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Nigerian internet firm widens the access net

Nigerian internet firm widens the access net

The hype surrounding Africa’s technology sector was already gathering pace by 2012. Soon-to-be online marketplace giant Jumia had launched, the iHub technology space in Nairobi was becoming internationally known and internet penetration hit 15%.

Amid the proliferation of startups and excited chatter about “Silicon Savannah”, Kendall Ananyi spotted an opportunity. A video-on-demand and streaming service seemed like a winning idea for the millions of young people getting online. But while internet numbers ballooned in urban areas, patchy connections and expensive data were stumbling blocks.

“We found that the internet was expensive and streaming video was going to cost a lot of data,” he says. “So we said: ‘Let’s go after the internet problem.’” Today, the company Ananyi co-founded to provide low-cost internet is thriving. Tizeti boasts more than 300,000 users, 10,000 hotspots and covers over 70% of Lagos.

The story of technology in Africa is one of upwards mobility; internet penetration is now north of 20% according to the International Telecommunication Union (other estimates are even higher), there are more than 400 technology hubs, and startup venture capital funding hit $560m in 2017. However, the internet remains out of reach for millions. Rural and landlocked regions are drastically underserved and a digital gender divide persists.   

Tizeti, which provides broadband packages to businesses and homes alongside public wifi hotspots with unlimited data through its wifi.com.ng platform, has 80 solar-powered network towers in Lagos. “We built our network into one of the submarine cables off West Africa but that doesn’t take it to the user so sometimes we use fibre to connect the internet and we use the towers to connect people through point-to-point,” says Ananyi.

CEO Ananyi, previously at Microsoft and then Exxon in Lagos, says the biggest cost challenge is energy and so using solar power was crucial to address price barriers: “Our model involves us building our infrastructure [towers]. We own it and so then we are not leasing space or reliant on generators. This cost difference can be passed on to the customer.” 

Tizeti’s hotspots launched in 2017 and the company now partners with Facebook to provide the Express Wifi public hotspots service; 100 MB of data costs N50 (14 cents) and 10 GB is N2,000 ($5). Ananyi claims this is 30-50% cheaper than using established mobile operators.

The bulk of Tizeti’s profits come from monthly subscriptions but Ananyi says revenues from hotspots are increasing and that they are reaping benefits from their affordable pricing model.

“The bottom of the market is where most of the internet users are and so if you create a higher margin product then the market will be smaller and we wanted to build a product that anyone could afford. As we offer unlimited data we have seen a lot more downloads. It is significant and people simply can’t do that affordably on a mobile network.”

Affordability is key

A study by the Alliance for Affordable Internet (A4AI) said Africans spend almost 9% of monthly income for 1GB of data compared to 3.5% in Latin America and the Caribbean.

“Affordability is the number one issue that impedes people getting online,” says A4AI’s Eleanor Sarpong. “There are groups of people who will still have to make a decision between buying a device and buying food. Unfortunately, we can’t control income levels and so public access is very important.”

Customers are applying pressure. South African citizens used the Twitter hashtag #DataMustFall to criticise high data costs. Research by Ecobank says 1 GB of pre-paid mobile data cost $10.34 – the seventh highest in sub-Saharan Africa, trailing Zimbabwe ($25) and Equatorial Guinea, Africa’s most expensive at $35, among others.

If operators were willing to share infrastructure and data, expenditure could fall, resulting in lower pricing and enabling operators to reach more people, Sarpong believes. “If we are to close the African internet gap, providers and governments must be willing to share data and then we can direct investment to the right places and increase access.”

Universal Service Access Funds – public funds financed primarily through mobile operators and telecoms to enhance ICT capabilities – could also be better utilised. Across 37 USAFs in Africa, unspent funds total $408m, A4AI estimates. If spent effectively they could “bring 6 million women online, or provide digital skills training to 16 million women and girls,” says the organisation.

The huge growth of underwater fibre networks has had an impact but equipment damage and infrastructure issues taper reliability, Meanwhile, landlocked countries’ ability to access networks is often limited due to costs, regulations and lack of “last mile infrastructure”. Sarpong says regions and authorities could make improvements “either by subsidising the cost or making sure they have enough investment to take it from the border that last mile into the country”.  

A4AI says governments should treat ICT like utilities and “not tax internet investments and infrastructure but tax revenues made at the end” to help widen access. 

Narrowing the access divide

Technology is helping narrow the access divide. Satellite-powered broadband is connecting schools in rural Uganda, while Google has joined Facebook with public wifi hotspots in Nigeria. Meanwhile, local ISPs such as Mawingu Networks in Kenya are providing affordable internet to rural communities and poor areas in Nairobi. Groups like Project Isizwe in South Africa are rolling out free public wifi in cities and Zenzeleni Networks has created the first cooperative-run ISP using solar power to get the rural Eastern Cape town of Mankosi online.

At Tizeti, which closed a $3m Series A funding round in September, led by 4DX Ventures, hot on the heels of a $2.1m seed round in 2017, Ananyi and the team have big plans. The company owns the Wifi.Africa domain, will expand into Ghana in 2019, has plans for Senegal and beyond, and intends to extend its reach to more cities and rural areas in Nigeria.

“There is a direct correlation between affordable connections, high speed internet and innovation,” Ananyi says. “It’s really exciting because the more the internet is affordable, the more people will want to use it.”

Chris Matthews

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Written by African Business Magazine

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