The cost of Internet access - and the importance of IP transit
Data recently released by the International Telecommunication Union (ITU) states that achieving universal access to broadband connectivity before the decade is out will cost about $428 billion. It’s a staggering figure that considers infrastructural needs, basic digital skills, local content and regulatory frameworks. Africa’s broadband ecosystem certainly stands out in terms of need and investment potential. The continent is home to 17.2% of the world’s population and yet less than half of its inhabitants use the Internet. This presents great opportunities for collaboration towards business growth and economic development. However, it’s important not to undercut on quality – particularly as the coronavirus pandemic has shifted so much of our lives online, including access to essential services. Addressing the digital needs of underserved communities is vital work that has the potential to transform people’s lives. I’m fully behind the idea of digital connectivity as a human right – but that doesn’t mean any low bit rate connection will do. Everyone has a right to reliable, high-quality and affordable connectivity – and that needs to be our baseline. Interestingly, when we look at all the components involved in broadband service delivery, an unexpected (for some) picture emerges. The costliest component is not actually the one that impacts the quality of the service the most. Take a look. The IP transit component has the biggest impact on the end-user; it allows users to send and receive packets of data to every other connected device in the world reliably and at the highest quality possible (taking redundancy, latency and routing into account). Yet, at around 3%, IP transit is a fraction of the overall cost for an ISP to provide an Internet service to an end customer (in South Africa). However, the cost of the last mile gobbles up almost 60% of the total revenue! This will naturally vary depending on the cost of IP transit in the market, regulatory fees, the number of last mile providers, and so on, but it does provide some important food for thought. All too often ISPs focus solely on price, and don’t consider the question of quality as much as they should. ISPs shouldn’t risk buying the cheapest IP transit on the market – sinking the ship for a ha’penny worth of tar and all that. Instead, they need to see it as an area that needs maximising for the best, most cost-effective results. These are four key points to bear in mind: 1. Prioritise network security The Mutually Agreed Norms for Routing Security (MANRS) operator community helps ensure groundwork is in place to acceptable levels of security, stability and performance within the Internet community at large. So, ideally you want an IP transit provider that implements the MANRS routing manifesto actions (this can be checked here Another critical security element to consider is RPKI ROV; I would strongly suggest making sure that your upstream ISP drop invalids (which you can do here 2. Double-check the local routes It’s important to know if your IP transit provider is well peered with all of the major local networks (both content and eyeball networks), preferably over PNI. That way, they can keep traffic local if an Internet exchange has a wobble, or there is a major failure network. The most reliable way to verify this is through a looking glass; if they don’t have a publicly accessible looking glass listed on peering db (https://www.peeringdb.com/), that’d be a big red flag for me! 3. Ask for guarantees Like any good partnership, make sure your IP transit provider operates transparently and is not afraid to stick their neck out for you. If there’s an attack can they work with you to mitigate its impact? Do they have enough highly skilled engineers to work with you through major failures? What are their latency and packet delivery guarantee levels? A financially punitive SLA provides confidence that your provider is going to go above and beyond to get the job done. 4. Renew relationships In a time of ‘great deals’ and ‘great prices’ don’t underestimate the importance of great long-term relationships. Even if the price-tag is slightly higher, I think it’s wise to consider the value of a proven quality service that comes with 24/7 support and in-country engineering expertise that you can build a strong relationship with over time. In pursuit of ubiquitous connectivity across Africa, let’s not drop the ball on quality. While cost is always a necessary consideration, knee-jerk decisions based on price alone are rarely successful. When it comes to IP transit, they make no financial sense at all. Let’s all do our bit to keep the African traffic in Africa as opposed to looping it out of the continent and back again for no good reason at all. Ed. (first published on ITWeb - The cost of Internet access – and the importance of IP transit | ITWeb)
Connecting the continent – imagine Africa’s Internet in 2030
Here’s a thought. Imagine if we grew the Internet in Africa over the next decade as fast as we grew it in the last… what would that mean for the continent? In my business meetings and social engagements alike, we all agree that the digital economy is crucial to Africa’s economic development. The World Bank states that universal and affordable Internet coverage can help address crippling issues such as poverty and unemployment. Africa’s digital transformation would help raise growth per capita by 1.5% and reduce the poverty headcount by 0.7% per year. Given that so little of the current population has high-speed access to the Internet, there is some exciting – and necessary - work ahead. Momentum is already well underway. In the last 10 years, the number of local Internet Exchange Point (IXP)s has doubled and there are now 46 active IXPs across 34 African countries. If we could double that again over the next 10 years, there could be up to 100 IXPs helping to connect the African continent by 2030. IXP growth = economic growth IXPs operate as interconnection points for networks. They are essential pieces of infrastructure that help keep Internet traffic local and thus, more accessible and affordable. What’s more, their presence is an important indication of a market’s developmental stage. There’s a marked difference between countries that have developed a strong IXP ecosystem and those that are