2011's Stealth Tech Trend: Smartphones Go to the World's Hinterlands

This is the time of year when people come out with lists of trends for the 12 months ahead. But I'm going to focus on just one that I think has a lot of potential: People in really rural parts of the world could get wide access to the Internet through cheap wireless base stations and smartphones. Why would they want the Internet? The answer is simple: money.

A lot of cash gets sent to people living in rural parts of the world from family members who have moved to more urban areas, but that cash doesn't move particularly efficiently. The mobile Internet could change that.

Eric Brewer, a computer science professor at UC-Berkeley, has figured all this out and started to introduce his idea of a mobile payment network. He has connected rural areas in India and the Philippines to the Internet, enabling hinterland communities to gain access to basic services such as health, education and money.

Needless to say, the idea of bringing the Internet to such communities raises social and economic questions:

  • Why would a rural community want Internet access if it may lack (and want) access to more basic services like electricity, water and sewerage?
  • How could a rural Internet access service provider build a workable technological infrastructure?
  • How could such a service provider make a profit?
  • Who would finance such a service?
Cheap, Robust Access at an Ultra-Local Level

Brewer, who founded search engine provider Inktomi and sold it Yahoo in 2003, has figured out some answers for these questions. He points out that smartphones are taking over the niche occupied by PCs. Brewer believes that smartphones are the best way to get the Internet to rural regions. And their enhanced capabilities will allow smartphones to do things cheaply and portably for the inhabitants of these areas that PCs weren't designed to do.

With their imaging capability and data-collection technologies, for example, smartphones could be add a new layer to rural health care systems. Already, with inexpensive add-ons, smartphones have been proven capable of running diagnostic tests for tuberculosis and malaria.

Brewer has also thought about how to get cellular service into a rural area cost-effectively. Researchers have built a rural cellular base station in Ghana for about $200,000. Brewer and his colleagues are working on one that's even less expensive: a $5,000 base station consisting of a PC, a solar electric panel, and a WiFi link that could handle 10 calls. If they were able to share revenues with larger telecoms with networks in urban areas, Brewer believes that a network of mini-telcos would emerge.

Creating a Virtuous Circle

Brewer thinks such rural wireless service providers ought to be backed by entrepreneurs and possibly micro-financiers, rather than large institutions such as the World Bank. His reasoning is that startups are more likely to be willing to make the investment of time and energy needed to get such services operating effectively. Moreover, if small operators can get such services up and running quickly, word of their success will spread, and other rural communities will follow suit.

While using smartphones to improve health care for people in rural communities is a worthy goal, it's probably not the right application to help get such micro-telcos off the ground. For that, Brewer's previously stated idea -- using the rural wireless Internet as a means of remittance processing -- is the better business model.

The magnitude of these payments is particularly striking in portions of Africa and the Philippines. Here are some figures for 2009 remittance levels that Brewer provided:

  • North Africa: $17.6 billion
  • Philippines: $14 billion
  • West Africa: $10.4 billion
  • East Africa: $5.9 billion
Remittance processing is obviously a vital application, and rural residents in the developing world do not now have such an easy, reliable way to get access to the cash that their distant family members send them. The convenience of such a service -- and its lower costs -- would make life better for both the senders and the receivers.

Hurdles Are High, but Surmountable

Brewer's idea is certainly worth exploring: The key to its adoption would be to find a technological infrastructure that is robust and cost effective. I don't have any particular insight into how to make the technology work under rural Africa or East Asia's weather and other conditions. However, beyond that, the economic model must pass certain tests for it to take hold.

Specifically, the fixed costs of setting up such mini-telcos must be more than offset by the profit -- possibly from subscription fees and remittance processing payments -- of delivering wireless Internet messages. Moreover, this mini-telco must work out a way to get smartphones into peoples' hands at an affordable price.

Those are considerable hurdles, but it's possible to imagine that as these mini-telcos become viable, capital would flow into innovations that would push down the cost of setting them up and operating them.

And once the infrastructure is profitable for remittance processing, new uses for the rural mobile wireless Internet could emerge. These might include the health-monitoring applications that Brewer discussed and possibly e-commerce -- to sell the goods produced by those living in rural villages to people around the world.

In theory, it would be great if everyone had Internet access. But this will happen only if ideas like Brewer's can be made economically viable for capital providers, service providers and rural communities.

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