Development and Cooperation in the 21st Century

A while ago I have conceptually represented the successful business model of GrameenPhone (GP), a telecom operator in Bangladesh. I see conceptual modelling as an elegant way to share successful experiences in development. The mini-case presented below focuses particularly on the Village Phone Program of GP and is structured and presented through the nine business model building blocks described above.

GP started its operations in 1997 as a joint venture between four companies from as many countries: Grameen Telecom of Bangladesh, Telenor AS of Norway, Marubeni Corp. of Japan and Gonofone Development Corp. of the United States. Today this venture has more than 820,000 subscribers, commanding 70 percent of the market share. The company has become one of the largest corporate tax-payers in the country while some 30,000 people directly or indirectly depend on GP for their livelihood.

GP's Village Phone Program aims at connecting all rural villages in Bangladesh through sharing mobile phones. It presently has 23,000 Village Phones that are in operation around the country. The Village Phones in operation presently provide access to telecommunications facilities to some 40 million people in remote, rural areas.

Value Propositions. The Village Phone Program has two main value propositions that it offers to two segments of target customers.

• Value proposition 1: In co-operation with Grameen Bank, a micro-credit institution, GP sells mobile phones on credit to creditworthy women in rural villages. The women then become local operators and sell GP's telecommunications services to the villagers. For them this has become an new opportunity to make a livelihood with as a micro-enterprise.
• Value proposition 2: Through the intermediary of the village operators GP sells communication services to villagers. Contrary to all predictions the rural poor have shown an enormous interest in these communication facilities that have become a tool to increase their productivity.

Target Customers. The Village Phone Program targets two segments of customers.

• Target Customer 1: Creditworthy village woman living in the centre of a village and willing to operate a telecommunication service.
• Target Customer 2: Villagers in rural Bangladesh even with very low incomes.

Distribution Channels. The Village Phone Program markets its two value propositions through two distinct channels.

• Channel 1: The first value proposition is marketed through Grameen Bank because as a micro-credit institution they possess the information of who is creditworthy and could be interested in becoming a village phone operator. And it is the Bank that finally lends the money to the future operator to buy a GSM mobile phone.
• Channel 2: The actual telecommunication service is marketed to the villagers through the local village phone operator.

Relationships. The main relationships GP maintains are with the village operators. They are essentially handled through the local branches of Grameen Bank. The relationships with GP's final customers, the villagers are handled by the village operators.

Capabilities. This business model building block describes the core capabilities GP's business model is based on and that it has to ensure in order to function. These capabilities are offered internally or through partners.

• Capability 1: Network infrastructure management, ensured by Grameen Telecom
• Capability 2: Billing, carried out by Grameen Bank.
• Capability 3: Identifying village operators, done by Grameen Bank.
• Capability 4: Service provisioning, offered by GP

Value Configuration. GP's value configuration is a complex relationship of the activities and resources of the different actors involved. These are Grameen Bank, GP and Grameen Telecom. All parties ensure an essential function in their main domain of expertise and the whole works as a network organization.

Partnerships. As the value configuration illustrates GP's Village Phone Program is based on a number of partnerships in different areas.

• Partnerships in financing: Grameen Telecom, Telenor, Marubeni, Gonofone, World Bank.
• Partnerships in infrastructure: Grameen Telecom, Telenor.
• Partnerships in customer handling: Grameen Bank, Village Operators (micro-enterprises).
• Partnerships in service provisioning: Grameen Telecom.

Revenue Model. GP's Village Phone Program revenue model is based on revenue flows from the village phone operators who offer telecommunication services to the villagers on their own account. In fact, the operators can independently price their services though GP gives price recommendations. The billing of the operators, a critical activity of every telecommunication company is done through the partnership with Grameen Bank.

Cost Structure. GP has two main categories of expenses to cover.

• Network costs. GP pays Grameen Telecom for the network capacities it effectively draws on in order to offer its services to the villagers.
• Administration costs.

# posted by Alex Osterwalder @ 11:14 a.m.