Demand-side stimulation

Rohan Samarajiva Nagarkot, March 28-31, 2015

Locally relevant content leads to increased use of the Internet

But, it needs to be accessible quickly and cheaply

In recent times• More attention has been given to create

locally relevant content (Part 2)• Less attention to the supporting infrastructure

Content providers lack incentive to host locally

• Cheaper to host overseas (US / EU)• The Internet makes “virtual” a reality (content does not

HAVE to be hosted in close proximity to its users)However,• Access becomes costly (E.g. Int’l bandwidth costs

passed on to users)• Latency is higher

Adoption / use

impacts

Similar to the case of Europe pre-liberalisation

• Historically content was hosted in the US• Before telecom markets were liberalised,

hosting services within the EU was expensive• Traffic was routed via the US

As traffic and locally relevant content increased;• IXPs emerged (reduced latency & cost),

becoming large hubs content was hosted closer to the hubs

Similar impacts have been observed in Kenya with the introduction of KIXP and access to Google Global Cache

Case study Rwanda• Landlocked• Dominated by mountains

in the west and savanna to the east

• Area 26,338 sq km• Population 10.7 million

(2011 est)• Median age 18.5 yrs• Pop density 407 (highest in

Africa)• GDP per capita 698 USD• Gini (high) 50.8• HDI (low) .0506 (151st)

Legal/ Policy Dimension

• Vision: Knowledge based economy by 2020

• National ICT Plan (NICI - 2015) was introduced in 2011 and is specifically aimed at increasing access to and uptake of Internet services across the country

• Universal Access Fund (UAF), specifically aimed at facilitating access to telecoms services in rural areas• Additional tax on telecoms operators• Subsidize Internet services• Subsidies of mobile handsets• Government separately contributes to a “One Laptop per Child” project.

In Rwanda there is a large negative externality associated with overseas hosting of local content

LOCAL HOSTING OVERSEAS HOSTING

Hosting Costs (Size of website: 8 GB)

USD 261 (annual) USD 149.99 (annual)

Cost of importing traffic (9 Mbps)

- USD 13,500 (annual)

Average Latency 10 ms 350 ms

- Passed on to ISPs and finally to end-users, for an annual saving of USD 111

Economic Dimension

The websites that generate less traffic are much worse off

• Approximately 8 content aggregators operating in Rwanda

• For over 800 small websites (all hosted overseas)

• About 80% of the traffic flows back in to Rwanda ~ 1 Mbps

Hosted in-country is too expensive at present; However, traffic is limited (partly) because of high latency. Cost-effective local hosting is needed.

Invention: Google’s Global Cache & Akamai’s local cache cluster in Rwanda

GGC, containing largely YouTube videos was made available to all ISPs connected to RINEX in July/August 2013

AnalysisPage Load Time as Round Trip Time

Decreases (Ilya Grigorik, 2012)

Number of game players and average latency (Source: GamersNights, 2014)

• Liquid Telecom offered to host their server

• As the latency decreased, the number of players increased

• During congested evening hours, researchers measured peak latencies up to 800-1000ms in Rwanda

PART 2: FOSTERING INNOVATION

How do you get content & apps that are attractive to Nepalis

• Web content in local languages/of local relevance

• Most people will access the Internet through wirelessly connected devices– Apps become relevant

• How to encourage more, better content services and apps

Revenue sources

• In-app advertisements• Pay per download of content or app• In-app purchases• Upgrading free apps to more feature-rich ones

for a fee (freemium), and• Subscriptions

Payment facility• Premium SMS

– Ideal because it reaches all mobile subscribers regardless of phone type

– However, challenging because MNO revenue shares can be very high

– Nevertheless, rates are negotiable and MNOs are beginning to realize that high revenue shares are slowing market growth

– Increasing smartphone penetration and mobile money adoption are rapidly creating alternative payment facilities, outside MNO control

• Airtime transfers• Mobile money• Bank-based payments such as electronic transfers and checks, or debit

and credit cards

Distribution channels

• Availability of an app is dependent on its distribution network– Through app stores– Mobile operators—e.g., through unstructured

supplementary service data (USSD) services– Through local distribution networks

Incubators & hubs

• E.g., what Ooredoo is doing in Myanmar– Big bar camps to identify potential

innovators/entrepreneurs– Selected entrepreneurs are provided work

locations where they can interact with each other• Provided mentoring so they can develop products &

most importantly viable business plans• Provided guidance by experienced entrepreneurs

– Possibly matchmaking with angel investors?

Which ones work?

• Or all?• Any that have been missed?

References

• http://www.infodev.org/infodev-files/mobile_apps_at_the_base_of_the_pyramid_summary_report.pdf

• http://lirneasia.net/wp-content/uploads/2015/03/Promoting-Local-Content-Hosting-to-Develop-the-Internet-Ecosystem.pdf