Africa Telecoms

AFRICA TELECOMS www.africatelecomsonline.com

ISSUE 1

COMMUNICATING ICT SOLUTIONS WITHIN AFRICA

SEACOM

A faster way to connect

Rwanda

A success story

THE DIGITAL DIVIDE

exclusive Interview Chris Gabriel

M-BANKING

The Future of Banking in Africa SA R29.95 USA $3.50 UK £2.25 EU e2.95 Rest of Africa US$2.95

CONTENTS

November 2009

04 Guest Editorial

18 Gadgets

06 News

28 The Birth of the Digital Divide

Dr Hamadoun Touré, Secretary General of the ITU.

The latest local and global telecoms news.

14 Calendar

Upcoming events, shows and conferences which you can’t afford to miss.

16 Regulator Speaks

p.32 M-Banking The next wave in banking technology has arrived – and its mobile. Discover how mobile operators are jumping aboard the latest incentive to get the unbanked of Africa firmly into the financial mainstream.

2 AFRICA TELECOMS November 2009

Paris Mashile, Chairman of ICASA South Africa

Want the next big thing in portable devices? Our gadget review is here to help you choose.

Africa Telecoms looks at the moment the internet was born, and the creation of the Digital Divide.

p.48

The Rate of Termination Namibia

A case study on how Namibia resolved the termination-rates dilemma between telecommunications operators.

p.42

Special Report: Rwanda Success Story One of the smallest african states, yet with a network coverage which rivals many developed nations. How have they achieved this?

22 Exclusive 46 Computer to Handheld Interview Chris Gabriel CEO of Zain Africa shares his views on the market and looks at the operator’s expansion plans for Africa.

Intel looks at the software and processors in new devices.

56 Seacom

The undersea fibre-optic network is delivering unprecedented capacity and connectivity between Africa, Asia and Europe.

62 ITU Revisited

Africa Telecoms attended the ITU Telecoms World 2009 conference held in Geneva recently. We report on developments which are sure to change the industry.

68 Tenders

A list of the latest telecoms tenders from across Africa.

72 Last Word

Can old-fashioned courier still out-gun broadband.

Johann Barnard seems to think so.

AFRICA TELECOMS Executive Editor Mohammed Khan

Publishing Consultants SchreiberFord Publications

Africa Telecoms and Africa Telecoms Online is published monthly by 3i Publishing.

Director of Sales Bradley Shaw

Contributors Ken Wieland, Christopher Stork, Sarah Lacey, Alex Comninos, Steve Esselaar, Ali Ndiwalana, Brett Haggard and Johann Barnard

Unit 10, Planet Art 2, 32 Jamieson Street, Cape Town 8001

New Business Development Sarah Theron Designer Alexandra Flemming

T: +27 21 426 5590 E: info@3ipublishing.co.za www.3ipublishing.co.za www.africatelecomsonline.com

Printing Tandym Press

Web Development Wilbur Taute

November 2009 AFRICA TELECOMS 3

Guest Editorial

Dr Hamadoun Touré

Secretary-General, International Telecommunication Union

4 AFRICA TELECOMS November 2009

growing at twice the rate of the global market. That saw the number of subscribers leap from just 11 million in 2000 to 246 million by 2008. Mobile now outnumbers fixed line penetration by nearly 5:1.

But despite this very encouraging trend, the high-speed Internet services needed for important business, government and consumer applications continue to be either very expensive or simply not available.

This is Africa’s next big challenge: to find innovative, fast ways of bridging the broadband divide, so that all Africans are

ITU

Last month, ITU Telecom World 2009 welcomed an unprecedented number of high-level guests - Heads of State, Ministers, CEOs and industry gurus – to showcase, explore and debate the future of information and communication technologies and services. A great many of these participants made their way to Geneva from Africa, Asia and the Middle East – proof, I think, that the balance is shifting away from the increasingly saturated markets of the North in favour of the many exciting opportunities that abound in emerging economies.

