An Interview with Jim Forster of INI Holdings: Increasing Access to Affordable Communications

This blog is the first in a series of interviews focusing on last-mile innovation.

Mobile internet access is available to over two-thirds of the world via 3G coverage, yet significant populations within low- and middle-income countries still cannot connect to the internet because of availability and affordability issues. Ensuring equitable access in these frontier markets poses complex challenges but also a dynamic set of opportunities. A growing number of innovative enterprises and community networks are seizing these opportunities to meet the demand for access among rural and low-income urban consumers. They are employing novel business models and technologies to profitably and sustainably serve markets where mobile network operators and fixed-line internet service providers cannot make their traditional operating models work. The diversified models and ingenuity of these connectivity enterprises are causing investors to pay attention. With funding from USAID under the Last-Mile Connectivity Initiative, mSTAR recently completed a landscaping of over 50 last-mile connectivity enterprises offering services and 50 investors channeling capital into these solutions. jim5.png

Jim Forster is one investor who has taken notice. Jim is a connectivity veteran who spent 20 years at Cisco, founded, and currently serves as Chairman of Mawingu and AirJaldi Networks. In response to the growing opportunity for investment, Jim recently launched INI Holdings with partner Ben Matranga to manage a portfolio of investments in affordable, reliable, and high-speed connectivity.

Hannah Skelly, mSTAR Technical Advisor, interviewed Jim in March 2018 to learn more about INI Holdings.

What new trends get you excited about the last-mile connectivity space?

JF: In 2018, much of the world is connected, but many people still don’t have connectivity. The first wave of extending communications technologies prioritized access, with the benchmark being number of total users. It is a binary measurement that rightfully prioritized expanding coverage to more people. We believe the next wave is beginning to prioritize consumption and providing communications at a price and quality that nearly all can afford.  Our ultimate goal is not just for people to have communications tools in their hands, but be able to use them because the cost and quality is no longer a barrier.

What motivated you to start INI Holdings?

JF: I spent 20 years at Cisco Systems. It was fascinating to build products that are key parts of the internet as it grew so rapidly. The last several years at Cisco I spent time looking at how to spread the internet into more places, especially rural areas of Africa and Asia. I saw there was a need for financing of early stage companies. At Cisco I was a Senior Engineer but when I left in 2008 I became an angel investor, learning by doing. Recently I wanted to accelerate and do more, so I asked Ben to get involved. He’s got lots of great experience that complements mine, including working with entrepreneurs to rebuild infrastructure in Africa and Latin America. I knew his passion for restoring communities and supporting new ideas and experience in finance and infrastructure in remote areas would help push our investments forward.

The INI investment portfolio includes internet service providers (ISPs) that have developed operating models that can profitably provide service where none currently exists as well as offer service affordably to low-income consumers. What are the main characteristics of these companies’ approaches that enable them to operate profitably in areas that the traditional mobile network operators have passed over?

JF: Traditional mobile operators have a cost structure that requires certain corresponding revenue. While mobile networks are great, they are not the only structure that can deliver internet content and services. In particular, in the US, Europe and Eastern Asia there are very large and successful networks, such as the cable company networks, or the various DSL/FTTx/Fixed Wireless networks that everyone uses at home and in the office. Besides connecting desktop, laptops and over-the-top (OTT) video and music systems, these networks carry more data to mobile phones than the mobile operators carry. But in Africa and South and Central Asia, these networks almost don’t exist. By dropping the requirement that connectivity should work even while moving and have a phone number, it’s possible to use other technology that is faster and cheaper than the mobile infrastructure.

INI describes itself as a double-bottom line investor, both venture capitalists focused on financial returns and impact investors focused on socio-economic outcomes. What are the most important social returns you anticipate from your investments?

JF: We expect our portfolio of ISPs to focus on access at an affordable price. We know that communications is one of the primary discretionary expenses for our customers – if our companies can provide better quality at a lower price – that puts more money in our customers pockets.  In South Africa for example, our customers currently spend up to 20 percent of their income on data from mobile telecommunication operators: we offer 20 times more bandwidth value. That’s more bandwidth at a lower cost.

