 | Issue: | Latin America 2008 |
| Article no.: | 5 | |
| Topic: | Telecommunications business in rural regions | |
| Author: | Jorge Luis Inchausty Crespo | |
| Title: | President and CEO | |
| Organisation: | Datanet ISP Latin America | |
| PDF size: | 260KB |
About author
Jorge Luis Inchausty Crespo is the President and CEO of Datanet ISP Latin America based in Bolivia; he is responsible for Datanet throughout South America. Mr Inchausty has more than ten years experience in emerging broadband, telecom service and TV technology markets and, as well, with telecom and media industry convergence. Prior to founding Datanet ISP Latin America, Mr Inchausty was a founder of StatusPRD, one of the first TV Production Agencies in Bolivia. Jorge Inchausty has a Master degree in e-Commerce, Science Doctorate in Telecommunications and Bachelor degree in Information Engineering.
Article abstract
People in isolated rural areas rarely have access to information and communication technology (ICT). As a result, social and economic development in these regions lags. Although it may not be economically viable for large telecom companies to operate in these regions, smaller companies can profitably develop local telecommunications services, and the solar powered energy needed to support it and supply energy to the population. This basic infrastructure can help local business develop and thrive and give the population access to educational facilities.
Full Article
In the last ten years we have seen a revolutionary change in the way technology is being used to distribute mass media. With the growth of the Internet and its fundamental role in the dissemination of information, a clear gap has been created between the people who can access this form of mass media and those who cannot access it or do not know how to use it. In a world where globalization is a common objective this difference between those who can and cannot access technology should not exist. There is a need for what I call Profits for Progress. In Latin America, and in South America in particular, the population is distributed in a peculiar way. There are many small primitive populations and communities whose economic, social and technological development is delayed. Countries like Colombia, Ecuador, Peru, Bolivia, Uruguay and Paraguay, among others, have numerous small communities located in remote rural areas that still do not have access to any type of communications technology. These small rural areas are limited by their meagre economic resources, low productivity, extremely low population density and sparse or non-existent technological resources. In the last five years, despite the increasing demand for technological progress, for social growth, and for access to mass media, companies have not been motivated to set up businesses that use low cost technologies, and alternative energy sources to generate a model of social and economic development in the communications sector. Consequently, companies must be encouraged to take on these projects designed to produce such items as alternative electrical energy sources, solar panels, satellite connectivity systems and energy-efficient wireless communications systems. Businesses dedicated to the installation, maintenance and provision of telecommunication services, including telephony and Internet access, in remote communities are also required. To prepare for this type of project, exhaustive market research is not necessary. The same model can applied in each region since these remote communities essentially have the same social and economic conditions and the same needs. For this type of project the initial investment has to fund the acquisition of a power source (solar panels for obtaining alternative energy, batteries, grounding systems, etc.), as well as a communication system or a satellite telecommunication connection, antennas, routers, modems, servers, cables, connectors and accessories. Experience shows that, in the majority of these rural areas, a satellite connection is the only way to access mass media and the only way to get electrical energy is from solar collectors. The primary goal of this business model is, first, to connect these remote areas to a main source for these services and then later set up local distribution systems that can get these services to the region’s end users. These services must be delivered to end users in the easiest and lowest cost way possible. Wireless technology is recommended in these regions because in addition to consuming very little electrical power it also covers extremely wide areas. In these ‘clean air’, unobstructed, regions it is possible for a wireless system to cover up to 20 kilometres with power consumption levels as low as 100mw. Establishing rural telecommunication centres is an interesting business. The centres create an environment for local entrepreneurs; with basic training in the set up and operation of these systems, it becomes possible for local entrepreneurs to generate a new business built around the distribution and maintenance of local services. This could turn enterprising settlers into small industrialists with an unlimited capacity for growth and provide facilities to promote third party industries. This business model calls for an initial investment to implement the project. This investment should cover the costs of equipment and infrastructure, as well as the initial maintenance and operational costs. The distribution of these services in the region and the consequent growth of small local industrialists would result, ideally, in a return on investment within the first ten months from the start of telephony service, and within a year from the start of operation of the utilities generation project described below. Before starting a project of this type, there is a major hurdle to overcome. Currently most of these remote areas have no electrical energy. In the few communities that do have some sort of generating capacity, the power produced is of such poor quality that it does not meet the needs of telecommunications service providers or, indeed, of business of any type. Getting quality electrical energy to these remote populations, which are often located very far from big cities and their electrical generating plants, is a major problem. Even when a generating operation is established it often cannot sustainably supply the quality of service a telecommunications business needs. Consequently, it is essential to use alternative electrical power plants. Solar panels, for example, can generate the low cost, high quality, energy needed for the telecommunications operation and, at the same time, generate sufficient energy to sell to small industrialist and generate additional revenue. Experience with these types of businesses shows that electricity produced by diesel or other generators is usually not adequate; the investment required for generators is great, the fuel is costly and the electricity produced is of poor quality and cannot guarantee the correct operation of telecommunication equipment. Moreover, fuel-based generators create environmental contamination. The business model depends upon offering low cost telecommunication services to end users at educational centres, cyber-cafés, schools, and communication centres. The services supplied will depend on demand, which can be as simple as local telephony or as complex as international telephony and high-speed access to the World Wide Web. The local entrepreneur will have to encourage the evolution and the education of the population and get them to embrace this technology and the ability to access mass media; they will have to train users to operate and take advantage of the new services. Socially, the dissemination of these services and the basic and advanced educational programmes they can bring is vital. Children and young adults need to grow up using information and communication technology (ICT) so that they will be equipped to participate in the Information Society and the global economy. Their experience using ICT will help prepare them to face the challenges of higher education and even newer technologies. Promotion and regional distribution are important. In rural areas it is important to encourage agricultural producers, active mines, tourist attractions, skilled artisans producing wares, commercial exploiters of natural resource, local industries and tourist-based businesses to develop their own Internet websites. Showing remote location to the entire world might attract the interest of investors and clients and can directly generate and accelerate local growth. Internet access allows businesses to offer their products to a world market instead of just to the local inhabitants, thereby considerably expanding their distribution. Undoubtedly, the slow and low return on investment and energy generation are not attractive to large telecommunications operators. Nevertheless, experience has taught us that taking advantage of natural resources, competent business management, and the positive social consequences that technology brings, all combine to generate interesting benefits for all parties involved. The greatest benefit of this business model is the direct social impact it can have on the inhabitants of these remote regions. It can drive social and regional development, make higher quality basic education available, provide access to higher education and personal development programmes and connect children, young people and adults to current technology and the advantages it brings. It could also offer secure unlimited communications service as well as generate employment and make available natural, non-polluting, renewable, solar energy to the local population. In this way, large companies can sell their products, small entrepreneurs can sell their services and create jobs, and the inhabitants of the region benefit from the economic growth and social development. The world can benefit by becoming familiar with what these remote regions have to offer. The development of rural telecommunications in combination with the local generation of solar energy – following the suggested business model, suggests that the strategy of combining natural and technological resources to further socio-economic development – is at the core of the profits for progress concept.