Many of the world’s most vibrant markets for mobile services are now found in Africa, and the continent itself is beginning to pioneer innovations, such as Mobile Banking, that are being enthusiastically adopted by operators worldwide. This is a major step forward for Africa, which is transitioning from a pure consumer of technology to a technology innovator in its own right – a key paradigm shift that I think will have a snowball effect in fuelling economic growth in those nations with the vision to put ICTs at the heart of their development strategies.

The high African presence on the ITU Telecom World show floor also testified to Africa’s increasing openness to public-private partnership as a way of driving network build-out and the launch of new services. Indeed, investment in ICT infrastructure in Africa has increased dramatically in recent years, reaching US$ 8 billion in 2007 - more than double the figure of US$ 3.5 billion invested in the year 2000. These figures reflect an increasingly vibrant private sector investment climate, which has been stimulated by the opening of most African ICT markets to competition, coupled with the establishment of independent regulators in almost 90 per cent of countries in the Sub-Saharan region.

This highly dynamic environment is translating into lower prices for consumers and significantly widened access to telecommunications, particularly for mobile services in urban areas. Africa’s mobile market was the fastest-growing market of all world regions in the early years of the new millennium,

empowered to become active participants in and contributors to the emerging Knowledge Society.

This dream can become a reality. Our challenge is to make it come true by 2012, so that ICT plays the key role of catalyst for other sectors in meeting their own Millennium Development Goals through applications like e-health, e-education, e-commerce, e-government and more.

Let me take this opportunity to wish Africa Telecoms every success in charting the progress of ICT development in one of the world’s most exciting and auspicious markets. AT

4G Technology is a leading provider of products,

solutions, services and support to the

telecommunications industry in Africa.

We offer planning, optimization, performance and monitoring solutions and services for mobile and fixed Telecommunication networks.

For more information on our extensive range of solutions for your business, contact us at: Tel: +27 11 468 5488 Fax: +27 11 468 5515 E-Mail: 4g@4gtech.co.za Web: www.4gtech.co.za

News Rwanda

MTN launches Rwandan money transfer service

ZTE Targets Nigeria Chinese telecommunications equipment provider, ZTE, is to invest about US$1 billion in telecoms support services in Nigeria.

“It is all about the promotion of technology. We are into GSM products and the new generation products and development,” said Zhang Zhengyong, the Wireless Solution Manager, ZTE Corporation R&D Centre. “Nigeria is a big telecom market and here the competition between operators is always having an impact on the subscribers, and it sometimes affects the credibility and contributes to loss of attention.

We propose to bring new technology to Africa, especially Nigeria.”

Earlier this year, ZTE partnered with MTN to provide phones and several other support services in the country.

Mobile operator MTN says it will be introducing its mobile money transfer product in Rwanda before the end of this year, building on the recent launch of this service in Uganda.

MTN Mobile Money will be the first of its kind in Rwanda, bringing the service to its more than 1 million subscribers.

Mobile banking and transfers is a hot topic across the continent, with both Zain and Safaricom offering similar services in their territories.

MTN Rwanda says it has started testing the new system and is piloting with selected MTN Mobile Money Agents.

"We are proud to be involved in this initiative that is critical to the financial development of the Rwandan economy,” says Khaled Mikkawi, MTN Rwanda chief executive officer. “We are also fortunate that other MTN markets have launched the product and we can draw from their experiences.” MTN money transfer services has been piloted in Cameroon, Ghana, Cote d'Ivoire and Nigeria.

Universal charger Universal phone charger standard approved ITU has given its stamp of approval to an energyefficient one-charger-fits-all new mobile phone solution. The announcement comes as ITU lobbies hard to have the essential role of information and communication technologies (ICTs) recognized in the draft Copenhagen Agreement as a key part of the solution towards mitigating climate change.

Every mobile phone user will benefit from the new Universal Charging Solution (UCS), which enables the same charger to be used for all future handsets, regardless of make and model. In addition to dramatically cutting the number of chargers produced, shipped and subsequently discarded as new models become available, the new standard will mean users worldwide will be able to charge their mobiles anywhere from any available charger, while also reducing the energy consumed while charging.