In terms of geography, your investments span many interesting frontier markets —Mawingu in Kenya, Habari in Tanzania, AirJaldi in India and TooMuchWiFi in South Africa. What has your experience been in these markets – have you noticed any major similarities or differences?

JF: Each market has its own particular set of challenges. There are some clear similarities in hardware technology, building out revenue models, or sales strategy. We are hands-on investors that provide financial capital alongside technical and strategic expertise. But ultimately, it’s about finding great local entrepreneurs and building exceptional teams that know their communities far better than we do.

What do you anticipate your portfolio will look like in 3-5 years?

JF: INI is focused on building a portfolio of ISPs that serve millions of clients. That takes time, but we know great companies are built one happy customer at a time.

What advice would you give to other investors looking to enter this space?

JF: Find other investors who shares your values and complements your knowledge base. There are many investors who are happy to have new investors participate in deals. Always focus on the people – the customers, the entrepreneurs, the line managers – they are ultimately what you are investing in.

mSTAR is supporting the USAID Digital Inclusion team’s Last-Mile Connectivity Initiative to connect investors, such as Jim and Ben, with the growing number of connectivity enterprises. Stay tuned via the mSTAR blog and the Digital Inclusion website to hear more from investors who see huge commercial and social potential in the connectivity space and the enterprises developing and deploying solutions.


A Rapidly Growing DFS Market: What mSTAR Accomplished in Bangladesh

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write on their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 25,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $2.2 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursements to more than 1,500 farmers to date, with more on the way.  Check out our four-year retrospective infographic here!

By Josh Woodard, Regional ICT & Digital Advisor

When mSTAR first started activities in Bangladesh in September 2013, the mobile financial services (MFS) market was still in its relative infancy, having only launched less than two years prior. At that time, it was very much a domestic remittance service with people using MFS to send money to friends and family elsewhere in the country, much of which was done through unofficial over-the-counter services rather than individual mobile wallets.

Between September 2013 and June 2017:

  • The number of registered mobile wallets grew more than five-fold
  • Active wallets increased more than seven times
  • Average daily MFS transactions grew by almost six-fold.

Source: Bangladesh Bank

Our initial mandate in Bangladesh was to help USAID’s implementing partners digitize their payments, so that implementing partners no longer needed to send people with backpacks full of cash from Dhaka to pay field expenses, such as training allowances. Bangladesh was in some ways an initial testing ground for USAID’s move away from cash in its programming, codified in its Procurement Executive’s Bulletin from August 2014, making electronic payments the new default for USAID awards.

We demonstrated success early on helping two USAID projects transition to mobile payments through a small grants program. The Aquaculture for Income and Nutrition project ended up saving the equivalent of around 600 person days per year in efficiency gains by eliminating cash for training allowances. Digitizing payments for Dnet’s Aponjon initiative reduced processing times to pay their health workers from 30 to 8 days, greatly increasing employee satisfaction.

These benefits inspired other USAID implementing partners to explore transitioning away from cash without grant support from mSTAR. Through a mix of technical assistance and trainings, mSTAR supported 40 USAID programs to better understand digital financial services (DFS), including MFS and agent banking. Through our awareness raising activities over the past four years, we developed more than 70 learning documents and trained close to 600 people on DFS. In total, USAID programs receiving mSTAR support transacted more than $2.2 million, including transactions made to and by their beneficiaries, which numbered more than 25,000 individuals, two-thirds of whom were female.


In 2014, to encourage greater focus on the needs of the financially excluded and underserved, we launched the Mobile Money Consultative Group (MMCG), which promotes dialogue and partnerships and was modeled on previous work done by FHI 360 in Malawi. Over the past three years, the MMCG grew to include dozens of members from the development, telecommunications and financial services sectors, eventually adopting the name Digital Finance Consultative Group to better capture its broader membership base. It was so valued that in anticipation of mSTAR’s closing, members transitioned the group to a new coordinator, UNCDF, which recently hosted the first meeting independently of mSTAR.

