The Promise of Mobile Banking

mpesa_logoAround two billion people on the planet are “unbanked” — which is to say they have no access to financial services. Their transactions are all in cash. Any savings need to be hidden in their home. They are vulnerable to crime. They can’t earn interest. They can’t transfer money to others. They don’t qualify for loans.

Fortunately, new technologies are offering important opportunities, particularly through cell phones.

The best-known and most celebrated online financial service utilizing cell phones is M-Pesa, launched in Kenya in 2007. M-Pesa allows users to deposit cash into their M-Pesa accounts (usually via the ubiquitous cell phone agents that sell users minutes all across Kenya), store money, and transfer money to others. They can also pay bills, purchase air time, and in some cases buy products.

M-Pesa was launched when Safaricom, a leading mobile operator in Kenya, saw that new cell phone users were “banking” minutes on their phones. Apparently, if someone had some money, it was safer to buy and store minutes than to hold cash. When Safaricom allowed users to share minutes, they saw people start to make payments to one another in this new “currency”. So Safaricom decided to allow users to not only store and share minutes, but also money. M-Pesa was born.

The service spread quickly in Kenya, and currently includes over 25 million active users (which is about the entire adult population of the country). A study of M-Pesa by MIT and Georgetown researchers concluded that between 2008 and 2014, M-Pesa was responsible for lifting 200,000 families out of poverty (about 2% of total households).

M-Pesa has also been launched in Tanzania, South Africa, Afghanistan, India, and several Eastern European countries — to mixed success.

M-Pesa also provides a financial platform for other services. For example, the Kenyan company M-Kopa sells personal solar systems for households that are lacking electricity. Payments for the system are made daily for a year through M-Pesa. If a payment is missed, the system is disabled until payments resume.

Online banking is convenient for those of us in developed countries. In developing countries, it is transformative.

Celebrating Fiber

fiber.jpgAs broadband expands throughout the globe, most communications are still carried by fiber optic cable. Can we take a minute to celebrate the marvel of this technology?

Scientists have known for 150 years that glass can be used to guide light. In the 1980s, manufacturers improved techniques to make highly transparent threads of glass the width of a human hair and over a hundred kilometers long. Simultaneously laser technology was getting cheaper and smaller, and digital data processing getting faster.

So why bother with fiber instead of traditional copper (the first undersea copper cable was laid across the Atlantic in 1858)?

For starters, fiber optic cables have an unbelievable capacity for carrying information. A single fiber, for example, can carry 3,000,000 simultaneous phone conversations. Since a cable can comprise over 1000 fibers, this means a single cable could support three billion conversations — or half the planet speaking with the other half, simultaneously.

Light travels efficiently with very low attenuation. Signals can maintain sufficient strength for over 100 kilometers before needing a boost.

Cables carrying information with pulses of light aren’t subject to electromagnetic interference the way typical copper cables are. The signals avoid corruption (and eavesdropping is much more difficult).

And one more important characteristic of fiber optic: the main ingredient in a cable is silica (aka sand). While copper cables around the world are highly prone to theft (copper can cost a few dollars a pound, and large cables will weigh tons), if thieves want silica, it’s a lot easier to pilfer the beach!

Defining Broadband

broadband.pngThe name of this blog uses “broadband”. Many of the posts discuss “broadband”. Perhaps we should define the term?

The term “broadband” typically refers to an internet connection that is always on and with high bandwidth.

In developed countries, our initial internet connections in the early 90s were typically by modem  and at slow speeds. Those connections allowed e-mail to be exchanged and a few other information services, but were quite restricted.

Broadband arrived in the late nineties, typically offered either over phone lines (DSL) or cable service. We then started connecting our broadband connections to local wifi, so our computers, and later our other mobile devices, were always connected to the internet at high speed.

Simultaneously the mobile phone providers started adding data capabilities, starting with snail-slow 2G, but then progressing through 3G, 4G, LTE, and now in some regions 5G. These mobile data connections became critical with the introduction of the iPhone in 2007, which offered feature-rich mobile access to the internet. Since the iPhone, a slew of competitors have appeared, and we now take for granted that the device in our pocket is always connected.

Broadband (as opposed to intermittent access to the internet) is useful for consumers (think streaming video and nice web apps like Uber) — but is vital to businesses. Cloud-based services, distributed databases, remote access to resources, mobile apps — and pretty much everything else a business does these days demands reliable broadband connectivity. Broadband quickly evolved from a luxury to an absolute requirement for essentially all business and commerce in developed countries.

What percentage of the planet currently has affordable access to broadband?  According to the UN’s State of Broadband 2017, the best estimate is that as of now, 48% of the world’s population is online with reliable, affordable broadband access. Regions obviously vary greatly: Europe is 80% online, Africa only 22%.

