Serving the Next Billion People
There are 3.4 billion people without access to the internet. But the digital infrastructure approach to delivering connectivity in these new markets will need to be quite different from the hyperscale approach that has worked in developed markets.
This is the third in a series of five blog posts reflecting the top-of-mind issues discussed during the most recent Infrastructure Masons Advisory Council meeting.
The majority of the world’s population still lacks access to the internet, with Asia and Africa having the lowest rates of access. “Large gaps in connectivity persist, mainly due to the lack of infrastructure, affordability, lack of skills or lack of relevant content,” according to a United Nations report on the state of broadband.
But along with those challenges come great opportunities. There are strong social arguments for bringing more people in emerging countries online – and equally compelling economic ones.
One example: Digital impact on Southeast Asia
Global giants like China and India often dominate conversations about emerging markets. But the greater Southeast Asian region is host to the world’s fastest growing internet market, with nearly 3.8 million new users online each month. This digital wave – led by a younger tech savvy population – is disrupting longstanding industries.
For example, e-commerce fills the gap in rural areas where consumers lack access to physical stores. Goods and services are reaching new markets as digital options expand. And at 12% growth, digital wallets and online banking are “leapfrogging” the use of credit cards – another innovation for individuals and disruption for industries entrenched in more developed areas. In general, access to services and information via the internet is changing the quality of life for consumers and presenting opportunities for new businesses.
The big picture: Internet World Stats
There are 7.5 billion people in the world and 4.1 billion are connected to the internet. Yet internet connectivity in developing markets is growing rapidly. Between 2000 and 2018, internet penetration grew the fastest in Africa (9941%), followed by the Middle East (4893%), and Latin America/Caribbean (2318%).
“Between 2000 & 2018, internet penetration grew 9941% in Africa, 4893% in the Middle East & 2318% in Latin America.” – Click to tweet
For internet providers and other organizations that are part of the digital infrastructure ecosystem, moving into these new markets requires a whole new way of thinking. The success seen in the U.S. and Europe will not be easily replicated – certainly not with the same approach.
“As I travel the world I hear about ‘the next billion people.’ These are people who aren’t in urban centers and maybe don’t even have water. They certainly don’t have electricity,” said one Advisory Council member, a partner. So the digital infrastructure approach in these new markets will need to be quite different from the hyperscale approach that has worked in developed markets.
“The digital infrastructure approach in new markets will need to be quite different from the hyperscale approach in developed markets.” – Click to tweet
“You can’t take the model that works in North America or Europe,” one end user member pointed out. “We’re going to have to fundamentally rethink things when we’re talking about the next billion users.”
Unique characteristics, multiple challenges
According to the World Economic Forum, each developing internet market has its own unique characteristics, but there are common challenges not seen in the developed world. Those challenges include:
- Severe digital divides between wealthier urban centers and poorer rural districts
- Less developed fixed infrastructure, necessitating greater access through mobile networks
- Low ARPUs (average revenue per user) which discourages investment by mobile operators
- Mobile broadband uptake that depends on handset costs falling to affordable levels
- The need for local language digital services
The challenges are big, but emerging markets offer providers the opportunity to adopt new – and in many ways, more versatile – technologies without having to support legacy digital infrastructures.
“The challenges are big, but emerging markets offer providers the opportunity to adopt new – and in many ways, more versatile – technologies.”– Click to tweet
Leapfrogging physical infrastructure
The lack of existing digital infrastructure in emerging markets gives providers a sort of clean slate. It allows them to implement the technologies that suit specific markets’ current situations and projected requirements, without the burden of legacy infrastructure.
“It’s much like 20 years ago when I traveled around Europe and saw youth just adopting cellphones; they weren’t putting in landlines,” explained one partner member. “The next billion people are similarly going to leapfrog physical infrastructure as we know it today. They’re not putting in the High Aswan Dam. It’s a different ecosystem so it requires a different kind of infrastructure. It’s not going to be campuses of six 30MW buildings.”
“The lack of existing digital infrastructure in emerging markets gives providers a sort of clean slate.” – Click to tweet
There are opportunities for digital infrastructure providers to engage the public sector to deliver infrastructure and services, according to the World Economic Forum. Those opportunities include bridging the digital divide through innovative funding and market access models and working with local ecosystems to solve local and regional needs for governments, businesses, and consumers.
Exactly what digital infrastructure will look like in emerging markets remains to be seen. But one thing is certain, and that is its power to transform the lives of individuals and communities.
Stay tuned for the fourth installment in our 2018 top-of-mind series and hear from the Advisory Council on managing unpredictability without breaking the bank.
Previous posts in the 2018 top-of-mind series: