it sounds like an entitlement program run amok, but it paid for itself several times over. this picture caused an outrage in the conservative blogosphere. it appears to show a homeless picture snapping a picture of first lady, michelle obama as she visits a soup kitchen. how in the world bloggers and talk show radio hosts asked does cellcc1: son afford a phone in partial le through a program called lifeline assistance that subsidizes the purpose purchases for the very poor. according to the research, reduced price cell phones generate an average of $259

worth of economic activity per person per year. if every adult eligible were to take advantage, it totals $3.7 billion. in developing nations, the advantage is even bigger. in doesn't villages, smart phones are used for communication, trade, and even banking. so we started with the question, why would a poor person have a cell phone, why wouldn't he. nicholas sullivan is fellow at the fletcher school and auth or of can you hear me now? microloans and cell phones are connecting the world's poor to the global economy. i think most people would be surprised to hear is that there is a subsidy for cell phones for the very poor. >> it's about two years old and

started in 2008, but it's just an extension of a subsidy that existed since the 1980s during the reagan administration for land line phones. >> it comes out of my land line bill? >> it does. it's called the universal service fee that is tacked on t the end of your phone bill and goes into a pool and washington used it to sisidiz land line access for low income americans. cell extended to covercc1: phones as well because of the recognition of the general trend lines. >> what's the real problem here? what's the essence of the objection? >> i don't think there is an objection really. >> surprise. >> i will answer that. it's the feeling that cell phones are a luxury.

>> it was thought that there was another obama program and so forth, but actually a reagan program that had just been extended to cell phones. i think say 35 states have endorsed this and use it. california is one who is not. a lot of tats is the perception that the taxpayers are paying for it, but there is a pot of money in washington that comes out of everyone's phone bill. the money is there. >> smart phones is almost technology equalizers. we heard about the digital divide that may center around pcs for people who are lower income. smart phones lower that. smart phones are your operating system. is that alleviating the issue? >> it has quite a bit today's mobile phones and the plain vanilla low end are more powerful than the computer we used to put a man on the moon.

there is a lot in that phone. the phones being used are not necessarily smart phones and they are not subsidies on people buying phones, but being given out. the two biggest companies are track phone which is a company in mexico and sprint nextel. >> i had not noticed until i did research that these are available in 7-11. the take away phones are the subsidized phones. >> just like in developing countries. >> what does your research show? how is it helpful to the economy that someone who is poor have a phone at all? >> we asked the question and did a poll with a national pollster, has the phone helped you find work or make money. half of the people who get the

subsidized phones, half said yes even though they had it three or six months. the average income they cited was $259 a year increased earnings. >> less than the subsidy. >> the subsidy is $10 a month. the phones are being given have 250 minutes on it. >> what are do they do with it? >> they use them like anyone else uses them. staying in touch with people or answering calls or looking for work. being there to get the call. >> this wasn't the original question when we had land line subsidies. that was a safety issue. make sure grand ma and grandpa don't cancel the phone and they can call. that is a different motivation. now we have to justify it because -- >> it's still the same program. just my study was looking at the

income-producing effect. i did the same in developing world and people had gone from no phones to cell phones and looked at it. i think the impetus is similar. health and safety and since a lot of people had been cutoff land line phones, the number of people wireless only, especially my support is like 35% wireless only. >> poor people tend to use wireless phones. it seems counterproductive, but they are not sure where they are living. >> i have a land line at home and it never rings. we just continue to pay the bill. >> somebody said the reason we keep a land line is to find our cell phone. why wouldn't states -- 15 states don't subsidize wireless phones.

why would you not? >> jerry brown, the first thing he did is said 60,000 cell phones have to go away. stop paying for the land lines. >> to be eligible, you have have to be within 135% of the federal 54 efforty guidelines. it would be 300 million in extra income amongst the poorest of the poor. they are obviously one of the groups putting a burden on the state. it would seem to be -- >> seem to be. why is it not done? >> it's a lack of awareness about the program or a built in idea that it's a bad thing and it's a state give away, but it's not.

