This post is the second in a series that covers the importance of mobile tech in frontier markets.
2015 is expected to be a landmark year for the telecommunications industry; according to Ericsson this will be the year in which the number of mobile subscriptions will surpass the global population. In less than 30 years, mobile technology has evolved from the ‘brick’ used by the global elite (and to great effect by Michael Douglas in Wall Street) to a low-cost computer that fits into one’s pocket and has become an indispensable resource for hundreds of millions of people.
While the world has surely been changed by the mobile phone, further evolution is still underway. As of today, over one billion people still remain outside the realm of reliable network coverage. In Africa, for instance, 31 out of 100 people remain uncovered; many people still live in underserved and inaccessible rural communities around the world, and the telecommunications industry has struggled to provide them with access. For those fortunate enough to have access, mobile technology has become critically important. Tens of millions of the world’s unbanked people conduct financial transactions via SMS messages. Kenya leads the world in mobile banking, with transactions totaling about 25 percent of its annual GDP.
Mobile technology fosters innovation in other industries as well. For example, healthcare services are increasingly being delivered via mobile devices. Tomorrow, I will feature a Kenyan company that is successfully delivering important medical care to underserved and rural communities in both Kenya and Zimbabwe. Access to the global telecommunications grid is now a requirement for integration into today’s global economy. Those without access are being left behind.
The challenge, of course, is to connect these rural and underserved communities in a manner that makes economic sense. Major telecoms carriers are currently unable to address the needs of underserved communities because they cannot profitably provide services to remote areas. In fact, global cell phone user growth was only just over two percent in 2014, the slowest rate of growth since perhaps before Michael Douglas took that call on the beach.
Kurtis Heimerl knows first hand the challenges and importance of connectivity. He was raised in rural Alaska and launched Endaga, an innovative telecoms startup, as part of his research in 2011 when he was a Computer Science doctoral candidate working in the Technology and Infrastructure for Emerging Regions (TIER) department at the University of California at Berkeley.
Endaga has built a low-cost base tower station (BTS) that enables entrepreneurs in remote areas to create low-cost yet profitable cellular networks. To date, the Endaga team has successfully created active an network in rural Papua, Indonesia. Presently they are expanding into the Philippines, Pakistan, and even Somalia.
While the global growth rate for mobile subscriptions may be slowing, many tech companies – Google and Facebook most famously – are looking for growth in emerging markets to capitalize on the astounding 32 percent growth of smartphone usage in 2014 in the developing world, and building the infrastructure for growth in the developing world over the long term. The companies are exploring plans such as Google’s ‘Loon Project’ that will use balloons to provide internet connectivity for the world’s most remote areas. Their technology – years away from fruition – will act as complementary tools that can enhance Endaga’s networks.
Endaga’s networks run off OpenBTS, an open-source API that is delivered through a small box and can run independently of an electrical grid. The company’s CCN-1 base tower station is weather-proof and can deliver connectivity in a radius of up to ten kilometers (approximately 6.2 miles). Exterior solar panels provide power during daylight hours, when network access is most needed.
Endaga’s proprietary software includes a management layer that includes billing and analytics functions for the entrepreneur/network operator. The entrepreneur can easily set up the BTS and sell both access and prepaid phone credits to users. Endaga enters into a revenue-sharing agreement with each local entrepreneur, and benefits from scalability as more and more networks are brought online. Endaga intends to continue lowering the price for its hardware so that its entrepreneurs can benefit from much shorter payback periods and achieve profitability sooner.
We are confident that Endaga will be a ‘game-changer’ for many of the world’s unconnected communities. We think this is a great story and will continue to write about their progress.