPO services to outside institutions.
“I responded to the call by ICTA to replicate the Mahawillachchiya success story in other villages in the country – just because we have a common goal, that is to provide ICT facilities to the poor communities,” Wanni explains about his decision to take the lead responsibility of the e-village, a project supported by ICTA.
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ICTA managed to convince many unlikely leaders to take up its cause, including popular Buddhist monks, who command an unprecedented respect among the predominantly Buddhist population in Sri Lanka. Villagers go to the monks for advice on critical decisions and they send their children to temple for religious education at Sunday School. Technology introduction for rural communities had never been on the agenda until ICTA convinced the majority of temples to open telecentres within the temples themselves. Out of 570 telecentres, 217 are operated in temples and other religious locations as of mid-2008.
Sonia Maria da Silva is an award winner in the field of environmental activism, as demonstrated through the “100 Dimensao” project in Riacho Fundo, Brasilia. Revenues are not a motivational factor, as her goals are mostly philanthropic and results-based. Yet Jose Avando and Fernando Portella, ATN’s key leaders, managed to convince the leadership to partner with ATN’s telecentre network agenda.
Shared goals and mutual understanding were the primary strategies that had motivated community leaders to become partners in a common agenda. Sonia was motivated by her desire to serve more children and communities through her environmental programs. Wanni was driven by his desire to replicate his success in Mahawillachchiya, while the Buddhist monks seized the opportunity to deepen their connection to local communities by offering educational services. Both ICTA of Sri Lanka and ATN of Brazil managed to build successful partnerships with such diverse leaders to achieve their institutional missions.
Key learning: It is important to consider mutually beneficial, inclusive partnerships with multiple leaders operating at diverse communities and ecosystems in order to seek the overall economic sustainability of the network operation.
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Economic Vision and Mission “Integrating ICT with development, culture, nature, and spirituality” is the grand vision statement of Sarvodaya-Fusion, ICT4D program of the 50-year-old national NGO of Sri Lanka, Sarvodaya. Drishtee, a for-profit Indian ICT4D organization, states that its vision is to, “create and implement a sustainable, scalable platform of entrepreneurship for enabling the development of rural economy and society through the use of Information and Communications Technologies.”
All the organizations in the study have broad visions that convey optimistic, ambitious goals that have the capacity to inspire their staff as well as external stakeholders.
Mr. A.M.M. Yahya, Director of Grameenphone, emphasizes that, “We focus, re-focus and ultrafocus ‘till we get the clarity in our minds.” In other words, they strive to seek clarity and focus in what they are doing, why they are doing it, and with whom or to whom they are doing it.
Regarding to whom: Disadvantaged rural communities that do not have access to ICTs are the common target of four1 out of five organizations studied in this research, including D.Net, Drishtee, Sarvodaya-Fusion, and Grameenphone-CIC.
As to with whom projects are implemented, the organizations recognize “telecentres” and “telecentre operators” as the common delivery window and delivery agents for their projects.
What do they do? The organizations deliver diverse services, from ICT education to e-governance, and mobile phone sales to online trading, that meet the needs of the “target group” through multiple models.
1 ATN’s target is ‘telecentres’.
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Why do they do it? The reasons were echoed in the key words that were repeated in their mission statements: “education,” “development,” “entrepreneurship,” “poverty alleviation,” and “empowerment.”
In order to achieve its mission, Grameenphone CIC had set an initial goal to create at least one telecentre in each of the 462 upazillas (sub districts) in the country. The organization managed to set up 500 telecentres in 450 upazillas by mid-2008. Drishtee plans to found more than 2,000 telecentres by 2007 and is expanding at the rate of almost 1,000 new telecentres annually.
All the networks studied in this research have a major focus on revenue generation to support sustainability for their member telecentres. Code-named “Mission 6K” in 2000, Drishtee set a goal to develop a package of services that would generate a monthly income of 6,000 Rs Ind. (US $125) by the average telecentre, which would generate a profit of 1,500 Rs Ind. (US $31) for the telecentre owner after settling general expenses of approximately 4,500 Rs. Ind. (US $93). Drishtee’s model demonstrates its commitment to facilitate the economic sustainability of its franchisee telecentres. Drishtee reported achieving this milestone in 2004. Sarvodaya-Fusion offers services, provides help desk support, and guides its telecentre operators toward reaching economic sustainability. ATN works with diverse organizations to arrange a package of services that helps its 4,000-member national telecentre network pursue economic sustainability.
Key learning: Incorporation of economic sustainability as an integral element into the organizational vision and mission is essential for a telecentre network to materialize sustainability.
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Enabling Management Environment After spending almost ten years improving its telecentre model, Sarvodaya-Fusion turned to the Nonprofit Enterprise and Self-sustainability Team (NESsT), a social enterprise capacity-building organization, for expert assistance. Fusion simultaneously hired a dedicated Business Development officer to work as NESsTâ€™s counterpart in order to develop new social enterprise activities that would help to sustain Fusionâ€™s telecentre network. The process took nearly two years to develop business plans that begun execution since early 2008.
Shared goals and mutual understanding were the primary strategies ATN used to motivate community leaders to become partners in a common agenda.
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Drishtee enjoys more support, employing a cadre of 84 staff members to execute its action plans, and its executive staff and board members have substantial professional and business experience. Grameenphone CIC ensures it will have a competent staff by requiring at least graduate-level qualification in telecom, ICT, or business management disciplines. Furthermore, the organization taps into the expertise of its mother organization, GrameenPhone, to help it carry out effective promotional campaigns.
Box 2.4: A model experimented by Drishtee made an effort to improve location and entrepreneur selection process to set up telecentres Location selection and entrepreneur selection involve a meticulous process. Drishtee had experimented a model called the “ICT segmentation model” to identify feasible kiosk locations. The model considers multiple variables under three themes: (1) rural dynamics, (2) rural economics and (3) rural infrastructure. The values given to each variable assess the locations based on a viability scale. The scale categorizes each location as unsustainable, sustainable, viable, or profitable. Entrepreneurs are selected based on the following set of criteria: •
Above 18 years of age
Minimum education through 10th year of school
Demonstrated entrepreneurial skills
Ready to sell Drishtee’s services to rural populations
Has a drive for community development
Self-motivated and a personal goal-setter
A proven multi-tasker
Is a good human being who believes in “Service before Self” (Source: www.drishtee.com)
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Financing the operations through diverse sources is a constant priority for the telecentre networks studied. Successful networks tend to avoid dependency on a single financial source, instead maintaining diverse financial resources. For instance, Drishtee derived its core capital from equity investments, yet, they also tapped into philanthropic donors to carry out research activities. Likewise, Grameenphone CIC was supported by the GSM Association during the pilot stage of its telecentre initiative. ATN was set up by spending state resources, but tapped into corporate donations in order to expand the programs it offers.
Spending sufficient time and resources for research and improvement was another common characteristic found among the networks studied. One typical research project took place in 2005 when Drishtee created the “ICT Segmentation Model” to assess the viability of potential telecentre locations. Similar research carried out in 2007 lead Drishtee to introduce Business Process Outsourcing (BPO) into its telecentre network, as discussed earlier. Sarvodaya-Fusion used a strategic alliance with Sri Lanka’s leading ICT university, the University of Colombo’s School of Computing, to lead its telecentre design process and, subsequently, to test the viability of Wi-Fi applications in rural settings.
Key learning: Systematic improvement of the management environment (resources, structure, competencies, and capabilities) of the operation is essential to seek sustainability.
Exploring Untapped Market at Bottom of the Pyramid The typical mid-sized village in India has a population of about 6,200, 60 percent of whom depend on agriculture. Only 26 percent of such villages have electricity and, of those, electricity was so limited that it was available for as few as three hours per day in some places. The average adult literacy rate in the villages is 52 percent and only about 10 percent of the community holds bank
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accounts. Average village households earn less than US $50 per month, 40 percent of which is spent on food. Despite these severe challenges, Drishtee strongly believes rural India is still an untapped market for low-cost telecentre services, having a US $10 to $12 billion market potential (Drishtee, 2007).
In 2006, after six years of hard work, Drishtee reached the cash flow break-even point for the core organization. Drishtee generates its revenue via its network of more than 1,000 kiosk-based telecentres operating in eight estates, by delivering services to rural village communities.
Karishma Kiri of Microsoft Unlimited Potential Group led a team of researchers between 2004 and 2006 to study the business potential of for-profit rural kiosks (telecentres) in India. At the time more than 9,000 customers had been surveyed by 300 kiosks belonging to n-Logue and Drishtee in 13 districts. Among them 77 (88 percent) of operators reported profits of less than US $40 (2,000 Rs. Ind.). The projectâ€™s major revenue driver had been ICT education while other services, such as digital photography, e-governance services, web browsing and emailing, also generated some income. Development services offered by kiosks, such as e-governance and healthcare services, are reported to be popular with farmers, housewives, and unskilled laborers. Research reported the participation by low-income households earning less than US $40 (2,000 Rs. Ind.) per month, though a gradual increase was seen by households earning more than US $165 (8,000Rs. Ind.). The average kiosk customer spent US $2 to $4 (100 â€“ 200Rs. Ind.) per month (Kiri & Menon, 2007).
In Sri Lanka, 80 percent of the population lives in rural areas, which accounts for the 88 percent of the poor (World Bank, 2008). The population living below US $2 a day is estimated to be four million. Yet, 41 percent of these poor people own a phone, and 22 percent of them are on mobile phones (Samarajiva, 2007).
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Such hidden resourcefulness at the bottom of the pyramid is evident in the voluntary contributions made to develop Village Information Centers by rural communities. Sarvodaya-Fusion estimates that the average VIC generates about US $100 for each US $66 spent by Fusion to train leaders to set up VICs. Such resources are raised by leveraging ongoing development programs (e.g. microfinance), encouraging local donations, and tapping into community savings.
Key learning: Sustainability champions recognize the hidden opportunities within the bottom of the pyramid communities, despite the lesser resourcefulness of the sector, and strive to convert such opportunities into financial revenues.
Systematic Planning “Select the right entrepreneur with the right location, train and supervise him/her well, facilitate a fair loan, provide the right services and business tools – and there is a good chance that the entrepreneur will have a profitable business. A profitable business is a sustainable business.” Quoted by Dwight Wilson of the OneRoof (telecentre network), San Francisco, USA, in Telecentre Magazine (September 2008).
The telecentre models developed by Drishtee, Grameenphone CIC, and OneRoof are all heavily reliant upon entrepreneurial telecentre ownership. To become a telecentre franchisee under Grameenphone CIC, each telecentre owner undergoes financial due diligence checks covering three years of operating records and then must pass two rigorous interviews. A selection committee uses the interviews to gauge leadership qualities, entrepreneurial qualities, aptitude, self-motivation, experience, strategic priorities, life issues, and delivery capacity, among other factors that may affect the candidate’s suitability for the position.
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The market potential of the location where the telecentre would be installed is the second most important factor that champions seriously consider. During the vetting process for ICTAâ€™s Sri Lankan Rural Knowledge Centers (an entrepreneurial telecentre model), the organization checks four specific criteria:
a) Size of the local population (a minimum of 2,000 to 5,000 people)
b) Availability of a fixed market within a five-kilometer radius (as an indication of economic activity in the zone)
c) Presence of a school with a minimum of 300 students
d) Availability of electricity (ICTA, 2007; Liyanage, 2005).
Drishtee tested a comprehensive analytical tool called the â€œICT Segmentation Model,â€? developed by their research team to assess the viability of a particular location for a telecentre. In the model, key variables are grouped as a) Rural dynamics, b) Rural economics, and c) Rural infrastructure. Between zero and ten points were then awarded to each variable, categorizing them as profitable, viable, sustainable or unsustainable, in order to judge the suitability of the location (Drishtee, 2007). In the estate of Assam, the assessment classified only 11 locations as profitable and 600 as sustainable out of the 2,468 villages (gram panchayats) surveyed in 2005 (Drishtee Foundation, 2008).
Key learning: Planning is an integral part of the operation. Sustainability champions carry out systematic planning and continue to review them.
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Box 2.5: Telecentre equipment package and monitoring The telecentre equipment package is another important factor decided by each champion after meticulous planning based on multiple review processes. One common choice among the organizations surveyed is a limit of two to four computers per telecentre, except for a handful (for example, ICTA’s Distance Education & Learning centers, where ten computers are offered). Internet provision, however, differed among the networks. Sarvodaya-Fusion notes little demand for the Internet among its clients and therefore does not offer Internet access. Grameenphone CIC, however, considers providing Internet access an important element, as its revenue model is built on the Internet. OneRoof, Drishtee, and Grameenphone CIC have created or adapted online monitoring systems to monitor the performance of their telecentres. Drishtee has a Management Information System along with the Drishtee Portal, which provides access to the franchisees. Fusion monitors the performances of its telecentres on a weekly basis—though not online—tracking visitor attendance, the delivery of telecentre services, revenues, and outstanding balances.
Focus on Marketable Services and Products “Typesetting, word processing, Excel account sheets – all these services were not available to our communities before we set up the telecentre. Computers and Internet already provide them something new. Why do we need any more services?” – telecentre leader at workshop, in Sri Lanka.
“Are you sure those are the needs of the community you serve?” The question raised by the workshop facilitator opened the eyes of a group of telecentre operators, who were quite frustrated with the fact that their services were not earning the revenues expected.
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Ananya Raihan and his team at D.Net carried out extensive research surveys showing that poor Bangladeshi communities, with basic educational skills at best, nonetheless required information services to protect their health and improve their agricultural practices. The Mobile Lady concept had been an innovative response to overcome the barriers posed by lack of literacy and technical knowledge. Mobile Lady traveled from village to village offering tailor-made information services, such as pH measuring, crop treatments, and medical information, extending tailor-made ICT services way beyond those offered by traditional telecentres.
Box 2.6: Subsidy vouchers to promote community participation at telecentres In 2004, Sarvodaya had undertaken a consultancy project to design a subsidy voucher for ICTA, with the goal of attracting more rural customers to telecentres. The design resulted in two vouchers: the SPV (Specific Purpose Voucher) and the APV (All Purpose Voucher), targeting two different community groups (the SPV for school children and the APV for adults and unemployed youth). The vouchers were designed to offer different services available at the same telecentre. The vouchers proved capable of attracting multiple customer categories (school children, unemployed youth, adults) to use the center during different time periods of the day (Figure 2.1). Due to the voucher system, the total customer number increased fourfold. By 2008, the design had been rolled out around the country in about 100 Nenasala. Figure 2.1: distribution of customer attendance of telecentres throughout the day on both weekdays and weekends.
(Source: Sarvodaya Consultancy Report, 2004)
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Satyan Mishra and his team at Drishtee relentlessly searched for appropriate services for rural communities in India when creating their model. An example of one of their innovations is a web-based matrimonial service package (Vaivahiki) designed to find appropriate marital partners. “Gram Daak” (village mail) was an e-mail-based “postal” service designed to speed message delivery beyond that available by the inefficient “snail mail.” “Gram Haat” (online auction place), was a specialized online marketplace to sell domestic animals, bicycles, etc. (Drishtee, 2008).
Though such services were designed to cater to community needs, Drishtee recognized that they were not profitable enough on their own to meet the substantial expenses of telecentre operations. Such services alone could not meet the US $125 (6,000 Rs Ind.) revenue target that was estimated as the reasonable monthly revenue for a Drishtee telecentre. With persistent efforts to improve profitability, in 2007 Satyan’s team identified more than 12 unique new products and services.
Key learning: Services and products are expected to serve the needs and wants of the target communities, and in turn, provide an opportunity to earn revenue for the operation. Sustainability champions make continuous efforts to improve the package of services and products.
