Is telecentre Break Even Point a myth..?

Well, that is a question raised by some members in the Ugabytes discussion group. There will be many more out there thinking the same.
In simple language – break even point is where the total revenue in an enterprise meets the total cost. But in application it is not that simple, especially for a socially driven, donor funded telecentre operation, who used to convince a donor to balance their short fall.
But the positive point is, that the sound champions are already there in the telecentre eco-system, who managed to define the less-defined ‘telecentre break even points’. I have met 3 convincing case studies so far;
1. Grameen CIC’s (Bangladesh); the franchise telecentres are expected to meet break even point in 12 months. The total establishment cost per telecentre is estimated to be 1000$US. Grameen offers marketable services such as Grameen Public phone connection, e-top up services (FlexiLoad) and EDGE mobile internet services (with a one year gestation period) for the telecentre operator to reach that economic goal.
2. Drishtee (India); have a systematically designed ‘Mission 6K’, that is to provide a marketable package of services to each telecentre, enabling monthly revenue of 6000Rs (Indian). Estimated break even point is 4500Rs, which is expected to reach in 6 months to 1 year period. Service package includes; mobile phone top up, insurance services, educational services, matrimonial services, online marketing of village products etc.
3. OneRoof (Mexico); franchise model offers 9 products and services to sell through telecentres to reach break even point in 6 months time (estimated). Clean water filters, Carrier counselling, solar panels etc. includes in addition to the traditional ICT based services.
These cases demonstrate the product and service models designed by telecentre network operations of scale, targeting individual telecentre sustainability. There must be other simpler versions adapted by individual operators, as the economically sound individual telecentre operations are already out there, though yet to be taken into this study.

Empty telecentres ..! Why..?

Telecentres full of computers – but without customers ..? A common question in many parts of the world.

‘Just provision of equipment and building the skills of telecentre operators alone would not solve the problem. It may require attention into broader socio-cultural aspects beyond technology, management and entrepreneurship’. That is the finding of an action research carried out in Sri Lanka, studying Socio-anthropological and Technological reasons behind lack of community participation at telecentres.

Research was carried out by Sarvodaya, together with University of Colombo School of Computing, Centre for Women’s Research, University of Peradeniya and D.Net (of Bangladesh).

The project had set up telecentres at the heart of 2 rural villages, provided the most up to date technology packages and tested community interactions.

Socio-anthropological reasons constraining participation:

• Religion,


• Cast


• Ethnicity


• Community leadership found as more intrinsically influential in addition to the Gender, Age, Occupation & Educational status.
  

For instance, locations such as Buddhist temple which were recognized as a place of common interest, in a predominantly Buddhist rural community, found to act as a barrier at the participation of women. In contrast, same telecente facility has become the reason for Muslim youth to visit a Buddhist temple for the first time in their life, fostering healthy ethnic relations.

Such findings provides new insights – that the challenge of filling the rural telecentres are beyond the management and entrepreneurship.

Citizen newspapers; another social enterprise model?

Imagine a villager visiting a telecentre to feed a local news clip to an e-Newspaper that circulates to 100,000 people a day, and get a payment for the news feed..! Well I have eye witnessed that was happening in Chile. In this case it was the telecentre operator (local girl) does the newsfeed.

‘Telecentro San Rafael’, small telecentre with 4 computers, located in a mix community of 6000 people, was run by a young girl. The place is busy with local children, youth and house wives seeking internet services, printing and photocopy services, generating about 270$ a month. During the free hours, telecentre operator feeds the news, that she gathers from the local area to the popular e-newspaper of the area – ‘El a Maule’ (http://www.elamaule.cl/ ). She earns a reasonable fee for her news.

‘El a Maule’ is one of the five well known e-Newspapers in Chile, focus into local news of Maule region of Chile. As per the latest statistics of Diarios Ciudadanos (the company who manage them), more than 100,000 page viewers per day read the news generated by over 2000 Citizen news correspondents, who feed the 70% of the overall content.

Diarios Ciudadanos introduced first Citizen e-Newspaper of Latin America in 2005. By now they run 5 e-Newspapers, and 2 more are scheduled to be launched in months. They partner with local institutions such as Maule Activa – the telecentre network operator, who runs 30 telecentres in Maule region. Telecentre operators were provided training to become local correspondents. For Maule Activa it serves two purposes; (a) an opportunity for the local community to bring their local voices (news) to the national attention, (b) an additional income to the telecentre operator.