>> Most telecommunications satellites have been placed in geostationary orbit (GEO), a circular orbit 35,785 km (22,235 miles) above the Earth >>

6 AFRICA TELECOMS November 2009

News

Mobile still strong Mobile is still driving telecoms investment Africa’s mobile sector remains the driver of investment growth across the continent, representing almost 69% (US$98.8 billion) of all cumulative telecommunications investment between 2000 and 2013, according to ICT Market Research and Analysis firm, BMI-Techknowledge.

Releasing its Africa Telecoms Services and Infrastructure Market Analysis and Forecast, the research house estimates that combined fixed and mobile cumulative capex will grow to US$141.1 billion by 2013.

The report states that Africa recorded year-on-year growth of 31.1%, reaching an estimated 405 million subscribers by the end of 2008, with the fixed networks accounting for 7.5%. The mobile networks unprecedented growth over the past few years continued, with an estimated 94 million new subscribers being added in 2008, totalling an estimated 375 million subscribers.

BMI-T expects Africa’s combined fixed and mobile subscriber market to reach 782 million subscribers by 2013.

“Even though the mobile sector is currently leading the charge in terms of investments, the fixed network sector will also witness heightened investments due mainly to the landing of various under-sea cables,” writes Fezekile Mashinini, telecoms analyst at BMI-T and author of the report.

“2009 has witnessed the landing of under-sea fibre cables such as SEACOM, Low Indian Ocean Network (LION), The East African Marine System (TEAMS), and most recently Globacom's “Glo 1” cable. The expected spending by operators on terrestrial links to bring the bandwidth inland is expected to run into millions of dollars.”

Strategic partnership for Etisalat Informa Telecoms & Media have announced their exclusive strategic partnership with Etisalat, signed at Gitex, the premier communications event of the Middle East, held in Dubai.

The GSM>3G Middle East Telco World Summit represents one of the most powerful telecom summits and conferences of the year, attracting 2,500 telecom ministers, regulators, investors, operators, industry leaders, experts, professionals and telecom companies from the Middle East and around the globe.

Commenting on the strategic alliance, Ian Hemming, CEO of Informa Telecoms & Media said: "Etisalat offers the highest quality of innovative services, including broadband, mobile and IPTV, positioning the UAE as one of the most technologically advanced nations in the world. We lead in the introduction of new services, in both the domestic market and across its networks in the Middle East, Africa and India. Etisalat brings a wealth of expertise and experience to any high-level Summit."

"Etisalat has joined the league of major telecom providers in the world and is well-positioned to be the strategic operator partner at this event." he added. Commenting on this association, Ahmad Abdulkarim Julfar, Chief Operation Officer of Etisalat said "Etisalat's partnership in these key industry forums reinforces our commitment towards shaping the future of telecommunications industry in the region by benchmarking our technological know-how, sharing experiences and outlining best practices and exchanging insights with world leaders and global partners."

Etisalat is an industry leader in broadband services and has recently heralded a new era with the deployment of its Fibre-To-The-Home (FTTH) technology that will revolutionise customers' access to fixed line services making UAE among the first countries in the world to enjoy this status.

>> There are currently more telephones in Tokyo than in all of sub-Saharan Africa. About two thirds of the world's population do not have easy access to a telephone >>

November 2009 AFRICA TELECOMS 7

News

IT Competitiveness South Africa has slipped, according to a recent study South Africa has slipped in an IT industry competitiveness study conduced by the Economist Intelligence Unit (EIU) – falling six places from 37th last year to 43rd this year. The Benchmarking IT industry competitiveness 2009 report gives the local industry a score of 35.3 out of 100, placing it second on the continent after Israel (64.3) and ahead of Saudi Arabia (33.9) and Egypt (33.8).

The report states the industry health overall has “held up well despite sharply reduced spending in most parts of the world on IT hardware, software and services. However, protectionist instincts are on the ascendant, even in the most free-market economies, while venture-capital and other forms of funding are being squeezed.'

