rural internet

Rural area internet connectivity

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Rural area internet connectivity

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Internet Media and Services
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
USD 100 million - USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Partnerships For the Goals (SDG 17)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Quality Education (SDG 4) Decent Work and Economic Growth (SDG 8)

Business Model Description

Invest in standalone Wi-Fi stations in public areas offered to users for free and sold to sponsors in exchange for advertising, while developing alternative revenue streams from both consumers and third parties. The initiative enables to take advantage of the organizations that may benefit from high value advertising and market information gained from a growing Internet user base. (6)

Expected Impact

This initiative intends to reduce connectivity inequalities in colombian rural areas, creating new access to markets and education oportunities.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

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Sector Classification

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Sector

Technology and Communications

Development need
>Only 42.56% of households in Colombia have a computers and/or tablets and around and 73% have a mobile phone (1).

Policy priority
> Modernization law of 2019 intends to modernize institutions and focalize investments to facilitate the deployment of high cost infrastructure in the ICT sector. Auctions of the connectivity expectrum have taken place (2)(3).

Gender inequalities and marginalization issues
>Only 6.11% of women work in the ICT sector, without growth over the last years (19).

Investment opportunities
>The IT sector is expected to grow with prospects for U.S. companies derived from the Trade Agreement (4).

Key bottlenecks
> The main bottlenecks and obstacles include rural connectivity infrastructure development and deployment, access to technology and devices and skill development among less educated population.

Sub Sector

Internet Media and Services

Development need
>23.8 million people have no internet (50% connectivity) presenting significant asymmetries between urban and rural: 45.7% in the head municipalities vs. and 6.2 % in scattered rural areas (1).

Policy priority
>National Development Plan: Improve internet quality and accelerate digital social inclusion deploying networks to expand connectivity. By 2022 11.8 million households (70%) will be connected and at least 80% of people over the age of 5 will use the Internet.(3).

Gender inequalities and marginalization issues
>Only 6.4% of rural households with female heads have fixed or mobile internet access (12).

Investment opportunities
>Mobile broadband has been the main growth driver of the Colombian ICT sector in recent years, as has been the case around the world (5).

Key bottlenecks
> The main bottlenecks and obstacles include capex intensive connectivity development, transport infrastructure lags.

Industry

Internet Media and Services

Pipeline Opportunity

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Investment Opportunity Area

Rural area internet connectivity

Free standalone Wi-Fi stations in public areas to increase rural connectivity in exchange for advertising and user data.
Business Model

Invest in standalone Wi-Fi stations in public areas offered to users for free and sold to sponsors in exchange for advertising, while developing alternative revenue streams from both consumers and third parties. The initiative enables to take advantage of the organizations that may benefit from high value advertising and market information gained from a growing Internet user base. (6)

Business Case

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Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

USD 100 million - USD 1 billion

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

10% - 15%

> OhMyFi estimates that the total potential in Colombia is +1M connection spots in the country. With +3000 connections and selling ~$2MUSD/year the total market size is $333 MUSD (13).

> Colombia: internet penetration 2000-2019. In 2019, around 65 percent of the Colombian population accessed the internet. This is over 12 percentage points more than in 2014. Colombia was also one of the South American countries with the highest mobile internet penetration rates (19).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

Findings of the Connected Europe Broadband Facility (CEBF), that invested on rural connectivity show IRRs of around 14% (14).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Long Term (10+ years)

According to the investment criteria established by CEBF, a Greenfield infrastructure connectivity has aninvestment period of over 10 years (world bank)(14).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Market - Highly Regulated

> lack of early-stage financing and unfamiliar or restrictive regulations could be an obstacle, existing rural internet models have succeeded at a small scale.

Capital - Limited Investor Interest

>The investor pool might be limited due to high capex requirements and risks of rural areas.

Capital - Requires Subsidy

>Public - private alliances might be required to carry-out projects.

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

> 23.8 million people have no internet (46% connectivity) presenting significant asymmetries between urban and rural: 45.7% in the head municipalities vs. and 6.2 % in scattered rural areas (1).

> Colombia ranked 131 out of 206 countries in internet speed, with an average bandwidth of 3.4 megabytes. The average speed in Taiwan is 85 megabytes (3).

Gender & Marginalisation

Only 6.4% of rural households with female heads have fixed or mobile internet access (12).

Expected Development Outcome

> Create new ways in which people can connect with one another including increased access to financial capital services (mobile banking)(7).

> Increase GDP - a 10% increase in penetration leads to a GDP per capita increase of 1.2% -1.4% (8).

Gender & Marginalisation

> Close digital gender gaps, currently 19% of women in the country have no access to the internet.

Primary SDGs addressed

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.c.1 Proportion of population covered by a mobile network, by technology

Current Value

Current levels (2018): 49.9% of households have internet connectivity (9).

Target Value

Target levels (2030): 100% connectivity by 2030 (9).

Partnerships For the Goals (SDG 17)
17 - Partnerships For the Goals

17.8.1 Proportion of individuals using the Internet

Current Value

Current levels (2018): 60% of of the population used the internet(9).

Target Value

Current levels (2018): 60% of of the population using the internet by 2030 (9).

Secondary SDGs addressed

Quality Education (SDG 4)
4 - Quality Education
Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth

Indirectly impacted stakeholders

People

> 23.8 million Colombians without internet (1).

