Movirtu rolls out a Cloud Phone aimed at low-income users: first market is Madagascar, others will follow

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Right at the bottom of the pyramid are phone users who can’t afford the minimum cost for a SIM to share in someone else’s phone. Movirtu has produced a cloud-based, login account which will enable anyone who has access to a GSM phone to share it but still retain their own number. Russell Southwood spoke to the CEO and founder, Nigel Waller about the potential market for this low-cost telephony product.

Nigel Waller used to work in telecoms back-end infrastructure and during this time, an African operator asked him how it would be possible to deliver a phone service more cheaply in rural areas: just getting a SIM card to someone costs the operator around US$7 in markets without high taxes. He was driving on a snowy road in Moscow when the idea came to him: why not make the mobile service for the user based on a login like e-mail and then they could share phones?

The product was being tested in 2010 and started being deployed as a pilot with several operators in Africa. Two weeks ago it went live with Airtel Madagascar. But as Waller told us:”We’d like to see it rolled out across all the Airtel territories”. To back its expansion it raised US$5.5 million from London-based TLcom Capital at the end of last year.

The product has two markets: low-income individuals who want access to a phone without buying a handset or a SIM card and agents who will be able to offer access to phones and individual accounts to use them.  It costs as a little as US20 cents to deliver the service set-up compared to anything between US$14-21 to deliver a SIM card.

The account details are stored in the operator’s hub and each individual user on the platform gets to store contacts and can have a service which forwards missed calls to another phone for when they are not logged in. It also contains a gateway that will allow them to use m-money services like M-Pesa. For the wealthier users in this low-end user group, there is a product called ManyMe with which the user can get several different numbers on the same basis. It currently works on any GSM handset but not CDMA, although they may extend to it in the future.

According to Waller:”We need the involvement of grassroots NGOs. In one country we’re working with an organisation that needs to reach 500,000 farmers and only 1 in 5 has a phone. The NGO wants to communicate with this group, including doing surveys and sending out pricing information.” The 400,000 without a phone can in many instances share with the 100,000 who do have a phone.

The product is aimed at those who are earning US$1-2 a day. At the upper end of this range, the user will often save for six months to buy a branded handset and from Movirtu’s research, it’s clear they understand and want to have a warranty. In this range, Waller reckons as much as 40% of the market will be interested in the product:”We’re pragmatic and know that in the short-term the take up is likely to be in the hundreds of thousands and we’re working hard with the local local marketing people to explain how it works.”

“It’s clear from our research that those who share phones – either with family or friends – are paying up to a 50% premium (when they pay the phone owner) for air time. With our platform, the owner of the phone gets an airtime incentive to lend the phone. There’s also a huge gender and geography disparity: 70% in this segment without a phone are women and 80% are in rural areas.”

“People feel a lack of dignity (when they have to borrow a phone) and there’s no privacy because the phone owner can see who they’ve called. So we’re trying to ease the ecosystem and offer a solution that meets their needs. All you need to log in is a 4-digit pin code.”

This week on Balancing Act’s You Tube Channel:

Nigel Waller, CEO and founder of Movirtu on the Cloud Phone and low-income and rural users.

One of Nigeria’s leading TV producers, Obi Asika, CEO, Storm360 (who made Big Brother) on music TV, format programmes and the potential for music and TV content delivered over mobile.

Damian Cook, CEO, e-Tourism Frontiers on: the growth of online transations in the African tourism market; the growing interest of international Online Travel Agents; and the use of social media and User Generated Content to market yourself. Did you know the gorillas of Uganda have Facebook pages?

A clip that has been barely watched but should provide food for thought for anyone thinking about getting network out to rural areas.

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