Good call: smartphone data diets could improve lives

It was the second year of his PhD at London Business School and Alp Sungu didn’t have a research area in mind, beyond wanting to use technology to help alleviate poverty in a part of the world that needed it most. So, his PhD adviser – Kamalini Ramdas, Professor of Management Science and Operations – said, “Why don’t you go to Mumbai [India] and explore an underserved community there?”

This catalysed a boots-on-the-ground exercise that, some four years later, led to the 2022 research paper ‘The Digital Lives of the Poor: Entertainment Traps and Information Isolation’ that the two co-authored.

Spending six months in a very poor community in Mumbai, he was struck by the high rate of smartphone penetration – “which was very surprising because this is a community where a child dying through malnutrition is not surprising.”

Knowing that smartphones are one of the most effective tools in helping alleviate poverty in hard-to-reach areas because they enable information access, the researchers were also struck by the difference in attitudes towards smartphones in developed nations, where they are often perceived as addictive, with associated mental health and productivity problems.

Smartphones: information provider or digital addiction?

They posed the question: Are smartphones a way to access information, or a source of digital addiction, or both – and how does one affect the other?

The first step was to develop a novel app to track real-time smartphone usage in a low-income community, analysing over 9.4 million minutes of usage data from 929 residents of a Mumbai settlement.

The app showed that the amount of time people spent on their phones was two and a half to three hours a day – around 50% more than that of the average US user.

While this might seem excessive, Alp points out that “access to entertainment is very restricted in these places. People work for long hours doing very labour-intensive jobs and often they even don’t have a TV, so this technology is the only way to access both entertainment and information; hence smartphone users may be faced with having to choose between entertainment now and access to information later”.

Three main findings

The study consisted of a randomised control trial that gave people one of two data plans over a three-month period: a repeating monthly plan, with roughly 15 gigabytes of data a month; or a repeating daily plan with a limit of half a gigabyte of data a day. There were three main findings.

First, with daily plans, consumption smoothed out – users did not “binge” early in the month and exhaust their data later.

Second, for users on a monthly plan, access to information earlier in a monthly plan was the same as for users in the capped plan, but because users binge-used their data early in the monthly plan they had exhausted their data later in the month. Because they now lacked internet access, their accessing of information went down.

By contrast, as consumption was smoothed out in the capped plan, accessing of information was the same throughout the month – users were more likely to access information consistently across time if their data usage was capped.

In effect, by making data more restrictive, access to information was increased.

The third and arguably most important finding related to the information supplied. The researchers sent messages to people via WhatsApp, inviting them to attend in-person health camps. Here, assignment to the capped plan not only increased late-plan access to the invites to health camps, but also increased actual attendance by 27%.

The cost of data stockouts

The study also showed that entertainment consumed 61% of users’ phone time. Alp explains, “We all tend to binge-use entertainment – YouTube, Instagram, TikTok and so on – and we are typically on monthly plans, regardless of where we live. But the knock-on cost of running out of data is very different for a consumer in a developed economy than for one in a poor community in the Global South.

“In the former, a smartphone user might simply top up their data allowance. But for the latter, exhausting your data and being unable to access the internet means being isolated from information and from markets. If you are an Uber driver, for example, you lose access to the Uber platform, so you cannot work. If you’re a vegetable seller, you cannot access market price information, so you can’t choose the optimum location to sell your products or determine a competitive price.”

The study thus revealed a hitherto unidentified barrier to digital information access by the poor: binge-using data early in monthly plans can lead to a lack of internet access later in the month, with real-world consequences for users.

A practical solution

The study then looked at a practical solution to the problem caused by the inherently addictive nature of smartphones – a mobile data plan that limited data to daily “rations”, rather than monthly allowances.

Most participants – particularly those who reported having low self-control and high fear of missing out – preferred the capped plan, even when it was costlier for them. For Alp, this was “perhaps the most surprising finding of all – people loved it!” Participants were then offered the choice of a monthly plan or a daily one at the same price. Remarkably, 75% opted for the daily plan. The study then tested how much they liked their chosen plan by telling them that, whatever plan they choose, the other one’s price would be reduce by 10%. Even more surprisingly, 44% of participants preferred that plan, even at a 10% price premium, indicating a clear willingness to pay for data caps.

The solution to the problem of binge-using data, the researchers argue, need not be paternalistic in the sense of making people spend less time on social media; rather, by offering the option of a capped plan, it’s about enabling users to save their data till the end of the month – they can still use it for whatever purpose they want.

“It’s easy to ‘borrow’ from tomorrow’s data to watch a movie today, so you can borrow entertainment – but information is often time-sensitive,” Alp points out. “You can’t check tomorrow’s stock prices today.

Implications for business

The authors believe their study highlights the potential value of designing a digital environment that leverages the day-to-day interaction of people with technology to improve certain outcomes.

“The findings have significant implications not only for smartphone users in impoverished communities, but also for telecoms providers”, says Kamalini. “Because capped plans are inherently cheaper to provide, offering them could enable telecoms companies to increase bottom-of-the-pyramid customer value and expand access.”

This suggests there is an opportunity to amplify the impact of life-improving services targeted at the poor by leveraging users’ interactions with smartphone technology. “We just carried out one intervention to offer information access through mobile phones, WhatsApp invites to health camps. There are thousands of different inventions actively being implemented in health, education, finance, ride-sharing platforms and so on,” Kamalini adds. 

“What’s important for research is to document the externalities in terms of poverty alleviation. It’s not that using social media is a bad thing – the point is that its use in certain communities hurts information access, and that has costs", says Alp.

“One study participant told me, ‘I choose these daily plans because every morning I wake up happy because I know I have access to the internet’. In other words, people want these plans because it’s a way for them to protect their future selves from their potentially tempted present selves.”

The findings beg the question why the default option for mobile phone contracts is monthly data plans. Looking at the historical and cultural reasons behind this, Alp has his own theory: “Probably back in the early 1900s some manager at BT – the world’s oldest telecoms company – said we should do monthly plans because our salaries, our utility bills, everything is done on a monthly cycle, and that makes intuitive sense.

“But when you go to this part of the world, that’s not how things work. People work on a daily wage – the structure of their lives is very different and they tend to make more day-to-day decisions than long-term plans. So, if I’m in a business looking to enter a base-of-the-pyramid market, I might want to ask myself, ‘Should I just bring what I have from the setting that I already know to the developing world, or should I reinvent my product and my service design?’”

The implication for business is to question one’s cultural norms when going to new places and think about designing something that would work the best in that community. Alp adds, “What we did with the data plans – which were already there – is just one small step towards this broad approach.”

This research was supported by the  Wheeler Institute for Business and Development at London Business School.