A Bold Idea to Move Poorer Nations Online

What can you do if you’re a nice country and you want to join the 21st century, but the students at your universities, normally the hottest market around, just aren’t online? They can’t afford it, and your government can’t afford to help.

One thing you can do is listen to an entrepreneur who fled your country more than 20 years ago but who is now eager to come back and help the land that rejected him.

He may just have a crazy idea that makes sense: Package the students as a target market, develop an education portal on the Internet and eventually take it public or sell a stake to the highest bidder: Let marketers pay for the privilege of reaching the students.

That would solve a couple of problems, chief among them funding. Instead of paying to put the Internet on campus, the government could get investors to do so. Then, if the idea is successful, other countries might copy it--especially if the governing board includes successful, visible people from outside your own country.

That’s the outline of an exciting new project in Argentina, where only 200,000 of the country’s 10 million students are online.

The government went to the right source for advice--Argentine entrepreneur Martin Varsavsky, founder of Viatel Inc., Jazztel, Ya.com and EinsteinNet, four European telecom, information technology and Internet companies with multibillion-dollar valuations. He promised to help by rounding up qualified bidders and a credible board, while remaining uninvolved in the business side himself.

He also will donate $10 million as “start-up capital” for a government-owned company that will construct the educational portal.

Though the Madrid-based Varsavsky considers himself Argentine, he left after the military government of the time killed his cousin and threatened his family. Consider this project as some kind of reconciliation: rescue rather than revenge.

“Above all, what the Internet needs to grow is an educational system that reaches all corners of each country, and income distribution that allows most people to afford to be on the Web,” Varsavsky says. That is his goal first for Argentina and then perhaps other countries.

Aside from Varsavsky’s contribution, the company will own all the university system’s own content--registration services, to sign students up for attendance and for specific classes and activities; course materials and readings--and beyond that the right to sponsor online communities and, of course, any other online offerings targeted at the students.

That should be compelling enough--more than what has supported many a hot initial public offering. The plan is for the company to go public next year or at least to sell a 20% chunk to some outside investor.

“The money raised will go to improve the portal to some extent, but most of it will go to wire schools, libraries and universities,” says Varsavsky. “The systems used to connect students will not be PCs but more what we are doing at https://www.einsteinnet.de--namely thin clients where all the information is network-based so the government will not need to upgrade hardware all the time.

“If we are successful, my $10 million, combined with my know-how to build companies, combined with the resources of the Ministry of Education, will create $5 billion to $10 billion in value to be used to improve education.”

That assumes a valuation of $500 to $1,000 per user, as opposed to, say, Terra (the offshoot of Spain’s Telefonica), which is trading at $24,000 per user. Commercial partners could be expected to apply a substantial discount to any company controlled by a government, however well-meaning. On the other hand, well-educated students, especially as they graduate and get jobs, are an enticing market.

Will the scheme be successful? It should be if the government can keep a light hand and let the company follow its own destiny. The freer the company is, the more it should be worth to investors.

Meanwhile, says Varsavsky, his aim is to make the project a success so it can be replicated in other countries.

“At first,” he says, “I thought this should be a worldwide initiative, but it’s too easy to kill off something that ambitious with early criticism.”

Instead, success in Argentina will prove the concept; failure--or flaws--will lead to better projects in other countries.

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Esther Dyson edits the popular technology newsletter Release 1.0 and is the author of the best-selling book “Release 2.0.” She is also chairwoman of ICANN, the Internet Corp. for Assigned Names and Numbers. Questions and comments should be directed to Esther Dyson at edyson@edventure.com.