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IGF 2018 - Day 2 - Salle IX - WS384 Overcoming Barriers to Investment in Connectivity

The following are the outputs of the real-time captioning taken during the Thirteenth Annual Meeting of the Internet Governance Forum (IGF) in Paris, France, from 12 to 14 November 2018. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid to understanding the proceedings at the event, but should not be treated as an authoritative record. 



>> SHARADA SRINIVASAN:  Is this working?  Yes.  Okay.

My name is Sharada Srinivasan I'm a university at the University Pennsylvania Law School.  I am here moderating the session on overcoming barriers to investment in connectivity. 

This is a 60-minute session that tends to explore various barriers to finance and connectivity in particular to undeserved communities, and the idea behind the session is to try and both understand these barriers in a more nuanced way, but also try and understand policy environments that enable such, like, such investments, financial investments, in particular, in last mile connectivity.

We have a great panel to get us started, and we are hoping that this is an interactive session.

So, I will introduce the panelists first, and then we will give you an overview of the structure of the session followed by some discussion that we will have.

So, I will first give you broad remarks from our research on financing, connectivity and what we have learned from studying over 120 projects in 50 countries in the last three years as part of one world connected.

Following that, we will have fire starter remarks from three of our panelists.  We are still waiting for one panelist, Paul Roni, up until now we will have Antonio Garcia who is joining US FROM the INTER-AMERICAN Development Bank, and he will be providing his comments via remote, then we have Allen Bailochan Tuladhar, who is the head of PicoSoft Nepal, a network using TV space technology in Nepal, and then we have Wi-Fi Interactive Networks, which is a tech start-up in the Philippines that is trying to use add supported business models to try and spread connectivity to undeserved communities, and we have Namibia, Paul Rone, who has just joined us who will provide us an African perspective to the questions that we are interested in in terms of where the investments are coming from, what the landscape is like, what are the barriers that exist, and where do we go from here.

For those coming into the room, come forward.  It's great to have you here.  And, thank you for joining us in this afternoon session.

So, I will briefly start because I really think the wealth of knowledge is in our panel here who are doing the hard work, both of deploying on the ground, as well as raising money to sustain such deployments.

At one world connected, we study initiatives that connect undeserved communities.  We do that both through supply side projects that try to use innovative technologies to try to connect undeserved communities, at all sorts of scales.  So, we have mostly rural remote projects but also study regionally vast deployments and sometimes national deployments as well.

From our research, we realized that financing connectivity seems to have a very checkered landscape.  There seems to be a wealth for idea of players and not a lot of clarity on where exactly the funds are and to what exactly they are going into.

So, on one hand we have the development finance and the development IT community, which through our research, at least has showed, has been investing primarily in large network scale deployments in, say, fiber or, like, backbone infrastructure, and then we have, like, companies, like Microsoft, for instance, that's like started ground initiatives that are trying to fund startups which are trying to have sustainable business models to do the same, to fund connectivity as well.

Then, after that, we also have a huge host of Civil Society organizations that have their own grant awards, the FEED alliance awards earlier this morning, ISOC, and FRITA all have beyond the net program which are much smaller in scale and to try to fund connectivity.

But the scale and kinds of projects that reach out to these funders are widely variant, and it really remains to be seen what kind of funding models sustain over the long-term.  If you want to create a sustainable investment in last-mile connectivity, if you want to create something that lasts, what are the ways in which we fund this, and how do they ensure that it lasts?  Those are the questions that we are really interested in asking, and we have a diversity both in region, as well as in expertise to answer those questions.

But, without further ado, I will start by requesting Antonio Garcia which is with the international government bank with wide regional expertise on infrastructure investments, especially in the Latin America and Caribbean region.

Antonio, if you could hear us, could you please provide remarks. 

>> ANTONIO ZABELLOS:  Hello.  Thank you very much for having me and for the opportunity for reference.  And, also for the organization of the panel.

When we're thinking about these problems as related to financing and infrastructure, I would like to stress that there are four major aspects that we need to keep in mind, particularly those are aspects that we have observed in the case of Latin American and the Caribbean countries.

The first one has to do with a social demographic approach.  Most of the time we are talking very much about what is the situation national wide, but the true thing is that we realize that the manage of the problem defers pretty much where we are considering a role verses urban areas.

So, the first thing that we have to keep in mind when we are thinking about financial strategy which are precisely the area that we are intending to cover and what are precisely the type of public services that we are thinking of, and these are important aspect to keep in mind.  For instance, there are many, many countries in Latin America where the penetration rate of 4G and 3G are still below 50% or 30%.  So, whereas the 2G penetration are above 90% in most of the cases.

So, let's say that there will be a natural way for countries to buy means of waiting the Italian first, for instance the mobile infrastructure, to start providing broadband services across the different areas of the Country at a minimum, let's say, cost. 

