Cost structure

By design, our solution is extremely low cost. To get a sense of this, consider the following:

• To cover an entire district like Vishakapatnam (Andhra Pradesh, India), having approximately 800 villages with a total population of about one million will require a total capital expenditure of on Rs. 13,54,000 ~ US$30,000 or 3 cents/person.More extensive coverage will probably cost ten times as much, but still less than a one-time cost of dollar a person.

• Using off-the-shelf technology, the cost of an average kiosk would be Rs. 28,000 ~ US$600. Note that this cost would be lower with volume purchases. Moreover, the cost for a single-board computer, similar to a Soekris, will be lower if local SBC manufacturers can be found.

• The operational expense, including the cost of field technicians, and capital depreciation on an 18-month schedule is about Rs. 3000/month ~$65/month or 11 paise/person/month.

• Assuming 5% penetration of the target market, with a service charge of Rs. 5/month (US$1.30/year), an operator can make a profit of roughly Rs. 3500/month.

• With a microfinance loan at 20%, breakeven can be achieved in under 10 months.

Capital expenditure (capex)

1. Kiosk cost

The cost of a kiosk depends on whether there is a PC in place already or not, and whether there are additional constraints (as described below).

1.1 PC-based solution

If there is a PC in place (most likely running Windows XP), then we can run our software on this PC, without the need for a Soekris box. In this case, the cost is only for a wireless card, external antenna, and a coax cable:

  Cost of this solution: Rs.  4,000

1.2 Single-board computer-based solution

If there isn't a PC, or if the operator does not want to disturb the existing infrastructure, then we need to install a single board computer, such as a Soekris box with storage, and provide an external antenna:

1. Soekris with 802.11 and 40Gb HDD: Rs. 12,000
2. External antenna and LMR-400 coax cable: Rs. 3,000

  Cost of this solution: Rs. 15,000

1.3 Additional costs

If the power situation is bad, then a car battery and solar panels will be needed.

  Additional cost for power remediation: Rs.  8,000

If the kiosk operator would like to provide terminals for users, then they can use recycled PCs.

  Cost per recycled PC: Rs.  5,000

1.4 Cost range

• The least cost solution is to enhance an existing Windows PC, which would cost only Rs. 4000.

• A mid-range solution would consist of a Soekris box, external antenna, and one recycled PC, for a cost of Rs. 20,000.

• If the above system is deployed in an area with bad power, then the cost would be Rs. 28,000.

• A kiosk with an always-on solar-powered Soekris, driving 5 recycled PCs, would cost Rs. 48,000.

2. Ferry

1. Soekris with 802.11 and 40Gb HDD: Rs. 12,000
2. External antenna: Rs. 2,000

  Total cost per ferry: Rs.14,000

3. Head office or regional office (gateway)

1. Soekris with 802.11 and 40Gb HDD: Rs. 12,000
2. External antenna and cable: Rs. 3,000

  Total cost per gateway:Rs. 15,000

4. Overall Capital Expenditure

The requirements to cover an entire district like Vishakapatnam (Andhra Pradesh, India), having approximately 800 villages with a total population of one million, is as follows:

• We assume a deployment of 400 kiosks because we will need 1 kiosk for every 2 villages (or about 2500 people).

• Assuming half the kiosks are Windows PC based, and the rest need a Soekris box with solar cells, the cost would be 200* 4,000 + 200 * 28,000 = Rs. 6,400,000.

• 2 recycled PCs per kiosk: Cost would be 400 * 2 * 5,000 = Rs. 4,000,000.

• 80 vehicles (1 vehicle per 5 kiosks): Cost would be 80 * 14,000 = Rs. 1,120,000.

• 20 Internet gateways: Cost would be 20* 15,000 = Rs. 300,000.

• 80 additional vehicles and 40 additional intermediate staging points for redundancy: 80 * 14,000 + 40 * 15,000 = Rs. 1,720,000.

Total cost for providing access to 1 million people: Rs. 13,540,000 = ~US $300,000.

Cost per person: Rs. 13.5 or 30 US cents.

Operational cost (opex)

The operational cost (opex) is based on three factors:

• Cost of field technicians
• Cost of Internet access for gateways
• Cost of bus-space rental
• Capital depreciation

1. Cost of field technicians

Field technician salaries are roughly Rs. 10,000/month. One technician can manage 20 kiosks. So, the cost per kiosk per month is Rs. 500.

2. Cost of Internet access

BSNL provides DSL access for Rs. 250/month. If we assume that there is one gateway per kiosk (at scale), then the cost of Internet access per kiosk is Rs.250/month.

3. Cost of bus space rental

We assume that the bus/car operator is paid Rs. 1000/bus/month as rental fee. For the Vishakapatnam case, with 8 vehicles, the cost would be Rs. 8000/month, or Rs. 200/kiosk/month.

4. Depreciation cost

Given the weather conditions, we can assume that the entire capital plant will have to be replaced every 18 months. The total capital cost for Vishakapatnam is Rs.13,540,000 or Rs. 38,500 per kiosk. Amortized over 18 months, the per kiosk cost is Rs. 1880/month.

5. Total opex cost

The total cost, therefore, is 500+250+200+1880 = Rs. 2830/month. Each kiosk serves 2500 people. On a per-head basis, the opex is merely Rs. 1.10/person/month.

Sustainability

Assuming a 10% penetration of the target population of 2500 users (i.e. 2 villages), a kiosk would have 250 customers. If the kiosk operator charged each customer Rs. 11/month, the revenue would be Rs. 2800/month, which would allow the operator to break even. Additional profit can be generated by charging more per user, by increasing penetration, or offering additional services, such as computer literacy or digital photographs.