BoP Spending
It was a fascinating discussion. I'm a strong supporter of sustainability (otherwise, why bother?) and Al Hammond gives a passionate and convincing argument for the central role of business in creating sustainable solutions. Talking with him beforehand, he mentioned (paraphrasing heavily) comparing the measurable benefits of the past five decades of foreign aid versus the last decade of private sector mobile phone rollouts -- the long-term benefits greatly favor the mobile phones.
I can only imagine that once mBanking really gets rolling, all doubt will be erased that the cell phone has helped the Next Four Billion more than 2.3 trillion dollars in aid. My mind quickly out-paces itself when I begin to ponder mBanking benefits for everyone from rural artisania workers able to take and receive payments for commissioned artwork to p2p payment systems to direct-to-market agricultural benefits...
Now, I have a few outstanding doubts about some parts of these two plans - some scalability and malicious-user problems with the Vietnam model, and some privacy and franchise-enforcement questions with the healthcare idea. Now, I have fewer doubts on both of these concepts, combined, than, say, the OLPC Project (though I strongly believe that a base-of-the-pyramid approach to the OLPC could work well). The huge difference between a BoP, market-driven approach and traditional development is that investors bear the brunt of failed projects, a pleasant change from the recipient country being in deeper debt regardless of the outcomes of debt-financed aid projects. I think traditional development will forever have a role in humanitarian and post-conflict aid, but in infrastructure and service creation, the BoP, private-sector approach will prove long-term much stronger than pure-play foreign aid programs, for the simple reason that it applies reasonable risk management to development projects. What a concept!
Without further ado, my full meeting notes after the jump...
The usual apologies for typoes and terseness applies; I was taking notes on my OLPC XO, which though is a technological marvel, is meant for smaller, less gentler hands.
Low-cost Rural Connectivity Model: Vietnam pilot
NextBillion blog post on rural connectivity , NextBillion on mBanking
- Approach to ict: think about scale; therefore focus on mobile companies, only a market driven approaches will scale
- Pilot in three rural communes in Vietnam using wifi and voip to extend network to rural area; pilot then invite mobile companies backed by intel
- wifi backhaul, but wimax and vsat approaches possible
- Sin Mua commune: pop 2203 mountainous, fiber in 12km and decent power
- ptp antenna with omni distribution 7km hop
- meshed wifi APs ; local calls stay local via switch; EVN telecom
- nghia tho commune: ppo 939; further to fiber, simple install for regular electrician not engineer required
- $1000link can go 65km ptp backhaul
- tinho tho third cmmune, more compex net mesh
- performance
- wifi phone to wifi phone 400 meters range (so 800m total between phones with AP in the middle)
- wifi ph to mobile network 500 m
- laptop internet access 1km
- invisible voip system, just a phone
- economics
- $22k/community with labor and nondiscount/mass equip, likely lower number
- capex 14.47/house. 3/21person
- 20% of gsm network cost
- low power, don't need generators for network devices
- Value prop to customers and mobile providors
- 1/2 of calls stay local to a community => free calls in town b/c never hits network => increased penetration and long-term increased revenue b/c of increased penetration and access to non-local calls via switched net
- 3% teledensity in rural vietnam
- mobile companies can make money off these models
- 30% household penetration generating $4 rev/month, networked infrastructure payback is 1.5yrs
- addresses fears of mobile companies against voip as competition
- Addon benefits
- remote management of switches, auto interference detection and channel switching, auto-rollover to other wifi networks
- shut down virus and p2p traffic
- broadband net allows voice, software flexibility
- easy training of local engineers to build out network, sustainable
- 4G network?? wimax doesn't win out in rural areas in tech and loses w/r/t cost; follow on gsm tech in future?
voip questions
- The wifi is essentially open wifi for laptops; also tourist selling point for free wifi?
- Along with wifi and VOIP rollout, pilot places 3 telecenters in each commune, one at the commune headquarters, one at the main healthcare location, one at the school, with hopes that individuals could set up home-based cybercafes
- negotiated with local radio station to use their tower, gave them an omni AP, wanted internet even though they didn't have computers
- so did they get PCs? pilot started 3 wks back, equipment failure from mistake by other cell provider (corporate sabotage?) and weather problems since, so no reports yet.
