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TECH TALK: The Rs 5,000 PC Ecosystem: Telecentres (Part 3)

February 19th, 2003 · No Comments

The key question is: how to make the Telecentres economically viable? The Rs 5,000 PC (5KPC) only helps to make the Telecentre less expensive to set-up. But a 10-15 computer centre will cost about Rs 200,000 (USD 4,000) to set-up and about Rs 20,000 (USD 400) monthly to manage (people, space, bandwidth and maintenance costs). The two questions that we need to address. Where will be the initial set-up costs come from? What are the sources of income?

The initial investment can come from three possible sources: local banks and financing organisations (for example, World Bank, microcredit institutions), the community members themselves who would set the telecentre as a co-operative, or individuals and corporates who would invest in telecentres by providing microfinance at the location of their choice. Telecentres could also be set up institutions like post offices, banks, railways (at their stations), hospitals, schools and colleges.

Each telecentre should be run as a profit centre, with the objective of providing returns to the investors over a period of time. If we were to look to a three-year payback of the principle amount with interest, the additional revenue that would need to generated each month is about Rs 7,000. Thus, we need a business model that generates about Rs 27,000 each month at a minimum, or about Rs 1,000 per day. If we assume there are 10 computers, we are looking at an income of Rs 100 per computer per day. Taking it one level further, if the computer is used for about 5 hours a day (50% utilisation), we are looking at generating Rs 20 per computer per hour.

Cybercafes in India today charge between Rs 15-40 per hour, with the median being about Rs 20. So, in theory, just be offering cybercafe services, it should be possible to generate enough revenues for break-even. But over time, as telecentres (or cybercafes) proliferate, the hourly rate is likely to come down to Rs 10. That is what we need to assume. This means the additional set of services that are on offer need to generate the balance Rs 10 per hour.

By offering value-added services like eLearning, printing of documents and forms, storage space for documents, access to specialised software applications and neighbourhood wireless access services, it should be possible to bridge the revenue gap and create an economic model for the telecentres which is self-financing. As individuals and enterprises discover the value of the Internet and computing, they will want more services, and this can create a positive feedback loop as entrepreneurs come in to create these offerings.

The telecentre can be thought of as a platform which bridges the digital divide, by offering equal access and opportunities to people across the emerging markets. For example, they can use a site like eBay to market their crafts globally, as entrepreneurs in Ecuador are doing. In India, ITCs e-Choupal program is helping provide the latest prices for agricultural products through Internet kiosks across villages. The telecentre can be a positive disruptive force for the next users, because it breaks down the barriers imposed by geography through centuries. By bringing information, computing and communications to the mass-market, the telecentre is the disruptive bridge that the emerging markets and their people need to create new opportunities and open up new horizons.

Tomorrow: Homes


TECH TALK The Rs 5,000 PC Ecosystem+T

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