The percentage of people with simple cell phone coverage that allows voice calls (but no date) is much higher. Simple cell phones (also referred to as “feature phones”) have reached the low cost and sufficient access that most regions on the planet are now connected by phone. There currently are now about 7 billion cellphones on the planet, about the same number as the global population (although penetration obviously varies greatly — from 240 phones per 100 people in Hong Kong to less than 10 in many regions of Africa). According to a recent Facebook study of 75 countries, 94% of the overall population had access to 2G networks (which are sufficient for voice and texting), while only 76% had access to 3G (data) networks or better — and many of those networks are still very expensive to use.

So simple cell phones are very widespread. This is a remarkable achievement, representing arguably the first truly universal global technology.

It also represents the leading edge of the internet — once people have simple phones, it is really only an issue of cost to start moving into fuller feature smartphones. And the transition to smartphones, which about half the planet is now going through, is the true game changer. It’s convenient to be able to call and speak with somebody, but having full access to information and services as afforded by smartphones represents a major opportunity.

The biggest current challenge confronting the expansion of global broadband is that most of the regions not yet covered are rural and poor. It is prohibitively expensive to lay fiber optic cable (or any cable) to rural regions. Cell tower coverage is easier — but even then, there needs to be a critical mass of paying customers to make the economics viable. Cell towers are generally placed 1-2 miles apart (at the least). The fixed costs of cellular infrastructure impose economic limits on regions cellular networks can serve. The expansion of cellular coverage is slowing down, because the places that are left are rural and poor.

To complicate things further, the next generation of cellular technology that is currently being designed and deployed by telecommunications firms is 5G — which is really optimized for rich cities. It allows a huge number of high speed connections (in anticipation of the “Internet of Things” — where everything is hooked to the internet), but is very expensive to deploy. Gartner estimates that 20 million “things” will be connected by 2020 (and growing quickly). Just the bandwidth needs for self-driving cars alone will be enormous. So no longer will just consumers be paying for access: 20 million items will as well.

That’s all great for rich countries, but 5G isn’t designed at all for poor, rural regions. It’s too expensive.

So for now, the bad news is that there remain major obstacles to smartphone use and increased broadband coverage in developing countries. The good news is that most of the planet has simple phones — and that in itself is a very good thing.

Update on CubeSats

cubesatCubeSats are miniaturized satellites which comply with agreed to standards, including component cube dimensions of 10 cm on a side and less than 1.3 kg of weight per unit. Imagine a container with a liter of water — that is about the size and weight of a CubeSat.

Because they are so small and primarily use commercial off-the-shelf components (mostly designed for cell phones), CubeSats are fast and cheap to design and deploy. Historically they have been launched as secondary payloads with larger launches. Over 800 CubeSats have been deployed to date, and at least 1200 more are planned for orbit. A new industry of launch services targeting CubeSats (and other small satellites) is taking shape.

The simplicity and low costs of CubeSats means many groups can now become involved in space science. Universities, high schools, and individuals have all designed and launched CubeSats. Some have even been funded by KickStarter campaigns.

Developing countries are also involved. For example, Kenya recently designed the CubeSat 1KUNS-PF which was carried to the International Space Station by a SpaceX resupply mission, and from there launched into orbit. Over 18 months it will assist with mapping of Kenya, monitoring the coastline, and identification of illegal logging. To date, an impressive 80 countries have launched CubeSats.

So to summarize, 800 CubeSats have been launched by 80 countries, with 1200 more already scheduled to go!

Exploring the Frontiers of Broadband

IMG_2277I’ve been fortunate to spend much of the last six months traveling in developing countries, learning about the progress and consequences of the extension of broadband into resource-poor environments.

I’ll be writing more on this topic in coming months, but here are a few pictures of communities I’ve visited where I’ve enjoyed conversations with locals.

Rural Nicaragua has increasing cellular coverage — if people can afford it. Notice that these homes have electricity, but no antennas signaling television. People at this economic level may own a feature phone but not a smartphone. This image is taken outside of Tipitapa.

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In rural Malawi, I would see some signs of the use of solar power, including mobile panels that villagers could move around to optimize the sun. This image is from Mulanje District, a poor region in the south of the country.

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In Soweto, South Africa, most homes have no electricity, but some connect (generally illegally) to power poles on the periphery of the settlement. This allows residents to occasionally have lights and charge cell phones.

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Most of the planet at this point is connected by feature phone, and about half the planet by smartphone — a percentage that will grow greatly in the next few years.

The Outsize Role of Tech Incubators

iHubThe outward signs of increased connectivity in developing countries are hard to miss. Even in cities with relatively recent connectivity, it is common to see swarms of smartphone-toting 19-year-olds taking selfies.

Often, however, there is more consequential activity taking place behind the scenes.

