When internet comes to our doorsteps, who wins and who loses?

29 Apr 2019

BY TLOTLO LEMMENYANE

Zimbabwean billionaire Strive Masiyiwa’s first name means “make great efforts to achieve or obtain something”. And he is to the manner born.

The telecommunications magnate first came to Botswana in 1998 as a broke 37 year old ball of fire. His pair of shoes had seen better days, with the soles almost departing from the uppers.

The down at heel tricenarian soon distinguished himself as something of a corporate giant slayer.Masiyiwa who is the Mas in Mascom Wireless led a team of Botswana small time investors into a partnership with Portugal Telecom, pulling off a David and Goilathesque upset that set billionaire competitors like MTN tumbling. Since then, he has not only been mixing with, but beating the top players in the industry.

It is no wonder that when Masiyiwa strives towards a goal, everyone sits up and takes notice.

The corporate giant slayer is still on the prowl and has now set his eyes on connecting ordinary Batswana folk to the internet directly from source into their homes. This will be a great leap forward for Botswana, however there is a catch.

There is likely to be blood on the floor as he adds one or two telecommunications giants’ scalps to his collection.

Masiyiwa was in Botswana on Tuesday last week and had the august audience of President Mokgweetsi Masisi, and scores of young Batswana who are still trying to find their bearing amid the future shock.

Dubbed the Youth Entrepreneurship Town hall, Masiyiwa and the President carried a ‘sweet note’ to young people, most of whom find themselves grappling with the bigger question of whether they can make anything out of their lives. With thousands of Batswana youths still trying to claw their way out of the unemployment abyss by starting businesses owing to having no other option for work – called necessity entrepreneurship – Masiyiwa’s rags to riches story presented fitting motivation.

With President Masisi standing next to him, this emboldened and to an extent validated the message he delivered.

It is at that particular venerable gathering that Masiyiwa pronounced a commitment to usher homes with internet connection directly from source. This will be a major game changer in the country’s internet industry tossing up both winners and losers.

The winners:

Batswana Folk:

Internet directly from source will mean goodbye to the buffering problems and hello to the best, fast and uninterrupted internet experience. Perhaps most importantly the cost of using internet will drop significantly.

Presently internet is inaccessible to most Batswana, the biggest deterrent being the cost of its usage. Internet directly from source also promises a kind of world where people will easily and readily feed on information, likely to help them shape and make better decisions about their lives, because that simply is the power of information. The weight of this victory falls largely on the ordinary people. One might ask, if ordinary folks are the biggest winners, then why should it matter who loses?

Job creation:

“I said to President, President if you want to create jobs today for three to five thousand young people, let’s put fibre in every home in Francistown and Gaborone.” These are Masiyiwa’s words. He is proposing that he can train young people on how to install fibre and in that way putting fibre in homes will create a need for their service. “The way you train electricians, you train fibre installers. They don’t have to work for Liquid or anybody. If I train you to be a fibre installer and that’s the way you make money, you’ll go and knock on doors and ask, please can I put fibre in your house.” Masiyiwa said that they’re in negotiations with the government of Egypt on their intention to train 30 000 fibre installers. Bringing fibre into homes will also shepherd the need for installers, which from that regard will create jobs. 

These are without doubt two big wins which the country is in dire need of. No President can say no to such offers.

The losers?

That said, this now brings into discussion the question of who might lose. To arrive at the crust of this, it is important to know who Strive Masiyiwa is. He first came to Botswana two decades ago as a young chap who stood against the Goliaths of the telecommunication industry and bid for a license, to which he won. That is how Mascom came into life. Fast forward to over 20 years later, he has returned to finish what he started. Today Masiyiwa is a billionaire at $1.9 billion net worth as at 2019. He is ranked at 916 on the 2019 world billionaire list and number 8 on Africa’s 2019 billionaire list. Masiyiwa is a significant shareholder, just over 50 percent, into Liquid Telecom, a private company which to date has wide stretch of fibre. “Liquid Telecom has over 70 000 kilometers of fibre. In one week across Africa we built more fibre than Botswana Power Corporation has. We do roughly 100 kilometers a day,” he said on Tuesday to the media. If Masiyiwa’s company does 100 kilometers of fibre in a day, imagine what he can achieve in Botswana in just a week. 

