Deployment of networking technology in developing nations


30 Jun 2020    15 mins read.

Introduction

This report aims to explore the deployment of networking technologies in developing countries, with a particular focus on sub-Saharan Africa, due to its high potential for Internet growth and also as an area with a large number of developing countries. Networking technologies can be very broad but to minimise ambiguity, references in this report are to any core technology which helps bring people online. Considering the large amount of capital and operating expenditures required to traditionally deploy networking infrastructure, possible technologies that could alleviate the cost, thus making such investments sustainable have been evaluated and some key recommendations on how to accelerate deployment made. Given that the target audience for this report are the board of directors of the African Development Fund, whose aim is to contribute to poverty reduction and economic and social development on the African continent, this report also evaluates the topic in relation to the associated economic and social benefits that could be gained/derived in a situation where deployment is successful.

Background

Over the last twenty years the Internet has created millions of jobs paving way to the emergence and transformation of entirely new sectors. It has become so crucial to our lives that the United Nations (UN) declared that it considers the Internet to be a human right (Kravets, 2011). Amongst the 17 Goals it adopted for its holistic approach to achieving sustainable development, the UN emphasized the need to increase access to information and communications technology by striving to provide universal and affordable access in least developed countries (United Nations, 2016). Opportunities for social and economic advancement can be provided to people in developing countries, by connecting them to the Internet. Yet, as of 2019, over half (53%) of these people do not use or have access to the Internet (International Telecommunication Union (ITU), n.d.). Sub-Saharan Africa’s Internet access in particular makes for quite a revealing story, plagued by poor infrastructures, low levels of computer literacy and overall high costs of Internet services. Whilst lack of funds, insufficiently regulated markets and political instability remain significant barriers, the lack of coverage in rural areas is the consequence of a basic economic challenge. Lack of adequate infrastructure means that the deployment of networking in developing countries/remote areas can be twice as expensive, while revenue opportunities are as much as ten times lower (GSM Association, 2018). A combination that deeply affects the business case for Mobile Network Operators who end up focusing on profitable urban areas. With Africa, set to be the next place in the midst of a rapid digital change – and the pace of change unlikely to slow any time soon, it is plausible that the increase in deployment of networking technologies on the continent will bring about numerous gains that span from welfare improvements to economic benefits for a multitude of stakeholders. As such, it is essential that we consider new operator models, enabled by alternative technologies, that provide novel definitions of “profit” – where sustainable and affordable access is prioritised rather than huge financial Return on Investments (ROI).

Evaluation of economically viable solutions

To ensure that the deployed networks are maintained, the evaluated solutions bringing coverage to developing countries need to do so in an economically and commercially sustainable manner. This requires fulfilment of two sub-goals:

  • Lowering expenditures (Both Capital and Operating expenditures) of cell sites and overall infrastructure associated with telecommunications deployment (thus increasing ROI)
  • Enhancing the demand for mobile and Internet services, therefore improving the profitability and attractiveness of such investments.

Using traditional methods, the cost of network deployment in rural areas can be quite variable due to the diverse nature of the topography. Backbone nation-wide fibre networks requiring huge amounts of capital expenditures would first have to be built. As explained earlier however, this is not an economically viable solution given the low-income power of people in developing countries. The need for novel approaches and solutions is therefore clear and a number of industry initiatives, have appeared in recent years, addressing these challenges in very innovative ways (Fraunhofer Institute for Applied Information Technology Fit, 2019). This report presents the case for leveraging such novel/emerging wireless technologies to solve the challenge of rural connectivity. Amongst the well-known examples of industry initiatives that have sought to address the challenge, include Facebook’s ‘Internet.org’ and Google’s ‘Loon’. For brevity sake, this report chooses to recommend/focus on Google’s Loon as it is perhaps the most promising of the aforementioned solutions. Despite covering only one technology in greater depths in this report, it is hoped that coverage of this prime solution catalyses discussion of other equally or potentially more promising ideas.

What is Loon?

Loon LLC is an Alphabet Inc. subsidiary and was formerly a research and development project undertaken by Google X with the aim of providing Internet access to rural and remote areas. The loon system consists of a network of balloons, each carrying the most essential components of a cell tower that were redesigned to be light and durable (Loon LLC, n.d.).

The balloons are floated about 20 km (a distance twice as high as the weather and airplanes) into the stratosphere as shown in the diagram above. The loon system is classified under High-Altitude Platforms (HAPs), and as such is characterized by a point-to-multipoint (P2MP) architecture where each cell is served by one base station. Signal is communicated/propagated from ground stations by Internet Service Providers (ISPs) through the network of balloons to user devices.

Control, current developments and other notes

The stratosphere consists of many layers of wind, each with differing speeds and direction. Using wind currents which travel in different directions at different altitudes, the balloons can autonomously navigate to their destinations. By controlling how inflated it is at any given time, using algorithmic forecasting for windstreams, the balloon can be steered towards the desired location. Since the balloon are filled with helium, this is done by controlling how inflated it is at any given time. Letting in normal air makes the balloon denser making it more likely to sink and removing air to just maintain helium makes the balloon more likely to rise due to it becoming lighter. The google loon project is practical and finely suited for deployment of networking in developing countries, due to the significant reduction in capital and operating expenditures; (the 1st sub-goal identified earlier). Furthermore, its joint venture with Telecommunications companies who are demonstrating willingness to close coverage gap means that, cellular spectrums are shared leading to the minimisation of duplicate expensive infrastructure. Having partnered with Telkom Kenya in 2019, loon has already begun marking progress towards the first commercial deployment of its balloon powered Internet in Africa.