Exploring Social Investors “Eight years ago, there were so few large-scale telecentre models that it could be argued that subsidies or philanthropic donations were needed to jumpstart the field. We are well beyond that argument today. While rural telecentres remain a challenging business, there have been enough successes. And there is a deep enough body of knowledge regarding services, infrastructure, training, selection of entrepreneurs, etc., which is why we need to focus on improving access to loans rather than focus on subsidies and donations”- Dwight Wilson, CEO, OneRoof, San Francisco, USA, quoted in ‘Telecentre Magazine in Sept. 2008. Such conviction helped OneRoof open telecentre networks in India and Mexico.
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Telenor is a Norwegian telecommunications organization providing mobile connectivity in twelve countries across Europe and Asia. In 2005, Telenor held a competition among its internal staff to search for new business ideas. One leading idea that captured the eye of senior managers was to introduce Internet services to rural communities by establishing cyber-centers using newly introduced EDGE technology (Enhanced Data Rates for Global Evolution). Grameenphone CIC, the biggest corporate sector telecentre network in the country, is the result of Telenorâ€™s investments (along with GSM2 Foundation) to pilot test this idea.
Acumen Fund, is a non-profit global venture fund that employs entrepreneurial approaches to solve the problems of global poverty. Concentrating on the health, water, housing, and energy sectors, Acumen makes investment decisions based on social impact, scalability and sustainability. A product or service is deemed to have social impact if it addresses a critical need at the bottom of the pyramid. Sustainability implies a clear business model that shows potential for financial stability within a five-to-seven-year period. Scalability denotes the capacity of a business to reach approximately one million end users within a five-year period (Acumen, 2008).
Acumenâ€™s involvement in the telecentre sector began in 2006 when they invested US $1 million in equity so that Drishtee could develop health services to be provided through telecentres. In 2007, they made US $600,000 of further investments in a Drishtee subsidiary.
Key learning: More investors are recognizing the telecentre market and bottom of the pyramid market as places of potential economic promises. Hence, investors are entering into this industry sector, which in turn provides more options for the telecentre and network operators to seek financial resources.
2 GSM - Global System for Mobile communications, originally known as Group Special Mobile
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The silver lining of the Sustainability cloud
Case studies ATN – Brazil: Building partnerships for telecentre sustainability Drishtee – India: Tapping the bottom of the pyramid D.Net – Bangladesh: Exploring the knowledge market at grassroots Grameenphone CIC – Bangladesh: Telecentres as a corporate social responsibility Sarvodaya-Fusion – Sri Lanka: Evolution of a social enterprise
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Building Partnerships for Telecentre Sustainability ATN – Brazil Abstract Telecentre Association for Information and Business (Associação Telecentro de Informação e Negócios), popularly known as ATN of Brazil, is a public interest civil society organization
Box 3.1: Country fact sheet Total Population – 191.6 million Urban population – 85% Literacy (% population age 15+) – 89% Poverty (% population below national poverty
created to support a telecentre network
line) – 22%
formed by Brazil’s Ministry of Development,
Primary school enrolment – 137%
Industry and Foreign Trade. The association
Major issues: Reduction of poverty and
was set up in 2006 with a mission to serve for the development and sustainability of telecentres throughout the country.
inequality GDP growth (2006 – 2007) – 5.4 GDP per capita growth – 4.2
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Capitalizing on its close affiliation with influential entities within the federal government, ATN explore alliances with local government authorities, corporate sector partners, and NGO partner institutions all around the country. Then the organization systematically facilitates win-win partnerships between multiple stakeholder institutions, with the goal of developing a package of services and products to be delivered by telecentres. Such partnerships are brokered through a diverse set of business models; thus, both telecentres as well as partner institutions generate revenues while delivering services to their local communities. During the past two years, ATN has managed to influence 4,000 telecentres belonging to ten partner organizations, including both private and non-profit institutions as well as state governments and the military3. ATN continues to expand its network with the aim of reaching all 15,000 telecentres currently functional in the country.
Background As early as 2001, the Ministry of Development, Industry and Foreign Trade launched a project titled “Telecentres for Business and Information” with the participation of private sector institutions. The project started with donations of “end-of-life” (used) computers from private companies and banks to entrepreneurial grassroots leaders. The objective was to provide digital opportunities to poor communities, which rarely benefited from e-governance advances widely offered by state institutions. The project spurred the creation of 45 entrepreneur-owned telecentres at the initial stage, which subsequently scaled up to more than 1,000. The telecentre model was based on a basic business model requiring the telecentre owners to invest in part of the package, such as a server, the location, and the cost of management, while ten computers, Internet access, and training were provided by the ministry. As of early 2008, there were more than 15,000 functioning telecentres in 5,553 municipalities in Brazil. Note: statistics and contextual notes documented in this case study, unless otherwise stated, are current as of May 2008, when the final interviews were carried out with ATN senior officials. 3 Every Brazilian has to undergo one year of military training. There are 132 telecentres in these military bases;
thus, citizens automatically get exposure to ICTs during their military training.
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In the meantime, public exposure to ICTs has been widely increased by the growth of cybercafés across the country. In 2008, there were about 50,000 cybercafés, popularly branded either as LAN houses or Internet cafés. LAN houses are known for computer games, entertainment, and chat services, whereas Internet cafés are popular with more advance Internet users for their focus on information services, such as providing access to online newspapers and information searches for students to research school projects. Cybercafés are a thriving business in Brazil, with an estimated 20 to 22 million people using them per year and minimum annual revenues of US $15$20,000 per café. Given the profitability and relatively small investment cost, small private owners continue to add to their numbers in local townships, while two major corporate partners dominate the market.
These cybercafés are equipped with state-of-the art equipment, and run by very competitive business models, attracting youth and computer-literate adults as their primary customers. Cybercafés currently outnumber telecentres and are thus becoming a heavy competitor against telecentres. In Sao Sabastião, Brasilia, there are about 15 cybercafés within the community of 135,000 people where 80 percent earn less than 600R$ (US $252) a month. Within the same environment, four telecentres set up by the state government, aiming to support the development of poor communities, struggle to market their services under heavy competition by cybercafés.
Problem they Addressed There are approximately 15,000 telecentres in Brazil’s 5,553 municipalities. Most of them were set up within rural communities since 2001 by the federal government or by state governments. The primary objective of these telecentres is to serve poor communities, provide access to digital tools, and facilitate empowerment. These telecentres have local ownership models with diverse forms of ownership structures. Some telecentres are operated by NGOs whose core competency and primary goals are neither ICT nor enterprise development. As these telecentres struggle to sustain their operations, their owners have complained to the ministry about the difficulties they face.
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On the other hand, many rural communities do not have sufficient access to IT-based educational and other e-services offered by the state and other institutions. For instance, fewer than 200 universities serve 5,565 cities of Brazil. The city of Socorro has one university, yet its offerings were limited to only two courses. Yet, on the other hand, the University of Metropolitan Santos (UNIMES - based in SĂŁo Paulo) offers 14 online courses for the undergraduate level and nine courses for the post-graduate level. Despite the fact that telecentres were well-positioned as a potential connecting point between these two entities, the connection has never been made.
The ATN Model Since its inception, ATN focused on three major aspects: a) Policy improvements b) Capacity-building for telecentres c) The addition of marketable services and products. The ATN served as a broker between multiple institutional partners with the potential to influence the sustainability equation of telecentres, thereby redirecting the revenue streams, which were already existing in the vast Brazilian market.
Policy Improvements In January 2007, just six months into operation, ATN capitalized on its relationship with its founderâ€”the Ministry of Development, Industry and Foreign Tradeâ€”with a groundbreaking technical cooperation agreement. The agreement empowered ATN to provide a two percent tax benefit to donor organizations and corporate institutions that supported telecentres (as micro and small enterprises). In April 2007, ATN signed an agreement with Caixa, the second largest public bank of Brazil that enabled ATN to become a master representative of the bank. Through the agreement ATN was able to enter into contractual agreements with telecentres on behalf of the bank to deliver potential services via telecentres.
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Capacity-building The Technological Development Support Center (CDT) of the University of Brasilia signed an agreement with ATN in October 2006 to provide capacity-building programs for telecentre operators in the subjects of entrepreneurship, planning, monitoring, and network management. After a year-long negotiation process with Microsoft’s Unlimited Potential community affairs team, ATN signed agreements worth US $33 million in December 2007, to donate 40,000 software licenses for Windows, Office 2003, and SharePoint. These donations removed a liability and helped telecentres to offer legitimate computer services, which otherwise had been under condemnation by the Brazilian Software Engineering Association—Brazil’s software intellectual property watchdog—due to the telecentres’ heavy use of pirated software.
Networking and Partnership Building As early as 2006, ATN started an institutional partnership with the Brazilian branch of the US computer chip maker, AMD, to support the company’s “50 X 15 strategy.4” This partnership was not based on any particular financial agreement, but was rather designed to promote the mutual interests of both organizations. The high-profile partnership helped ATN attract new partners, such as The Bradesco Foundation5, Microsoft Unlimited Potential, and Peabirus6. Furthermore, the partnership provided ATN with access to expert AMD advisors who helped the ATN team formulate business models to secure subsequent partnership engagements. In return, the chip maker was able to include ATN’s large scale initiatives as evidence of its progress toward AMD’s “50 X 15” mission.
4 AMD’s 50 X 15 program is a global initiative to extend the internet accessibility to 50 percent of the global
population by 2015. The initiative is carried out in partnership with multiple stakeholder institutions around the world. 5 Bradesco Foundation is the philanthropic arm of the country’s largest bank, Bradesco. The foundation has
provided 10,000 refurbished computers to ATN’s telecentres. 6 Peabirus is a social networking site in Brazil.
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ATN has signed various partnerships with state government institutions with existing telecentre projects that have helped to expand the ATN telecentre network. For instance, the Minas Gerais state government struck a deal to provide its 300 telecentres with access to the suite of ATN services in order to support the sustainability of the telecentres. Such agreements expand the number of telecentres under ATNâ€™s influence, increasing its clout when striking service partnerships.
ATN also competes for government bids, in order to provide service opportunities for its member telecentres. For instance, ATN won a project bid worth US $250,000 (598,000 R$) from the Youth Secretariat of the State of Pernambuco, to offer 10,000 youth scholarships for IT training to be offered at 40 telecentres.
Services and Products With the contract agreement entered in September 2007 with the University of Metropolitan Santos (UNIMES), most of the telecentres located countrywide were able to become affiliated units of the university, thereby offering accredited e-learning courses. These services attract hundreds of school children and teachers. ATNâ€™s agreements with Caixa enable affiliated telecentres to offer bank-affiliated services, otherwise only available in bank branches via rural telecentres. Two types of services are offered:
a) Transactional services: enabling consumers to conduct financial transactions, such as paying utility bills at telecentres
b) Banking services: enabling telecentres to provide official documentation on current accounts, accept loan applications, and provide other services on the bankâ€™s behalf
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ATNâ€™s partnership with Gera Negocios (Generate Business), a private institution, provides online courses on informatics and entrepreneurship via telecentres. The courses are relatively inexpensive and consist of less sophisticated self-learning material. They allow telecentres to target a different segment of the community, including rural artisans, small entrepreneurs, small traders, etc. Students register with Gera Negocios through their local telecentres and receive electronic passwords to access the services from the telecentre.
Another partnership with GetNet, the private organization that offers prepaid card services for four mobile operators in Brazil, was due to be signed in 2008. The outcome would make telecentres prepaid card-selling agents, positioning them to serve the 100 million existing prepaid card users in the country. GetNet places a prepaid card sales machine registry at each telecentre, which records each sale so that ATN can monitor card sales on behalf of GetNet.
Multiple Business Models ATN negotiated commission-based business models for each business partnership, which had the potential to generate substantial revenues. In each negotiation, the agreement was designed to pass the major portion of the financial benefit to the telecentre, while also keeping a portion for ATN to ensure its own institutional sustainability.
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Table 3.1 provides a detailed account of the variety of business models ATN negotiated with each partnership.
Table 3.1: ATN negotiated various partnership models, services, and fee structures
23 types of university courses (online) through telecentres
For each student, UNIMES will pay 20% of commission to telecentre, 5% to ATN.
1. Transactional modality: consumers pay utility bills at telecentres
Telecentre receives 20 cents for each transaction and ATN receives 5 cents.
2. Banking services modality: telecentres carry out various bank services
Various models: For bank account opening, telecentre receives US $1.5 (4 R$) & ATN receives US $0.40 (1 R$) / account. For accounts for business operation, telecentre receives – US $6 (14.40 R$) & ATN US $1.50 (3.60 R$)/ act. For loan application processing, telecentre receives – 1.6% of total value & ATN receives 0.4%.
• Gera Negocios
Offering online training courses through telecentres. Student registers online (at telecentre), and receives a password from Gera Negocios.
Gera Negocios – provides the overall account (on each course and students) every month,.17.5% of commission goes to telecentre and ATN receives 7.5%.
• State Govern-
State Government offers grants to train 10,000 youth, on basic IT & internet services. Courses designed by Gera Negocios, offered at 40 telecentres
Revenue divided between parties on the basis of 25% to ATN, 45% to Gera Negocios, 15% to telecentre. (Balance of 10% to buy training material & 5% for taxes).
Selling prepaid cards (for mobile phones) at telecentres.
Telecentre receives 5% of the commission and ATN receives 0.5%.
ment of Pernambuco & Gera Negocios
7 The partnership agreement between GetNet and ATN was about to be signed at the time of the interview
carried out with ATN (March 2008). The services are expected to begin at the end of 2008
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Financial performance As ATN is affiliated with the state, the organization does not have the same familiarity with philanthropic donors as NGOs do. During 2007, ATN generated only three percent of its annual revenue from donors. Interestingly, 58 percent of resources were generated from the corporate sector during that year, compared to 38 percent from state sector funds (Table 3.2).
Table 3.2 â€“ Financial performance of ATN
Sources of Financing
2009 (Next year fiscal forecast)
External revenue Foreign / international donors
Public sources (Federal + local state gvt.)
US $28 million
In-kind Donations 1. Software licenses from Microsoft
(7,150 licenses ) 2. Refurbished computer donations from Bradesco Foundation
US $1.7mil (4 mil R$) (8,000 computers)
Self-Financing (Internal Revenue Generation) Fees for service(s) 1. UNIMES (Online courses)
2. Contracts with various state governments and ministries
3. Contracts with Ministry of Development, Industry & Foreign 4. Dividends from investments (invested in Bank of Brazil as a fixed saving)
Figures are approximated at the rate of 1R$ (Brazil Reais) = US $0.42
Source: ATN Account records, (provided during interviews) Data updated in March 2008
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ATN generated US $35,500 (84,000 R$) by delivering services, raising nearly equal proportions from the public and private sectors. Ironically, despite five contractual agreements in place to generate significant proportions of revenue, ATNâ€™s 2009 revenue projections were weighted heavily towards the state sector (80 percent) rather than the corporate sector (20 percent). This is in large part due to the fact that most of the service contracts signed with corporate sector partners were still at the pilot level of implementation; thus, ATN did not have sufficient data for future projections.
Staff ATN is governed by a general council of 58 members representing public, corporate, and academic sector institutions that are actively involved in digital inclusion projects in Brazil. A fiscal council and executive board is elected by the general council for four-year terms. The executive board is formed by a director general, an administration and finance director, and an operational director. The executive board, together with another three additional members, forms the fiscal council, which was currently composed of an ex-ambassador, the president of a research institution, and the president of a library workersâ€™ union (Table 3.3).
The executive board manages the overall operation. Although there are only two ATN staff members to support them, they are able to derive support from their own staff at the ministries where they hold their primary jobs.