>> i think it's just lack of understanding. there similar programs -- >> speaking of paying bills, we will talk more about the developing world. coming up in a bit. look, every day we're using more and more energy. the world needs more energy. where's it going to come from? ♪ that's why right here, in australia, chevron is building one of the biggest natural gas projects in the world. enough power for a city the size of singapore for 50 years. what's it going to do to the planet? natural gas is the cleanest conventional fuel there is. we've got to be smart about this. it's a smart way to go. ♪

welcome back to press here. we are talking about cell phones for the poor. >> i want to ask you about maybe similar programs in other countries like brazil. from what i gather based on statistics, the greatest growth is coming from countries like c: that. that there programs like that in poor countries, but what poor countries have and what caused the spread is prepaid phones. the phones themselves are not that expensive and you get them on the black or the gray market: you can get the phones and buy

as many minutes as you can afford. 100 minutes.cc1: the they do banking oncc1: phones? >> that's the first killer ap. >> it stops someone from carrying the market cash. we have seen in developing worlds that because there is no infrastructure whatsoever, they started with a wireless sense.ructure that makescc1: >> that was leapfrog number and number two, people who didn't have phones went to mobile phones and people who never had bank accounts are bypassing the banking system. it's kind of a shadow system. it's particular ly well developd in kenya of all places. there is a model that has about 100 iterations of mobile money transfer banking around the

world. >> would a country benefit from subsidizing their citizen's cell phones? >> or are they so cheep it doesn't make a difference? >> the demand is so high and the opportunity costs of not having a phone is so great. >> into the other side of the question, if no, why do we? >> because we have the post paid system which is very expensive. you design up for a cell phone account and you have to block yourself in and you always go over the number of minutes and you have the taxes and fees. you get it to go. >> kids are always buying prepaid and criminals buying prepaid cell phones. why don't the poor people. either you are going to subsidize or not. >> prepaid phones are doing pretty well. >> the growth is quick. >> because of that, a lot of people have been knocked off land lines and post paid phones

are going to prepaid phones. you don't need the subsidies. it's a different business model that has been attractive. the developing world has gone from 2%, 5% penetration of land lines 10 years ago to 70 to 80% penetration with mobile phones. >> nick sullivan is at the fletcher school. coming up, is your social network plan antisocial. all-around social animal will impress you.

>> social media experts say few give you a reason. >> where people are focusing attention. >> analyst said that question, why, is the least-asked question in social media. brian is the best selling author of engage and a frequent key note speaker back from spain and morocco and dploeblly recognized as one of the most prominent thought leaders of social media according to his own website. >> why? >> we will get to your qualifications in a minute. it's a good question. i have seen the facebook logo. why would i follow you you on

facebook? maybe a discount or a contest, but beyond that, there is nothing else left. >> that's exactly why it's the least asked question. hy would you want to followcc1: your yogurt. brands see facebook as another chan toll reach consumers and they are neglecting to think about why a consumer would want to follow and more importantly, why they would want to stay connected overtime. i have seen the pay off. next the number at the cash register. the relationship ends. >> that assumes that you are getting the pay off. >> assuming i have been motivated to like my yogurt. facebook or twitter. it's a fast relationship. it's not going to be something. >> here's the thing. we have to create community. how do you have a kmund over a fast relationship. yogurt is in or out? >> first time that phrase has

has been said. >> a portion or a reason to build a community. that was the first take. got to build the community and maybe this is what we were talking about. if it was another topic, it might be there. >> a lot of businesses and brands have not even asked customers or consumers what you expect from the intersection or connection or twitter. when you ask the consumer, they want a discount or exclusive content or exclusive information. we want a reason to stay connected to you or you will spam my wall and i won't see what my friends are saying. >> it doesn't have to be a discount. there things in which company, wmw and toileta, movies and documentaries are interesting that are related to the car. >> it represents a tremendous opportunity where brands can be

a media property and create content that sort of sells it creates ing, butcc1: an experience. that's valuable to a consumer.c: tangible value. even still they are not thinking delivering that as value. are get it, but otherscc1: using it as a broadcast mechanism. you, as going to askcc1: stepping back with the interaction of google plus, do : you think the marketers are reaching the point where maybe they understand the consumers are getting social networking fatigue? someone wrote about it and i wrote about the idea that there so many social networks now. i have google plus and i'm not sure why i use it. >> it's nice. >> i notice on twitter you are asking people when they would leave facebook for plus. i was wondering that. maybe it's overwhelming about that.