As the market grew, mSTAR played a crucial role in ensuring that DFS providers were considering the financial needs of Bangladesh’s millions of financially excluded individuals, many of whom are supported by USAID’s programming in country. We began conducting assessments looking at opportunities for digitizing transactions and expanding DFS offerings, including examinations of saving groups, agricultural value chains, and agricultural mechanization. These have already contributed to the deployment of two digitally-enabled micro-credit products for smallholder farmers, the first-of-their-kind in Bangladesh, as well as modifications to the pricing structure and product offerings of several other providers.

It is refreshing to see that the DFS sector in Bangladesh is finally moving past the pure domestic remittances model to a increasingly holistic one that more broadly meets the financial needs of Bangladeshis—although it still has a distance to travel. In some ways, it is bittersweet to have to end our work in Bangladesh right when the DFS market seems to be picking up momentum. However, I am proud of the contributions we have made to promote inclusive DFS growth in Bangladesh. I am hopeful that our objectives over the past four years will continue to be realized by other actors in the DFS ecosystem we played a small role in shaping.

Josh Woodard is a Regional ICT & Digital Advisor for FHI 360, based out of its regional office in Bangkok, Thailand. He has provided technical oversight to the mSTAR team in Bangladesh since the beginning of implementation in 2013. In addition to the mSTAR blog, he occasionally shares his perspectives on digital technology and development on LinkedIn.

From Farm to Phone to Table: A Case Study Series Explores the Impact of Digital Tools on Agriculture

This post is excerpted from a monthly theme series from NextBillion focusing on agriculture during the month of September. It was authored by Cristina Manfre, senior associate with Cultural Practice LLC, and Christopher Burns, senior coordinator, digital development for Feed the Future at USAID.

Over the past 10 years, and particularly over the past five, the use of mobile phones and internet-enabled, digital tools in farming activities has skyrocketed. Today, the smartphone or tablet is no longer seen just in the developed world; at least one mobile phone now sits in the pockets or hands of over 60 percent of the population in the developing world. Coupled with the increased spread of 3G and 4G connectivity, and the growing presence of mobile money products, low-cost sensors, geospatial visualization and machine learning, what has emerged is a broad set of digitally based applications that have driven greater financial inclusion, more precision agriculture, better data collection and analytics, and more effective information dissemination. Agricultural organizations are increasingly embracing these tools to better provide for the welfare of the communities they serve.

The U.S. Agency for International Development, through the U.S. Global Development Lab and the Bureau for Food Security, is working to demonstrate that digital tools and approaches can improve cost-effectiveness and better development outcomes in food security and nutrition programs. As part of this effort, USAID is launching a case study series to highlight different approaches to digital tool adoption and how these tools are impacting organizational culture, operations and programming.

The series profiles different organizations, from social enterprises to non-governmental organizations and traditional private businesses across a number of regions, from sub-Saharan Africa to Latin America to South and Southeast Asia. Greater attention is being given to Feed the Future (the U.S. government’s global hunger and food security initiative) countries and the newly released target countries under the Global Food Security Strategy. Most organizations and projects being showcased have received some form of USAID assistance.

Read the full blog here and learn how digital tools are being used to enhance development outcomes in food security & nutrition programs.  

Photo Credit: Morgana Wingard for USAID


How Start-ups, Microsoft, Facebook, and Wikipedia are connecting Kenyans to the Internet: New Podcast

“The poorest people don’t have access to media. So to speak, they are in the dark. The only way to enable them to move out of poverty is if we enable them with information and show them the potential of what they can do.”

Evah Kimani on connectivity in Kenya.

A country of 40 million, 15 million Kenyans regularly access the Internet.

Evah Kimani, a Kenyan ICT4D expert, has spent her career making this possible. Trained in computer science, Evah advised mSTAR and SSG Advisors on the popular report, Business Models for the Last Billion. She has 13 years of experience developing Internet products in Kenya, and she has seen how the Internet transforms lives.

Evah spoke to mSTAR on our podcast, mSTAR Presents: Digital Development Leaders, last year. She discussed how the growing digital divide further handicaps an already disadvantaged population and how private sector, non-profits, and the government are innovating to connect rural Kenyans to the Internet.