Table 3.3: Human resource capacity of ATN during 3 consecutive years
Full-time paid staff
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ATN’s Challenges Over-reliance on Key Individuals ATN’s operation heavily depends on three individuals: José Avando, the Director General, Fernando Portella, the Administrative Director, and Renato Júnir, the Operational Director. All three hold key responsibilities for ATN, while carrying out their other responsibilities in the government ministries they report to. Yet, their passion and devotion to ATN drives its overall success. A fourth individual, Professor José Rincon Ferreira, the visionary leader and Director of Technological Articulation in the Ministry of Development, Industry and Foreign Trade continues to play a critical visionary role behind the overall institution and its performance. Thus, ATN seemed to be depending too much on influential, high-performing individuals rather than its institutional strength at the time of study. Entrepreneurial Capacity: ATN’s human resource pool is heavily composed of executives whose primary experience is in the state sector. Though the organization has performed well with its current management team, recruiting a more balanced assortment of talent may help spur entrepreneurial capacity. Furthermore, given the scale of revenue generation and financial performance related to current contractual agreements, more performance monitoring structures may be required in order to support organizational performance in the future.
Case Studies of Brazilian Telecentres Case study 1: The Low-income Family Association The non-profit Low Income Family Association’s (LIFA) telecentre of Sao Sabastião, Brasilia started in 2006 with the help of the Ministry of Development, Industry and Foreign Trade. LIFA’s main objective is community development for low-income families earning less than 600R$ (US $252) per month. In order to achieve that objective, LIFA carries out micro-enterprise programs with about 200 families.
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LIFA’s telecentre was a result of their request to ministry, upon the realization that the low-income communities it served were eager to access the Internet and IT services, but could not afford to visit the 15 cybercafés available in the city of 135,000 people.
LIFA used the ten computers donated by the Ministry to offer ICT skill-building programs through its newly-founded telecentre. The organization offered a three-month basic MS Office course for US $6 (15 R$/ month) and use of a computer with Internet access for US $0.4 (1 R$) per hour. There were about 65 students enrolled in the courses at any one time and a daily average of 10 people accessing the Internet for about one to two hours each.
Table 3.4: Income/expenditure analysis for a 1-month operation of the telecentre
IT training (65 Students – 65 x US$ 6.3)
Internet – 10 people / day 1-2 hours avg. (22 days X 10 X 1 R$)
Total income Staff salaries
Internet and Telephone
Note: Figures are approximated at the rate of 1R$ (Brazil Reais) = US $0.42
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After deducting utility bills and staff salary for one full-time telecentre operator, the telecentre barely makes a monthly profit of US $38 (90 R$).
Although there is a constant demand for the IT training courses, like many telecentres, the organization was under pressure from regulatory bodies for its failure to comply with proprietary software agreements. The organization found itself in a catch-22 situation, as it was unable to afford legitimate licenses, given its poor financial revenues, and was therefore unable to offer more courses based on the same software, which would otherwise allow it to pay for the necessary licenses.
Microsoft software donations, being arranged by ATN, are expected to make a big difference to their business model. They would enable them to offer courses to many more students, thus generating more revenue at no extra cost.
Furthermore, with the support of ATN, LIWA was about to receive the training and resources necessary to offer financial services in partnership with Caixa Bank. LIWA believes the services would attract more customers to their telecentre, thereby considerably increasing revenue across operations.
Case Study 2: Centro de Ensino a Distancia Centro de Ensino a Distancia (Center for Long Distance Learning) of Socorro, SĂŁo Paulo is a busy medium-scale e-learning operation. The organization has a telecentre equipped with 11 computers, 4 lecture rooms equipped with state-of-the-art satellite-based distance learning facilities, and a small administration space. The place is full day and night with 400 studentsâ€”both young people and adultsâ€”coming from long distances in order to connect to their online education classes. These include 17 courses, through the graduate and post-graduate levels, offered by the center in affiliation with the University of Metropolitan Santos (UNIMES).
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On average, students pay a monthly course fee of about US $82 (195 R$), and a single course lasts for three to four years. Thirty-five percent of the fee for each course is paid to the center, generating an average of about US $11,492 (27,300 R$) in monthly income for the telecentre. After settling the utility bills, rent, and staff payments, the telecentre was able to earn a gross profit of US $6,315 (15,000 R$) from offering the courses.
The story is a great example of the importance of value-added services to achieve reasonable profits for a telecentre. Although the telecentre was initially set up in 2005 by the town’s Chamber of Commerce and the original 11 computers used were still kept busy providing Internet and IT services, the center’s only real economic success was generated by the introduction of the distance learning courses.
Centro de Ensino a Distancia is one of the 132 telecentres that collaborated with UNIMES to start the virtual university three years ago. Since then, the courses have served over 10,000 students. About 90 percent of these students are school teachers between 25 and 44 years of age, who are intent on improving their teaching skills and educational qualifications. The virtual university offers 29 courses in all, including classes in business administration, accounting, pedagogy, and history. The university has a monthly target of 3,000 students in order to break even with its operational costs, and recognizes agreements with telecentres as one of its strongest outreach models.
Case Study 3: LAN House at Sao Joao Located at the end of a small town of Sao Joao Da Alialiance, in the State of Goiás, LAN house is a cybercafé, not a telecentre. A private investor living in Brasilia started LAN house with an initial investment of US $12,000. The investor owns a number of LAN houses, which now form a small network.
The cybercafé is colorfully designed and illuminated and is equipped with ten computers—all are
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the latest flat-screen models—connected through a local area network with Internet access. A small cafeteria sells coffee and snacks in addition to CDs and other IT accessories needed by clients.
Services offered are limited to Internet browsing, word processing, and printing. Given the high demand for music downloads, CD burning is allowed for no extra charge, but it is compulsory to buy CDs from the café. A set of popular games (downloaded from the Internet) are available for children and youth to play. All the services are priced with two different rates for day and night. Most users reportedly enjoy chatting and networking using Brazil’s most popular social network site—Google’s ORKUT application—which far outperforms Facebook in Brazil.
The entire operation is managed by one youth, a feat that is possible because no training or assistance is provided to the customers, other than occasional technical help.
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Tapping the Bottom of the Pyramid Drishtee, India8
Box 3.2: Country fact sheet
Total Population – 1,123 million
“Bottom of the Pyramid” (BOP) communities have historically been regarded as poor
Urban population – 29% Literacy (% population age 15+) – 61% (World Bank, 2008a)
potential markets because they are comprised of families living below US $2 per day. Such perceptions drive away potential investments in these communities, thus depriving them of
Poverty (% population below US $1 a day) – 33.5% Primary school enrolment – 90% Major issues: maternal and infant mortality
economic opportunities. Drishtee Development and
organization with a social objective, clearly focused on exploring win-win partnerships
GDP growth (2006 – 2007) – 8.4% GDP per capita growth – 7.7% (Sources: World Bank, 2008a; UNDP, 2008)
that stimulate economic growth. Since 2001, Drishtee has invested in Internet kiosks as rural centers for creating employment opportunities and providing advanced access to services
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for rural populations. Drishtee’s network reached nearly 4,000 kiosks by 2008. More importantly, Drishtee mastered the art of delivering value-added services and products relevant to the communities where it placed its kiosks, thereby helping to improve the income, savings, and buying power of the rural towns. In turn, the value-added services and products provided a strategy for sustaining both its kiosk-based telecentres and the core organization itself.
Background India, the largest democracy in South Asia, grabs global attention with its impressive development growth rate of 8.4 percent. The ICT sector contributes to its growth, helped by the country’s unique ability to capture the global outsourcing (BPO) market. Nevertheless, the United Nations Development Program’s Human Development Index (HDI), which measures the relationship between income and human wellbeing, ranks India 132nd among 179 countries, with an HDI of 0.0609 (UNDP 2008). The poor rating was attributed, among other factors, to low life expectancy, low adult literacy (61 percent) and high poverty (UNDP, 2008).
Nearly 80 percent of India’s population live in rural areas composed of 600,000 villages with an average population of 6,000. About 26 percent have access to electricity, although in some places access is limited to three hours a day. The majority earns below US $2 per day, while agriculture provides employment for nearly 60 percent of the population. India has made persistent efforts to bridge its “digital divide.” Large-scale initiatives using ICT4D tools and training to improve the lives of poor communities have been implemented at the state and national levels by both governmental and non-governmental organizations. Among the telecentreaffiliated initiatives, ITC eChoupal, NLogue, Tarahaat (by Development Alternatives), and the MS Swaminathan Research Foundation (MSSRF) are some distinguished projects to note. Note: Statistics and contextual notes documented in this case study article are updated only through August 2007, when the final interviews were carried out with Drishtee senior officials. Some specific data were updated (eg. kiosk numbers and revenue performance) via follow-up discussions with the same officials in December 2008.
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Drishtee’s Institutional Evolution Drishtee Development and Communication Ltd. was a for-profit company, with a socially-oriented mission centered on developing India’s rural economy. To achieve this mission, it set up ICT kiosks in rural villages. The presence of kiosks provided local populations with access to a range of ICTbased products and services. In addition, the availability of an Internet connection allowed rural artisans to interact with outside markets. As locally owned and operated centers, kiosks were also able to provide employment opportunities to rural youth.
Drishtee was initiated as Drishtee.com Ltd. in 2000 as a limited public company designed to deliver rural services based on its proprietary technological solution. The company’s turning point was a highly successful online e-governance software consultancy project called “Gyandoot” that it developed in Dhar, Madhya Pradesh, India, which subsequently won a Stockholm Challenge Award. Since that project, Drishtee has focused on investing its ICT expertise for the benefit of rural communities. In 2001, Drishtee managed to set up three kiosks as pilots, which had subsequently grown to a network of more than 4,000 by 2008.
During its evolution, Drishtee recognized the importance of concentrating on value-added services and products to be delivered through kiosks, in addition to the traditional core services offered at telecentres. The company partnered with multiple organizations for that purpose while setting up its own subsidiary (Quiver InfoServices Ltd.) to develop some specific rural services. As a result, Drishtee was able to launch telecentre-based services in finance, healthcare, and livelihood generation through e-commerce. An example of such service is the Drishtee Haat website (www. drishteehaat.com), an e-commerce online marketplace for rural products. Such value-added services and products together formed the sustainability model for kiosks.
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The Problem They Addressed Out of 222 million households in India, about 35 million (15.6 percent) fit the “bottom of the pyramid” category (NCAER, 2008). The group spends an estimated US $8 billion a year on products and services. Drishtee estimates a US $10-12 billion market across rural India (Drishtee, 2007).
This market segment remains largely untapped due to geographical, social, economic, and developmental constraints. For instance, rural artisans were connected to the markets through a chain of “middlemen” who aggregated and sold their goods. Such inefficient middlemen absorbed the better part of the profits generated through the value chain. Further, the system undermined the technology transfer, market exposure, and bargaining power of the rural consumer. Thus, the average household income remains stagnant at US $50 a month despite the hard work done by rural artisans.
Drishtee’s vision was to explore this untapped market through ICT-based strategies to materialize win-win partnerships with the poor communities that other companies ignored.
Proposed Alternative Drishtee’s proposed solution tried to strengthen the existing value chain by increasing its efficiencies. It did this by implementing a model focused on the following three components: 1.
Value-added services and products to be delivered through the kiosks
An e-commerce portal
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Rural Kiosk: The Drishtee kiosk is a small, rural telecentre facility, usually equipped with a minimum of two computers, an Internet connection, and other basic IT equipment, such as a printer, a digital camera, and a backup battery (UPS). The kiosks are placed in rural villages, thus enabling the consumer to interact directly with the kiosk operator. There were over 2,200 kiosks operational in eight estates of India by the end of 2007, and the company was reportedly adding almost 1,000 kiosks annually into the overall network.
Value-added Services and Products: Many kiosks deliver traditional telecentre services, including basic computer education, computerbased English education, communication services, and photo printing.
There are about 12 value-added services and products designed and developed by Drishtee to be delivered through kiosks. They include education, health, communications, agriculture, and e-governance services. The company also provides micro-finance services for local enterprise development.
The range of value-added services offered at kiosks is subject to local demands. In places where Drishtee can successfully compete with the local market, kiosks sell agricultural products, such as seeds, pesticides, and fertilizers. In areas where access is remote, Drishtee enables kiosks to sell an assortment of products known to be of interest to its target clients, such as insurance packages (life, motor, and crop), mobile phones, mobile recharge vouchers, eyeglasses, and battery-powered lights.
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e-Commerce Portal: Kiosk operators are eligible to access the online portal (http://ind.dristee.com) that opens up a broad array of services. It is a user-friendly online service delivery network built upon a dynamic database, run in both the Hindi and English language. The portal is uploaded regularly with new services.
The other portal, Drishtee Haat9 (www.drishteehaat.com), is an online marketplace to showcase rural artisan goods to metropolitan and international markets. Producers are invited to upload images and information about their products, enabling the artisans to reach worldwide buyers online.
The Business Model and its Evolution Drishteeâ€™s business model was a complex one due to its evolving nature and the innovative experiments carried out by the company on an ongoing basis. Within this evolving context, their business model for kiosk operation was founded mainly on two revenue sources:
A one-time franchise fee (when the kiosks went into service)
Transaction fees (commissions) from the value-added services offered by the kiosks
The franchise arrangement was such that the kiosk owner would pay the license fee to access Drishtee brand name, promotions, value-added services, capacity-building support, and microfinance arrangements.
9 Drishtee Haat was designed, developed, and managed by a subsidiary of Drishtee - Quiver InforServices Ltd
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In the initial stages, kiosk owners had to pay a US $310 (15,000RS. Ind.) initial down-payment, on a total package worth US $1,445 (70,000Rs. Ind.), which included the basic equipment for the kioskâ€™s setup. The balance could be paid in three-year installments. Since April 2006, the model was changed to a one-time license fee (US $206; 10,000 Rs. Ind.), allowing the kiosk owner to purchase hardware.
Transaction Fees from Value-added services: Prior to 2006, kiosk operators did not have much choice of value-added services, other than traditional telecentre services, such as photo printing and e-governance. Since 2006, Drishtee invested heavily to improve its service package. The process involved a needs assessment, demand assessment, mapping of alternative services, pilot testing, and partner identification and rollout.
Drishtee provides services at a fixed price to its kiosk operators, while maintaining variable revenue sharing models with third-party service providers. Kiosk operators offer those services at a nominal fee, which generates revenue for overall kiosk profitability.
In order to provide value-added services to kiosks, Drishtee partners with well-reputed organizations such as ICICI, Amaron, Bajaj, and Microsoft Corporation. (Table 3.5).
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Table 3.5: Some examples of value-added services offered and the partner institutions that make them possible Service provider
Batteries and related equipment
Bajaj General Insurance
Various insurance products
e-governance and various services
Various finance products
Kotak Bank & Life Insurance
Various insurance and finance products
Nokia & Motorola
Recharge coupons and bill payments
Quiver Infoservices Ltd.
English, computer services, e-commerce
Reading glasses and eyesight screening
Prepaid Wallet The concept of a â€œprepaid walletâ€? was introduced in early 2007. A wallet was a fixed amount of money (about US $83 or 4,000 Rs Ind.) to be paid ahead of time by each kiosk owner for services to be rendered. The wallet could be used to pay for a menu of Drishtee services and products. The kiosk owner agreed to top-up the wallet when the amount was depleted by use.
After pilot-testing the model with ten kiosks, approximately 1,300 kiosk telecentres had subscribed to it by mid 2007. A centrally regulated management information system monitored the wallets, and a call center provided a help desk to provide assistance with wallet operation.
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While the average value of the wallets ranges between US $63 and $83 (3,000 - 4,000 Rs. Ind.), the value can be altered according to the individual’s transaction volume.
