Panel
For Better or Worse? Technology's Transformative Role in Developing Regions
Milken InstitutePaul Kedrosky, Joe Mucheru, Denis D. O'Brien, Hilton Romanski, Kentaro Toyama, Stephanie von Friedeburg, Ross Lajeunesse, Thomas Witt, Kate Ambrose, Samia Malham
- Panel Overview & Core Theme: Moderated by Paul Kudrowski (SK Ventures), the panel included Stephanie Don-Friedberg (World Bank CIO), Kintura Toyama (U-Michigan Assoc. Prof.), Hilton Romanski (Cisco SVP), Dennis O'Brien (Ex-Digicel Chairman), and Joe Mucaro (Kenya Cabinet Secretary), debating technology's transformative role in developing regions against a backdrop of polarized "leapfrog" optimism versus infrastructure realism.
- Kenya's Mobile & Financial Baseline: Kenya has achieved 94.4% 2G and 78% 3G coverage with 37 million subscribers, driving a mobile money user base that grew from 4 million bank accounts to 28 million (over 70% of adults) over 15 years.
- Innovative Use Cases: Local startups are leveraging mobile money to create new markets, such as M-Kopa, which uses pay-as-you-go solar models to provide electricity to 300,000+ subscribers at roughly $0.50/day.
- Broadband Challenges: While 4G rollout is underway, Kenya's competitive market has resulted in coverage gaps in rural areas where operators prioritize profitability; the government is implementing "laptops for children" and digital literacy programs to address this.
- Global Connectivity Gap: Stephanie Don-Friedberg highlighted that 4 billion people remain unconnected (no smartphones/computers), with a projected 11 trillion USD Internet of Things market by 2025 where 40% of value is expected in emerging markets.
- Analog Foundation Requirements: The World Bank's research emphasizes that technology alone cannot drive development; success requires a parallel "analog foundation" of regulation, internet governance, and skills training (technical, social, and privacy) to prevent exclusion.
- The OTT Funding Dispute: Dennis O'Brien argued that the broadband gap in remote regions (Africa/Pacific) is caused by the unsustainable cost of tower maintenance (e.g., $1.50/liter diesel for mule-accessible sites), while Over-The-Top (OTT) giants like Google and Facebook utilize the infrastructure without contributing to network costs.
- OTT Revenue Models: O'Brien noted Facebook earns ~$13 per user with a 30% net margin but pays "a nickel" to the infrastructure providers who built the networks, urging a new revenue-sharing model to prevent network collapse.
- Government Countermeasures: Joe Mucaro stated that Kenya is exploring licensing reforms to lower spectrum costs in exchange for broader rollout commitments and is considering taxing OTTs for services like WhatsApp/Viber that erode operator voice revenues without paying local taxes.
- Cisco's Comparative Advantage: Hilton Romanski posited that developing markets possess a comparative advantage in solving hard problems (healthcare, banking) that can create scalable global business models, potentially shifting the Fortune Global 500 composition from 5% to 50% developing companies by 2026.
- Inequality & Amplification: Kintura Toyama argued that digital innovation in the last 45 years correlated with rising inequality in the US, asserting that technology amplifies existing human forces and social divides rather than automatically solving poverty without a strong analog foundation.
- Facebook Zero Failure: Dennis O'Brien identified Facebook's "Free Basics" in India as a failure because it subsidized the carrier while excluding the carrier from revenue sharing, whereas the project was "too good for Facebook" but "very bad for carriers" in a high-spectrum-cost market.
- Ad-Blocking Retaliation: In response to OTT reluctance to share revenues, Dennis O'Brien revealed Digicel rolled out embedded ad-blocking technology globally, forcing OTTs to pay for data or lose traffic, a move welcomed by consumers who view ad-heavy downloads as a waste of limited data.
- Consumer Value Perception: Joe Mucaro countered that many in emerging markets accept limited connectivity (like Free Basics) because they do not yet perceive the value of broadband, noting that device battery life and charging costs remain significant barriers to adoption.
- Rwanda's Success Case: Rwanda reported financial inclusion rising from 42% in 2008 to 89% by leveraging 4G LTE to enable real-time banking, mobile tax payments, and a unified e-gateway, significantly reducing the cost of doing business.
- Satellite Alternatives (Loon): Google's "Loon" project (high-altitude balloons) was identified as a viable model for hard-to-reach areas, though experts cautioned it is a transitional solution that must eventually be replaced by economic physical infrastructure (fiber).
- Infrastructure Integration: Panelists agreed that broadband deployment must be integrated with other public works (roads, power grids) through "trunking" fiber during construction to lower costs, though political and business coordination remains a hurdle.
- Investment Requirements: The World Bank estimates $450 billion is needed to connect the next 1.5 billion people, necessitating public-private partnerships and infrastructure sharing to avoid a "two-speed" world where developing regions stagnate.
- Final Consensus: The group concluded that while technology is a necessary condition for development, it is insufficient on its own; success requires synchronized policy, infrastructure investment, education, and equitable revenue models between telcos and OTTs.