In any case, there will be a decision on how to bring public and private into that particular grading.

So, the first thing that we have to keep in mind is the demographic approach that I was saying between (Indiscernible) and second how we can take advantage of assisting infrastructure like the 2G and how to upgrade, or even how to make use of electricity power line just to reach out those areas which at this moment in time are not connected, or you know the of the service is not that good.

The second aspect is that we have to come up with particular financial models that makes the business case for telecom operators really work on those particular areas.  So, we have been talking very much about public-private partnerships, but you know, the question that we need to think of is whether this PPP model is different depending on the type of infrastructure we are financing.  Is it the same model of PPP when we are thinking of the cable, or the problem of an optical fiber network, or even data center or even a satellite, because you know all of them in one way or another are going to contribute to the bridge the system gap, but also it could contribute to strengthening the demand and foster innovation.  So, the PPP model probably has to be adjusted to the particularities of the Country, and the particularity of the network that we are trying to finance.

And, for instance, in this particular regard, we are -- the bank at this moment in time is thinking about alternative models, like for instance issuing a digital bonds taking into account the government are seated on a particular public asset, like for instance a universal service funds like, for instance, expectron (Sp)frequency bonds that has not been allocated.  It could be a way for the government to issue digital bonds the same way they are issuing treasury bonds and has a link to a particular project related to digital infrastructure as a key act included in digital agenda.

The third aspect is related to regulatory framework.  For instance, we go to Latin America the Caribbean region, we realize most of the countries are having regulatory framework which dates from late 1990's or early 2000.  So, in most of the cases, the world broadband as we understand today is not captured, and that is why, you know, developing the specific or modern regulatory framework such as infrastructure sharing, such as you know rights of ways could be something important to keep in mind just to facilitate the deployment, and to make that deployment easier.

For instance, another important topic to keep in mind is the issue related to the local deployment, how local authorities sometimes introduce complications in such a deployment.

So, and then the last one, which is not minor thing, is the institution nality.  So, we sometimes realize that the countries are not having a specific institution dealing with the infrastructure and they are relying pretty O the private sector as they keep layers to bring connectivity in those areas which at this moment in time are not connected, or to bring connectivity at a particular quality even in those areas which have little amount of time connected.

There is also at times from that particular aspect, and it is not just that we need to bring in the mainstream of telecommunication from the Country, probably we have to think of alternative players, like offices, for instance, finance, because we will also have a war on this particular matter.

So, let's say that by having actions on those particular aspects, let's say, the social demographic and the operating of the infrastructure, the alternative financial models, they update regulatory framework and they institutionally are going to make the Country be prepared for a better connectivity and moreover, to make use of the connectivity as a trigger for competitiveness, for a digital -- I mean for using the digital across the different sectors of economy or even the social gap.

So, thank you very much.  And, I am hope for questions, I suppose at the end of the session.  Thank you very much again.

>> SHARADA SRINIVASAN:  Thank you so much, Antonio for those remarks.  After we have the fire starter remarks from all of our panelists, we will have an open discussion from different stake hold ter group, like, perspectives.  We intended to do it like a bit of a breakout group format, but given the structure of this room, I don't think the breakout panel format really works out, so we will just have a Q&A session instead with the panelists, all of whom have, like, very different skill sets and very unique and regionally specific perspectives on this matter.

I now move to the first person on my left, Allen Bailochan Tuladhar.  He is the Microsoft regional director in Nepal, and also has a network called Pico soft which deploys TV technology in rural villages in Nepal.  They were an air band grantee last year and the software work has they're doing -- am I audible?  Yeah, some of the work that they are doing is -- okay.  Some of the work that is being done is incredibly fascinating.  So, I will hand over the mic to him. 

>> ALLEN BAILOCHAN TULADHAR:   Thank you.  I think maybe I should step back a bit to talk about why Internet is so important and rural Nepal, where we take it for granted while it is anything a conference like this that Internet is working and that everyone has access to it, but still statistic we all know have the world's population, and in a Country like Nepal where the geography terrain is extremely difficult, impossible to lay fiber across do homes so that they have access to affordable people are still below the poverty line to make it affordable for them, but we kind of ask saying why do they need Internet?  Most of the families are historically I think if you look at Nepal, we've fought World War I for other people's wars, we fought World War II and majority of Naples have always been working for other countries, whether that is providing Secretary to the Queen of England or to the police of Singapore or Bruni, or Indian Army or British Army.  So, we've had this history of having (?) overseas.

Most of the people that is the diaspora working overseas spend about one-third of the money calling back home in an international call.  Had they had the digital skills and the connectivity, their calls could really have dropped.  Not only doing voice calls, they could have been doing video calls and finding out did the children go to school, what was cooked, did the money that I sent home, did it arrive, and whatever.  They're kind of homesick, call ten times a day, and with that being a killer app, I think the connectivity is so much more important.

