This model was developed to address requirements from USAASA for subsidies for public internet access facilities and to answer frequent public questions about starting an internet cafe. It differs from previous models by allowing quick comparison of scenarios through selectable Excel scenarios for location and facility type. Key inputs include utilization rates, costs, and the number of PCs. Outputs include months to breakeven, cash flows, revenues, utilization rates, and more. It covers a 5 year period and aims to determine breakeven at 60-65% utilization if revenue exceeds costs.

1. Public Internet Access Business Model
Why was the model developed?
The following is an extract from the USAASA tender for subsidies for Public Access ICT:
4.7.1.4 How financial sustainable is/are existing public access facility/facilities, clearly
indicating:
4.7.1.4 .1 Average total revenues per month (also including revenues per service
offering);
4.7.1.4 .2 A breakdown of average costs per month;
4.7.1.4 .3 Average time period it takes to reach break-even per public access facility
(from deployment); and
Work began on this model when Telkom took the decision to respond to the USASSA tender, but the
model was only completed a few months later. Apart from the USASSA requirement, many members
of the public have posted questions to websites and blogsites enquiring about the viability of Internet
Cafes, or asking how many PCs they require when starting up an internet cafe, and so forth. This
model attempts top address the USAASA requirements as well as the questions from the public.
How this model differs from some previously published models
Many options are quickly selected via slider bar, radio button , drop down menu or check box,
making it easy to vary inputs within seconds.
Some input parameters of necessity need to be entered as numerical values typed in via a keyboard,
but this makes it time consuming if one needs to compare different scenarios.
This model uses selectable Excel scenarios to enable operators, investors, service providers, telcos
etc. to quickly compare different types of facility, in terms of location or building type. The building
type & location determine the monthly rental, salaries and wages and also the adoption rate, and all of
these are inputs in each scenario. Adoption is very fast in a city CBD, and very slow in a village which
has never had internet connectivity before. A key feature of this model, is the use of a Bass Diffusion
curve (or S-curve) to model the utilization of the Public Internet component of the business.
The Scenarios presently in the model are: City CDB, Shopping Mall, University Town, Village near
University Town, Suburb, middle income, Suburb - low income, township - middle income, township,
low to very low income, Village, Shipping Container
While the scenario types are fixed - a new Scenario can be added, but this takes between 1 and 2
hours - one can use a given scenario and change user defined values to fit a scenario not provided
for.
For each Scenario, one can enter a utilization percentage per timeslot. One can play with these
utilization figures, to see how one can increase utilization. For example, one could offer a discount
during an early morning slot when utilization would otherwise be low. For one of the Scenarios – City
CBD – different utilizations can be loaded, using the standard Excel Scenario Manager.
A timeslot granularity of half an hour has been selected. This is typically the shortest timeslot
offered at low cost internet cafes. High priced Internet Cafes do offer shorter timeslots, e.g. R5 for 10
minutes at some of these, but using shorter timeslots makes the spreadsheet a little unwieldy,
although it can be done if there is demand for such planning.
The model covers a 60 month period, i.e. 5 years. In general, the facility will reach breakeven when
the target utilization of 60-65% is reached, provided there is sufficient revenue (from revenue
generating PCs, and days operation in a week and hours of operation in a day), and the key Opex
determinants (staff costs, monthly rental, loan service costs, access and bandwidth costs) do not
exceed revenue.

2. User defined inputs
Arbitrary inputs, typed in via keyboard:
a) Per Scenario
Salary/wages for manager, admin person, and if required, evening and weekend assistants
Building cost or monthly rental (also with a radio button to select either one)
Average % utilization of revenue generating PCs, per half hour time slot, from 08:00 to 22:00
b) Global (applicable for all scenarios)
Repayment period and interest rate for PCs
Repayment period and interest rate for other equipment
Many others, including electricity costs
Selected via drop down menu
Scenario (e.g. CBD, shopping mall,...)
Type of PC: includes new PC, second hand PC, thin client USB, thin client Ethernet
Service provider and package: Telkom SSO, Telkom FLL (W-CDMA), ADSL512k, ADSL4M,
8ta Int 3,CellC, Vodacom My10G, Mweb 512, Mweb 4M, user defined
Selected via slider bar:
Number of revenue generating PCs
Price per hour
Operating times after 5PM, per scenario and on the main worksheetS-curve adoption
parameters, per scenario
Lower limit and upper limit of S-curve to add PCs, when PCs not all purchased upfront
Selected via Radio Button
Revenue generating PCs at launch: all, half, third
Subsidy levels for manager and admin: 0%, 50%,100%
Selected via Check Box
Business open on Saturday
Business open on Sunday
Business open at 8AM (default is 9AM to 5PM)
Donated PCs
Add 1% to average utilization
Outputs
Numerical value: Months to breakeven
Cashflow chart showing income, OPEX, net revenue vs time
Cummulative revenue at 36 months and 60 months
Daily average utilization
Graph of S-curve
Pie Charts showing relative costs of bandwidth, salaries, revenue, other opex at 12, 24, 36
months (but will be changed to a single bar chart)
Months when PCs are added, for the case when not all PCs purchased upfront
Business hours as a percentage of max 96 hours per week (14 hours per day x 7 days per
week)