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AITEC RELEASES AFRICAN COMMUNICATIONS
INFRASTRUCTURE & SERVICES REPORT 2002/03
Africa’s total
international bandwidth has more than doubled in the last year, mobile has
overtake fixed-lines and Africa has some of the fastest growing mobile markets
in the world, and new partnerships with the private sector are being forged as
an alternative to privatising PTOs. Yet private oligopolies threaten to supplant
public monopolies, Internet user growth has slowed to some 20% per year, and a
strange case of the missing Internet content eludes would-be users. These are
some of the key conclusions of the first African Infrastructure and Services
Report launched by African IT Exhibitions and Conferences (AITEC) at the African
Computing & Telecommunications (ACT) summit held in Nairobi (Kenya) from 5 –
9 August 2002.
The report begins with a critique of the
telecommunications regulatory environment in African countries, and then
provides a regional status of the policy frameworks for information and
communication technologies (ICTs). ‘In an increasing number of countries
regulators are asserting their independence, introducing increased competition
and setting ambitious universal service targets,’ says Sean Moroney, Chairman of
AITEC.’ The report then goes on to provide a detailed inventory of the regional
telecommunications infrastructure underpinning ICTs in Africa, and an analysis
of the new service offerings which are being introduced by fixed-line and mobile
operators, Internet service providers (ISPs) and satellite service providers.
Cutting through the infrastructure and services are
a number of limiting factors on the growth of ICTs in Africa. Cost is a key
constraint, which creates a number of seemingly irrational paradoxes: even
though Africa has some of the poorest countries in the world, it has some of the
highest costs for international calls, for mobile services, and for
international bandwidth. Consequently, it is more expensive for an African ISP
to operate than its counterparts elsewhere in the developed world. Some of the
new services which are being offered are based on new business models which help
to radically lower costs and address the market. Prepaid billing, a concept
which had one of its first successes in the African market, has driven the
growth of mobile. The introduction of new low-cost satellite-based services has
increased the availability of bandwidth. Voice over Internet protocol (VoIP) has
become an importance for international calls, and the first adopters of the free
ISP model are beginning to appear in the region. These models and technologies,
in turn, present challenges to the established regulatory environment and to
policy-makers at both the national and regional level.
The report concludes with an ‘African Connectivity
model’. Based on the premise that all international bandwidth is procured either
by satellite or regional fibre connectivity, the model puts all projects in time
series and demonstrates the evolution of international bandwidth over the last
five years. The report also contains an optional CD-Rom with full electronic
copy of the Africa Connectivity Model, and a supporting library of satellite
footprints, regional fibre projects and telecommunication
indicators.
Regulatory Hurdles, and Regional Policy Making
‘The backdrop to the sea-change in the structure
and dynamic of telecom markets are those tough decisions taken by African
Telecommunication Ministers to liberalise the sector and to introduce regulatory
frameworks to manage the new multi-operator environment,’ says Muriuki Mureithi,
CEO of Summit Strategies in his chapter on Regulation. ‘The ensuing competition
has clearly stimulated demand…But how far can competition tap the latent
(suppressed) demand in Africa? Emerging trends indicate that the timing of the
introduction of cellular competition is fostering market concentration.
Oligopolies/monopolies are entrenching themselves in the market. This
concentration of market power is eroding the benefits that competition can
bring, and will see a return to the regime of high tariffs and low growth,
driven this time by the private sector maximising profits in a de facto
monopoly.’
‘The weakest link in the liberalisation process is
at the policy level. After hurriedly setting up and promulgating
telecommunication laws in response to pressure, governments failed to establish
an institutional mechanism to continuously review sector policy...Consequently,
many governments now find themselves with policy frameworks rooted in the past
and unable to respond to the demands of today and the near future.’