still on the rise. The Internet Society reports how the exponential growth of IXPs in Kenya has contributed to faster and more affordable Internet connectivity, improving user experience and reducing users’ costs hugely. For example, the Kenya Internet Exchange Point (KIXP) grew from carrying a peak traffic load of 1 Gigabit per second (Gbps) in 2012 to 19 Gbps in 2020. According to the ISOC report, this resulted in vast cost savings for all networks that could connect to the KIXP. Fast forward 10 years and it wouldn’t be surprising to see terabit per second peaks at IXs in Kenya. South Africa has six Internet exchange points. The largest IXP is NAPAfrica - not just in South Africa but in Africa – with three Internet exchange points and over 700 members. The other three Internet exchange points are with INX-ZA which manages JINX – the oldest IXP on the continent and one of the oldest IXPs still operational globally. As of 2020, South Africa’s six exchange points carry more than 1Tbps. This has saved networks fortunes. There is no doubt that IXPs drive Internet ecosystem growth which in turn, helps fuel a country’s economy. IXPs need networks The growth of IXPs across the continent is impressive. However, we need to acknowledge the importance of underlying infrastructure. This enables networks to reach users and interconnect with other networks such as content networks at an IXP. Interestingly, the number of unique terrestrial paths connecting Nairobi and Mombasa in Kenya is roughly equivalent to the number of paths between Johannesburg and Cape Town in South Africa. If we look to West Africa though, there is no comparable connectivity between two of its metropolitan areas. South Africa has established itself as the Internet hub for Southern Africa and Kenya is currently the hub for East Africa. Right now, the jury is out on where the hub will emerge in the west. Fast forward 10 years and make a guess – Lagos or Accra? Abidjan or Kinshasa? Perhaps the mix of English and French-speaking countries has constrained collaboration somewhat in West Africa. As it stands, there isn’t enough collaboration between markets with each doing its own thing. The ISOC report does state that in Nigeria, the IXPN grew from carrying just 300 Megabits per second (Mbps) to peak traffic of 125 Gbps in 2020. One would only presume that Ghana is gearing up too but are there enough networks to support IXP growth in West Africa? Easy, ethical business environments Healthy regulatory environments are an important factor in developing the ecosystem. What is clear is that the ability to get licensed quickly and efficiently and at a fair price has a huge impact. Workonline for instance, recently secured its license in Ghana and has selected PAIX’s carrier-neutral data centre to deploy its first point of presence (POP) in West Africa. This is a great step in the right direction to boost Ghana’s Internet ecosystem and hopefully position Accra as a key city for interconnection in West Africa. Our mission now is to further develop the Internet ecosystem across Africa; extend networks, reduce costs, localise traffic, boost local content production, and ensure robust, reliable connectivity. While there are many challenges ahead, the achievements so far demonstrate an ambitious continent – from east to west, north to south – eager to grow. We don't know exactly where it will all land but I have a feeling it will be up and to the right on any graph! Ed.
Building a better Internet in Africa – the time is now
I was recently reminded of that analogy between railway networks and telecom networks. Both are crucial infrastructures that connect people to the wider world and transport various goods and services. The more extensive the rail or telecom network is, the more opportunities there are for business growth and economic development. The thing about building a good network though, be that rail or telecom, is that stakeholders need to work together. Without collaborative effort between public and private players, the entire project is derailed, or unplugged if you will, by narrow-minded objectives. I think it’s worth being reminded of – particularly as we navigate the new normal of the Covid-19 pandemic. Virtual networks and digital access are more important than ever before and yet, Internet penetration in Africa is still only 39.3% compared to a world average of almost 60%. There are huge opportunities for the African Internet market right now: demand is through the roof as businesses, homes and governments all scramble to shift their operations, lives and services online. So, in these troubled times, how can we push the Internet further and faster across the African continent? Happily, we don’t need to reinvent the wheel. As demonstrated successfully in other regions, a more consolidated approach between governments and businesses is vital. Here are three key focus areas: 1. Licensing and regulations The regulatory environment in Africa is absolutely critical to attracting investment and evolving the continent’s Internet ecosystem. Unfortunately, some markets are held back by heavy-handed governments; in one African market, for example, a megabit per second costs $90-$99 but is sold at $280 – that’s a hefty Internet tax of around 200%. On the flipside, South Africa’s deregulated business environment, coupled with the deregulation of the telecommunications framework, created a boom in licensed ISPs and IXPs across the country. This helped fast-track Internet penetration and resulted in vast economic growth. Connectivity is still far from ubiquitous but energetic entrepreneurs and SMEs are working hard to get things done – without too much negative interference from government. 2. Connectivity Access to new markets across the African continent is increasing thanks to a growing number of both terrestrial and subsea cable systems. One of the new kids on the block, 2Africa, for example, is an impressive subsea cable that will start serving the African continent in 2024. Many new business opportunities have arisen as capacity for Internet services increased in line with demand. This will hopefully induce an exciting influx of new online content producers, payment platforms, retail services and the like. 3. Mutual data centres and data exchange With the continent’s supply of subsea cables growing, the demand for data centres – particularly colocation - is growing. We’re seeing a continent-wide spike in interest and investment in data centres. South Africa is currently Africa’s largest data centre market with Nigeria coming in second. Just a few months ago in March, when most business activity had effectively shut down thanks to COVID-19 lockdowns, PAIX announced their new datacentre launch in Kenya and emerging-markets investor Actis bought the Rack Centre in Lagos. There is still massive scope for growth in Africa now. It’s a real opportunity for us to increase penetration and evolve the Internet ecosystem for good. This is both a terrifying and seriously exciting time. A consolidated approach will get things moving faster and provide bigger, more sustainable wins for us all. Ed
