Saturday
June 2
2012

Scott Anderson

Weekly Roundup: Bringing Broadband to the BoP and Other Insights From OMJ’s BoP Week

Two quotes stuck out to me this week while attending the Strategic Partners Dialogue, the second event part of the BoP Week hosted by the Inter-American Development Bank’s Opportunities for the Majority. The first was from Valeria Bundinich, vice president and chief entrepreneur at Ashoka’s Full Economic Citizenship, who moderated a panel on affordable housing financing across Latin America and the Caribbean.

“None of us would consider building our home at 30 to 40 percent interest rates,” Bundich said, noting the number of low-income people in the region who turn to microcredit to finance home construction. “But hundreds of thousands of people are doing that.”

The second comment that hit me was from Regenie Fraser, secretary general at CANTO, a trade organization representing various ICT companies and systems providers in the region.

“Broadband is a basic human need,” Fraser said. “People are willing to give up other things to hold on to their broadband.”

I had never heard it put that way. I can understand low-income people would be willing to pay exorbitant financing fees to provide adequate shelter for their families. But broadband as a need? … Really? When I caught up with Fraser later in the program she said she wasn’t exaggerating. In fact, some of the things she’s heard people give up include utility water and sanitation services in exchange for high-speed Internet – especially if those folks have had access in the past. Internet traffic in Latin America is on track to rise 50 percent a year through 2016, proportionately making it the world’s fastest growing region, according to a Cisco forecast.

Like housing – undeniably a human need – expanding broadband requires close collaboration with public and private stakeholders, and a willingness to build trust across them. Building that trust was part of the mission of the OMJ Dialogue, which brought together government officials, financers, NGOs, and, of course, entrepreneurs to discuss how policy innovation can be a catalyst for market-based solutions to poverty in both broadband and housing.

Diego Molano, Minister of Information Technologies and Communications Colombia, detailed his country’s “Digital Living” broadband effort, which aims to increase access to high-speed Internet from about 25 percent at present to 50 percent of the country by 2014, more than tripling the number of cities with broadband. But even if the broadband reaches its destination, the proverbial mom and pop store owners still find it hard to see the value of cloud computing for inventory management, versus the tried and true pencil and paper, for instance. While this is certainly changing with younger generations, in part because of the spread of mobile networks and smart phones, Molano said more public-private partnerships are needed to bring along more small and medium-sized enterprises, and introduce them to new applications.

“Only 5 percent of SMEs receive credit. The same goes for broadband – only 5 percent of SMEs have access to broadband,” he said through an interpreter. “They have the money to pay for broadband, they have money to buy computers … the problem is not money, it is access.”

Frank McCosker, general manager of Global Strategic Accounts at Microsoft, said one new technology that holds extraordinary promise is using “white spaces.” The term refers to available space on the electromagnetic spectrum within TV broadcast frequencies, which can be repurposed to deliver wireless Internet to rural areas. (Check out a recent story on Microsoft’s efforts with white spaces in The MIT Technology Review).

“It’s just going commercial just now,” he said, noting that the company is exploring markets in Uganda, Tanzania and Kenya. “Where TV can be received, broadband can be received. … We think it’s one of the answers to the infrastructure problem.”

Andres Maz, executive director for advanced technology at Cisco, said despite the demand for Internet and the even more heightened pace of mobile traffic growth, which is around 100 percent a year, there still are too many restrictions on providers looking to service low-income communities. In fact, there are foreign investment restrictions, special licenses and fees for telecom companies, instances where telephone companies are banned from providing broadband while broadband companies are banned from providing telephone services.

“When you look at the reality of the sector … in many countries there are foreign investment restrictions,” he said through an interpreter. “The higher taxes raise the risk premium and raise the interest rates that operators must pay. … This policy inconsistency must be looked at.”

But, Maz ended on a strong point of agreement with government officials: The applications that reach the BoP and are relevant to their lives and livelihoods, will drive growth.

“Our applications must be born in Latin America, they must be home grown,” he said.

Check back with NextBillion or visit the IDB’s Opportunities for the Majority Content Partner Blog for upcoming posts and videos of entrepreneur interviews from the Strategic Partners Dialog.

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Categories
Entrepreneurship, Technology
Tags
Base of the Pyramid, IDB, Opportunities for the Majority, telecommunications