Take a listen.

Submit Session Ideas for ICTforAg 2017

This blog is modified from the originally published blog on ICTworks.

ICTforAg is a one-day conference which builds on ICTforAg 2015 and 2016, bringing together 300 thought leaders and decision-makers in agriculture and technology from the international development community and the private sector. Community-driven sessions examine how new innovations can empower smallholder farmers, and the communities that support them, through information and communication technologies (ICT).

We are looking for the ICT4D community to sign up to present or register to attend ICTforAg 2017 and examine these trends with an exciting mix of educational keynotes, lightning talks, and group breakouts. An evening reception will be held to foster networking across sectors. Session submission ideas are due April 14!

While this year’s conference takes a particular interest in new ICT solutions that can boost the productivity of both smallholder farmers and agricultural value chains, all possible ICTs, including traditional media platforms, agribusiness IT systems, and existing government support systems, will be discussed.

To answer the real challenges smallholder farmers and agriculture value chain stakeholders face, the conference will have four focus areas:

  1. Where are Digital Financial Services improving farmer finances?
  2. How can Digital Extension Services succeed where analog versions have failed?
  3. What does Private Sector Partnerships – Version 2.0 look like?
  4. Where is Climate Smart Agriculture having impact in mitigating increased variability?

Like previous conferences, ICTforAg 2017 will be a community-driven event. Please submit your ideas for presentations and session topics in one of the four areas listed above. Our aim is to create a day of intense exploration of the already possible and soon-to-be potential of tools like blockchain, drones, sensors, augmented reality, predictive analytics, big data, gamification, and automation, that will move us from talk to ICTforAg action.

Presenters and session leads will play a central role in developing the event and have their ticket costs refunded. Session ideas that also include voices from the field and these cross-cutting themes will be at an advantage:

  • Gender equity
  • Youth engagement
  • Private sector engagement
  • Climate change resilience
  • Fragile and conflict environments
  • Monitoring, evaluation, research and learning

Submit session ideas, register, and read more about the event here.

5 Ways to Improve Your Data Security (Today!) for Digital Data Collection

Guest post by Alexis Ditkowsky 

Close your eyes and imagine you’re being interviewed about your sexual behaviors, your finances, and your health conditions – and then asked the same questions about each member of your family. The person speaking with you has taken photos of you, your children, and your home, and they captured your GPS coordinates within one meter of accuracy.

You’ve trusted a stranger with incredibly personal and easily identifiable information.

But what steps are they taking to keep your data secure and your family safe?

On Thursday, March 9, mSTAR’s Abdul Bari Farahi and SurveyCTO’s Faizan Diwan led a presentation on data security for electronic field-based data collection with an emphasis on what you can do today to improve security practices during each step of the process. data-flowsHere are five takeaways:

1.) Improve your security on tablets and smartphones

  • Encrypt your tablets
    • Most Android devices come with 1-2-click settings to encrypt tablets as a whole
  • Install an Android app that allows you to lock, track, and wipe remotely (e.g. Avira)
  • Use a data collection app that allows for encrypting collected data “at-rest”
    • This way, even those who collect the data can no longer see it after the form has been finalized

2.) Improve security on your server

  • Use a platform that allows you to use your own encryption keys, so even your software vendor cannot view the data if they try
    • Encryption in transit and encryption at rest are not enough
  • Use a good password!

3.) Improve security on your computer

  • Keep exported data in an encrypted folder on your computer when not in use
    • BoxCryptor offers a desktop encryption option that lets you share data via Box while keeping it encrypted
  • Use a good password!
  • For an additional layer of security, you could also use a cold room computer, which is never connected to the internet
  • Avoid connecting to unknown and insecure and or unencrypted networks

4.) Improve security for your organization

  • Develop standards of practice, check lists, and other shared resources
  • Mitigate cybersecurity risk
  • Use technology that is secure but convenient
  • Use two-factor authentication where possible
  • Raise security awareness within organizations
  • Avoid single point of failure on all critical elements of business including employees, servers, technologies, and strategies
  • Backup data continuously
  • Create an environment for continuous monitoring of “everything all the time”

5.) Improve security in your sector

  • Encourage donors to increase pressure on grantees to deliver on data security commitments
  • Work with IRBs to create electronic data security policies in their requirements and guidelines
  • Develop sector-wide standards for reporting and investigating data security lapses

Too often the perceived costs of strong data security get in the way of taking low-burden but high-impact action to improve practices. And while the costs of poor practices can be hard to quantify, the risk to your reputation and to the safety of respondents, particularly in humanitarian situations, is all too real.