The Internet’s ‘new normal’ - the good, the bad and the heroes
At least half of the world is currently in some form of lockdown as governments attempt to slow the spread of COVID-19 and 'flatten the curve' of infection rates. While such measures are crucial to save lives, the economic costs are nonetheless devastating. Wherever possible, communities, organisations, individuals, and businesses are using the Internet to stay connected, provide services and keep the (somewhat smaller) wheels of commerce turning. The digital economy has kicked in to enable what’s being touted as the world’s biggest work-from-home experiment. For those who can access the Internet and use it to their advantage - be that for delivering on a deadline, watching a movie, buying food or even getting a medical check-up - it’s working well, for now. So well, in fact, that Google and others like it have said that their employees will be working remotely until at least 2021. Twitter has announced that its employees will be working from home ‘forever’. Africa’s demand for online access is not only growing in terms of volume; more users are demanding higher speeds and better quality connectivity too. I think Seacom’s 15% increase in South African data traffic is indicative of how people are now behaving. Workonline recently announced its connection to France-IX to expand its peering capacity in Europe, whilst also increasing its transit and backbone capacity across Europe (which is it impressively able to do remotely after the implementation of Covid19 related planning) to meet the growing demand in Africa. Many FTTX providers have won popularity points recently by increasing packages and offering more bandwidth at no extra cost, however, there have been concerns that this may set an unsustainable expectation. It’s all well and good increasing the size of the motorway to allow for more traffic and less congestion of the last mile, but if rest of the global networks (such as undersea and terrestrial cables, peering ports, etc) haven’t also been upgraded this can lead to a worse experience for all. Some much-needed recent good news is the announcement that 2Africa, the impressive new subsea cable to serve the African continent and Middle East region, is going ahead and is fully funded by leading undersea cable network operators such as Facebook, MTN GlobalConnect, Orange, STC, China Mobile International, Telecom Egypt, WIOCC and Vodafone. The build will be led by Alcatel Submarine Networks (ASN). All going well, I’d presume that this exciting boost to the continent’s Internet capacity will start to impact the local markets in 2024. While COVID-19 threatens human health, it has also put the health of Africa’s Internet ecosystem at risk. What we do know is that tech supply chains have been disrupted and hardware manufacturing has been hampered. Some questions I have been asking myself of late are: Will the new cables, 2Africa and Equiano, go live on time? Will the Internet ecosystem be able to continue meeting the continent’s huge increase in demand for Internet connectivity if new cables are delayed? How will consumers react to fluctuating prices should supply drastically wax and wane and wax again? Price volatility is going to be par for the course as we figure out the ‘new normal’; how will network operators, particularly the outfits less resistant to big market swings in the short to midterm, respond? I think, given all the questions we face, that it’s important to approach the Internet’s ‘new normal’ with pragmatism. We’re going to have to give a little to get a little, let alone some form of normality. This calls for patience, calm, flexibility, dedication and a realistic attitude to what is and is not possible. What’s more, as Internet access fast joins Maslow’s hierarchy of needs, our Internet engineers and technicians should be lauded for the heroic work they are doing while navigating a combination of constrained operating conditions, global uncertainty and individual anxiety. In fact, I think this is one of the most important shifts to come out of this period of total upheaval. Now more than ever we need to acknowledge the men and women who are working hard in testing conditions to keep the Internet on. These specialists rarely get the credit they should and yet they are out there every day, facing enormous challenges (not to mention irate clients) fixing and splicing fibres, connecting people and innovating solutions. The health of the Internet depends on them and they deserve our applause. We are living in extraordinary times. Yes, we face a lot of unknowns but when has the world ever stood still? One thing is for sure though, the Internet is going to play an even more central role in all our lives going forward. Look at the online retailers, digital banking platforms, virtual meeting apps, online teaching/ learning, collaborative tools and platforms, and live-streaming entertainment channels. They are all enjoying massive growth right now, and only enabled through the provision of reliable Internet connections, secure data centres, and the rest of the digital economy. As with any crisis, the speed at which COVID-19 has transformed our society and economy presents many exciting opportunities as well as unnerving challenges. We can either dig our heels in and fear the worst or we can adapt to our changing circumstances with gusto. I don’t know about you but I’m choosing the latter. Ed
