Iqbal Quadir, founder of GrameenPhone, and Nicholas Negroponte, founder of the One Laptop Per Child Foundation, recently “squared off” in the pages of Good magazine to debate the respective merits of two very different technologies.

Quadir, as you might expect, comes out in favor of cell phones, as a technology that is spreading fast on its own because of its immediate perceived and real economic value–which will allow adults to provide better education for their children.

Negroponte, as you might expect, favors laptops, for their value in offering children a “window” on the world and a medium that encourages learning and creativity–which will make them more productive adults.

It’s hard to argue with either side, but it’s pretty clear which side is winning the debate in the marketplace. It’s not exactly Ali-Frazier, but it’s a good debate with both sides accomodating their opponent’s perspective.

Maybe the next such debate will be Smartphones v. Netbooks.

An AP story for a new project I’m involved with to get cell phones into the hands of people who need them, an innovative new program from Tracfone Wireless:

By LUCAS L. JOHNSON Associated Press Writer (August 18, 2008)

A cell phone company is offering free wireless phones and 68 minutes of free air time to more than 800,000 low-income Tennessee residents in a program aimed at ensuring they can make a call in an emergency.

Prepaid cell phone provider TracFone Wireless Inc. announced Friday that it’s launching its SafeLink Wireless program in Tennessee, which officials said would become the first state to have widespread, free emergency wireless service for poor people.

SafeLink provides eligible low-income households with a cell phone, access to 911 emergency services and 68 minutes of free air time for up to a year before customers If customers run through their 68 minutes, they can still call 911 (which is a free call) and they can purchase additional minutes for other calls at a discounted rate, said Jose Fuentes, director of government relations for Tracfone Wireless. The cell phone’s standard features include voicemail, text capability, call waiting, international calling to over 60 destination and caller ID.

John Taylor, a spokesman for Sprint Nextel Corp., one of the nation’s top three carriers, disputed Fuentes’ claim of sparse advertisement. He said Sprint participates in the Lifeline program by offering a discount on services and advertises on its Web site and through print, such as mailings. According to the FCC, 21 million households across the country qualify for Lifeline. “I’m elated that this program is providing needy families with access to basic cell phone service,” said Democratic House Speaker Pro Tem Lois DeBerry of Memphis, which has the state’s highest low-income population.

Fuentes said families may qualify if their household income is not above 135 percent of the federal poverty level, and if they receive assistance through government programs such as Medicaid and Supplemental Security Income.

Nicholas P. Sullivan, a visiting scholar at Massachusetts Institute of Technology, recently released a study (“Phoning in a Major Econmic Boost”) analyzing the impact of mobile phones on low-income households. He said the troubled economy makes the phones even more of an asset.

Tennessee Safety Commissioner Dave Mitchell agrees a cell phone is a valuable safety tool, especially when someone is traveling. “This program will allow drivers to call 911 if they encounter an emergency or get stranded while on the road,” he said. “I am thrilled that Tennessee is the first state in the country to offer this program and help keep our citizens safe.”

CellBazaar, a kind of “Craig’s list for cell phones” that is available only on GrameenPhone in Bangladesh, won the Best Use of Mobile for Social and Economic Development Award at the GSM Association’s blowout meeting in Barcelona, Spain. Here’s the citation:

“Grameenphone CellBazaar is a user-generated virtual marketplace, accessible via mobile phone or PC to nearly 17 million people in Bangladesh. In developing countries, limited communications hinder commerce and uninformed farmers and traders have little bargaining power with exploitative middlemen. Using CellBazaar, buyers and sellers trade basic goods from their mobiles, bringing the benefits of information exchange and one-to-many trading to a previously unwired rural population. Users post or search an item, spending less than US$.02, either by SMS or WAP or WEB, depending on their preferences. While common telephony establishes one-to-one communication, CellBazaar links many-to-many using the same basic mobile infrastructures.”

Judges’ comments: “Great initiative – full marks for self-sustainability. This grass root level initiative is not only for operators to make money but for rural folks to sell and trade their goods and increased price transparency and help for the illiterate is also available. It has clear environmental benefits through reduced travel.”