Corporates

> 34% of SMEs that advertise using digital media(1). > Companies like OhMyFi wishing to profit from the market opportunity.

Public sector

> Local governments are directly impacted by their opportunity to provide connectivity to their population.

Outcome Risks

>Increasing carbon footprints in the process of infrastructure deployment and increased energy use.

>Gender inequality and/or marginalization risk: Inequalities in the benefits received among men and women due to differences in skills.

Impact Risks

Drop-off risk: > Adoption of technologies might be delayed by the lack of skills of the target population.

External risks: > Violence in the area might generate damage to infrastructure projects and delay progress. > Drastic changes in the environment that are not accounted for such as earthquakes, tsunamis, and other natural disasters affecting connectivity infrastructure.

Stakeholder participation risk: > The Government, together with the National Development Plan, must fulfil its digital transformation initiative. > Technology providers (hardware and software) need to provide advice and support for the tools' proper use.

Gender inequality and/or marginalization risk: > Challenging gender stereotypes about the use of technology risks unequal access or benefits.

Impact Classification

C—Contribute to Solutions

What

Positive outcome due to increase in internet access and quality.

Who

Underserved population without internet access.

Risk

Failing to develop connectivity could reinforce poverty traps for rural population and could increase further inequalities.

Impact Thesis

This initiative intends to reduce connectivity inequalities in colombian rural areas, creating new access to markets and education oportunities.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(National Development Plan): Improve internet quality and accelerate digital social inclusion deploying networks to expand connectivity (15).

(The National Plan for Rural Connectivity): aims to deploy the infrastructure to guarantee access to the Internet, and offer conditions for using this service through public access solution (16).

(ICT Plan 2018-2022): will make the internet a tool for equity, through increased connectivity and the productive use of the internet by massifying and improving the quality of internet access (17).

Financial Environment

Financial incentives: The government created a $1,4 billion COP fund (Fondo Único de Tecnologías de la Información y las Comunicaciones - FUTIC) to finance rural connectivity projects until 2022. The government created the Colombia Rural Project with a budget of over COP500,000 million for infrastructure and connectivity.

Other incentives: USAID has facilities destined to improve rural connectivity issues in Colombia.

Regulatory Environment

(Law 1978 of 2019): telecommunications network providers may execute projects for the benefit of the most vulnerable communities that contribute to closing the digital divide (16).

(Orange economy (2018)): The government aims to promote Colombia as a regional and global target market for the development of the orange economy, and to double its contribution to GDP from 3.5% to 7% between 2012 and 2022 (3).

(Modernization law): It aims to accelerate the expansion and upgrade of the network, tighten the regulatory framework and close the digital divide (3).

Marketplace Participants

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Private Sector

OhmyFi is a web platform for marketing, communications, loyalty and studies in real-time through free Wi-Fi that allows users to customize, communicate and engage with clients. Lavazza, Microsoft and the Colombian National Coffee Growers Association of Colombia partnered in a digital transformation project to benefit 500k small coffee farmers in Meta region.

Non-Profit

NGOs such as Malkaia. Colnodo and USAID are working to improve access in rural areas.

Government

MINTIC: leading policies and initiatives to finance rural connectivity. Department of national planning: assigning significant budget to achieve connectivity goals.

Target Locations

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References

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    • (1) MINTIC (2020) Indicadores básicos de TIC en los hogares. Accessed february 8th 2021
    • (2) MINTIC (2019) ¿Qué es el Proyecto de Ley de Modernización del Sector TIC? Accessed february 8th 2021
    • (3) Oxford Business Group (2020) - New ICT laws and attention to innovation increase Colombia's internet coverage. Accessed January 26 2021
    • (4) International Trade Administration (2020) – Information and Communication Technology. Accessed January 26 2021
    • (5) EMIS Insights (2020), Colombia ICT Sector Report 2021-2022.Accessed February 8th 2021.
    • (19) MINTIC (2018) Así usan la tecnología las mujeres en Colombia - Accessed February 8th 2021
    • (6) MinTic (2020) – Plan Nacional de conectividad rural. Accessed June 2 2020
    • (7) OECD (2016) – Economical and social benefits of internet openness. Accessed May 22 2020
    • (8) Deloitte (2017) – Value of connectivity: Economic and social benefits of expanding internet Accessed May 22 2020
    • (9) DNP (2018) Objetivos de desarrollo sostenible. Accessed February 8th 2021
    • (10) DANE (2018) Encuesta de Calidad de Vida. Accessed February 8th 2021
    • (11) MINTIC (2018) así usan la tecnología las mujeres en Colombia. Accessed February 1st 2021
    • (12) DANE (2020) Mujeres rurales en Colombia. Accessed February 8th 2020
    • (13) La Republica (2018) – OhMyFi conecta a más de 2.5M de personas por mes. Accessed May 30th 2020
    • (14)World Bank (2019) The Connected Communities Initiative experience. Accessed February 8th 2021
    • (15) DNP (2017) – Plan Nacional de Desarrollo (2018 – 2020). Accessed February 8th 2021.
    • (16) MinTic (2020) – Plan Nacional de conectividad rural. Accessed June 2 2020
    • (17) MinTic (2017) – PlanTic (2018 – 2022). Accessed June 1 2020
    • (18)MinTic (2017) – PlanTic (2018 – 2022). Accessed June 1 2020
    • (19) Statista (2021) Colombia: Internet penetration. Accessed February 8th 2021