Sustainable business models at the community level
From ApcAccess
AM SESSION: About 16 participants
Chair: Muriuki Did a research, hope all participants took a paper and read it.
NOTE: Refer to power point presentation
Biz model template by Osterwalder (2004) Infrastructure - core capabilities - partner network - value configuration
Offer - value proposition
Customer - customer relationship - distribution channel - target customer
Finance - cost structure - revenue streams
The most critical we would be interested is the cost structure and revenue streams.
NOTE: See slide on Features for biz models for equitable access
Groups researched: - telecentres - info centres - min-telcos - entrepreneurial
How they managed to cover: - Capital needs to establish - Cost structure - Pricing - Revenue streams
NOTE: All detailed in the research paper distributed.
Discussion framework: - what are the issue at stake? - What are the practical strategies being undertaken to address the issues? - What are the support/strategies required to move forward?
SHIFT OF SPEAKERS: Michel Lambert, sought clarification-speaking at national and regional levels, not community. Wants to shift to afternoon session. Agreed.
Carlos Afonso, RITS, Challenge of sustainability, Brazilian experience
NOTE: No power point presentation.
See bio for introduction
RITS has been participating in several projects on digital inclusion. One of the first one was done in Sao Paolo, about 4 years ago. And begun with a group of five telecentres, in very poor communities in the city. Sao Paolo is a very industrialized city, the centre, also a lot of poverty. Metropolitan area now about 12 million people.
Maybe for projects that we’ve been developing, we may need to consider that you might have a client in the target group which is not necessarily the client. The client in this case could be a sponsor/donor, or govt agency. For example, we have the private sector who supports our work. And the target group is the user community. User community which is poor, must receive this benefit as a public service, this should be part of a public policy, like public health, and public education. Because info and communication, crucial part for social, economic, human advancement.
Between 2004 and 05, built 104 telecentres, serve 600,000 people, in very poor communities, still sustainable. Got community involved, and they participate in decision-making. They decide about community priority needs for this telecentre to be there. There was a case the telecentre was developed in such a way for people with special needs. Another community wanted a telecentre but would like to use it as a space to leverage regarding defence of the environment. This was the approach we used. Developed all this with free software.
Changes of government, threaten public policies. They seemed to be discussing support for Microsoft, but didn’t understand, because the telecentres were already running on FOSS, but it seemed Microsoft convinced the mayor that they needed Microsoft software for them to run their telecentres. Win-win situation for Microsoft. Because they gain in income tax deductions. Microsoft just wants to list this as a donation to gain. Not to do with helping community, even if they donate the software licences.
In (year?), 700,000 people, ADSL connected in telecentre, sustained by public policy of the local government.
Another case, huge company called ??? , have been asked to support federal govt to support digital inclusion in Brazil. But they provided support up to 2 years for 100 telecentres. Usually, technical support based on the local tech facilities they had throughout Brazil. Some have good relationships with local government. So they had continued support from the municipality. If not from the government, the local government wouldn’t support. So ended up with big problem of sustaining 100 telecentres and to train them on tech issues.
Another case, small communities throughout the river, wi-fi satellite connection. The connectivity might be threatened because federal govt is rethinking about wi-fi access.
ISSUES Public policy, amenable to change
Karel Novotny, Tanzania Biz Model
See pp presentation.
??? commissioned to collect cases on good biz models. Bad examples a lot, just as for telecentres, likewise for wireless connectivity type projects. How can wireless technology strengthen the sustainability of the telecentres. One example, is the telecentre in Karagwe, Tanzania (see presentation slide).
Started with very basic connectivity (see slide).
Self taught knowledge, not hired staff of the organisation. Not only about setting up the network, but trouble-shooting on viruses, and other problems. The knowledge stays within the organisation. Three years already and still growing. Knew the environment very well. He used a tree to install an antennae. Issue of sustainability, used local resources, and local environment. Only in initial stage, had support of Dutch expert, colleague.
John Dada, Nigeria
In Scandinavian countries, it’s 1,000 times cheaper than in my village. This has been very difficult challenge. There is an ISP consortium, but they say, only for private sector organisations. There is the universal access point, which Nigeria complies. The money that was paid in 2005 has not been fully spent. 2006 still sitting there. Written 4 proposals but none funded. Part of the money spent on buying new computers.
When decisions are taken at this level, small players little to say. Strategies - microfinance program - rural ISP program an entirely separate structure, to eventually join the ISP consortium to get cheaper bandwidth - low power PCs (different from ???) - training program – provide at chargeable fees - technical support for clients - run cyber café - have consultancies - have retired ICT professionals providing free in-house technical support
WHO PAYS THE BILL? Bought a radio from Malaysia recently. At the end of the day, the tel call cost USD200 for a USD300 radio. There was a problem with the configuration, had to call supplier in Msia.