Potential cost savings

Whilst google hasn’t fully disclosed the amount/cost involved in deploying and running the balloons, the expected savings are in the order of magnitudes. Preliminary studies conducted by James Burr from the Australian national university found that; Assuming that Google intends to make no profit directly off of Project Loon and that all costs to the user merely keep the project from running at a deficit, the cost per User per day if deployed in India with a 5% usage rate is $0.001. Over 5 years, that would be $1.86. With such low costs, this leaves plenty of room and provides very good affordability even if google decides to monetise it. To accelerate successful deployment of networking technologies in Africa, the African Development Bank needs to get involved to ensure that more telecommunication companies on the continent are pursuing similar ventures. The full set of recommendations on how to do this is elaborated on in the conclusion section of this report.

Economic Opportunities and Social benefits

The imminent digital revolution in Africa holds many promises for developing country allowing them to skip through stages of development. The Internet breaks many barriers and broadens access to resources, allowing entrepreneurs and small-business owners to grow regardless of where they live. It has been one of the most transformational technologies of our lifetimes and contributes over 21% to the GDP growth (Kaur and Randhawa, 2018). It also accounts for 4% of national GDPs in G20 economies and as such has the potential for huge impact in developing countries. This thought was echoed by the former Director of the Division for Public Administration and Development Management of the UN Department of Economic and Social Affairs (DESA), Ms. Haiyan Qian. She says; “Helping developing countries build their citizens’ access to the Internet is akin to giving them a tool that boosts their chances of achieving sustainable economic growth” (United Nations, 2012). In the case of successful deployment of networking technologies. The following are possible expected benefits that could be derived:

  1. Increased access to education: The education gap between rural and urban populations could be bridged using Internet connectivity. Electronic devices such as smartphones and tablets could be used to deliver invaluable classroom lessons to children in sparsely populated areas, who are otherwise not likely to receive it. An example of such initiatives being put to practice is the $173.5 million giant literacy campaign, instigated by the Kenyan education ministry in 2016 (Livingston, 2016). Utilizing durably built, portable connectivity devices called ‘BRCK’, culturally relevant and localized educational content are made available to students in even the most remote physical location.
  2. Poverty reduction and welfare improvements: With the expansion of network coverage and Internet access, individuals in developing countries (including remote areas) gain access to the modern/wider economy. This opens up a myriad of opportunities that help with welfare improvement and poverty reduction. They are able to participate in e-banking and easily take out microloans. A study published in the journal of Macroeconomics found that “A small boost in microlending to the developing world could lift more than 10.5 million people out of extreme poverty” (Zhang, 2017). A case study in India, illustrated how, using such economic tools, those living in extreme poverty are able to improve the quality of their lives. Businesses that received microloans were twice as profitable as those that didn’t, because, they no longer had to choose between investing in a business or buying everyday necessities such as medication (Zhang, 2017).
  3. Increased connectivity: due to arguably being the most inexpensive connectivity tool. Using Internet messaging applications such as WhatsApp, individuals in developing nations are now able to stay in touch with family and friends and can communicate much faster.
  4. Improved efficiency: This can span a variety of industry and applications. In the agricultural sector for instance, farmers can easily access crucial information about variables such as temperature and humidity through a variety of sensors using IoT (Internet of things) systems. This kind of precision agriculture has also led to the development of other unique insurance system (Yan, 2019). Farmers in eastern Africa for instance, can now purchase insurance that automatically makes mobile payments to them if their local weather stations record extreme whether occurrences such as drought or flooding.

Conclusions and Recommendations

Despite the recognition of the Internet as one of the most transformational technologies of our lifetime, the majority of people in developing countries lack access. This is due to the unfortunate combination of high costs for deployments and low-income power of people from third world countries. Project Loon, based on innovative technology, aims to solve this problem in an economically sustainable way, bringing revolutionary change to people residing in remote/rural areas. It by-passes the need to lay down cable infra-structure and is scalable and practical for the intended market. The hope of universal Internet access is no longer far-fetched, and one can positively speculate on the impact on economic and social welfare. Nevertheless, the real potential for Loon is yet to be seen. The technology is not yet technically mature, and it faces regulatory challenges or royalty burdens. As such, closing the coverage gap remains challenging and should not be left to the industry alone. For a faster significant impact, successful deployment of networking technologies in Africa requires collaborative efforts from multiple development and finance institutions (DFIs). The AfDB could coordinate and ensure that other mobile network operators (MNOs) on the continent are pursuing similar joint ventures by:

  • Potentially subsidising the costs, and
  • Setting up suitable pay-as-you go regulatory frameworks and environments that are easily implemented in collaboration with MNOs

This strategy is in line with the overarching objective of the AfDB, to spur sustainable economic development and social progress in its regional member countries (RMCs), thus contributing to poverty reduction (African Development Bank Group, n.d.). To fulfil the second sub-goal required for a commercially sustainable deployment; “Enhancing demand for mobile services”, telecom operators would also need to partner with local innovative companies that offer essential features, so the package is worth much more than just an Internet connection. This could include essential healthcare service, mobile banking or other features/benefits discussed in the next section of this report.


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