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  S p o t   L i g h t

Goodnight Internet Supermarket!


Few years ago, it was the cynosure of all business eyes. Everybody wanted to have a chunk of the fast profit- making business or so it seemed. But not long after, the business turned sour becoming more of a nightmare to operators. Customers deserted them. Public power supply became elusive. Crime bursting operatives became their regular guests. They were forced to close shop.

Such is the story of the Cyber café and its operator in Nigeria. Pathetic as their story may look, experts insist they have a share in their predicament. But should they be singled out for blame in an environment that is everything but business friendly?
The collapse of the Cyber Café business is our spotlight this month. It is written by ROMMY IMAH with additional reports from IFEANYI OSUEKE and FRANCA ENEGBETA. Flip over and have an exciting time…


Requiem for a once booming business

  The Internet serves as the platform for research, business and even education for its users. New skills, new knowledge, new businesses and new contacts are acquired making use of the information super-highway. For first time users, it is as infectious as pool betting- the further you go, the more addicted you become. But unlike pool betting, opportunities, unquantifiable opportunities abound in the Internet.
A couple of years ago, it was a booming business. The excitement of going to the Cyber café for research and other online business transactions knew no bound. As a result, cyber café spots were opening up in virtually every street in all major cities in Nigeria. The

revolution in the ICT sector also contributed immensely to the boom in the business. And so, the role of the Internet as a means of bridging the digital divide came to the fore.
According to Wikipedia, the free encyclopedia, a Cyber café is a place where one can use a computer with Internet access, mostly for a fee, usually per hour or minute; sometimes one can have unmetered access with a pass for a day or month, etc. It may serve as a regular café as well, with food and drinks being served.

Located world-wide, many people use Cyber cafes when they are travelling to access the webmail and instant messaging services so as to keep in touch with their family and friends. Beyond this however, in many developing countries like Nigeria, Cyber cafes serve as primary form of Internet access for citizens because a shared-access model is obviously more affordable than personal ownership of Internet facilities.

Apart from Cyber cafes established by hotels, libraries and airports for the convenience of their customers, a substantial number of Cyber cafes in Nigeria for instance, are privately owned. And it is these privately owned ones that are massively patronized. But in recent times, the Cyber café business in Nigeria is crumbling at alarming proportion. And from every indication, it seems set for further degeneration.

Described as a natural evolution of the traditional café, what has today popularly become the café started as a place for information exchange, and has always been used as a place to read the paper, send postcards home, play traditional or electronic games, chat to friends, find out local information.

Elsewhere, while most Internet cafés are private businesses, many have been set up by government and non-governmental organizations to help bridge the 'digital divide', providing computer access and training to those without home access. For example, the UK government once supported the setting up of 6000 telecentres.

In looking at the evolution of the Cyber café, Wikipedia recalled that as Internet access is in increasing demand, many pubs, bars and cafes have terminals and so, the distinction between the Cyber café and normal café is eroded. But there appears to be a global recession in Cyber café business however, the situation in Nigeria looks alarming.

So, why is this once lucrative and vibrant business extinguishing with such supersonic speed in Nigeria? Why is Cyber café business becoming history in this part of the world? Or is it not an irony of sort that while the ICT sector in the country is growing with such an impressive rate, the Cyber café business is rapidly dying? Questions!

Experts spoken to by this magazine were united in agreeing that poor business knowledge and plan were monumentally responsible for the recession being witnessed in the business today. Perhaps only a few of the operators knew that Internet related business is a cut-throat one especially when it is done without sufficient business knowledge.

 

Take the issue of the Internet Service Providers (ISPs) for example. A research study last year showed that in seven years of steep rise in mobile connections, it was everything but rosy for Nigerian Internet Service Providers. The report had it that within a short space of three years of commencing operations in Nigeria, about 60 Nigerian ISPs have closed shop.

According to the report, there existed a huge gap between demand and supply of bandwidth brought about by consumers' inability to buy the Internet infrastructure. This was said to be a spillover effect of non-accessibility to public power supply, which is a common phenomenon in Nigeria.

The report went further to show that 51 of the 60 ISPs that closed shop said that poor power supply was responsible for their predicament promising to execute their licenses if power situation improved.

It is certain that in line with the peculiar way of doing business in Nigeria, some of these ISPs that closed shop did not tell their clients (which include Cyber café operators) that they were being forced to wind up due to some factors beyond their control. And so it was possible that as soon as they closed shop, their Cyber café clients followed suit.

And this is why experts argue that there was need for any prospective Cyber café operator to do an audit check on the performance of available ISPs and pick the one that most suit his expectations. The process will save the prospective operator money and the grief of running around in search of solution when it would have become late.

The ISPs have their peculiar problems. While some of them would fail to pay for bandwidth space on time, others come slow in responding to distress calls. Whereas some of them are problem-prone during rainy season, some others lack the technical know-how to respond to problems from clients. These are some of the issues that need to be considered by prospective Cyber café operators.

But why are the Cafes dying?
Reports have it that recession in Cyber café business has assumed a global phenomenon. In European countries in particular, the number of pure Cyber cafes is decreasing by the day since more and more normal cafes offer the same services. There are also some European countries where the total number of publicly accessible terminals is also decreasing.