Algeria

Algeria Telecom to invest $6bn over 5 years

Fleur Suijten

BPA Worldwide has confirmed the first combined print and web audit to be conducted in Africa. Reinforcing its position as the only global auditor of media, BPA Worldwide has announced that Africa Telecoms magazine is to become its first audited title published by an African media owner.

Published by 3i Publishing in Cape Town, South Africa, Africa Telecoms was launched in November. It will focus on the African telecoms and IT sectors and, editorially, will provide analysis of trends and technologies pertinent to the sectors in Africa as well developments worldwide that will have an impact on the continent.

“Since Africa Telecoms magazine will have a worldwide circulation, we felt that we had to deliver a globally-recognized circulation audit in order to achieve credibility and respect for our publication,” explained executive editor Mohammed Khan. “In so doing, we are making a statement of intent for Africa Telecoms and what we hope to achieve from the outset.”

3i Publishing plans to use the BPA audit to indicate to both current and potential advertisers that its circulation figures can be substantiated, giving them the peace of mind that they will be receiving the best value for their advertising spend, aimed at their particular target markets.

“We intend to fully utilize BPA’s value-added services to ensure that we maintain the standards and quality of the publication,” added Khan. “This is all part and parcel of the membership, including our digital media, and we hope to take full advantage of BPA’s experience and expertise within the industry.”

Stuart Wilkinson, BPA Worldwide’s Managing Director for EMEA, complimented 3i for committing itself to independent verification and commented that this was an important move for a title looking to sell advertising in the international technology sector.

“For a media owner to commit itself to BPA’s rigorous, internationally recognized audit standards is an important step forward,” Wilkinson said. “It shows that media owners are increasingly recognizing the importance of such auditing in developing media markets and that clients and agencies are seeking reassurances of ROI on their investments in emerging territories as they do in advanced media economies.”

Ilker

Africa Telecoms Audit

Algeria’s state-owned telecoms firm Algerie Telecom is to spend US$6 billion to upgrade its fixed-line and mobile operations over the next five years, reports Reuters.

"We will invest the money in overhauling our technology and buying new equipment for our entire networks," said Cherif Yaici, the company’s deputy chief executive.

The spending forms part of a wider US$150 billion government plan to upgrade the country’s infrastructure, with Algerie Telecom looking to grow its fixed-line subscriber base by 5 percent and its mobile subscribers by 20 percent next year.

The fixed-line operation has 3 million lines while its mobile customers total 9 million, he said.

>> In 1981 the world's first international cellular mobile telephone network NMT opened in Scandinavia with Nokia introducing the first car phones for the network >>

8 AFRICA TELECOMS November 2009

Global Distinctions between UC and collaboration to disappear in next 5 years

Gartner says that distinctions between the components of unified communications (UC) and collaboration (UCC) will no longer exist by 2013 and that more than 50 per cent of the vendors currently in this space will fail to meet all the communications needs of collaborative workers over the coming years.

“Business end-users typically treat the UCC components – voice, messaging, conferencing, instant messaging (IM)/ presence, applications, clients, social networks and collaboration tools – in silos,” says Jeff Mann, research vice president at Gartner.

“They can no longer work this way as UCC represents a fusion of different communications cultures and work styles.

The artificial separation they are used to will become a thing of the past,” he says.

“Combining communications with collaboration makes both sets of services easier to access and adds richer ways for teams to work together. We’ll also see organisations combine the groups responsible for voice and collaborations to better support UCC,” Mann adds.

The value for organisations will include

simplified and more effective usage of the increasingly broad range of communications and collaboration options, improved responsiveness of individuals and groups to events, and increased integration of communication functionality with applications.

Today however, organisations are dealing with multiple products and vendors performing overlapping communications and collaboration functions and by the time the integration occurs, Gartner expects a reduction in the number of strategic communication partners used by an organization. “UCC has so far been a largely vendor-push concept. For end-users to optimize the potential benefits, they must assess their real needs, match them to specific offerings and not allow vendors to push products on them they do not need,” concludes Mann.

