BARCELONA — In Peru, where more than a third of the population lives in remote towns, some of the barriers that prevent mobile network operators from connecting the unconnected are physical: mountains, jungles, and rivers.
But across many geographies, the challenge to connectivity comes in the form of cost versus return calculation. It is far more expensive to set up the infrastructure in rural villages than it is to upgrade services in cities, and there is likely to be far less revenue per user.
“Rural is always left behind.”— David del Val Latorre, president and CEO, Telefónica Research and Development
At Mobile World Congress this week, representatives from Facebook and Telefónica, the Spanish multinational telecommunications company, announced the launch of “Internet para Todos Peru,” or IpT Peru, which will bring faster mobile internet to rural markets across the country. IDB Invest, the private sector arm of the Inter-American Development Bank, and CAF, the Development Bank of Latin America, are joining Facebook and Telefónica as equity investors in this wholesale rural mobile infrastructure operator.
This marks the first time a technology company, development banks, and a telecommunications company have collaborated to bring mobile broadband to remote populations, said Aitor Ezcurra, IDB Invest division chief for corporates.
The four partners investing in IpT Peru share an interest in bridging the digital divide, Ezcurra said, adding that development finance institutions can play a unique role in these partnerships because “we have long-term view on returns.” This is in contrast to many investors who are not interested in extending broadband to rural markets, largely because of risk, he added.
“We look for investors pushing the developmental agenda that we have,” Ezcurra said. “Finding partners like Telefónica and Facebook, this that’s what makes it important for us.”
A model for rural connectivity
Part of the goal of IDB Invest and its partners is to see how different aspects of its investments can be replicated across Latin America, where 20 percent of the population lacks adequate access to mobile broadband and internet access, according to Telefónica.
Tech and development leaders at MWC will consider solutions to closing the mobile gender gap and the tradeoffs between "good digital identity" and risks such as data privacy.
For Telefónica, development finance institutions such as IDB and Silicon Valley tech giants such as Facebook can provide the partnership they seek to move into a market where returns on investment may take longer. Meanwhile, Facebook has a business model built on advertisements, so its interest in these last mile connectivity efforts is in building its base of potential users.
IDB Invest has backed a number of shared infrastructure solutions for rural connectivity in Latin America. Infrastructure sharing brings multiple broadband providers together on the same network to keep costs down. A recent report by the World Bank highlighting the promise of shared infrastructure explained that while public agencies can play a role in bridging the divide, the private sector is behind the most successful broadband initiatives.
“There is this arms race in the cities,” said David del Val Latorre, who leads research and development at Telefónica, and attended an event Facebook hosted at MWC this week to discuss IpT Peru and other new partnerships for Facebook Connectivity. “Rural is always left behind.”
While IpT is in its very early days, if successful, it aims to be a model for rural connectivity across Latin America and the Caribbean, in part because this wholesale rural mobile infrastructure operator model provides mobile network operators with a viable business model to extend to the last mile.
“You can put an antenna in a small village and have a picture taken, but if it is not commercially viable, it will not last,” Del Val said.
Telefónica is not the only mobile network operator Facebook is collaborating with. This is thanks in part to the Telecom Infra Project, or TIP, which is now its own nonprofit entity. Facebook launched it to bring operators, infrastructure providers, and others together to develop new solutions for telecom network infrastructure.
Because of its participation in TIP, Telefónica has accessed new technologies that allow it to save costs, which has opened up opportunities to explore new markets, Del Val said.
IpT Peru represents one way TIP aims to connect tech development with field deployment, Aaron Bernstein, who leads Facebook’s connectivity ecosystem programs, told Devex.
MWC focused on the benefits that 5G, the latest generation of cellular mobile communications, can bring — but many emerging markets are still left behind from 2G, 3G, and 4G.
While IpT Peru is certainly not the only example of a partnership using infrastructure sharing and open access to bridge the digital divide, Peru offers a unique option for telecom companies interested in this approach. In an effort to get mobile network operators to expand service in rural areas, the Ministry of Transport and Communications created a Rural Mobile Infrastructure Operator designation, allowing for wholesale services in rural areas not served by traditional telecom infrastructure. In Peru, IpT will upgrade existing services in rural areas from 2G to 4G, and install new towers that other mobile network operators can pay to use.
“We all have the common mission of connecting more people,” Cait Campos, connectivity program manager at Facebook, told Devex. The RMIO model is “optimized for rural,” and Peru is just one example of where Facebook is exploring models for rural connectivity at scale, she added.
Facebook sees wholesale open access networks as “a more sustainable and cost-effective way to think about connecting the next 4 billion people,” Campos continued.
She and her team at Facebook, as well as their co-investors, hope that IpT Peru will demonstrate how new business models with open access principles, new technologies, and the right policies in place can bring mobile broadband to rural populations.
Update, March 6: This story has been updated to clarify that IpT will upgrade existing services in rural areas.