I had a nice chat with a delegation from Tajikistan (population: 7mil) this morning who represent the advisors to the President and Parliament on mobile and Internet policy.
They liked babajob but the meeting got me thinking about what policies I'd put in place if I were in their shoes.
1. Encourage mobile digital payment systems. Google - and all free internet services - only exists because ad publishers pay for clicks. Publishers only pay for clicks because a reasonable portion of those clicks turn into actual sales on their website. Those website sales only happen because people can buy things online with their credit cards. It's the reason that Google only made $20m in 2008 in India (even though it had the #1, #2 and #4 sites) - we have only ~20m credit cards (and very few people use them). You don't build digital payment systems because you want to make Visa rich - we do it so that an entire ecosystem of new services can arise.
2. Similarly, policy makers should be encouraging mobile banking systems far more quickly than they do today. These are two of the most heavily regulated industries in the world but they really should merge. If you've visited the Philippines or Kenya anytime in the last 5 years, you'll see the amazing power that being able to super-easily move money on phones has enabled. It's really only because of regulatory hurdles that these systems have not been copied elsewhere.
3. This is more specific to India but governments must issue unique identifiers to their citizens (e.g. UID, social security numbers, etc) in order for credit systems to properly function - be they MFIs that get duped because one woman belongs to 2 loan groups or credit agencies that do not exist India because they can't correlate their user records. Yes their are privacy concerns in UID but read Jared Diamond or Robert Wright - the societies that have thrived over time are those with strong trust, land title and contract systems. In a modern society those systems are entirely based on knowing the difference between two people with the same name, something that's made possible if you give everyone a unique unumber.
4. Encourage efficient markets and communication for all citizens- even the very poor. This is somewhat a plug for babajob but the poor do face the most inefficient markets in the world and that often fundamentally limits the choices (How are you supposed to look for a better paying job if you are a live-in maid in the country? Well, we are trying to solve that problem). Furthermore, super-cheap cell phone plans improve the quality of life and allow for much better real-time coordination of activity. For example, the real reason that rural fisherman with phones make money is not just that they know which market has the best price - it's that they can call other fisherman who tell them where the fish are today. Similar, if a delivery helper in Mumbai has a phone, it's easy to imagine that the number of deliveries he can make radically increases because he does not have to wait around (he can just call ahead).
4a. There are 2 primary ways that governments can ensure that phone calls are cheap:
1. Keep the regulated rate that carriers charge each other for connecting between networks as low as possible. This is the reason that India has some of the lowest rates in the world (and the US's are so high). Of course this rate is guaranteed profit floor for the carriers and they'll resist it mighty, but this is way to make the market bigger and efficient.
2. Don't overcharge for 3G bandwidth. I honestly find the 3G auctions ridiculous. Rather than taxing the potential innovations of 3G AFTER we've found the killer applications and a market has been proven, governments are taxing the carriers before BEFORE any significant money has been made. This effectively makes cheap 3G systems impossible (because the carriers had to pay billions for the spectrum). It's really the exact opposite of the policy you'd want to encourage innovation. Instead, just levy a tax on the services when they are consumed.