CellBazaar was founded by Kamal Quadir, brother of Iqbal Quadir, one of the founders of GrameenPhone. The company was initially developed by Quadir when he was a student at MIT’s Sloan School of Management, and was a prize winner at MIT’s annual $100K Entrepreneurship Competition.

See the proud press release on Telenor’s web site.

Not along ago, India’s Tata Motors introduced the Tata Nano, a car that sells for rougly $2,500 USD. Now, another India’s Spice Telecom has introduced a people’s phone selling for roughly $20. It lacks a screen and other bells and whistles, but is aimed at the “next billion” owners of cell phones in the developing world.

One of the main themes of You Can Hear Me Now is that cell phones give both producers and consumers much better pricing information and thus help create fairer and more efficient markets. Much of the evidence in support of this theory is anecdotal, and most of the rgiorous academic support is at the macro level. For example, I cite Leonard Waverman of the London Business School and his econometric “proof” that adding 10 phones per 100 in a developing country adds .6 points to annual GDP — i.e., it will rise from 4% to 4.6%.

An upcoming paper by Harvard’s Robert Jensen (The Digital Provide: Information (technology), market performance and welfare in the South Indian fisheries sector, to be published in the Quarterly Journal of Economics in August) looks at the impact of cell phones at the micro level — that is, how have cell phones affected the economic gains of fishermen in Kerala, India.

As reported in To do with the price of fish (The Economist, May 12, 2007), Jensen studies fishermen in several villages before and after cell phones were introduced, beginning in 1997. (This, of course, is what econometric research tries to do — simulate change while holding all other factors equal.) Before phones, fishermen late to their local market would find it oversupplied and have to dump some or all of their catch for lack of buyers. Once phones were introduced, they could shop amongst other markets along the coast, and bring their supply to meet the demand. Over time, this reduced waste and smoothed prices, leading to the Law of One Price. Fishermen’s profits increased by 8%, and consumer prices have dropped by 4%. Yes, a win-win — except, of course, for the middle man, who has had to reduce payouts to reflect an efficient market.

World Resources Institute (WRI), creator of the Next Billion “development through enterprise” blog, has just published a new book called The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid. The authors use household survey data to measure the empirical size and scope of bottom-of-pyramid market.

In a recent post, WRI senior VP Al Hammond notes the remarkable success of cellphone companies in cracking the “BOP code,” and notes several of the key themes of You Can Hear Me Now. He attributes the success, unmatched in any other sector, to extraordinary “push” using “sachet marketing,” i.e. selling text and voice combos in small prepaid increments. He also notes the way local cellphone companies have leveraged local entrepreneurs to create deep distribution into rural areas.

At the same time, he notes the “pull” of ICT–”the insatiable demand for ICT services even for very poor people.”  This, of course, is what has surprised so many development and industry experts. Hammond notes that in virtually every country, the share of spending on ICT rises exponentially as income rises. In fact, the percentage of income spent on ICT is higher than that spent on food, housing or transportation.

Remarkable–it reminds me of the Bangladeshi lady who referred to the cellphone as “magical as Aladdin’s lamp.”

In Toronto’s Globle & Mail, Jennifer Hollett writes about cellphones connecting the “poor and vulnerable to the rest of the world.” Some parts of her Cellphone gaining global reach are based on an interview with me, but the most interesting quote comes from a research officer at CARE Canada, for which Hollett volunteered in Africa:

“People will often prioritize connectivity above nourishment.”

This seems inconceivable, at first blush, but it does point to the fact that for most people in developing countries the phone is a productivity tool that either saves time and money–or makes money. It also helps to explain the answer to one of the big questions about phones in poor countries: How can people living on $1 or $2 a day afford phone service?

Because they a) share the phone and thus the cost and b) they find that the phone more than pays for itself.

Indeed, an old but still relevant study in Bangladesh by the Canadian Telecommons Group found that the cost of a trip to Dhaka was anywhere from 2 to 8 times the cost of a phone call. In economic jargon, the resultant “consumer surplus” suggests that people get far more than what they pay for in a phone–and that they’d be willing to pay more. The surplus is increasing all the time; a new study from TeleGeography’s Wireless Operators Research Service notes that ARPU (“average revenue per user) is declining globally–giving subscribers more and more bang for their buck.