WHAT WORKS: N-LOGUE'S RURAL CONNECTIVITY MODEL


EXECUTIVE SUMMARY

In a country where rural telecommunications infrastructure has traditionally been installed only through licensing obligations, n-Logue Communications Ltd. has created a for-profit business model designed to affordably meet the latent demand for rural connectivity. The company was incubated by the Telecommunications and Computer Networks (TeNeT) Group at the Indian Institute of Technology in Madras, as part of the group's mission to create appropriate and cost-effective technology solutions designed for developing countries. n-Logue aims to fulfill its stated mission of "significantly enhancing the quality of life of every rural Indian" by setting up a profitable network of wirelessly-connected Internet kiosks in villages throughout India.

BUSINESS MODEL
To enable its rapid expansion, n-Logue has employed a three-tier franchise business model that pushes the delivery and management of Internet services closer to the end user. Each tier consists of independent, financially self-sustaining entrepreneurs operating interdependently with one another.

At the top level is n-Logue, responsible for overall management of the network. The company facilitates relationships between its upstream partners - banks, governments, hardware and solution providers - and its business franchisees.

On the second tier are the Local Service Providers (LSPs), responsible for managing the project at the local level. In coordination with n-Logue, the LSP invests in and sets up an Access Center that provides last-mile access to subscribers in the project area.

On the bottom tier of n-Logue's business model are the local entrepreneurs that are recruited by the LSP to invest in and set up Internet kiosks in their villages. The kiosk owners purchase the computer equipment through n-Logue, who also provides training, support and technical assistance. These locally-owned franchises offer a variety of Internet and computer-based services aimed at the rural market.

TECHNOLOGY
n-Logue currently relies on corDECT, a fixed Wireless Local Loop (WLL) technology, to provide the backbone of its IP network. Developed by the TeNeT Group, corDECT provides the most cost effective per-line cost available to n-Logue's networks. The point-to-multipoint wireless radio frequency technology supports simultaneous voice and data channels of 35-70 kbps to subscribers within a 10 km radius of its broadcast location. Coverage is extendable up to 25 km through the use of a repeater. Its low costs, ease of deployment, and minimal maintenance requirements make corDECT ideally suited for rural use.

ENTERPRISE
n-Logue facilitates a variety of relationships between its upstream and downstream partners. The company takes care of regulatory and licensing issues, and manages relationships with both incumbent telcos and relevant government agencies. n-Logue has also partnered with banks and hardware suppliers, giving kiosk owners favorable access to loans and low cost computer equipment. Finally, n-Logue and its partners have developed relevant local language content and services aimed at making the kiosk useful to all sectors of rural society. As such, the company functions as more of a full-service provider, rather than as a traditional ISP.

CHALLENGES
n-Logue faces a number of challenges to maintaining its aggressive growth rate and creating a kiosk-based ecosystem that realizes the benefits of IT for rural development. Finding the right personnel at each level of the franchise model is critical. The biggest determinants of the profitability of a kiosk are the talents of its operator, who must perform many roles, including salesperson, marketer, teacher, service provider, and computer professional. The LSP, too, must understand the nature of the business and be aggressive in marketing its services and expanding its subscriber base. As n-Logue expands, its ability to hire and retain enough qualified employees capable of performing well in this emerging market will help to set the pace of the company's growth.

As the company scales, it also faces internal challenges typical of fast growing enterprises. The company's success depends on its ability to quickly put in place the systems and processes necessary to effectively manage its growth. n-Logue must also minimize the impact of external factors that could impede its growth, such as village size and availability of electricity in rural areas.

Although the threat of competition does exist, it is minimal. Despite having the necessary licensing, the incumbent Telcos have chosen not to aggressively expand their presence in rural areas. By relying on its own infrastructure and investment at the local level, n-Logue is also in a better position to scale than other kiosk networks operating in India. n-Logue retains a competitive advantage over its potential competitors because of its proven experience to leverage relationships between its upstream and downstream partners.

CONCLUSIONS
n-Logue has developed a viable and scaleable model for delivering information-based services to rural areas. Through its three-tiered franchisee business model based on corDECT technology, the company is able to quickly and cheaply scale its network. Moving forward, n-Logue is well positioned to capitalize on progressive uses of technology that enable rural development. As the company scales, there is enormous potential to leverage n-Logue's rural networks in ways that take advantage of both existing and new technologies in the areas of health, finance, agriculture, e-government, and civil society empowerment. Significant opportunities also exist for the creation of new partnerships with corporations, governments, and NGOs whose use of n-Logue's networks brings further benefits and development to rural areas.

There will be challenges as the company continues its aggressive expansion, most notably in finding, training and supporting the right personnel at all three tiers of its business model. The company must work to put in place all the systems and processes necessary to effectively manage its growth and replicate its successes. Although the potential for competition continues to exist, n-Logue's experience in creating and managing a diverse set of partnerships gives it an advantage as it develops rural ecosystems that bring benefits to all sectors of society. The next 12 months will be the most demanding for the company since it was founded, and will be a critical test of the viability of the company's business model on a national scale.

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