Broadband helps viable business models become more efficient
Connectivity, productivity, lower costs and more information are among the benefits
Broadband can help companies targeting the base of the pyramid to improve operational efficiency and customer service. Companies that have adopted broadband in their operations have an average increase of productivity of 10%, according to the McKinsey Global Institute.
Examples across the world are numerous. The Inter-American Development Bank (IDB), published “The Broadband Effect: Enhancing Market-based Solutions for the Base of the Pyramid” that analyzes several cases. The study produced by the consulting firm Hystra for the Opportunities for the Majority Sector, alerts about the importance of this technology to generate opportunities for low-income populations in Latin America and the Caribbean.
Broadband helps commercially viable business models to be more efficient in terms of access, creation and distribution of goods and services for the base of the pyramid in sectors such as agriculture, health education and financial services. Below we share some examples and success stories:
- Better information at lower cost: Broadband minimizes transportation costs and provides access to better information and connection to the world. Urban Planet Mobile, for example, has 250,000 subscribers that receive English lessons on their mobile phones via video or audio. eKutir in India connects farmers with experts that guide them in their agro and business decisions.
- Improves competitiveness and access: It allows small franchises and businesses to improve the diversity, quality and competitiveness of their products. Small stores that offer Barared broadband services in Mexico, doubled (on average) their commission sales. They also make banking services more accessible since 35 transactions per day are carried out in these small stores. This way, customers at the base of the pyramid can perform their operations closer to home at a lower cost than at a local commercial bank.
- Better efficiency: Broadband enables employees, business owners and intermediaries to tackle complex tasks more efficiently, even by hiring lower skilled workers at the base of the pyramid. Connectivity typically enables standardization, simplification and monitoring of complex tasks and provides real-time technology support to carry them out. In Kenia, Kilimo Salama relies on the use of data from GPRS weather stations to determine which farmers will receive payouts, replacing costly field visits. This simplified payout process significantly reduces operational costs. Meanwhile, Narayana Health leverages its most costly resources, the specialists, who can be called through Skype to diagnose a patient at another location.
- Empowerment of providers: At Bridge International Academies, connectivity provides teachers with all the tools required to teach and follow up on pupils’ learning pace. This helps provide better teaching, acquire new skills and have time to build relationships with students and families, which increases motivation.
Although these cases illustrate the benefits of adopting broadband, the report highlights its challenges, since in most cases the biggest obstacle is the investment in infrastructure that is required.
The IDB recognizes the definition of broadband as connections that have a minimum speed of 256 Kbps (one fourth of a megabyte). This minimum speed has direct implications on the type of services and applications that can be provided. The greater the bandwidth and speed, the greater the quality associated with the service.
Adopting broadband will help businesses that provide services for the base of the pyramid to reach and serve their target in a more efficient and effective way. The cases illustrated in this document show that there are opportunities for those interested in leveraging connectivity for development.