Monday, January 6, 2014

Access is Solved, so where are the users? Part 1

I remember that five years ago or so, a 1 Mbps Internet connection in Nairobi, the capital of Kenya, would cost anywhere from $500 to $1000 a month. That is US dollars, in case you’re wondering. This was way out of the reach, not just for ordinary Kenyans, but also for most of the upper-middle class, as well as the vast majority of businesses. This was one heck of an “Access Problem”.


An Internet Cafe in Kampala, Uganda, January 2008, before Access was solved


Since then, the telecommunication industry has delivered - and did so with astounding speed and ubiquity, which I don’t think anybody anticipated or believed possible. Today, well over 90% of the world’s human population lives in an area that has at least 2G mobile coverage - and that almost universally means access to at least a 2.5G Edge Internet connection. Virtually all urban areas are covered with 3G, 3.5G and increasingly, LTE. Indeed, 3G access is used not just for phones, but in many countries, it is the dominant way people access the Internet on computers, too (using USB 3G modems, or tethering with their smartphone).

How did this happen?

I will use Africa as an example, only because I worked there at that time and had a first row seat to see the events unfolding, although I guess it was quite similar in other regions:

Five years ago, all Internet connectivity in Africa south of the Sahara, and most of the rest of the developing world, went over very expensive and very slow satellite connections, that brought the Internet to the large urban areas. There were hundreds of Internet Cafes in all cities, most of them were dingy places with cheap furniture, a ridiculously slow Internet connection, and old PCs swarming with viruses. Yet, the Internet was such a revolution, that young urban people all over Africa were queuing up at Internet Cafes to use the Internet, paying by the hour. In parallel, Internet-enabled feature phones were becoming increasingly popular, and mobile operators had Edge or GPRS access in the big cities, and starting to roll out 3G. However, just as recent seven or eight years ago, it was sufficient to travel 5 kilometers out of the city to reach no-Internet-land.

This all changed in one bright day in July 2009 when the Seacom undersea cable went live, connecting the port city of Mombasa in Kenya to Europe via speed-of-light-fast and high capacity submarine cable. I still remember a colleague of mine at Google’s office in Nairobi who, that morning, had a smile smeared from ear to ear, as he stared at his monitor repeatedly running a ping command, and not believing his eyes seeing the latency has dropped from 900 milliseconds to just 300 milliseconds. About half a minute after the ping, he felt compelled to ping again, just to verify that he wasn’t dreaming.


Seacom landing in Mombasa (source: businessdailyafrica.com)
After Seacom proved to the skeptics that there is indeed a market for submarine cables even in poor countries like Kenya, many more undersea cables followed. And not just cables landing at the coastal towns. Thanks to the work of a few dozen companies across the continent - mobile operators, national telecom companies as well as dedicated fiber optic companies - there are now cables criss-crossing Africa, running along the main roads, national power lines and railroads. Today there are almost no towns left, with say over 50,000 people, that don’t have a fiber cable reaching them. That’s true globally, not just for Africa. The construction of new fiber cables is continuing today so fast, that in a couple of years that threshold is likely drop to 10,000 people.


The Fiber backbone in Africa (source: ubuntunet.com)

As you know if you’ve been reading this blog, I travel extensively all over Africa and Asia, both in urban and rural areas. I don’t remember a day in the past two or three years where I didn’t have an Internet connection for the whole day. Sure, when you’re far away from human settlements, driving through the rainforest or across the mountains, there are areas without a signal. And when you’re in a village, not all locations get great coverage. However, the Internet is never too far away, and it is always there on high-traffic roads and in almost all human settlements, except those that are in extremely isolated geographical locations.

ACCESS IS SOLVED!

So I say “Access is Solved”. By that, I don’t mean that it cannot be improved. 

It would be nice to get 3G in the village too, not just in the downtown of large cities. It is important to cover the last pockets of human settlements that don’t have access. It is critical that prices of connectivity and devices come down, and come down a lot. It would be cool if I don’t need to pay two different ISPs to connect to my home in Phnom Penh to increase the chance that at least one of them is working at functional speed at any given time. 

In other words, there’s a lot of room for innovation on the Access side - and innovation in this space would be more effective if it focused technologies that enable delivery of much faster access, in way that is profitable for operators in markets, such as rural areas, where the Average Revenue Per User is $1 a month or less.
The bottom line is, however, that we are over the hump. The Internet is here, and it is accessible, at least in the telecommunications sense of the word, to almost all people.

SO... WHERE ARE THE USERS?

Having Access (in the telecommunications sense of the word), doesn’t mean that the potential users will use the Internet. In fact, the numbers show that there is a huge demographic of potential users out there, that should be using the Internet, and is not.