RWANDA: TERRACOM OFFERS DSL AND PHONE LINE FOR US$80 PER MONTH
Not too long ago, a high-speed internet connection in Rwanda cost close to $1,000 per month. A whopping 22 customers could afford to buy this service from the national telco - RwandaTel. Then, Terracom arrived.
Terracom started laying fiber throughout Rwanda, bought RwandaTel for $20m and dropped the price for a combination high-speed internet connection and phone line down to $80 per month. Greg Wyler - the American entrepreneur cum do-gooder behind Terracom - sees affordable internet service as a key step to establishing Rwanda as an African IT hub. And that may well mark the first time Rwanda and IT hub have appeared in the same sentence.
"In Rwanda now, we have about 350 kilometers of fiber," Wyler said in an interview with The Register. "So, if you are a company and want to get into the African market, then basing your headquarters in Rwanda is a great idea.
"There is a vision here that, if we do this in Rwanda, and it works, then maybe people will take the same approach in other countries. Maybe the rest of Africa can come out of the digital divide."
While not universally cheered, President Paul Kagame receives credit for pushing Rwanda in the right direction, especially from an economic point of view.
"He is bringing in business to Rwanda and helping create a stable environment," Wyler said. "The President has a real entrepreneurial spirt and real business acumen."
Wyler arrived in Rwanda two years ago, looking for aid work as a teacher. While hunting down a job, he ran across a project to put computers in Rwandan schools and link them to the internet via satellite connections. The plan, which included the purchase of $2,300 PCs, appeared too expensive and inefficient to Wyler. Why purchase expensive computers and then deliver just 64kbps connections to the students?
"The thing is that money is not the problem," Wyler said. "The problem is the way they spend it. You'll find that a lot of money goes to consultants and to buy $2,300 computers when a $500 computer will do. So, I started a company to try and give them an idea of how to do this."
Wyler zeroed in on building out the country's networking infrastructure. If you're going to buy computers, they may as well connect to the internet at a useful speed - 300kbps and up - and at an affordable price. After one year, Terracom managed to overtake RwandaTel in subscribers. In October of 2005, Terracom bought RwandaTel for $20m.
"I am optimistic that Terracom will expand telecommunications and reduce prices to its respective customers and Rwandans at large," said Rwanda's Finance Minister Dr. Donald Kaberuka when the deal was announced.
When pushed, Wyler tries to dodge financial questions about Terracom. For example, the funding for the company comes from unnamed investors in the UK. In addition, Terracom does subsidize some of its services at the moment, but won't provide details on the scope of the price breaks. The firm highlighted its for profit intentions after laying off 136 workers, following the RwandaTel buy.
"I try not to talk about the investors or financial issues," Wyler said. "People tend to get caught up in that."
While turning Terracom into a successful service provider is a long-term goal, the company will focus for now on laying more fiber and bringing cheap internet connections to as many people as possible. So far, close to 700 people have signed up for the combination ADSL and phone service, while thousands use free dial-up services.
Over the next few years, Terracom will work with Sun Microsystems to put 20,000 thin client computers in hundreds of Rwandan schools. The thin clients do not have power hungry processors, disk drives or fans and require about 20W as compared to a 200W PC. The power savings should make it possible to run the thin clients on solar power, according to Wyler.
Terracom plans to manage the servers behind the thin clients, and Sun will likely donate some of the gear in the project. A number of countries around Africa have contacted Terracom with the hopes of establishing their own high-speed networks. The company, however, remains cautious about stretching beyond Rwanda.
"Everybody wants us to do this in their country," Wyler said. "In order for us to even think about expanding, the country would need to have a political environment that is clean and forward thinking. If we can get the computing density up in Rwanda, then it's a great model for these other countries."