This prepaid model ensures the purchase of services for the short-term future, providing better financial leverage for Drishtee to organize bulk-service purchases from larger vendors, thus enabling the company to offer services to the kiosk user at an affordable price.
“Mission 6K” – Telecentre Sustainability Model With all its services and business products, Drishtee’s primary aim was to ensure the kiosk owners’ sustainability. “Mission 6K” had been one of its institutional missions to build up a robust package of services enabling kiosk owners to earn minimum monthly revenues of US $124 (“6K” or 6,000 Rs. Ind.). The figure was based on calculations of the expenditures necessary for operating the average kiosk, including rent, utility bills, loan repayments, and salaries, totaling US $93 (4,500 Rs. Ind.). The US $124 (6,000 Rs. Ind.) gross income target was calculated to include a profit of US $31 (1,500 Rs. Ind.).
In 2000, Drishtee set itself a target to reach the “Mission 6K” milestone—the date by which its set of products and services could reliably earn 6,000 Rs. Ind. per month in revenues for kiosk owners—by 2005. The organization met its goal in 2004. By August 2007, Drishtee’s new kiosk operators were taking 6 to 12 months to reach the break-even point.
Financial Performance As with any private company, Drishtee’s major capital investments were derived from shareholders. The company’s capitalization reached a value of 1.5 mil Rs. Indian (US $30,970) in 2000. Nevertheless, since 2004, Drishtee also channeled philanthropic funds (including funds donated by telecentre.org), and venture capital funds (for example, The Acumen Fund) to carry out research
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and development activities. For instance, Drishtee pilot-tested the introduction of Business Process Outsourcing to its operations in 2005 with the financial support of telecentre.org. Such donor revenues accounted for 26 percent of Drishtee’s overall revenues in 2006 (Table 3.6).
The year 2006, six years into its operation, was a financial turning point for Drishtee. In August 2006, the managing director’s comments on the annual report stated that the “financial year ending 2006 has been particularly important, because the company reached the (cash flow) breakeven10 point on one hand, and the total kiosk number surpassed the 1,000 mark on the other hand.”
Overall revenue grew from US $28,000 to US $789,000 over a two-year period from 2004 to 2006. This growth was attributed to the enhanced revenues from both the kiosk franchise fee and the value-added services and products. Franchise revenues were expanded from US $7,600 in 2004 to US $263,000 by 2006.
Nevertheless, Drishtee made a serious strategic shift to reduce its dependence on franchise fees, by shifting the focus into value-added services. Results of the efforts were reflected in its proportionate revenues. While overall contributions from franchise fees decreased from 73 percent to 41 percent between 2004 and 2006, revenue contribution from value-added services increased from 27 percent to 33 percent during the same period (Table 3.6). The percentage contribution from value-added services was reported to increase to 56 percent by 2007. These services were expected to generate 75 percent of overall revenue by 2008.
10 Note: statistics in this case study article are updated only through July 2007 when the original interviews
were carried out with Drishtee senior officials. Some contextual notes, however, were updated via follow-up discussions, which took place in mid-2008.
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Table 3.6: Drishtee’s institutional revenue performance over 3 consecutive years (in US$) Income
Value-added services and product income
(Donor) Project** income
Profit / Loss
(Source: Drishtee Annual Reports 2003 - 2006) **Project Funds include donor funding and equity investments by outside donors: Acumen Fund (equity), telecentre.org, International Finance Corporation (grants), eBay, Chambal Fertilizer and Chemical Ltd. Note: figures are approximated at the rate of 1Rs. Indian = 0.0206$US
Human Resources There are about 84 staff members working full-time for the overall Drishtee operation, including staff members in 46 field offices. The company’s headquarters is located in Noida, Uttar Pradesh, and is staffed with 25 people, including five sales staff, four account staff, and two call center staff (Table 3.7).
Table 3.7: Drishtee’s human resource allocations over 3 consecutive years
Full-time paid staff
Part-time paid (consultants)
Drishtee business associates
* Some staff members were moved to a newly opened subsidiary.
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The member of the four-person board of directors had a mix of corporate sector experiences and a social enterprise perspective, set on serving poor communities. Satyan Mishra, the founding champion and currant Managing Director of the organization, had a master’s in business administration (MBA) and extensive experience in the field of software development. His contributions had been highly acclaimed with multiple global awards, including an Ashoka Fellowship in 2004 and participation in the Clinton Global Initiative in 2005.
Challenges Selecting competent ground-level entrepreneurs remains the biggest challenge for Drishtee. During the early stages, people had been recruited based on their financial capacity to run a business focused on the “Bottom of the Pyramid.” Additionally, psychometric tests had been carried out to select appropriate personalities. But over the years such models had been shifted to more pragmatic approaches. Now prospective entrepreneurs are given a chance to reach out to the communities where they hope to do business and show results. Community acceptance, dedication, passion, and a focus on results are measured in the selection processes.
Nearly 10 percent of kiosks closed down during the company’s early phases. The situation has been reportedly improved with continuous improvements in site selection, entrepreneur selection, and the effectiveness of service packages.
Rural infrastructure deficiencies, such as electricity, remain a constant challenge. Uninterrupted power supplies (UPS) overcome the problems to a considerable degree by protecting hardware and customer documents, but are not a solution for long periods without electricity. The problem requires more innovative solutions in areas without reliable access to electricity.
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Exploring the knowledge market at the grassroots D.Net, Bangladesh
Box 3.3: Country fact sheet
Total Population – 158.6 million
Urban population – 27%
known as D.Net, is a registered non-profit,
Literacy (% population age 15+) – 47%
Poverty (head count rate in year 2000) –
Bangladesh. Formed in 2001, the organization primarily engages in applied research in ICT for development, poverty alleviation, and
50% (upper poverty line), 34% (lower poverty line) Primary school enrolment – 103% Major issues: high incidence of poverty &
human rights. Based in the capital city, Dhaka,
D.Net implements activities around the entire
GDP growth (2006 – 2007) – 8.4%
country, with a special focus on partnerships
GDP per capita growth – 7.7%
with multiple stakeholder institutions. Although
(Sources: World Bank, 2002; World Bank,
85 percent of the organization’s financial needs
2008c; UNDP, 2008)
are still funded by external donors, D.Net is striving to grow its social enterprise base, expanding from its current 15 percent internal revenue
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towards self-sustainability of the core institution. Such entrepreneurial ambition is conceived with the help of the devoted core inventors of the organization, who have created unique, awardwinning programs, such as the Pallitathya model and a for-profit subsidiary, Multimedia Content and Communications Ltd.
Background Bangladesh, neighboring India in South Asia, is one of the world’s most densely populated nations. The country’s population is evenly distributed throughout 64 districts, except for three hill tract districts. With only four metropolitan cities, urbanization is limited to 27 percent of the population, while 73 percent population live in rural areas, most of whom depend on agriculture for survival. Among the population of 158 million, 55 percent over the age of seven cannot read or write (World Bank, 2008c). With a Human Poverty Index11 value of 36.9 percent, Bangladesh is ranked 110th among the 135 developing countries in the world (UNDP, 2008). In particular, the country has a high child malnutrition rate, which, at 48 percent, is regarded as the second highest in the world.
Though Bangladesh has made reasonable progress since the early 1990s, with an average of 5 percent GDP growth and almost 100 percent primary school enrolment (World Bank, 2008c), its political instability and poor regulatory policies still undermine its well being. A vibrant Bangladeshi NGO sector, with an estimated 2,000 NGOs functional in the country, is making progress against negative social indicators. Some of Bangladesh’s NGOs, such as BRAC, ASA, and Proshika, are among the largest such organizations in the world. These organizations’ innovative anti-poverty experiments are often expanded into nationwide programs, impacting the micro-finance, education, and health sectors, while also facilitating advocacy and women’s empowerment (World Bank, 2006).
Note: statistics and contextual notes documented in this case study article are updated only through July 2007, when the final interviews were conducted with the D.Net senior officials. 11HPI – 1; Human Poverty Index for developing countries, reported by the UNDP Statistical Update, 2008.
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D.Net’s Evolution In 2001, a team of university academics engaged in a research project to measure Bangladesh’s “e-readiness.” The results awakened them to the need of rural communities to have access to information and knowledge. This realization led to the formation of D.Net, with a core group of 18, including seven expatriates, who remain founding directors.
The Problem They Respond to High incidences of poverty, low literacy amid corruption, political instability, and poor regulatory policy environments, prevent access to critical information on livelihood and human rights for the majority of the population. Thus, this hinders the efficiency of poverty alleviation of more than 40 percent of the poor population in the country.
While electricity reaches only 28 percent of the country, mobile phone networks rapidly expanded since 2000 to reach 100 percent of the territorial area by 200812. Such progress has provided an opportunity to build relatively low-cost technological infrastructures to improve access to critical information regarding livelihood and human rights to poor communities. Pallitathya is the model D.Net developed to capitalize on this opportunity window, in order to serve poor communities throughout the country.
What is Unique? In early 2004, a needs assessment survey was carried out in 22 of 64 districts in Bangladesh. The survey’s goal was to better understand the information needs of poor communities and to select the villages to pilot-test D.Net’s Pallitathya model. After selecting four villages, further intensive surveys were carried out to identify various information service providers in specific thematic areas, including agriculture, health, education, appropriate technology, and human rights.
12 Three hill-tract districts were excluded from mobile communication networks due to state policy decisions.
This policy has since been altered, recently allowing 100 percent territorial mobile phone network coverage.
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The Pallitathya model has three components; Pallitathya Kendra (the telecentre), the Pallitathya helpline and the Jeeon-IKB (Information and Knowledge Base). •
The Pallitathya Kendra was a conventional telecentre equipped with three to five computers, a digital camera, a printer, and Internet access (GPRS technology). In addition, the center was equipped with soil testing equipment, a nebulizer, and other equipment to help centers offer both knowledge-based services (information) and income generating services (e.g. computer services).
The Pallitathya helpline was a mobile phone-based counseling operation created by linking “Mobile Lady” and the “call center.” Mobile Lady is essentially a female “informediary” who visits rural communities equipped with a mobile phone and a few other mobile tools (e.g. a handheld pH meter). Mobile Lady visits door-to-door and connects information seekers with the Pallitathya Call Center, a help desk located in Dhaka.
The Jeeon-IKB is a customized livelihood information and knowledge base, created in a local language (Bangla) offline database13.
In the Pallitathya helpline model, Mobile Lady serves as the “last mile” of connectivity, visiting village households on a bicycle with a cell phone, traveling five to seven kilometers a day, to meet village people who seek livelihood or other information. She also provides specialized services, such as water pH measurement at shrimp farms. The Mobile Lady relays customers’ queries to the Pallitathya help desk (or call center) where additional information is generally requested.
The Pallitathya help desk was situated in D.Net headquarters. It was equipped with a phone line, headsets, a computer, a voice recorder, Internet access, and a printer. Six subject specialists were employed in two shifts, who were given the heavy task of receiving and answering calls, while accessing knowledge databases as required. All the research tasks were expected to be completed in the shortest possible timeframe, ensuring minimum phone bills to the customers.
13 It is currently available online at www.jeeon.com.bd. The original database was split and is available on two new
websites: www.jeebika.com.bd, a job portal, and www.jeeon-thikana.com.bd, an information directory service.
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Business Models Pallitathya Kendra was hosted by a local NGO, carefully selected by D.Net. The NGO contributed the location, set-up, and management of the telecentre. D.Net provided two computers, initial training, and access to the Pallitathya model.
D.Net does not charge a license fee to the hosting NGO, which operates as an independent body. A Memorandum of Understanding (MOU) signed between D.Net and the local host held both organizations accountable for carrying out Pallitathya activities. D.Net believes that such a shared responsibility model better serves the self-sustainability interests of the local host organization.
Since knowledge products were the value-added core service of D.Net, revenue generation was concentrated on Mobile Lady and the Pallitathya help desk components. As illustrated in Table 3.8, a variety of fee-based service packages were offered. If the villagers sought quick answers, the prices they had to pay were relatively high, whereas free services were available if the village accepted the “snail mail” option.
There were 924 queries generated from four pilot villages during first six months of operation, of which 75 percent were generated during the “free time” (Table 3.8). Housewives were the biggest customer group, and major topics of questions raised were health and agriculture related (Raihan et. al., 2005).
After the pilot phase, D.Net expanded the Pallitathya helpline services to an additional 50 villages and plans were underway to expand the service countrywide. Revenue for D.Net was based on the revenue sharing models it had negotiated with its original mobile operators.
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Table 3.8 â€“ Types of services provided via the mobile lady and their corresponding business models
Answer Rate Taka/ min
Duration to receive answer
Rate Taka/ min
Mobile to mobile (instant reply): villager calls to help desk seeking instant information, answers provided instantly via mobile.
Mobile to mobile (late reply): villager asks a question, and answers are provided via mobile within 3 days.
Mobile to letter: villager asks the question via mobile, but answers are sent by post within 7 days
Letter to letter: villager asks question through post, and answers are provided through post
sunday 9-11 am wednesday 5-7 pm
Free time: two times a week villagers can ask questions and answers are provided instantly using both mobile and post options.
Note: 1 Bangladesh Taka = US $0.0145 (Source: Raihan et. al., 2005)
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Social Enterprise Learning Curve The major objective of D.Net’s social enterprise engagements was to seek alternatives in order to reduce financial over-dependence on donor funds. Since the inception of the organization, its social enterprise interest went through three stages:
a) various development-related consulting engagements b) revenue generation based on knowledge products c) re-formation as a social enterprise institution.
Consultancy-based revenue generation was carried out by the multi-disciplinary expert body of D.Net’s founding members. This team offered consultancy services for a variety of projects (within and outside of D.Net) and donated a minimum of 20 percent of the revenues14 to D.Net. For instance, in 2006 about 23 percent of D.Net’s revenue (US $88,000) had been generated from such contributions (Table 3.9). In addition to the financial gains, such consultancy engagements provided wider opportunities to network with new partner institutions, expand the organization’s knowledge pool, and build the organization’s profile.
With the inception of its Pallitathya program in 2004, D.Net recognized an opportunity window to market tailor-made “knowledge products” to cater to grassroots community needs. The program gradually developed into the “Jeeon-IKB” knowledge base with 30,000 local language web pages in nine thematic areas. The subsequent integration of animated audio-visual content (e.g. “Moni” - www.moni.com) further added the value.
14 In some cases, 100 percent of the revenue was retained by D.Net, and used to support programs like BORN
(Bangladesh Online Research Information Network: www.bdresearch.org).
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Recognizing the market potential for the product, D.Net explored two avenues: an individual subscription model and a wholesale model. Under the individual subscription model, individual subscribers accessed the content for a fee, via telecentres or other methods of Internet access. In the wholesale model, a third party, which may be a donor, can buy the content as a wholesale product and make it available to local telecentres.
After relentless efforts over several years, in 2008, D.Net successfully negotiated with the United Nations Development Programme (UNDP) to purchase a portion of the audio-visual content available in the database. The organization further continues to explore market opportunities, despite some bitter experiences with corporate partners, who reportedly abandoned negotiations halfway.
In parallel, D.Net developed its own multimedia unit and produced a number of documentary films, which were acclaimed at home and abroad by development practitioners. Further, they gained significant experience in developing and maintaining dynamic websites and portals, which started to catch the attention of various organizations.
Taking all this into account, in July 2007, the D.Net governing body decided to form a separate commercial subsidiary named Multimedia Content and Communications Ltd. (MCCL) that was entirely focused on knowledge-based income generation to raise revenue in order to support the organizationâ€™s general operations. The organization began offering services in July 2008.
