September 27, 2020

Smart Business Models Are Needed to Connect Schools & Clinics

In 2015 Huawei released Connecting the Future, a report calling on the ICT industry to develop new business models to address the digital divide.

Now five years on, it is time to update this report with specific ideas that reflect today. Here I want to look at the pressing need to connect schools and clinics to the Internet and the new business models that can help do this.

It’s Not Just About Coverage

Before we look at the business models for connectivity itself, we need to acknowledge that just as the majority of the world’s population is covered by a broadband network, the majority of the world’s schools and clinics are covered too – both tend to be in population centers. The issue is not just one of connectivity infrastructure. Where infrastructure is needed, Huawei has a variety of low-cost base stations that can help.

Huawei’s RuralStar connects Tobolo, a remote village in Nigeria

For everywhere else with a broadband network, though, schools and clinics are not connected for similar reasons that affect much of the world’s population. These include a lack of devices (and power), suitable local content, and digital skills.

One Size Doesn’t Fit All

There are three major differences between
schools and clinics that we should clarify:

  • Schools often need a lot more
    devices and power than clinics, with a typical school needing at least one IT
    lab of 30 devices (usually one device per two students in a class of 60). In
    contrast, a clinic, depending on its size, could get by with just a few devices
    at crucial points of care for registering patients, consulting patients, and
    managing medicines.
  • Educational content for schools
    may be quite complex with content required for multiple school years and multiple
    subjects, and in interactive formats for meeting local curricula. Health
    content is usually easier to develop through health information management
    systems supplemented by live consultations and training by video.
  • Digital skills in schools need
    to start with teachers and enable them to teach digital skills to students, much
    like the approach that Huawei’s TECH4ALL
    DigiTruck program is taking in Kenya
    , which has so far taught digital
    skills to 1,145 students and 100 teachers. In clinics, it is only necessary to
    teach health staff, and they only need to learn to input and use health data
    and simple IT systems. One of the challenges in education is integrating
    digital skills into the educational teaching environment, which comes with
    additional cultural and teaching challenges.

Innovative business models can address these issues. For example, some companies subsidise devices through advertising (or e-commerce revenue obtained from consumers using those devices), while pay-as-you-go phone options sold together with solar panels (which are remotely locked if payment is not made) is now primed to take off for consumer purchases thanks to new solutions to lock smartphones and new partnerships with banks, operators, and device manufacturers.

Digital Skills Boost ROI

This year, all sorts of educational content has been rapidly created and made available either for free or affordably, with many private companies collaborating with curriculum regulators and developing different business models for governments, schools, or consumers. GSMA reports that there is now strong evidence of ROI for operators to invest in training citizens in digital skills, since those consumers will increase their online usage and many governments have now begun increasing their investments, such as by rapidly training health staff in digital skills to collect COVID-19 related data.

Now back to connectivity, and more
importantly, the affordability of connectivity. This is a critical issue, much
more so than the actual connectivity infrastructure, though we can discuss that
too. The challenge, as with individuals, is that business models for
connectivity are usually based on recurring expenses. Connectivity can
generally be provided over either fibre networks, microwave, or mobile
networks. Telecommunications companies cover the up-front costs of a mobile tower,
microwave tower, or fibre Internet and then recoup those costs, along with
operating costs, from customers over time. In the case of a fibre connection,
the up-front costs are very high, but the operating costs are very low.
However, for a mobile or microwave tower, the up-front costs are less, especially
on a per user basis, but the operating costs are higher, particularly power
costs.

Solving the Connectivity Problem

Implementing connectivity requires either a
long-term commitment to funding from schools/clinics, so that the operator makes
the up-front investment, or a large up-front investment from the
schools/clinics themselves, so that the operating costs are low. A key factor
in deciding which option to take would be the availability of existing
infrastructure. If an operator already has infrastructure (mobile, microwave,
or fibre) nearby, then using that could be most cost effective, as they’ve
already made much of the up-front cost and may only need minimal additional
infrastructure along with the operating costs.