To simplify and minimize the cost of integration, Gartner recommends that organisations develop a convergence road map, and migrate platforms, especially using standards, towards increasing levels of interoperability.

Gartner says that consumer markets – and not the UCC vendors - are driving innovation in the UCC space.

“They are driving corporate user expectations and requirements, particularly as the blurring of work and leisure tasks and time drives a demand for personal products to be used for work purposes,” Mann says.

Gartner predicts that the global UCC market will reach $7.4 billion in 2009, a 22 per cent increase from 2008. Microsoft, IBM and Cisco accounted for more than 30 per cent of the total market in 2008.

“The vendors that survive consolidation will be those that can provide more of the collective components of UCC that previously existed separately,” Steve Blood, research vice president at Gartner adds.

“The move to UCC threatens the established status quo between traditional voice and data vendors. It also presents a significant opportunity for public portal vendors such as Yahoo, MSN, Google and AOL to gain fee-based traction in the corporate market.

“Venerable telecoms vendors such as Siemens, Alcatel-Lucent, Avaya and Aastra will struggle to remain relevant as organisations increasingly seek rich and integrated UC and collaboration services,” Blood says.

>> The ITU is the world's oldest intergovernmental organization, with a history stretching back more than 130 years to 1865 >>

November 2009 AFRICA TELECOMS 9

Global O3b Networks, the developer of a new fiberquality, satellite-based, global Internet backbone for telecommunications operators and Internet Service Providers announced today it will be closing out the third quarter of 2009 with approximately US$600 million in contracts for services and a customer base for each product in its portfolio.

O3b Networks, funded by Google Inc., Liberty Global, Inc. and HSBC Principal Investments, is making rapid strides in its deployment of the world’s first ultra-lowlatency, Medium Earth Orbit (MEO), Ka-band, fiber-speed satellite network. The network is designed to improve Internet access for millions of consumers and businesses in emerging and developed markets, as well as selected vertical markets. Satellite delivery is scheduled for early 2011.

“We are really excited about our progress this quarter and more importantly, the response of customers to our product portfolio. We are proud to report that we have presold every application we developed for the initial launch of our satellites.” said John Finney, Executive Vice President of Sales and Marketing. “We have listened carefully to our customers ensuring that our services are available to meet advanced network requirements in time for O3b Service activation. This has given customers the assurance that they have a solution that is right for the growth they are anticipating.

Our attractive pricing and flexible terms has also made it easy for customers to make purchasing decisions to meet their long term bandwidth requirements.”

IMT-Advanced (4G) Mobile wireless broadband on the anvil New ITU radio interface standards to revolutionize mobile communication ITU has received six candidate technology submissions for the global 4G mobile wireless broadband technology known as IMT-Advanced.

The selected technologies are expected to be accorded the official designation of IMT-Advanced - to qualify as true 4G technologies - in October 2010.

The submissions were made in Dresden, Germany at the meeting of ITU's Radiocommunication Sector (ITU-R) Working Party 5D in response to an open invitation in March 2008. The meeting was held 14-21 October 2009.

The six proposals aligned around the 3GPP LTE Release 10 and beyond (LTE Advanced) technology and the IEEE 802.16m technology, will be assessed against ITU-R requirements using a defined evaluation process. This rigorous assessment over the next year will be supported by the work of independent external evaluation groups that have been established around the world and will take place under the direction of ITU-R Working Party 5D.

>> Globally, more than 65 000 000 km of optical fibre are produced each year. This means that each day enough fibre is made to circle the earth 4,5 times >>

10 AFRICA TELECOMS November 2009

Slavomir Ulicny

US$600-Million in contracts for 03b

Iran Petrov

Global

NATO uses telepresence for global collaboration The North Atlantic Treaty Organisation (NATO) has announced the recent deployment of a telepresence solution from Polycom, aiming to improve operational efficiency, interagency collaboration and enhance its ability to support out of area operations.