Along with that brings commerce, along with that brings a whole lot of other related aspects.

A couple of areas that we looked at saying, given the fact that Internet is needed and given the fact that there is a need for even where basic voice on mobile phones are not available, connectivity is a big challenge.

We looked at different technologies and white space technology was something that we wanted to test out, and over this year's monsoon, monsoon we have rains for literally weeks long, and one of the worst monsoons in about 35 years was this year.  I think our biggest problem with the network this year was more on the power, having not seen the sun and using solar power rather than the connectivity point, multi-point with white space technology going through different hills and mountains and trees and other foil ages and providing high speed broadband connectivity to the households.

How do we finance this?  I think the big question is, I think it's a mix between pure capitalism where we look at venture capital, 10X profits, to pure socialism where we say this has to be done for social good and has to be invested upon for the good of, so that would be mainly I think the government looking at the universal service fund to see how do we fund this.

We're kind of in between to see how do we use this social capital to provide the impact that is required.  Might not get the Benefits in terms of the investments.

We were able to attract the development aid finance as well that Sharada was talking about earlier, to get the British government to literally do a test on a new technology like white space to find out if it works, and if it does, can it be scaled up and deployed in other countries.

Microsoft, as a company, was -- we were able to get a support from the air band initiative to deploy the technology, and then the next big thing is how do we scale this up to an extensive level?

White space, I think in general, is still very capital intensive.  It's still not to the extent that mass deployment has not been done across the world and manufacturing is still limited, making the cost of fairly expensive.  Versus other point multi-point of site radio equipment which is literally much more cheaper than white space technology.

I think the big challenge is how do we make this investment sustainable.  The one-time grants are easy to get, but because this is so capital intensive, how do we scale this up so that even with a much smaller network, hundreds of thousands of people in rural areas who never had seen Internet get that you would spell moment for the first time when they use the Internet, whether that is to look at my normal example that I provide is showing what a volcano looks like.  When they see it, they get it in a minute.  When they go into science classes and explain about a volcano, they just don't get it.  Things like audio visual live streaming from the Internet is provided.

In the past week we've also looked at digital video broadcast to use one stream in terms of saving our OpEx, Internet that would have been available for a couple of dollars in the U.S. for us is over at least 15 times more expensive than -- so the back hall Internet is still extremely expensive for us.

So, that kind of adds on to make it sustain able in the long run.  So, making sure that we provide not only accessible, but also high quality, high speed broadband Internet becomes a challenge.

And, then the next challenge that we're looking at is saying, once we put this TV white space and have the back hall Internet on to a school, on to the local government office, the big challenge is how do we make sure that people are able to consume this?

So, last not only the mile, but also the last meter was important.  The last meter being content, the last meter being language, the last meter being accessibility, and the last meter also being digital literacy.

And, in terms of financing, it is not only financing the but also financing the soft skills that is required because the consumption of the values that the Internet brings is also able to be provided.

And I think we are in the midst of saying that financing and especially Country like Nepal has to be with a social mind on to it, so it's got to be more of a social capital rather than purely a venture capital or purely profit oriented capital.

Thank you.  I think I will take the rest in the QA session.

>> SHARADA SRINIVASAN:  Okay.  Thank you so much for your remarks.  That was incredibly rich in terms of the realities and challenges that exist in rural Nepal, and we are very grateful for the real-world perspectives from the grass roots that we are able to bring to the session because what enriches this discussion beyond the policy is the experiences of the people doing the deployments.

With that, I think we will move to the next one from Philippines, Wi-Fi interactive network.  They have a very different business model, and they will talk to us about the challenges and opportunities that they see in financing that. 

>> Thank you, Sharada.  So, the topic of this session, I guess, is overcoming barriers to investment, and we're also a recipient of the Microsoft initiative.  We received a grant on their very first batch.

So, when we talk about investment, we're really talking about a return on investment, if that's correct, right.  So, the idea is we have to follow the money.  So, if an investor talks to us and says okay, if we were to invest in connectivity, a very challenging topic because on the one hand you have a very high cost of providing service.  So, as Allen mentioned, you have the cost of equipment, and at only that you have the cost of training, the cost of installation, not to mention operational cost of paying for bandwidth.  So, that's one side of the equation.

On the other side of the equation, you have the audience or the user base that don't have much pending capacity.  So, you have high cost of providing service to a group of people that really can't afford to pay much for that service.  So, it's really a dilemma.

So, if you're an investor looking at this space, and we've got many, many venture capitalists, the real question for them is, is this a 10X investment opportunity for them, and how well will they recover the investment that they provide if they were to bet on this space.  So, it's a real challenge.