Alexis Ditkowsky works on community-based initiatives at Dobility, the social enterprise behind SurveyCTO

Photo courtesy of John Snow, Inc.

2016: A Year of Digital Development in Action

In 2016, mSTAR implemented 41 activities.

It was a year of dedicated work towards mSTAR’s goal of using technology to improve lives in underserved communities.

Read our 2016 Annual Report.

Our 2016 activities spanned Central America, Asia, and Africa. They included  diverse activities such as the Innovations Awards for original uses of data for resilience; a widely-received report on alternative business models for connectivity; and a Financial Inclusion Forum highlighting Bill Gates. All 41 activities were exciting and meaningful; here are our most noteworthy:

First of its kind digitally-enabled micro-credit in Bangladesh.
One of the biggest challenges farmers face in Bangladesh is that they pay back loans weekly. Paying loans so regularly can cause a snowball effect of debt for farmers who, due to the nature of farming, don’t have a steady weekly income. Once crops are in the ground, it may be a few months before they have income. To pay back the original loan farmers are often forced to “take out other loans…and rush to sell their crops immediately after harvest,” Josh Woodard, mSTAR Regional ICT and Digital Finance Specialist, has said. Rushing to sell  crops means farmers often don’t get their full market value. To address this, mSTAR has worked with two different banks in Bangladesh, Bank Asia and IFIC Bank Limited, to launch two new digitally-enabled micro-credit products for farmers; the first using NFC-enabled debit cards, the latter using mobile wallets. Both of these products have much lower interest rates than alternative options offered by microfinance institutions, as well as much more attractive repayment terms—a single repayment after six months, instead of weekly installments. With these products, farmers can now pay after harvest. No longer in a rush to see their produce, they are more likely to receive a better price. In a country where most people work in agriculture, these new products could be critical to stemming poverty and breaking a cycle of debt. Over 250 farmers have signed up for the initial pilots of these two products, and both banks are already eyeing expansion to thousands of more farmers.

Mobile money salary payments for teachers in Liberia.
Through mobile money, mSTAR is transforming the daily lives of teachers in rural areas. In 2016, mSTAR successfully rolled out mobile salary payments for teachers in Nimba County. Sixty-seven teachers received payments in the first mobile payment payroll. 100 percent reported saving time compared to traditional direct deposit. Mobile salary payments also helped teachers save money. Before, teachers reported spending approximately 13.5 hours and $25 of their salary to pick up their money. After mobile payments, they spent an average of 25 minutes and $2 in service fees to cash out their mobile money. The success of the rollout has resulted in buy-ins to roll out mobile money to health workers and to teachers nationwide.

Addressing the data gap in mobile phone users.
mSTAR, USAID/Mozambique and DFID, through DAI’s Financial Sector Deepening project, set out to clearly understand the landscape of growing mobile phone users. mSTAR and partners interviewed over 6,000 mobile phone users and non-users. The survey garnered valuable information and data about the availability and accessibility of mobile technologies and the way people use mobile phones in their daily lives. The findings will allow USAID staff in Mozambique to make smarter programming decisions as they increasingly rely on digital technologies to deliver better results.

In 2016, mSTAR used technology for better development outcomes across sectors. We encouraged innovative uses of data for resilience and rolled out mobile money products that show real promise in improving daily lives and diminishing the threat of poverty. In 2016, we continued to establish digital technologies as some of the most exciting and promising avenues to improving lives among the most vulnerable throughout the world.

Review our 2016 Annual Report (with pictures!) here. 

