London — Mark Summer and Kristin Peterson left Inveneo in September 2013 to set up a more commercially oriented version of what they had been doing: rolling out networks to unconnected communities and giving them access to communications. They started by offering the equivalent of an ISP in a box.
The last time I spoke to them in August 2014 they were working providing support and services for a new ISP in Gulu, Northern Uganda: http://www.balancingact-africa.com/news/telecoms-en/31469/broadband-in-gulu-and-4g-in-accra-two-sides-of-the-same-coin-for-africas-new-generation-local-roll-outs
So I asked Summer how they got to their current operational model?:" A lot has happened since we were in Northern Uganda but the goal and vision are still the same: reducing broadband costs for the average consumer. We've improved the software but now we need to work on the business model and understand the needs of the user".
"We decided to be hands on in a country and work closely with users to refine the service. We decided to do this in Kenya. We opened a local entity called Surf for the general Kenyan consumer. There are a lot of services for business or high-end users but not much for what I'd call the average consumer".
Surf offers this service in three different versions. Firstly there is a home version via fibre and Wi-Fi using unlicensed spectrum for KS999 per month (US$9.49) which is provided in partnership with Internet Solutions (formerly Access Kenya). Secondly, it launched Wi-Fi hotspots a year ago branded Surfspots, with access starting as low as US10 cents for 40 MBs going up to KS200 (US$1.90) for 1.25 Gb and US$5 for 3GB in daily, weekly and monthly bundles. Thirdly, you can get 40 Mb for watching an advertising video.
It started with a cluster of hot-spots in Nairobi's Eastlands but has also rolled-out in Kenya's second city Mombasa:"We're going for a significant density of coverage so it's available in most places that people will be throughout the day: for example, markets, restaurants, bars, chill spots and stages where matatus come and go. In other words where people live, work and play. We want to enrich the number the number of places they can go online because right now they bounce around between mobile and Wi-Fi".
"We're partnering with Facebook on over 100 hot-spots in the Greater Nairobi area and going into Mombasa and Kisumu. Before the end of the year we will also roll out into other communities across the country. If you get a data bundle, you can use it anywhere. You can roam throughout the country".
What speeds is it able to offer the users?:"We aim to get 10 Mbps to home users and we've capped it at that level per home user. On the hot-spot we want users to be able to stream without buffering on a mobile phone".
What are the current user numbers?:" We're not quite ready to share user numbers as we only launched 6 weeks ago. We'll talk user numbers in six months time but we're excited by the sign-up rates we're seeing and we'll use this data to understand how we can improve meeting our own goals. Our goal is in the multiple hundreds of thousands (of users) and we want to see how users react to (the new services)".
Kenya's Internet market is very crowded and there is a fairly widely distributed 3 and 4G offer from the incumbent, Safaricom. So who are Surf's competitors?:"In more mature markets, mobile operators and ISPs co-exist. Different (access) technologies exist alongside each other. The ISPs might not have the coverage of mobile operators but they will have better speeds. This gives the user a more efficient means to get online. You can get your emails from the mobile operator and download and stream using Wi-Fi. We're trying to stay away from the competition angle and create a position where the user spends more on all the providers".
So what was the motivation for the deal with Facebook?:"Facebook has Internet.org which has a lot of overlap with our goals. Express Wi-Fi is its software for the front end: a consumer UX, a captive portal and all of those kinds of things. Our expertise is rolling out networks and we have our own tools. Internet Solutions is the third partner and they have lots of networks and experience in rolling out network. There has been no investment from Facebook, just the agreement on the user interface".
"As partners, we are all participating in providing a service to a market segment that's not getting a service right now: urban and peri-urban areas. We're growing the piece and giving customers more options".
Is Facebook taking customer data from your customers?:"There are clear terms and conditions and privacy is a big part of them. Facebook doesn't look at personal data and you don't sign in with Facebook".
Kenya is one of Africa's bell-weather markets. If it happens there, it's likely to start appearing in other markets before too long. Existing African Internet users of almost all income levels show considerable determination in finding free and cheap hot-spot access.
Mobile 3G and 4G Internet access still commands a premium in most African countries and 4G is often priced as a premium service. Interestingly in Kenya, Safaricom's 3G and 4G service cost the same.
The challenge for Surf is whether they can provide Internet access sufficiently cheaply for low-income communities that these users will firstly, choose their hot-spots over mobile access when they can. The key to that question is probably a combination of density and marketing profile. Secondly, these users need to be persuaded that they might use this faster and more reliable bandwidth to stream content. Here the key is three-fold: pricing, speed and reliability. If all of this can be achieved, then the Internet access market will both grow and change.
In November last year I covered an unlicensed Kenyan ISP providing neighborhood broadband and content services with some considerable degree of success to a relatively large numbers of people. This "below-the-radar" operation shows what can be done and other more conventional businesses may well follow in its wake.