Not too long ago, a high-speed internet connection in Rwanda cost close to $1,000 per month. A whopping 22 customers could afford to buy this service from the national telco - RwandaTel. Then, Terracom arrived.
Terracom started laying fiber throughout Rwanda, bought RwandaTel for $20m and dropped the price for a combination high-speed internet connection and phone line down to $80 per month. Greg Wyler - the American entrepreneur cum do-gooder behind Terracom - sees affordable internet service as a key step to establishing Rwanda as an African IT hub. And that may well mark the first time Rwanda and IT hub have appeared in the same sentence.
"In Rwanda now, we have about 350 kilometers of fiber," Wyler said in an interview with The Register. "So, if you are a company and want to get into the African market, then basing your headquarters in Rwanda is a great idea.
"There is a vision here that, if we do this in Rwanda, and it works, then maybe people will take the same approach in other countries. Maybe the rest of Africa can come out of the digital divide."
Over-zealous internet advocates in the US often push the idea that pumping high-speed connections into low income neighborhoods or poor schools will somehow lift the downtrodden from their slums and carry them to the panacea that is technology and the future of our economy. Such talk proves more embarrassing than helpful, especially when it's just talk.
Similar conditions hold for anyone hyping a cure for the digital divide in Africa. Rwanda, for example, remains just over a decade past a devastating civil war. The ethnic conflicts that drove the war linger, as does a slumping, rural economy.
Rwanda, however, does appear to be a nation on the mend. Most of the news stories relating to the country now document the trials of those accused of genocide during the civil war. In addition, some form of international guilt over not aiding Rwanda during the 1994 crisis seems to have captured the attention of aid organizations who are now willing to send money and people to the country. And, while not universally cheered, President Paul Kagame receives credit for pushing Rwanda in the right direction, especially from an economic point of view.
"He is bringing in business to Rwanda and helping create a stable environment," Wyler said. "The President has a real entrepreneurial spirt and real business acumen."
Wyler arrived in Rwanda two years ago, looking for aid work as a teacher. While hunting down a job, he ran across a project to put computers in Rwandan schools and link them to the internet via satellite connections. The plan, which included the purchase of $2,300 PCs, appeared too expensive and inefficient to Wyler. Why purchase expensive computers and then deliver just 64kbps connections to the students?
"The thing is that money is not the problem," Wyler said. "The problem is the way they spend it. You'll find that a lot of money goes to consultants and to buy $2,300 computers when a $500 computer will do. So, I started a company to try and give them an idea of how to do this."
Wyler zeroed in on building out the country's networking infrastructure. If you're going to buy computers, they may as well connect to the internet at a useful speed - 300kbps and up - and at an affordable price. After one year, Terracom managed to overtake RwandaTel in subscribers. In October of 2005, Terracom bought RwandaTel for $20m.
“I am optimistic that Terracom will expand telecommunications and reduce prices to its respective customers and Rwandans at large,” said Rwanda's Finance Minister Dr. Donald Kaberuka when the deal was announced.