Microsoft Partners to Create Affordable Internet Across the U.S., and the World

Guest post from Microsoft

At Microsoft, we recently announced that we have awarded Affordable Access Initiative grants to twelve entrepreneurial businesses to help scale their solutions and business models to increase affordable Internet access in communities around the world. Each company will receive seed grants of $70,000 to $150,000 and resources including BizSpark tools such as free software, services and technology support to help extend the reach of their hardware, applications, connectivity and power solutions. Although there are still approximately 4 billion people globally not yet online, universal and affordable high-speed Internet access is more achievable than ever with new technologies and business innovations.

Microsoft’s Affordable Access Initiative aims to democratize access to the Internet through grants, commercial partnerships, connecting new leaders and community engagement. Together with our partners, we already have many exciting projects underway. Some recent progress:

  • In the United States, Microsoft is partnering up with Mid-Atlantic Broadband Communities (MBC) to help close the homework gap in two rural Southern Virginia counties. These are counties where only about half the students have broadband Internet access at home. By wirelessly extending its existing installation of fiber-optic connectivity, MBC will be enabling thousands of school kids to have connectivity at home. MBC will be leveraging new TV white space and Wi-Fi technologies developed by Adaptrum in San Jose, California and MediaTek in Taiwan.
  • Outside the United States, we are completing phase one deployments of other affordable access projects with our partners. These include projects in Jamaica and Botswana where connectivity and cloud services are being provided to many entities. In Botswana, we are partnering with the Botswana Innovation Hub, Vista Life Sciences, the United States Agency for International Development and Botswanan ISP Global Broadband Solutions to assist in remote delivery of specialized medicine, including cervical cancer screenings, to women at rural healthcare clinics. In Nanyuki, Kenya, our network operator partner, Mawingu Networks, is rapidly extending the reach of its wireless broadband network.

Taking what we’ve learned from our TV White Spaces work, we’ve seen how, for the first time, we have real, affordable solutions that truly bring the benefits of the Internet and computing to even the most remote communities. We don’t have to wait to make an impact. The challenge is deploying them, and then empowering people with the tools and information to make the most of them. And when you’re talking about an issue that affects 4 billion people, you can’t take a one-size-fits-all approach. Last-mile connectivity is a global challenge, but it requires local solutions.

mSTAR was honored to have Namema Amendi speak on Microsoft’s Affordable Access Initiative at the launch of the report, Business Models for the Last Billion: Market Approaches for Increasing Internet Connectivity. To view Namema’s presentation, click here

Event Highlights: Business Models for Connectivity

On Tuesday, May 24th, mSTAR launched Business Models for the Last Billion: Market Approaches to Internet Connectivity at the event Business Models for Connectivity. Business Models for the Last Billion details how innovative entrepreneurs and forward-thinking investors are connecting the poorest and most remote communities in the world to the Internet. We were thrilled to have an engaging and dynamic line-up of speakers at the report launch.

Highlights include Namema Amendi from Microsoft’s Affordable Access Initiative who opened the event by announcing Microsoft was giving seed funding to two of the business models featured at the event and in the report: AirJaldi and Wi-Fi Interactive Networks (WIN). More than 200 start-ups had applied for funding from Microsoft, yet AirJaldi and WIN were among only 12 companies that received the grant. To see Namema’s presentation, click here.

The report authors, Steve Schmida and Caitlin Lovegrove from SSG Advisors, then detailed the report findings. They concluded that the technology exists for connecting the “last billion.” The next step is to bring the businesses that provide connectivity to the world’s poorest billion to scale. Click here to see their presentation.

Philip Zulueta, COO of WIN, flew in from the Philippines to describe his start-up to the investors, donors, NGOs, government agencies, and tech companies present. WIN enables base of the pyramid consumers to access wifi. WIN partners with major companies to set up hotspots at kiosks where that company’s goods are sold. If a consumer buys the sponsoring corporation’s products, the consumer also gets 30 minutes of free wifi. To learn more about WIN’s model, view Philip’s presentation here.