It is believed that the cause of this development is a combination of complicated regulation, relatively high Internet penetration rates, the widespread of notebooks and Personal Digital Assistants (PDAs) in use and the relatively high number of WLAN hotspots. In Germany for instance, many pubs, bars and cafes offer WLAN (Wireless Local Area Network),

  but no terminals since the Internet café regulations do not apply if no terminal is offered.
Additionally, the use of Internet cafés for multiplayer gaming is very difficult in Germany since the Internet cafe regulations and a second type of regulations which was originally established for video arcade centres applies to this kind of Internet cafes. It is, for example, forbidden for people under the age of 18 to enter such an Internet café, although particularly people under 18 are an important group of customers for this type of Internet café.
In Nigeria, the operational environment is

not too different from the situation in Europe except for the issue of infrastructure. Infrastructural problem like power is generally seen as the greatest challenge militating against the growth of industries in Nigeria including Cyber café business.

Many of the Cyber café operators could not cope with the cost of running alternative power source. President of the Nigeria Internet Group, Engr. Lanre Ajayi agrees that erratic power supply is the greatest factor responsible for the pre-mature dearth of Cyber cafes in Nigeria. “There are basically two factors that can be traced to this. One is the cost of powering the cyber cafe; the bulk of expenditure of cyber café goes on power or diesel. And that is affecting the profit, eating into the margin very deeply.

“Again, the cost of the bandwidth is very high. Those two cost elements are affecting the margin of operators and users are not willing to pay more. They have the situation where revenue remains constant but the cost keeps increasing. So when the cost overtakes the revenue, then they are running at a loss. That is what happens to the cyber cafes and they are forced to close up”.

Ajayi who insisted that the real cause why the cafes are shutting down has to do with power argued that if the cost of power comes down, the cyber café will be comfortable and some people will go to them. In addition to this he said the computer as an important instrument for Internet access should be made affordable.

“The argument that the access at home is affecting them is a factor but it is not the major factor because I can tell you that not every home can afford a computer. The computer is still much more expensive than the television which is available in almost every home. So until we are able to bill the cost of the computer at par with the cost of the television, I am afraid not every home will be able to afford it.”

Both Adekunle Adekoya, chief software architect, Havila Cyber café, Lagos and Taofiq Mustafa, head operator, Cybertech, Fadeyi agree that the major predicament being suffered by Cyber café operators is the absence of power supply. Besides, they argue that the entry of traditional voice telecom operators has in no small way contributed in pushing Cyber café operators out of business.

In an interview he granted a Lagos based daily, president of the Association of Cyber café and Telecentre Operators of Nigeria, Layo Omotola attributed the state of affairs in the business to a number of factors including the incessant clampdown on operators by operatives of the Economic and Financial Crime Commission (EFCC) as a result of increasing cyber crime in the country in addition to the inclusion in their bouquet, Internet service provision by private telecom operators- fixed and mobile.

Omotola noted that individuals and organizations who hitherto were customers of the Cyber cafes have now abandoned them in preference for telecom operators. This situation he said has resulted to a drastic decrease in the number of functional cafes in the country.
According to him, in 2003, the country had over 15, 000 Cyber cafes with over 10, 000 of them sited in Lagos State alone. “As at the end 2007, the number had dropped to 1,002, and with a recent statistics taken by us, functional cybercafés are now below 600.”

  Because there are many opportunities in the modern business world often, enthusiastic entrepreneurs burn their fingers on the first attempt to start and run a business. This leads to loss of capital and the appetite to try again.
It is for this reason that project experts caution that careful preparation should go into any new venture to ensure that a just reward is reaped from the business. Business skills can be learnt. Entrepreneurs should have the best guidance and support at the start of their business to ensure a profitable and sustainable business.
Many of the operators who delved into the business without proper planning have long discovered that as quickly as the returns were coming, so the

challenges. In fact those of them who had to borrow from the bank to float the business are today biting their fingers as the debt burden on their head, resulting from their inability to pay up is rather heavy.

One other problem faced by operators is the activation of some virus-carrying messages by some unsuspecting customers. Some of these messages have easily ravaged networked computers in a café. Some of the operators cannot equally afford original software because of what some of them consider as the 'exorbitant cost'.A greater percentage of the customers that patronize Cyber cafes are within the age bracket of 15 and 35. Many of them, who visit the café especially for night browsing, come there to watch pornographic movies online. And experts insist that online pornography come with various forms of virus.

Again, privacy is considered a key factor in the course of sending information over the Internet. And this is one thing the Cyber café cannot guarantee. Some criminally minded people capitalize on the porous nature of the café environment to spy on what some other people are doing on the Internet.

It is common knowledge that in situations where a user does not sign out properly from his e-mail account for example, another user could gain access to some of the information in a previous user's account, and could use this to the detriment of the legitimate user hence the desire of Internet users to have private access at home.

