Featured in ICT Update’s Q&A entitled “Broadband Strategies”, Eric White answers some commonly asked, but seldom answered questions about providing connectivity to rural areas, business models that support it, and current trends in ICT policy.
Everyone agrees that ICTs are important for agricultural development. But the level of access in aCp other countries varies. What are some of the reasons why access to internet is often poor in rural areas?
It mostly has to do with the fact that it’s difficult for internet companies to make a profit, or even break even, in rural areas with the model they are comfortable using. The best situation for an internet provider’s bottom line is a dense concentration of high-income individuals. In this scenario, people can afford to pay not just for basic connections, but high-value ICT services.
This drives up revenues. And since people are geographically concentrated many of them can be reached with the same infrastructure, minimising network costs. Rural areas present the opposite scenario: citizens are generally poorer, driving down revenues, and because they are more spread out the companies need to provide more infrastructure to reach them, driving up costs. In the end that math doesn’t work out and networks are not deployed.
What new technologies and new business models are being developed that could provide affordable connectivity in rural areas?
There are several new radio technologies that drastically lower the cost of providing internet in rural areas, and hence make it more likely that a company can profitably offer access. A good example is the ‘small cell’. This is a scaled-down version of the technology currently used on standard 3G cell towers. It can handle less traffic and has a much smaller broadcast range, but it can be run on solar power and reduces capital cost by up to 80%. This can be a good option for rural areas where demand is likely to be less, and where people concentrate in small villages.
Another new technology, or class of technologies, involves the use of ‘TV White Spaces’. These are the spectrum gaps between TV channels. When TV broadcast channels were originally allocated, buffers of empty spectrum, or ‘white spaces’, were left between channels to ensure that they didn’t interfere with each other. But the size of the buffers was determined based on technology that is now several decades old. Due to technological advances, these white space gaps are now too big, and other signals can safely be broadcast through them. It is now possible to broadcast a WiFi signal a very long way – up to several hundred miles – very cheaply using these white spaces. This has important implications for rural internet access.
Are there examples of business models that have already been introduced, and have they been successful?
Indeed there are, but many are still new and coming onto the market. Altobridge, an Irish company that manufactures small cells, has had several successful pilot deployments in rural areas, and at the conference we’ll hear about their partnership with Orange in Niger. TV White Spaces are an even newer idea, but deployments are already underway throughout Africa. We’ll hear about an ongoing initiative in Kenya called Mawingu at the conference.
Not all successful business models for rural internet rely on new technology, however. One that has proven successful in many areas is for the government, or a company, to serve as an ‘anchor tenant’. In this scenario, the two parties agree that if the internet company offers service, the anchor tenant will buy enough connectivity to make the venture profitable for the internet company. Residents in the surrounding area then benefit from the new connectivity infrastructure.
What is being done at the policy level to support the introduction of new business models?
Well, public policy tends not to support a particular business model over another. It can offer incentives to use small cells, or it can authorise operators to use TV White Spaces, but that’s about it for picking particular business models. What policy can do effectively is ensure that the enabling environment – in terms of both infrastructure and regulation – does not contribute unnecessarily to the cost of providing internet service.
In some countries, this means that policy is restricted to things like ensuring local governments don’t try to tax fibre-optic cables that run through their land. In other countries, it means much more. An example is coordinating investors to put up the money to build fibre-optic cables in locations with limited internet. Some governments even build the cables themselves. Something that most governments offer is a subsidy program, called a Universal Service Fund, that helps make companies’ operations in rural areas profitable.
An emerging trend is to develop and implement National Broadband Plans or Strategies, which take a holistic view of the problem and coordinate resources across ministries to bring connectivity to rural residents. These plans coordinate supply incentives with demand creation, regulatory streamlining and pilot projects in multiple sectors. They can be difficult to implement though, and we’ll hear about a few of them at the conference.
This excerpt was taken from ICT Update, Issue No. 74, pg. 21. To download this article and other publications from the PDF version of ICT Update, Issue No. 74, please click here.