NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Co-ops are big in Brazil. They are how small communities organize to help themselves, given that they are often overlooked by large companies. Recently I had the opportunity to visit just such a coop in Valente, a town deep in Bahia in Brazil’s Northeast.

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The co-op helps its members produce and market sisal, a tough fiber used in rope and in many other products, and it provides microfinance services to its members. The co-op is technologically sophisticated–it uses modern computerized accounting systems and even has Voice over Internet Protocol phone links to it branches in 6 other nearby towns. The co-op has used that expertise to help establish an Internet center in Valente, which provides both computer training for students and free access to the community.

The problem is that the co-op pays a huge amount for its Internet access and to lease lines connecting its branches. This is a common problem in rural Brazil–Internet access, when its available, is very expensive; bulk bandwidth typically costs 5-10 times what it does in the United States.

So I was there on behalf of the Network for Inclusive Markets–WRI and its partners the AVINA Foundation and FUNDES Internacional— and the Inter-American Development Bank to explore whether the co-op could, in effect, become its own Internet Service Provider and specifically to find out whether it could make use of new, low-cost wireless technology to improve connectivity in rural Bahia. Because the coop is part of a well-organized network of some 1500 rural co-ops, the potential opportunity might reach into every corner of Brazil and benefit thousands of small communities and millions of people.

We don’t know the bottom line yet–the analysis is still underway. A quick look at the numbers and distances involved suggests that building their own WiFi network (using some advanced Intel-backed WiFi equipment that you’ll hear more about in the near future) would be feasible, and that providing better Internet service to the surrounding communities as well as to the coop and its members might well be economically viable–especially when the avoided cost of leased lines is included. If you’re interested in how it comes out, stay tuned to this space.What is clear is that the coop management was extremely interested and understood immediately both the benefits to their members and the potential of a new line of business for the coop–providing rural connectivity. In a way, the technology is the easy part. Creating coops with their management capacity and membership base, if they didn’t already exist, would be the hard part. But with this social infrastructure already in place, it might not be very difficult for rural Brazil to make big improvements in Internet access.