Diarios Ciudadanos maintain high standards of news excellence. They never allow news about violence, celebrity gossip, obscene photographs or offensive material. Every news feed by the citizens filters through a network of editors.

Citizen participation is given the best opportunity. As per the Diarios Ciudadanos, journalism evolves into Citizen journalism in the era of network of networks. The rural telecentres are a part of that network eco-system.

Formula for Sustainable telecentre Social Enterprise

C + M + P = SSE

Where C stands for Active Community Involvement, M for Sound Management and P being relevant Partnerships. The result SSE is Successful Social Enterprise

This equation is not conclusive but the idea is that we have to bring everyone who matters onto the table and the key person here remains the community. They are the King. They know what they want and can even suggest the best way forward.

Community Involvement is vital since the community is involved through needs assessment, surveys, research, PRAs etc. The community is able to state what they need, and are also able to prioritize them. They can even spell out the resources that they already have within them while at the same time identifying other resources that can be easily reached.

Management of the telecentres is also crucial. Businesses thrive on the profit motive and as such they hire the best. Hiring the very best may be way out of the league of rural telecentres, but ensuring ethical and professional management practices is something that ought not be compromised.
Partners are also important. These may range from networks (that is if they qualify to be called thus), funders, research institutes, educational institutions, professional bodied, faith based organizations, government departments etc.

This equation is not conclusive but the idea is that we have to bring everyone who matters onto the table and the key person here remains the community. They are the King!

Damas Ogwe

Ugunja Community Resource Centre

(in UgaBYTES, Online Sustainability Discussion)

Add your comments>> to improve this formula.

‘Mission Drift’ in the Sustainability journey

A major question emerged in a very dynamic, online discussion facilitated by UgaBYTES with over 600 telecentre activists, mostly representing Africa.

'mission drift - mean the risk of de-prioritizing or abandoning their social mission to focus on income-generating activities'. - Loic Comolli, NESsT

Telecentres have the major mission to serve the communities, the Economic sustainability push them for another mission – that is to generate profits. There is a challenge that how to protect the primary mission (Social objective) while they engage into the secondary mission (economic objective).

There are diverse opinions about the mission drift. Some believe it is acceptable within the context of sustainability success.

‘I don't worry about mission drift if the organization is improving what they are doing and getting more profitable and more sustainable and the community is getting more service’ – Peter Burgess

‘I don't find mission drift as a serious problem (as far as it highlights the value of community /stakeholder participation’ – Grace Mirandilla (Philippines)

Yet, there is a common concern to avoid mission drift. Why?

‘In the Philippines: a telecentre was so successful at selling mobile airtime that it abandoned all other (community) activities and focused on mobile’ – Loic Comolli

‘In this context, the Philippine example found that a part of its business was very much in demand, and ran with it. The question then is what happened to these profits from the cellphone activity. If it is sent out of the country to Switzerland for safe keeping ... not so good. If it is used to help local orphan children or do education, well and good. – Peter Burgess

Well, such thinking leads to another question. Will channelling the profits into other purposes drift the progress of economic initiative..?

According to NESsT – Social Enterprise Capacity Building organization; there are two ways to prevent mission drift. The first one is to run social enterprises that are 'close' to the mission of the telecentre. If the products / services sold are closely aligned with the mission, then the risks of mission drift are low. However, sometimes this may not possible, as profitable products of such nature are not always easy to find.

A second way to prevent mission drift is proper ‘Preplanning’. Before starting asocial enterprise, it is important to know What are the objectives? Develop financial and social goals for social enterprise. Set revenue targets. Social goals should be the mission-related targets one seek to achieve through social enterprise. – Loic Comolli
The proper mechanisms need to be put in place to avoid mission drift. –Loic Comolli, Grace Mirrandilla

Cases in Point:

Drishtee of India and Sarvodaya of Sri Lanka >

At Sarvodaya - management happily allowed 'Mission Drift'. How? promoted telecentre operators to generate income. They did. But, instead of ploughing that revenue into a systematic network operation, it allowed to invest into their own (locally driven) social missions. (Result - after 3 years, network started to drift into economic failure).