Telecommunications regulation sits within the wider
ICT policy-making environment, which at the regional level is spearheaded by the
United Nations Economic Commission for Africa (UNECA). ‘The African Information
Society Initiative (AISI) has provided the continent with a common framework, a
useable and workable guide for countries to formulate their policies and plans,’
says Aida Opoku-Mensah, Team Leader for the UN Economic Commission for Africa’s
(ECA) Promoting ICTs for Development Programme in her chapter on Policy.
‘Without this framework, many countries would have been struggling to keep
abreast of developments in the information society and today, some of the
poorest countries in the world such as Djibouti, Central African Republic and
Niger are developing NICIs under the AISI framework and working towards an
information society. This programme has proved pivotal both for the development
of national ICT policies, and for the development of regional policy.’
Upstream International Bandwidth
Doubles
‘International Internet bandwidth has expanded
substantially - up over 100%, from 700 Mbps of available outgoing bandwidth in
2001 to 1,500 Mbps in 2002’ says Mike Jensen, Independent Telecommunications and
Internet consultant, in his chapter on Internet infrastructure. ‘There are a
variety of reasons for this substantial growth, most notably: the increasing use
by Internet service providers (ISPs) of low bandwidth via satellite to augment
their existing links, the greater demand by a maturing user-base for more
bandwidth (including for VoIP), growth in use of public access facilities
(cybercafés, business centres) and also because of the lower pricing for
bandwidth created by new supplies from satellite providers and the establishment
of the new Sat-3/WASC submarine fibre cable along west Africa.’
Africa’s total upstream international bandwidth can
be accounted for by the established regional fibre and satellite
connectivity:
Regional Fibre Projects. Chapter 5 looks at
existing and proposed regional fibre projects in the region. ‘When the Sat-3/
West African Submarine Cable (WASC) and South Africa – Far East (SAFE) cable
entered commercial service at the end of May 2002,' notes Paul Hamilton, the
editor and a contributor to the report, 'they brought an extra 30 Gbps of
international capacity to alleviate the bandwidth demands of African carriers,
operators and Internet service providers (ISPs). At least one other undersea
(‘wet’), and four overland (‘dry’) regional fibre projects are also in the
pipeline, which promise to overcome the shortfall of bandwidth to carry
international voice and Internet traffic. However, the crux of such projects lie
in their economic viability, and how they can recoup the huge investment
required’.
Satellite. Chapter 6 looks at the continued
dependency on satellite for international bandwidth, at new services which are
becoming available, and at the changing structure of the satellite service
provider’s market. ‘Nearly all of Africa’s international bandwidth is provided
by satellite. Except for those countries which are connected to and utilising
submarine fibre-optic cables (Algeria, Djibouti, Egypt, Morocco, Senegal, South
Africa, Tunisia, Canary Islands and Cape Verde), satellite presents the only
means of carrying international traffic other than links they might have with
immediate neighbours… As a result, African countries have a very high dependency
on satellite: in the majority of countries more than 95% of international
traffic carried by satellite’.
The existing satellites above Africa are
heavily subscribed. There is simply not much capacity left, and it is
increasingly difficult to lease capacity on them. However, new satellites are
being launched - notably Intelsat 903 launched on 30 March 2002, New Skies
Satellites (NSS) 7 on 16 April 2002 and Stellat 5 on 5 July 2002.
New Service Offerings
The report examines a number of new service
offerings being implemented by operators, which have the potential to further
unlock African communication markets. These includine:
Voice over Internet Protocol (VoIP). Chapter 3
provides an overview of the fixed-line sector, including the privatization of
PTOs, the introduction of competition, and the increasing legal and illicit use
of Voice over Internet Protocol (VoIP). ‘The use of Internet Protocol (IP)
Telephony in Africa has long been an open secret,’ notes Paul Hamilton. ‘Seeing
the opportunity to bypass the extremely high prices charged for international
calls, a number of small, informal and illegal operators exploited this
opportunity and undercut the public telecommunication operators (PTOs). In
Africa, industry sources estimate the extent of this grey traffic to be between
10% and 70%, depending on the country. However, an increasing number of African
PTOs are themselves using VoIP to carry international traffic. Ironically,
service providers such as iBasis, ITXC and Gateway IP point out that PTOs can
use IP telephony as a defence against illegal bypass to recapture the illegal
traffic. Without the caller ever realising it, an increasing proportion of PTO
calls flowing into and out of Africa now travel at least part of the journey
using IP’.