Today, with the emergence of Smartphones like the Blackberry and the Pocket PC, promoted by both the fixed and mobile telecom operators, the Cyber cafe has lost a substantial portion of its market. Thus, Internet service offering is no longer the exclusive of the ISPs as virtually every player in the telecom industry now offers Internet service either through the mobile phone, the laptop or the desktop at home.

Analysts contend that with the current convergence drive in information technology, the mobile phone stands a better position to serve the consumer with

 

ease than the PC especially the upwardly mobile corporate executives. Nowadays, subscribers to Smartphones for instance, hardly patronize the Cyber cafes nor worry about getting to the office or carrying the laptop computer about before accessing their mails or looking for veritable information in the Internet. The Smartphones now do the jobs.

Indications are rife that the patronage for the Smartphones would continue to hike especially if prices of the phones continue to come down. In fact, a research result released sometime ago by Point Topic and YouGov showed that while current usage of the mobile phone to access the Internet is dominated by work-related applications, new users are much more interested in entertainment and keeping in touch with their friends.

The research pointed out that the quest for this mobile technology is driven by the consumer's desire for convenience and practical solutions especially in the case of Nigeria, now that there is growing interest in mobile banking.

  With the crash in prices of brand new and fairly used laptops and desktops in addition to the availability of affordable Internet cards and USBs, patronage for Cyber café services is obviously doubtful. Furthermore, the constant raid on Cyber cafes by security agents especially operatives of the EFCC have led to Café operators running away for safety and in search of alternatives.

Any solution in sight?
Sometime ago, global software giant, Microsoft introduced SteadyState, a unique product designed to

salvage the Country's failing Cyber café business. The product according to the promoters was targeted at reducing the cost of running conventional Windows operating system. While introducing the application, License Compliance and Anti-Piracy manager of Microsoft MEA, John Okereke said the failing business drew the attention of the software giant because Internet cafés and kiosks are a rapidly growing environment for shared access. He added that the business model of any successful Internet café depends on high-quality, reliable, computer access to customers while minimizing the overhead cost of acquiring and maintaining shared computers.

According to him, “Cafés and kiosks can be rough environments for shared computers; streams of anonymous users can't usually be trusted to treat the system gently. That's why you'll be glad to have Windows SteadyState - with user restrictions to help prevent problems and Windows Disk Protection to wipe away any problems that do occur”.

Highlighting the high rate of pirated software usage in Nigeria as one of the reasons for the failure of cyber café business, the Microsoft representative stressed the need for cyber café owners to invest in original software license for genuine products as this will ensure that their computers would always have the needed support offered by the solution providers and reduce downtime and associated risks.
Chief software architect for Havila Cyber Café, Adekunle Adekoya believes the solution to this failing business is merger and acquisition, a replica of what happened in the country's banking industry.

  While introducing the application, License Compliance and Anti-Piracy manager of Microsoft MEA, John Okereke said the failing business drew the attention of the software giant because Internet cafés and kiosks are a rapidly growing environment for shared access. He added that the business model of any successful Internet café depends on high-quality, reliable, computer access to customers while minimizing the overhead cost of acquiring and maintaining shared computers.
According to him, “Cafés and kiosks can be rough environments for shared computers; streams of anonymous users can't usually be trusted to treat

the system gently. That's why you'll be glad to have Windows SteadyState - with user restrictions to help prevent problems and Windows Disk Protection to wipe away any problems that do occur”.

Highlighting the high rate of pirated software usage in Nigeria as one of the reasons for the failure of cyber café business, the Microsoft representative stressed the need for cyber café owners to invest in original software license for genuine products as this will ensure that their computers would always have the needed support offered by the solution providers and reduce downtime and associated risks.

Chief software architect for Havila Cyber Café, Adekunle Adekoya believes the solution to this failing business is merger and acquisition, a replica of what happened in the country's banking industry.

  “The solution to the cyber cafe business is merger and acquisition. With the level of productivity in the business now, we cannot boast of making headway. When we merge we will have a new era of management that will not work based on sentiments because each individual's capital is at stake. And that is what we are saying that if we have the capability to survive, then we will remain in the business because whether private access or not, it is not everybody that can have access to private ownership; there will

always be people that cannot afford a PC”, he said. For Sabinus Eboh, a computer engineer and analyst, the solution lies on improvement on the country's social infrastructure especially public power supply. Besides, employees of Cyber cafes should be given adequate orientation with regard to the running of cafes while experienced maintenance engineer should be engaged at all time.

“One of the things that can be put together to help in the revival or improvement of cafe running is the issue of constant electricity supply from the public power supply. The use of diesel and fuel in the running of generators which serve as source of power supply to the cafes cost a lot of money.

“Employees of cyber cafe should be given some orientation as regard the running of cyber cafes by experts in the ICT industry. Good and qualified hands should be employed. A good and experienced computer maintenance engineer should be engaged or in the alternative a good IT consultant should be contracted for the purpose of maintenance at an agreed monthly or yearly fee”, he said.

The death of the cyber café business has been a source of worry to Nigerians especially those at the forefront of the advocacy for the use of this as an instrument of bridging the digital divide separating the country from the rest of the technologically advanced world.

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