New Business Models in Emerging Markets: MIT DakNet Project

When reading the Harvard Business Review in this week’s readings, all I could think about was a project that I had learned about when I was visiting MIT last year as part of a Science and Technology Workshop. The project is called DakNet (name derived from the Hindi word for post or postal) and its mission is “Rethinking Connectivity in Developing Nations”. The idea behind the project is to “provide low-cost digital communication, letting remote villages leapfrog past the expense of traditional connectivity solutions and begin development of a full-coverage broadband wireless infrastructure”. In simple words: initiators of the DakNet project, First Mile Solutions, targeted people at the bottom of the pyramid by providing them with low cost internet connectivity in an innovative way.

The DakNet project initiated in India, and later expanded in Cambodia, Rwanda and Costa Rica, was a reaction to a popular claim that people living in rural areas don’t need more than mobile services. What seemed to be a sensible observation for some was not adding any value to the people targeted by ubiquitous telephone services. MIT Media Lab researchers identified the need to provide services that span beyond telephony under the umbrella of “broadband connectivity for everyone” in a simple, accessible and affordable way, all three qualities highlighted in the business model innovation and implementation process mentioned in the reading.

The idea is simple because it leverages on the concept of giving people access to internet. It takes advantage of the existing communications and transportation infrastructure in the villages to combine physical transportation means with wireless data transfer. DakNet provides non-real time internet access by connecting mobile access points: kiosks and hubs to WiFi radio transceivers typically attached on moving vehicles: bikes, bicycles and buses. The system is broken into two steps:

1. When one of the moving vehicles comes within a range with a WiFi enabled device (a kiosk), it uploads and downloads megabytes of data.

2. When one of the moving vehicles comes within a range with an Internet access point (a hub), it synchronizes the data collected.

The figure below illustrates the model:

The most basic scenario would be:

· Someone opening a email client and sending an email from a kiosk in the village.

· The email is stored in the machine waiting for a mobile access point to come close.

· A mobile access point is detected by the kiosk and the email is transmitted from the kiosk to the mobile access point carried by a moving vehicle.

· The mobile access point is detected by the hub and the email is transmitted to the hub.

· The email is sent via internet.

What I think is fascinating about this project is that the researchers recognized the myths that were hovering around people in the bottom of the pyramid:

· Shared telephones are the best model.

· They don’t need computers.

· Connectivity, if offered must be real time.

The DakNet model is based on the idea that poor people do not necessarily need or want a shared communication medium, that they need access to more information that could add value to their daily life: health, agriculture, trade, education… and that asynchronous (not real time) services could be sufficient to meet the needs in many rural areas.

For end users of the kiosks, the cost was approximately $20/year and knowing that the average yearly income for a villager in India is about $1800, the service was deemed affordable especially that it improved the quality of the life in rural areas mainly by giving people access to information and services. Finally, the process is accessible and is typically implemented in collaboration with local non-profits and governmental agencies and made available to people through many kiosks in the villages managed by trained people.

Ultimately, the potential for such business models in emerging markets is amazingly vast but requires detecting the needs with an objective eye. We are all affected in one way or another by our lifestyles and beliefs, which could impede us from seeing the true needs of people in the bottom of the pyramid.

Sources:

http://www.firstmilesolutions.com/documents/FMS_Case_Study.pdf

http://courses.media.mit.edu/2003fall/de/DakNet-Case.pdf

http://www.firstmilesolutions.com/documents/DakNet_IEEE_Computer.pdf

What about internet contents for poor people?

Commonly, people talk about how important is that poor students have access to computers and internet. Even, there are measures to calculate how much a country’s GDP growths when more people gain access to these services. Nevertheless, sometimes we forget that computers and internet access are means, but not ends. They are only a tool to reach better conditions.  My question is: computers and internet access really improve poor peoples’ life?  Well, definitely the answer to this question depends how poor people use computers and internet.

After reading this week’s article, Dialing for Development by David Lehr, I have a better understanding what kind of applications could be developed for poor users’ cell phones. For example, texting about weather conditions or crop prices are good improvements in peasants’ lives.

In contrast, after reading about the initiatives to provide low cost computers and internet access in developing countries, I think something is missing. There is a lack lack of web pages and portals that address poor people necessities in developing countries.

I was trying to figure out how a poor peasant could have interest in surfing through pages as Amazon, Facebook, Ebay or Itunes. If you think it, most part of web sites and portals as Yahoo or Google applications are designed for middle urban classes, but not for poor people. It could seem stupid, but it is not.

The first time you use a computer, to continue using it you need to be attired; you need to find some benefit in it. For example, maybe an atom smasher has the potential to change my life, but I can’t figure out how is going to benefit my daily activities. Well, it is the same with computers; it is not enough to give access and computers to people from the bottom of the pyramid. A young peasant needs to find useful content in the internet to keep on using it as a tool.

In conclusion, poor people are gaining access to internet and computers are cheaper than before. This is an unstoppable trend. Well, there is an huge potential for social innovators to develop massively portals and web services for poor people. I was thinking in some examples. Look at these options and let me know your opinions:

1.       Music Online. Peasants from Mexico don’t like Lady Gaga or Jazz. They want their own music.

2.       Social Networks to provide low budget lodging. Poor people from rural areas need to travel to the city to buy/sell goods. Usually, they sleep at the streets because they cannot afford a hotel fee. A social network could put in contact poor people from cities with poor people from countryside.  Thus, peasants could get a very low budget lodgment, and poor city people could get an additional income from this.

3.       A motor search to find relatives that migrated. For example, in Mexico it is common that immigrants that came illegally to the United States, after a couple of years lose contact with their families. The opposite also happens, families that never know if its relative gained access to the United States or not. He never communicates back home.