[kictanet] Day 5 - Statistics on Affordability -CCKInternetStudy Report

Mon May 7 10:28:26 EAT 2007

Affordability:

This will never be realised so long as there exists dominant market
private monopolies. Government does not need to subsidize, but only
enable local participation at the last mile. The only "problem" right now
is the used-to-corporate-customers-only business models looks to still
miss to see the rural connectivity business case.

Assertion 1 ; INFRASTRUCTURE MONOPOLY

Grameen Telecom's original goal was to have a phone in every one of
Bangladesh's 65,000 villages by 2000, but only 4,543 village phones
were in service as of March, 2001. The primary constraint has been
a distorted telecommunications market controlled by a monopolistic
government provider, BTTB. Because BTTB has been unwilling to
increase its interconnect capacity, despite GP's offer to pay for the
upgrading, GP and other mobile companies have been unable to
connect additional phones to the national switched network and
instead have had to offer primarily mobile-to-mobile phone services (3).

This infrastructure barrier has also limited expansion of the rural phone
network.

Assertion 2: BUSINESS CASE:

Grameen Telecom (GT) has the explicit goal of helping Grameen
Bank's members shift from relatively low-yield traditional ventures
like animal husbandry into the technology sector, by creating
micro-enterprises that can both generate individual income and
provide whole villages with connectivity. GT uses GrameenPhone's
advanced GSM technology in stationary village phones owned and
operated by local entrepreneurs. These entrepreneurs purchase
the phones with money borrowed from Grameen Bank (2), and
sell phone service to customers by the call. Rates are generally
twice the wholesale rate charged by GP plus taxes and airtime
fees. An average of 70 customers a month uses each phone;
this shared-access business model concentrates demand and
creates relatively high cash flow, even in poor villages, enabling
operators to make regular loan payments and still turn a profit.
Repayment rates to Grameen Bank are 90-95%.

Rural telephones are also very profitable for GrameenPhone,
bringing in revenues per phone of $93 a month in March 2001,
twice as much as GP's urban mobile phones. However, rural
phones represent less than 2% of the phones used on GP's
network and bring in only 8 % of the company's total revenue,
so that the company's profitability depends primarily on its
urban business.

[http://www.digitaldividend.org/case/case_grameen.htm]

---- United States -----

Let me just share with you a little story -- the reason that
I'm excited about this thing being possible. I took a trip to
Minnesota and there was a company called Optical Solutions.

They market what is called a passive optical network in which
they bring fiber right to the household. They were describing a
farmer in

Northwestern Minnesota who's at the end of this passive optical
network. He has a couple hundred digital channels. They even
sent in another fiber for a couple of analog channels. He has 10
to 100 megabytes per second symmetric up in northern Minnesota.

He's doing this for $80 to $120 per month. So I'm saying here in the
northern Virginia high tech corridor where I live I'm 100 feet from a
central office of the RBOC and I can only get 56K dial up modem.
I think something is wrong with this picture.

[http://www.technology.gov/reports/TechPolicy/BB_Wkshop020325.pdf
pp33-34]
---------

Transparency (read Freedom of Information)

It is impossible/very difficult to get annual inter-government
departments expenditure on communications. While we are at
it could the government be transparent with the fibre optic
financing. Consumers hope of affordable communication is
pegged on this cable to ally fear our fears to hear later some
questionable financing arrangements we entered into behind
our backs.

Conclusion

Efficient e-government services demand affordable fibre infrastructure
that will not end up a very costly taxpayers burnen >> more poverty.

Government offices can afford broadband through fibre free inter-gov
offices MPs to/from their rural constituencies. ICAK is well into
actualising community fibres initiatives throughout Kenya with other
like minded partners.

We shall use alternative infrastructure rollout, we are lobbying for rural
electrification to include an overhead fibre cable by KPLC. Development
finance and govt support can/will leverage this low cost to cover the cost
of the necessary last mile infrastructure.
---------
*
jamesrege at africaonline.co.ke" <jamesrege at africaonline.co.ke>* wrote:

Walu, Your concern on affordability of internet access by rural communities
is justified. I don't think fibre optics
(being a point-to-point) network can benefit a majority of rural
communities economically unless there is a seriously
subsidized provision of the last-mile network. Thousands of schools and
Government offices which are situated far
away from the fibre optics paths will never sniff the benefits of broadband
communications supplied through fibre
optics pipe. Fibre optics, microwave and satellite media always complement
each other, especially for restoration
purposes. Kenya is lucky to have them all. Can Walu's concern be addressed
in all the cases?

On 5/3/07 9:01 AM, "John Walubengo" wrote:

> Day 5- Statistics on Affordability.
>
> I acknowledge an interesting thread filtering in on Trust relationships
b/w
> IGOs/ISPs...feel free to continue contributing on that as well as on
today's
> theme on affordability (multi-tasking
> encouraged by internet technologies ...)
>
> and just to pick up from Kai's projection of KDN fiber hitting Bungoma in
> early August 2007. This would be quite a welcome and timely development,
but
> at what cost to the consumer? To what extend will the (internet)
services be
> affordable to the rural/average communities?
>
> Affordability is a subjective term gven that what is considered cheap by
the
> Bill Gates of this world is probably not so for the average Kenyan on
the
> street. In trying to get an objective measurement for affordability,
the
> Report pegged it on the national average incomes. In other words, if
the
> monthly average income in Kenya is around 100USD and if the average
monthly
> cost for internet access is also around 100USD then obviously the average

> Kenyan will not bother with accessing the Internet - it just becomes way
> beyond their means or too expensive or not affordable.
>
> The report indicated that access through the more convenient Internet
> Dial-up/Desktop services costed over 200% the average incomes (too
> expensive), while the same access through mobile phones was costing just
8%
> of the average incomes (quite affordable). What needs to be done in
order to
> make Internet Services more afforable to Kenyans?
>
> 1 day deliberation on this one.
>
> walu.
>
>
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