Paul Talley, Chairman and CEO of ViRural, then described ViRural’s model. Currently operating in Nigeria, ViRural designs, deploys, manages and maintains wholesale cellular networks for rural communities with no power and no Internet. ViRural partners with local mobile operators so that consumers can use their existing devices to connect with no extra charge to ViRural’s networks. To see Paul’s presentation, click here.

Michael Ginguld, Director of AirJaldi, arrived from India and took the audience through AirJaldi’s journey of becoming a successful start-up. AirJaldi provides high-quality broadband Internet to rural Indians. AirJaldi currently serves 70,000 Indians who previously had little to no Internet and aims to reach 25% of India. Click here to see Michael’s presentation.

After the entrepreneurs presented their business models, the audience heard from the investors who helped turn Mawingu, an Internet connectivity start-up, into reality. Lauren Kickham from Vulcan Inc, Jim Forster, Chairman and Angel Investor for Mawingu and AirJaldi, and Namema Amendi from Microsoft described how they came together to invest in Mawingu, and what it takes for a start-up to succeed. To see the presentation on Mawingu, click here.

Manu Bhardwaj from the U.S. Department of State closed the event with comments on the Department of State’s Global Connect Initiative, which aims to bring 1.5 billion people online by 2020. Manu underlined the critical importance of closing the digital divide and echoed a sentiment Namema made at the beginning of the event: It is just as crucial for a student in rural Kenya to be online as it is a student in Virginia. All people benefit from Internet access. You can view Manu’s presentation here. To learn more about the Global Connect Initiative, click here.

mSTAR is grateful to the authors of the report, SSG Advisors, the speakers who shared their knowledge and insights, and the attendees, who made the event a success!

How to connect the last billion to the Internet

by Hannah Skelly

The Internet is an essential part of daily life. It allows access to job applications, financial services, and pertinent government information. In fact, studies have showed that internet connectivity increases opportunities for education, gender empowerment and economic growth.

Yet four billion people lack access to the Internet.
Major corporations are brainstorming large-scale methods to connect the “next billion” of the unconnected four billion—the world’s growing middle class. Yet the world’s most disadvantaged billion, the “last billion,” is largely overlooked in these schemes. The last billion often reside in the most remote areas of the world that traditional telecoms struggle to reach. The lack of access is causing a digital chasm between the connected and the unconnected, and it is set to further disadvantage this underserved population.

mSTAR examined solutions to increasing internet connectivity in the report, Business Model’s for the Last Billion: Market Approaches to Increasing Internet Connectivity, and discovered emerging business models connecting the last billion. The report will be launched on May 24th at FHI 360.  

The report was founded upon a belief that access to the internet should be affordable and available to everyone.

The value of the social, political and economic gains offered by internet connectivity have been well-documented. Seemingly every day, the myriad of ‘digital’ dividends that can be realized through increased connectivity – individually, locally and globally – transform and grow. At the same time, connectivity offers significant near-term financial dividends for a host of commercial service providers and their investors.

With these financial dividends as motivation, the telecommunications industry has brought 3.5 billion people online. Unsurprisingly, telecoms have received substantial returns (on the order of trillions of dollars) investing in appealing and reliable markets. But they are not reaching a large percentage of populations at the base-of-the-pyramid that stand to benefit substantially from internet connectivity. While eight out of ten people in the developed world have internet access, only one out of ten have access in the least developed countries.

Yet this digital divide is not only quite stark, it is actually growing.

In many cases, donors and development actors have found one-time, on-the-ground solutions for providing connectivity to communities that telecoms have not reached, whether for disaster response, security or livelihood development. However, a long-term and sustainable solution to enabling internet access for the four billion people that remain offline requires the promise of financial dividends for traditional telecoms or new entrants operating in these markets.

The good news, and the not so good news.
There are a multitude of reasons why individuals are not online, but the barriers posed by basic access and affordability are major contributors. The development community has been proactive about this issue: they’ve renewed existing commitments and launched initiatives dedicated to addressing various aspects of these barriers to extend connectivity. When this assessment began last fall, the United Nation’s Sustainable Development Goals had just enshrined the importance of universal and affordable access for the world’s least developed countries and the key role it can play across development, including women’s empowerment. Among donors, Global Connect, Connect 2020, the Global Broadband and Innovations (GBI) Alliance, the Broadband Commission for Digital Development, and the Alliance for Affordable Internet are but a few examples of the important work already being done in this space. In recent years, a noticeable set of new champions has emerged from the private sector as well: the tech giants.