“Information flow is vital to fulfilling our goals and mandates, as well as maximising the productivity and efficiency of personnel and ensuring the success of operations,” says Malcolm Green, chief of the NATO C3 Agency’s Capabilities Area Team 9 (CAT 9), Networked Information Infrastructure Communication Services.

“Polycom telepresence addresses these challenges by enabling our teams to collaborate more effectively over distances,” he says.

“Deployed in six international locations, the telepresence solutions join an existing large deployment of Polycom video conferencing systems in use today at NATO headquarters and in outposts around the world. The standards-based systems also inter-

operate securely and seamlessly with video conferencing systems in use by NATO allied partners,” he adds.

The technology is used daily for central command communications, emergency management, critical needs assessment, crisis communications, intra/interagency collaboration, workgroup collaboration and project management.

Apart from improving responsiveness, the new solutions have resulted in massive cost savings for NATO. NATO recently replaced a series of quarterly in-person meetings with telepresence, resulting in an estimated cost savings of $51,000, over 500 hours of travel time and 21,000 kg of carbon emissions for one quarterly session.

Telepresence also helps reduce health and safety risks to operational theatre personnel imposed by traveling, as well as the burden placed on the hosting agency’s resources with managing visitors.

“Telepresence provides a natural and effective meeting environment that

delivers a far superior collaboration experience over traditional conferencing,” says Green who led the acquisition for the Agency.

“The Polycom telepresence systems also have an advantage for us because they interoperate with our existing video conferencing systems and the systems used by our allied partners.”

“Native interoperability with existing video conferencing systems was critical for NATO,” said Joseph Moeder, deputy director, NATO Operations, ManTech Global Services Corporation, a leading provider of technology and technical services solutions to federal government customers.

“It ensures that when complex missions require a well-coordinated response among other government agencies and international organisations, NATO is able to connect and reach locations worldwide.

“In addition, NATO can maximise its previous investments in video conferencing technology throughout the Alliance,” he says.

>> Mobile broadband subscriptions overtook fixed broadband subscribers in 2008, highlighting the huge potential for the mobile Internet >>

November 2009 AFRICA TELECOMS 11

Global

Starhome implements new roaming solution for TelCell St. Maarten Global roaming services specialist, Starhome has announced that TelCell St. Maarten (TelCell), the mobile services division of the St. Maarten Group of Telephone Companies, has increased its customers’ roaming minutes by more than 47,000 per month since implementing its solutions several months ago.

An annual revenue increase in the range of $1 million is expected by TelCell.

The Starhome products implemented by TelCell comprise Home Short Code and Intelligent Call Assistant, solutions that according to Starhome substantially smooth foreign users’ call placing experience when abroad. The company’s Intelligent Call Assistant utilizes powerful roaming intelligence to analyze and correct roamers' misdialed calls. Statistics based on live services show that up to 60% of these calls are never redialed, causing operators to lose potential revenue. By correcting and completing more calls, operators generate lost revenues and visitor traffic while

increasing user satisfaction.

TelCell also implemented Home Short Code to enable inbound roamers to continue using familiar, home-based short codes to access their Value Added Services (VAS) while roaming in St. Maarten. By temporarily adopting visiting travelers as their customers, TelCell claims it is creating a true Virtual Home Environment.

With nearly half of the island’s telephony revenue derived from inbound roamers, these solutions have played a key part in enabling TelCell to establish the infrastructure needed to maximize revenue from roaming.

“The new roaming technology enables us to increase our market share among the large networks and secure our roaming revenues,” says Brian Mingo, General Manager at TelCell St. Maarten.

“We are confident that Starhome’s roaming solutions will enhance and enrich the experience of our customers and international travelers,” he adds.

Mingo says that TelCell has achieved an approximate average of about 47,000 additional roaming minutes per month since choosing Starhome, which equals an increase in the range of $1 million dollars in revenue annually.

