Business Times

Reduction of broadband pricing will make it more popular amongst poor

Government agencies in South Asia should support the reduction of broadband pricing in a bid to attract millions of the poor who already beginning to participating in the economic through the mobile phone, according to a Telco expert.

“The pricing of broadbands that are offered must be affordable to them,” Dr Rohan Samarajeewa, Chair and CEO LIRNEasia, a mobile telecom think tank, told the Business Times on the sidelines of the 2nd South Asia Broadband Communications Conference recently.

He said that similar to the concept of affordable shampoo sachet packs, poor people need to be able to pay when the need arises and when money is available to them and that the broadband pricing should be likened to such an affordable pricing mechanism.

“Broadband use in HSPA+ (high speed packet access) networks, where the relation between the base station and users is in any case not fixed is conducive to this form of pricing. Of course, sachet pricing can include ‘buckets’ of minutes, mega bites, etc, and need not be seen as a taxi meter,” he explained.

He said that according to research, among non-owners, 80% can get to a phone in under five minutes, adding that most of the poor connected electronically through the Budget Telecom Network Model. “This model has allowed South Asian telcos since 2006 to make excellent (if highly volatile) returns by serving ‘long-tail’ markets of poor people by dramatically reducing transaction costs primarily through prepaid method and also by allowing poor people to pay for services when they need it and when they have money (as opposed to fixed monthly payments),” he noted.

He added that this model also controlled the operating expenses through business process innovation while also focussing on revenue such as Budget Airline Model which allows it to make profits while conventional airlines flounder. He stressed that the telecom policy and regulation need to leverage such a model.

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