Here is where Botswana Fibre Networks (BoFiNet) comes in. Who is BoFiNet? BoFiNet is a wholesale provider of national and international telecommunication infrastructure. It was established among other things but primarily to fulfill the goal of “access to all” which simply means that every Motswana is to have internet connectivity. This why BoFiNet exists. What made this mission possible is that Government pulled in a sturdy financial muscle to acquire stakes in submarine fibre cables, which having done that gave BoFiNet a great footing into making internet cheap and smooth for Batswana. Today largely speaking internet is not cheap nor is it smooth, and worse it is to a great extent inaccessible to Botswana. This is five years since BoFiNet began its mission of deploying fibre infrastructure closer to people. Why is internet not cheap today?

If within the context of Goliath Liquid Telecom does roughly 100 kilometers a day, one can begin to imagine that it can really put fibre straight into homes in far less time than BoFinet. One could simply ask, given that BoFiNet already has the backbone infrastructure, what has specifically hindered it to deploy the infrastructure to homes?

The answer BoFinet gave Sunday Standard is that since 2014 it started deploying fibre infrastructure targeting Health facilities (Government and private), Educational facilities (Government and private), Government office and Industrial, commercial and civil properties in Gaborone, Francistown, Tsabong, Lobatse, Maun, Kasane/Kazungula, Mogoditshane, Serowe, Selibe Phikwe, Palapye and Bobonong.

This is a phased development approach, and funds permitting, the residential areas in the cities, towns and major villages will be adequately covered through FTTx in the next four (4) years. This is a high capital intensive undertaking, and each year we make efforts to expand our infrastructure. The costs relate to both fibre cable infrastructure and the technology that uses the fibre to deliver broadband to end users. It has to be noted that in the past years, with the funds that were available, the main focus was to build the backbone fibre infrastructure that connects major towns, villages and cities hence the reasons for not aggressively deploying Fibre to the homes. So funding has been an issue.” To that end it is worth noting that funding is not as much an issue to Liquid Telecom as it is to BoFiNet. This means that what BoFinet has snail paced to achieve, Liquid Telecom can surely overtake it. According to Forbes after a recently concluded deal between CDC Group, a British development finance institution and Liquid Telecom, the company is now valued at $2.25 billion. Forbes further states that Liquid Telecom operates fibre-optic networks in 20 African countries and has fibre infrastructure from Cape Town to Cairo.

Masiyiwa said Liquid Telecom is prepared to put fibre into homes without the capacity of the existing fibre infrastructure under BoFiNet. How does this render BoFiNet’s goal of access to all if Liquid Telecom will do more than what BoFiNet can? 

“For us whether or not we come into Botswana, whether we utilize their capacity (BoFiNet’s infrastructure), if they don’t want us to use it, we don’t mind,” said Masiyiwa.

And in response to this BoFiNet says, “operators pursue different strategies and it is not uncommon for an operator to invest and build their own infrastructure. BOFINET continues to work closely with the Government and other key stakeholders to build requisite infrastructure that will support the Botswana economy for many years to come.”

Coming back to the question of who will lose. BoFiNet is a wholesale provider of telecommunication infrastructure and by that one of its customers are the Internet Service Providers (ISPs). ISPs buy from BoFiNet and then sell to end users , the people. Most ISPs use radio infrastructure to provide internet largely because it is cheaper in terms of cost compared to fibre. Fibre infrastructure is expensive regarding set up cost but cheaper in the long run. In a scenario where fibre is put into every home, this may render ISPs using radio infrastructure out of business. With ISPs being customers to BoFiNet this may cause a dent in its revenue generation if ISPs close shop. It may not be too wild to posit that perhaps the slow deployment of fibre into homes by BoFiNet could also be attributed to that if ISPs go out of business, it also means BoFiNet loses significant revenue. From that perspective ISPs could end up being the losers. In another scenario where Liquid Telecom has more fibre than BoFiNet, this could lead to BoFiNet becoming Liquid Telecom’s customer in using its capacity to provide internet.

The gist of Liquid Telecom putting fibre into homes could be both a win and lose. As the scenarios presented it would be remiss to overlook the question of who stands to lose.