Countries, cities and communities around the world are adopting restrictive measures to contain the spread of COVID-19. Currently, the most effective ways we are aware of to slow the rate of transmission of the coronavirus is to wash your hands regularly and minimise social contact as much as possible. As self-isolation becomes the new norm, many people are turning to the Internet to stay connected – and to keep working. Here I am, sitting at home, working away, surrounded by (dare I say empty) crisp packets. My proximity to the kitchen does not bode well for my health. That said, while the increasing numbers of people working from home need to pay attention to their expanding waistlines (going running seems to help me a little), IP transit services and ISPs have a slightly more challenging task ahead. They need to keep the Internet on. The exponential rise in Internet traffic is already putting heavy strain on bandwidth capacity abroad. In a crisis like this, we really don’t want hospital x-ray machines and other vital medical equipment to stop working because the Internet is down, as #NLNOG so rightly pointed out in an industry thread last week. Given that we currently face a lot of unknowns – particularly here on the African continent where the impact of COVID-19 still hasn’t realised its full Machiavellian potential – what can we do to ensure the continuity of Internet services for the health and well-being of our societies? Businesses that form a critical part of Africa’s Internet ecosystem need to operate responsibly to ensure stability. Here are some ideas: Be communal: Manage business priorities while simultaneously working together (be kind!) to avoid any loss in services as demand on critical infrastructure increases. Netflix, for example, has cut streaming quality in Europe for the next 30 days to help reduce the strain on ISPs. Be proactive: Review and consider emergency business practices that have been productive in hard-hit countries abroad and implement measures before being caught on the backfoot. Be sensible: Just as medical services are asking people to postpone elective surgeries, I feel that it is important for the Internet community to postpone all non-critical maintenance. Have a look at the operational considerations for ISPs and network operators that Job Snijders of NTT put together for more on this topic. Stability and security: Continue with work that improves routing security (look at MANRS and RPKI BGP ROV) and increases reliability, but don’t worry about cosmetic work for now. Be safe: Protect your employees’ health by postponing any work that involves a group of people congregating, such as installing big routers or lifting heavy gear. Plan for the worst. There are some new realities that we need to adapt to fast. Tradeshows and conferences have all been cancelled, borders and airlines are all closing for the foreseeable future. RIPE80 is a great example of the industry shifting from physical to virtual meetings, and there will be many more to come no doubt. On the upside, my personal contribution to global warming has hit an all-time low (although I usually do offset my impact in other ways). Last year I spent 278 hours inside a metal tube hurtling through the sky, flying a total of 204 000km! On the downside, transporting critical equipment and people involved in shaping and ensuring the Internet keeps working will likely become very challenging. All we really know right now is that we don’t know what lies ahead. That said, I err on the side of optimism and believe that tough times can reveal some extraordinary opportunities. Right now, many are working from home looking for better connectivity and collaboration platforms. That’s just one of the many different needs – some perhaps more critical than others - that will require our help as the next few weeks unfold. For now, social distancing seems to be the best defence against COVID-19. By working together (virtually speaking of course) – and working responsibly - we can facilitate re-instil business confidence in due course and ease social stress as much as possible by keeping people connected. I implore the community at large to all do your bit… one way or another, we will get through these challenging times. Right, time to check the fridge. Ed
One of my main goals to unite the technical community in South Africa. I want to do this because I believe it allows the community to grow and develop. Through all my travels around the world over the past years, visiting many different technical communities, I’ve seen the impact that this can have. It’s in stark contrast to South Africa. It seems that South Africa engineers are overprotective of their perceived intellectual property and a more open approach to sharing and collaborating on industry challenges would, in my opinion, accelerate our development and bring us to the forefront of the industry. It is definitely a current shortcoming of the local community that I’d like to address. It was these thoughts that I shared with the judging panel that recently chose me as a finalist in the IITSPA’s 2016 IT Personality of the Year Award. I was truly humbled by the nomination, and would like to send my sincere congratulations to the winner - Sbu Shabalala of Adapt IT. It was inspirational to be recognized with local leaders who are making an enormous difference to the local technical community. The leaders and captains of industry recognized by the IITSPA are a group of incredibly inspiring leaders who will make inroads (and headlines) in the years to come. One thing I love about South Africa is that companies are open to learning and tackling issues in innovative ways. This is one of my favourite aspects of the local network engineering community, as well as it being a very entrepreneurial environment. I think that openness needs to be extended and exploited to let us grow faster, take the lead, and put the SA technical community on the map on a global scale. Ed
I have, for some time, touted the Internet as a basic human right. There are still many who view it as a luxury for those who can afford it, but it is my opinion that in the modern era, humans who live without access are prejudiced to the point where their rights are compromised. It should therefore be one of the top priorities of governments everywhere to ensure that all citizens have the means to access the Internet at a realistic price. The Internet should also be seen as a human right because it supports other inalienable rights, such as freedom of expression, where those without access are at a serious disadvantage to those who have.
