Tech firms race to reach next one billion users

Mr. Caesar Sengupta, General Manager of Payments and Vice President at Google who is leading the company’s Next Billion Users (NBU) initiative. [File, Standard]

A report released by the World Bank earlier this year revealed that Kenyan households spend, on average, 20 per cent more on mobile phone services than on cooking fuel and electricity each month.

This follows another study done in Nairobi’s informal settlements that found families prioritise airtime over food in allocating household budgets.

These findings point to the fact that Internet connectivity and smartphones are increasingly playing a central role in lives of millions of Kenyans. Many households today consider an Internet connection as a crucial utility akin to water and electricity.

Technology companies and telecommunication service providers are taking note and these demands and preferences are shaping products and services not just for low-income users across the globe, but for developing markets.

“The new users of our services are very different from the users who had existed before,” says Caesar Sengupta, general manager of Payments and Vice President at Google who is leading the company’s Next Billion Users (NBU) initiative.

The initiative aims at developing products and services tailor-made for the half of the global population mostly in developing countries who are yet to get online.

“Unlike many of us who started out on desktops and laptops and then moved to smartphones, new users today are all starting with a smartphone and largely staying on smartphones,” he says.

This entails people at both the youth and older demographic, and companies have had to develop a different approach to products and services other than the traditional model.

“Most of these users are coming from India, Sub-Saharan Africa, Brazil, Indonesia... and this brings other dynamics such as the language diversity which is very high in these markets,” says Mr Sengupta.

At the same time, many of the users rely on devices that are much less powerful than the ones used by their counterparts in developed countries and also face challenges in getting reliable and affordable connectivity.

According to the International Telecommunications Union, there is a discrepancy between the supply and demand of Internet services that makes policy makers over-estimate levels of access in Kenya.

Despite more than 90 per cent of the population having access to mobile phones, the ITU placed Internet access in Kenya at just 26 per cent of the population.

This is a large difference from the 90 per cent Internet broadband access provided by statistics provided by the Communications Authority of Kenya (CA).

“One of the reasons supply and demand-side data do not match is that supply-side data measure active SIM cards on operator networks, rather than unique subscribers,” says the study in part.

“Duplicate SIMs, which are measured by operators as active SIMs and reported to the ITU in the administrative data of countries, account for at least some of the over-count of subscribers.”

The CA itself has admitted that the indicators it uses to measure Internet access do not give an accurate picture and is currently in the process of reviewing its methodology.

Saturation

Nevertheless, for tech platforms and smartphone companies that are reaching peak saturation in developed countries, the message is that the next growth in users will come from developing countries.

For Facebook for example, the number of daily active users in US and Canada rose by a marginal 0.5 per cent between 2017 and 2018 according to the company’s annual report.

In Africa and the rest of the world, the company registered eight per cent growth in daily active users over the same period of time.

This has informed the company’s numerous partnerships with local Internet service providers to provide broadband access to populations in developing countries including Kenya.

Companies are also developing products that are attuned to the market realities of the new Internet users.  

Google for example rolled out offline functionalities for YouTube and Google Maps that allow users to download videos or maps that can be accessed without an Internet connection.

Some of these products have also proved popular in developed markets proving that the next billion users are influencing products and services for the Internet natives in developed markets.

In 2017, Google rolled out Files Go, an app that helps consumers free up space on their mobile phones that was optimised for users in developing countries who face storage challenges by virtue of the widely-used devices available in these markets.

Last year the company rolled out Files Go to global users after it registered rapid growth and has become a success in developing markets.

However, much still remains to be done in fast-tracking the spread of high-speed broadband to the last mile particularly in rural areas and governments have been called upon to step in with appropriate policy incentives that will also bring the cost down.

“Africa has a very challenging geography in terms of bringing wired broadband to the last mile and each government needs to see how they can advance infrastructure development through policies on land use for example or legislation on infrastructure sharing,” says Sengupta.