Making Rural Broadband a Realitydynamicspectrumalliance.org/assets/DSA...1. Nigeria example Broadband penetration 6% Electricity infrastructure is lacking Population 167million Land

Making Rural Broadband a Reality – the business case for low affordability markets

Eric Wilson

SOLAR-POWERED INTERNET FOR AFFORDABLE ACCESS….Helping to connect the next 1 billion people

OUR MISSIONTo enable large-scale expansion of affordable internet service provision in regions with negligible telecom or electricity infrastructure specifically to support internet provision for Education, Health, Local Government and Agriculture in order to enhance people’s lives and drive lasting socio-economic development.

Impact Broadband Ltd - Proprietary

The Economic Rationale for Rural Broadband is clear

• Broadband investment = highest GDP multiplierIncreasing Broadband penetration by 10% boosts GDP 1.4%Ghana GDP $50B @ 1.4% = $700M per year!!Education, Health, Government, IndustryAgriculture = 80-90% of rural GDP. Farmers able to check prices retain more economic surplus

• National Broadband Plans all focus on this:Indaba declaration: 80% penetration by 2020 (basic human right)Nigeria Plan: 5x increase by 2017South Africa: 90% pop (@ 5Mbps) by 2020Etc

2 Qiang et al (2009) – World Bank.


…To This:

Assuming no regulatory obstacles, would unleashed private enterprise proliferate to meet these objectives?

THERE IS A LOT OF GROUND TO COVER!1. New technologies eg TVWS help address this2. Power: low–powered radios can be supported by solar

power only (no diesel generators)

The Technology pieces are coming together


3. Dynamic spectrum database tools for better frequency re-use

4. Devices are becoming more affordable and local

1. Nigeria exampleBroadband penetration 6%Electricity infrastructure is lackingPopulation 167million

Land mass 923,768 km²

THERE IS A LOT OF GROUND TO COVER!New technologies eg TVWS help address thisEach TVWS mast can cover approx 200-250km²923,768km² / 200 = need 4,618 masts@ $10 - 12k cost each = $46 – 55million

This is not the core challenge!

Network Footprint Coverage is Manageable


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TVWS (UHF) and 5GHz frequencies

Why TVWS for “Last miles” access? Better Range & lower cost

Can use other frequencies eg 5GHz, but:

more limited rangeneeds more base stations (higher cost)less effective for non-line-of-sight cover


IBL business case compared TVWS vs 5GHz to cover 143 sites/hotspots over 1000 km²5GHz design needs +38% more masts, +125% more BTS radios & extra relay nodes Equipment CAPEX & planning/installation costs : 5GHz solution cost +40% vs TVWS TVWS Quality of service, reliability & stability will be much better

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Low Cost Devices are Available – e.g. Sûrtab Haiti

• Tablets manufactured in Haiti • Android functionality• Basic unit retail price $100 (will get lower)• Open to franchising in Africa


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• Technology jigsaw pieces are coming together• Power can be addressed through renewables• The spectrum can be made available and managed• Devices are becoming affordable• We can cover the land mass at moderate cost

Why isn’t everyone doing this?

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So what’s the problem?

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Kenya – iGO rural broadband service launched

• iGOService launched following TVWS pilot• Kajiado County Kenya• Solarkiosk partnership• Up to 15Mbps available• Air-time sales from kiosk• Connecting offices, schools, hotspots, etc• Initial launch on 5GHz, later TVWS when

policy allows


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The Business Case Challenge (1)

Multiple business case scenarios (Kenya):1. Aggressive roll‐out

• Deploy 1000 masts in 2 years • Peak financing >$50m, assumes 4‐5 m subs after 2 years (@ $2/month) positive cashflow• High Impact (socio‐economic benefits)• High Risk: if aggressive penetration is missed, financing + backhaul costs unsustainable

business

2. Prudent Case• Deploy 230 masts in 5 years • Peak financing $10‐15m, assumes 1.2 m subs after 5 years (@ $3‐4/month) positive cashflow• Modest Impact (socio‐economic benefits)• Moderate/manageable Risk – more self‐fundingSensible but not exciting!! Doesn’t deliver “faster socioeconomic advancement of the nation and its people.”


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Affordability (rural consumers): 5% net income = $1 ‐ 3 /month

Cost structure elements (upfront investment):1. Masts + radios + solar‐power kit – approx. $12,000 cost

• covers up to 1250 subs break‐even ~5 months2. Customer Premise equipment (CPE)

• Solar panels & batteries $800 + radio/Wifi/Antenna $800 + installation + tablet = approx $2000• Covers one site / hotspot break‐even (for 1 sub) ~83 years

3. Marketing & Education costs at launch per region

Business case naturally drives business strategy towards:• start with business customers, government offices, premium homes, internet cafes, wi‐fi hotspots, etc

where $2000 is affordable and/or shared across multiple users • Village entrepreneurs can add revenue from surplus solar power: re‐charging devices, lanterns, etc• Costs need to be lower &/or seek subsidies eg for solar power• No/Low affordability for spectrum costs & fiber backhaul/interconnect fees

The Challenge is Cost‐reducing & Financing the CPE gap for maximum ImpactImpact Broadband Ltd - Proprietary


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• Realistic/prudent business case will result in slow rollout, low Impact for unserved/under‐served areas

• High Impact cases are high risk. Private capital alone is unlikely to endorse significant investment in short term



• Economic opportunity is huge (+10% GDP +1.4%) incl:

• job creation, entrepreneurship, • productivity from education• Better healthcare• Etc …..

Need public‐private partnerships to accelerate development and maximise socio‐economic Impact

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Impact Broadband Fund Model

Impact Broadband Fund will: • Target equity investors who:

have strong interest in Broadband rollout to global population

will accept modest (but still positive) returns over longer term

are motivated by High Impact projects for economic development

• Leverage international development bank debt (eg OPIC, World Bank, etc)

• Leverage Universal Service Provision funds and National/Regional development funds

• Project‐specific grants e.g. for solar power

Financing leverage of x4‐5 on equity investments

Identify projects for Public‐Private Partnership model with local partners


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Accelerating Broadband for the unserved and under-served areas in emerging markets

1. Focus on broadband service provision in unserved/underserved rural areas Hybrid “regulatory TVWS pilot” & commercial service with 5GHz Target Education, Health, Government & AgricultureLocal implementation partners, knowledge transfer, local branding.

Role of Government/regulators (in PPP):1. Support investment in large scale rural broadband roll‐out

Leveraged fund model such as Impact Broadband Fund Utilise USPF for matching funds Grants/subsidy/microfinancing eg for solar power investments or community investments

2. Implement Regulatory policy: TVWS usage at no fee in rural areas (secondary user protection)Favourable fiber backhaul interconnect fees

3. Align with contracts for rural schools/hospitals/government offices for service provision4. Sponsorship for promotion & education programs5. Tax, import duties & VAT treatment


THANK YOU !


Documents

Making Rural Broadband a Realitydynamicspectrumalliance.org/assets/DSA...1. Nigeria example Broadband penetration 6% Electricity infrastructure is lacking Population 167million Land