Long-distance is go
After almost two months of fine-tuning, long-distance service is finally ready to launch. This means folks in the town will be able to call out of the coverage area (only around 5-10km) to any phone, anywhere. Likewise we purchased a few DID numbers which allow people to call a Mexico City, Los Angeles or Seattle number and connect right to the village. Unfortunately, a Oaxaca number was not available from our VoIP provider, nor does it seem to be from any others. For now if you are in Mexico you call a Mexico City number and if you are in the USA, you have the option to make a local call if you are in either LA or Seattle. These two locations were chosen because they are the two primary destinations for emigrants from the village. So instead of paying the exorbitant long distance charges normally associated with calling the village, it is now a free call. The village itself pays $3 USD per month for each of the two DID numbers. As for calling out of the village, we have set up a pre-paid system (thanks Tele!) that allows people to buy as many pesos as they want of credit. This money is collected by the municipal government and then paid out to the VoIP provider in bulk. The rates are incredibly low compared to what currently exists. For example it costs 15 pesos per minute to call the US from a phone cabin, but with our system it costs only 20 centavos per minute.
Short video about our first site
Things are coming along nicely so far. Over 300 people are signed up for local service and we are testing out the simple pay-as-you-go billing software that we developed as a precursor to getting “long-distance” calls up and running.
A Victory?
Movistar, the Mexican subsidiary of the Spanish telecom company Telefónica, recently announced that they would be starting a franchise-type approach to connect rural areas by sharing responsibility with local entrepreneurs. A few months ago we approached them with this idea, mainly in order to start a dialogue that we hoped would lead to a partnership of sorts in which Telefónica would allow us to use their frequencies in rural areas in exchange for our help in fulfilling their universal service obligations with the regulatory agency in Mexico. They were pretty luke-warm about our proposal, but it seems they have warmed up to the idea. So much so that (from the scant information we have) they are more or less copying our model. At first we didn’t know what to make of the news, but as we thought about it more, we realized that in some way (large or small) we have been able to influence the way the second largest provider of mobile phone services in Mexico does business. Whether it is Rhizomatica that does the connecting directly, or we instigate Telefónica or someone else to do so, there are tens of thousands of unconnected localities here and our overall goal is to get them covered.
If you are able to read Spanish, here is a link to a story about what Telefónica is trying to do.
First site up and running
We did it! After much fiddling around with equipment and an adventure getting the antenna and mast up and secure, our first pilot site is running smoothly, offering local service for $1.2o USD per month (with long-distance to come in the next days). So far around 90 people have signed up and the base station recognized over 400 active cell phones in the area, so we expect more to sign up for service soon.
We also had a lively discussion with the residents about how they wanted their system, the first of its kind that we know of, to run. One interesting thing that was proposed by one of the attendees and unanimously passed was to automatically limit the call duration to 5 minutes in order to allow others to make calls in case the available lines become saturated.
This first install is the culmination of over two years of planning and organizing, key equipment donations and many hours of volunteer labor from a number of very talented people. We couldn’t be happier with how it is going and are learning much from this initial experience and the feedback users are providing in the town.
Economics
Mobile communications are an increasingly important platform for the delivery of critical services in rural and impoverished areas. Mobile phones are used for much more than inter-personal communications. Doctors can diagnose patients, people can send and receive money, users can crowd source crisis information, and so on.
According to the International Telecommunications Union, 2-3 billion people around the world lack affordable mobile telephone services that facilitate critical communications and access to information. In Mexico alone, according to the Secretary for Communication and Transportation, there are 50,000 communities without any coverage. Due to market saturation in developed countries and economic disincentive in the developing world and especially rural areas, mobile coverage proliferation is slowing dramatically worldwide. And yet most telecom regulations forbid the provision of strictly rural service, effectively killing any chance for small providers interested and capable of serving the un-served to thrive.
Currently, only very large, politically powerful companies have access to the mobile spectrum and the concessions to provide cellular service. In Mexico, according to a recent OECD report on the Mexican telecommunications sector, “the poor development of telecommunication infrastructure in Mexico is due in large part to lack of effective competition, and the resulting high level of market concentration…This has resulted in a significant welfare loss for users in Mexico. This welfare loss is incurred by existing users who are overcharged in their use of telecommunication services, and from the welfare loss resulting from unrealised subscriptions to telecommunication services. Consumer welfare loss in the Mexican telecommunication sector over the period 2005-09 is estimated at USD 129.2 billion, or an average of USD PPP 25.8 billion per year. The latter amount is equivalent to 1.8% of Mexican GDP per year.”
As evidenced, both the business model and the technology that traditional providers employ and the regulation and policy regimes in place, have proven unable to solve the problem of connecting much of Mexico. We aim to challenge this situation and create opportunities that allow municipal governments and community-based enterprises to become service providers as well, thereby increasing access and spurring economic growth in places sorely in need of both.
There is another aspect to this issue which is important to consider, relating to the affordability of mobile communications. One of the communities where we are proposing to work, Tlahuitoltepec Mixe, after years of being left out, was finally connected by the country’s largest provider and now has cell phone service. However, the company is charging exorbitant rates to the residents (30-40 US cents per minute) and assigned a non-local area code to the town. Although the town is in Oaxaca, the company has set up the network there as if it were in Veracruz, which is many kilometers away. And since there is still a higher tarriff for roaming or out of area calls in Mexico, those in the town are paying even more than they should over and above the already excessive costs.
We did a very basic analysis of how much money was being spent on basic cell phone service in the town. Tlahuitoltepec has around 9 thousand residents, and we assumed that around half use a cell phone. And, on average (conservatively), each spends 150 pesos per month. If you do the math, the sum you get is $54,000 US Dollars per month being spent. This money is changing hands from the residents of the town to the cell phone company at a rate of nearly $650,000 USD per year.
Trying to keep this money circulating locally is one of our major objectives and relates directly to the ability of a community to operate their own communications infrastructure. This is usually where the powers that be begin to have a problem. It is one thing to operate your own radio, etc. but it is another to create economic benefit locally by running ads for the general store in town. In other words, the authorities are at times willing to tolerate communities running their own infrastructure, but it must always be “not-for-profit”. This is fine in some cases, but eventually destabilizes local communication projects and keeps them from attaining long-term sustainability. Challenging this structural (political, economic) imposition must be a priority.