So, in the Philippines, there is no question that the consumers or the users are hungry for Internet connections.  We don't even have to explain what the benefits are.  It is obvious to them, right?  .

So, the question is, if I have very limited capacity, where is that revenue going to come from?  How is this investment going to pay for itself if I'm going to put money into this space?

So, the way we approach this problem and this question is not so much to generate revenue from the users themselves.  In fact, we're actually focused on providing free Wi-Fi to the user base that we're (?).

Now, free Wi-Fi is not free for us.  It costs a lot of money.  So, the way we're tackling this issue is we're developing partnerships specifically with private enterprises, companies that have a stake in selling their products and services that are dependent on Internet connectivity to reach their consumers.

So, for instance, if we can set up our Wi-Fi hot spots in high traffic public areas where a lot of people congregation, then we can offer them free Wi-Fi and offer them a marketplace to avail of services that sponsor that connectivity.  So, if those sponsors can generate business and revenue by providing their basic services to consumers anyway, then it is a win-win for everybody.  So, we've had the opportunity to try at least three business models so far in the three years that I founded this company, and each one was a great idea to begin with, but as soon as you roll out all of this business models, this is where you encounter all of the challenges.

I'll give you an example.  So, one of the very first models that we executed was what we call sponsored Wi-Fi.  We talked to big, giant consumer goods company to pay for the cost of providing Wi-Fi at community stores.  So, these are mom and pop stores.  So, the idea was that if you purchase one of our branded products, for instance you buy a packet of shampoo, you in exchange should receive 30 minutes of free Internet access.  So, conceptually it makes sense, right.  The consumer doesn't have to shell out additional money just to get Internet access because they have to purchase shampoo or soap or whatever product from that store anyways.

The problem we encountered when we actually rolled out this idea was that the stores don't have POS systems to attract and distribute the sale for the free Wi-Fi reward.  So, then we couldn't sustain the corporate sponsors investment in this type of approach because they couldn't attribute the sale of their products to the reward.  So, we moved on to several other business models, one was a paid version and one now is a marketplace version.  I would be happy to discuss this specific models with you.  But, at the end of the day, I think when we're talking about investment in connectivity, it's obvious that, you know, it has to produce a return in investment to the funder and so the question is, is this really a venture capital type of funding activity, or is it development Al in nature given the fact that we're trying to address an audience that is limited spending capacity.

And, as far as regulatory policies or concerned, I think in the Philippines we've been trying to lobby the government to allow us to actually serve the public through government facilities where people are waiting, and we can provide free Wi-Fi, too.  So that is in the works right now.

For TV white space, for instance, we also tried to use that in the Philippines, but the lobby against using it by the broadcast networks was too much for us to overcome.  So, these are the things that we need help on, and I think an awareness of these problems would be very helpful.

Thank you. 

>> Well, thank you very much Philip, and I wanted to explain that Sharada had to leave, because she needs to return to the United States, and I just came from another session, so I'm happy to take over in her stead.  And, happy to acknowledge, now, thank you for your remarks Philip, and acknowledge Paul to give his perspective on what we are very proud as a very regionally diverse panel spanning all the different areas, and now Paul has done Yoman's (Sp) work in Africa helping to connect communities there.


>> Paul:  Thank you.  Very smooth changeover of chair.

My name is Paul Ronie (Sp).  I live and work in Africa.  I love TV white space.  That is my day job.  When I'm not involved in talking like this.

When we look at rolling out last mile connectivity projects, there is a lot of challenges, and not really a technology challenge.  These we can overcome.  It's not really a price of equipment.  This is changing.  And, we're getting down to price points that are much more affordable.

The challenge is convincing the funders of people with the money that you've got a bankable business plan, and it's difficult.  When you're looking at last mile networks, we've got a consumer that doesn't have much to spend.  So, when you build that business model, you got to take OpEx that are in more remote areas that are more expensive to reach.  There is a reason why mobile operators are not operating there.  The models that we operate on are different.  We got different matrices.  If you go to traditional funders, you know, they want the traditional stuff.  You know, how much money are you going make, where you are going to make it from, how much are you going to sell the service for, how much can the people afford the pay, how many people are you going to have, subscribers.

Then we have the complexity of the regulations.  Often the regulations don't support technologies such as TV white space and other new technologies.  So, without that piece of paper, often you just can't stop.

I've been engaged with Microsoft and Facebook and I'm engaged with quite a lot of our partners across the continent of Africa and we work for them.  Part of the service that we do is help them business model.  And, we are coming to the holy grail of finding a model where you can deliver a service as close to free as possible.  The cross subsidies like our colleagues are talking about often are quite important to enable us to achieve that.