Mobile Data. Chapter 4 charts the rapid growth of
mobile in Africa, and concludes with a breakdown of mobile data applications
which are entering service. In Nigeria, the number of mobile subscribers has
overtaken 1 million within twelve months of the two operators first cutting over
service in August 2001. ‘In the developing world, mobile data services built
over the existing GSM platform bring the possibility of Internet access to
places within cellular coverage that it would not otherwise reach for decades,’
says Paul Hamilton. ‘In Africa, the lack of fixed-line data infrastructure (not
just as voice) is a key reason holding back the development of the Internet. A
number of operators have deployed circuit-switched data (CSD) onto their
networks, one has deployed high speed circuit switched data (HSCSD) and at least
six are deploying general packet radio services (GPRS). For the time being, the
majority of African mobile operators have yet to make the investment into mobile
data, concentrating first on the burgeoning voice market and uncertain of the
commercial viability of mobile data. Increasingly though, some operators are
using other platforms to deliver a range of locally-tailored information
services through existing second generation (digital) mobile phones – including
short messaging service (SMS) and Interactive Voice Response (IVR) services.’
Free ISP. Chapters 7 and 8 provide a detailed
status of the Internet in Africa, and also looks at the early adopters of the
free ISP model in the region. ‘The rates of [Internet] growth seen in the 1990s
have slowed in most countries as the bulk of the users who can afford a computer
and telephone have already obtained connections,’ says Mike Jensen. ‘As of
mid-2002 the number of dialup Internet subscribers was close to 1.7 million, 20%
up from 2001, mainly bolstered by growth in a few countries such as Nigeria.’
‘There are three key business factors that will affect the growth of the
Internet in Africa: the cost and availability of technology, the price of access
and the availability of content (and services) relevant to African users,’
points out Russell Southwood, Chief Executive of Balancing Act in his chapter
exploring the "Strange case of the missing Internet content". ‘Of these three
factors content (and services) is arguably the most important. If the Internet
does not have any ‘use-value’ for African users then it will remain a marginal
technological curiosity that is in no way central to anyone’s life. But if
content is really so important why is there so little of it in existence?’
So far, only four African ISPs have launched free
ISP services – and two of these have been without a revenue-sharing agreement
with the PTO. The free ISP model represents a symbiotic relationship between
ISPs and PTOs. Elsewhere, fixed-line carriers have been willing to share a
proportion of the extra revenue brought by additional incremental traffic that
free ISPs generate, since users dialling up to free ISPs create larger phone
bills. ISPs effectively create much larger demand for minutes to be supplied by
PTOs. Vice versa, the ability for ISPs to waive subscription charges has allowed
them increase the size of their potential market, and also undercut rival ISPs.
Elsewhere in the world, the model has powered the growth of Internet in much the
same way that pre-paid billing has done for mobile usage. The first two free
ISPs were launched during 2002.
About AITEC
The African Communications Infrastructure and
Services Report 2002/03 can be obtained from AITEC (see below).
Sean Moroney, AITEC Chairman.
Tel: +44
(0)1480 831300
Fax: +44 (0)1480 831131
Email: sean@aitecafrica.com
Paul Hamilton, Telecommunications Editor
Tel:
+44 (0)208 769 1146
Fax: +44 (0)208 769 1146
Email: paul@aitecafrica.com
Paul Asinor, Client Services Manager
AITEC GHANA
Tel :233-21-7012137
Fax: 233-21-762926
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