Sunday, June 22, 2003

Simputer economics

The purpose of today's screed is to point out that the Simputer makes it possible to run a comprehensive global anti-poverty project at a profit, so that we don't have to fool around with thousands of little tiny non-profit organizations tackling inadequate slices of the whole problem. A corollary is that we have a new bottom-up model for globalization, quite different from the multinational corporate model. This new model is based on the poor having the opportunity to state their preferences for what happens next.

The design goals of the Simputer were

The last point requires a bit of explanation. SmartCards cost $1 or so in quantities of a few hundred or more. If one Simputer were to be placed in a village, users would have to pay $1 for the SmartCard, plus a share of the Simputer, plus a share of the communications cost.

Suppose that the Simputer, solar power, batteries, wireless Internet link, and everything else needed cost $700, and suppose that a microbanking institution loaned a villager the money, to be repaid over two years at 12% interest. The loan payments would come to about $1 a day. Simputers have built-in 56K modems. Let us suppose that a 56K wireless connection could be made available for $60 a month, or $2 a day. Let us further suppose that the owner could rent out the Simputer 10 hours a day, six days a week. What then is the pricing plan for users, so that the service provider could cover her costs and make a profit?

Well, we have the $1 SmartCard as a one-time cost. Then we have $3.50 per business day for the Simputer and the modem line, which comes to 35 cents an hour. Charge double that, and the service provider is making $3 a day, or about $900 annually, a very decent income in villages where the official poverty is defined to be $1 a day, as in India, or even 50 cents a day, as in some parts of Africa. So now our village entrepreneur is charging 70 cents an hour.

If poverty is an income of $1 a day, then poor people can't casually get on line with this service and surf the Web. But poor people can get on when it saves them money or brings them other significant benefit. What might do that?

In India, the government provides food aid to the poor, distributed through local merchants. It is reported that the merchants frequently claim that food shipments have not arrived when in fact the merchants have sold them off and kept all of the money. A SmartCard service could verify deliveries and also verify which individuals have received their allotments

Farmers would be able to check prices for supplies in several neighboring towns, and also check prices offered for their crops. Again, it is not necessary for each farmer to spend money in order for all of the farmers in a village to get the best prices available.

Teachers and students would be able to get educational materials from the Net and share them. A one-hour download at 56K bps is about 18 megabytes.

With telemedicine, a health worker could bring a portable instrument kit that plugs into a Simputer. The kit would contain a blood pessure cuff and meter (which would also measure pulse rate), a digital thermometer, a digital stethescope for heart and lung sounds, and a digital video camera suitable for viewing the back of the eye and the interior of the ear, nose, and throat. All of this equipment is available off the shelf today. In addition, there are digital meters for various blood tests, including glucose levels for diabetes.

The data would be sent via wireless communications to a doctor in a clinic somewhere (since doctors cannot afford to travel to villages). The doctor could also ask questions and hear the answers. The result is the equivalent of a standard office visit. If further tests, emergency services, or urgent care are needed, patients could be told what to do on the spot. Villagers would again need SmartCards, to carry their medical information with them. The government might provide the SmartCards.

I could go on like this, but the other possibilities I would cite share the same essential characteristics. None of them involve charity. Some would be funded by governments, as in public schools or a National Health insurance system (or, in the US, Medicaid), and others would be valuable enough and inexpensive enough for the users to pay for them themselves. The villagers could afford to buy the computers and to pay for services, at the same time creating jobs.

In the longer term, access to the Internet would allow village businesses (crafts, for example, or clothing or shoes) to access markets outside the villages, and other businesses to access new markets in the villages. We could expect to see the digital equivalent of the old Sears and Monkey Wards catalogs springing up with merchandise suited to local needs and local cultures. At this point, the combination of schools, economic opportunity, and access to consumer goods would put many areas on the path of accelerated development.

Of course none of this will make people happy, but as Ogden Nash pointed out,
"Certainly there are things in life that money can't buy, but it's really funny.
Have you ever tried to buy them without money?"
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