Increasingly, the communities in which we interact are moving online. Those who cannot interact in online communities or on online platforms are negatively impacted by their lack of access. In addition to freedom of speech, other UN-recognised human rights that are impacted by lack of access are the right to development and the right to freedom of assembly. While these rights were initially recognised in the physical space, the online space is becoming increasingly important in this regard as more people gain access to the online space and the possibilities of this space continue to grow.
The right to development encompasses several aspects. There are so many examples of businesses that have been started with nothing more than a smartphone. Having access to the internet as a whole on a reasonably affordable device is one of the cheapest ways of unlocking economic potential.
However, probably the most important aspect of Internet access in terms of human rights is the access to education. Although there are many factors that play a role in human inequality, the lack of education has to be one of the biggest contributors to the inability of people to lift themselves out of poverty.
In South Africa and many other parts of the world, one of the biggest contributors to the disparate education levels that persist is the difference in the quality of education, particularly when urban and rural areas are compared. If you have the Internet at your disposal, suddenly everyone has access to the great interactive library, giving those who are determined to achieve a far great chance of succeeding.
This access not only opens up educational opportunities for children of school-going age, it also provides an opportunity for those who had to drop out of school due to social or economic circumstances to complete their schooling. With internet access, no one is too old to address shortfalls in their qualifications or knowledge and change their destiny.
From there, the sky is the limit. Once schooling is complete, the wealth of online courses one can complete is vast. Even learners who may not have the resources to complete a formal course, could access the information online to potentially pursue the career of their choosing.
The Internet also provides an informal route to improve one’s livelihood. The Internet provides a wealth of information that users can combine to constitute their own education, particular to their needs. Through formal education, I feel that creativity is often stifled, however educating yourself according to your own personality, you might well be able to be successful in, and make a unique contribution to, business.
The value of access to the Internet to change people’s lives should therefore not be underestimated. Now, more than ever, governments and businesses need to focus their energies on ensuring that connectivity is not merely reserved for those who can afford it.
A very exciting space in which to create a new business is in the field of providing internet services. In terms of scope for development, the (Internet Service Provider) ISP environment in South Africa, and the rest of the African continent, is practically still in its infancy and there are numerous opportunities for new entrants to carve a niche and be competitive. Especially in the more established ISP markets across Africa, new entrants are mushrooming. This has created a market that is hungry for alternatives and competition, opening the door for new players. There are so many different aspects to Internet service provision, that one can create an ISP focused on a specific segment of the market to discern oneself from the competition. While there is scope for the entry of more big players in the market, there are also opportunities for smaller service providers to enter the fray. These operations require neither a large company infrastructure nor millions of USD in finance to get off the ground. For example, in the US two brothers started their own ISP, Brooklyn Fiber, on the roof of their grocery store to bring faster and more reliable Internet to their neighbourhood. These are the steps that prospective entrepreneurs can follow to set up their own ISP: 1. Market research Once you believe that you have identified a need in the market, it is time to carry out comprehensive market research and ensure that there is sufficient interest in your service, and that you will be able to provide it profitably. Predominantly, regulatory restrictions and getting access to the larger global networks will determine whether you are able to set up the ISP in the first place. Should this be the case, then it is necessary to create a long-term business plan that sets out the plan for the business. This should focus specifically on how the business will expand its reach, and how it will differentiate itself against current players, but also new entrants into the market. 2. Legal considerations Before getting started, you have to ensure that all the legal boxes have been ticked. First and foremost, you need to ensure that you have a license to operate in your chosen country. Getting these licenses in place may take some time, or not be possible at all. I would always suggest consulting regulatory specialists aware of the nuances in the market you are planning to build in. 3. Get your IP addresses and ASN The next step is to get resources, such as Internet protocol (IP) addresses and an Autonomous System Number (ASN) from the local regional Internet registry (RIR). An RIR manages the distribution of IP addresses and ASN resources in a specific region on behalf of IANA. There are five RIRs, each covering a continent; AfriNIC in the case of Africa. 4. Decide on your transits and peering Transits connect the ISP to the larger Internet. Because there is no single provider that connects directly to all other networks on the Internet, transits deliver traffic through multiple other transit networks. IP transit is purchased through transit providers, such as Workonline Communications. Transit providers have geographically different areas of strength depending on how their network is built. Deciding on the topology of your network is vital to its success, and usually requires expert advice. Most ISPs purchase transit from multiple providers, with different prices and service level agreements in place. Peering at Internet Exchanges (IXs) to reduce costs or improve performance is also an important consideration. 