Article 2: June 2008

This article compares and contrasts two models of e-service provision in order to identify potential synergies for greater user engagement and financial sustainability. It examines the innovative low-cost wireless DakNet network in Orissa state, which supports asynchronous communication between an urban hub and rural nodes. This infrastructure delivers low-cost prepaid services including e-shopping, employment and information searches. DakNet is propagated by village-based entrepreneurs, supported by a lean sales and technical support team. Current research indicates that the DakNet model can support not only rural businesses, but also local NGO development activities. This entrepreneurial model is compared and contrasted with the Community Multimedia Centre model promoted and supported by the development agency UNESCO through its Communication and Information Sector. We identify possibilities for cross-fertilization which leverage the strengths of both approaches.

UNESCO is a significant player in the development of community-based communication and information services, and supports a range of development programs including agricultural efficiency; health messaging; education; and human rights. A major pillar in UNESCO’s Communication and Information strategy is to provide access to information in marginalized communities through its Community Multimedia Centre (CMC) program. A CMC combines community broadcasting – for example a community radio station – with digital information and communication technology (ICT) such as personal computers and Internet. The idea behind this model is that while many people in rural areas of the developing world do not have access to phone lines and computers, online information can be shared through available media (such as radio) without the need for (usually English) language and/or digital literacy skills. UNESCO CMC facilities have been established in developing countries across Asia, Africa, Latin America and the Caribbean, in accordance with a set of sociocultural principles that emphasize the importance of:

UNESCO provides start-up funding to establish a CMC within a marginalized community, usually in association with other donors. UNESCO might contribute to an operating budget for the first year of the ICT component of the CMC’s operation, at which point the Centre might be encouraged to become self-sustaining through revenue generated by charging fees for service. The reality of the situation is that many UNESCO CMCs cannot self-sustain through charging fees for service, as operating expenses (e.g. repairs and maintenance, Internet connection and staff overheads) exceed current revenue generation performance. A 2006 evaluation of the UNESCO CMC initiative reported that in an effort to meet income targets, Centre managers “focus efforts on services targeted to those who can pay, losing the scope for activities targeted at the poor”, and in so doing start to alienate the very communities which they were established to serve. However, the very same report also came to the seemingly contradictory conclusion that “CMCs are accepted by and fully integrated into the communities and can in many cases be sustained beyond the pilot phase without core operating grants” (Creech 2006: 6-7). An alternative study of CMCs in India, Indonesia, Nepal and Sri Lanka found that “full integration” is a highly problematic notion that would be hard to achieve, since lack of participation by marginalized communities is in fact a core problematic that the CMCs are established to combat in the first place, and inevitably remains an issue for CMC programs” (Martin & Tacchi 2008). Part of the problem with many ICT for development initiatives is the top-down nature of the interventions, which assume that universal access to ICT will be beneficial and reduce poverty in rural and remote communities through the inexorable nature of technological determinism. Recent research demonstrates that in a number of locations, UNESCO’s community-based mixed media communication and information model – concretized in the global CMC program – needs to be both acutely aware of local contexts and highly sensitive to marginalized and excluded groups. This means they are always struggling with issues of financial sustainability, and there are many issues about the relevance of commercial software training programs to the lives of the rural poor (Watkins & Tacchi 2008; Tacchi & Kiran 2008).

The CMC project has delivered a network of community media and ICT nodes in remote and rural villages throughout the world. This development model has provided access to communication and information and e-services for marginalized communities which were considered unlikely candidates for the kind of private sector infrastructure developments found in urban hubs. However, participation and sustainability remain an ongoing and integral challenge to the CMC mission. The next example presents an ICT project driven by an entrepreneurial model which hopes to generate a profit in the very same environment.

India has become a poster child in information and communication technologies for development discourse. Indeed, its urban telecommunications sector is experiencing rapid growth. Wired and wireless teledensity in the urban population was estimated at 60% in March 2008. This is in marked comparison to a rural teledensity of 8%. Rural service provision is currently focused on voice services, and national broadband subscription rates (including urban and rural areas) remain comparatively low at 3.90 million (according to Telecom Regulatory Authority of India March 2008 figures). From a market perspective, the low teledensity achieved in rural areas is hardly surprising, since average revenue per user in these communities is poor compared to urban users. Many other factors have contrived to keep rural teledensity low, including regulatory and legislative barriers to network roll-out; and the sheer capital expenditure required by infrastructure development. However, the sheer size of the rural Indian market can provide significant return on investment.

First Mile Solutions (FMS) – based in Cambridge, Massachusetts – was founded to leverage the potential of the rural market. FMS aimed to occupy “the market niche between more expensive real-time Internet technologies and cheaper asynchronous alternatives such as transferring data using USB keys or CDs” (Chyau & Raymond 2005). Although its clients included both for-profit and not-for-profit organizations, some for-profits were “skeptical” about the possibility of profitably targeting the rural communities. This challenge led the founders of FMS to start a new venture, United Villages; an enterprise and business model for delivering products and services in at the rural level. In August 2003, United Villages and First Mile Solutions merged “to leverage the consolidated benefits of both the vendor and service provider models” (Chyau & Raymond 2005).

