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Google Looks Ahead to Its Next Billion Customers

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Why should the tech industry care about Africa? Google seems to know the answer.

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Ten schools in Cape Town, South Africa, will soon have wireless broadband Internet access, delivered from three base stations at a local university campus over unused channels, or "white space," in the broadcast television spectrum.

The test, described on the Google Africa blog, is a small start, but for Google (NASDAQ:GOOG), it's a crucial step toward the next billion Internet users.

Google plans to finance and build wireless networks throughout sub-Saharan Africa and Southeast Asia to bring the Internet to at least a billion more people. First reported in the Wall Street Journal, the project aims to improve the quality and speed of service in cities, and bring the Internet to remote areas that now have no access.

Broadcasting over "white space" isn't the only option. Google is thinking creatively about alternative ways to connect people: Balloons or blimps, satellite broadcasts and television frequencies – or some combination of all of the above – are being considered.

At the same time, Google is working on new, more cost-efficient smartphone designs to bring its Android mobile devices to Africa and Asia.

The wireless project is being managed by the Google X lab, headed by co-founder Sergey Brin, and Google.org, the company's nonprofit arm, according to sources quoted by the Wall Street Journal.

The rollout might be nonprofit, but the future prospects aren't. With 87% of its $50 billion annual revenue coming from advertising, Google's future is highly dependent on audience growth.

About 31% of people in the developing world have access to the Internet, compared with 77% in the developed world, according to figures from the International Telecommunications Union (ITU).

Only 16% of the people of Africa currently have Internet access, and about one-third of Asians and Pacific Islanders currently have Internet access. (The US lags much of the developed world, too, at 61% penetration.)

Moreover, mobile device sales have reached saturation point, literally above 100%, in most of the developed world, according to ITU.

The Google plan bypasses the whole issue of fixed broadband access, and with good reason. While some US consumers may be hoping for a quick expansion of the Google Fiber experiment in Kansas City, Missouri, it's unlikely to get much further than its present base (Kansas City, Missouri, Provo, Utah, and Austin, Texas) in the near future. Forbes estimates that a nationwide rollout in the US would cost upwards of $100 billion.

In any case, mobile use is growing far more rapidly in the developing world because of the lower cost and availability of both devices and data.

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