Rural broadband technical and market study project

Client: a major project funder 

Problem statement

Broadband is widely recognised as an economic enabler and access to broadband services is increasingly becoming seen as a basic right in developing and developed nations. With the publishing of the South Africa Connect broadband policy in December 2013, a detailed look into how the targets in the policy can be realised was required. The IDC recognises that South Africa has a mix of served and underserved areas (from a broadband perspective) and that given the sheer size of South Africa and paucity of infrastructure, rural broadband requires special applications and attention. To this end, the IDC commissioned a study to investigate the technical and market aspects of rural broadband. The aim was to determine whether or not sustainable rural broadband businesses can be created.

The solution approach

The Technical Analysis involved a ‘deep dive’ into low-cost access technologies, both current and emerging. BMI-T assessed the available and emerging wireless access technologies and their possible use in rural broadband applications. This was done through a combination of primary and secondary research. A detailed investigation into the definitions of rural and urban was undertaken, and a GIS mapping of rural/urban data was produced. The different backhaul mechanisms available to rural operators were studied. The project looked at the approaches adopted by the WISPs and the most successful were identified. The relevant regulations were determined and analysed.

The Market Study provides an understanding of the telecommunications ecosystem in South Africa. GIS data and statistics were analysed in an attempt to determine where the rural areas in South Africa really are, and how they are served by the incumbent telecommunications operators. Both sides of the demand and supply dimensions were considered, including an identification of the drivers and inhibitors of broadband. Broadband products available to rural communities were looked at in terms of availability and price. A financial model was developed to show the dynamics of establishing a WISP or rural broadband model. The model provides a basic set of financial results. A simple cash flow model is used to show the impact of the CAPEX and OPEX expenses, contrasted with revenues.

Outcomes achieved

Through this project, the client was well informed on the difficulties, risks and rewards of rural broadband operations. The financial model demonstrated that a workable business case is possible but only with careful CAPEX spending, seed capital to kick-start the business and a sufficient captive customer base.