I had a meeting yesterday with Ben Wolo, the Managing Director of Libtelco, Liberia’s national telecommunications company. I’ve spent much of the past week learning more about Internet infrastructure (just because I worked at Google doesn’t mean I understand these things very well!). After yesterday’s meeting, I now understand the set up behind the horribly slow Internet that I battle on a daily basis.
Liberia has next to no infrastructure. There is no connection to submarine fiber, no domestic Internet backbone, no exchange server, no data center, no copper wires. Everything connects to the outside world via satellite, and communicates from there via microwaves. What is exciting about the utter lack of infrastructure is the opportunity to build from scratch: to leapfrog the technologies on the decline such as copper wires and land lines. This is precisely what the private foundations are interested in supporting.
Now comes time to apply what I’ve learned over the past year. I can hear Dani Rodrik’s voice already. “Why aren’t investor’s doing it already? It might be that it’s not profitable – the economy isn’t developed enough to generate enough demand to make it profitable. That would certainly have been my guess. It might be a coordination failure: the demand isn’t there because the infrastructure isn’t there, and the infrastructure isn’t there because the demand isn’t there. I would have thought that easily possible. Maybe it’s credit constraints. It could be regulatory hurdles. I’m sure those exist too.
Turns out there is sufficient demand in Monrovia today to justify investment in fiber, a landing station to connect to submarine fiber, an exchange station, and a data center. The issue is not demand or a coordination failure. The issue is funding (the issue might also be regulation but I haven’t had a chance to explore that one yet).
Libtelco’s status as a wholly owned government entity creates these challenges. Public funding from the government would be difficult because of its limited budget and donor priorities. The Managing Director would have to convince public officials to support it. Libtelco raising commercial debt would be equivalent to Liberia raising commercial debt, which it cannot do due to its status as a heavily indebted poor country (HIPC). Libtelco could look for investors to take an equity stake, but that would require legislation since the government owns it. There may be creative options such as giving investors a revenue share instead of a share in the company.
There are many pieces that I still need to work through to determine the right answer for foundation support: the regulatory environment, the competitive environment, the appropriate ownership for the infrastructure, the politics, the list goes on. But it's exciting to know that the national telco is trying to do exactly what I was intuitively thinking needs to be done.
Liberia has next to no infrastructure. There is no connection to submarine fiber, no domestic Internet backbone, no exchange server, no data center, no copper wires. Everything connects to the outside world via satellite, and communicates from there via microwaves. What is exciting about the utter lack of infrastructure is the opportunity to build from scratch: to leapfrog the technologies on the decline such as copper wires and land lines. This is precisely what the private foundations are interested in supporting.
Now comes time to apply what I’ve learned over the past year. I can hear Dani Rodrik’s voice already. “Why aren’t investor’s doing it already? It might be that it’s not profitable – the economy isn’t developed enough to generate enough demand to make it profitable. That would certainly have been my guess. It might be a coordination failure: the demand isn’t there because the infrastructure isn’t there, and the infrastructure isn’t there because the demand isn’t there. I would have thought that easily possible. Maybe it’s credit constraints. It could be regulatory hurdles. I’m sure those exist too.
Turns out there is sufficient demand in Monrovia today to justify investment in fiber, a landing station to connect to submarine fiber, an exchange station, and a data center. The issue is not demand or a coordination failure. The issue is funding (the issue might also be regulation but I haven’t had a chance to explore that one yet).
Libtelco’s status as a wholly owned government entity creates these challenges. Public funding from the government would be difficult because of its limited budget and donor priorities. The Managing Director would have to convince public officials to support it. Libtelco raising commercial debt would be equivalent to Liberia raising commercial debt, which it cannot do due to its status as a heavily indebted poor country (HIPC). Libtelco could look for investors to take an equity stake, but that would require legislation since the government owns it. There may be creative options such as giving investors a revenue share instead of a share in the company.
There are many pieces that I still need to work through to determine the right answer for foundation support: the regulatory environment, the competitive environment, the appropriate ownership for the infrastructure, the politics, the list goes on. But it's exciting to know that the national telco is trying to do exactly what I was intuitively thinking needs to be done.
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