Business Day - PUBLISHED: 2009/11/24 06:24:08 AM
TELKOM ’S monopoly over landline communications may officially be over, but its continued control of the “last mile” of copper leading to most customers’ homes will remain a stumbling block to affordable internet access in SA for some time to come.
That means even the prospect of a huge increase in the amount of available international bandwidth in the coming few years, as various new undersea fibre-optic cables are linked up to an upgraded national network, does not necessarily mean that every home in the country will have instant access to cheap and fast internet services.
For existing home internet users that is an annoyance, and for the poor it is one of many bricks in the wall that constitutes the digital divide.
But for Cape-based internet entrepreneur Henk Kleynhans it is a virtual guarantee that the company he founded in 2004 will have a large pool of potential customers for the foreseeable future.
Skyrove enables small businesses such as coffee shops and guesthouses — or entrepreneurs wanting to on-sell wireless internet access — to set up WiFi “hotspots” with a radius of about 50m, and either hand out vouchers as a service to customers or take a share of the fee that can then be charged for bandwidth.
“We realise that there’s nothing we can do about Telkom’s monopoly over the last mile of copper,” says Kleynhans. “But we can stake a claim to the last 50m by helping people set up their own hotspots and gain access to the internet wirelessly and cost-effectively.”
Potential hotspot providers must have an ADSL line in place before signing up with Skyrove and paying a once-off amount of about R1000 for a high-speed modem and wireless router.
That part of the service is unremarkable since there is nothing stopping anyone from setting up a hotspot for their own or customers’ benefit — indeed, many coffee shop franchisees already do.
But keeping tabs on who is tapping into your hotspot is difficult in such circumstances, as is preventing a few individuals from hogging all the bandwidth. And it is impossible to set up a viable business selling internet access if you can’t control usage and bill accordingly.
These were precisely the problems Kleynhans encountered when he was living in a student digs while studying at the University of Cape Town in the early 2000s and couldn’t afford the R1200 a month it then cost to have an ADSL line installed. He realised it would only be viable if he could share the costs with his housemates and students in nearby digs, but in those days the technology to do so wirelessly was not only primitive but using it for commercial gain was illegal.
Kleynhans, who is now 31 and recently became a father for the first time, recalls that he wrote the business model for a service that would allow him to bill people for the megabytes they used in a sudden burst of inspiration at 4am on the night before a maths exam.
“I felt that breaking the law was justified under the circumstances,” he says.
The following year, his last of a four-year computer engineering degree, lecturers and fellow students were roped in to help Kleynhans refine the business plan, and Skyrove was launched at the end of 2004, shortly after he graduated.
The first outside investor came on board the following year, which allowed the company to hire a programmer and go to market with the world’s first prepaid per- megabyte WiFi billing solution. Skyrove now has more than 500 hotspots in operation around SA, and is adding about 20 new ones to the list each month.
Skyrove won the Enablis Business Report Competition in 2005, and the Technology Top 100 Award for Most Promising Emerging Enterprise in 2006. In July this year internet service provider (ISP) Cybersmart took a stake in the company, and in October a multimillion-rand investment deal was signed with US-based 4Di Capital, a venture capital group that is trying to establish Cape Town as SA’s Silicon Valley.
Kleynhans says the injection of cash in exchange for equity, which has left him with a stake in the business of about 25%, will allow Skyrove to invest in a proper marketing strategy for the first time as well as take advantage of 4Di’s experience in taking technology startups to the next level. The goal is to triple the size of the Skyrove network over the coming 12 months, which means creating at least 1000 new hotspots.
The key to achieving this, he says, is the simplicity of the process. “I call it the dad test: would my dad be comfortable using the system?” To gain access to a Skyrove hotspot, users — be they casual coffee shop customers or B&B guests making use of free vouchers or residents of apartment blocks serviced by hotspot entrepreneurs — log onto the company’s website from their laptops and either enter the voucher number and password, or buy bandwidth credits using their credit card.
The amount charged per megabyte, if anything, is entirely at the discretion of the hotspot owner or “Skyrover”. Kleynhans says the average currently is a little over 30c, which seems high compared with the 7c most home ADSL users are paying their ISPs. But that fails to take into account the line rental fee demanded by Telkom, which comes to well over R400 a month for a high-speed line.
So Skyrove’s value proposition remains attractive for casual internet users in particular, at least until they start using more than two or three gigabytes of bandwidth a month. And that will not change much even when bandwidth costs start coming down.
In fact, Kleynhans believes lower line rentals — but not too much lower — would be to Skyrove’s advantage as more potential hotspot entrepreneurs would be able to afford to become Skyrovers.
So far, there has been little penetration in the townships, which he puts down to the difficulty in getting an ADSL line installed and a too-low concentration of laptops, rather than the cost of bandwidth.
The revenue generated by each hotspot varies widely depending on the pricing model being followed, the highest being one serving an 80-room hotel that brings in about R30000 a month. But Kleynhans says many Skyrovers are not in it for the money; they want to be able to offer free internet access to guests or customers while retaining control of their bandwidth usage.
His immediate goal is to ramp up the marketing of the Skyrove concept and get many more hotspots up and running before the World Cup. “Guest houses used to see WiFi as a nice-to-have value add to attract guests, but now they’re realising that it’s an absolute necessity. Foreign visitors expect internet access, and those that come here for the World Cup are going to want to be able to take photographs and share them with their families back home.”
Kleynhans believes Skyrove’s potential SA market is still “absolutely massive”, but the next stage in the company’s strategy is to test the waters in other developing countries in sub-Saharan Africa and South America, where large parts of the population have similar hassles accessing the internet.
The key … is the simplicity of the process. I call it the dad test: would my dad be comfortable using the system?
