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Build on Existing Distribution Networks
Nokia Siemens Networks
announced a “Village Connections” pilot project
in Eastern Cape, South Africa last week. The
initiative, part of a broader goal of providing
wireless access to 5 billion people by 2015, is an
attempt to lower the capital and operating expenses
that keep most operators away from remote, rural
villages. Wireless subscribers to this service are
also expected to benefit from lower fees.
Nokia Siemens Networks (NSN) claims the reduced
costs are enabled by an innovative “distributed
architecture.” These technology and business-model
advances push call control and customer management
out to rural access points, each of which serves
approximately 80 subscribers and runs on a basic
computer equipped with a simple software application
and wireless card.
With this initiative, NSN moves toward a potentially
lucrative opportunity – a franchised service model
for phone and Internet connectivity. NSN claims its
GSM Access Points are “plug-and-play” and backed up
by solar or battery power. The challenge remains,
however, in identifying, training, supporting and
managing a large number of geographically-scattered
rural franchisees.
NSN (or other multinationals) will maximize their
chances of success by identifying and securing good
distribution partners. While every rural village has
a small shop or retailer, networking companies don’t
have enough boots on the ground to train
entrepreneurs or install and service even the most
self-contained access points at each location. They
may, however, be able to piggyback on distributors
who regularly supply soft drinks, beer, soap or
other goods to those retailers. Distributors would
gain a new revenue stream and operational
efficiencies (i.e., shopkeepers could place orders
using the new phone network). Village retailers
could benefit from offering a new product line to
their customers, beginning with phone service and
extending to handsets, additional airtime and phone
accessories. These shopkeepers are also the most
likely to know how to run a business and protect
valuable equipment. Schools might also be potential
partners. In many rural villages, the school is the
first (or only) place with a PC, electricity,
adequate security and sufficiently educated
personnel. And, if bureaucratic snags can be
avoided, it may be worthwhile to partner with a
government entity. Such alliances might help
technology companies solve the rural distribution
riddle.
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