A scalable business model for mass customization of broadband services in the emerging Africa market
De Wet, Dawid Pieter
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Africa’s rapid adoption of the mobile phone is quickly closing the digital divide in voice services. But, just as one divide is closing, another one is widening. Consumers almost everywhere are demanding more services and higher Internet access data rates. In the developing world the knowledge gained through access to information is creating unprecedented opportunities and is having a dramatic impact on the way people live and work. Africa, however, has been largely left behind in the shift to broadband. Increasing the availability and affordability of broadband services is thus high on the agenda for policy makers in Africa, though it will require major efforts from both government and the private sector. Fundamental to the all efforts to close the “digital divide” is the need to provide a ubiquitous and affordable access network that will enable distribution of broadband services to anywhere, and anytime throughout Africa. While many kinds of broadband services are being offered to the African population, the currently available services have failed to reach the majority of Africans living in rural areas. This poses a very pertinent question that justifies further investigations: why have the existing broadband services failed to satisfy Africa’s need for a ubiquitous digital communication service. The lack of penetration of the existing services makes it clear that a different technology and service offering is needed, a service offering that is affordable to the large consumer market segment and which can complement the mobile and ADSL broadband networks to provide services to all of Africa on a cost effective basis. This research work investigates the current business and technology domains and develops new knowledge and the insights that are required firstly to understand why existing broadband services are failing to reach rural Africa and secondly to understand what criteria must be satisfied to deliver broadband access services to the mass consumer Africa market. The research work focuses on the interrelationships between markets, technology and business of the consumer broadband market and defines new thinking as reference to provide guidance to the future development of more suitable broadband offerings for the rural African market. The study centres around three principal areas of knowledge contribution. Analysis of the primary factors impacting the delivery of broadband services Firstly the study addresses the current market dynamics and technology realities to determine two critical aspects: 1) Can the mass market afford broadband services or will it remain the privilege of the higher income groups? And, 2) Can existing mobile broadband , ADSL and satellite access services meet the demands to service the mass market or is an alternative technology option required? Through analytical review the study determined that there is a large, and growing, middle class market that can afford broadband access services. This market sector is quantified in terms of consumer income levels and demographic user data. The study formulates the commercial and service criteria applicable to a broadband access service on servicing this target market. The study further investigates the availability, affordability and market penetration of the current mobile and ADSL broadband services and found that the available service options cannot effectively meet the current and future demand. The limitation in meeting the current market demand leads to a large under serviced consumer market in Africa. The study proposes a unique approach to quantify the specific under-serviced gap, which will not be met by currently available broadband technologies. The technology comparative study provides new insight into the limitations of mobile 3G broadband services and why this technology will not be able to meet the future demand for consumer broadband services in Africa. The technology study furthermore quantifies the advantages of using satellite technology to implement a mass consumer broadband service in Africa. The study proves that the ubiquitous nature and rapid deployment capabilities of satellite access networks provides distinct benefits when deploying a mass consumer network which makes satellite the technology of choice for consumer broadband services. We then continue to assess the ability of existing satellite broadband offerings to satisfy the needs of African end-users, and find that those offerings have been optimized for the needs and affordability levels of customers from the develop world. The result is that satellite broadband services aimed at the African end-user is primarily used by corporate and institutional customers, with little penetration of the consumer market. This finding provides the motivation for developing a business model that can leverage available technology to effectively service the African consumer market. Innovation of new concepts to support a viable broadband business strategy The mobile prepay model as well as the DStv pay-TV subscription services have demonstrated the need for a specific business innovation to ensure successful market adoption of new technologies. Both these industries have demonstrated that innovative approaches in the commercialization of technology solutions are critical to ensure the mass adoption thereof. The second section of the study therefore focuses on the innovations that are required to overcome the obstacles as identified in section 1 in order to arrive at a business strategy and business model that will prove to be viable in the delivery of broadband services to the rural African consumer market. The first challenge is the selection of the most appropriate technology platforms and the architectural design of the delivery systems to effectively service the mass consumer market. In order to adapt the business models employed by existing satellite broadband service providers the study defines the following two specific business innovation concepts that contribute to a new business paradigm for mass market broadband access services: 1) Through applied billing model innovation the study defines a new billing structure for broadband services and set a completely new paradigm for users to influence the cost of the service. The new billing model provides end-user the capability to adapt their broadband usage patterns to meet their budget constraints. 2) To successfully deliver a technology service to an emerging market requires a very specific organisational structure that effectively integrates knowledge, capability and funding while minimizing risk and uncertainty. The study proposes a new symbiotic organisational structure that elegantly combines capability and knowledge while minimizing funding requirements to ensure the acceptable market development risk. Development of a business model simulator for satellite broadband service delivery The deployment of a new type of satellite broadband service to rural Africa on an experimental basis is too expensive to be conducted for research purposes. A more practical approach that is also widely used in other domains of engineering is to construct a simulated model of the system being studied. The third knowledge contribution area of the study therefore focuses on constructing a mathematical model of the expected behavior of a business operation that provides satellite based broadband services to the African market. This simulator can be applied to quantitatively analyze various existing or proposed new business strategies. The business model simulation integrates all the business, market, technology and commercial relationships that impacts on the expected behavior of such an operation and provides a quantified model of expected business behavior based on the underlying dynamics of the satellite broadband industry. The development and validation of the business model simulator represents a unique contribution to this industry as no results of a similar model that represents the operations of a satellite broadband access service provider has been published before. The model empowers Service Providers and industry stakeholders to analyze different business strategies and to quantify the impact of various business decisions. In general it can be stated that this research work adds knowledge and insight to the field of applied business strategy as applicable to providing advanced technology-based services for emerging markets. The final outcome of this research study is the business model simulator. It integrates various market and business elements as well as satellite network engineering practises into an integrated financial cost modelling, business scenario planning and engineering network design tool. Through this integration of known disciplines the study provides an additional extension to the field of satellite business engineering.
- Engineering 
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