Over the last few months, a new business model is emerging in Nigeria: free wifi. Companies provide free wifi and then make money via advertisement and other support services. Our university campuses are becoming the first anchor recipients of these bold entrepreneurial pursuits. Don Jazzy started this, at scale, and others like Cyberspace Network are joining the race.
Nigerian universities will be boosted academically with the introduction of free internet access on campus, as Cyberspace Network Limited has made available wifi access for all through its Surwella initiative. …According to Olusola Bankole, chief marketing officer, Surfwella, the free internet wifi will be launched across the length and breadth of university campuses in Nigeria, starting with the University of Abuja, from today, Wednesday 9, August 2017.The service will be free, “no payment, no subscription, no data purchase, and no need for modems. Free internet in the most useable form, on wifi,” he stated.
This is exciting for the end users because getting internet free in Nigeria is certainly empowering. The providers are working on the established constructs that scale, through freemium, can deliver huge value down the line. You give the Wifi service free and in that system become an aggregator who controls the ecosystem through which the end users and the publishers get in contact. This is the aggregation construct.
Under the aggregation construct, the companies that control the value are not usually the ones that created them. Google News and Facebook control news distribution in Nigeria than Guardian, ThisDay and others. Because the MNCs tech firms “own” the audience and the customers, the advertises focus on them, hoping to reach the readers through them. Just like that, the news creators have been systematically sidelined as they earn lesser and lesser from their works. But the aggregators like Facebook and Google smile to the bank. The reason why this happens is because of the abundance which Internet makes possible. Everyone has access to more users but that does not correlate to more revenue because the money goes to people that can help simplify the experiences to the users who will not prefer to be visiting all the news site to get any information they want. They go to Google and search and then Google takes them to the website in Nigeria with the information. Advertisers understand the value created is now with Google which simplifies that process.
The Wifi provider manages what passes through its network, assuming a power similar to Google News, as noted in the example of the aggregation construct. Just as Airbnb, and Uber simplify the processes of linking users to houses and vehicles respectively, the Wifi provider can link publishers to the end users effectively. Who cares to advertise via Guardian, Vanguard and ThisDay in Nigeria when you know there is a Wifi provider everyone uses to read the contents. You simply advertise through that Wifi provider expecting that it can organize what it wants its readers to see in its ecosystem. It becomes a key component in the system. That is a very powerful business model, if done at scale.
Core Elements of the Business Model
There are many ways people that deliver free wifi can make money in Nigeria. They include the following:
Advertisement: This is the same model used in many airports around the world. Before you can get on the web, you will need to watch some adverts. This is the key element of the free wifi business model.
Partnership: Just as Facebook helps New York Times to publish its contents on Facebook to reach more audience, ThisDay Nigeria can decide to work with these free wifi entrepreneurs to get people to read their contents in Nigeria. In that case, the entrepreneurs will be compensated. Also, in case governments want people to access contents online and are worried that few can afford to access them, they can partner with these free wifi entrepreneurs to host those contents for them. I expect companies like iflix and other video on demand firms to work with these entrepreneurs under revenue sharing model so that users can use their services to watch movies. This will happen as the wifi companies become stronger with scale.
Mining and Analytics: As data goes through their systems, they can make sense of many elements for partners. From surveys, as seen in some airports, to understanding what users care about in some specific localities, these entrepreneurs can provide insights on so many things. They will mine all the data they are collecting and can make money reselling them. This can help partners to deliver services and solutions at higher quality.
Promotions: You expect the companies doing this to position preferred products in front of the users. Some of those products could be their own products. Just like banks put their services in your view when you use their free wifi services, you expect the entrepreneurs to position their services, from movie to music, ahead of competitors’.Do not expect this to be a neutral internet. In some airports, you get free wifi sponsored by ecommerce companies which provide them to help you buy things from their sites For example, Konga can partner with a free wifi company in Lagos to make its site the landing page.
New Industries: The same manifestos which I have written that telcos need will be useful here. The free wifi or affordable internet business could unlock value in agriculture, as HITCH is doing in Nigeria.
With AgTech IoT (Internet of Things) innovation, companies like MTN, Airtel, 9Mobile and Glo can pipe a lot of agriculture data to farmers, banks, insurers and others, across the food chain. The telcos will aim to improve the connectivity of sensors and other data-capturing devices on farms to help farmers turn data into actionable insights through software platform. The opportunity is huge as this is an untapped market. I am hoping that telcos can come together to seed a new layer of African farming through connectivity. An initiative to connect African farms would be a necessary investment for them to expand beyond where they are today.