The impact of these sustained efforts towards institutional sustainability was visible in D.Netâ€™s revenue patterns in 2005 and 2006. The overall revenues doubled in just over a year, from US $183,000 to US $381,000. The positive gain was due in part to expanded fee-based revenues, which climbed from 8 percent in 2005 to 16 percent in 2006 (Table 3.9). D.Netâ€™s target is to raise 50 percent of overall revenues from fee-based services in upcoming years.
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Table 3.9: Revenue performance of D.Net in 2 consecutive years ($US) Sources of Revenue
External revenue including philanthropic donors Donor funds + expatriate income* Donations from local foundations
Individual donations (staff contributions as % of consultancy work)**
Fees for service(s)
Knowledge product sales
* ‘Voluntary Association for Bangladesh’ is a US-based non-profit organization (www.vabonline.org/vabnj) that collaborates with D.Net on a regular basis. The organization carries out fundraising events and channels funds to D.Net. These funds are used mainly for computer learning programs **These reflect the contributions from seven of the 18 founding members who contributed a minimum of 20 percent of their income from consultancy engagements that they carried out for a variety of academic projects
Governance Overall, D.Net’s operation was run by 70 full-time employees and six part-time employees as of 2007. Of these, ten staff members worked for Pallitathya help desk services and seven were engaged in content development activities. There were 18 founding members, who were engaged as consultants in various projects to provide expert services (Table 3.10). The governing body, which is D.Net’s highest policy-making body, is elected every two years at a general meeting. The governors appoint an executive committee, consisting of three founding members and two staff members. An executive director executes the policies designed by the executive committee.
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About 17 full-time staff members are directly involved with social enterprise activities. Another three staff members and four founding directors spend part of their time on social enterprise activities, including the design of the MCCL. Four founding directors had had previous entrepreneurial experience, such as developing business models for the CSR Institute of Bangladesh, the software industry, and the banking sector. Since 2006, a consultant had been employed to carry out the overall design of MCCL.
Table 3.10: Human resource capacity of D.Net over 3 consecutive years 2007
Full-time paid staff
Governing Body members
Part-time paid staff
Mobile Lady: Nayan Mondal Nayan Mondal joined Sehlabunia Pallitathya Kendra in September 2003 as a volunteer and in 2005 qualified as a “mobile lady” after passing an interview designed by D.Net.
Nayan’s day begins at 8:30 a.m. at Pallitathya Kendra, studying the day’s information updates. After spending some time with telecentre staff, she begins her bicycle journey to nearby villages. By early afternoon, she returns to the telecentre to carry out her follow-up work before leaving office at 5 p.m.
Her travels follow a monthly village visit plan, which is occasionally adjusted based on demand. She carries a water testing kit, enabling her to test the pH level of shrimp ponds. pH testing is a
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popular service; she averages six tests a month, although she can do as many as 27 tests during peak periods. If the pH falls outside the acceptable range, Nayan often connects to the help desk to request technical help for the client.
The mobile lady has a monthly target of 75 villagers to be linked to the Pallitathya help desk through her mobile phone. She meets this target by connecting an average of four people, as she travels five to seven kilometers in an average day.
Nayan moves door-to-door, and finds familiar people waiting for her arrival. She generally keeps moving, but occasionally spends extra time for an extended chat with a family she knows well. The mobile ladyâ€™s constant face-to-face contact with villagers is helpful beyond her specific task. For instance, when the Pallitathya introduces a new service, she carries leaflets and other material to promote it.
When she finds potential customers, Nayan first listens carefully in order to understand the personâ€™s queries, as often they are not explicit questions. Then she assesses the urgency of the request and decides whether to refer the person to the help desk immediately. If the issue is not urgent, she takes the query back to Pallitathya and follows up.
The Pallitathya Kendra manager checks the mobile ladyâ€™s progress against her monthly targets and a log book that records every mobile phone call. During the past six months (February to July 2007), she had failed to meet her target twice. The primary reason for the failure was reported as having to sit for her final graduation exams at the university.
As per the records, 95 percent of help desk calls were completed, meeting the customer satisfaction. Nevertheless, for the five percent of the answers that were not deemed satisfactory, the mobile lady was never refused payment. Villagers appreciate her hard work in trying to deliver better service. For some queries she calls the help desk four or five times in search of a better answer, though the client does not pay extra.
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When she first started work as a mobile lady, Nayan found that people would make fun of her, asking sarcastic questions, such as the personal phone number of the Bangladesh Prime Minister, and celebrities. That attitude changed as people began to realize the seriousness of the help desk approach and saw its gain for themselves or their neighbors. Though circumstances often caused her to travel late in the evening, she never felt that her personal safety was threatened because she is known throughout the territory.
Gender sometimes plays a role in the operation. Males in urban settings occasionally show some irritation at receiving her services, but Nayan reports that gender hardly seems to matter in the villages. She feels that this service should be carried out by females, as it gives a chance for females to move around - an activity that normally might be frowned upon.
Challenges Despite having a market potential for knowledge products, D.Net could not move quickly to convert the opportunity into a financial gain. Its biggest challenge was the infusion of internal business capacity in the absence of an in-house business champion. D.Net’s grassroots user base is slowly recognizing the value of knowledge products. Yet, the group has very little buying power. About 75 percent of the 924 queries generated during six months of the pilot operation had utilized “free time” service. This will continue to make it difficult for D.Net to expand its revenues, unless it changes its business model. Designing appropriate pricing models for the help line was a constant challenge. In the absence of previous examples from similar organizations, D.Net applied a corporate sector “call-center” model. The inconsistent information demand patterns, the diversity of the query topics, and the need for multitasking required highly competent—and therefore expensive—people to work at the help desk. Existing business strategies could not afford such expensive professionals.
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Telecentres as a Corporate Social Responsibility (CSR) Grameenphone CIC Abstract
Box 3.3: Country fact sheet Total Population – 158.6 million Urban population – 27%
Established in February 2006, Grameenphone
Literacy (% population age 15+) – 47%
Community Information Center, widely known
Poverty (head count rate in year 2000) –
as Grameenphone CIC, is one of the youngest
50% (upper poverty line),
units in Grameenphone Ltd. The roots of the
34% (lower poverty line),
businesses can be traced back to Grameen Bank, Bangladesh’s renowned microfinance agency, whose founder, Mohammed Yunus, was awarded the Nobel Peace Prize for his efforts to eradicate poverty through microfinance.
Primary school enrolment – 103% Major issues: high incidence of poverty & child malnutrition GDP growth (2006 – 2007) – 8.4% GDP per capita growth – 7.7% (Sources: World Bank, 2002; World Bank, 2008c; UNDP, 2008)
Grameenphone Ltd. is the leading telecommunications service provider in Bangladesh, with more than 10 million subscribers as of January 2007. The company was established in 1996 as a joint venture15 between Telenor ASA of Norway and Grameen Telecom, another member of the Grameen family. Though registered as a “for profit” organization, Grameenphone CIC is dedicated to establishing and delivering telecentre-based services across Bangladesh. The organization considers its efforts to work with telecentres as a manifestation of its Corporate Social Responsibility (CSR) philosophy, rather than a profit-oriented operation. The company therefore operates at a marginal profit—although it could command more in the marketplace—in order to ensure the sustainability of the program. Note: statistics and contextual notes documented in this case study article are updated only through July 2007, when the final interviews were conducted with the Grameenphone CIC senior officials. 15 In the joint operation, Telenor ASA held 62 percent of the company shares while Grameen Telecom held 38
percent of the shares.
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The Grameenphone venture is unique for its optimistic engagement in the telecentre sector, while the world was questioning the ability of telecentres to stand as economically sustainable units. The project has demonstrated promising results to date, as it has scaled up operations from 16 pilots in 2006 to 568 CICs within a one-year period.
Background The original concept for CIC was submitted by the Fibre Optic Network Division of Grameenphone and then refined in a new business idea competition carried out by Telenor ASA16. One leading idea that emerged was to â€œintroduce Internet services to rural communities, establishing cyber centers using newly introduced EDGE17 technology.â€? The concept was subsequently further refined to build telecentres instead of cyber centers, because of the much stronger social impact that telecentres make in the communities they serve.
In 2006, Grameenphone was tasked to carry out a preliminary study with the support of the Global System for Mobile Communications Association (originally Groupe Speciale Mobile Association; GSMA). The team had visited telecentres in Bangladesh and evaluated existing models. The result was the design of the first pilot to test the telecom services in 16 telecentres located in different areas of the country. During the exercise, GSMA provided technical assistance and enterprise development skills as free services, exploring the future potential for business.
A positive evaluation of the six-month pilot gave Grameenphone CIC the confidence necessary to scale up the operation, setting an initial target of 500 CICs by the end of 2006. The joint venture
16 Telenor ASA is a Norwegian telecom company with a strong international reputation as a corporate
sector organization working on mobile telephony in 12 European and Asian countries. 17 EDGE - Enhanced Data Rates for Global Evolution - an advanced mobile connectivity protocol.
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A positive evaluation of the six-month pilot gave Grameenphone CIC the confidence necessary to scale up the operation, setting an initial target of 500 CICs by the end of 2006. The joint venture reached that goal, which placed at least one in each sub-district (upuzila) of the country, without much difficulty. Since then, the scale up operation has been deliberately slowed to optimize operations and ensure quality of service. Despite the slow down, by June 2007, it reached 568 CICs.
The operation is estimated to provide over 20 million rural people the chance to use the Internet and email for the first time, as each telecentre provides state-of-the art EDGE (Enhanced Data Rates for Global Evolution) technology, an advanced mobile technology enabling high-speed mobile Internet and data services. As the first and only provider of EDGE technology in Bangladesh, and in the country at the time, Grameenphone became the default Internet service provider (ISP) for CICs.
The Network Business Model The Grameenphone CIC model is a franchise system, where the company teams up with local entrepreneurs (the franchisees) to set up telecentres (CICs) according to detailed franchise rules. The total cost of establishing a CIC franchise is estimated to be US $1,000. Local entrepreneurs are asked to invest in the location (rent), build-out costs, furniture, and equipment. Grameenphone CIC provides the brand name, including the logo, designer sign boards, and look and feel of the store, promotion materials (hanging poster, wall posters, pamphlets, and T-shirts), and initial value-added services and capacity-building opportunities. Value added services include Grameenphoneâ€™s public line phone connections and its e-top up services (FlexiLoad18) and EDGE mobile Internet services. A 12-month gestation period was provided before due payment for Internet services, and FlexiLoad and franchise fees, thus allowing the telecentre owner to have a marketable service to offer from day one, without a significant cost to pay during
18 The FlexiLoad e-top up service is being offered by Grameenphone to retailers upon their request. This service is such a
popular product that entrepreneurs need to qualify for it via both financial and non-financial criteria, and stay on waiting lists for over six months to acquire the service. A lower bar was set for CIC owners to qualify and they were assured that they would receive the service as soon as they requested it if they qualified.
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the first year of operation. Grameenphone CIC estimates that the one-year period is sufficient for local owners to reach break-even point.
The contract agreement between the local telecentre owner and Grameenphone CIC was established initially for a three-year period, with room for the owner to cancel the agreement with three months prior notice, while sharing the profit or loss between the two parties. The idea was primarily to foster the growth of entrepreneurship among the rural unemployed while eliminating the digital divide through ICT services.
In order to finance the venture’s start-up costs, Grameenphone invested US $50,000 to cover administration and program activities for the operation. Of 16 pilot CICs, 15 received credit from Grameen Bank19 while the remaining CIC was self-financed by a local entrepreneur.
The Grameenphone operation was expected to break-even by the end of the first year (early 2008), when franchise fees
were due. The product sales (FlexiLoad, etc.) were being paid to
Grameenphone (table 3.11).
The CIC Business Model The business model of the Grameenphone CIC was based on three key objectives: •
Economically self-sustainable telecentre (CIC) model
Entrepreneur-centered local ownership
Supporting local communities to connect with ICTs
19 Grameen Bank is the microfinance arm of the Grameen family of businesses. 20 The franchise fee still awaits legal clearance from government authorities. Furthermore, there is no revenue
expected during the first year as a12-month grace period has been offered to CICs.
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Table 3.11: Estimated revenue21 from the overall Grameenphone CIC network operation (including commissions to CICs)
Sources of Revenue
Franchise fee Product sales 1:
Product sales 2:
US $3 mil
US $6 mil.
For Grameenphone CIC
US $12 mil $US
US $1 mil
Public phone TOTAL
US $3.25 mi
US $6.7 mil
GP & CIC owner GP & CIC owner
US $13.1 mil
* Figures include total revenue projected collectively for Grameenphone and CIC entrepreneurs (Note: figures were only projected, as the proper accounts were not in place by the time research interviews were conducted in July 2007).
Grameenphone had set economic milestones to reach these three objectives: Ensure each CIC earns a minimum of US $5 per day. Achieve CIC brand and store recognition by 20 percent of the local community Quickly reach extensive scale of operation (i.e. all the sub-districts of the country will have at least one CIC by the end of the initial year)
21 Revenue calculated only for 568 CICs. Potential network expansion is not taken into account.
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The local CIC entrepreneur had four major products to generate revenue: 1.
FlexiLoad (e-top up22 service)
Other ICT services, such as computer use, photocopying, photo printing, laminating, etc.
Of the services available, the joint venture expected the majority of income to be generated by FlexiLoad and phone services, for which the market was already established. The sales of Internet and computer services were expected to catch up gradually over the one-year period.
Enabling the Environment to Carry out Business Operations Grameenphone CIC pays serious attention to the following factors in order to ensure the smooth operation of its business plans: 1.
Selection of CIC operators (with willingness to invest)
Capacity-building and training of CIC operators
Help desk services available for CIC operators
22 FlexiLoad is a prepaid mobile phone system introduced by Grameenphone. Using the system, prepaid phone
holders can make payments at FlexiLoad dealers in order to charge their phones electronically. A commission is paid to the dealer (in this case Grameenphone CIC) for each transaction.
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Operator Selection: Operator selection is one of the prime areas of attention. Most local owners have prior experience in small enterprise management, computer or network administration, digital photography, mobile telephony, and “scratch card” selling. Grameenphone recruits prospective local CIC owners through systematic pre-promotions. Due to the established brand name of Grameenphone, local entrepreneurs look forward to becoming partners. Grameenphone representatives carry out financial due diligence to short list the potential candidates and then finally subject them to a rigorous interview process to ensure that they fully meet the organization’s high standards for entrepreneurship.
Local Promotions: Promotion of the CIC among the local communities begins before the launch of the CIC. Inauguration of the CIC is a highly promotional exercise, where organization makes every effort to ensure the participation of political, religious and community leaders at the ceremony. Such high profile support builds the credibility of the CIC operation within the locality.
Additionally, Grameenphone takes advantage of its 4,000-person nationwide staff by inviting staff members whose hometowns are close to new CIC venues to attend to the CIC opening ceremonies as “ambassadors of Grameenphone.” These occasions provide staff with recognition in front of their relatives and peers for contributing to the development of their hometown.
Capacity-building and Training:
CIC operators are provided with regular and consistent capacity-building and training programs. This includes building the capacity of the operators to recognize and respond to ground demands, community mobilization techniques, and entrepreneurial strategies.
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Help Desk Services: CIC operators require technical and other help as they engage with day-to-day operations. To support them, Grameenphone has a countrywide network of more than 600 “service desks’’ that offer technical assistance to its mobile customers. This network was engaged to offer on-demand help services to CIC operators as well.
Additionally, Grameenphone CIC has mobilized the help of multiple NGO partners to help CIC operators mobilize the community.
