In Kerala, Cell Phones Go Fishing
    By Esther Duflo
    Lib ration

    Monday 02 October 2006

    The images that come to mind when one thinks of the role of modern technologies in development are those of Bangalore computer companies or Bombay call centers where young women dubbed "Sally" or "Barbara" handle credit card problems in English with a carefully trained American accent. But in spite of the impressive growth of these sectors, they employ only a minute fraction of the population, and their impact on the majority of the population remains very limited. Some think that communication technologies could have a more profound impact on the population of poor countries. The initiatives to overcome the digital divide (the inequality of access to information technologies) abound. Thus, southern India's land tax registers have been wholly digitalized, which allows for the immediate issuance of property titles, facilitating land transfers. The Massachusetts Institute of Technology (MIT) media lab is trying to develop a 100 dollar portable computer, supposed to revolutionize education in developing countries and help them to "catch up with a good four decades of development." After popularizing micro credit, Mohammed Yunus, founder of Bangladesh's Grameen Bank, founded Grameen Phone, a mobile phone company. The bank's poor clients can take out a loan to equip themselves with a mobile phone, the services of which they rent out to the residents of their villages.

    Others (including Bill Gates!) are more pessimistic. They believe that developing countries must first resolve their essential problems (water, hygiene infrastructure, basic health care, roads, electricity) before investing in digital technology. Information technologies are luxury technologies for countries that are already more advanced. The enthusiasts retort that it's precisely in developing countries, where infrastructures are of poor quality, and villages are often very isolated, that communication technologies are a fundamental tool, capable of bringing doctors together with their patients or peasants together with their consumers. In Bangladesh, the hope is that the Grameen telephone ladies, as they are called, can exercise a profitable activity even as they help peasants find the best prices for their products. The introduction of the mobile telephone in Kerala, a coastal region of southern India, furnishes a perfect example of how this could work.

    Fishing is an essential industry in Kerala. Sardine fishermen put to sea very early and bring their catch back to the wholesale markets that are held on the beaches between 5 and 8 a.m. Before the introduction of mobile phones, they had to decide beforehand at which beach they should disembark. Changing beaches if the demand was not very strong one morning or if the competition was too intense was not possible (the beaches are roughly 15 kilometers apart, but the fishermen have no transportation apart from their craft).

    And since fish cannot be stored, if they didn't find buyers, they'd have to throw their merchandise away. Conversely, if too few fish were for sale, the buyers would leave empty-handed. From one beach to another, conditions could vary enormously the same day: fisherman selling at a discount or throwing their fish away at one beach, while prices soared or buyers left empty-handed ten kilometers away. Between 1997 and 2001, telephone transmission towers were progressively installed in Kerala. Most are close to the sea and transmission is still good at the 25 kilometer band of sea within which the sardine fishermen work. Consequently, the fishermen can use the telephone to sell their catch to potential buyers before unloading. They can set the price before they come in and chose with the buyer where the merchandise must be delivered. All sellers now have access to all buyers, and vice versa. That allows them to coordinate, avoiding situations where supply is excessive in one market and inadequate at another. Harvard economist Robert Jensen interviewed fishermen before and after the introduction of the transmission towers in fifteen Kerala sardine markets. He shows that, as soon as a tower is introduced into a region, the variability of prices from one market to another is considerably reduced and that waste (5 to 6% of the catch previously) disappears. He concludes that the introduction of the telephone led to an 8% increase in fishermen's profits and a 4% reduction in prices, which also increases consumer well-being. An example as remarkable as unexpected of the power of technology!