You don't necessarily have to charge for the service or you can find ways to cross subsidize that service.  What we're starting to look at in our part of the world is at the rural level is to have hubs, community hubs and the community hub, the core of it is providing connectivity services, but the other services they start to provide are things like financial services.  And, this is where we can start to derive revenue.

So, by offering e money as an agency which then enables center to start facilitating government services, because now we got a fixed point where people can apply for the pass poured, pay for their passports, and those fees and revenue that can flow into the model.

We're also looking at running these community hubs.  They become the post office in the community, so now we've got a fixed presence for people to collect their post, which means they can start engaging in eCommerce, because now we have financial services, some of them go in as Internet.

And, then, of course power.  You know, solar power these centers.

So, often where the rural connectivity might be the only place in the village that actually has electricity, and it becomes a center where people can actually go, communicate, collaborate, share information, it is like what in Africa would have been the tree, you know, the village would have congregated under the tree.  Now we're looking at them to congregate around this technology center which is the hub of the providing digital services into that community.

So, you take that to a traditional finance institution and you know, it's a little bit too complex for them, because you're relying on multiple revenue streams, though we need to start either educating, getting them to understand alternative financing, and there are alternative financing institutions now that do understand this need.

There is a gentleman that many of us might know, Coska (Sp), used to be with the initiative in Kenya, and he is now with an institution which I've written down here, but good networks.  They're one of many that now understand that, you know, there are financial, there are business models that can be understood that can drive the good and are sustainable, but it's understanding the complexities of the problem.

It's often easier to get funding for a big network, so if you are doing a national roll out and you want billions of dollars, it is often easier to raise money for that than it is for a Britt fish network where you're looking at a smaller amount like 100,000 U.S.  Often raising small money, which is what did community networks need, is harder than raising large amounts of money which funders seem to be more comfortable, including if in Namibia for example, at one point we were looking at funding to connect most of the scores and clinics, and we had quite a lot of funding interest.  We didn't get the record approval, so without that piece of paper, you know, that project was temporarily put on hold. 

>> Well, thank you very much, Paul.  It is fascinating, one of the themes that you state is there is a mismatch between large finance in terms of scale.  They often, large financial traditional findings instruments do not know or understand how to deal with projects as small as community level intervention, and there has been a lot of effort to try to tap into those markets, try to make them available, but I would say at this point those are more preliminary and speculative than real at this point.  So, it is a real challenge that we all face.

So, at this point, if I am correct, everyone has had their initial statements, including Antonio from the inner American development bank, so this is the stage where we are trying to draw on the knowledge in the room.  One of the things about this proposal that we actually scored the highest of all the proposals is in the IGF process is because what we suggested is that there is so much additional knowledge, not just represented here, but among the different participants in the room, that we wanted to have an open discussion now about ways to overcome the kinds of challenges that the panelists have identified, and also other challenges you may have identified on your own.

So, at this point I would like to open it up to the floor and get your feedback on these ideas, but I will ask you to identify yourself, and because we do have remote participation, make sure to speak into a microphone, if you would.

Please, in the back. 

>> AUDIENCE:  Does this work? 

>> Yes. 

>> AUDIENCE:  Okay.  I think there is a basic issue I've been working on this for half a century, that with modeling this on services if it is telecom the point of railroad.  And, the problem we have is we need the business model of roads, not the business model of services.  That they should be basic infrastructure.  So, how do you get investment in roads.  People did try to have a profit, you know, center model, that didn't work.  So, the real question is how do we encourage investment in physical infrastructures?  We get communities to buy in, but more important to separate with what we do with the network.  I understand you want to connect a school.  That is useful project using whatever means, but long-term is providing the basic infrastructure for all purposes, and difficult in selling that is probably similar to the problem explaining why you need roads in the early 1900's, but there is a bis amount for roads, but the value goes to the community as a whole and the profit comes to the community, and that is a business model, but we need people to understand that.  We try to sell services.  The simple example I use, we try to sell service like phone calls.  That is an app in here.  It is not a service you buy anymore.  I think that is true for a lot of these services, and any attempt to be able to charge for usage requires preventing connectivity because you didn't put a payroll back.

An example I use is put Serengeti sell law are phones, but each line needed an account.  The accountants couldn't get an account.  They weren't worth that much.  If the county owned the radio structure, so the question is how do we adopt an infrastructure model to understand that is a business model? 

>> So, it's an interesting question.  I mean, are -- is the Internet the new road infrastructure?  I do have one reaction, which was think about the old telephone network, which were typically publicly owned and publicly run once upon a time.  There's been a change, and I do remember that there is -- I did some studies to try to understand where that type of investment works and where it doesn't.  The challenge has been that there is operating expenses in the network and more so than the telephone network.  The telephone network, you can take a phone from the 1920's, attach it to the wall, it would still work.  In this space, we are reinvesting in new technologies, re-configuring them, security patches and the like, and there is an interesting question about whether the same sort of approaches we use in roads will work as effectively in something like the Internet.

