Excerpt from ICTWorks post highlighted regarding relevance to Dadamac Connect’s interests
Is All Data Bandwidth is Equally Valuable?
The “all bits are created equal” debate in Network Neutrality doesn’t really take into account our varied experiences of Internet. On a personal level, it is clear that some bits are more valuable to us than others.
A one or a zero that indicates whether your loved one is alive is worth infinitely more than four gigabytes of the latest Hollywood movie.
This leads me to question the assumption, implicit in most national broadband strategies, that the value of Internet increases more or less proportionately with increase in speed. The reality is that even very tiny amounts of data can be enormously valuable and that the value of access goes up dramatically with even a little access and then tapers off.
From a value maximisation perspective then one might conclude that it is more strategic to make a priority of ensuring that everyone has at least some connectivity as opposed to some percentage of the people getting fast Internet.
The Network Effect
This got me thinking about the spread of mobile telephony in sub-Saharan Africa. The Pay-As-You-Go (PAYG) model implemented by mobile network operators (MNOs) meant that it didn’t cost any money to be part of the network. All phones with a SIM card automatically register on the network and are callable on the network. A credit on the network is not required.
Why has this turned out to be a such a phenomenally successful model? Because MNOs recognised that each and every person connected to the network added value to the network whether they made a call or not because they increased the size of the callable network, thereby increasing value to paying users.
This phenomenon is known as network effect and while it may have been a somewhat esoteric concept twenty years ago when the mobile industry started, it is now well understood by any Internet entrepreneur.