Business Models for Equitable Access
This 15-page paper is about business models for ICT that are sustainable and built to suit community needs. According to the executive summary: "Recognising the potential of information and communications technologies (ICTs) for socioeconomic development is the first critical step towards exploiting their benefits. Yet a gap exists between the opportunity and the exploitation. The challenge is multifaceted and the consumer, the supplier, as well as the governance of the policy and operating environment have a role to play....With all players engaged, the goal to provide equitable access will be realised in a 'win-win' framework."
Issues discussed in the document include: "On the supply side, the issues that operators face include a lack of physical infrastructure, such as poor roads and a lack of power, as well as low population density. Investment in ICT infrastructure per capita is higher in rural areas, with lower revenue generation. This prompts operators to prioritise urban areas. For consumers, on the demand side, capacity to pay for services is a major challenge. A lack of skills and ICT literacy also inhibit use in rural areas." The paper suggests 1) defining rural areas' varying support needs; 2) examine the disconnect between what universal access fund managers believe is a commercially viable rural area and what the operator of the ICT infrastructure of that area experiences about commercial viability; and 3) instead of duplicating ICT infrastructures near borders, consider cross-border access by roaming.
Practical strategies for ICT business models are suggested to have the following recurring features:
- innovative cost structure - reducing costs through "choice of technology or covering capital costs through donor or government support, in-kind community resources, or gifts. The business models also manage operational costs by lowering overheads or tariff rates. They optimise on revenue streams by expanding revenue streams where possible without making the service unaffordable. The focus is cost management.
- Partnerships that engage various players at various levels win. All partners can bring their core capabilities and benefits to the synergy....
- Development partners have played and continue to play a very important role in creating awareness of ICT access in rural and poor neighbourhoods. However, local stakeholders should also take responsibility for long-term sustainability."
The document charts business models for ICT at the village level and gives an example of phone shops modelled on the Grameen system. "A key lesson is the need for strong high-level organisational relationships with shared goals and long-term commitment where all parties have a stake in the partnership."
Regional and national infrastructure of fibre optic cables, as stated here, follows one of three business models: commercial, consortium (public/private partnership), and open access. Kenya has 4 projects, with different partnership models, running underwater cables for broadband internet access. This should make consumer services competitive. On the local side, the paper suggests that operators can intervene by working with equipment manufacturers to make technology cheaper.
The document suggests that policies should:
- address and create linkages with other non-telecommunications challenges.
- recognise alternative network providers and apply a favourable licensing regime to them when they operate in underserved areas, supporting a framework to provide equitable access.
- fit into a framework offering incentives for service providers and the community, and a regulatory regime to guide these incentives for long-term sustainability.
Key recommendations are:
- “Governments and other stakeholders (e.g., civil society and development partners) should create awareness amongst communities that they can play a role in securing their own ICT future, and that models exist that can support their quest for equitable access to ICT infrastructure.
- Governments should recognise rural areas as special areas with particular ICT access challenges, and establish or strengthen rural development funds to support ICT infrastructure development.
- Universal access funds should, through various incentives, recognise, support and encourage the private sector and communities to create innovative business models to expand access to ICTs.”
APC website on December 22 2008.