Finding the Business Case to Connect the Last Billion

Finding the Business Case to Connect the Last Billion

COVID19 highlights the digital divide that separates urban and rural populations and trailing countries from the rest of the world. Can Big Tech and the mobile industry collaborate to close this gap, or will it persist in the 2030 decade?

Gayan Koralage - March 2021

A staggering 50% of the world’s population still lacks the reliable service that you’re fortunate to experience on your devices. Yet, the number of internet users doubled in the last decade. This emphasises a delinquent strategy that service providers and governments have adopted to focus on connecting only the 50% that bring a return on investment. 

Defining the gap

Today 47% of households worldwide lack reliable connectivity, defined as a bare minimum of 30 Mbps. Of the 4 billion people lacking reliable connectivity, the last billion is further overlooked by network operators. Not that service providers are cut-throat bargain hunters. Connecting the last billion requires bridging the coverage, speed and usage gaps whose obstacles prominently include:

1. The high cost of deployment, due to lack of on-ground telco infrastructure and geographical challenges
2. Lack of financial maturity
3. Deficiency in digital literacy
4. Affordability of smart user devices

This piece focuses on the first. Connecting the remaining four billion to the internet by 2030 will require USD 428 billion. Connecting two billion by 2025 requires USD 2.1 trillion. As Nicholas Negroponte, the visionary behind the “One Laptop Per Child initiative,” puts it “, Connecting the last billion is very different from the next billion. The next billion are low hanging fruit. The last billion are rural... ”

The six most significant economies in the ASEAN region is set to triple their e-commerce spending by 2025 (image 1). However, given the urbanised population’s higher spending ability, higher literacy, availability of high value-added services and sheer population density, network operators have so far found it more financially viable to add capacity to existing regions than setting up new capacity.

Latterly, industries exploring more affordable rent, employees, and students with work/study from home initiatives, urban areas approaching saturation at hypersonic speeds all denote that its high time that the telco industry shifted their focus to the rural infrastructure.

For local SMEs, it is the stairway to the national stage; for unconnected youth, it is a pathway to education, understanding, wider opportunities and richer life. This enrichment is essential to growing socially responsible communities and empowered individuals who ultimately embellish the country’s development.

What is the success of Big Tech’s initiatives to connect the unconnected so far?

Big tech companies have taken up this expensive challenge to propose new solutions to bridge the digital divide. However, not all of these solutions have come to fruition. Here are some examples: 

Alphabet / Google

• Alphabet Inc, together with its subsidiary Google, have been experimenting with various initiatives to explore alternatives in bridging the rural connectivity gap. One of them is Project Loon, which uses high-altitude balloons to bring 4G LTE connectivity to rural areas and requires no ground infrastructure. Unfortunately, it was shut down in January 2021 as it was unable to lower costs enough to be commercially viable. Google Station, which was touted to bring high quality and easily deployable Wi-Fi service to consumers, was wounded down in India, Indonesia, Mexico, Philippines, Brazil, and South Africa in February 2020 due to the failure to monetise the program sustainably. Currently, Alphabet is working on Project Taara, which experiments in providing internet connectivity by using light to transmit information at high speeds. With Taara benefiting from Loon’s lessons, it remains unclear if this technology would be cost-effective enough to be rolled out to the mass market.

Microsoft

• Microsoft Airband for high-speed internet connectivity for unconnected communities worldwide was officially launched in 2017. It intends to connect 2 million in the US and an additional 40 million globally by 2022. From coffee shops to satellite operators, Microsoft's partnerships have connected more than 1.5 million people in the US and 14 million people globally as of 2020.

SpaceX

• StarLink, a division of SpaceX, was launched in January 2015. It utilises a network of orbital satellites to provide internet connectivity via a receiving satellite dish. Starlink has obtained USD 885mil in federal subsidies to offer broadband services in the US’s rural areas. As of February 2021, it has over 10,000 users and is slowly gaining traction in improving rural connectivity. However, Starlink would still be hampered by satellite connectivity’s biggest downside - disruptions due to bad weather.

Huawei

• In 2017, Huawei launched Rural Star 2.0, aiming to reduce the cost of providing rural coverage. It is designed to give both 2G and 3G for rural communities; it shortens operators’ investment return to less than five years and promotes new rural network construction in emerging markets.

Can Big Tech succeed faster in collaboration with mobile industry players?

• DadaabNet is a high-speed network that NetHope set up in 2011 in collaboration with other organisations and local telecoms providers in a huge refugee camp in Dadaab, Kenya. The camp previously had its own costly satellites, but this collaboration has driven demand up and costs down. The project ended in 2013, where 100% of users experienced 2x speed bandwidth, and 95% experienced a drop in internet costs.

Source: Bluetown

• Bluetown, a Danish ISP company, in partnership with Microsoft Airband in Ghana, has covered 440,000 Ghanaians in the last year. It will expand the coverage to 2 million once its latest project is completed in 2021. While Bluetown is solving the network connectivity in Ghana, Microsoft Airband integrated Bluetown’s ISP into a network of other ISPs to reduce the connectivity gap in rural communities.
• Project Taara by Alphabet collaborates with Econet Group and its subsidiaries, Liquid Telecom, to expand and enhance affordable, high-speed internet to communities across their network in Sub-Saharan Africa in 2020. Taara link can cover distances up to 20km and transmit bandwidth of up to 20GBps+. Alphabet reportedly in talks with Reliance Jio and Bharti Airtel to pilot this programme in India following their success in Andhra Pradesh, India.
• Huawei and its customer Safaricom installed RuralStar in 2017 in Duse, a remote town in Kenya and within 2 months, over 556 people connected for the first time.

Bluetown and Microsoft is the best example of how an ISP company and big tech could work together, connecting the unconnected population. Having a big name such as Microsoft has its perks.

“The Ghanaian government was positive about getting new technology, and Microsoft had a lot to do with that,” Nick Pallesen, CCO at Bluetown.

What comes next?

 Open RAN and infrastructure sharing beyond telcos: Excerpt + sharing fiber.

Partnering to make space connectivity affordable: Amazon’s Kuiper aims to sell satellite-based backhaul services to internet providers. SpaceMobile and Lynk aim to beam signals directly to users' existing smartphones from low earth orbit (LEO) satellites using incumbent wireless operators' licensed spectrum. Such space-based roaming partners sell airtime to terrestrial 4G and 5G network operators under a wholesale business model; these operators, in turn, offer expanded and/or new connectivity plans to their subscribers with passive infrastructure players managing network operations end-to-end. Unfortunately, mapping out satellite coverage and obtaining government funding is difficult, given inaccurate coverage maps about 40% of the time in the US and higher in APAC. Big Tech must be incentivised to invest in and increase the accuracy of the broadband mapping of the digital divide.

The innovative low costs technology uses to access difficult-to-reach areas with a limited budget. (Huawei’s Rural Star 2.0 and Bluetown's business case).

Virtualising networks to improve the business case. Google Fi is a mobile virtual network operator (MVNO), meaning it licenses unused network spectrum from other carriers. It leverages the networks of T-Mobile, Sprint, US Cellular, and Three to offer better coverage in specific areas like Northern New England and the Midwest and strong coverage throughout the larger UK.

Closing the urban-rural divide will need direct support initiatives beyond universal service funds, including area-focused tax incentives, subsidising equipment, funding 5G R&D and testbeds.