Both of the solutions have been delivered as a managed service, providing TelCell with the latest technology, Starhome’s expertise and 24/7 performance monitoring to ensure service levels are high. Amit Daniel, Vice President of Marketing at Starhome says, “Starhome is proud to partner with TelCell St. Maarten and provide its customers with our innovative technology that has been proven to improve the customer experience and increase operator revenues.

“We are pleased to have become a key contributor to TelCell St. Maarten’s continual drive to provide its customers with premium mobile communication solutions and look forward to strengthening our partnership,” he concluded.

>> The first transatlantic coaxial copper submarine telephone cable called TAT-1 was installed in 1956 and carried 36 telephone circuits. >>

12 AFRICA TELECOMS November 2009

ADVERTORIAL

N-SOFT INTRODUCES BILLING CONVERGENCE IN AFRICA N-SOFT proposes a full suite of solutions which can all be combined together. This combination contributes to the operator growth by benefiting from every one of the advantages of a centralized system.

Wholesale services with fraud detection and control mechanisms (tool free and premium numbers incl.) / Internet billing services / Callshop billing solution / Mobile services billing for calls, SMS, roaming, MMS, bundle, etc. / Convergent billing / Residential telephony services / Voicemail IVR / Nomad services (calling card based)

N-SOFT, a leading supplier of innovative billing for fixed, mobile and next generation networks, has officially launched NS-Convergent Billing, the new carrier-grade solution for the African market.

NS-Convergent Billing is a state-of-the-art billing solution combining and integrating real-time charging for all prepaid and postpaid services, from a single platform and for all services, independently of the multi-environment telecommunication architectures. This turn-key solution is scalable to hundreds millions of subscribers and is an ideal solution for new entrants, established telecom players converging multiple applications and networks in one efficient and flexible system.

This solution is more than a convergent billing as it embeds real-time rating, charging and recharging, bundles, promotions, customer management and self care, amongst others.

Roger Zini, N-SOFT CEO believes that Convergent Billing is the key element for African Telecom Operators. He stated that the profusion of technologies (CDMA, WIMAX, GSM, PSTN, etc.) and the growth of end-user appetite will definitely force operators to adapt their networks as well as their offerings to this evolution of requirements.

The investments might be capital intensive now, but the medium to long term incomes will ensure a quick recovery due to the high differentiation and fast reactivity compared to other players in the market place.

NS-Convergent Billing will increase revenue generation by creating new growth areas (e.g. explore new market segments, possibility of cross sales or flexible combined offers) as well as improving customers’ loyalty and limiting the migration of existing customers while optimizing the usage of the existing infrastructure, customer service and quality of service.

The development of convergence passes through four stages: • Creation of innovative and attractive services • Minimizing the decline of telecom revenue (related to moving from fixed line to mobile/ VOIP technology) • Proposing coherent offers suited to various users’ profile • Developing an approach of convergence in two ways + Working on the existing communication tools + Optimizing services by gathering marketing information (e.g. crossed offers, similar tariffs, cross promotions, distribution networks) and services (billing, support, etc.).

A full suite of solutions all compatible to each other to fulfill telecom operators’ expectations Visit www.n-soft.com to find out more about the potential of our offering.