Investors See Value
As the free wifi entrepreneurs shake Nigeria, nothing will be the same again. I will not be discussing the impacts to telcos because that will miss the mark. The key thing is that these entrepreneurs can control access to digital contents in the Internet. As aggregators, they will be the winners, not the creators of contents, under the abundance of internet. Investors love such positioning in markets and that is why the money is flowing in..
Tizeti, a Nigerian startup which develops solar powered WiFi towers with its Wifi.com.ng service, today announced it had secured $2.1-million in funding through US-based Y Combinator from several investors.
“Today’s seed announcement allows us to grow aggressively in the Nigerian market, and we will continue to invest in building out our own solar-powered infrastructure, as well as refine and expand our consumer-focused product,” said Kendall Ananyi, the CEO of Tizeti, in a press release.
The round’s investors include Western Technology Investment, Social Capital, Vy Capital, Picus Capital, Ace & Company, Lynett Capital Partners, Zeno Ventures. The round also consists of a handful of angel investors including Y Combinator’s Michael Seibel and Gabriel Hammond.
Sure Tizeti is not free as in Cyberspace Network since it charges from $30 per month, Nevertheless, Tizeti is well positioned to have substantial market opportunity for unlimited Internet service at that price point. This aggregation model does not have to be wholly-free to work, in Nigeria. What I expect to happen is for people to come together and pay for one account and then use the service in turns. For example, three students can pay for that $30 and they will decide who uses the service over the month at what point. Provided that the service is of decent quality, the model will work since the amount is still largely affordable.
The Industry Players
One of the pioneers of this business model is Don Jazzy, the CEO of Mavin Records. With his partners, they unveiled Flobyt Wifi – a free, fast, reliable and easy to use wifi service across partner locations including; eateries, parks, taxis, buses, restaurants, cafés, etc.
Flobyt is a free WiFi service installed across partner locations in Lagos like eateries, parks, taxis, buses, restaurants, cafés and many other businesses. The service is free for patrons of a business who wish to access the internet while in the premises of the patron locations. The internet router itself is a plug-and-play device that, according to the founders, does not require much technical know-how to operate….
There is no charge to use Flobyt WiFi, all it takes is to walk into a partner outlet, patronise them and use the internet without restrictions…
The company plans to take its services to other parts of Nigeria, through West Africa and ultimately throughout Africa giving the public access to free internet while providing value for the business owners.
This is very ambitious indeed and they certainly have a plan. With his celebrity status and contents (he is an entertainer), Don can offer contents and essentially drive what people can access through his Wifi service. Expect his products to be well promoted through this avenue.
Besides Don Jazzy, we have CafeNeo which offers free internet in its stores. Another firm, HITCH, takes it further, delivering value to users by helping them catch contents, to access offline. Users access free service by connecting to HITCH smart WiFi hotspots.
HITCH is a cloud platform that enables curation and access to videos via a HITCH-designed (smart) WiFi hotspot that caches content, and lets users access it offline.
You can add Facebook Free Basics here as it is free to the approved sites.There are also banks like Diamond Bank and Union Bank which allow customers to browse free in their bank premises, provided you are a customer of the bank.
There players will have to expand beyond into other areas for growth and opportunities. A piece by Oluwole Ogunlade noted that free wifi could be very catalytic in the transportation sector. Imagine deploying these services in luxury buses like ABC Transport or Chisco Transport. Any transporter that does this will certainly win customers. The entrepreneurs should explore such partnerships.
What if you could instantly turn those “bored” commuters to your potential market audience by giving them free WiFi while they travel or wait at bus stations? It’s an instant win-win as the BRT becomes more appealing to commuters. And aside BRT services, there are over 16 car hailing services in which a provider can hook up with as distribution partners.
These services are not really designed for serious work on the web with their less than an hour session caps in some cases. Largely, they expect you to use this to check emails, update Facebook and do nothing of great value. That should be the consolation for the telcos as it will be a tough order to offer great wifi experience free in Nigeria. However, if they find value, they will continue to make free better.
I was in Cape Town last November and noticed that in some parts of the city, one can have good quality free Wifi. Indeed, entrepreneurs across Africa see this as a promising business model. Free wifi is not a business model that should be taken for granted, especially for the telcos. The telcos will have to think what they have to do because if these free wifi entrepreneurs succeed, they will have challenges selling their priced data plans. Giving things for free or nearly free under the aggregation construct is always very contagious. Just like it is hard to compete against Facebook and Google since they offer their services free, free Wifi entrepreneurs can essentially lock out opportunities for many telcos. But these wifi entrepreneurs have a long way to go. Scale will, at the end, become the limiting factor in their business models.---
Click to join Tekedia Capital and build Next Africa with min of $10,000 co-investment in startups.