you see facebook on that. >> the minute they turn on brand pages, you see that everywhere on the back of your yogurt. it depends on whether you look at it from the coner or perspective. they know there is direct connection opportunities, but that ers, i don't know f.cc1: poll, some expressed fatigue, but many have said they are going to use both much they use twitter as well and see how their relationships pan out. >> in fairness to facebook, they talk about a shift from pure numbers to engagement in activity. people are using more aps with their accounts. >> from a second point of view, people can only have so many friends well before the twitter and facebook. you can only have so many relationships. you can only have that. who are we supposed to be liking and having relationships with and linked in with and all this stuff in the social media world? >> anyone who will have a personal relationship with us that can be a company like

apple. there has to be a permanent tie where i give a damn. saturn cars, i never owned one, but back in the day there was an incredible connection. some do it well. saturn, apple. >> dell, ford, these are companies and coca-cola has the most lightso facebook. starbucks is up there. these are companies that are forging a unique relationship with their consumers and finding ways to foster it. the psychological standpoint is something that outside of my professional realm, that is, are we redefining the boundaries of what a relationship is.cc1: is it moving from relationship relations?1: >> are we getting serious? >> you are redefining the relationship. >> i kind of wonder, it started social graph and the

average -- >> was it dunbar. the numbers debated. 130 to 150. oddly enough on twitter and facebook, the average number of 140ish.ions is cc1: i wonder and this is a hypothes hypothesis, whether or not we are moving away from a social graph and more towards an interest graph. are connecting around what they are passionate about. you maintain the relationships that are important, but they opened up an opportunity for people. think about the number of people who say how are you versus people we know. >> should there be a rush for google? i have an equal relationship with an acquaintance as diwith dell computer. they have been part of my social graph. >> not yet.

i just interrupted you, but explain to the viewer why they are waiting in the first place. do we know? >> brands are clamoring to get in google plus. google does what google does. here's a network, everybody. >> i apologize for sbripting. >> it's funny because here's a company that couldn't get social right at all and now it's the fastest growing social network in history. 20 million in three weeks. it took facebook 852 days to get to 10 million. >> the voice mail. why don't you sign up. on the land line. >> we got invites. we thought that was special. >> i saw that. no problem. >> it will be back.

>> brands saw it as an immediate opportunity. all of the fuss, the incredible bus, no pun intended. that was the last thing. now you have michael dell over a weekend asking, do you think that this would be a great place where we could bring suft mer service. he had a phenomenal reaction from customers. you start to see that the opportunity is really there. people expect brands to come to them. they don't want to visit websites and pick up the phone and call when they have a problem. there is nothing wrong with that. google under estimated the brand demand and as you saw when they started pulling out the brand profiles that were set up, you got the push back and it said we are expe dieding. >> like on coca-cola or an auto maker, is that impeded by plus or did they double dip?

the question is whether or not they would lean on unique individuals. the individuals on facebook will stay commitment and might experiment, but google plus will cultivate their own community. >> that's a quick question. do they tend to be more technical or more offshore? i'm not sure what they are? i have a bunch of people i'm following. >> i saw start ups as technical and california and talking about technical and california, it's a little clicky at least to start. >> serial number one people are out there, but is there a perception and we know the difference between facebook and linked in. here's my business connection. for people who want this, why am

i jumping from facebook to google plus? do we know that yet? >> it resembles a lot when they were hot and heavy at the beginning. you see geek celebrities after that. it feels like that and it's like a volcanic eruption. i guarantee it will have its own. >> does it offer anything different? >> it costs a fortune to give free advice out. i am a company and i have a pr department and a facebook unit. do we start on google plus when it opens up or do we wait? >> you have to like me on facebook and then the free advice comes.

to what extent is your company mentioned. are people talking about the industry? who is saying what to what extent? what's the real opportunity? that should define your strategy instead of building a presence and trying to force build a community that doesn't deliver a vail back to you. >> we appreatciyou being with us today. we will be back here in a moment.

>> i'm a big fan and we appreciate you being here with us. >> thanks so much. >> that's our show for this week. you can find more about nick sullivan's work and you can hear me now.com. the show broadcasts sunday evening at 10:00 in the san francisco market and xm sirius nationwide. thank you for making us part of your sunday morning. >> you heard of teacher's pet, how about teacher's pet peeves? >> this is so controversial. >> inn educator smell spells out

what everyone needs to know. class action is next.cc1:cccc1: :