Value-added Services: Grameenphone CIC concentrates on expanding the value-added services available in the CICs by offering diverse thematic services, including those related to agriculture, health, and education, in addition to ICT services. For instance, they aim to offer updated market information, pest and disease decision-making support through its CICs. In order to provide this information, the organization builds partnerships with state, private and NGO sector organizations. In one such effort, Grameenphone CIC has started negotiations with Katalyst and D.Net (two other prominent NGOs operating in the country) to provide access to their knowledge services (help desk and databases). Telemedicine is another area of interest for Grameenphone, which is already piloting experiments to test how telemedicine services could be delivered via CICs.
Staff Twenty full time staff members and one part-time intern run Grameenphone CIC’s overall operation (Table 3.12). The senior managers all have experience in telecom and ICT-related business management, and the rest are recent university graduates.
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Grameenphone’s (mother organization) staff subsidizes some management tasks that would otherwise have to be performed by Grameenphone CIC staff. For instance, promotional campaigns were designed by Grameenphone’s marketing department.
Table 3.12: Human resource allocations for Grameenphone CIC operation
Full-time paid staff
Part-time paid staff
Corporate Social Responsibility (social mission) Grameenphone had multiple reasons to be seriously conscious of its social responsibility. As a leading mobile service company in Bangladesh, it serves over ten million customers. And as a partner of a world-renowned social development organization – Grameen Bank – it had a reasonable responsibility to demonstrate tangible social impact from its profit-making enterprise.
Among Grameenphone’s earlier CSR engagements, its “village phone” project,23 where over 191,000 poor women were given mobile phones through micro-credit programs offered by Grameen Bank, received the widest recognition. The program had reportedly been able to boost the income of rural poor families, promote rural healthcare, develop agricultural businesses and, more importantly, empower the status of rural women.
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Grameenphone CIC was the latest CSR model. A Grameenphone research team had already evaluated the model against few other CSR pilot programs and identified the CIC model as the promising one to satisfy the organizationâ€™s CSR objectives. The CIC model was designed, on a very large scale, to help students, adults, artisans, and women in rural or semi-urban communities, gain the access and knowledge to use ICTs competently. For many clients, CICs helped them save time and money, by cutting down on distant travel to townships.
The model itself was financially self-sustainable and thus would not need a continuous channeling of outside resources (i.e. donor funds or company funds). Furthermore, the model provided more income-generating opportunities to local entrepreneurs â€“ the CIC owners â€“ than did any alternative model studied.
Grameenphone considers the money it invested in the CIC program as an investment in the community. For instance, at one CIC, the company provided a one-year grace period on its fee for Internet access (worth US $12 or 850tk per month) and franchise fee (worth US $14.5; 1,000tk per month). The company does not expect to run the CIC program as a major profit-making venture; instead, the money generated will be reinvested in the expansion to more CICs.
23 The Village Phone program offered mobile phones on credit to rural women. The mobile component of the
program was offered by Grameen Telecom (of Grameenphone) and the micro-credit financing was provided by Grameen Bank (parent organization of the Grameen Family).
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Case Study: Grameenphone CIC – “E-com Cybercafé”, Gazipursadar, Dhaka. The “E-com Cybercafé” in Gazipursadar, Dhaka, was founded more than three years ago as storefront computer hardware repair business, but added a CIC operation six months earlier. The CIC is located on the second floor of a building complex, situated next to a busy main street in a marketplace inside Dhaka city. The CIC faced heavy competition by many other shops offering the FlexiLoad service in its neighborhood.
The CIC is equipped with three computers with Internet connectivity to offer basic computer and Internet services to customers on a fee-for-service basis (e.g. US $0.30 or 20 taka per hour of Internet use). About 15 customers visit the center on an average day, mostly in the afternoon hours. The center is mostly empty during morning hours. Most users of the CIC are journalists editing their articles and uploading them to their respective newspapers.
As the CIC service was still new to the area, not many people were aware of its existence; thus, it planned to engage in a number of local promotions. The CIC was managed by the owner himself (who was busy with his computer repair shop as well) and an assistant. The owner presented himself confidently, demonstrating his entrepreneurial skills with financial projections and clearly articulated future business plans. According to his business plan, the initial target group was local school children, to whom he would offer computer training programs. His market strategy recognized children as the entry point to promote the CIC among adults. He believes that, in the long run, adults will tend to buy the refurbished computers he makes, too.
“Having the Grameenphone brand name was a big value to my business, and their help (capacitybuilding and promotional activities) in many ways helped my operations significantly” – states the owner, for whom it was quite difficult to qualify for CIC ownership.
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Though the CIC wasn’t making reasonable revenue at this moment, the owner anticipated a good financial future. He was subsidizing the CIC operation from the income generated from his computer repair shop, but had plans to gain a reasonable profit starting from next six-month period.
Table 3.13: Income / expenditure analysis of the CIC Income;
3000Tk (US $44) / month
700tk (US $10) / month – electricity
1500tk (US $22) / month – maintenance and other expenses
2500tk (US $36) / month – wages for assistant
1700tk (US $25) / month
Projected income in 6 months: 10,000tk (US $146) / month (maximum potential would be 15,000tk (US $219))
Challenges The biggest challenge for the Grameenphone CIC was the lack of computer and ICT awareness among the communities. This challenge was anticipated from the beginning, and the organization has therefore designed promotional campaigns to raise general public awareness about CICs and their available services. Yet, this may require persistent promotions. Another challenge was a lack of confidence among CIC owners, particularly about their CIC’s ability to sustain itself as an economically sound operation. Grameenphone CIC carried out continuous monitoring while providing capacity-building, help desk services, and other support systems to build owners’ confidence and ensure the sustainability of individual CICs to reach their anticipated break-even point during a one-year period.
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Box 3.5: Country fact sheet Total Population – 19.9 million
Evolution of a Social Enterprise Sarvodaya-Fusion Abstract Sarvodaya is Sri Lanka’s most renowned NGO, widely regarded as one of the largest in South Asia, working in more than 15,000 villages
Urban population – 15 % Literacy (% population age 15+) – 91 % Poverty (% population below national poverty line) – 23% Primary school enrolment – 108% Major issue – Long-running armed conflict in Northern Province GDP growth (2006 – 2007) – 6.8% GDP per Capita growth – 6.5% (Source: World Bank, 2008)
across Sri Lanka. The organization pioneered telecentres in Sri Lanka during 1997. Toward 2006, as multiple organizations, including the government’s e-Sri Lanka program scaled up telecentres across the country, Sarvodaya shifted its focus to the sustainability of its initiatives and thus formed Sarvodaya-Fusion as a specialized ICT4D program. Fusion, from its inception, was a social enterprise, pursuing double bottom lines. The organization’s social bottom line included setting up zero-cost Village Information Centers (VICs) to support marginalized village communities. Its economic bottom line aimed at revenue generation by delivering ICT services through telecentres
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Background Sri Lanka’s continuing strong economic growth (about 6 percent), is a paradox given the continuing ethnic war in the country’s North-East theatre. Despite its economic growth, however, 22 percent of the country’s 20 million inhabitants live below the poverty line. Seventy-seven percent of the population live in rural areas, though unlike the trend in many countries around the world, Sri Lanka exhibits relatively low rural-urban migration.
Despite a high adult literacy rate (91 percent), computer literacy in Sri Lanka is limited to 10 percent of the population and Internet penetration is reported to be as low as 3.7 percent (ITU, 2008). Sri Lanka’s capital, Colombo, and the mostly urban southwestern region of the country enjoy high technology penetration, while the rural majority is deprived of most development opportunities. Poor infrastructure, such as the lack of electricity, which is limited to 68 percent of households, hampers access to the technology opportunities of the digital age for the majority of the community.
Since 2003, Sri Lanka’s government has implemented a national ICT program e-Sri Lanka, which aims to mainstream ICTs into the national development process, empower citizens, and bridge the digital divide. To date, the program has invested US $80 million with the help of international donors, including The World Bank. e-Sri Lanka is implemented by ICTA—the ICT Agency of Sri Lanka—which plans to set up 1,000 telecentres (branded Nenasala) in rural locations. Five hundred and seventy of the telecentres were in operation by mid-2008.
Sarvodaya, the country’s pioneering telecentre initiative since 1997, also collaborates closely with the e-Sri Lanka initiative. As the country’s largest development NGO, started in 1958, Sarvodaya continuously channels substantial resources to improve livelihood in 15,000 villages (about half of all villages in the country). The Sarvodaya Economic Enterprise Development Services (SEEDS) program—Sarvodaya’s micro-enterprise arm—delivers US $34.7 million in micro-credit to nearly
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180,000 grassroots entrepreneurs. There are over 3,900 self-empowered village communities, which manage US $30 million in community savings in multiple community-driven enterprises (SEEDS, 2008).
In 2006, Sarvodaya launched a specialized ICT4D program called Sarvodaya-Fusion, which consolidated the organization’s decade-long ICT4D experiences. Sarvodaya-Fusion’s mission was to empower rural communities using ICTs. As an emerging social enterprise, Sarvodaya-Fusion leverages the diverse resources of its parent organization, Sarvodaya, as well as the multiple state (and other) resources in the country.
Problem They Addressed As of mid-2008, there were over 600 functional telecentres across Sri Lanka that were created by multiple organizations, with the majority being set up by ICTA. Most of these telecentres were installed in rural locations where reasonable infrastructure24 facilities were available. These telecentres struggled to reach economic sustainability.
An additional 3,000 rural communities, most of which lacked the proper technical infrastructure, though they actively participated in Sarvodaya’s development programs, were looking forward to digital advancements (connectivity and training). Those infrastructure impediments, along with computer illiteracy and the absence of appropriate technical assistance made it difficult to install telecentres in these communities.
24 For instance, site selection criteria for telecentres sponsored by the ICTA (www.icta.lk) were:
a) Size of the population (2,000 – 5,000 people) b) Availability of a fixed market within a five km. radius (as an indication of economic activity) c) Presence of a school with a minimum of 300 students d) Availability of electricity. Sarvodaya’s telecentres were located in its district offices, where electricity, phones, and transport facilities were already available.
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Key Program Elements Sarvodaya-Fusionâ€™s strategy rests upon two major key program elements: 1.
Village Information Centers (popularly known as VICs)
Built upon the social capital and resources deployed by Sarvodaya programs within marginalized rural villages across Sri Lanka, VICs, are basic forms of libraries, and do not have computers or Internet connectivity. The majority of villages targeted for the VIC program were located off the connectivity grid because of their low market potential for telecommunications and other service providers.
Fusion facilitates the education and preparation of poor, rural communities through the VIC model, then expects them to interact with telecentres as an ICT window available in nearby townships. Figure 3.1: Rural communities access basic information at VICs and are
expected to interact with telecentres for ICT services.
Economic sustainability of telecentre offering services at an affordable price
â€˜Zero Costâ€™ village initiatives VIC at rural, disadvantage communities
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Village Information Centers (VIC): Village Information Centers take the form of libraries designed to cultivate an information culture at the rural village level. Each VIC maintains files with about 60 categories of information directly connected to livelihood issues (see VIC case study below). On average, 30 people per week access information via the average VIC.
About 177 VICs had been set up by Fusion between 2000 and 2005. In general, 78 percent of VICs are able to financially sustain their operations and 10 percent reach telecentre status. As of 2008, 121 VICs in 11 districts were reported to be functional. Among them, 21 had become small-scale telecentres.
Telecentres: The telecentre network that the Fusion operates with is a “network alliance,” thus characterized by multiple telecentre models with diverse ownership and management schemes. Some of the telecentres are owned by local community organizations (including religious bodies, such as Buddhist temples), while local entrepreneurs own others.
The smallest telecentres, which are mostly set up by the village communities themselves, have only one to two computers and no Internet access. The majority—more than 500 telecentres of the alliance—set up by the ICTA, were equipped with four computers and broadband connectivity. Finally, a few sophisticated telecentres were equipped with more than ten computers, broadband Internet access, and video conferencing facilities.
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Social Enterprise Approach Sarvodaya-Fusionâ€™s sustainability model was focused on double bottom lines: an economic and a social bottom line.
Economic Bottom Line: Decentralized network operation In search of economic sustainability, Sarvodaya moved away from the centralized telecentre network model it had created since 1997, to a decentralized model in 2006 (see Box 2.3 in chapter 2). From 2006 to 2008, Sarvodaya-Fusion restructured its own 34 telecentres, limiting its direct ownership to only six telecentres. These centers served as experimental units designed to pilottest the services and products designed for the larger telecentre network. They were also operated as revenue centers where services were offered for a fee.
Fee-based products (value-added services) In 2008, Fusion began offering ICT courses through the telecentres in its network. The decision to provide these fee-based services was based on a two-year business product development process that involved the expert support of the Nonprofit Enterprise and Self-sustainability Team (NESsT), a non-profit social enterprise consulting organization (Box 3.6).
Basic ICT courses were offered at telecentres. Fusion designed and developed course material, educational supplements, and exams that were administered at the end of the course.
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Fusion’s business model provides standardized course material to be sold by operators for US $3.50 (400Rs.SL.) per book, with a ten percent commission for operators. Courses were conducted by telecentre operators with free guidance from Fusion staff as needed. At the completion of the courses, Fusion administered national examinations and offered a Fusion-branded certificate for a fee.
Fusion projects that these value-added services can improve its current revenue intake by 20 percent and can increase the number of students served by about 15 percent. Beyond solely increasing the commercial success of telecentres, Fusion supported the telecentre network in a number of ways. In order to promote knowledge sharing between telecentres, Fusion implemented various workshops to support peer learning and skill development exchanges. These efforts expanded the number of telecentres in the network from 34 to 400 telecentres during the period from 2006 to 2008. Starting in mid-2007, Fusion also fostered a partnership to organize the telecentres into seven regional networks in order to promote regional peer-support.
Social Bottom Line: “Zero-cost” Village Information Fusion’s “Zero-cost” strategy ensured that VICs do not financially depend on Fusion for their operations. VICs were owned by the villages in which they were located and were managed by local volunteers. Fusion spent about US $60 (6,500 Rs.SL.) on initial training and follow-up guidance for each VIC. In return, VICs were set up by the village community at a cost of about US $75 (7,500 Rs.SL.) each. Over a three-year period, the accumulated average asset value for VICs averaged more than US $200 (20,000 Rs.SL.) (Table 3.14).
Required resources were mobilized through village savings and local fundraising. Some VICs carried out fundraising events; for instance, borrowing multimedia projectors from nearby telecentres to show popular films in the village in order to raise capital to install new phone lines or buy refurbished computers.
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Table 3.14: Resource mobilization and performance of 5 VICs in 3 districts (values in Rs.SL) VIC name
Initial investment in village by Fusion Training community leaders (1,500Rs/ person)
Investments by Village community Setting up VICs (in-kind and financial contributions)
Follow up work (in-kind contributions) Value of assets Outcome No. of information categories Computers (donations) Visitors / week
VIC 1 – Maharathenna, Kandy District, VIC 2 – Hippola, Kandy District, VIC 3 – Akurumulla, Gampaha, VIC 4 – Divurumgama, Badulla District, VIC 5 – Wekada, Badulla. The VIC model is designed to serve the less sophisticated information needs of rural, disadvantaged communities. Since its emphasis is on information rather than technology (i.e. not having computers and Internet), the VIC model bypasses the infrastructure impediments, which usually prevent ICT technology transfer in rural areas.
Villagers are able to access information in VICs, which would otherwise require visits to multiple offices in sometimes distant locations. In one research assessment, 56 percent of the respondents reported indirect economic benefits and travel time savings due to the diverse information available to them via their neighborhood VIC (Kapadia, 2005).
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In addition to providing information, VICs catalyze a range of community development processes. For instance, by mapping local population data, VICs are able to determine the number of disabled people living in the village so that the community may provide them with greater attention. VICs were also used as centers for distributing social marketing or public service messages for topics such as HIV, child labor, and corporal punishment (Kapadia, 2005).
