Grameen Telecom : The Organizational Structure for Rural Service Deployment
Telecommunications are increasingly recognized as critical components in the infrastructure of economic development. Telecommunications services, can substitute for other forms of communications such as postal services and are often more effective in their use of time, money and materials. Further evidence shows that a reliable telecommunications system generates new communication and builds stronger, more complex and more productive patterns of communication. Increasingly productive communication channels, in turn, promote economic growth. For example, a small grocer in Rosario, Uruguay, who sold and delivered groceries to homes, was able to serve a large clientele beyond his immediate neighborhood primarily because residential telephones were available locally and customers could order their goods by telephone for home delivery. Given this linkage between economic development and telecommunications services, developing countries are trying to improve the existing infrastructure for service deployment. Beginning in the early 1980's, many developing countries made telecommunications a development priority and launched ambitious initiatives to enhance telecommunications service provision. For example, in the 1970's and 1980's, oil surplus developing countries such as Indonesia, Iran, Kuwait, Nigeria, Saudi Arabia and Venezuela undertook large investment programs in telecommunications once foreign exchange became readily available. Other developing countries such as Hong Kong, Korea, Singapore and Taiwan used telecommunications as a key part of their overall economic strategy to build up a highly competitive position in the world market for high-technology industries and services. One identifiable problem in promoting the provision of telecom services is the organizational structure of the telecommunications industry. Historically, state institutional monopolies distorted market equilibrium through either price control or output restrictions. Therefore structural changes in the telecom sector became an economic priority for the developing world. Driven largely by technological innovations, related changes in cost structures, and growing and diversified demands of business, many countries undertook major changes in the 1980s in the how the sector was structured and regulated. Liberalization and the break-up of the American Telephone and Telegraph company (AT&T) in the United States was followed by privatization and the introduction of competition by the United Kingdom and Japan. This policy was gradually extended to most of the countries in the Organization for Economic Co-operation and Development (OECD). By the 1990s, about forty developing countries had completed, embarked on, or were preparing major reforms of the telecommunications sector, and ? by the beginning of 1989 ? more than half of the world's main lines were operated by privately-held companies. Restructuring the telecommunications sector, however is problematic. Although a global trend toward liberalization and privatization can be observed, most public telecommunications services in developing countries are still provided by entities that are partly or wholly owned by the state. These government-owned telecommunications operators are organized in different ways. In some countries such as India, Algeria and Cameroon, they form part of the conventional government department. In other countries, such as Ecuador, Indonesia, Jordan and Thailand, governments have established semi-independent, state-owned enterprises or state-owned corporations under company law. Argentina, Chile and Mexico used this organization structure before privatization occurred between 1987 and 1990. These partially reformed telecommunications providers continue to constrain the development of telecommunications. For example, government owned and operated telecom providers suffer from lack of political autonomy, inadequate internal organization and management, and a shortage of funds for investment. In addition, this form of organization discourages the deployment of universal. Responding first and foremost to their more vocal urban-based clientele, government led telecom providers tend to discriminate against the less politically organized rural population. In addition, instead of reinvesting telephone revenues in network deployment, they are often used for other budgetary needs. Even where the private sectors plays a predominant role in the telecom sector, rural areas tend to be neglected. Given the cost structure associated with building out networks, providers hesitate to invest in rural areas. Not only are the costs per user higher, the demand is also less certain and less lucrative than in urban areas. Notwithstanding the difficulties entailed in restructuring the telecom industry, some developing countries have succeeded not only in opening up their networks to competition. They have, at one and the same time, succeeded in achieving universal service goals. Most impressive in this regard has been the case of Bangladesh. For example, in Bangladesh, GrameenPhone operating commercially provides cellular services in both urban and rural areas of Bangladesh, with approximately 40,000 customers. A pilot program of GrameenPhone, in collaboration with the micro-credit facilities of the Grameen Bank through a wholly owned subsidiary called Grameen Telecom, enables women members of the Grameen Bank's revolving credit system to retail cellular phone services to rural areas. This pilot project currently involves 950 Village Phones and phone operators providing telephone access to more than 65,000 people. Bangladesh's case raises the question of whether this successful organizational model can be applied to other developing countries. In particular, is this solution unique to the context of telecommunications reform in Bangladesh? Or, can its results be replicated in the country-specific context of other developing nations. If the Grameen model is not completely replicable, in what ways might it be adapted to meet conditions elsewhere.? This thesis addresses these questions. This thesis argues that the country-specific context of telecommunication reform is critical in determining the success of telecom reform. On this basis, it contends that Grameen Phone model?as it exists in Bangladesh?can not be directly replicated in other developing countries. To succeed in another context, it must address the specific constraints that exist in a given national environment. Moreover, the model must be adjusted to bypass or overcome the structural flaws that are country-specific. The thesis is organized as follows, Chapter Two conceptualizes the diffusion of telecommunication in transitional economies. In addition, it describes how the stages of deployment relate to the challenges of telecommunications financing and structural reform. Chapter Three describes the transition of the Bangladesh telecommunication sector from a state monopoly to telecom reform in the context of the diffusion model. The analysis will identify the specific factors that created an environment favorable for the advent of Grameen telecom. Chapter Four provides a detailed description of the Grameen telecom model, and evaluates how it works. Based on this characterization, it defines the essential criteria that must be met for the model to be successfully replicated. Chapter Five presents a conclusion of the key findings of the Grameen Telecom model and recommendations that may be useful for other developing countries that are trying to achieve universal service deployment.
- Dec 9, 10am-11am: Thesis Presentation: Jacqueline Beilhart
- Dec 9, 11am-12pm: Thesis Presentation: Camille Koué
- Dec 9, 11am-12pm: Thesis Presentation: Samhir Vasdev
- Dec 9, 5:30pm: CCT Geneva Summer Program 2014 Info Session
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