What is the incentive for private sector to provide rural connectivity? It’s just not there. No electricity, no roads, no connectivity, and so on. There’s a huge number of people at the bottom of the pyramid.
Not going to close shop. We’re continuing with this multiple approach. We estimate wireless program will be able to stand on its feet in 3 years and return some funds to org.
DISCUSSION
Ashis: The Microsoft issue very common. Also same in India. For 50,000 promised to distribute, softwares, etc. also don’t understand why the government wants Microsoft. We have ensured that 100,000 will use free software.
There are some free info based services that govt supposed to give. Who pays for the toner, paper, operational costs? We left to state govts to fix a nominal charge. Opportunity costs very high for a farmer to reach a telecentre, but if the service costs very cheap. He’s ready to pay if the tel call is urgent. The operator is an entrepreneur, and needs to charge for services. If the opportunity cost for the end user can be reduced, the end user is willing to pay.
Ashis: Managing the network, there’s a need for a second line of people. In a district, there are 150 telecentres in India. But this function also comes with a price. The sustainability issue must also consider this.
The third sustainability perspective is financial. Whatever was there for a cost initially, is written off.
Internet costs is also not low. Better that services that are localized, wireless server, services through an intranet. Then don’t have to pay the internet costs. Have tried in municipal areas, and now in rural areas. Dedicated server set up in district in West Bengal.
Wireless has to be point to point and point to point in a local way. So that there’s no back end costs.
Mike: Q to Carlos and John. What conditions of the donation are in terms of long term-Microsoft, what I understand, next version have to pay for software, even though initially free.
Carlos: Bill Gates says “donating free software is enlisting new clients”.
Mike: Just came back from evaluating telecentres in Sri Lanka, impressive roll-out. Operational costs, part of the problem also on management issues. Have to also look at printing cost issues, and how to reduce the cost, and binding and everything. A lot of info that can be downloaded and printed in telecentres.
In many telecentres, electricity biggest costs. How to bring in renewable energy, and reduce electricity consumption. Varies from country to country.
Rent for premises also big problem. How to provide access rent free? A third of the telecentres in Sri Lanka hosted in temples.
Limited usage-lack of local content in local languages. Visited 40 telecentres, before could find a user browsing the web. Many people don’t use English. Got to have local content.
In Tamil areas, they were more keen. They could access Indian content.
Centralised subsidy system, voucher system. Making vouchers available to the poor and youth. The tc operator would generate income, by giving out the vouchers and to access, giving IPs, etc. and then billed to the govt, and the tc receives revenue. The tc can become more sustainable through external subsidies.
Big companies could do this and give to their employees.
They adopted a sliding scale on connectivity costs. First year, no connectivity costs, increases by the year. Can accelerate the usage of the facilities while the market starts to reduce the prices. Changes in market environment will make it cheaper, more competion, through time. Rather than services being costly, could make it cheaper in the longer term.
Graham: Mike might have already answered question—looking at government role. There’s got to be a role for public sector somewhere. How to mix what John has accomplished with public commitment that Carlos raised, to me this is key to a sustainable biz model.
Milenna: One of the issues mentioned, limited access to resources. Possible solution, can be implementation of renewable energy resources, like solar, water and wind power. Depending on the local resources. Believes wireless solutions can help countries in Africa, which don’t have enough bandwidth. Another is to work at policy change level.
Impact of tech on human health. Mobile and wireless, there has recently been research that shows there might be negative health implications. These sciences can help us develop more human friendly ICTs, so to strengthen this research work.
To reduce technology waste, issue for the developing countries. Solution to make efforts into producing ICTs infrastructure and products with longer life cycle so that they can be used longer. Decomposting and reuse and recycling of old. In most cases, western countries basically just dump into developing countries. Life cycle so short so when dumped, used two to three, five years, where do they go? Decompost without any protection measures. Strategy also to work on policy change, and research and development to improve tech to be not that harmful.
Carlos response: The issue of public policy. Let’s assume the gov est a strong public policy, providing access to every poor community. The problem is that even the ones already est by law, for health and education does not work well. So even for ICTs, it won’t work well, but it doesn’t mean that it shouldn’t be est even if it may be vulnerable.
70% of users are young people. On average, register 2500 to 4000 at telecentres. Even if the service is charge at 0.5real, the number of the users will be halved. There is an allowance, but usually consumption goes over. So they usually get support of local entrepeneur to get at cost. Or they do training courses, not necessarily on the use of ICTs. But say, on how to purchase things through internet by entrepreneurs.
The idea is to avoid charging users, have access made available for free.
