30 June 2017

Nigeria: Tizeti Woos Household and SME Customers a Combination of Wi-Fi Hot-Spots, Lower Prices, Better Quality and No Data Caps

London — Outside of their corporate niche, Africa's independent ISPs have in the main not tried to pitch for household customers. Few have had the vision or the capital to make such an idea a reality. Russell spoke this week to Kendall Ananyi, co-founder of Tizeti about how it wants to change things.

The idea for Tizeti's Wifi.com.ng consumer and SME Wi-Fi service came out of a barrier the founders bumped into when they were developing another product:"We were working on a VoD box to deliver a VoD service. The top ISP in Nigeria (Swift) just cancelled its unlimited service. The idea was pretty much dead after that. So we said to each other should we go after the Internet problem. There were issues of speed but the bigger problem was data caps."

So they started creating Wi-Fi hot-spot delivery on estates in the Lekki Phase One district of Lagos. One installation just led to another and as Kendall Ananyi told me:"We just bootstrapped it."

But both of them knew it would take more than bootstrapping to take things to the next level and were ambitious to see it move in that direction. Late last year co-founders Kendall Ananyi and Ifeanyi Okonkwo were among the Y Combinator cohort along with an Indian start-up Wifi Dabba that wants to take hot-spots to tea stores.

Out of this opportunity and a lot of legwork, Tizeti has just announced seed funding of US$2.1 million from investors including including Western Technology Investment, Social Capital, Vy Capital, Picus Capital, Ace & Company, Lynett Capital Partners, Zeno Ventures and a number of angel investors including Y Combinator's Michael Seibel and Gabriel Hammond.

Two things have been missing from the African ISP space: firstly, founders with enough vision and determination to provide a consumer data product up against the mobile operators; and secondly, founders with enough capital to make this vision a reality.

However the US$2.1 million is really quiet a modest amount of money alongside the scale required. Other independent ISPs that have gone into the consumer space, admittedly with a slightly different vision, have burned through tens of millions of dollars.

Tizeti now has 45 solar-powered towers across Lagos in places like Yaba, Gbagada, Lekki and parts of Ikeja. Each of its base stations gives an approximately 1.5 kms of coverage. Currently there is no coverage on Victoria Island. It's delivering the service on licensed spectrum (using 5.400 GHz) to small devices, either in the home or to an SME premises. These devices can deliver signals either to a subscriber, a public router for a hot-spot or a teleport device. A teleport device? This is a workaround device to give subscribers UK and USA IP addresses so that they can access services like Netflix.

For N9,000 (US$27.83) a month (plus a N30,500 setup fee) ,the residential subscriber gets an unlimited data allowance with a 2 mbps download speed. The SME price is based on the same set-up cost but sold on a 6 month contract costing N57,000.

The public hot-spot service which is in soft launch phase is charged on a time basis as follows on a per device basis: a day (N200/US61 cents); a week (N1000/US$3.09); and a month (US$9.28). The service is currently being offered on a seven day free trial period.

In Lagos it has its own fibre from the landing station to its NOC and then transmits wirelessly to its towers. So if anything goes wrong, it has control over its own network:"We own the entire stack." How will it replicate this control when it expands out of Lagos?:"One of our providers lands in Port Harcourt."

So how many customers has it currently got? Ananyi was cagey saying that commercial confidentiality prevented him from giving a number. But he did say that there were thousands of household customers and that 1,918 people were taking advantage of the free offer on its hot-spots.

And the pattern of consumption so far?:"We've seen consumption of between 200-900 GB and in one instance up to 1 TB. There's a lot of video streaming by residential customers and the SMEs use the capacity to provide for a number of users."

Will Tizeti return to the idea of providing a VoD service?:"No, not at this time. We think solving the Internet is a way bigger problem. We'll partner with other VoD providers."

The Tizeti team have big expansion plans and this is one of the main reasons that it raised the seed fund round: it wants to create 3,000 Wi-Fi hot-spots across Lagos. In geographic terms, it wants to expand to the South-West and South-South regions of Nigeria and "is looking at the regulatory requirements for Anglophone countries in West Africa. We aim to 'win Lagos', with a view to expanding across the West African region over the next 18-24 months The launch in the South-South states will take place by 1 October this year. We've asked for resellers to apply to us for those regions."

Mobile data prices are still too high and the service provided too often unreliable to mean that they will not have competitors like Tizeti who can provide three things the user will be interested in: cheaper prices, a better quality network and no data caps. What's not to like?

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