Doing Well by Doing Good?

from The Wall Street Journal

The cellphone is a hot tool in rural projects. Firms hope profits follow.
By CRIS PRYSTAY

One day in mid December, Subhash Arve stood in his grape field, just outside the village of Boregaon in the Western Indian state of Maharashtra, fretting over whether it was time to spray the first crop of the season with a growth hormone. So he whipped out his mobile phone.

The phone's software, loaded on by Tata Consultancy Services Ltd., prompted him to click various icons and answer some simply worded questions to indicate what variety of grapes he was growing, when he had pruned his vines and what type grafts he had used. It also instructed him to take four or five photos with the phone's camera. He then keyed in a code, and, minutes later, the details of his crop and photos of the grapes popped up on a computer screen at the Maharashtra Grape Growers Association in Pune, 220 kilometers away.

A reading from a soil-analysis sensor planted in the village by Tata Consultancy and a local weather forecast also appeared on the screen. A scientist at the association then sent Mr. Arve the answer he sought, via brief text message: Spray now, and use gibberellic acid, a plant hormone that regulates growth and is tricky to apply. Too little or too much can damage the crop. The scientist recommended an exact amount.

Mumbai-based Tata Consultancy began piloting the cellphone-based crop-advisory service in Mr. Arve's village in October. The information-technology consulting arm of the Tata Group, which has interests in steel, telecommunications and financial services, hopes the project will spearhead its push into rural markets.

But this project is about far more: The mobile phone is now one of the hottest development tools world-wide. Nongovernmental organizations see cellphones as a way to bolster incomes of the world's poor, while corporations eyeing untapped rural markets hope new mobile-phone services can boost rural incomes and corporate revenue at the same time. South Asia, where mobile-phone use is rapidly growing, has become a test bed.

Reuters Group PLC is piloting a service in India called Reuters Market Light, providing information on crop prices in local markets to farmers, helping them decide to which market in their area they should take their produce on any given day to get the best price. That service, which was offered free to farmers in a few regions in Maharashtra under a pilot program last year, was rolled out state-wide in October as a commercial service. Reuters is looking for telecommunications partners to take the service India-wide next year.

In one of the earliest efforts to recognize the cellphone's potential, Grameen Bank, the Bangladesh-based pioneer of microcredit in remote regions, and Grameen Foundation, a separate entity in New York, have helped introduce "village phone" programs in 10 countries, setting up 300,000 women in tiny villages with mobile phones that each woman rents on a per-call basis to her neighbors.

On another front, several organizations, including the University of California, Berkeley, are testing literacy courses that can be delivered to rural residents over the mobile phone, some with game-like learning.

"Mobile phones are a pretty important tool for development. I'd put it up there, just behind education and public heath, in the importance to economic growth," says Leonard Waverman, a professor of economics at London Business School who has studied the impact of telecommunications on economic growth and productivity.

Although as few as 4% to 5% of rural Indians have cellphones, about 50% of new customers are expected to come from rural areas over the next two to three years, according to estimates from BhartiAirtel Ltd. in India. The expanding number of phones helps raise rural incomes in some simple ways. It makes carpenters, weavers and plumbers more reachable by their customers, and it gives better information to farmers and fishermen about where to sell their harvests.

A Harvard University economist's study on the impact of mobile-phone usage among fisherman in Kerala, India, found that the variation in fish prices in Kerala dropped to 15% from 70%, and the wastage of each daily catch to near zero from 5% to 8%, after 2001, by which time most fishermen and traders were using cellphones to coordinate with traders in various markets to determine to which port they would deliver their daily catch. The fishermen's profits increased an average of 8%, even as the price paid by consumers for fish dropped 4%.

A study of the village-phone project in Bangladesh by the Canadian International Development Agency showed that people in towns where a mobile phone is available saved up to eight times the money they would have spent to travel elsewhere to use a phone or talk to another person. The savings can be used for improved nutrition, education or reinvestment in a business.

Specialized software and information services, like the one that Tata Consultancy is piloting, add momentum to the development trend. The company hopes its service will address a host of problems faced by rural farmers. Not only do many have to guess which market is best for selling their crops, they struggle to use modern fertilizers and pesticides. Many are illiterate so can't read instructions. Poor infrastructure, meanwhile, makes it difficult for government agencies to offer education and advice to every farming community.

The consulting firm has designed its software to use icons and simple instructions in local dialects to get around the literacy problem. Besides connecting farmers with local crop experts at government research institutions and universities, Tata Consultancy plans to offer other information, like daily crop prices from local markets, train and bus schedules, and regional job postings.

"If we are able to create meaningful applications for the Indian farmer, the potential is huge," says K. Ananth Krishnan, Tata Consultancy's chief technology officer. There are more than 200 million people in India who work in the agricultural sector, and are still underserved by mobile companies, he says.

The consulting firm, which began work on a prototype of its cellphone-based crop-advisory program two years ago, sees the effort as "applicable to a whole range of countries," Mr. Krishnan says. So far, Tata has provided the special cellphones to about 50 farmers in one village, monitoring how well they manage the phones and ironing out kinks. It is in the process of providing phones to another set of farmers, and aims to have pilot programs running in three different villages, with about 2,000 farmers participating, by March.

There are hurdles. Navigating a complex phone menu is a challenge, so the high illiteracy rate is a big hurdle. Tata Consultancy uses icons primarily to guide participants through the process of sending queries. But the farmers have to be somewhat literate, because some of the prompts are in text.

Meanwhile, obtaining localized price information from many markets is labor intensive for the service provider. Tata Consultancy has built up a network of volunteers, such as government agricultural institutions and nongovernmental organizations. Rolling its program out nationally may require going beyond volunteers to paid positions, which would boost the cost.

The price of the handsets also must be kept low, no small feat. As with other phones already sold in poor rural areas, they generally must be sturdier than those sold in cities, with higher audio levels to overcome noise in market places, longer battery lives and quicker recharge times. The design also must protect electronic components from the heat. Tata Consultancy's phones also must contain a camera and specialized software. The firm is considering the concept of co-branding the phones with companies that want to advertise to farmers, like fertilizer or seed companies, to keep the cost down.

Reuters believes providing local price information is a viable business. The company, whose main clients are financial institutions and newspapers, set up Market Light as part of its "innovation program," a unit designed to explore new business ideas. Reuters Market Light hired 45 people who visit 50 local markets in Maharashtra each day to observe transactions and get a price range on eight different crops, plus four journalists who write stories relevant to the local agricultural community. The company is offering a text-message service that is delivered through local mobile-phone network carriers. Farmers get price information from markets within a six-hour travel distance of their farm, local weather forecasts and news that may affect prices of their crops.

Reuters offered the service free for part of last year, but now charges 175 rupees, or roughly $4.50, for a three-month subscription. "Our business model tells us that theoretically this is cost effective," says Amit Mehra, managing director of Reuters Market Light. "We want to see that transmitted into real numbers on the ground. That began in October; we're in the process of proving it."

Bharti Airtel is piloting distance-education and telemedicine projects over the phone, and plans to conduct a pilot study in a Himalayan village, in partnership with the State Bank of India, on a service that will allow customers to transfer money through text messaging to people without bank accounts.