At Drishtee – systematic protection from the 'Mission Drift'. The systems were in place to secure the 'Mission' - at every segment of the eco-system, both ways - Economic and Social. Result is very encouraging. Drishtee started with 3 telecentres and over 7 years, now expanded into over 1650 (all are decentralized locally owned operations). Every telecentre reach their break even in 6 months, and they serve the needs of local communities. Drishtee (network operator) - announced reaching their breakeven point after 5 years into operation.

Prepaid Valet - a new Telecentre business model

Prepaid valet is an equivalent to the prepaid mobile card model in telecentre eco-system. In the pre-paid card model, customer has to load an amount of money into a designated account in advance. Then variety of services will be bought to match the money value. When money depletes, the account will be toped up by the customer.

Prepaid Valet is the latest enterprise model introduced by Drishtee to their 1650 telecentre operators. Valet is a fixed amount of money (about 4000Rs) to be set aside by each telecentre. Drishtee offer pool of services / products to the teleceneter to match the value. Telecentre has to top-up the money when the amount depletes.

The services offered though this model includes insurance packages, education programs, mobile phone recharging, mobile phone selling, emergency light selling etc.

Though they introduced this model only about 10 months ago, already 1300 telecentres subscribe to the model. Drishtee support the telecentre operator to find money for prepaid valet by arranging bank loans, micro-finance etc. Furthermore, a centrally managed MIS (management Information System) monitors the operation of each telecentre vaulet. A call centre runs as a help desk to provide assistance for the telecentre operators, who need extra assistance for valet operation.

Average value of valet range between 3000 – 4000 Rs, but depending on the transaction volume, value can fluctuate.

This model provides a better financial leverage for Drishtee to organize bulk-service buying with larger vendors, thus enabling to offer services at telecentres at an affordable price. Further it builds up better-control at the telecentre operators at their financial handling.

Elements of telecentre Eco-system

When the attention on Sustainability builds up, the challenge grows up to draw the lines between the stakeholders within the telecentre eco-system. Because, so far the research engagement did not try to distinguish the sectors (stakeholders) constituting the telecentre eco-system, instead attempted to map the issues, constraints, champions, best practices etc looking at the broader picture (overall eco-system). But, as the study goes on, as multiple professionals tend to interact with the subject, naturally the demand rises to recognize the specific demands at each stakeholder level.
So the question no 1 (Q1): Who are the stakeholders?
> Telecentre operators (at grassroots level)
> Telecentre networks (networking 10s, 100s & 1000s of telecentres under one umbrella)
> Community (who interact with telecentres )
> Service providers (who provide services to the telecentres / networks)

Q2: Why are these stakeholders important?
These stakeholders collectively thread the overall eco-system. They are interdependent and complementary.

Q3: Should we consider them individually in the sustainability journey?
Probably yes, because, the demand at each stakeholder is different.
> expectations of sustainability
> perception into the sustainability
> capacity to contribute to the sustainability
> urge / readiness to engage with sustainability

Here is one example:

There are four contrasting stakeholders in the telecentre eco-system of Polithathya model of Bangladesh; Prawn Farmer, Mobile Lady, Telecentre Owner, Telecentre Network facilitator (D.Net).

Prawn farmer: looking forward to have the most appropriate treatment to his epidemic at farm, quickly and cheaply.

Mobile lady: seeking to continue her job, find more community members with questions, generate bit more revenue, find a better incentive.

Telecentre owner: struggle to maintain / upgrade computes, pay bills, enhance services, and find the breakeven point, if not a small profit.

Network facilitator: grapple with more complex issues, maintain a good floor of knowledge services / products, add more value, maintain a competent carder of human resources (very expensive), expand institutional status, and all these add more into the final budgetary demands.

Thus it may require different approaches to the same question of sustainability, differently at each layer of eco-system.

Mobile penetration at BoP – An opportunity for telecentres

According to a recent study, 41% of the bottom of the pyramid (BoP) in Sri Lanka owns a phone, and among these 22% owns a mobile phone. The growth of the mobile phone sector since 2001 is phenomenal: 22% in Sri Lanka, 76% in Thailand, 60% in Philippines, and 23% in Pakistan.