On Karel’s presentation. The point is, the community in terms of type of purchasing power etc, is very uniformed. Very difficult to find s/o with computer at home to pay the tc to get wireless to their computer. In a small town though, you do have a different profile of people, poor and not so poor, and some could afford. In a very poor neighbourhood, it’s very hard to sell services.
Although can approach small businesses in a village situation, but still money is small. Experimenting. Money to pay but not enough to be sustainable. Several different cases, there’s no template. Depends on the situational context, the user profile, etc.
Universal Access Fund. One in Brazil, as in Nigeria and India (Rs. 8 thousand crones). Accumulated USD4 billion, never used for anything. The fund grows, prime target for treasury to balance national accounts. That’s what they are doing. Public policy is difficult.
John’s response: Access fund is an outcome of the WSIS process. The national governments are proud about keeping this agreement. If there can be a watchdog on the use of the universal access funds set up, as far as govts concerned, kept their side of the bargain, but funds just sitting there. Not just for treasury, but also target for change in governments, for politicians to dip hand into it.
Social enterprise approach – costs based on those who can afford, same service, price differentials.
Karel’s response: APC members, the middle link, of linking communities, is being done by wireless technologies. Many learnings among APC members, CEPES, etc. Very often there are stories of 10 km link through the desert, where private sector ISPs not interested in doing. Sustainable services like local telephony, etc. but that’s where the public policy comes in. There are regulatory issues surrounding telephony, etc. The policy advocacy also has to push for governments not to block the use of these, for example, through higher taxes, or through decisions by private sector on infrastructure, cost structure and access.
Murali: Pricing and public policy issues. The responsibility comes with mainstreaming of ICTs. If you do this, you’re buying into multistakeholder partnerships. Can’t talk about just ICT infrastructure in isolation but also at other infrastructures for development advancement, the responsibility also lies with other ministries as well. Example, Ministry of Health and delivery of health services.
There’s a need for proactive strategies—from accountability and transparency perspectives.
Miriuki: Key stakeholders, but not clear about the roles and power of the following and how to move forward: - community - opportunity costs of the end user. Is it true that the consumer has no role (they may be spending on beer rather than on getting info that could help them) - what about the private sector’s role? Is there a way to tap into their skills and willingness to look at the market, and how to develop? - development partner - government
Policy Regulation Pricing
Ashis: GOVT Cost of the solar cell and initial cost is high. What is the practical solution? Satellite technology is good for broadcasting. If two-way service, very expensive. Wireless is the solution for very far to reach areas. Monitor screen is very toxic. Life for two or three years. Donations of these are very harmful. Census and collection of data, telecentres support these processes for govt. Business process outsourcing. Govt departments were very excited with this. Rent – shared premises, govt offices. 40% will be hosted in Panchayat office. Service development package—must be suited to needs of the people, and the pricing must also be suitable. Types of services provided could also include the sale of local produce and handicrafts, sold directly to US agents, rather than through middlemen. Need not always be services that cost highly for telecentres to provide.
Ashis: In India, took some time to change the law how to utilize Universal Access Fund. Only for voice services. Couldn’t use money to support data services. VOIP cannot be provided by telcos, because against the law. Only allowed telephone services. Alternate telecom network—three important companies in India. Rail, gas and ??? Lot of bandwidth, dropping points, bandwidth available at ends of the rail line, but not in between. The dropping points are very expensive.
Mike: Universal Access Fund – there is no good concensus on how to use the funds. It points to the capacity of the regulator. If the model is a competitive model, where public institutions and NGOs can propose how to use the funds. The regulators don’t know how to evaluate the proposals properly, because they may be more technical in perspective. Have to have very clear process on how to use funds, based on criteria.
Participant, ComputerAid: Involvement of private sector-connecting rural communities in Nairobi. Telecoms are not forced to provide in rural areas. They are not charged/fined if they don’t meet the min percent of required outreach. Changing policy framework to make compulsory development is probably key aspect of this.
Provision of mobile providers in rural areas. Kenyan example, not only mobile companies charged duty and for calls they make, huge duty fee on base stations. Cannot develop network further. Change that part of policy, to speed up rural telephony a bit.
Private sector participation—pay as you go, rather than dependent on visa payment system, but couldn’t get the required volume. Voucher sytem ???
Sometimes problems not about old computers, but about power/electricity. Power surge protectors must also be considered and shouldn’t be just about purchasing hardware. Planning could be the ultimate solution. It always depends on case by case, use of old computers. Sometimes still cheaper than buying new.
Karel’s story—goes beyond mere financial sustainability. Print info on prices of agri products in other nearby countries, or info on other community needs. Local content, content with local relevance.
Ashis: Exponential growth of mobile services to rural. Static services not interested to expand for voice and data services.