5. Find a carrier neutral facility Carrier neutral data centres allow interconnection between the parties collocated within the facility. By using a carrier neutral data centre, you are able to switch providers, or connect to multiple providers, without having to physically move or deploy more infrastructure in another location. This is important in South Africa, because since Telkom’s monopoly ended in 2007, over 300 companies have been licensed to build networks. This creates increasing competition and opens the market for new entrants. A truly carrier neutral data centre allows an ISP to react to a developing market, keeping options open in terms of carriers and service providers. 6. Engineering skills Many smaller ISPs opt to employ outsourced network management services, which assist in reducing risks and lowering costs from the start, as opposed to employing high-end skills on a day-to-day basis. 7. Acquire infrastructure The next step, is to then invest in your own physical infrastructure, such as routers and switches. The choice of equipment will be decided by the design and topology of your network. It is always a good idea to thoroughly research what routing and switching infrastructure will grow with you, and meet your specific needs depending on what services you intend to offer. 8. Final setup Now that everything is in place, only the final setup remains. This means running your interconnects to your transits and peers and configuring the routers and switches.. After months of planning, you are now ready to open your doors as a fully-fledged ISP. Ed
Advice for budding Techtrepreneurs; critical lessons I’ve learnt in starting my IT business
Starting a new business is daunting. But when starting a new business in the IT and Telecommunications field, things can get exponentially hairier, but done correctly, having a business in this industry can be extremely rewarding, both personally and financially. One of the most exciting aspects of the technology industry is the rate of change we see. This allows for the creation of brand new, successful businesses on a daily basis. Although starting any new business is always a challenging undertaking, it also has the potential of being one of the most fulfilling experiences. If you see the potential to create a business, and you can make a compelling argument that the business model has longevity, I would encourage you to go for it.
I would like to share some of the important lessons I learned first-hand with those who are just starting out or thinking about creating their own business. These are by no means the only things you should consider, as there is by far a long list of things an entrepreneur should know before starting a business, and thankfully we have Entrepreneur Magazine for that, but these are some of the things I have learned that you should definitely consider and contemplate more than once.
1. Formalise your business agreement One of the most important consideration for a new business is to ensure that there is a strict, formal, well-written agreement between you and your business partners. Do not only plan the way the business is going to work, but also how it will fail, and what each party is liable for if it does. I have always insisted on putting such agreements in place and it has saved my relationships with friends in the past.
2. Cash flow is king In addition, cash flow management remains a critical task for any business at any stage. Any business, particularly one that has just opened, is at serious risk of failure if cash flow becomes compromised. Watch your cash flow like a hawk, which means planning and accounting for every little cent you’re going to spend. The margin between making it and failing can sometimes be as small as purchasing something for the business this month, when it could have waited another month.
3. Work towards the best, but plan for the worst What happens when the business goes bust is a difficult thing to talk about, because when you are starting out, you are hopeful and idealistic, and you do not really want to talk about the downside. But you have to talk about it, and plan for a situation where the business goes under.
4. Beware the financing trap
To return to financial management, I would discourage new business owners from acquiring too much finance and being over-indebted from the first day, unless it is absolutely necessary. Finance needs to be repaid, placing strain on that all-important cash flow, when often an innovative solution will reduced the reliance or even the necessity of finance.
5. Learn to walk before you try the 100m Olympic spirit Nine out of ten times, I find that budding entrepreneurs have completely overestimated what they are going to need to spend to get started. New businesses often want to splash out on marketing, without asking whether they have a product to sell and whether people would want to buy it. If you know that people will buy your product, go out and sell it first. Just get your first order. If someone is willing to pay you for something if you deliver it to them, you have your first order, and all you need is the cash to produce the product or service. This may mean starting smaller than planned, or maybe lower margins from the start, but it reduces the risk profile of the venture drastically.
What I have seen a few times before is someone leaving their job with enough money to pay themselves a salary for a few months, and then spending all that money on setting up a marketing plan, doing a little advertising, and on other operational expenses, without having sold anything yet, and then go bust due to a lack of revenue.
6. You are either all in, or all out Something that always amazes me is people saying that they would like to get involved in a part-time business. I always draw parallels between having a business and having a baby. It is going to be kicking and screaming and be very fragile in the first few years. If it is not, you are doing it wrong. If the business makes it past the first few years, it has a better chance of surviving. Like a baby, the older it gets, the more it is able to look after itself. However, it needs your involvement at the outset. If you can only devote some of your time to the business, you might be absent during a crisis, and that could prove disastrous.