In Sri Lanka, BoP consumers alone represent four million people who live below 2$USD a day. Despite the cost burden, they choose to purchase mobile phones because of convenience and the lack of other communication options. Another 31% (1.3 million people) are planning to buy a mobile phone before June 2008, according to the study.

But 28% are not planning to buy. According to LirneAsia, the group who conducted the research, this is the community who offers the opportunities for telecenters. Why..? majority ( 86%) of this 1.2 million population live in rural villages (where telecentres are setup). Though they are not willing to buy phones, a communication is a need for them.

How the telecentres can take the advantage?
> Offer attractive and affordable phone services (especially international calls)
> Promote alternate modes of communications (eg. Internet affiliated communication services – VOIP) – (26% in Sri Lanka and 71% in India, of the BoP unheard about Internet).

Factors to be aware of;
> Majority of this group is females (61% in Sri Lanka, 64% in Pakistan, 53% in Philippines)
> 86% of this non-phone buying community of Sri Lanka will be rural. (92% in Thailand).
> Average monthly income of majority would be less than 75US$
> Mean age of this group would be 40yrs.
> Majority of them in Sri Lanka was sensitive to privacy of their phone communication.

Based on the presentation "Mobile Penetration in Sri Lanka, Implications for Telecenteres" by Prof Rohan Samarajiva of LirneAsia, at Sarvodaya's National Telecentre Alliance Conference, August 31, 2007.

Leader-centric networks, are they sustainable?

Most of the grassroots telecentre networks are leadership driven, according to my observations. In Sri Lanka, most of the successful Nanasala are driven by charismatic leaders. In India, Bangladesh and Chile, I have observed the same character though conditioned by the socio-economic and cultural characteristics of the country. Originally, I thought it was my Sri Lankan (Sarvodaya-ness) culturally bound mind-frame created this insight. Yet, Maule Activa of Chile convinced me this character is common across the world.

What does that mean by Leadership driven / leader-centric-ness?

Leader has a vision and ambition. Vision builds the path, adjusting to the changing socio-economic and techno-cultural landscape. Ambition fuels the mission generating human and capital resources to translate that vision into action. Thus the telecentres / networks continue to survive.

These leaders maintain their circle of attention on;
> Maintaining a circle of influence with their target group (eg Community, Telecenter operators)
> Maintain visibility within their landscape
> Adapt strategic changes frequently (within Human & Financial resource base)
> Always in search for emerging opportunities

Still I could not find a logical reason to say they are not sustainable, as most of them run beyond the initial capital infusion (donor supported or slef-invested). But most of them do not demonstrate skills of articulating their success stories in the standard terms; balance books with consistent revenue, translating in-kind resources into economic terms, consistently generating convincing success stories in place of inspiring highlights.

Another quite common character to most of such leaders is, they fail to provide substantial revenue and welfare packages to their subordinates. That itself deprives their ability to infuse professional staff members, instead end up with constant struggle of keeping with, mostly, low quality staff.

But, as per the Peter Drucker, these leaders manage to get the best out of most human resources.

How genuine is the question...sustainability?

As I travel across the world – Asia, Africa, America, Europe – the common question raised – “Are the telecentres sustainable?”. It sounded, at times as a statement rather than a question..! I tried to analyse it, as it was quite intriguing. So following is my own self-questioning;

Who are the most common people raised this question?

Donors, consultants and policy makers!

What is their affiliation to telecentres?

There are two distinct types (a). Not deep in their experiences with telecenters, (b). closely affiliated with telecentre projects.

Why the group (b). ask this question?

>They are working in different thematic areas in the field of telecentres (eg. Project management, Monitoring and evaluations, content development, network facilitation, fund raising)
>They work often with NGO based telecenter networks. Most of these networks demonstrate the extra urge to ‘bend for money’ (fund raising vs capital-raising), which tend to dilute the feeling of economic sustainability.
> Not having seen systematic annual accounts, presenting internal revenue.
>They have never seen a convincing research study on the economic sustainability of telecentres / networks.

Are they really seeking an answer?

Not sure..!!!!

But the perception correction is very important.