Marc is happy. Just last week he got promoted as the regional manager for his high-tech company’s operations in the state where he and his wife grew up. That means they can go back and enjoy life with their parents and long-time friends in their childhood village. The kids would get to see their grandparents more often and Marc’s wife, a huntress, can take care of the expansive forests around the village. While preparing the move, Marc notices that his trusty telecommunications provider, who had served him very well during the last years in the city, does not offer his favorite IPTV product in the village. Moreover, when calling to ask about the 16Mbps Internet connection he has been enjoying recently, Marc got frustrated to learn that all they were offering was a slow 64kbps ISDN connection. Apparently, his soon-to-be home was located in a so-called “white spot”, an area of his country where Internet access is still restricted to dialup speeds.

City versus village: why bother?

In Europe, around 30% of the population shares the same fate. In many other countries in the Americas, Asia and Africa the problem of providing rural Internet is much more pronounced with rates of up to 85% of the population being disconnected from even basic Internet. In our “digital economy” more and more services are being offered online, companies rely on remote data access of their employees and trade partners and governments, schools and universities disperse knowledge through the Internet. Being excluded from this plethora of online offerings is analogous to trying to study literature without having access to books or any other written material for that matter. Obviously, this dramatically slows down a country’s economic growth prospects and widens the “digital divide”, since rural areas are excluded from a large part of the information society. This in turn weakens a country’s economic power and hinders its international competitiveness.

In rural areas a few factors come together which make covering them with broadband services a challenge for traditional telecommunications operators. Even though the fraction of the total population living in rural areas can be quite significant, e.g. up to 60% in Mozambique, rural areas also cover the vast majority of a country’s land mass. A common ratio is 20% urban and 80% rural territory. Thus the population density in rural areas is very low. In case of wired connections this means having to dig long trenches and laying huge amounts of ducts and cables before even switching on the first customer. This upfront investment in equipment and sunk costs is highly risky for both established players and newcomers to the telecommunications market. Mostly provisioning expenses are also higher due to rough environment, natural obstacles like mountains or rivers and a less well developed general infrastructure like roads, electricity, and railroad systems. On the revenue side, companies can not expect large returns since on average the rural population is not as affluent as its urban counterpart, especially in developing nations.