Telecentre capacity-building Capacity-building was carried out as an ongoing development process for telecentre operators. The Telecenre Family Project of Sarvodaya-Fusion was designed as a dedicated program that helps telecentre operators: •
Build their overall skills
Foster alliances with other organizations
Create awareness and advocacy in and around the network of telecentres
The program offered telecentre operators opportunities to develop English language skills, strengthen management and marketing skills, and hone communication and leadership skills through a series of workshops, campaigns, and online tools (e.g. www.tcf.lk) that were offered free of charge. The program initially concentrated on 200 telecentre operators, but by 2008 had expanded to focus on 400 operators. These operators were networked into provincial forums of telecentre operators, thus building further telecentre alliances.
Combined impact of VIC and telecentres The VIC – telecentre combination allows rural communities without roads, electricity, fixed-line phones, or sometimes even mobile telephony, to interact with ICTs. For instance, during the Asian tsunami, some communities received government warnings and instructions from their VICs, which, in turn, had received the information from their respective telecentres (Kapadia, 2005). While VICs
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prepare their communities for the information age, they subsequently prepare them to interact with telecentres located in nearby townships. In turn, telecentres act as ICT skill development centers to augment rural ICT literacy.
Financial Performances Table 3.15: Financial performances of Sarvodaya - Fusion (in $US)
Sources of Funding
Revenue from outside sources Foreign/international sources
Revenue centres (6 telecentres)
Computer repair services
Revenue from Self-financing Product sales (ICT Course books & exams) Use of hard assets (rental of equipment/facilities)
** excluding in-kind contributions (Note: exchange rate calculated at 1Rs.Lk = US $0.0087) (Source: Annual financial accounts, Sarvodaya-Fusion) (Note: exchange rate calculated at 1Rs.Lk = US $0.0087)
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From its first year, Fusion has managed to demonstrate social enterprise gains. As indicated in the 2007 budget, 25 percent of overall revenue was generated internally by the organization during its first year of operations.
Half of Fusionâ€™s revenue was generated from the six telecentres that operated as revenue centers. However, from 2008 onwards, their value-added product sales (i.e. ICT courses) were projected to begin revenues, with gradual increments towards 2010.
Its shift from an entirely donor-dependent operation to dual revenue (donor and internal revenue) mode, was reflected by a significant reduction of donor contributions to the major revenue stream. Funds contributed fell from 75 percent of major revenues in 2007 to 65 percent (projected) in 2009. In turn, contributions from internal revenues were projected to increase from 25 percent to 35 percent (Table 3.15).
Their eagerness to generate revenue during the first year is reflected in the miscellaneous income the organization earned (US $17,000). The majority of those funds were reported to be derived from delivering expert services to other projects. These technical assistance and consulting engagements were expected to be reduced as other revenue streams started to grow.
Fusion plans to continue fundraising from donors to expand the free services it offers to meet its â€œsocial bottom lineâ€? goals, such as VIC training and telecentre operator capacity-building. Additionally, Fusion plans to use donor funding to pay for its new research and development activities. For example, in January 2009, the organization started researching mobile-based solutions as a new value-added service for telecentre networks. Research was commenced, with the support of new donor funds.
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Human Resources Since 2006, Fusion adopted the following initiatives in its transition to becoming a social enterprise: 1.
Introduced a new organizational structure
Recruited and incorporated experienced professionals with more entrepreneurial backgrounds
Sought expert advisers to provide external support for staff
Introduced a governing structure incorporating professionals with more entrepreneurial expertise as the governors
Table 3.16: Fusionâ€™s human resource capacity over 3 consecutive years
Full-time paid staff
Part-time paid staff
Fusion dramatically changed its overall administrative and human resources structure. The full time cadre was cut from 61 in 2006 to 38 in 2008, while the management structure was simplified in order to clarify the organizationâ€™s focus on both social and business responsibilities, which were moved into separate departments (Table 3.16).
Its management structure was reinforced with more corporate sector expertise. For instance, a new manager with CIMA (Chartered Institute of Management Accountants) professional qualifications was hired. A dedicated business executive was recruited to carry out the business product planning
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process. NESsT was hired to provide non-profit sustainability coaching over a two-year period. The NESsT consultants directly supported Fusion’s business promotion executive and the manager through the process of designing pre-feasibility and feasibility studies and then subsequently writing the business plans associated with new services. Furthermore, at the governance level, Fusion introduced six new board members in April 2007, consisting of three corporate senior executives, two development sector executives, and one academic executive.
Case Study: Village Information Center (VIC) Divurumgama Village name
Distance from Colombo
2092 (Male- 962, Female- 1,130)
Youths – 817
Adults – 677
Children - 598
The Divurumgama Village Information Center serves information needs of a rural community of 2,092 people. In a typical day, about five people visit the center to access basic information that may be travel, banking, or education related; or to inquire about obtaining an appointment with a medical specialist in the town, or to access a birth certification application form for newly born child. (For additional information refer to Table 3.17). The center was managed by two village youth, whom were paid a monthly allowance of Rs 1500 by the Village Shramadana Society (Sarvodaya affiliated community-based organization) from their own village savings.
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In 2005, the village community initiated the VIC during a village shramadana camp, where people collectively share free labor to carry out common purpose development activities. Specialist training on collecting, organizing, filing, and maintaining information material were given to two village youth by the telecentre staff at the Badulla Sarvodaya District Center (about 20km away). Subsequent visits by the telecentre coordinator helped to add more skills to the VIC team.
In 2006, VIC received a laptop donated by Sarvodaya-Fusion, which triggered community enthusiasm to interact with computers. Since then, youth members have started composing a village handbook gathering information related to special interests. There have been six handbooks produced, and the Shramadana Society purchased another computer recently, which enables VIC to assist the Societyâ€™s development activities, especially to compile project information in relation to microfinance deliveries by Sarvodaya Economic Enterprise Development Services (SEEDS). Also, the VIC carries out basic computer training to village youth.
Table 3.17: Information categories of a typical VIC Type of information
No. entry categories
Village maps, resource maps
Welfare services, application forms
Economic development & agriculture
(Source: Kapadia, 2005)
Womenâ€™s rights, family life Crop cultivation practices, Market information
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Attention to VICs has been depleted under the pressure created by the overwhelming demands of social enterprise targets. Hence, the VIC program tends to suffer from a shortage of human and financial resources.
Reporting and monitoring systems have not yet been developed to provide managers to gather an accurate picture about the state of revenue and operations in the VIC and telecentre networks.
The diversity of telecentre models in the network made it difficult or impossible to execute uniform business plans, posing a challenge for business revenue generation models. For instance, temple-based telecentres were much less able to act in entrepreneurial ways than were telecentres operated by skilled business operators.
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Social Enterprise Approach to Telecentre Sustainability
A Critical Analysis of the Case Studies At a time when the economic sustainability of telecentres was regarded by many as a remote possibility, the case studies documented in this study are likely to reverse that prejudice. The five case studies represent corporate, state, and non-profit approaches to social enterprise – with both “for profit” and “not-for profit” objectives – in Bangladesh, Sri Lanka, India, and Brazil.
Each case study targets the “bottom of the pyramid” market, by using telecentres as the “outreach window.” With the equal pursuit of social and economic returns—double bottom lines—all the cases studied demonstrate the characteristics of social enterprises (Chell, 2007); that is, applying market-based strategies to achieve a social purpose.
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This chapter sheds light onto the scale, stability, strategy, and profitability of the five organizations, while scrutinizing their business models to recognize how they support individual telecentre sustainability.
Common Characteristics in the Organizations Five organizations demonstrate common characteristics in important aspects, such as their:
a) profit orientation b) â€œbottom of the pyramidâ€? approach c) use of a telecentre 2.0 model (a network approach to telecentres)
Profit Orientation: Table 4.1: Organizational status and financing structure of each organization
Not-for profit, Public interest Civil Society Org.
Donor funds/ corporate grants/ public funds
Annual expenditure budget (USD)
Grameephone CIC Bangladesh
Sarvodaya-Fusion, Sri Lanka
Not-for profit, NGO
Not-for profit, NGO
* 2006 figure (Source: Annual reports, Financial reports)
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Among the five organizations, two (Grameenphone CIC and Drishtee) were “for-profit” and three were “not-for profit” organizations. Of the non-profits, ATN was a public interest civil society organization set up by the federal government of Brazil. D.Net and Sarvodaya-Fusion were nongovernmental organizations (NGOs). (Table 4.1).
In 2007, annual budgets among the institutions varied between US $90,000 and $747,000 (Table 4.1). One noteworthy shared characteristic was the use of both philanthropic and corporate financial resources to finance the organizations’ cash flows. Four out of five institutions tapped into both philanthropic funds, such as grants25 and donations, as well as traditional capital, such as private monies and commercial lending (Figure 4.1).
Figure 4.1: Financial composition of the operating budgets of each organization Financial operations Philanthropic financial resources (donor funds, grants)
D.Net Sarvodaya-Fusion ATN (Drishtee)
Traditional corporate resources (loans, equity, shares)
Grameephone CIC Drishtee
Three non-profit organizations (D.Net, ATN and Sarvodaya-Fusion) derived their initial capital investments from philanthropic grants. Yet, their annual financial records demonstrated their com-
25 Grants included funding provided by international donor organizations, government funding, corporate
grants, or individual contributions. In-kind contributions were not included in this analysis.
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mitment to generate revenue from their own sales of products and services. For instance, in 2007, 65 percent of ATN’s financial resources (cash flow) were contributed by grants, and 35 percent were derived from internal revenues 26 . The case was similar with Sarvodaya-Fusion, where 75 percent of its revenue was received through philanthropic grants and the balance was from internal revenues (Table 4.2). D.Net derived 15 percent of its funds from internal revenue.
Nevertheless, the two “for-profit” organizations predominantly tapped into traditional corporate capital. For instance, all of Grameenphone CIC’s capital requirements were contributed by its parent organization, Grameenphone. Drishtee derived 75 percent of its 2006 cash flow from internal revenue. However, the remaining 25 percent was raised from philanthropic institutions (Table 4.2).
Table 4.2: Detailed analysis of sources of cash flow finances by each “non-profit” organization (percentage)
Outside donor funds Name
Interna tional Donors
Sales of Products /services
* 2006 / 2007 figures ** Corporate and local donor organizations (Source: annual reports, financial reports)
26 Internal revenues (ie. earned revenue) were derived from the sales of products and services, license fees,
membership fees, dividends from investments, assets, and ancillary business ventures.
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Bottom of the Pyramid (BOP) – the target market: All five organizations recognize the market potential at the “bottom of the pyramid” communities; thus, they target these communities as their key customer segment. Drishtee believes there is a market potential of US 10 to 12 billion dollars spread over 600,000 villages across India. SarvodayaFusion has identified a target market for ICT services of four million people earning below US $2 per day over 30,000 villages across Sri Lanka. Grameenphone CIC estimates a potential market of 20 million rural people who do not yet have access to the Internet or email facilities (Table 4.3).
Table 4.3: Target markets of each organization
Telecentres and e-learning
15,000 telecentres in 5,563 municipalities
Overall rural market
US $10 – 12 billion in 611,000 villages
Connectivity; Internet & email based ICT market
20 million people
Sarvodaya - Fusion
ICT access, skills and education
4 million people in 36,000 villages
Livelihood and human rights information
14 million people
Furthermore, three of the five organizations (Table 4.4) highlight community development as one of their primary areas of activity. They all recognize community empowerment as one of their major goals, and thus seek to engage women, children and youth in their operations, as well as promote rural entrepreneurship. For instance, the mission of Drishtee, despite being a for-profit organization, was to empower rural artisans. Similarly, D.Net aims to impart knowledge through ICT intervention to empower underdeveloped communities.
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Table 4.4: Activity areas, ground presence, and ownership patterns of each organization
Primary area(s) of activity
Community development, Public policy, Education
Rural & suburban
Delivering services using ICTs
Community development, Education, Health
Suburban & urban
Rural & suburban
Community leaders / local entrepreneurs
ICT for development, Applied research, Human rights
Telecentre 2.0 model: The core strategy of each organization recognizes the telecentres as an integral component of overall operation, and the strategy is founded on:
a) the telecentresâ€™ ability to serve as an outreach window b) the telecentersâ€™ ability to scale up the operation-forming networks
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Telecentres as Outreach Windows Figure 4.2: All the organizations recognize telecentres as an outreach window Grameenphone CIC
ICT education Bank services
e - learning
e - governance Knowledge products
Sarvodaya - Fusion
Telecentres form the outreach window for all five organizations to reach out to the BOP market (Figure 4.2). In Brazil, ATN targets the support of low-income communities by targeting the telecentres set up by local government authorities. In India, rural villages (panchayats), where the average monthly household income is less than US $50, are targeted by locating Drishteeâ€™s kiosk at rural locations. In that respect, telecentres are treated as a distribution channel for diverse ICT-related products and services targeted at rural communities (Figure 4.2).
Figure 4.3: Illustration of the Telecentre Network Model Telecentre franchisee
Telecentre owned by local enterpreneur
Core organization Village information centre
s vice ser ble a t e k Mar
Telecentre owned by NGO
Telecentre set up by Government
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The Telecentre as a Scalable Network Another attractive feature has been the scalability of telecentre networks. The number of telecentres has continued to expand rapidly across regional boundaries throughout each country in which they operate. In Sri Lanka, there were 570 telecentres established by the state government over a period of four years since 2004, and another 400 are planned for upcoming years. And there were other NGOs and corporate partners, such as Easy-seva, setting up additional telecentres. In Brazil, 14,000 telecentres have been set up by NGOs and local entrepreneurs with the support of federal and local governments since 2001. D.Net plans to collaborate with more than 2,000 telecentres that have been set up all over Bangladesh by NGOs and corporate organizations (Table 4.5). None of the networks studied has identified an optimal number of telecentres, although Grameenphone CIC plans to temporarily stop its initial expansion at the 500-telecentre mark in order to carry out an assessment before expanding further. Such network approaches follow the â€œtelecentre 2.0â€? concept, where partnerships, scale, collaboration, and networking lead to the co-existence of telecentres that would otherwise attempt to survive as individual entities (APDIP, 2007).
Table 4.5: Scale and type of telecentre networks Name
Number of Telecentres
Local governments, Military institutions, NGOs, Private owners
Sarvodya - Fusion
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Business Models While there were similarities in each organizationâ€™s network approach, there were differences observed in their business models, especially in the aspects of:
a) Partnership structure
b) Service offering
c) Revenue structure
Partnership Structure: There were three partnership structures presented by the five organizations in the study. 1.
Franchise model: Setting up telecentres as franchises. (Grameenphone CIC and Drishtee)
Partnership model: Partnering with telecentres set up by outside organizations. (D.Net, ATN)
Hybrid model: Setting up proprietary telecentres and creating partnerships with others. (Sarvodaya-Fusion)
Franchise Model: Two organizations, Grameenphone CIC and Drishtee, use a franchise model. Local entrepreneurs provide the start-up investments to found the telecentres, and the central organizations arrange for financial assistance if required. Location selections are based strictly on objective criteria, such as infrastructure availability and market potential. Both organizations carry out a rigorous procedure to select the entrepreneurs, and expect them to invest in hardware and other equipment, management costs, and the build out of the telecentre. Branded services are then offered through contractual agreements. In the model, each telecentre pays a license fee, and thus becomes a source of revenue to the core organization.
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Partnership Model: In this model, the core organizations are not involved in setting up the telecentres, selecting the entrepreneurs who will run them, or choosing the center’s location. Instead, they establish partnerships with the organizations that own or sponsor existing telecentres, and provide support to build the capacity of telecentres and telecentre operators. In Brazil, ATN partners with telecentres that were set up by local organizations with the sponsorship of local and federal governments. Similarly, D.Net partners with local NGOs that invest in telecentres. None of these partnership models generate direct revenue from the partnership engagement, nor do the organizations charge a membership fee or attach their brand name to the service.
