Connectivity for the Bottom Billion: A Call for Collective Action

In the developed world, we take the universal availability of the Internet largely for granted. That connectivity in turn creates tremendous opportunities and benefits for individuals and businesses alike. What we often forget is that less than half of the world's population has access to the Internet. Most of the 4 billion people who live in an unconnected world live in developing countries in Africa and South Asia. The problem is particularly acute for the billion people with the lowest incomes, who tend to live in rural areas of developing countries where there is little or no infrastructure to provide connectivity. This lack of access to connectivity leaves billions cut off from the Internet and thus the ability to use it to improve their lives and economic situations.

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Recently, technology leaders and policymakers have placed increasing focus on bringing the world's 4 billion unconnected online. For example, Google and Facebook are investing in advanced new technologies, including balloons and drones, and Microsoft and others are investing in TV White Spaces, which delivers high-speed internet over long distances through unused spectrum. Meanwhile, Secretary of State Kerry recently hosted world leaders to launch the Global Connect Initiative, which seeks to catalyze policy makers and donors to do more to push for universal access.

The increased attention on universal connectivity is essential because the evidence suggests that there does need to be a major paradigm shift in order to bring the bottom 4 billion online. At SSG Advisors with support from the mSTAR project of FHI 360, we've been working with technologists, industry leaders, investors, entrepreneurs and policymakers from around the world to explore what it would take to bring the bottom billion online. Our analysis focused on the toughest use case: the rural poor living in less developed countries.

Through interviews and design thinking workshops in Silicon Valley, India, Kenya, the Philippines and Washington D.C., we learned that current approaches to providing Internet connectivity (which happen primarily through mobile networks) are reaching their limits. Mobile network operators have done an impressive job connecting the world with voice and data services. However, we uncovered broad consensus that most industry players do not see rural, low-income markets as commercially viable. This disconnect threatens to leave billions of people - especially in rural parts of Africa and Asia - without access to the Internet.

At the same time, through our analysis and interviews, we also saw cause for optimism that we can make rapid progress to bring the bottom billion online. We met numerous entrepreneurs across Africa and Asia who have developed innovative, ultra low-cost Internet access services to rural and base of the pyramid (BoP) customers. Mawingu, for example, is bringing broadband to rural parts of the northern Kenya. In the Philippines, a new start-up, Wi-Fi Interactive Networks (WIN), is using a novel partnership with a major consumer packaged goods manufacturer to deliver free Wi-Fi to BoP consumers who purchase these products. In Nigeria, ViRural will be launching an innovative mobile service that will connect thousands of rural villages to 2G, 3G and community Wi-Fi for the first time.

High-profile efforts by Google and Facebook focus on developing new, breakthrough technologies. But most efforts to extend connectivity on a commercial basis to the BoP are creatively leveraging existing, proven technologies, rather than developing new ones. These efforts rely on innovative strategies to supplement customer revenue with other income streams and drive down costs. Commoditized communications technologies, renewable energy, local switching, and local content servers are just a few of many cost-saving elements. They also rely on local entrepreneurs as agents and advocates and drive income through content and value-added services, developing alternative revenue streams from both consumers and third parties.

Even with these very promising emerging business models, BoP connectivity start-ups face numerous challenges to scaling their solutions. First and foremost, these companies, despite their early commercial success, must contend with the perceived high risk of BoP markets and the relative lack of focus by key stakeholders and investors on connectivity for low-income populations. This can make accessing early-stage capital extremely challenging. Secondly, these start-ups lack access to the relationships and expertise they need to reach scale. While tech incubators and accelerators have proliferated across Asia and Africa, most are focused on the mobile app economy, not on supporting rural connectivity infrastructure businesses. Lastly, in many countries, the regulatory environment is extremely complex and often tailored to large companies and incumbent systems, not innovative start-ups and new approaches.

The increased focus on universal connectivity by leading companies and policymakers creates a fantastic opportunity to bring these efforts together, marshalling the resources, the leadership, and the partnerships that are needed to grow the businesses that can bring the benefits of Internet connectivity to the world's most challenging markets. It is now up to technology companies, governments, and investors to take the next step. By working together to identify, nurture, and scale promising BoP connectivity businesses through early-stage blended finance, incubation services, and policy reform, we can bring the bottom billion online and create opportunities for economic and social development in rural communities across Africa and Asia.

You can read an executive summary here. FHI360 and Microsoft are hosting a launch event for the full report on May 24 in Washington, DC. Click here to register to attend.