Providing internet to off-grid solar customers in Africa is the next logical step for BBOXX Ltd. in becoming a “next-generation utility,” according to Mansoor Hamayun, chief executive and co-founder of the U.K.-based company, which is backed by Engie SA and venture capital investors.
Hamayun told BloombergNEF in an interview that BBOXX can increase its average revenue per user and overall number of customers by offering internet as an additional service to electricity under a pay-as-you-go model.
BBOXX has launched its internet hotspot model in Rwanda, where customers log into the hotspot using their existing BBOXX user account, and the amount of time they spend on the internet is added to their bill. Hamayun is considering expanding internet provision into urban areas of the Democratic Republic of Congo, where it may bundle a Wi-Fi offering together with solar energy and partner with a telecoms company to facilitate it. The aim from a customer’s perspective, would be to “have one sole provider for internet, utility and appliances,” he said. “Electricity is a starting point. All the infrastructure that we have to build around it then becomes the foundation for extra services – everything from logistics to call centers and customer services,” said Hamuyun. BBOXX is able to provide lower-cost internet due to the existing distribution and logistics networks it already has in place, plus call centers, customer services and billing processes.
Providing internet access in rural places is a “mass market opportunity”, as without internet access, the use case for mobile phones and many other appliances becomes limited. “We are seeing evidence among certain customers that payment for internet is equal to what they pay for electricity, so it doubles the revenue we receive,” Hamayun said.
Q: Why are you operating a Wi-Fi hotspot in Rwanda – is 3G network coverage not available?
A: 3G is expensive and unreliable in rural areas of Rwanda. With a point-topoint Wi-Fi and local hotspot, you can improve the user experience and lower cost. Those hot spots are at a village level, not at individual customer homes. People come near to the hot spot and sign up to it using their BBOXX customer name, which is then added to their usual bill. It’s a technique we’re using in Rwanda that is cheaper than 3G. Looking ahead, we want to roll out our internet service to all customers and expand our hotspots in Rwanda, and are considering doing this in the DRC as well – which is a big market for us, given our recent deal with the government there to provide 2.5 million citizens with clean, reliable and affordable energy.
In the DRC, given lots of our customers actually have bigger solar systems, it might make sense for us to look to bundle in a 3G router as part of the offering and have a deal with a telecom company to facilitate this. [We want our users to have] access to internet if they are part of BBOXX. The actual method of delivering that – be it via a hotspot or a 3G router – will differ by geography and demographic.
Q: What is the network coverage in the DRC?
A: In the DRC we operate in urban areas, where coverage is a lot better than in rural areas. So that’s why 3G suddenly becomes an option. We are in discussions about starting a pilot in the DRC in the near future. If we can deliver a set of services to the rural poor, then our ability to translate that offering to an urban context becomes a lot easier. Economics is often the most challenging in rural areas.
Q: Why is this bundled service advantageous to customers?
A: From a customer’s perspective, you have one sole provider for internet, utility and appliances. Many customers don’t have internet access, or cheap enough internet, to use their appliances with. The reason for the high cost of internet in many areas is that the overheads of managing customers are expensive. So the fact that we’ve built up an effective distribution and logistical network, call centers, customer services and billing processes — all established with our electricity offering — helps to lower the cost of internet and other services to people. Electricity is a starting point. All the infrastructure that we have to build around it then becomes the foundation for extra services – everything from logistics to call centers and customer services. Hopefully in the next 2 to 3 years, internet access will become as common to our customers as a lightbulb is today.
Q: So you’d be offering internet access to customers via home routers, when they also purchase your off-grid solar products and appliances?
A: Exactly. The offer would be a solar home system, appliances and internet for a certain price.
Q: When would you like to launch that pilot in the DRC?
A: Around Q1 next year. Over the next few months, we will expand the number of sites we have in Rwanda among rural customers, and start an urban pilot next year. Our focus now in Rwanda is on ten villages, and in each village to reach at least 500 to 1,000 individual users per hotspot. We think we can reach that by the end of this year. Then we want to expand the number of rural hotspots toward the end of next year. Often people put energy access and internet access into two different buckets, but it’s only natural for companies like BBOXX to start providing those sort of services. If you install a hotspot, but people don’t have access to electricity or appliances, then it won’t get used properly. Likewise, without internet access, the use case of mobile phones and many other appliances is limited. This triple play of electricity, internet and appliances is an absolute necessity to scale up these essential services and is a major step in us truly becoming a next-generation utility.
Q: By how much does offering internet increase your revenue?
A: We are seeing evidence among certain customers that payment for internet is equal to what they pay for electricity. So it doubles the revenue we receive. There is enormous economic value potential. Internet makes it easier for people to coordinate. In Rwanda we see cases of farmers sending photos of their produce to would-be traders in nearby cities. Anything that reduces friction is very quickly adopted. We are already working very closely with Orange Energie in the DRC. [We have a shared ambition] to offer value added services to our customers. This is something we plan to offer soon in all markets. From a telecoms perspective, a viable option is to partner with energy companies to provide their customer base with electricity. Otherwise they won’t be able to offer many of the value added services that they need to grow their revenue base for the future. Home routers are only useful if you have the electricity to power it and appliances that come with it. Our offer is to provide a bundle of SHS [solar home systems], smart phone and home router.
Q: Is it also an effective use of existing services, like distribution networks and call centers?
A: It’s synergetic. If you’re only building an internet company, then you’re setting up a lot of connectivity, but if households lack electricity then it’s difficult to serve your network and power it to begin with. And the other issue is that households don’t have a way of financing an internet package or a smart phone, so if they don’t have electricity in their homes, then they won’t get internet. With electricity, suddenly they can charge a phone, and will therefore have demand for internet. And if you create conditions for the internet, then there will be pick up. The incremental cost for us from call center logistics and so on, is minimal – for the higher economic value we get from the customer.
Q: Do you know of other PAYG [pay-as-you-go] solar companies offering an internet package?
A: Surprisingly not. Most people have been trying to build up a distribution network and products. They have been focused on upgrades like bigger televisions. Its only when you reach a certain proportion of customers in a particular location that this business model becomes possible.
Q: Where is the equity coming from to enable BBOXX to provide PAYG as a service?
A: We credit check our customers and install the system in their household with a range of appliances. Each system is remotely monitored and controlled. In Rwanda, customers can qualify for an upgrade to a smart phone, and once they get that they can access the hotspot and pay using mobile money. BBOXX has received equity from institutional investors like Engie and on a local level we work with banks. In Rwanda, we have debt funding from Deutsche Bank and Banque Populaire du Rwanda. A USAID guarantee and agreements with the Africa Guarantee Fund is part of that, and the debt comes from a socially-focused fund they manage. That allows us to purchase the equipment that we manufacture, install it and receive payment that matches the debt profile.
BBOXX was one of our 2015 New Energy Pioneers winners. If your company is a start-up disrupting the clean energy or transport space using innovative technology or business models, learn more about the competition here.