Zimbabwe Online (ZOL) has entered the mobile revolution by rolling-out the country’s first public wireless hotspots, something that will change the face of surfing in the country.

One of Zimbabwe’s biggest internet service providers, Zimbabwe Online (ZOL), in conjunction with various hotels, coffee shops and sit-down restaurants, has been rolling out high-speed Wi-Fi access points branded ZOLspots. Members of the public will have access to the internet from these points using laptops and hand-held mobile devices as they discuss business, or simply enjoy a meal. In a three-month trial period that ended on 1 August ZOL hard-tested their product providing free access to the public.

Zimbabwe Online (ZOL) is one of the high flyers in the country’s ISP market and it competes with the likes of Africa Online, Ecoweb and Mweb. It is a private company set up in the 1990s by well-known chief executive officer David Behr and his partners. Since 2000 the company has increasingly positioned itself as the largest bandwidth reseller in Zimbabwe. Now it hopes to capture that all-important competitive edge by muscling in on the Wi-Fi space.

Catching up on a global trend

Over the past few years increased use of laptop computers and increase in worker mobility have fuelled the demand for wireless networks. According to ZOL’s customer services manager, Salva Shuva, the release of lightweight wireless networking hardware and the inclusion of Wi-Fi adaptors in an ever-widening array of consumer devices means wireless technology to meet this demand has come of age.

Wi-Fi is a radio networking technology that has gone through global standardization over the past few years. It allows local area networks (LANs) to be deployed without cabling for client devices. This flexibility reduces the costs of network deployment and expansion and considerably enhances the convenience of remaining constantly connected.

The widespread adoption of this technology has led to the explosion of both company-wide and public wireless networks providing extended data services to corporate, business and residential users. In many cities of the world thousands of hotspots are now available especially in retail outlets where people congregate.

These wireless zones are increasingly being aggregated to form a cohesive network of public access points extending across cities and countries. According to a recent report by research group Datamonitor, spend on municipal networks in the US and UK will grow at a compound annual growth rate (CAGR) of 48% from US$900 million in 2007 to US$6.4 billion in 2012.

Product offering

Anyone with a Wi-Fi enabled device can use ZOL’s service. Customers purchase a prepaid voucher at any ZOLSpot and get immediate access to a high-speed (256k), low-contention broadband link. Vouchers are valid for time frames ranging from 15 minutes for up to a month. Some are one-off-use, discontinuous tokens while others are continuous, usage-based vouchers. With time ZOL expects to develop more creative pricing plans to offer unmetered flat rate access and other bundled packages of service.

ZOL’s primary selling point

According to the company’s lively chief operating office, Constance Mungwanyo, ZOL prides itself as being, “first with most product offers” in the ISP sector. Besides seeing the emerging technology as a means to sustain their profitability and boost average revenue per user (ARPU) she also sees Wi-Fi as just one way in which the company is offering the public an innovative product.

But how readily identifiable is their target user community given Zimbabwe’s economic difficulties and financially unstable environment that puts pressure on prices and margins and makes their business case seem no more than deceptively attractive? Mungwanyo says although “they are not looking at raking in millions” and despite having no real earnings projections grounded in market certainty they still have a semblance of a business model that is not a simple leap of faith.

She argues that they are not risking it for there is pent up demand for such service. She talks of, “a lot of idle laptops out there” and a breed of mobile workers that need internet access. Their market research indicates that Zimbabwe’s middle class has become a discerning lot with most absolutely demanding a Wi-Fi enabled laptop when purchasing today. Many of these are willing to pay a premium for a portable, if not mobile, connection to the internet.

Although traditionally the country does not have the culture of long coffee breaks ZOL says they have observed a growing trend in nomadic behaviour such as business breakfasts and a demand for flexi-work environments by mobile executives and portfolio workers. But more interestingly, network down-times due to Zimbabwe’s erratic power supplies and frequent blackouts offers them a unique opportunity to offer internet connectivity from paid Wi-Fi venues that are serviced by back-up generators.

Mungwayo contends that a lot of things are taking place in Zimbabwe despite the economic challenges and the restricted cash envelope most business find themselves operating with. Moreover, she is of the opinion that, “things will come right in the country and ZOL will be there when things come right”. Hence their forging ahead with plans to creatively reach out to more customers by offering new services.

The partnership business model

With such a prospective customer base in mind the ISP has to date installed 14 venues countrywide and envisages bringing the total to 20 sites by the end of July. In this trial period demand has been “overwhelming” with various hotels, food outlets, and business parks enquiring about joining the network. Many outlets are willing to partner with ZOL because of its experience in packaging bandwidth buying from internet access providers (IAP) to provide the upstream fixed connection.

In an industry where capital expenditure is front-loaded yet delivery of significant new revenue streams takes time ZOL sees the partnership business model as a two-pronged strategy for them. First, it captures customers where they converge and, second; it takes a lot of pressure off them by reducing their overall build.

Installing wi-fi based public hotspots on a 50-50 revenue sharing arrangement with the retail outlets will drive growth. Some outlets are even willing to take on the entire cost of building the network on their premises, with ZOL setting up the customer interface, billing service and technical support. Such cost-sharing minimizes the ISPs capital investment and enables it conserve capital in face of an uncertain market.

Competiton door wide ajar

It is clear ZOL’s move signifies an opportunity to reshape consumers’ understanding of mobile computing. However, it is still not clear if this will lead to a shift in Zimbabwe’s ISP landscape. Although the potential market in Zimbabwe in terms of subscriber headcount and revenue generation possibilities is small the door to competition remains wide ajar and expectations are that other ISPs will soon enter the fray. Only time will tell if ZOL can use their first-mover advantage to consolidate what they have put out.

Author: Eric M. Mazango

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