4 September 2015

Kenya: Argon Telecom Wants to Halve the Cost of Data for Residents of Kenya's Kibera Using Low-Cost Wi-Fi Roll-Out

London — One of the recurrent themes of the last three years in this e-letter has been the need for operators to cut the cost of data. More competitive African markets may now have European or US level prices but that does little to widen the market to those with lower incomes. Step forward Argon Telecom that wants to turn this barrier into an opportunity. Russell Southwood spoke to Andy Halsall, one of its founders about its plans.

Andy Halsall used to work at Fon that has the largest Wi-Fi network globally which has 14 million hot-spots. It also pioneered shared personal hot-spots where an individual shared part of his or her hot-spot bandwidth with outsiders in return for payment. When he left he started to think about how "the technologies used could be used to drive down costs."

So he got together with his co-founders and launched the company at the beginning of 2014. The company has four lines of business: wholesale VoIP; retail VoIP; developing a cheap smartphone; and rolling out Wi-Fi networks.

The main focus at the moment is on rolling out in Kenya:"We've just submitted a licence application and we're hoping to launch our initial services in Kenya towards the end of this year."

It wants to blanket Africa's most high-profile slum community Kibera with Wi-Fi hot-spot coverage. This city within a city has - with some nearby rural edge of city areas - a population of 3.1 million:"We've taken a different approach with the technology and are using Wide Area Networks. We're putting up hot-spots connected to the wireless backhaul networks. The hot-spots will be delivered using unlicensed spectrum in the 2.4 and 5 GHz bands." Obviously users will only be able to get on to the network where it is deployed:"We hope to provide Wi-Fi throughout Kibera so both on the streets and in the home."

Most of the Wi-Fi technology used is "off-the-shelf. There are good companies with good equipment out there." The wireless access units cost "a few hundred dollars" and they will be installed on buildings in sight of the community. To get the coverage required, there will be a large number. To ensure a lower level of vandalism, they will be sited in community locations like schools, churches, mosques and NGO offices:"We hope to give community locations a certain amount of free Internet access for hosting the equipment."

Also "the build and operations will use as many local staff from Kibera as possible and will be done in coordination with local community organisations". The proprietary technology is the management system for the network that handles billing and "makes sure everything functions together."

"Wi-Fi offers a number of advantages over the cellular technologies traditionally used for mobile internet access - lower equipment costs, easier installation and maintenance, reduced licencing demands and unregulated spectrum."

So if the overall objective is to lower the cost of data, how much will it come down? Argon Telecom wants to cut both the wholesale and retail costs of data by half compared to the cellular operators:"We've not formalized our launch pricing but overall we want to get to half the price of cellular data." So will the network offer a voice service?:"The network is first and foremost a data network. But it can support any voice data service (like Skype and Viber) and will offer VoIP related services over the top."

Users in Kibera will be able to get the data service on any device that can receive Wi-Fi:"The reality in Kibera is that this will be smartphones, although there will also be feature phones but we won't be supporting them." The company is also developing a US$40 smartphone which it is planning to roll-out in Q1, 2016. Halsall describes this as a "separate but interlinked development." In other words, it's not just been developed for this roll-out and will be sold elsewhere.

So how will the service be sold?:"People will be able to buy data airtime through the service itself and there will be physical distribution through outlets such as stores. We'll use something similar to scratch cards."

One of several social benefits from this network roll-out is that through a combination of lower pricing and free content it hopes to encourage greater online content use by Kibera's residents. This will include both stuff that does you good (for example, health and jobs information) and stuff for enjoyment (For example, entertainment). The free content will be delivered through a small walled garden on the network and in combination with the promised lower data prices for looking at content more widely.

So what's the bigger roll-out plan?:"The first part of the network will be in Kibera and we'll launch there. If it's successful there, we'll look to deploy in poorer communities in Nairobi and in remote communities. Argon Telecoms sees a large business opportunity in those at the Bottom of the Pyramid:"Everybody should have the right and will want access to the Internet. We want to target the Bottom of the Pyramid which other operators tend to ignore and make reasonable returns."

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