Just as GrameenPhone brought cellphones to rural villages by extending microloans through Grameen Bank, the company is bringing Internet connectivity to remote parts of the country. Entrepreneurs take out microloans to buy computers and printers, and connect to the Internet through GrameenPhone’s EDGE cellphone data network. While not as fast as a broadband connection, it does the trick.

A recent Washington Post story shows the impact such connectivity promises: one woman connected to a cardiac specialist in Dhaka; another called her uncle in London for pennies using computer-aided VOIP. Meanwhile, just as 250,000 phone ladies have started profitable businesses leasing time on cell phones, a new set of entrepreneurs is making money selling computer services. By year end GrameenPone expects 500 such centers in place, serving an estimated 20 million people.

The initial project was started by the GSM Association’s development fund. Says Rob Conway,the Chief Executive Officer of the GSMA – the global trade association for mobile phone operators. :

“GrameenPhone’s ground-breaking use of GSM technology has placed Bangladesh in the vanguard of our global push to use mobile networks to bring affordable Internet access and email to the billions of people in the developing world that aren’t served by fixed networks.”

The Ministry of Information and Industry reported that China had 443 million subscribers at the end of September ’06, and is adding more than 5 million subscribers a month. This gives China close to 1 in 5 cellphone subscribers worldwide.

Similarly, about 1 in 5 Skype users now come from China, despite the government’s ban on use of Skype Out to connect from a PC to the regular phone network.

As GrameenPhone celebrates the 10th anniversary of being awarded a cellphone license in Bangladesh with its 10 millionth customer, it also celebrates 123% growth in subscribers year to year (after the 3rd quarter results). Market share remains steady at 63%.

With new competition from Egypt’s Orascom, prices are dropping and average revenue per user is down. But this is good for Bangladesh, where fewer than 1% of the population had a phone 10 years ago. Today, teledensity is about 8% and moving upward fast.

More than two billion people in the world have a cellphone. But for the world’s largest mobile phone companies, a new race has begun for the next billion. Most growth will come from the developing world, which already has more cellphones than now exist in industrialized countries. In fact, more cellphones are bought every day in Africa than in North America. And microfinance, which has propelled companies such as GrameenPhone in Bangladesh to close to $1 billion in revenues, has a role to play.

Says David Keogh, deputy director of the Grameen Foundation’s Technology Centre in Seattle (as reported in the World’s Poorest Nations New Frontier for Cellphone Giants from the Toronto Globe and Mail):

“It’s a win-win-win model, all the way down. Worldwide, rural markets have not really been cracked open by the telecom operators, simply because they’re not willing to invest . . . what we’ve done with organizations such as MTN is to say, ‘you have a channel to market: it’s the microfinance sector.’” MTN Rwanda and MTN Uganda are replicating GrameenPhone’s phone-lady scheme to reach into rural villages.”

That’s 1,321 Philippine pesos, sent from London to Manila via cell phone, as described in New Conductors Speed Global Flows of Money from The Washington Post.

It’s no secret that remittances sent home by foreign workers eclipse both foreign direct investment (FDI) and foreign aid in many countries. In the Philippines, for example, remittances equal nearly 16% of total GDP. In India, nearly $23 billion is sent home from overseas, but just 3% of GDP.

Those numbers are going to increase, thanks to the cell phone, which is facilitating the process and speed of transactions, and dramatically lowering costs. Overall, anywhere from $250 to $300 billion in remittances are sent each year, with bank costs and fraud eating up 20-30% of the money. People in 17 countries can now send money to the Philippines by cellphone.

From a 2006 editorial in Dhaka’s The Independent, as quoted in You Can Hear Me Now:

“Further rapid increase in the use of cell phones is a good indicator of social progress. The fact that these phones are also being used widely by rural people is a happy trend in the reduction of distance in urban-rural communication.”

A very unusual and innovative way to raise money for social causes has attracted such of the world’s best known consumer product companies, such as GAP, Converse, Armani Exchange, and Motorola. They are selling products under the band name Red and donating a percentage of profits to the Global Fund (a project supported by Tony Blair, Bono, the Bill and Melinda Gates Foundation, among others). Red is a brainchild of Bono’s. (Want to Help Treat AIDS in Africa? Buy a Cellphone, from the New York Times.) 

To date the Global Fund has raised $10 million in Britain, with which it is testing treatment of HIV-positive women and children in Rwanda. Red products are just hitting shelves in the U.S.

Bill Gates told the New York Times:

“Red is one of the first major efforts to tap more Americans to contribute to fighting AIDS a continent away. And they can do so simply, just by switching their cellphone or buying some of the clothing that’s part of the Red line.”

Says Ron G. Garriques, president of mobile devices at Motorola: “I don’t believe it’s giving up profit. What I believe is, it’s making more profit.”

Large parts of the world that haven’t had or still don’t have phones also lack electricity, which of course makes operating cell phones difficult. Both the cell towers and cell phones need to run off generators, old car batteries, or solar panels. But a new initiative by Ericsson and South African operator MTN looks to replace diesel powered generators with biofuels derived from palm and pumpkin seed oil. See Pumpkin Power Dawns for African Mobile Networks by Reuters.

Supported by GSM Association’s development fund, the project is first being trialed in Nigeria, then will be replicated in Uganda, Rwanda and Kenya.

Yet another in what is becoming a steady stream of articles on mobile banking in developing countries: Phoney finance in the Oct. 28 issue of The Economist (requires subscription). This article focuses on South Africa, where 500,000 people now use their mobiles as a bank. Again, the upside is huge: 16 million South Africans, over half the adult population, still have no bank account. And 30% of them have mobile phones.

What amazes me about this phenomenon is that people who until recently never owned phones or had bank accounts, are now transferring money by phone.

As in Bangladesh and elsewhere, the rise of a valuable new service is creating thousands of rural income opportunties. One non-bank provider of financial services, Wizzit, hired 2,000 unemployed young Wizzkids to bring in new customers.

Other mobile banking operations in South Africa in clude MTN Banking and Celpay, which started as a subsidiary of Celtel but is now owned by First National Bank. In the Philippines, where mobile banking started, Globe Telecom and Smart Communications have both developed highly evolved services.