7. Be future first Finally, it is important to plan well into the future. Basic business plans with a long-term outlook are one of the cornerstones of a successful operation. You should have a vision of where you want the business to be in 50 years, and how you want it to get there. Chances are that the business will almost definitely not end up where you thought it would as it will evolve over time, but thinking into the future helps you to anticipate eventualities, and plan for how to deal with them.
With the best intention, a business may go bust due to market conditions that are completely out of your control. A fluctuating exchange rate may cripple you slowly, or a revolutionary development within your industry may render your product or service obsolete overnight. These can impact everyone, so rather focus on what you can control; focus on the things that you can have a direct and tangible impact on the outcome. The 7 point I have listed are those that I found to be the most important in my journey, however your journey may present others that impact on you even more. Keep a list of the challenges you face and the lessons you learn, and always refer back to them to help you to keep developing. One of the most important consideration for a new business is to ensure that there is a strict, formal, well-written agreement between you and your business partners. Do not only plan the way the business is going to work, but also how it will fail, and what each party is liable for if it does. I have always insisted on putting such agreements in place and it has saved my relationships with friends in the past.
Six of the most important things African tech start-ups need to know
The number of tech start-ups in Africa is rising rapidly. While the perception of the viability of tech start-ups in the majority of African countries has not been entirely positive, in reality, the conditions for creating a successful tech business have hardly ever been more favorable for those with innovative ideas. 1. Although the subdued growth rate has been frustrating for many, living standards on the continent are rising steadily, and with this, the demand for more technology. As a tech start-up in this environment, the first thing you need to know is that bandwidth can and will be a commodity across Africa, even in remote areas, at some point in the future. Until then, make sure your idea is mobile friendly and is community driven. Find a specific niche in the market and keep your start-up laser focused on what that community needs, how they would put your idea to use, and what your goals are. 2. Know that once you have something that is of value for that community, there will be other communities that will find value from it. Think for example, how Uber has grown to be the largest taxi company in the world. Other tech start-ups, such as AirBnB, have also become leading players in their fields. Whenever they become this successful, they open the doors of opportunities. With Uber, there are so many opportunities to become a supplier. Likewise, there are so many ways of doing something similar and riding on the coattails of their idea. Look at how AirBnB has opened a market for anyone with a spare square and to earn whilst doing so. Make sure your idea is expansive, that it can positively impact communities and grow employability and entrepreneurial spirit. 3. Never forget that despite the fact that the rulebook is often rewritten by new and innovative tech start-ups, basic business principles still apply. Of these, nothing is more important than cash flow. A downfall of many new start-ups is shortsightedness, and not paying enough attention to traditional business processes. Cash is king, if you can’t pay your bills, or don’t have a clear financial strategy, the venture is likely to be short lived. 4. Importantly, entrepreneurs must resist the temptation to bend the rules to get the business going. Getting the right legal framework in place can sometimes be a slow and painful process, but I would urge start-ups not to pay any facilitation fees of any shape, form, or kind. This might be trickier to avoid in some markets, but avoiding this will pay off in the long run. 5. Funding schemes abound: from hungry investors seeking out the next best app to farsighted business angels waiting to befriend the continent’s billion-plus buying power. A possible pitfall for tech start-ups is that of venture capital. This has two sides. Business owners often overvalue their operation, which is human. On the other hand, because equity is hard to come by, business owners often end up selling their souls, per se, to funders who may not have the business’s best interests at heart. There are many funds that are set up by governments to support budding entrepreneurs, which also come with the assistance of an advisor. It may be worthwhile to look at these opportunities before jumping into the arms of a venture capitalist. Many business incubators can also offer good advice. 6. I subscribe to the conviction of endurance. Often startups are seen as flash-in-the-pan disruptive fads. There is an interesting practice that I have only encountered in Japan, where people write a business plan for the next 100 years of their operation. Of course, the plan will not look anything like it does now 100 years down the line, but it forces one to think past oneself and into the future. It forces you to look at the business in such a way that it is not linked to your persona. When business owners sit down and do this, they lay the groundwork for a company that has the potential to be profitable well into the future. Ed