>> AUDIENCE:  I can go into a lot of de-Dale, but I'll make it briefly.

The phone model, remember they charge for usage, and it never really worked.  This is why the United States has created the federal communications commission in order to have regulations, because the model as to the railroads of high capital cost low differentiation never really worked.

The Internet actually viable model biceps paw rating the infrastructure from the services.  So, the transition from phones to creating apps is a good example.  So, we don't want to go too much in phone thing, but remember the phone system was very expensive, too, high cost and everything, because the technology did change.  Maintain capacibility in the software.

Again, I go into more detail but want to warn you of the danger of analogies. 

>> Just to also add-on what was mentioned.  What one of the key challenges that last mile operators face is that middle mile.  In Africa we don't have that middle mile.  So, it does need to be part of the core infrastructure, it should be budgeted by government, and you've got the whole Bill once approach.  We're very good at building roads, and now we're starting to become good at building railroads, but we still don't run fiber down the roads and bridges and railways.  It needs to be a for thought, not an afterthought.  But we don't do that yet, and it's got to be part of government planning.  I agree with the middle mile.

>> AUDIENCE:  Just one quick comment.  I often use the example that, you know, Wickmedia where you can bring a disk in.  You can get some of the value, have a server in the village that delivers value.  They argue we do need fiber for that but how do you feed the donkeys you use to transport the disk.  We feed the fiber.  Sorry.  If nobody laughed, I missed on that one. 

>> Yeah.  I'm a bit surprised that the whole discussion is, like, whether we have the Internet or we don't or whether we should pay for it or not.

There is a very good business model that has been proven to work really well, it's drugs.  You get the first one for free, and then you need to pay if you want more.  But in a way I forgot to introduce myself.  I'm Stefan from Qubix.

On Internet there is the one you need to actually be connected, which is mostly social, and then a lot of static content and then one you don't need to update all the time where you can get a solution where static content doesn't cost that much in terms of data and that one is free and people know what they could have if they have the Internet, and then there would be more interest to pay for that kind of content.

We do work with people around Cape Town.  We have a sort of project like this where they have a met network in a township and then you can get your Wikipedia or whatever static content you want for free, and if you want to check your Email or go social, then you pay for it.

I wanted to ask Allen and the gentleman, I'm sorry, I forgot your name from the Philippines.  If you had explored -- Philip from the Philippines.  How could I forget?  Shame on me.

I wanted to know if you had explored such a solution to actually mix a free static content and then pay for more dynamic content. 

>> Actually, we've just deployed.  So, we kind of partnered with the British Army where they have been using similar using in terms of technology the broadcast one-way internet using a satellite small home dish that would get the link down.  So, static content like training materials, like videos as television content where you would not have to literally send URL even up and it would just be getting it streamed down without even have -- we wanted to go as much Cloud as possible without having and go server less as much as possible.  So, lower the power consumption as much as possible.

And, yes, we've been looking at using DVD to stream regular mostly demanded YouTube videos, local television content, and also a lot of training materials and Wikipedia and a few other content newspapers, more static -- well, static in the way that static for a day or so, for a month or so, for movies and things like that that would get streamed one way.

So, that, I think, is worked well, because of our back hall Internet is not being used and we are using digital video streaming to come down with the content over a small home dish antenna and providing it over our network of white space technology and then the access points going on to the Wi-Fi on to the devices giving them as much richer content as possible without having to spend on the back end.

I hope that answers your question. 

>> So, to answer your question directly, no, we haven't looked into drugs yet, but we're tempted (Laughter).

I think one of the business models that are actually so obvious that has worked so far are the business models of Facebook and Google.  Right?  It's free to the -- the content is free to the user.  User doesn't pay, but the thing is, in order for that model to work, you have to generate so much venture funding to keep the party going until at some point you reach a level of scale that you can justify the investment and you can now monetize the traffic that goes through your network.

So, I think if we're talking about committee networks, I think that is the real challenge.  Is if you're talking about smaller packets of Internet access, it's very difficult for advertisers to bite into that and invest money into it, because the scale of reach in terms of their audience is not as big as, say, the reach of a Facebook or Google can generate, right.

So, at the end of the day, it begs the question now is, you know, do you want to keep investing in something to generate scale first and then monetize later, like typical venture capital funding, or are there other business models that we can creatively look at.  And, I think Paul mentioned something about digital services earlier.  And, this is exactly the direction we're taking with our version 3.0 of our business model.