TELKOM ’S monopoly over landline communications may officially be over, but its continued control of the “last mile” of copper leading to most customers’ homes will remain a stumbling block to affordable internet access in SA for some time to come.
That means even the prospect of a huge increase in the amount of available international bandwidth in the coming few years, as various new undersea fibre-optic cables are linked up to an upgraded national network, does not necessarily mean that every home in the country will have instant access to cheap and fast internet services.
For existing home internet users that is an annoyance, and for the poor it is one of many bricks in the wall that constitutes the digital divide.
But for Cape-based internet entrepreneur Henk Kleynhans it is a virtual guarantee that the company he founded in 2004 will have a large pool of potential customers for the foreseeable future.
Skyrove enables small businesses such as coffee shops and guesthouses — or entrepreneurs wanting to on-sell wireless internet access — to set up WiFi “hotspots” with a radius of about 50m, and either hand out vouchers as a service to customers or take a share of the fee that can then be charged for bandwidth.
“We realise that there’s nothing we can do about Telkom’s monopoly over the last mile of copper,” says Kleynhans. “But we can stake a claim to the last 50m by helping people set up their own hotspots and gain access to the internet wirelessly and cost-effectively.”
Potential hotspot providers must have an ADSL line in place before signing up with Skyrove and paying a once-off amount of about R1000 for a high-speed modem and wireless router.
That part of the service is unremarkable since there is nothing stopping anyone from setting up a hotspot for their own or customers’ benefit — indeed, many coffee shop franchisees already do.
But keeping tabs on who is tapping into your hotspot is difficult in such circumstances, as is preventing a few individuals from hogging all the bandwidth. And it is impossible to set up a viable business selling internet access if you can’t control usage and bill accordingly.
These were precisely the problems Kleynhans encountered when he was living in a student digs while studying at the University of Cape Town in the early 2000s and couldn’t afford the R1200 a month it then cost to have an ADSL line installed. He realised it would only be viable if he could share the costs with his housemates and students in nearby digs, but in those days the technology to do so wirelessly was not only primitive but using it for commercial gain was illegal.
Kleynhans, who is now 31 and recently became a father for the first time, recalls that he wrote the business model for a service that would allow him to bill people for the megabytes they used in a sudden burst of inspiration at 4am on the night before a maths exam.
“I felt that breaking the law was justified under the circumstances,” he says.
The following year, his last of a four-year computer engineering degree, lecturers and fellow students were roped in to help Kleynhans refine the business plan, and Skyrove was launched at the end of 2004, shortly after he graduated.
The first outside investor came on board the following year, which allowed the company to hire a programmer and go to market with the world’s first prepaid per- megabyte WiFi billing solution. Skyrove now has more than 500 hotspots in operation around SA, and is adding about 20 new ones to the list each month.
Skyrove won the Enablis Business Report Competition in 2005, and the Technology Top 100 Award for Most Promising Emerging Enterprise in 2006. In July this year internet service provider (ISP) Cybersmart took a stake in the company, and in October a multimillion-rand investment deal was signed with US-based 4Di Capital, a venture capital group that is trying to establish Cape Town as SA’s Silicon Valley.
Kleynhans says the injection of cash in exchange for equity, which has left him with a stake in the business of about 25%, will allow Skyrove to invest in a proper marketing strategy for the first time as well as take advantage of 4Di’s experience in taking technology startups to the next level. The goal is to triple the size of the Skyrove network over the coming 12 months, which means creating at least 1000 new hotspots.
The key to achieving this, he says, is the simplicity of the process. “I call it the dad test: would my dad be comfortable using the system?” To gain access to a Skyrove hotspot, users — be they casual coffee shop customers or B&B guests making use of free vouchers or residents of apartment blocks serviced by hotspot entrepreneurs — log onto the company’s website from their laptops and either enter the voucher number and password, or buy bandwidth credits using their credit card.
The amount charged per megabyte, if anything, is entirely at the discretion of the hotspot owner or “Skyrover”. Kleynhans says the average currently is a little over 30c, which seems high compared with the 7c most home ADSL users are paying their ISPs. But that fails to take into account the line rental fee demanded by Telkom, which comes to well over R400 a month for a high-speed line.
So Skyrove’s value proposition remains attractive for casual internet users in particular, at least until they start using more than two or three gigabytes of bandwidth a month. And that will not change much even when bandwidth costs start coming down.
In fact, Kleynhans believes lower line rentals — but not too much lower — would be to Skyrove’s advantage as more potential hotspot entrepreneurs would be able to afford to become Skyrovers.
So far, there has been little penetration in the townships, which he puts down to the difficulty in getting an ADSL line installed and a too-low concentration of laptops, rather than the cost of bandwidth.
The revenue generated by each hotspot varies widely depending on the pricing model being followed, the highest being one serving an 80-room hotel that brings in about R30000 a month. But Kleynhans says many Skyrovers are not in it for the money; they want to be able to offer free internet access to guests or customers while retaining control of their bandwidth usage.
His immediate goal is to ramp up the marketing of the Skyrove concept and get many more hotspots up and running before the World Cup. “Guest houses used to see WiFi as a nice-to-have value add to attract guests, but now they’re realising that it’s an absolute necessity. Foreign visitors expect internet access, and those that come here for the World Cup are going to want to be able to take photographs and share them with their families back home.”
Kleynhans believes Skyrove’s potential SA market is still “absolutely massive”, but the next stage in the company’s strategy is to test the waters in other developing countries in sub-Saharan Africa and South America, where large parts of the population have similar hassles accessing the internet.
The key … is the simplicity of the process. I call it the dad test: would my dad be comfortable using the system?