United Villages Networks Private Limited has operated in India since September 2005 and is currently working in two Indian states: Orissa and Rajasthan. Recently, the company has opted out of being an Internet Service Provider in favor of providing information technology enabled services (ITES) to rural communities via village-level franchises. Specifically, United Villages has developed a low-cost Internet access model called DakNet (lit. ‘Post Network’), using proprietary Mobile Access Points technology. Village-based franchisees known as DakNet Service Providers (DSP) sell subscriptions for users to access a range of services on the DSP’s laptop (subscriptions are also sold by the United Villages’ sales team). This data is uploaded periodically to a roadside access point. Wifi transceivers mounted on local buses send and receive data from the roadside access points, for later transfer to/from the Internet via wireless protocols. This store-and-forward system allows DakNet to offer an asynchronous network communication model to users at low cost. In Orissa, the DakNet store-and-forward system operates in four steps (see figure 1):

United Villages is working with leading mobile service providers to use roadside mobile towers as real-time Internet access points. This means that buses will be able to store-and forward data as they travel, rather than wait until they return to Bhubaneswar’s main bus station. Currently, there are over 60 DSP franchises in Orissa which are granted – in general – to existing rural entrepreneurs already running a local business such as a photo studio, public telephone booth, electrical equipment shop, TV/radio repair shop etc. Less frequently, an individual running a village school or a rural NGO might take on a franchise.

The DakNet system supports a suite of e-services designed for users with limited or zero digital literacy (see table 1). Comparable services accessed via mobile phone are usually priced too high for rural users, and not otherwise available in the villages of Orissa (cyber cafes are only located in urban centres). Through DakNet, such users can get access via an individual subscription similar to prepaid cellular mobile phone connection and recharge service. The DakNet subscriber is provided with a unique number that serves as account login, and recharge coupons are offered to the users to make use of the e-services over time.

E-service	Description
Email, voicemail, SMS	Asynchronous mode only
Job Search	Subscriber sends curriculum vitae to United Villages and receives relevant job vacancy information
Matrimonial	Subscriber receives information about potential brides/bridegrooms from United Villages
Infoguru	United Villages operator conducts a web search on behalf of subscriber
E-shopping	Subscriber can order items from United Villages’ e-shopping catalog

The e-shopping service can be used by both subscribers and third parties who can order directly from the DSP. United Villages provides a paper catalog to assist e-shoppers, but can also accommodate non-catalog items. E-shopping orders require payment in cash, as the cost of the average order often exceeds the balance of a prepaid subscriber. After accepting an order, a request is sent to the Bhubaneswar hub via DakNet from the DSP's laptop. The services are purchased from regular wholesale dealers in Bhubaneswar and sent to the villages using the bus network which facilitates the DSP to offer items below the market price. United Villages is building a network of rural entrepreneurs armed with mobile phones who can also phone in e-shopping orders for village customers, without the need to access a laptop.

DakNet is still in its early stages with approximately 1,100 subscribers in Orissa. Now that its infrastructure is established, United Villages aims to ramp up its subscriber base through ongoing sales drives and roll out new e-services. It’s interesting to note that the original goal of its parent First Mile Solutions was to provide rural email and voicemail. In Orissa, United Villages has found limited demand for these services; as the cost of making calls and sending text messages from mobiles has become more affordable. DakNet email has also yet to find popularity with village users outside of college students, public servants, and local organizations such as NGOs. Hence the development of offline information search services such as Infoguru and Job Search (table 1). However, DakNet’s ‘killer application’ looks likely to be e-shopping, whose popularity is driving the company’s business strategy. Using e-shopping, subscribers receive quality goods cheaper than local market prices, with the further incentive that the goods are delivered close to the door. This service is used by both individual householders and small businesses alike; in this way, local markets can benefit from the service, rather than compete with it. A major benefit for one-person business is that the proprietor no longer has to travel to a major city to purchase specialty trade or domestic items, saving time and the cost of travel. Individual consumers can get better quality goods than are available locally, such as cosmetics or baby food items.

Although it’s far too early to say whether United Villages will be a business success, we might speculate by drawing a comparison with the “relatively minor innovation” in India in 1988 that led to the rapid expansion of public telephone booths across the country (Panagariya 2008: 373). Local entrepreneurs offered metered payphones that allowed users to precisely monitor (and therefore control) the cost of the call they were making. This enormously popular killer application generates profit for the entrepreneur through commission earned on each call; the user benefits through a proliferation of public phone booths in the market, providing increased telecoms access through a choice of suppliers (Panagariya 2008: 373-374). Perhaps DakNet’s e-shopping is the same kind of “relatively minor innovation” that could generate a significant profit in rural areas through e-retailing. On the other hand, DakNet is locked into a proprietary software and hardware system that may become vulnerable if 2.5G mobile services become more affordable to rural users.

Both UNESCO Community Multimedia Centres and DakNet by United Villages leverage analog and digital technologies to provide ICT to rural communities in India. The CMCs have sprung from a development-driven model and are tasked with providing online access to marginalized communities. DakNet has adopted an entrepreneurial model in order to provide relevant, affordable and profitable e-services to rural users with limited disposable income. Both offer a solution to rural ICT access – what useful comparisons can be drawn between the two models?

