{"id":202,"date":"2016-11-22T05:26:44","date_gmt":"2016-11-22T05:26:44","guid":{"rendered":"http:\/\/www.jongore.com\/blog\/?p=202"},"modified":"2016-11-22T05:31:52","modified_gmt":"2016-11-22T05:31:52","slug":"mno-economies","status":"publish","type":"post","link":"https:\/\/www.jongore.com\/blog\/startup\/mno-economies\/","title":{"rendered":"MNO Economies"},"content":{"rendered":"

In the rest of the world the majority of startups look at the internet as their primary distribution channel. \u00a0If you build an app, and someone has internet, that person will\u00a0get your app if they want it. \u00a0In Africa, where smartphone penetration is less than 20%, startups don’t have the luxury of building a great app and letting users find and download it. \u00a0 However, there is a second more important distribution channel in Africa, and that is the MNOs. \u00a0If you want to build a mobile business you need buy in from the MNOs, and they demand a hefty fee for doing business. \u00a0When I worked in Tanzania running a dev shop the MNO took 65% of the revenue we earned. \u00a0Any revenue from users that bought our product, or used our service, would be split in favor of the MNO. \u00a0For context, Apple charges 30%<\/a> of revenue for any app on their app store, and some companies complain Apple is anti-competitive at that rate.<\/p>\n

The good news is that the MNOs are lowering their take of revenue share, although I’d be surprised if a company earned more than 50% of the revenue. \u00a0 There are more startups out there with better products. \u00a0These startups are slowly building up a following and are able to negotiate better deals from the MNOs. Sometimes they will go exclusively with one MNO to get a better deal. \u00a0The bad news is it is really hard to build successful businesses with MNOs in Africa with the deals they demand. \u00a0It takes a special type of entrepreneur and businesses..<\/p>\n

The reality is that the MNOs are in a far more dominant position than Apple and Google. \u00a0They set the terms and if you don’t agree, or if the MNO gets a better deal, or they don\u2019t like you, they cut you off. \u00a0 That happened to me at my company in Tanzania. \u00a0Overnight they switched us off, without any warning, cutting off tens of thousands of dollars from my revenue stream.<\/p>\n

I think this will get better for startups. \u00a0MNOs have excellent distribution networks in Africa, and they are extracting rents for building those. \u00a0They have every right to do that at the end of the day, \u00a0but I also think they need to look to the future and realize that the app economies work differently than their MNO economies. \u00a0As smartphone penetration ramps up, data gets cheaper, and local startups build better local apps, the balance of power will shift to Apple, Google, and startups. \u00a0Whether trading a couple giant local MNOs for a couple giant global internet companies is really a good tradeoff is up for debate, but I maintain that having more options for the consumer is always better.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the rest of the world the majority of startups look at the internet as their primary distribution channel. \u00a0If you build an app, and someone has internet, that person will\u00a0get your app if they want it. \u00a0In Africa, where smartphone penetration is less than 20%, startups don’t have the luxury of building a great […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-202","post","type-post","status-publish","format-standard","hentry","category-startup"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/comments?post=202"}],"version-history":[{"count":4,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/202\/revisions"}],"predecessor-version":[{"id":206,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/202\/revisions\/206"}],"wp:attachment":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/media?parent=202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/categories?post=202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/tags?post=202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}