We must connect the missing middle

Increased broadband connectivity has a meaningful and direct impact on the economic prospects of individuals, communities and countries at large. A World Bank study estimated that a 10% increase in broadband penetration in low and middle-income countries can result in a 1,38% increase in economic growth. 

At home, Statistics SA’s General Household Survey released in December last year found that 8,3% of households in South Africa had access to the internet via copper or fibre. This is not to say that the rest of the country is not interested in connecting – the same survey found that almost two thirds of South Africans access the internet via a mobile connection.

Why, then, is there an obsession with serving fibre to the top-end of the market which has buying power but which represents less than a tenth of South African households? The answer is found in economics, but it’s short sighted because there’s a way around this if we change how we engage communities and work with, not against, local government.

For as long as the status quo is maintained, the pie will remain the same size and the slices will become smaller for players overselling the same plots of land. No amount of market dominance or arrogance will change that. On the other hand, baking a larger pie requires bravery, a healthy appetite for risk and the patience to forge strong public-private partnerships.

Sitting just below the premium real estate, or higher income areas, is what we at Zoom Fibre call the missing middle. Consider the well-documented missing middle in our tertiary education system: there’s a large cohort that is not wealthy enough to pay for its own education but not poor enough to benefit from government assistance. The household missing middle has a huge appetite to have fast, stable internet connectivity but doesn’t flash the buying power of higher-income areas and so it has had to make do with less. However, underestimate this segment at your own peril.

An encounter with a young man drove this point home, and gave Zoom Fibre a shot in the arm of our belief that the next-best everything – scientists, engineers, entrepreneurs – will come from the missing middle and poorer communities who are desperate to be connected with the world and to be given the opportunity to spread their wings like their wealthier counterparts in more upmarket suburbs.

On one particular day in Northdale, Pietermaritzburg, while engaging the community, a young man, no older than 22 years old, walked into our tent and eagerly asked how soon we could get a fibre line past his house. He then wanted to know what the fastest service would be, to which I answered: one-gigabit-per-second. At this point I was intrigued and so asked what he needed the line for. He answered that he needed it for a job at Amazon.

Here we were, standing in a so-called middle-to-lower income suburb, and a young man from a previously disadvantaged background, belonging to a community others see as risky in terms of buying power, was working for one of the biggest companies in the world. What enabled this? Access to connectivity. The potential is extraordinary, and access for less well-heeled folk to the same web and same information as the privileged is a great leveller.

A business must be viable and profitable, and so how does one serve the missing middle? An FNO takes on most of the risk – we put down the capital. An FNO’s customers are effectively internet service providers (ISPs) who sell services to households on our infrastructure. For most, this is a numbers game: the more homes to sell to, the more interesting the conversation. Certainly from our experience, one must take a different approach and engage with ISPs beforehand and be transparent about which areas are in the pipeline. It’s important to partner with ISPs that share the same passion about enabling real digital inclusion. When approaching higher-risk areas there simply must be engagement between FNOs and the community to understand its needs, which is a little different from the classic FNO practice of providing infrastructure and waiting for ISPs and their customers to come flocking. There is no space for arrogance in telling a community what it needs. One cannot be tone deaf when attempting to expand the pie.

Another way that we will change South Africa’s low broadband access is through public-private partnerships. Whenever one deals with infrastructure there must be engagement at municipal level and this can become frustrating when the skills at municipal level are not on par with the private sector, or when tardiness, disinterest or greed hamper and slow down any meaningful progress.

To be blunt, embarking on a large fibre project is not about securing a retirement fund, it’s about enabling connectivity which changes lives for the better. Delaying and hindering progress is short-sighted because it slows down this enablement, it slows down job creation and it perpetuates the status quo.The good news is that there are public sector visionaries that understand the bigger picture and understand how the private sector can – and should – provide value. For example, in June the Saldanha Bay Municipality (SBM) will announce its SBM Smart City project, where it partnered with Zoom Fibre and Amoeba TSC.

There is a degree of cynicism in South Africa around the concept of smart cities, but that’s because talk is cheap. The proof of the pudding is in the eating, as they say. In this case the project covers 2000km2 of land and fibre has been deployed to every one of the 44,000 ratepayers in the municipality. That alone will mean that everyone will have access to the internet, whether they are high, medium or low earners.

But that’s just the beginning, and this is where providing access to connectivity becomes exciting and where potential is limited only by imagination. Once the fibre is down one can start overlaying various platforms and smart technologies aimed at real, agile and speedy service delivery.The benefit in the next 5 to 10 years will likely be profound. The entire Saldanha Bay Municipality will have access to connectivity, every street corner will have a security camera and every citizen will have access to fast, reliable internet and a means to engage directly with their municipality. This speaks to another observation by the World Economic Forum’s report on how better connectivity can improve Africa’s economies: it allows for more direct interaction between citizens and governments.

There’s no good reason this cannot be replicated throughout the country but just like endeavouring to provide access to connectivity for the missing middle, there’s no time left to talk. We must be bold and proudly disrupt the status quo. The return on investment may take a tad longer, but the reward of real digital inclusion will be life-changing for millions.