Figure 4.4 : Business Model 1 Revenue
In this model, the core organization uses a hybrid of both models - both own telecentres as well as partnerships. Sarvodaya-Fusion set up telecentres
at Sarvodaya district coordinating centers, where it contributes the total equipment package, the manager, and a set of services, and centrally
coordinates all the telecentres. In the meantime, Sarvodaya-Fusion signed on as a partner with ICTA— the state body that set up telecentres (branded
as “Nenasala”)—and began carrying out capacitybuilding programs for telecentre operators.
Different Models of Revenue Channeling: In order to channel the revenues generated by the
“service offerings” of the core organization, there were three different models adapted by the five organizations in the study.
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In one model (Figure 4.4 : Business Model I), the core organization (e.g. Grameenphone CIC) directly set up a franchise operation with the telecentre. The core organization shared both its brand name and a set of services designed for telecentres to offer, and the revenue stream was directly channeled back to the core organization. Sarvodaya-Fusion also uses this model for its own telecentres.
Figure 4.5: Business Model II Figure 4.5: Business Model 11
In the second model (Figure 4.5 : Business Model II), in addition
to its direct partnership with the
party service providers with the telecentre. In Drishteeâ€™s case,
Third party institutions
services were offered by thirdparty organizations as well as
Third party services
by the core organization. Yet, in ATNâ€™s model, only third-party organizations
and the core organization only carried out a coordination role. Revenue streams in this case were channeled
institutions as well as the core institution. Nevertheless, the core institution closely coordinated all the services and revenue streams.
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The third model (Figure 4.6 :Business
Figure 4.6: Business Model III
Model III) was a unique one adapted by D.Net. In this model, though core organizations worked closely with the
telecentres, revenue streams were not involved with the telecentre. The main
services offered by the core organization were channeled through an extension of the telecentre (via the Mobile Lady). For instance, knowledge services were
offered by the Mobile Lady to the rural communities, and for additional services
they were directly connected to the help desk at the core organization. In this
model, the core organization directly engages with the community to offer services and generate revenue, using telecentres as outreach points. When a community member makes a phone call from a telecentre to acquire help desk services, the fee is automatically charged to the phone bill.
Service Offering: All the organizations under study made a remarkable effort to build new services on top of the core traditional ICT services offered by telecentres, such as computer rental, photocopying, printing, and communication services. The type of services offered varied from e-governance to e-commerce, or from life insurance to e-learning. Among the five organizations, Drishtee developed the most diverse offering (Table 4.6).
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Yet, all the organizations paid a great deal of attention to expanding the service spectrum offered by telecentres. The range of value-added services offered by the telecentres were generally decided by the primary objectives of the core organization, the needs of the target community, the demands of the telecentre operators in the network, and the readiness of third-party institutions (Figure 4.7).
Figure 4.7: Key elements at designing products and services
Core organization objectives
Product & service design and development
Third party service providers availability
In Sri Lanka, Sarvodaya-Fusion spent nearly two years to develop one value-added service: ICT courses to be offered at telecentres. The process started through a participatory workshop with telecentre operators that listed at least ten potential value-added services that could be purveyed by telecentres. Subsequent market analysis and competency analysis singled out ICT courses as the most feasible one (discussed in Box 3.6).
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Table 4.6: Services offered by different organizations
speicialized ICT training
Basic IT services (including internet)
Mobile phone/card selling
Non-ICT services Grocery Products?
ATN recognizes e-learning, specialized ICT training, and banking services as key potential telecentre services. An example of ATNâ€™s unique ability to broker win-win partnerships is the deal it negotiated between the University of Metropolitan Santos (UNIMES) in SĂŁo Paulo, a modern university with an e-learning focus that offered 14 online undergraduate and nine post-graduate courses. The partnership enabled all 23 e-learning courses via telecentres, allowing students and teachers to access the courses in their own neighborhoods for the first time.
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ATN’s partnership with Caixa, Brazil’s second largest public bank, enables its affiliated telecentres to offer remittance services, such as paying utility bills or processing bank account applications, which were otherwise limited to the bank branches located in townships.
D.Net’s Pallitathya Kendra’s (telecentre) Mobile Lady travels five to seven kilometers a day and visits about 75 villages a month, connecting rural women and farmers to a telecentre and help desk information services. Shrimp farmers use her to obtain their water pH measurements to sort out appropriate treatments with the expert support of D.Net’s help desks. The help desks draw on information organized in nine thematic areas, including health, human rights, and education, which are offered through 30,000 local language web pages at telecentres.
In Sri Lanka, Sarvodaya-Fusion recognized that 89 percent of the telecentres in the country were offering ICT courses as one of their major services, but that they were not meeting appropriate standards set by the state body, the Tertiary and Vocational Education Commission. Fusion thus developed standard course materials and certifications, which included the national examination, to add value to ongoing programs.
Third-party Institutions: In order to offer the spectrum of services they provide, four of the organizations in the study mobilized the expertise and resources of third-party institutions. For instance, ATN entered into contractual agreements with six institutions that included two banks, two educational institutions, a mobile operator, and multiple local government institutions.
In order to provide 12 services that could be provided by kiosks, Drishtee worked with ten reputed organizations, such as ICICI, Amaron, HCL, CEEP, Quiver Infoservices Ltd, Microsoft Corporation, and Intel.
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Sarvodaya Fusion partnered with the Ministry of Tertiary Education and the Ministry of Agriculture to provide ICT courses and agricultural information via telecentres, most of which were sponsored by ICTA, the governmental ICT institution.
Grameenphone CIC was screening potential partner institutions to provide services at the time of the research interview.
Fee Structures: Drishtee and Grameenphone CIC both charge franchise fees from telecentres in their networks. All the organizations use relatively complex fee structures, rather than flat fee structures. Such fee structures reflect the effort to generate revenue for the core organization while passing on a reasonable benefit to the telecentre. The fees also reflect a greater understanding of the capacity of telecentres and related third-party institutions to provide services in â€œbottom of the pyramidâ€? ecosystems (Table 4.7).
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Table 4.7: Multiple partnership structures, services and fee arrangements designed by each organization
Offer brand name, of the abil-
Telecentre pays royalty fees for use of brand
ity to offer 23 services, access to the online portal
UNIMES & ATN
23 types of University courses (online) through telecentres
CAIXA & ATN
For each student, UNIMES will pay 20% of its standard commission to the telecentre and 5% to ATN.
1.Transactional modality: consumers pay utility bills at telecentres
Telecentre receives 20 cents for each transaction and ATN receives 5 cents.
2.‘Negocial’ modality:telecentre carry out documentations for various bank services
Various models: For each new bank account opened, the telecentre receives 4R$ and ATN receives 1R$ per account. For every business account opened, the telecentre receives –14.40R$ and ATN receives 3.60R$. For every loan application processed, the telecentre earns 1.6% of the total loan value and ATN receives 0.4%.
State Government of Pernambuco, GERA NEGOCIOS & ATN
State Government offers grants to train 10,000 youth, on basic IT & internet services. Courses designed by Gera Negocios, offered at 40 telecentres
Revenue is divided between parties, with 25% going to ATN 45% to Gera Negocios, and 15% to the telecentre. (The balance of 15% is used to purchase training materials (10%) and to pay taxes (5%).
Providing value added ICT cours-
The telecentre pays a fixed charge for each student to take final exams at the end of the course.
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The commission-based fee structures designed by ATN for e-learning courses (with UNIMES) channel 20 percent of commissions to the telecentre while the core organization receives five percent. For each bank transaction (e.g. paying a utility bill) completed, the telecentre receives 20 cents, while ATN receives five cents. The revenue sharing model adapted by ATN shared 15 percent of revenue with telecentres, 45 percent with the third-party institution, and 25 percent with ATN, with bulk IT skills-training programs for local communities being funded by local government institutions. The payment to the third-party institution was required because it provided specialized educational material for the courses (software, curriculum, etc.). A similar model was adapted by Fusion, when it offered valueadded ICT courses through Nenasala, the partner telecentre network.
Are They Profitable? Given the relatively short life span of each organization, they are still at an early stage of the organizational growth cycle, and are reporting reasonable revenue growth. Within the first year of the operation, ATN recorded a revenue of US $21,000 by charging a five percent commission27 for providing e-learning services through telecentres, which was projected to reach US $47,000 in two yearsâ€™ time. Grameenphone CIC reported a revenue of US $250,000 by offering phone services and US $3 million through the sale of FlexiLoad prepaid mobile phone cards by telecentres in the 2006-2007 budget period. Drishtee earned US $275,000 in revenue from products and services and US $335,000 from franchise and subscription revenues during the 2005-2006 budget period.
Drishtee, the longest serving social enterprise among the study group, showed incremental revenue gains over a three-year period. Importantly, such increments were forecasted to be concentrated on products and services offered through telecentres rather than on license or franchise fees earned from new telecentres (Figure 4.8). Similar upward trends were projected by both Grameenphone CIC and ATN.
27 Twenty percent of the commission goes to telecentres.
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How Does This Help Telecentre Sustainability? The common assumption held by every organization was that basic ICT services offered at a telecentre alone would not be sufficient to make a reasonable surplus. Thus, the strategy was to offer value-added services in addition to existing basic ICT services in order to boost revenues to secure reasonable surpluses (Fig 4.9a & b).
The models employed were targeted to expand target customer groups (e.g. youth, women, and adults) by offering diverse services, and also to improve customer volumes. The subsidy vouchers distributed by Sri Lanka’s “Information and Communication Technology Agency (ICTA)“ had managed to stimulate more rural visitors to telecentres. More importantly, different voucher
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types stimulated the adult population in addition to the children and youth (see Box 2.6 in chapter 2). In Bangladesh, services such as the provision of FlexiLoad mobile prepaid cards28, e-governance services, and basic grocery sales (such as agricultural inputs) stimulated a diverse set of customer groups to visit the telecentres.
Figure 4.9 a: Combined service offerings to improve telecentre revenues
Business process outsourcing Web development
Organizations who offer the service : ATN, Drishtee, Grameen, D.net, Fusion
Basic IT services (Printing, Photocopy, Photo-printing, Laminating, Type setting) & Internet
e- learning Specialized ICT education Online trading Knowledge products
Vouchers, Mobile prepaid cards Bank services e-Governance Insurance services
High Customer volume
Another feature was the systematic value addition (i.e. increase the revenue potential of the service) (Figure 4.9a & b). Premium services, such as certified e-learning ICT courses tended to generate better revenues. With the provision of ATNâ€™s 23 online courses, one telecentre reported an increase of 400 students (mostly school teachers) spread over both day and nighttime periods, boosting its revenue by US $15,000, and securing a gross profit of US $8,000.
28 Note: Nevertheless, in some townships, they add up to high revenues. As reported by Grameenphone CIC,
some CICs draw over 25,000 taka a month just by selling FlexiLoad phone cards and Internet services, though such places are not very common.
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Drishtee estimates that an average monthly revenue of US $150 per month would be sufficient for a telecentre to break even, assuming the monthly operational cost to run a telecentre is approximately US $100, allowing for a US $50 surplus. Drishtee states that since 2004, their service package has been capable of generating that target amount within six to 12 months of the initial operation of a telecentre.
Grameenphone CIC states that by using its model, including phone line connections, FlexiLoad phone cards, and EDGE mobile Internet services, telecentres can reach the break-even point in one year. The package includes a one-year free subscription service.
Figure 4.9b: Overall strategy to improve telecentre revenues
Building enterpreneurial capacity
Premium value product & services Low value product & services Basic IT services
Building financial capacity
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Other Support Services: Table 4.8: Packages offered by core organizations to telecentres Grameenphone CIC Membership fee for use of brand name
Free capacitybuilding services Fee-based services
In addition to a marketable service offering, telecentre operators received other support services from core organizations. For instance, as a result of ATNâ€™s negotiations with the Microsoft Unlimited Potential29 program, the company donated 40,000 Microsoft Windows software licenses to telecentres participating in the ATN network. For the many telecentres that operated using pirated software prior to the donations such support made a dual impact: On one hand they became legitimate operators, not subject to restrictions posed by unlicensed software; On the other, they were able to raise their market prices for ICT courses offered at their telecentres. Fusion offered leadership and social enterprise capacity-building programs to its member telecentres and facilitated provincial and national alliances of telecentre operators. Such alliances formed peer networks that sometimes helped generate additional resources. For instance, the telecentre forum of the Southern region, reportedly secured US $4,000 from a local donor (Chamber of Commerce in Hambantota District of Sri Lanka) to provide training scholarships and hardware donations, in March 2007. 29 Microsoft Unlimited Potential is an initiative of Microsoft Corporation to enable sustained social and economic
opportunities across the world.
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Limitations: Nevertheless, as observed with Drishtee, ten percent of telecentres failed to survive due to complex reasons, especially during their early years of operation. After one year of operation, Fusion decided not to run three of its ten telecentres as revenue centers when the core organization recognized that those telecentres were not installed in the right locations. Although sufficient evidence could not be materialized, the core organization’s studies reported that a significant number of telecentres failed to sustain themselves.
While such failures were attributed to complex reasons, discussed in chapter 1, following are some additional observations made during the research: •
Financial resources were either not sufficient or not flexible enough to support the incubation periods of these telecentres - as observed by Sarvodaya-Fusion, for example.
Service packages offered by the organizations were not sufficient to generate the revenues in the required volume at the desired speed. With the exception of Drishtee, all the organizations offered three to four general services, which were not necessarily popular or lucrative enough to meet revenue goals. For instance, in a competitive environment, where FlexiLoad mobile prepaid cards were easily available in grocery stores, some Grameenphone CICs struggled to reach their financial targets.
Capacity-building programs and help desk programs were not strong enough to overcome the acute deficiencies attributed to initial telecentre selection procedures (e.g. SarvodayaFusion).
Some business models—for instance, the D.Net model—were not strong enough to draw the required volume of customers to the telecentres; thus, they failed to generate sufficient revenues.
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Conclusions and Recommendations During the two-year period of this study the telecentre ecosystem has continued to evolve. The five organizations that were extensively studied, themselves had undergone multiple changes in their progressive growth curve. However, this research has carried out a snapshot analysis of a frozen picture that provided some fundamental understanding into the question of economic sustainability.
Key conclusions of the research findings can be summarized into following three groups:
1. Feasibility of telecentre sustainability: •
As observed with all five case studies, research findings provide evidence that telecentres have the feasibility to be profitable “bottom of the pyramid” social-enterprises.
The economic sustainability of telecentre is an outcome of the fulfillment of multiple factors. Entrepreneurial capabilities of telecentre operators and the presence of sufficient products and services to be delivered via telecentres are two important factors among them.
2. Being a part of telecentre network: •
Being a part of a telecentre “network” provides a better chance for individual telecentres to meet sustainability. There is a strong likelihood that receiving a package of support services helps telecenters to reach sustainability. However, we cannot dismiss the individual
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Sustainability First In search of telecentre sustainability
Harsha Liyanage, Ph.D. Research Publication by Sarvodaya Fusion, in collaboration with telecentre.org
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ISBN No: ISBN 978-955-599-507-8 Layout & Design: Mudra advt & solutions contact: Sarvodaya-Fusion, No.726, 2nd floor, Kotte Rd, Atul Kotte, Kotte, Sri Lanka This book and the telecentre.org program are supported by the following social investors:
Published on Apr 4, 2011
Published on Apr 4, 2011
Sustainability First is a research publication, capturing the lessons learned from a two year long qualitative research carried out between...