Last month I happen to sit at the expert panel discussing rural telecoms at the annual EastAfricacom conference at the KICC. This conference brings together over 600 telecoms executives to discuss and share ideas and lessons on the advancement of telecoms in the greater Eastern Africa region and is organized by comworld series.
I sat at the panel that discussed the topic ” Strategies to Solve the Service Gap in Rural Areas”. Other panelists were Bayan Monadjem (Director of Network & CAPEX Planning, Airtel Africa), Jean-Pierre Bienaimé, (Chairman, UMTS Forum, SVP Strategy & Comm.s, Wholesale, Orange F-T Group), Khalil Nassar (CTIO, Vivacell, Southern Sudan), Julius Kinyua (CEO, Flashcom), Faical Mahamoud (Marketing & Communications Director, Djibouti Telecom), Declan Murphy (Founder, The Ecology Foundation) and Job Ndege (MD iWayAfrica Services) whom i was representing.
The panel discussed the issues and challenges that face the expansion of networks to offer rural access and some of the highlights include:
- Lack of commercial incentives to invest in rural networks due to the poor ROI. It came out that majority of telcos who have invested in rural areas did so due to clauses in their licenses that required them to devote a certain % of their capital to rural networks
- The lack of a working universal access fund policy that can aid in the funding of rural networks by operators who would have otherwise not invested in rural areas
- Lack of mains power supply making it expensive to offer services in rural areas due to the large opex spent on power generation which is mostly done by use of Diesel generators
Some of the key proposals were as follows
- The governments should spur rural access by first being a consumer of access services through e-government initiatives in the rural areas.
- Lowering of Capex by sharing of infrastructure by telcos operating in rural areas
- The extension of mains electricity supply to rural areas as a precursor to rural network access. There was also the proposal for use of alternate power supply sources such as solar and wind to power rural network infrastructure and the creation of power kiosks outside the base stations to provide free cellphone charging services to rural folk. The base stations could also distribute the excess power they generate to the nearby villages.
- Design tariffs and products that suit rural customers who do not have a constant income stream.
O3B networks is a nextgen company founded by Greg Wyler in 2007. O3B is an acronym for the Other 3 Billion denoting the 3 billion people in the world who still lack reliable means of communication.
O3B has a plan to launch Medium Earth Orbit (MEO) satellite constellation to offer low latency fiber quality broadband connection to regions in the world without much terrestrial infrastructure such as Africa, South Asia and the Pacific. O3b has a strong financial backing by big guns such as by SES World Skies, Google, HSBC, Liberty Global, Allen and Company, Northbridge Venture Partners, Development Bank of Southern Africa, Sofina and Satya Capital.
Their plan is to launch a constellation of 8 satellites into medium orbit by 2013 and offer connectivity to mobile operators and internet service providers. They will be a wholesaler and will only sale bulk capacity to providers of video, data and voice and not directly to end users.
O3B believes that the MEO satellites will offer lower latency (and therefore higher throughput) to most undeserved markets where fiber capacity has not and will never reach in a long time. To see how low latency is related to higher throughput see this tutorial here.
The O3B idea is a great one and deserves all the support it can get so as to make it a success.
A while back several investors financially backed the Iridium project. This project was to offer mobile voice communication via 66 Low Earth Orbit (LEO) satellites from anywhere on earth. However the project was a failure even before it started and was bogged down with project delays, design problems and poor marketing. Iridium estimated that it would easily get about 600,000 customers to break even and that the market for their service would be massive. At the end it only attracted 22,000 customers hence failing to even break even. With calls costing about $7 per minute and the handsets costing about $3000, the project was doomed from day one.
The Iridium project failed not because the concept did not work, It did. The failure was due to the managers of this firm underestimating the impact the GSM technology would have on the voice market. It is GSM technology that killed Iridium as it offered very cheap calls from small cheap handsets that could be used even in a building or car (as opposed to iridium sets that could only be used outside in open space).
Many a pundit have expressed fears that the O3B project will also join the likes of iridium in the not so envious club of spectacular project failures. I would however like to differ with the critics of O3B who have predicted its failure based on the failure of previous projects such as iridium and teledesic. This is because O3B is being implemented at the right time in history. This is because broadband internet and voice are now a mass market products unlike when Iridium was being implemented. When teledesic and iridium were being launched, broadband and voice were niche markets and very expensive for the average person. When iridium was launching, mobile communication was classified as a luxury and data transmission was only done by big corporations such as banks and oil companies. Today, things are very different and i think this is what makes the O3B different.
Last mile challenge.
On of the biggest problems in African telecoms is the availability of a reliable and extensive last mile. Africa has never been attractive to investors wishing to invest in last mile because of two factors:
- The African rural population density is very low meaning that traditional last mile access technologies such as wimax will not return on investment and therefore not commercially viable.
- The African continent is massive. The African land mass is equal to USA, India, China, Europe and many other countries put together. The image below says it all. Click it for a bigger and clearer version of the image
As a proponent of the enhancement of African rural communications, I believe the O3B project will help bridge the existing gap in the rural and city populations of Africa by overcoming the last mile commercial viability challenge and leveraging on the satellite footprint to offer cost-effective coverage to nearly every spot on the continent. This means that everyone in Africa will have instant lower latency access to the Internet. According to O3B, they will avail fiber quality satellite connections that will offer lower latency of 190ms (due to MEO satellites), high-capacity links at a low price of about $500 per Mbps. This is very competitive by any standards in developing countries. This capacity can then be distributed via methods such as 3G, LTE, Wimax, WI-Fi etc.
Apart from providing the rural population with broadband internet, the O3B satellites will also provide cellular operators with the much-needed GSM trunking services at a lower cost and therefore enable faster deployment of mobile networks in rural Africa.The cost of network expansion to rural Africa will therefore drastically reduce and this will speed up connectivity and spur development. To see how connectivity aids development in rural Africa, download the Commonwealth rural connectivity report here.
The Google dimension
Many people were surprised when Google decided to back the O3B project. People failed to see the interest Google (which to many is just a search engine) had on provisioning of affordable connectivity in developing countries. I believe the backing from Google was the game changer. On their blog, Google say their mission is to “organize the world’s information and make it universally accessible and useful.” Well, Google has succeeded in organizing the world’s information and O3B will help it make it universally accessible. Google believes that by funding such projects, it will extend its reach to the whole world and increase its market for Google phones, OS’s such as Android and Chrome OS, cloud services, advertising and search engine. Google’s backing for open source software development will also mean that cost barriers to ICT implementation will be eliminated for the other 3 Billion people in the world.
I therefore believe that the Google backed O3B project has come at the right time in history and will play a much bigger role in bridging the digital divide in Africa than fiber optics whose extended coverage is less than 20% of the continent. The participation of Google in this project will also reduce the cost barrier to adoption of ICTs in the developing world such as Africa.