So, the bottom line is we're going to give connectivity for free.  So, like what the gentleman mentioned earlier, we're not going to charge for the cost of infrastructure for people to avail of services.  That's a given.  Okay.  Like roads, for instance.  But the companies that benefit when the road is there have a commercial stake in terms of getting something in return.  So, if we develop those partnerships f we nurture those partnerships so we can give this company some audience to market their products and services, then there is a business model out there.  So, one obvious transaction, for instance, online remittance.  So, in the Philipines it is a $25 billion industry of international funds coming into the Philippines from Filipino workers working overseas, right.  But the domestic market is as big, if not bigger, as well.  So, if we can allow consumers to transfer funds using our Wi-Fi hot spots and earn transactional fees by moving funds from one hot spot to another city or town, then there is a business model there that we can take advantage of.

>> AUDIENCE:  Hello.  This is Edmon Chung from DotAsia.

This is a topic that is definitely near and dear to my heart, and the question is why haven't we solved any of this?

Listening and hearing the challenges is kind of interesting.  One thing that comes to mind is why isn't this a priority yet for Governments as they pave the road, ?  Why isn't it put there?  Is there, for this group or people around here, is it a policy, you know, thing that we should need to push for?  Is this something that needs to be part of, let's say, the SDGs and Governments are racing, you know, chasing down those KPIs.  We got to put that as part of it so that it's measured and therefore when they build new roads that, you know, is that the answer?

And, then, I want to share a couple of, I guess, experience from Hong Kong where we come from.  Of course, Hong Kong is highly connected and stuff, but there are also rural areas and challenges.

What is interesting is, first of all, if there is basic connectivity, something maybe the question is not necessarily building alternative networks or alternative infrastructure to serve that, but again going back to regulations or regulator framework to, you know, require the incumbent or require the existing network to open up.  Maybe it's a cost issue.  The cost issue is because they're charging high prices for individuals there.  You know, what happened for example in Hong Kong was in early days it was kind of forced open in some sense that you have to offer this network to interests net service providers at a, you know, particular rate which is low.  That is first phase of it.  And, that kind of creates a better business without requirement of intensive cap ex, right, for smaller providers to specifically address certain areas of geographically or community wise.

And, a second phase, what happened in Hong Kong, which I think is also interesting, is an initiative that started just a few years ago looked at the under privilege living within the urban area and by looking at that and doing a bunch of studies, we realize that it's the billing services and customer support that is costing the most for these tell co-s.  The ISPs are actually by taking that away from them, it is possible to offer to under privileged subscribers at a much lower rate.  And, that creates -- both of which is kind of like if you know what MVNO means, it's the mobile virtual network operator model.  Both of which kind of has that concept in it, but this might be a way to think about in is basic connectivity, how do we better utilize that connectivity, and back to the middle model question is, why isn't this already a priority and, you know, what can we do? 

>> So, I'll take that question.  On the first part, I completely agree, because Governments like Singapore, Australia, and New Zealand, Korea, government really did initial investment in the first mile middle and even the last mile so that when private enterprise came to the party, the heavy lifting was already done.  So, yes, to a big extent government has to be involved.

In a Country like the Philippines, for instance, they've just had so many other priorities, like physical infrastructure priorities, like roads, bridges, and whatnot, but over the last ten years, they've realized that ICT is actually a game changer, so they've recently formed the department of ICT, which is its own Minister, its own Secretary to run things.  But, as far as why are they not investing, I think the bottom line is you're talking about billions and billions of U.S. dollars that has to go into this investment in order for us to reach that market that is undeserved or un served, and that is where government has to come in, because public transportation is an investment that government makes initially and do the heavy lifting.

So, I think I completely agree that, you know, government has to participate in this type of investment. 

>> I have one question for all the panelists. 

>> Moderator:  To add a couple of thoughts to what you're saying.

The government is actually deliberately creating monopolies in middle mile in undersea cable landing stations.  We've literalized lots of different parts of the market but sometimes they create monopolies and enforce them.  That is a problem.  I think certainly international policy can be helpful of the

Opening existing -- there is an interesting question about opening networks.  Opening existing networks is something there is a long history of.  If it is a new network the question is can that work, there is a bunch of experiments going on now with new infrastructure with a wholesale only model.  It is not clear how those are going to do because of the risk you put in.

But I wanted to go back to the last thing you said.  If you want to know why it is not a priority, it's the lack of a tie to the SDGs.  We have a blind spot.  Connective tight is valuable to us in our own sake.  It is the nature of the community.  What we're discovering is health ministers, they want to know how it goes to their PKIs.  And, if you are going to build a collision of support in the government, you're going to have to do that with the kind of combined services, which we traditionally ignore, because we think of the separation of the service and network, and to maybe analog is what is going on with the small cell deployment to 5G.  There is not enough consumer bandwidth there, so looking at combining with other verticals to find additional combinations of support.  And, that is a new model that is a hybrid type model that is not just focused on connectivity, which I think has been under appreciated, but is maybe helpful in the ways that Paul and Philip are talking about to unlock the potential of the investment.

