This third “What Google Should Do In Africa” post could be subtitled “Grow some balls”. Why, oh why, is it that Google, so unafraid to tackle telco and broadcast market behemoths in the United States, behaves like a timid NGO in Africa?
Although this post has been in the queue for a while, the timing now could not be better as two days ago Google launched innovative new SMS-based services in Uganda in partnership with the Grameen Foundation and MTN. This provoked a response from Katrin Verclas (@mobileactive) in which she queried the apparently high costs of the premium SMS charges being levied. This was riposted by Erik Hersman (@whiteafrican) who rephrased Katrin’s post as the question “If you provide services to the poor, should you make a profit?”.
For me the problem is not whether the poor should pay for services. I don’t think anyone engaged in this discussion believe the poor shouldn’t pay for services that are of value to them. It is not even whether they should pay a premium rate for services. The problem for me is the base rate itself of SMS charges. Google and Grameen have correctly identified the tremendous potential power of SMS as a technology that can effectively provide data services to the poor. However, this transformative technology, whose marginal cost of deployment is effectively zero, is being throttled by mobile operators charging a disproportionately high price for the service. Mobile operators in Africa still embrace the economics of scarcity.
In his post, Erik makes a provocative statement. He says,
If there’s a problem with collusion and price fixing in an industry (like there sometimes seems to be with SMS services in a country), that’s something beyond the scope of individuals and needs to be tackled separately by regulation.
If only it were that simple. Telecoms regulation in Africa is in a parlous state. With few exceptions (Nigeria being a notable one) communications regulators in Africa are under-resourced and often insufficiently independent from governments who maintain a substantial investment stake in the incumbent fixed-line and mobile operators.
So what happens in practice? Regulators often start out well. They issue a call for public input on issue X, be it interconnection, local-loop unbundling, carrier pre-select, spectrum licensing or what have you. Who responds to these calls for input? Right now in most African countries the only organisations effectively lobbying the regulator are fixed-line incumbents and mobile operators…. with PREDICTABLE RESULTS. The old joke about a telecom company being a law firm with an antenna stuck on top is actually not that funny in Africa. Incumbent operators are experts at both influencing policy and regulation development and at stalling any efforts to reform unfair practices.
For the rest of us, lawyers are notoriously expensive and there are few civil society organisations with the resources to actually draft the kind of input that regulators need in order for there to be a balanced debate. There is a desperate need for organisations like Google who have a vested interest in seeing more data traffic to help lobby for more competition, for lower barriers to entrepreneurship in the telecom sector, and for cheaper access for all.
So when I see the company that wagered billions in the 700MHz spectrum auction in the U.S. to effectively arm-wrestle Verizon into OpenAccess conditions, the company that has made countless submissions to the FCC to lobby for unlicensed access to television white spaces spectrum, announce that they have “partnered” with a single mobile operator in Uganda to deliver SMS services, you will understand me if I seem a little let down. The new SMS services for Uganda ARE innovative and I believe they have been well-conceived. Kudos to the Grameen Foundation for developing them and to Google for supporting them. Am I wrong to want more from one of the most innovative companies in the world?
Imagine the innovation in services that might be unleashed if SMSes were priced so that Africans didn’t have to think twice about sending them. Imagine the economics of abundance being applied to the telecoms sector in Africa. Sadly, voices calling for this on the continent are not nearly loud enough. Google, which represents that principle so well, disappoints by failing to stand up for it.
It’s not sexy, it’s not whizz-bang, but it is true that Google could have a more profound effect in Africa by hiring a few lawyers, lobbyists, etc who can help level the playing field for the regulators on the continent than a dozen SMS services.
Ironically, Chris Anderson’s new book that explores the economics of abundance quotes Google CEO Eric Schmidt on the cover. Schmidt says:
“With the cost of distribution relentlessly driving towards zero, Chris Anderson, has once again identified the next big thing”
If he really believes that, why not Africa too?