ICTworks by Inveneo

Research shows that increasing access to information communication and technology (ICT) increases economic growth. In Mali, access to ICT products – especially the Internet – is extremely limited. According to the International Telecommunication Union (ITU), one percent of Malians have access to it; this is one of the lowest rates in Africa. For this reason, USAID/Mali asked the Business Growth Initiative (BGI) to identify concrete ways in which Internet access can be more sustainably provided in underserved areas by shared Internet access points.

While a great number of government and donor initiatives have been implemented to expand Internet access, progress is slow. This may be explained, in part, by very limited collaboration in terms of public-private partnerships (PPP) or business-to-business relationships, which limits the impact their individual small budgets can make.

Collaboration is needed in Mali to help eliminate supply and demand barriers limiting Internet access. Supply issues arise from a very uncompetitive telecommunications sector, limited and expensive electricity, and lack of ICT and business skills of ICT providers themselves. Demand-side constraints are based on an illiterate, poor market that does not understand the benefits of ICT because it lacks local content. These constraints are amplified in rural areas where limited access to the Internet is expensive and slow.

There are a number of promising initiatives that will create more competition in the telecom sector. The Universal Service Fund (USF) will be utilized over the next few years to expand telecommunication services to rural areas. The Comité de régulation des télécommunications (CRT) – Mali’s telecommunications regulatory commission – needs to promote more transparency, competition and collaboration among telecom firms, specifically by developing regulation that promotes wholesale pricing for Internet Service Providers (ISP). If CRT accomplished this, it would catalyze more affordable Internet that will motivate rural ISP to increase access.

BGI created six business models to improve Internet access (en français) and the current telecom environment. These models are based on successful ICT centers in Kita, Mopti (which is a Local Community Learning and Information Center, or CLIC) and Kolokani; the success of Mali’s Household Energy and Rural Electrification Development Agency (AMADER) in expanding electricity service, and market opportunities implemented for Internet customers. The models:

1. Create win-win relationships;
2. Focus more on the market/customer;
3. Offer a diverse number of products;
4. Use the right technology and skills

These models include a rural ICT center, a temporary ICT center, a non-business hour center, a tourism multimedia center, an agriculture marketing center and a village communication system. BGI considers these business models able to use different organizational structures: a traditional social enterprise, a PPP, a hub-and-spoke model, and an advertising model. An analysis of the business models, the best organizational structure for them and how they meet the principles is in Table 1.

BGI’s analyses and business models were presented at a stakeholder meeting where stakeholders agreed to form an Internet working group under the Agency for Information Technology and Communications (AGETIC).

Mobile phones seem to be ubiquitous in the developing world, until you leave the main population centers. Then service drops off fast, and rural residents are left to walk miles to get a signal. But it doesn't have to be that way. There should be a strong business model for the right entrepreneur to deploy a local phone system cheaply, and with a good investment return.

Back in April, the Technology salon studied this issue and we found that micro mobile telco business models are essential, yet elusive. That's before I learned about the Village Telco initiative.

This project aims to assemble and develop the cheapest, easiest to setup, manage, and scale, local telephone company toolkit in the world. Even better, the Village Telco focuses creating a sustainable business model for entrepreneurs as much as the technology.

In awe of such a ambitious goal, I interviewed Steve Song about the Village Telco project, with an aim to understand its business models.

ICTworks:
You say that any entrepreneur with modest resources and technical ability should be able to deploy a Village Telco. What might be the business model that you anticipate them using? And in that model, what are the start up costs? Revenue model? Break even projection?

Steve Song:
We've discussed this a lot within the community. Initially we picked the figure of USD $5,000 and asked whether it was possible to start a Village Telco with that sum of money and could you break even in six months.

The answer is yes but it really depends on your priorities. The above assumes that every user will pay for their own Mesh Potato. Any telco really begins to deliver value when it begins to experience the network effects when the network reaches a certain critical size.

Accordingly, you might want to discount the Mesh Potatoes in order to stimulate roll-out, just as the mobile operators do. In this case you would need more upfront money for roll-out on the assumption that a larger network is going to generate significantly more income because it is delivering higher value to customers.

Here's a fairly simple spreadsheet at which you are welcome to play around with. Don't take any of the existing data in there too seriously as it is really intended as a sandbox to play around with different scenarios e.g. discounted Mesh Potatoes, monthly subscriptions, no monthly subscriptions, free local calls, more or less Internet use, etc, etc.

There are a host of variables and it is not clear until we get some more examples in the field which model is going to suit the market best. This is likely to vary from country to country and from urban to rural areas.

One key selling point of the Village Telco is free local calls. In Johannesburg, Dabba who operate a Village Telco-like operation in Hillbrow in Johannesburg, they have found that 70% of the calls are local on the network.

Congrats to ict@innovation for launching the first East African Regional FOSS Business Models Course that seeks to answer the key question of "How can African IT-businesses make money with Free and Open Source Software?"

This advanced course will bring together over 20 experts from universities, training institutions and private sector in Tanzania, Ethiopia, Rwanda, Kenya and Uganda. Its main goal is to form a corps of trainers and advocates who are equipped to spread the word on Free and Open Source and its potential for IT-companies in Africa. The course inter alia builds on more than eight practical case studies of African IT companies, who use FOSS to generate income drive innovation, add local value and provide legal, low-cost and high quality software solutions to businesses and administrations in their countries.

Inveneo Certifed ICT Partner, James Wire of Linux Solutions was moved to tears by the opening ceremonies:

"On August 31st 2009, on a good Ugandan monday morning, I was invited to address the participants as the General Secretary of the Free Software and Open Source Foundation for Africa, I could hardly hold back my tears of excitement. Not only did I appreciate how far we have come, I also quickly made a mental comparison of how we used to previously confine our Open Source discussions to evening drinking sprees in dimly lit dingy pubs and now here we were in a state of the art four star hotel with Open Source being the reason. The two weeks training has brought together participants from Ethiopia, Kenya, Uganda, Tanzania, Rwanda and Burundi.

The most unique aspect about this training is that all the content was prepared by Africans with African experiences in mind. This was intentionally done to ensure that the skills and knowledge passed on does not become a white elephant for the participants. With many African countries having lots of similarities in terms of society setup and management, I believe a lot of fruit will come out of this training."

See more about FOSSFA and InWEnt launching first East African regional course on Business and Open Source in Kampala, Uganda