One such activity is the emergence of tech incubators in larger cities. Modeled after co-working spaces in the US or Europe, the new tech hubs, such as Nairobi Garage in Kenya or BongoHive in Zambia, provide the space and tools that entrepreneurs require. They also provide an immediate and invaluable source of community to help with collaboration, training, and promoting innovation.

I’m currently working from Phandeeyar, a tech incubator in downtown Yangon. I feel right at home. There are tables of young techies working on startups. The conference rooms include whiteboards covered with unintelligible flowcharts. The kitchen area boasts unlimited coffee. The ping pong table appears to get a lot of use.

Best of all, membership is $25 / week — about 10% what I would pay in the US.

Coworker.com lists co-working spaces in 125 countries – and growing! Co-working spaces represent a mostly hidden, but very consequential, form of tech infrastructure in developing countries.

The Concern of Space Junk

space junk.jpgThere currently are less than 2,000 operational satellites in orbit. In the next few years, SpaceX and other launch services are going to be deploying tens of thousands of new satellites. What does this portend for the problem of space junk?

The short answer is that it is hard to know for sure.

The good news is that space is big, including even near-earth orbit. There is a lot of room for a lot of satellites. If you think, for example, about the number of boats the oceans can accommodate, and then realize that space is much, much larger, it gives an idea that there is a lot of room to work with. The odds of a collision are low.

All new satellites need to have launch approvals and also decommissioning plans (typically involving falling back into the atmosphere and burning up). SpaceX and OneWeb, for example, have committed to one year deorbiting plans for satellites at end of life.

We’re also pretty good at tracking larger pieces of space junk and identifying potential problems. The International Space Station is periodically moved in order to minimize chances of collision. Around 20,000 man-made objects are currently tracked in space (although they need to be big enough to track — estimates assume many millions of smaller items are also in orbit).

The concerning problem is that one collision can lead to the creation of lots more space junk, which in turn could collide into other satellites. Computer models show that a chain reaction of this sort is possible (the “Kessler Syndrome”). This also isn’t hypothetical: at least five satellite collisions have resulted in increased space debris. Both the International Space Station and the Mir Space Station have sustained damage from collisions with space debris. Space crowding is particular acute at the poles: many satellites maintain polar orbits (in order to have complete coverage of the earth), which means the orbits all cross at the poles.

Some scientists argue we are already in the early stages of the Kessler Syndrome.

So on the issue of space debris, most scientists cautiously believe we are OK if we are prudent. But there are definitely unknowns, and definitely risks.

Facebook Gets Into the Satellite Business

fFacebook has reportedly registered a new subsidiary to build low earth orbit (LEO) satellites, competing with SpaceX, OneWeb, and others. The subsidiary, called PointView Tech, plans to launch a demonstration satellite in 2019 to investigate using the E-band spectrum for communications. E-band promises much higher data connection speeds than those planned by rivals, but needs to overcome challenges, including absorption by rain or other particles. E-band is also used by the Facebook drone project called Aquila.

For the Facebook satellite constellation to work, there would need to be thousands of satellites, similar to SpaceX and OneWeb.

The PointView Tech initiative puts Facebook in direct competition with SpaceX. There doesn’t appear to be much love lost between Mark Zuckerberg and Elon Musk. They have engaged in a public feud around AI. Musk recently deleted all Tesla accounts from Facebook. The relationship also wasn’t helped when Facebook’s last satellite project, AMOS-6, blew up on launch of a SpaceX rocket in August 2016.

Low Cost Satellite Networks

cubeWhile SpaceX, OneWeb, O3B and other multi-billion dollar satellite constellations garner most of the press, other lower cost initiatives demonstrate a different and potentially consequential approach.

Sky and Space Global, for example, plans to launch 200 nano-satellites (under 10 kg each) into low earth orbit in order to provide telecommunications services in Africa, Latin America, and elsewhere. The satellites, which adhere to CubeSat standards, will be deployed in near-equatorial planes, reaching 15 degrees north and south of the equator.

Satellites will be launched aboard LauncherOne, the air-launched rocket from Virgin Orbit. Satellites will communicate with ground antennas which provide wifi hotspots, or potentially with a new generation of $20 Android phone capable of direct communications with the satellites.

Sky and Space Global aims to build and launch the entire constellation of 200 satellites for $200 million, a fraction of the cost of even one geosynchronous communications satellite.

Coca-Cola to Provide Wifi Hotspots

ekocenterCoca-Cola is planning to build wifi hotspots across sub-Saharan Africa and Southeast Asia. In partnership with Intelsat, Coca-Cola is launching its “Ekocenter” program to promote local development and community. Each Ekocenter will provide local wifi, as well as power and clean water.

The program initially is targeting sub-Saharan Africa and Southeast Asia. Future expansion will include Latin America.

When possible, Ekocenters will be run by women, consistent with Coca-Cola’s 5×20 goal of empowering 5 million women by 2020.