Tuesday, 21 February 2012
The case for "Free" Wi-Fi in South Africa
As bandwidth coming into South Africa continues to increase, broadband costs are tumbling. I believe that broadband access is an essential service and should be readily available to anyone - how else can we give practical effect to our fundamental right to freedom of speech as enacted in our consitution? Will free internet access ever be feasible in South Africa?
In 2002 South Africa had one single national broadband wholesaler. Today there are more than thirty reselling capacity to more than 500 local Internet Service Providers (ISPs) of which perhaps half are members of the industry representative bodies ISPA and WAPA. That equates to approximately one local internet service provider for every major town in South Africa.
A quick Google search for "Free" Wi-Fi will lead you to believe that free broadband access via Wi-Fi is almost ubiquitous around the world, with links to many success and failure stories.
What exactly does “Free” Wi-Fi imply? Furthermore, in a country with one of the biggest divides between rich and poor: What exactly is the target market and what are the motives of those offering "Free" Wi-Fi? Perhaps a publicity stunt? Or maybe a foot-in-the-door to get access to critical municipal infrastructure? Offering "free" access in areas where only a small number of foreign visitors will dwell briefly? Only access to search, maps, local facilities and social media? Only to facilitate access to their well monetised on-line services, benefiting only them and their direct associates? Or perhaps more altruistic?
Who are the real champions of low-cost internet access? Here's the non obvious fact: Unlike in conventional markets, in the ISP industry we find that it is the smaller members that have an edge on pricing - which they achieve by leveraging the best locally available infrastructure in a way that defeats the logistics of a large operator.
I am a founding member of a small ISP called Wish Networks, that operates only inside Stellenbosch. Our pricing on 1GB has, since 2004, been consistently half of the average entry level broadband package available from any national operator.
We all know that nothing is truly free: there are costs involved in any project and someone footing the bill. So perhaps the real question is: When will indirect revenue and benefits generated from a free broadband service outweigh the costs?" - or more practically: "Is there a model for access to broadband services that can be sustained with indirect revenue generated - or where obvious benefits justifies the investment?"
We at Wish Networks believe there is. However, purely putting up unsupported hot-spots connected to a fast broadband line costs us an average of R5 per customer per month. The real costs in offering a quality broadband service are in the support: At Wish Networks, with our current number of customers, the average monthly cost per customer to slightly more than that of our entry-level packages. If we reach our goal of doubling our customer base before the end of the year we will be able to lower that cost to below the cost of our entry-level package - and will be, once again, on track to halve the prices of our packages, as we have done repeatedly over the past 8 years.
From these figures, it is clear that unsupported “Free” Wi-Fi can easily be provided purely from any larger company’s marketing budget - and that support is in fact the biggest cost. But: Imagine the economic and educational potential, if a resident of a rural area could, for the once-off price of a second-hand computer or mobile handset (often free!), gain access to unlimited self-empowerment- and/or educational materials? We believe that we have a model whereby we can make this a reality to all rural residents of the greater Stellenbosch area, at a sustainable cost of between R20 and R100 per resident per year (let alone monthly). If it can work here, it can work everywhere.
How does this does not spell doom and gloom for ISP's and mobile operators, you may ask? I believe that they are the ones with the experience who will be doing the heavy lifting. They are the ones with the "last meter" support networks crucial for maintaining infrastructure and connections. But they need to work together. We don't need government-mandated LLU - we already have our own wireless "local loops". We can work together to turn our network infrastructure into a shared resource, operated like an open marketplace where ISP's can compete on offering the best support.