If there is little existing infrastructure
and thus a large up-front cost is necessary, usually in fibre or microwave, the
public sector could decide to make this investment itself, if there is a large
amount of funding available, or a loan can be taken out and repaid over time.
If the costs of that loan repayment are less than the alternative of an
equivalent contract with the private sector, it could make sense. In many
developing countries that lack existing infrastructure, this option is selected
with the intention of renting out that infrastructure to the private sector to
connect other customers nearby, and then using that revenue to recoup any loan
costs. Variations on these business models are very interesting, and it can
lead to interesting collaborations between the private and public sectors.

Collaboration for Connectivity

One such collaboration is with power
companies. Since civil works account for a large part of fibre costs, many fibre
companies co-locate their fibre on electricity poles. As schools and clinics
all need electricity, one option is to connect them to fibre at the same time
as connecting them to electricity grids (though some remote areas may not get
connected to the grid and could use off-grid solar instead). This can reduce
costs significantly. As with electricity, once it connects a school or clinic
and can easily be extended to other paying customers nearby, the same can be
done with broadband, and thus generate revenue. In fact, as the last mile of
broadband could still be delivered wirelessly, there may be minimal costs
beyond just putting Wi-Fi routers on school or clinic rooftops!

There are also innovative business models
available using wireless or mobile networks. Three in particular are worth
exploring:

  1. When operators are given mobile
    licenses, they are often accompanied by various obligations for coverage (e.g.
    percent of population or number of base stations). But, they can also be given
    obligations for providing Internet to schools or clinics. Earlier this year,
    South Africa made additional spectrum available to operators to cope with
    demand during COVID-19, with one requirement being to make connectivity
    available to 104 district virtual classroom platforms with minimum speeds of 10
    Mbps. They also mandated zero-rating (i.e. free access for mobile subscribers)
    to local education websites.
  2. Many governments around the
    world have Universal Service Funds (USF) to support building base stations in
    rural areas. In Kenya, the current USF is requiring operators that build those
    base stations to connect at least one primary or secondary school in the site
    vicinity with a minimum speed of 10 Mbps through 1 (or more) CPEs – a CPE is a
    mobile router with a sim card inside that provides a Wi-Fi hotspot.
  3. When operators build a base
    station they need land and power, among other things. Schools often have a lot
    of land and are secure. Many are also connected to the grid or have solar
    power. Kenya, for example, aims to connect all schools to power. Around the
    world there are mobile operators who will pay rent to a school to use their
    site, so it is possible for agreements to be reached whereby the operators
    could instead provide internet to the school in lieu of payment, as well as
    sharing costs on power (or even paying the school for power).

These three business models are interesting
for mobile operators for two reasons:

  • Operators want to increase
    demand for Internet usage, especially in areas where demand may be low,
    bringing Internet connectivity for the first time. Providing free Internet at a
    school will help increase demand, and those using it at school will also
    increase their digital skills. Students and teachers will get used to the Internet
    and be keen to use it more outside of school.

Read more: Student Voices: Why We Need Access to Digital Skills

Students learn digital skills during the DigiTruck program in Kenya
  • Operators have a fixed capacity
    at a mobile site based on the equipment they are using, and much of the time
    this capacity is not being used. There is little marginal cost for a base
    station at full capacity or half capacity, other than some extra power or extra
    international bandwidth fees. This is one reason why many operators offer very
    cheap Internet packages at certain times, like night owl packages to be used
    (for downloading) between midnight and 5 am. Therefore, operators do not incur
    particularly high costs when providing schools or clinics with unused capacity.

As teachers and students become more used
to online learning during COVID-19, they are not only acquiring the digital
skills they need, they are also experiencing how useful online learning can be.
This changes both what is possible and students’ expectations once they return
to school.

The same is true in the health space. With
health workers becoming accustomed to collecting health data and receiving
training on COVID-19 and other diseases online, and with patients around the world
becoming used to speaking to a doctor online, both health workers and patients
have gained digital skills and the expectation of more online health
interactions.

This is a wonderful opportunity for
speeding up school and clinic connectivity efforts. And though the benefits are
now clearer than ever, we know there is less money than ever, especially in
developing countries.

So, let’s work together to further explore
how innovative business models can help get those schools and clinics online as
fast as we can.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *