An Introduction to the Problem Domain

It has long been understood that different economies and societies in the world have developed in different ways and at different paces. This is measured and compared in various ways including the Human Development Index devised by the United Nations Development Program (UNDP) (UNDP, 2005).  Indeed, since the second World War, especially since the 1960‘s, a whole International Development “industry” has grown up, based on the idea that the richer (so called “developed nations”) should assist the less well-off (so called “developing nations”.)

Many have thought, researched and sometimes pontificated on the causes and potential solutions for under-development. (e.g. Smith, 1776; Miller and Guthrie, 2001 and De Soto, 2000)  Education, information, governance, corruption and many other factors have been named as key factors. Clearly infrastructure, in its widest sense is also important: transport, legal and banking structures and telecommunications.  The latter in particular determines a society‘s ability to participate fully in the global economy.  This is not simply an economy of commodities and finance, but also an economy of ideas.  So it

was that in the nineties, the expression “Digital Divide” was coined.  (See Literature Review for more detail.)  A good telecommunications infrastructure is now considered critical to the extent that a specific target has been set within the United Nations (UN) Millennium Development Goals: “In cooperation with the private sector, make available the benefits of new technologies, especially information and communications”  (UN, 2006)

The author has been involved for a number of years in introducing information technology into developing world contexts – latterly in the commercial supply of broadband Internet via satellite.  This research is designed to better understand what makes a small Internet business in the developing world viable.  The answers will be significant to the author‘s business, and to other parties.  This includes organizations like InfoDev (part of the World Bank) where the ability to move from pilot and demonstrator IT and Internet projects to large scale implementation has been elusive. (Terrab, 2005).  For the US Department of Defense (DoD), viable communications businesses would assist in the achievement of Stability, Security, Transformation and Reconstruction (SSTR) objectives mandated under the new DoD Directive 3000.05 (US DoD, 2005)  For many small charities and indigenous businesses, it could mean the difference between having access to broadband Internet and not having it.    Since the subject matter under examination is at the intersection of business and technology, it makes an ideal dissertation subject for this MSc which was designed to produce “hybrid managers” – those equally comfortable with those two domains.

It would seem reasonable to conclude that many of the initiatives that have been taken to address the Internet connectivity deficiencies in the developing world have been single dimensional interventions, due to the large number of failures.  Examples are cited later.   Yet cause and effect are rarely single dimensional in the complex real world.   A holistic understanding of the systems involved is desirable.  This is often called Systems Thinking (Senge, 1994).  It is posited that a more holistic understanding will reduce the chances of failure and unintended consequences.   A case study of the Japanese communications company, DoCoMo was undertaken as part of this MSc course.  They

designed and implemented a service known as i-mode as a competitor to the mobile phone Internet access service known as Wireless Application Protocol (WAP).  DoCoMo developed a complete understanding  of the whole ecosystem around their new service.  They considered themselves, the users, the handset manufacturers and the content providers, making sure that the new service would be attractive to all.  This understanding laid the foundation for a phenomenally successful service (Natsuno, 2003)

Southwood, 2005 explains that some Interventions have been massive commercial infrastructure projects, such as laying submarine fiber off the shores of Africa in order to provide high capacity, high speed connectivity to developing countries.  However, these projects have often not improved connectivity for the average consumer because there has only been a single supplier (no competition) and because the incumbent telecommunications companies, often nationalized monopolies, have controlled pricing to consumers.  Affordability has therefore not significantly improved, even in coastal capitals such as Accra, Ghana. 

At the other extreme, many development organizations have set up small local Internet cafés as demonstrators or pilot programs in rural areas.  Whilst rural connectivity may be desirable from a development standpoint, they cannot often work as businesses for  a number of reasons, but basically because they cannot generate enough revenue and reduce their costs far enough to be profitable.  The case of Nakaseke, Uganda is illustrative and is mentioned again in the Literature review.  (Potts, 2003)

While there are many thousands of small Internet cafés in developing countries, connections are generally very slow, based on informal personal observation and reports received from colleagues.  Slow connections make the use of certain applications impossible or impractical.  For example, Voice over Internet Protocol (VoIP), streaming media and many Web 2.0 applications require reasonably fast connections.  Without fast connections, developing world users will not be able to participate as equals in the evolving global markets. [See DRASTIC paper on website size and download speeds]

The technology to provide fast Internet connection to almost all parts of the globe has become increasingly available and affordable over the past 4-5 years as Internet-over-satellite networks have been extended and enhanced and made available through Very Small Aperture Terminals (VSATs.)

The questions that need to be answered are these: 

• Is there a business model which will allow fast Internet access to be commercially viable in the developing world?  
• Can the principles of Value Innovation proposed by authors like Kim and Mauborgne (2005) and Prahalad (2005) work in practice in a developing world context? 
• Can a purely business approach to Internet provision achieve much more than the donor funded pilot programs have so far?