As large multi-national corporations look to expand markets for advertising and gather data on nearly all market segments, efforts to connect developing markets have moved beyond the realms of CSR budgets to the realm of engineering dream teams and newsworthy technology endeavors. The field is inundated with announcements on various ‘moonshot’ technologies that aim to overcome barriers of geography and (hopefully) drive down costs. Balloons. Drones. Cutting-edge satellite technology. Large and small, high and low. These efforts seek to provide universal connectivity in awe-inspiring places and mind-boggling arrays. Closer to earth, equally impressive initiatives like Project Link or Terragraph are a testament to the investments large firms are making in urban markets. In addition to these high-profile efforts, a multitude of other inventive methods for extending connectivity abounds: license-exempt solutions, mesh networks, local caching and dynamic spectrum switching keeps Techies buzzing. There is a seemingly endless list to work-around solutions. All of these efforts are exciting to follow, but how will they work in real-life and reach rural lower-income populations at lower price points? Can they be paired with business models that truly offer low-cost connectivity?

Telecoms have been honing their business models for the last several decades to serve the largely urban middle-to high-income segments of the world population. Mobile network operators (MNOs) in particular have been innovating through dynamic pricing and improved terrestrial technologies. However, these models remain noticeably bilateral – provider to consumer – and despite requirements to reach rural communities, the focus on high-revenue markets shows little signs of changing. While the challenge these traditional providers face in reaching low-income populations are complex, one monolith dominates: profit. Low costs and high volume are key to financial dividends at the base-of-the-pyramid. That does not bode well for a service dependent on infrastructure requiring large capital investments and high operating costs. These costs are only compounded by the need to reach wider geographic areas to attain large consumer bases.

MNOs have found ways to improve fiber backbone infrastructure technology and drive down infrastructure costs. Tower-sharing, tower management companies, solar technology, software solutions and mobile virtual network operators (MVNOs) are just a few. Yet these still remain incredibly high cost, particularly in rural areas with widely dispersed populations. The low spending power of base-of-the-pyramid consumers does not balance the other end of the equation. Layer this onto additional challenges: unfavorable business environments, licensing fees and taxes, low knowledge on services desired at base-of-the-pyramid markets and household income elasticity, and prices only go up. Universal Service Funds and Private Public Partnerships, although successful in some contexts, have to date comprised the exception rather than the norm, and industry alliances tend to focus on responding to challenges faced with their existing high-revenue markets such as data overload.

Moving the market approaches forward.
The understandable limits of prevailing telecom business models in reaching the most disadvantaged populations presents those committed to universal connectivity with a dilemma that alternates between perplexing and frustrating. Committed development actors, now joined by large corporations, are determined to close the digital divide and achieve connectivity for the base-of-the-pyramid. This assessment sought to move this conversation forward by examining existing or potential business models that can extend connectivity to the lowest income consumers in a financially sustainable way. By tackling these important questions and providing concrete recommendations for next steps, it is hoped that that for-profit companies, development actors, foundations and governments can work collaboratively to make affordable connectivity a reality for everyone.

Entrepreneurs who have spearheaded models for connectivity in the world’s most challenging environments, and investors who are backing them, will be speaking at our May 24th report launch. Register to attend and learn how these innovative models are connecting the last billion.

Register to attend mSTAR’s Business Models for Connectivity event.

Follow the conversation on Twitter at #ConnecttheLastBillion.

Hannah Skelly is a member of the mSTAR project at FHI 360. She has worked with donors across a spectrum of development fields over the last nine years, including education, health and conservation. New to the techie field, (and under the initial impression that WiMAX was a laundry detergent), she is learning the benefits, and potential pitfalls, of using ICT tools in development everyday. Hannah has an MA in Development Economics from the Fletcher School of Law and Diplomacy at Tufts University and a BA from Emory University.