Internet Protocol version 6 (IPv6) is the current iteration of the Internet Protocol and designed as replacement for IPv4. The updated version also offers several functionality enhancements for those who have switched to the new protocol. IPv4 was first defined in 1981, and utilised a 32-bit address identifier. The newer IPv6 addresses are 128-bits in length, vastly enlarging the size of the usable address space. IPv4 Internet addresses are quickly becoming exhausted. By contrast, IPv6 offers a staggering quantity of usable addresses, and are unlikely to reach exhaustion in the foreseeable future. Despite the many advantages offered by IPv6, uptake around the world has been relatively slow. To accelerate its deployment in Africa, groundbreaking terrestrial network service provider Workonline Communications is offering 100 Mbps of free IPv6 transit to qualifying AfriNIC Local Internet Registry members. AfriNIC is the regional Internet registry for Africa that administers Internet number resources, including IPv4 and IPv6 address space. The latest version of the Internet Protocol features vastly expanded address space to provide for the needs of the rapidly growing number of Internet-connected services around the world. Through Workonline Communications we hope to facilitate skills development and improve operational knowledge of the new protocol within the African service provider community by providing zero-cost interconnection for African networks with the global IPv6 Internet. IPv6 facilitates interconnectivity for the proliferating number of connected devices and appliances from smartphones to automobiles, enabling the continued growth of the “Internet of Things”, made up of truly connected homes, businesses, communities and commercial centres. Managed effectively, IPv6 allows the reduction of the amount of information stored on network devices to route packets to their destinations. Smaller routing information bases increase efficiencies and performance, and improve the overall costs of operating provider networks. Network configuration is also simplified under IPv6. Through stateless auto-configuration, a host can generate its own IP address, reducing the need for manual input from network administrators. IPv6 further enables a host of new and valuable Internet services by eliminating the need for address sharing technologies such as Network Address Translation and re-establishing the end-to-end connectivity principle envisaged by the original architects of the Internet. This makes peer-to-peer networks much easier to create and maintain and enhances other IP services such as VoIP. Because of the numerous benefits associated with IPv6, along with the limited useful lifespan of IPv4, industry professionals around the world are working with network owners of all kinds to improve adoption rates. This offer of free transit is our way of supporting the ongoing efforts of the community at large to assist with this transition. Workonline Communications’ IPv6 offer is available at the Teraco Data Centre facilities in Johannesburg, Cape Town and Durban. Ed
How the NSP industry will impact the provision of Internet Access into Africa
From the recent South African SONA and Budget Speech 2015, it is clear that the development of the country’s ICT sector has become a focus area for South African government. Amongst others, the decision was made to invest ZAR 1,1 billion in terms of broadband connectivity to schools and government buildings. Through this investment the government is clearly indicating the importance of access to information (through access to the internet) for the development of our education system, as well as the efficiency that online processes will bring to both government and related institutions. I am a firm believer that the delivery of good quality, reliable, high-speed Internet access to South African schools, both in urban and rural areas, will be of benefit to the economy and the level of education in the country as a whole. Keeping this in mind, it is important to note how the NSP industry will impact on the provision of Internet access to the end users – ISPs offering Wi-Fi services and users of these Wi-Fi networks. In the near future I foresee a huge proliferation in the provision of Wi-Fi networks and in fibre capacity within many metropolitan areas in the country. While there is currently saturation in the provision of both under-sea cables and national long distance bandwidth in the country, the consumer is not reaping the benefits of this owing to the low density of metropolitan fibre networks (although this is changing rapidly) and incumbents fighting to maintain historic levels of revenue. This being said, the economic question around connecting lower densely populated South African metropolitan areas remains a challenge that needs to be addressed and solutions developed and facilitated by key industry players in partnership with the South African government. In the last year, the cost of bandwidth has reduced to the point where the revenue spent by advertisers per view is enough to cover the cost of a browsing session on the network – which goes as far as assisting in cross-financing the cost of laying fibre in metropolitan areas. In the next two years, we are bound to see a proliferation in available access to open Wi-Fi networks, which allow consumers to browse for a certain amount of time for free. Additionally, as fibre is laid in the country’s metropolitan areas, affordable access to the Internet through these networks will become a reality for the average consumer. While rural areas are probably those most in need of access to the Internet, these areas present challenges of their own in this regard. Although the population in these areas can be extremely dense, the size of the economy and the amount those in these areas are able (or willing) to pay for use of the Internet is reduced compared to other densely populated metropolitan areas in the country. This means the ROI on the cost of digging and laying fibre cables makes business plans tricky to rationalise. It is imperative that all the relevant industry players work together with the government to address these challenges and come up with viable solutions. Access to information via the Internet is especially important in an emerging market such as many countries in Africa, as it facilitates for a better quality of education and even for increased entrepreneurship (through broadened access to entrepreneurial education) – in turn assisting in the fight against unemployment and poverty. A survey carried out by Dalberg in 2013 found that the rapid reduction in cost of devices, increasingly affordable bandwidth and development of local content are indications of a positive trend towards leveraging technology to support educational outcomes. In this regard, it is important to note that while the Internet has high potential for delivering positive benefits in terms of education, its full potential can only be reached with sustained investment in broadband infrastructure. It is important that those in the ICT, NSP and ISP sectors realise that they can play an important role in the empowerment of marginalised groups. The recent focus by government on the development of the South African broader ICT sector and the roll out of access to the Internet is certainly encouraging, and it is important for this to be realised, especially in areas where these kinds of initiatives have not been implemented before. Ed