Understanding smartphone usage in low-income markets

Google is to invest up to $1bn in India’s second-largest mobile operator, Bharti Airtel, as the company looks to boost its presence in the country’s booming telecoms market. The multinational technology company will buy a $700m stake in Bharti Airtel, giving it a 1.28 percent ownership in the company.

The move is part of the “Google for India Digitisation Fund” which was launched in 2020 and is aimed at providing affordable access to smartphones to more than a billion Indians and speeding up use of cloud-based computing for business.

The investment is great news for India’s small business communities, helping them to adopt digital tools as India works to adopt digital education, payments and e-commerce. The micro, small and medium enterprises (MSMEs) sector in India is second only second to that of China. In financial year 2020, the total number of MSMEs in the country was more than 63 million.

But what of the those who struggle? Although its economy is growing, poverty in India is still a major challenge even though it is on the decline. It has around 84 million people living in extreme poverty, which makes up to 6% of its total population as of May 2021. How do people living poverty make use of mobile technology, and how might the better use of mobile data support business progress and poverty alleviation in the Indian subcontinent?

Alp Süngü is a Ph.D. candidate in Management Science and Operations department at London Business School. His primary research interest is on data-driven operations for poverty alleviation. Currently, he conducts hands-on field research in underprivileged Indian settlements. His research looks at the digitisation of the poor and at nutrition challenge in urban slums.

Alp takes his commitment to field research extremely seriously and has an unusual approach. As part of his ongoing Ph.D. research, Alp spent five months in an urban slum in India in an effort to gain a greater perspective on how people in resource-limited environments use their mobile phones for poverty alleviation and how they make food choices.

“It was an eye-opening experience which began with me and my advisor, Professor Kamalini Ramdas, literally cold calling the local pharmacies – whose owners were likely to be more educated – to build connections on the ground. My first challenge was that I needed to find someone local who spoke English and could assist me as my interpreter and guide during my extended field visits.”

Alp’s initial experience of the slum proved to be more visceral then he might have expected: his interpreter and helpmeet proved to be a teenager who was in dire need without the slightest motive to earn money.

“I offered him a salary that can double their household income, however, he refused it many times. He had a different contract in mind: he wanted to work conditional on our long-term friendship. We would make monthly phone calls and play online games on our smartphones. Therefore, my very first lesson from being in a slum was that it was all about building relationships with people and the need to work actively within a very localised form of the network economy. I was immensely lucky to move beyond a ‘researcher-researchee’ relationship to get an undiluted perspective on the lives of those we are studying.”

Today, it is estimated that more than five billion people have mobile devices, and over half of these connections are smartphones. Nevertheless, the growth in mobile technology to date has not been equal, either across nations, or within them.

The received wisdom is that people in advanced economies are more likely to have mobile phones – smartphones in particular – and are more likely to use the Internet and social media than people in emerging economies.

Alp’s research, which examines mobile data usage of the poor and nutrition challenge in urban slums, is however uncovering a more complex story of mobile data access and food habits in extremely poor, developing world communities.

“There is perhaps a rather myopic perception in rich, developed countries that identify the greatest challenges of poverty, and aim to alleviate it, through their own lenses. I believe this might be a fundamental reason that could hinder development through making it potentially inefficient.”

“Smartphones as a case in point. Internet access is considered as a powerful tool for poverty alleviation and for the personal economy. What is unique about these devices is that, for the first time we are able to provide relevant information to the poor in such an efficient and scalable way. I deeply believe this value, but what I have also witnessed is that, by an order of magnitude, access to entertainment is of a higher priority than using the technology for gathering information and business support. If we overlook this perspective, we may fail to unlock the true potential of mobile phone technology in poverty alleviation.”

Alp observed that many people he met in his adopted community spent up to nearly five hours a day on mobile devices, mostly on apps such as TikTok and YouTube.

His time in the slum helped Alp uncover several abiding wider truths about poverty that owe as much to Jack London’s famous The People of the Abyss, as to any deeper insights into the use of mobile data.

“There is an abundance of literature on the importance of providing information through mobile phones. What might be missing is an investigation on how the poor interact with the digital world and finding ways in which to improve its information transmission role. During my time in these underserved communities, I met people who are suffering from malnutrition or preventable diseases, yet I haven’t met people who don’t own, or share, a mobile device. It was very clear that some people were sacrificing their essential needs for purchasing a mobile phone.”

Using essential resources for diversion and entertainment is, Alp maintains, common across developing nations. He points to Poor Economics by Nobel laureates Abhijeet Banerjee and Esther Duflo, which illustrates the spending priorities in African nations. In particular, the book characterises spending behaviours with examples of people willing to spend a decade’s worth of savings on a wedding or a funeral, or, although evidently malnourished, choosing to own a DVD player in order to spend time watching films.

Clearly discernible cases of malnutrition in the community in which Alp lived were more due to addressable ignorance, than a direct result of poverty.

“One day a mother, very proudly, told me about her trick, which enables feeding her daughter milk every day. She was mixing it with the street water, so she could amplify the amount. People would spend their money on chocolate and chips, fill themselves up, but remained severely malnourished and lacking in the necessary vitamins and minerals needed to keep themselves healthy. As these packaged goods are high in calories, children would have enough body fat and seem healthy enough, making hard to act upon their malnutrition.”

Alp’s research with Professor Kamalini Ramdas and Dr. Ali Aouad focuses on improving nutrition through incentivising the poor to choose healthy food products. To do so, they are developing a machine-learning-backed algorithm. This algorithmic approach enables them to design a food subsidy scheme that targets the highest nutrition intake. “The idea behind the algorithm is analogous to price promotions, our objective is to leverage food subsidies to make shopping baskets as healthy as possible.”

Speaking of his own ambitions, and what drew him to undertake his research at LBS, Alp says that he is not motivated by money, or by one of a number of people moving a large company’s performance in the right direction.

“I am motivated by being able to make a difference,” says Alp. Recalling his first conversation with Rajesh Chandy, the Academic Director of the Wheeler Institute for Business and Development prior to commencing his research, Alp says he was impressed by the emphasis on the multinational community and his School’s commitment to development across the world. “‘London’ is the location, and in the title of the School, but it’s impact is globally important.”

You can access the research article here. Alp’s research is sponsored by the School’s Wheeler Institute for Business and Development.

https://www.london.edu/news/understanding-smartphone-usage-in-low-income-markets-2006

Steve Liem

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