There were a few technology challenges that Grameen Telecom (GT) had to face when it began the Grameen Phone project. Bangladesh has one of the worst telecom infrastructures in the whole world. Basically 97% of all households and nearly every rural village do not have a telephone. Most of the telecom market is controlled by a government provider (BTTB) that will not add to its capacity to connect the fixed telephone infrastructure to mobile systems, which also hinders an expansion for a rural network.
The mobile-to-mobile GSM network that GrameenPhone (GP) uses is more expensive and less efficient than what its competition uses. To combat a limited infrastructure Grameen Telecom uses GrameenPhone’s mobile-to-mobile GSM technology to provide nationwide access. Service is provided in urban areas as well as rural areas by a system of cellular towers connected by fiber optics that follow major railways, or by microwave connections.
GrameenPhone uses GSM cellular technology because it is what the Bangladesh government gave them a license for and it allows GP to market to wealthier consumers who travel in and out of the country. To combat GSM cost issues GrameenPhone had an advantage of establishing earlier and more broadly than its competitors, thus seizing key markets in rural and urban areas. Also the extent of GrameenPhone’s GSM network is an advantage because it allows urban customers to use their GSM only phones in rural areas.
The goals of GrameenPhone are to promote economic development, promote social development, provide affordable GSM cellular service nationwide, and to connect rural Bangladesh through the provision of mobile telephone service by creating micro-enterprises that can both generate individual income and provide whole villages with connectivity. The Top Ranked Objective is to connect rural Bangladesh through the provision of mobile telephone service by creating micro-enterprises that can both generate individual income and provide whole villages with connectivity. This is GP’s TRO because it accomplishes the rest of the goals that it has set for itself. It also addresses the problems of connectivity in Bangladesh, poverty, and underdevelopment.
Strengths of GP include: provides nationwide mobile GSM service to urban and rural areas, the shared-access business model concentrates demand and creates high cash flow, financing from Grameen Bank, Grameen Bank provides credit and bill collection services, discounted rates between GP and GT, rural telephone service in high demand, GP has experienced rapid growth (has 63% of mobile phone market in 2000), substantial revenue growth, GT support of Village Phone and operators, GP customer service, low rate of service cancellation, first-mover advantage, extent of its GSM network, GP phone services appeal to wealthier travelers, and increased health and safety benefits.
Weaknesses include: uses cellular technology too advanced and expensive for fixed phone centers, limited rural marketing, no content development for Village Phones, and inferior mobile-to-mobile phone services.
Opportunities include: development of trained entrepreneurs, loan repayment rate to Grameen Bank is 90-95%, enhances status of female operators, female villagers feel liberated by public space, social and economic benefits, rural competitors unable to expand subscriber base further than tens of thousands, Bangladesh Railways fiber optic infrastructure, BTTB’s poor performance, cooperation between competitive mobile providers to compete with BTTB, Bangladesh’s new Telecommunications Control Commission assumes some powers from BTTB, and rural competitors have limited service areas.
Threats include: very limited infrastructure, underdevelopment, poverty, telecom market is controlled by BTTB, BTTB to launch its own GSM mobile network, competition from rural providers, Bangladesh currency constraints, taxes, and illiteracy.
GP was the first company to provide a GSM mobile phone service to rural areas which otherwise would have no phone service at all or very limited service considering its current competitors. Village Phones not only make communication for rural Bangladeshis easier or possible, it creates economic opportunity for villagers, increases efficiency and productivity for businesses, and enhances women’s status. GP may use technology that is more expensive and inefficient to some consumers but its shared-access business model enables it to pay the extra costs and wealthier consumers, especially consumers who travel, find GP’s mobile GSM technology appealing. These strategies help GP achieve its goals.
Before GrameenPhone came along the Bangladesh Telegraph and Telephone Board (BTTB) was the only telecommunications operator and carrier in the country. They held a monopoly over the telecom industry until 1989. Its service was slow, costs were high, and complaint rate was high. BTTB controlled the national switched network and would not increase its capacity to expand into rural areas. From 1991 to 1996, Pacific Bangladesh Telecom Ltd. (PBTL) was the only mobile telephone service provider, who provided to the small group of urban elites. Policy and infrastructure barriers kept threats of substitute products and the entry of new competitors to a minimum. This lead to almost no intensity of competitive rivalry at the time. Customers had no bargaining power because there were only two services. The suppliers had all the bargaining power.
In 1996, new GSM network licenses were auctioned off and the market grew extensively. The poor performance of BTTB’s service lead to increased demand for efficient telephone service, giving new competitors the opportunity to enter the market. Customers were given more bargaining power, more substitute products became available, and the intensity of competitive rivalry has risen. Now many mobile providers are working together to compete with BTTB to expand its fixed network.
There were a few technology challenges that Grameen Telecom (GT) had to face when it began the Grameen Phone project. The goals of GrameenPhone are to promote economic development, promote social development, provide affordable GSM cellular service nationwide, and the TRO is to connect rural Bangladesh through the provision of mobile telephone service by creating micro-enterprises that can both generate individual income and provide whole villages with connectivity. Grameen Telecom uses GrameenPhone’s mobile-to-mobile GSM technology to provide nationwide access. Policy and infrastructure barriers kept threats of substitute products and the entry of new competitors to a minimum. The poor performance of BTTB’s service lead to increased demand for efficient telephone service, giving new competitors the opportunity to enter the market. GP was the first company to provide a GSM mobile phone service to rural areas which otherwise would have no phone service at all or very limited service considering its current competitors.
References
http://siteresources.worldbank.org/INTEMPOWERMENT/Resources/14648_Grameen-web.pdf