Capping Mobile Data Access Creates Value for Bottom-of-the-Pyramid Consumers – Experimental Evidence from a Mumbai Settlement
52 Pages Posted: 24 Jan 2022
Date Written: January 18, 2022
Smartphones have enabled the delivery of life-improving information services to bottom-of-the-pyramid (BOP) consumers. However, little is known about how the poor interact with the digital world. Through a novel app we developed to investigate real-time smartphone usage, we identify a heretofore unnoticed barrier to digital information access by the poor – data shortages. We offer a practical operational solution to this problem – shorter data replenishment cycles – which serve as a commitment device to curb binge usage. By analyzing over 9.4 million minutes of smartphone usage data from 929 residents of a Mumbai settlement, we find that entertainment consumes 61% of their phone time. We randomly assign participants to a `capped plan' – with daily data usage caps – or a standard plan. Our data reveal that absent caps, participants binge on YouTube and social media, resulting in subsequent data shortages. Assignment to the capped plan increases late-plan access of invites to health camps sent via WhatsApp, increases attendance at these in-person camps by 27%, and reduces social media checking. Our results are consistent with users prioritizing entertainment even when data is scarce, or facing data stockouts. Most participants (particularly those with low self-control and high fear of missing out) prefer the capped plan, even when more expensive – a clear signal of demand. Because capped plans are also inherently cheaper to provide, offering such plans could enable providers to increase BOP customer value and expand access. Subsidizing capped plans could amplify the impact of life-improving services targeted at the poor.
Keywords: bottom-of-the-pyramid value creation, mobile data replenishment, information isolation, commitment devices, field experiment
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