Telecom Rumble - Jockeying for one of the world’s fastest growing markets
In its 2006 report on Africa, BuddeComm, a global telecommunications research Web site run by Australia’s Paul Budde Commun-ication Pty Ltd., notes that the continent’s telecom markets are among the fastest growing in the world, thanks largely to the explosion of cell phone use and the roll out of new networks. Mobile users constitute about 85 percent of all African telephone subscribers, the highest ratio of any continent. Under-standably, re-gional and international providers have been jostling for market share. Mobile networks saw their data revenues increase by between 20 percent and 100 percent in 2005, even though much of the data traffic consists of short message service (SMS).
“With fixed-line and Internet penetration at little more than 3 percent and mobile penetration at around 15 percent, enormous opportunities continue to exist for telecommunications service provi-ders, equipment vendors and investors,” the report, titled “2006 Telecoms, Mobile and Broadband in Africa,” says. It further notes that Africa needs to invest US$11 billion per year over a 10-year period to reach its target of 10 percent teledensity by the year 2010. African governments are counting on the private sector to be the major financier of telecommunications development in the region.
Here’s what’s happening in some countries:
Squabbling between governments and telecommunications companies is delaying the arrival of an underwater fiber optic cable in East Africa, which could do more to transform the region’s economies than any other single infrastructure project of equivalent cost. The East African Submarine System (EASSY) cable, slated to arrive in 2007, will stretch from Sudan to South Africa. Currently, all of East Africa connects to the Internet and international broadband via satellite, which is slower and more expensive than fiber optic cable connection. EASSY would drop the cost of Internet and telephone connections by some 65 percent—a boon to business.
All public schools in Rwanda are expected to be equipped with computers by the end of 2007 under the government’s 2020 Vision Program. As of November, 1,138 out of 2,300 primary schools had at least one computer each and 400 secondary schools were fully equipped, 39 of them boasting wireless Internet access. The program is part of a national IT policy to make the tiny Great Lakes nation the leading IT-endowed state on the continent. Under the program launched by President Kagame last year, over 60 percent of primary and secondary schools already have been equipped with hardware and IT instructors. In the next phase, all urban and rural schools will get the machines, which will be connected to electricity lines, generators or solar power. More than 400 students have benefited from full scholarships to study information technology in India, South Africa and the United States. They are expected to graduate and return home to take up civil service jobs to promote the information, communication and technology program.
The Uganda Communications Comm-ission liberalized its telecommunications market, ending the monopoly enjoyed by MTN Uganda and Uganda Telecom. Previously, only these two companies could roll out infrastructure, while Celtel Uganda was licensed only to sell and provide. The change made it possible for Celtel to compete more directly with MTN. It also allowed several smaller players to make infrastructure available to other users. The commission said all players would be issued the same license as part of the liberalizing. Uganda moved quickly to liberalize its telecoms market after a five-year exclusivity period that limited competition in basic telephony service, cellular telecommunications service and satellite service expired on July 24, 2005.
Safaricom, Kenya’s leading mobile network service, is rolling out the most advanced commercial wireless technology yet. HSDPA (high speed downlink packet access), or 3.5G, service, will be available in parts of Nairobi, the capital, for a 12-month trial period. The software upgrade will provide speeds of 1.8 megabits per second, allowing users to download music, video and e-mail to their cell phones five times faster than with the first third-generation (3G) networks. Safari-com is also rolling out a pilot 3G universal mobile telecommunication service (UMTS). The 3.5G technology will be cheaper than VSAT, which many companies operating in rural areas currently use. Critics contend that African mobile operators should launch simple data products tailored for ordinary Africans rather than sophisticated technology like 3.5G in a market that is still mainly voice centered. While 3G mobile systems have been launched in Africa, only South Africa has 3.5G service, but Tanzania and Nigeria are also gearing up to launch it. Cell phone use has exploded in Africa and proponents of the 3.5G technology say high-speed Internet access via data cards or phones could be huge among small businesses in countries where fixed-line infrastructure is patchy and unreliable. Kenya is one of the biggest telecoms markets.
By Rosalind McLymont