Philosophically, development and entrepreneurialism may seem to be at odds. Yet we have seen in the discussion above that market mechanisms can form part of a sustainability strategy for CMCs, through charging a fee for service to some CMC users. The aim of United Villages is hardly one of ‘profit at all costs’: the company describes its mission as “Serving the World's Poor, Profitably” (www.firstmilesolutions.com). This kind of “social entrepreneurship” aims to catalyze grassroots change through sustainable economic models. But as every good capitalist knows, you need money to make money. CMCs receive start-up and top-up funds from UNESCO and other donors; United Villages started life with financing from venture capital investors.

Furthermore, both models co-locate their point of service with existing entities. Village-based DakNet Service Provider franchises were often taken on by rural entrepreneurs already running their own businesses. CMCs have attached their ICT services to existing community-based media initiatives already embedded in villages. Therefore both models leverage existing activities. However, United Villages is now requesting new franchisers to devote themselves (or a delegated staff member) full-time to being a DakNet Service Provider.

Another point of comparison between CMCs and DakNet is the use of intermediaries who make ICT-based services comprehensible to and usable by the local community. For example, CMCs ‘interface’ with the local community through a network of volunteers who supplement the small full-time staff of the centre and provide training and advice for the local community. Similarly, DakNet Service Providers act as intermediaries to United Villages’ e-services; these DSPs are supported on-site by a team of traveling sales and technical staff. Furthermore, operators in the United Villages main office also act as intermediaries by conducting tailored Web information searchers on behalf of users, such as Job Search and Infoguru (see table 1). The importance of intermediaries to both initiatives demonstrates how a focus purely on universal access to ICT is simply insufficient to guarantee the take-up of services by rural users. A sustainable ICT intervention is not just about building infrastructure and providing reliable bandwidth; it must also develop a network of intermediaries who provide an interface to rural users with low digital literacy skills. Indeed, these human networks could be considered as one of the most valuable forms of capacity building that result from rural ICT projects of this nature.

It’s been suggested that “Technologies may end up clearly defined but they do not start out that way... Thus human agency is central to the process of technological advance, contrary to technological determinism... the issue here is not merely how the technology is used but what it becomes” (Feenberg & Bakardjieva 2004). The original mission of United Villages was to provide ICT-based communication such as email and SMS to rural communities; in response to market demand, this mission has now evolved to the extent that e-shopping (rather than email) has become the primary offer of the company. The primary offer of CMCs is based on their previous media operations, with ICT supplementing and bringing an additional dimension. The broad social ambitions of the CMC program mean that measurements of success are harder to make (although it’s worth noting that CMC programs can be more committed to providing services in local languages, whereas the DakNet interface is written in English). DakNet is a success if it provides e-services that are relevant and affordable to the emerging rural market, and brings in a profit.

We have drawn some comparisons and contrasts between the ICT for development model (represented here by UNESCO CMCs) and an entrepreneurial technology-push model (represented by DakNet). One vision of a future hybrid of the two models is presented in the village of Satasanka, outside Bhubaneswar. The FREEDOM India Trust is an NGO which specializes in ‘right to information’ programs such as capacity-building for women, youth, farmers, and panchayat raj leaders. It follows a development agenda, akin to that of CMCs. The NGO is also a DakNet Service Provider. Not only does it provide a DakNet access point for users in nearby villages, it also uses DakNet to facilitate and accelerate its communication with government, donors and other NGOs. This hybrid demonstrates how NGOs and social entrepreneurs can come together to effect sustainable grassroots change using ICT. Future planned services being explored by United Villages include microfinance and e-government services.

Perhaps the strength of the DakNet model over fixed CMC infrastructure lies in the ubiquity of its own low-cost mobile wireless network, and its increasing use of existing mobile phone networks. This allows it to provide e-services to a large number of villages, and gauge demand through fee-based services. This entrepreneurial model offers much of interest to ICT for development initiatives.

This research is part of the Moving Content project, which is investigating the United Villages DakNet system in three village panchayat areas in Orissa. The research is supported by the Australian Research Council’s Centre for Creative Innovation in collaboration with the Intel Corporation, USA. Contact j.tacchi@qut.edu.au for more information.

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M.S Kiran is a Senior Researcher with Queensland University Technology. He has expertise in journalism, teaching and research. He worked as an Evaluator on the Intel Learn Program, an after-school program designed to teach technological literacy, problem solving and collaboration skills. Kiran also worked on the localization of content and design of evaluation instruments for the Intel Teach to the Future Skills for Success in-school program.

Jerry Watkins has an extensive international track record in communication design, creative production and project management. He has provided creative communication solutions for some of the world’s most well-known companies. He is a Senior Lecturer at Swinburne University and researches digital content and sociotechnical systems.

Jo Ann Tacchi is an international authority in media ethnography and anthropology, with an extensive track-record of publication and applied research. Jo is an Associate Professor in the Creative Industries Faculty at Queensland University of Technology, and a Fellow of the Australian Research Council’s Centre of Excellence for Creative Industries and Innovation.