Bringing Cell Phones To the Third World

An anonymous reader tips a story about Denis O'Brien, a mobile phone entrepreneur whose goal is to spread cell phones throughout third-world countries. Quoting: "...O'Brien keeps pouring money into the world's poorest, most violent countries. His bet: Give phones to the masses and they'll fight your enemies for you. ...In Trinidad & Tobago, where the state mobile phone firm was dragging its feet on connecting Digicel calls to its own customers, O'Brien harangued government officials to speed things up, even phoning one Christmas night to complain. After the launch the state firm started dropping Digicel calls anyway, making its new competitor look bad. O'Brien took his case to the people, taking out ads in T&T's papers listing life 'Before Digicel' and 'After Digicel' and held a press conference. The state firm eventually relented. In its first four months Digicel bagged 600,000 customers and is narrowing the gap now with the state in market share."

"Pouring money"?

[kaos07]

The summary makes it out as though he's some kind of philanthropist giving away free phones because of some kind of altruistic motive. But from the article we see:

"O'Brien has built a US$2.2-billion personal fortune by dominating the mobile business in a dozen poverty-stricken countries (in all, he's in 27 countries and territories)".

So we have another non-story. The story could be called "Someone else making billions of dollars by tapping into new markets". Even without getting into lengthy debates about the nature and ethics surrounding the modern economic system, it's really drawing a long bow trying to portray this guy as a defender of the third world. Not only because he's only giving them cell phones for god's sake, not like it's medicine or anything, but he's making billions of dollars out of it as well.

Re:That's what they need

[Chuck Chunder]

Good communication can help struggling economies a lot.

I think we often see these things as a modern luxury and forget the actual utility they can provide.

I remember an example given by Muhammad Yunus in Banker to the Poor [amazon.com] where a woman used to waste a day walking to the next village to pick up some raw materials, only to find out when she got there that they weren't ready yet. A whole days productivity wasted because she had no way of knowing without actually going to check. A cell phone (shared by the village) changed that.

Re:"Pouring money"?

[kaos07]

Wow so we have someone who clearly missed Economics 101. You need a citation required to show that profit is cost subtracted from revenue? And you think it takes some kind of inherent "skill" to raise the price by a certain percentage? There's some people you can't convince, and I'm not even going to try.

Re:That's what they need

[Ironsides]

One guy I know immigrated to the US from South Africa. He was shocked that cell phones were seen as a luxury in the US. The reason, he discovered, was that in the US, the land line telephone system in the US works for 99.999% (or something like that) of the time. Where as, in South Africa, the odds were that the land line was not working. Cell phones were the only reliable form of communication.

Re:That's what they need

[nogginthenog]

Landlines are extremely reliable in the UK and most of Europe.
Pretty much everyone in Europe has a mobile (cell) phone. My 65+ year old parents both own one. I think a big difference is that you don't pay to receive calls. You can buy a cheap ($30?) phone on a pre-pay tariff and it costs you almost nothing to run as long as you don't make too many calls.

You are an idiot

[Chuck Chunder]

Generating profit (Revenue - cost) tells you that he's either underpaying his employees or overcharging his customers, or both.
That's where "profit" comes from. It's not some magical formula that's so hard to understand and explain.

No, it means he's generating value.

He may be making it for 20 and selling it for 30 but it may actually have a value of 50 to the buyer.

I just got an SMS from my boss. It probably cost him 30c which is "ridiculous" for such a tiny amount of data.

However the message was about intermittent connectivity problems we're having with payment processor we use. The 30c costs dwarfs what we can lose if the connectivity issues aren't addressed so it's value to us is much more (and that added value continues on to our customers and their customers).

That's a first world example but the same principle applies anywhere [slashdot.org].

There is no shame in taking a profit if you are delivering value.