- telecom ministry hearing demand from other communes
- SMS over voip network?? no, no sms in pilot; a real dual mode wifi+gsm phone in plan for rollout
- $20 phone + $5 wifi chip + $5 biometric reader = $30 sale price at 1M units phone
- sms capability and biometric reader for full support of mbanking with security of transactions
- connectivity platform
- mbanking about to explode to benefit of rural
- then eduction, entertainment = > huge mkts making basic connectivity look small
- get paid for crop via mobile phone?
Scaling Healthcare and ICT
- building infrastructure including healthcare
- 150+B market in developing world currently for healthcare, 1/3-1/2 on pills
- problems with doctor/hospital avoidance, informal providers, fake drugs, inflated pricing
- last mile healthcare - mi farmicita; franchised, tightly managed distribution platform with high tech info / feedback loops
- franchise distro system of pharm via secret shoppers, audits, etc - to weed out anyone not playing by the rules; provide a private sector discipline that doesn't exist - one strike and you're out
- franchise pharmacies as scalable model, low startup cost, generic localy produced drugs, new techs and new distribution channel
- services: drugs, then diagnostics, minor remote surgery (req. broadband), **grows from pharma to accessible medical kn and diagnostics
- future build out of new techs
- diagnostic tech for matching patient and drug, dna analysis unit for $50 ea, 5 minute analysis, 50 cents/test, don't need dr to read it, tests for specific diseases
- remote practice tech, remote reading of sonogram, etc
- future build out of new techs
- Information usage
- walmart logistics, detailed patient records, remote
- 2 way info - collect patient data for health min, marketers, consumer data, biometric data
- incubation, 3rd party insurance to subsidize access to very low income,
- model assumes internet (which can be sold on the side)
- economics
- pharmacy net - 5M investment, 1-2 yr value is 25M
healthcare Q&A
- How scale at right speed to avoid same problems as doc/hospital avoidance? lots of culture/trust issues aswith any medicine/new tech?
- focus on selling pills, build trust and branding thru good product and fair prices; 1 yr to build trust in kenya, build trust gradually and also intro svcs gradually, remote treatment requiers good records
- selling of healthcare info?
- local decisions, incentive to use data for revenue, run tests for health ministry for a fee, sell to marketers, insurance; balance with value prop
- hope towards regulatory rules, system built to pass HIPAA standards
- Other models, like similares in Mexico (untested meds)
- Regulatory and trust problems
- Maintenance costs of the remote practice equipment?
- upkeep of diagnostic - consumables all on sample chip of 5 cent, one tool one test, so low upkeep, designed for bop use, low expertise and cheap
- govt role?
- public sector provision problematic due to high red tape, low trust. so lower hanging fruit is private sector; Philippines law allowing remote pharmacist approval to pill dispensing
- Kenya Mexico, Philippines and India as rollout countries
- high variability of prescription standards across countries (doc, pharmacist, anyone sells) and enforcement and behavior varies from that. education of regulators during scale, but value prop is a massive improvement over current
- telemedicine via fee for service private sector care, but maybe a nonprofit insurance system also?
- Current examples of remote practice include Nighthawk, which has radiology expert across the world for late night xray analysis
Some more questions...
- How resistant is the wifi mesh to malicious usage - i.e. someone who sets up their own AP in the mesh to capture data (e.g. mbanking info, healthcare info?) as it goes through, or to reroute calls?
- Healthcare privacy issues will become paramount since the entire model is built on creating consumer trust; one person who's HIV status is leaked kills the project. It's great that the system is built to conform to HIPAA standards, but I think this decision has to be part of the franchise's strictly managed rules, only sell info in aggregate or at least with patient identification info stripped and in sufficient quantities that small communities don't reveal data by accident.
- The franchise model is great, but problematic with free-wheeling copyright/trademark infringement will produce copycats, will require massive marketing system especially when you have to de-authorize a pharmacy.
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