I'm sorry. 

>> So, one question, short question for all the panelists.  How do you make the decision on the cost of the Internet service for consumers, when you're targeting the last mile connectivity.  So, I was wondering what kind of data is available out there for to you make the decision, or how do you make the decision, and how much of it is based on the local community, like the knowledge about the local communities and how much is intuition?

Thank you. 

>> Actually, for us it's basically the benchmark has been what are the city folks paying.  The rural folks don't want to pay anything more than that.  The reality is it costs much more higher to deploy the network in the rural area than in the city it gets shared per capita across a much larger density of population, where as in the rural areas that is not the case.

But the benchmark always has been what is the cost of interests net in the city, and I think that puts a ceiling to us in terms of what can get charged and then we just go with that. 

>> Okay.  From my perspective, we've got to look at at affordability and it is what people can afford.  When you get to the rural areas that affordability goes down very low.  People have a choice, do I buy bread, or milk, or Internet.  They have very little disposable income.

The broadband commission take the A4I affordability, which is 1 gigabyte for 2% of GNA, and we've got countries in of a Rick that you that have met that, like Nigeria, but 40% of the population fall below that because of the income disparity.  So, it doesn't work.

My personal view is we need to get to a point where we provide a basic service of Internet for free, and I think without that -- and that will create the demand.  And, we'll get to what the gentleman says there.  Once we get the demand, we start to realize it enhances their life and income and then they will pay for more.

So, yeah, that's basically my view.  Thank you. 

>> So, in our case, since we've actually rolled out different models, paid version, free version.  So, to answer the question is I think as far as the audience we're addressing, it's definitely zero cost to them.  It's free.  That's how I look at it.  So, we've tried the paid version.  People just weren't willing to pay consistently for us to be able to afford covering our costs, right.  So, the revenue has to come from elsewhere, and that's why we're working with corporate partners to generate business for them using our connectivity to bring them business, but also give the public access to the Internet at the same time. 

>> I'll go back to repeat.  So, please.

>> AUDIENCE:  Okay.  Just a quick thing.  There is a process different for each neighborhood, but you common have businesses paying for it.  There is precedent in enter city roads.  Before the automobile made people appreciate roads, the businesses in the community would invest with not looking for profit in the roads itself, because it benefited them in commerce.  The idea of having business demonstrate the value, it is not that they're going to pay you for the routers, they're basically building common infrastructure and they benefit.  So, I think that is one way of driving the value.  But after that I think we have to get to the point where people see the value, and I think that's anyway we do that. 

>> Am I given the commitment, I am delighted to give them a chance to speak.  The question is:  The middle mile challenge is a real one.  Here in Nigeria as well.  One consideration is can we start to apply the heavily unused universal service funds in more creative ways to get that middle mile connectivity to community networks and other innovative low-cost networks?

So, is there -- I would love to get the thoughts of the people who are doing this on the ground.  Should we be encouraging universal service funding to be applied not just to last mile connectivity, but to middle mile connectivity?

Please, Paul. 

>> Paul:  I think the answer to that is yes.  Without the middle model, we don't have last mile at the end of the day. 

>> We are at time, so I will --

>> AUDIENCE:  I am from Argentina.  A few months ago, we bring a new license for community networks for free.  We are starting to just that, to give them money from the service fund to create their infrastructure, to get to only with cities below 5,000 people and with no ESP bring in service there.

So, we think it is a good method to get there and connect the small towns. 

>> Thank you for that.  An inspirational model to understand where to put those limited resources to the most effect.  And, I think that finding business models that are creative scaleable and sustainable so that it's not ongoing support, but hopefully one-time investments that get deployments jump started I think is exactly the right approach.

Well, at this point we've reached the end of our appointed hour.  I wanted to thank all of you for coming, because this is the knowledge -- the goal of this was to draw the knowledge in the room.  We've succeeded in doing that.

I wanted to thank the panelists for creating such a great robust discussion, and Antonio from Latin America, from Nepal, Philip from Southeast Asia and from Africa I think we're very well represented here across the globe, and I'm particularly grateful to our colleagues from the Philippines, Nepal, for accepting our invitation to come here.  They actually traveled just to participate in this panel, as the primary he thing, and they've traveled a great deal to participate in the IGF.  And, we are committed in our program to give a platform to the people that are building the networks.  So, not just the so-called experts but to find out from the people directly what the real challenges are, and I wanted to personally thank you for the terrific work all three of you are doing in actually making all the things that policy makers talk about in general terms a reality.

And, with that, please join me in thanking our panelists.

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