Big change on a tiny screen

What accounts for the unreasonable success of the cell phone is that it reduces the cost of disseminating and accessing information instantly. The mobile phone is what I call “a general-purpose personal information communications device”. The “personal” refers to the information, rather than to the ownership of the device because what information is depends on the recipient.

The rich and the poor alike have a need for information and depending on their personal interests and occupations, they differ in their willingness to pay for information. Therefore while the device is common, what the poor do with the device is different from what the rich do with it.

One can distinguish between two broad categories of information: pure and actionable. Actionable information is something that enables a decision to be made and action is prompted as a result, as in the case of the protesters. Pure information is something that does not result in an immediate response or action. Pure information is “good to know” as opposed to actionable information which is “need to know.” One may call pure information a luxury good, while actionable information a basic good.

Since the rich typically spend a greater percentage on luxury goods, and the poor a greater percentage on basic goods, it is obvious that the poor will spend relatively more on actionable information as opposed to pure information.

Examples of pure and actionable information are not independent of a person, naturally, given that information is personal. The price of fish at a particular market along the Kerala coast is actionable information to a fisherman out at sea because it affects his decision where to land his catch. The busy stock analyst catching up with the latest political news while commuting to work is consuming pure information, and he is willing to pay for it even though he will not take any immediate action on it. But getting news on his cell phone is a luxury that the fisherman would not be willing to pay for.

The bottom line: though the technology is universal, the needs and capabilities of different parts of the world are diverse. That is, there are different markets. And what works in one market may not work in another: a tautology, no doubt, but often forgotten in the haste to transport a solution from the developed world to the emerging markets of the developing world.

For instance, online advertising, search, etc work in the United States and other rich countries to support free or subsidised services. But in the poor countries, the services may not be supportable unless of course the market in the poor countries is defined only in terms of the small percentage of rich people in those countries.

India’s population differs significantly from the population of an advanced industrialised country like, say, the US. Solutions that work for the US population, will work only for those Indians who are on average as rich as average Americans. But for the rest of the population in emerging markets, different solutions apply.

The opportunity for developing innovative solutions specifically for the emerging market is phenomenal. Consider the sheer size of the population which is mobile-phone enabled: there are 250 million or so mobile phone subscribers in India, and the number is growing at around seven million a month. Most of the new users will not be those who can afford the luxury of pure information, but will be those who need actionable information.

The taxi driver needs to know where his next fare is, the plumber where the leaky faucet is, the corner grocery store which household needs supplies and where. We all have goods and services that we need to sell or buy from the neighbourhood. The cell phone is the perfect device which will create a mobile marketplace where millions of trades can be enabled for economic efficiency.

Markets aside, the change that the mobile phone compels lies in how it changes the power structure in favour of the people, whether in a democracy or a dictatorship. It enables a marketplace for ideas. The mobile revolution is not just a good idea, it is inevitable.

The writer is a Mumbai-based economist

atanudey@gmail.com