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Mobile and broadband penetration – The story of Botoku

BY: Enoch Darfah Frimpong

Botoku is a small village in one of the remotest areas of the Volta Region of Ghana. It has a small population of about 5,000 people. The mainstay of the people is subsistence farming, an occupation which makes it inpossible for anyone to predict their income level.

Botoku has a very youthful and energetic population but lacks industries and other job avenues to utilise the strength of the people who are yearning for work.

According to the people of Botoku, many of their citizens have managed to migrate to the city centers, particularly Accra while some others have succeeded in their quest to travel abroad for greener pastures.

When these fortunate citizens return to the village to visit relatives, they bring with them mobile phones and others carry laptop computers.

At school, some of the children have been exposed to computers in books but not the physically computers.  The lack of ICT infrastructure in that part of the country for many years is as a result of the reluctance on the part of the telcos to invest in those areas.

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They claim that people living in areas such as Botoku have low income and, therefore, they (telecos) may not be in the position to reap faster returns on their investments.

The story of Botoku is  the same in many other parts of the country and this is a contributory factor to the low broadband penetration in the country.

But in its quest to ensure that the entire country is connected with broadband services, the government, through the Ghana Investments Fund for Electronic Communication (GIFEC) has identified deprived areas such as Botoku to build communication infrastructure to ensure that the inhabitants of that village and others are not deprived.

A couple of months ago when the facility was inaugurated, the people of Botoku proved  wrong  to the telecom companies  as more than half of the population got hooked to the network operator, tiGO, which assisted the government and GIFEC to build that infrastructure.

The same day as the inauguration was done, nine other deprived villages were also went live.

Those that  the Graphic Business interviewed, expressed delight at the development and indicated that, from now, “we can also speak with our children, brothers and sisters outside the village.

A class six pupil who only mentioned her name as Joyce also told a couple of jounalists  that she and her friends can now use the Internet they have so much heard about.

Today, some few people are beginning to set up structures to operate Internet cafes and business centres.

According the 2011 report of the International Communications Union (ITU) the broadband penetration in Ghana is 23 per cent but the reality on the ground points to about a paltry 10 per cent penetration.

However, the potential is there and the telcos should instead see light at the end of the tunnel and increase broadband infrastructure in those areas by coming up with packages that will encourage people to use the service at affordable rates.

The rates can be increased later when the people are financially benefitting by using broadband services.

INDEPENDENT THOUGHT

According to Mr Magnus Rehle from Greenwich Consulting "My experience is that operators in general and also in Ghana have a lot to gain when Mobile broadband becomes a mass market service”.

He told the Graphic Business that “At below 10 per cent penetration you attract a lot of early adopters who use a lot of data. But as the number of user’s increases you can spread the cost between more users and the percentage of heavy users is going down".

He further argued that "Flat rate and lower prices will kick off the market and make Internet available to more people in the country which is good for the whole economy”.

Mr Rehle said "We see a tight link between economic growth and wealth and penetration of mobile broadband, and we see example from many other markets that its really good for the operators as well".

He said cheaper smartphones will boost the uptake the coming year. With 90 per cent penetration on mobile phones but only six per cent on Internet the potential when you can buy a smartphone for US$20-40 and bringing Internet to everyone is good for Ghana and good for the mobile operators"

But there are areas like Botoku where electricity is a challenge and that is where he said that "There is the need for solar powered smartphones. People in Africa and India have a huge challenge charging their phones since mobile penetration are higher than electricity.” To him, the mobile operators are not seeing a potential is who they see to be poor and unprofitable.

THE WAY FORWARD

The argument by Mr Rehle and the realities are confirmed in a book titled “Fortune At The Bottom Of The Pyramid” which has emerged as a dominant concept in business, propelled by C.K Prahalad’s (2005).

The concept by the author who draws the attention of the world on how the multinational companies can focus their attention on the poor to increase their profitability has attracted international recognition because it has the potential to impact the world’s billions of poor people—as well as the managerial practices of multinational corporations.

Prahalad and Stuart Hart argued in 2002 that multinational corporations (MNCs) have only targeted customers at the upper end of the economic pyramid and have ignored BOP customers, assuming them to be inaccessible and unprofitable.

Prahalad and Hart argued further that MNCs should view BOP markets as an unexploited opportunity and be proactive in fulfilling the needs and wants of low-income consumers.

According to them, the MNCs must tap the vast markets at the BOP by specially designing and developing quality products and services, or they must select some to alter and make available at lower cost.

Serving BOP customers is a profitable opportunity for corporations. It is also a social imperative, given that two-thirds of the human population (about four billion people) are at the bottom of the economic pyramid.

By addressing the BOP, they say, MNCs can curtail poverty and improve the living conditions of the world’s poorest.

To conclude, then, Prahalad’s work on the fortune at the bottom of the pyramid has become a dominant idea for discussion among practicing managers, academicians and policy makers.

He argues that MNCs can do profitable business with the four billion customers at the bottom of the economic pyramid and that doing so will help lift the poor out of poverty, an ascertion which will soon manifest in Botoku and other parts of the country only if the mobile operators will listen and act.

His perspective is promising and defies many conventional assumptions about business. He makes a key contribution by drawing the attention of large corporations to the often ignored and forgotten BOP population.

If the mobile penetration now stands at about 98 per cent, it makes it imperative for the players in the industry to work to ensure that broadband also increases to about half, that of mobile.

Apart from making profits, the telecom companies are also eager to help with the accelerated growth of the countries in which they operate because of the rippling effect of that on their business.

It is also worthy of note that, every 10 per cent increase in ICT infrastructure brings about additional percentage in Gross Domestic Product

WORD OF CAUTION

However, considering the dangers and risks involved, all stakeholders should proceed carefully, to avoid adding further woes to already marginalized and vulnerable BOP customers.

Managers working in MNCs also need to be circumspect in their BOP initiatives, to minimise possible complications and failures. Instead of simply being driven by a proposition that has attracted wide attention or has an emotional appeal, they should craft their BOP strategies carefully, keeping in mind promises as well as threats on the way.

With this, just as in any business decision using Botoku as a case study, the talk can start about not just the fortune at the bottom but also the fortune for the bottom of the pyramid. GB

Story by Charles Benoni Okine