EVENTS CALENDAR

DATE

EVENT

CITY

CONTACT

Johannesburg South Africa

Retha Barnard +2711 516 4058

Cape Town South Africa

Caroline Wiezien 0044 207 017 5605

ORGANISER

02 Nov 2009

AFRICA AND MEDIA BROADCASTING 2009

11 Nov 2009

AFRICAN COMMUICATIONS

11-12 Nov 2009

OUTSOURCE & CONTACT CENTRE

Nairobi Kenya

Helen Moroney 0044 1480 880774

www.aitecafrica.com/event/view/36

24-25 Nov 2009

CUSTOMER SERVICE & CONTACT CENTRE

Lagos Nigeria

Helen Moroney 0044 1480 880774

www.aitecafrica.com/event/view/36

07 Dec 2009

GSM>3G MIDDLE EAST TELCO WORLD SUMMIT

Dubai UAE

Veronika Pete 0044 207 017 5818

Informa Telecoms & Media

8-10 Dec 2009

MANAGEMENT WORLD AMERICAS

Orlando USA

Rachel Huffine (1)9739445105

TM Forum www.tmforum.org/Americas2009

25 -29 Jan 2010

TEAM ACTION WEEK

Lisbon Portugal

Lauren Wynne (1)9739445100

www.tmforum.org/TeamActionWeek/

27-28 Jan 2010

MANAGEMENT WORLD ASIA 2010

Raffles City Singapore

Rachel Huffine (1)9739445105

www.tmforum.org/ManagementWorldAsia/

24-25 Feb 2010

BANKING & MOBILE PAYMENTS EAST AFRICA

Nairobi Kenya

Helen Moroney 0044 1480 880774

www.aitecafrica.com/event/view/45

24-25 Feb 2010

MANAGEMENT WORLD ASIA 2010

Johannesburg South Africa

Rachel Huffine (1)9739445105

www.tmforum.org/ManagementWorldAfrica/

2-3 Mar 2010

MANAGEMENT WORLD MIDDLE EAST 2010

Dubai UAE

Rachel Huffine (1)9739445105

www.tmforum.org/ManagementWorldMiddle/

12 Apr 2010

SATCOM 2010 AFRICA

Johannesburg South Africa

Retha Barnard +2711 516 4058

www.terrapinn.com/2010/satcomza/

14 AFRICA TELECOMS November 2009

Terrapinn www.terrapinn.com/2009/mediaza

Informa Telecoms & Media www.comworldseries.com/africa

AITEC Africa

AITEC Africa

www.comworldseries.com/me

TM Forum

TM Forum AITEC Africa

TM Forum TM Forum Terrapinn

November 2009 - November 2010 Follow these events on: www.africatelecoms.co.za/events

DATE

EVENT

CITY

CONTACT

ORGANISER

27 Apr 2010

EAST AFRICA COM

Nairobi Kenya

Veronika Pete 0044 207 017 5818

11-12 May 2010

BANKING & MOBILE PAYMENTS WEST AFRICA

Lagos Nigeria

Helen Moroney 0044 1480 880774

www.aitecafrica.com/event/view/46

19-20 May 2010

BROADCAST & FILM AFRICA

Nairobi Kenya

Helen Moroney 0044 1480 880774

www.aitecafrica.com/event/view/43

16 Jun 2010

WEST & CENTRAL AFRICA COM

Dakar Senegal

Caroline Wiezien 0044 207 017 5605

12 Jul 2010

WIRELESS BROADBAND WORLD AFRICA 2010

Johannesburg South Africa

Retha Barnard +2711 516 4058

www.terrapinn.com/2010/wirelessza/

02 Aug 2010

THE INTERNET SHOW

Johannesburg South Africa

Taryn van Zanten +2711 516 4026

www.terrapinn.com/2010/africa/

13 Sep 2010

TELECOMS WORLD AFRICA 2010

Cape Town South Africa

Retha Barnard +2711 516 4058

www.comworldseries.com/africa

28 Sep 2010

NIGERIA COM

Lagos Nigeria

Caroline Wiezien 0044 207 017 5605

6-7 Oct 2010

AITEC MOZAMBIQUE ICT CONGRESS

Maputu Mozambique

Helen Moroney 0044 1480 880774

26 Oct 2010

NORTH AFRICA COM

Cairo Egypt

Veronika Pete 0044 207 017 5818

Informa Telecoms & Media

10 Nov 2010

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Cape Town South Africa

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30 Nov 2010

GSM>3G MIDDLE EAST TELCO WORLD SUMMIT

Dubai UAE

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November 2009 AFRICA TELECOMS 15

The regulator speaks THE IMPACT OF SATELLITE COMMUNICATIONS IN BRIDGING THE DIGITAL DIVIDE

Paris Mashile Chairman of ICASA South Africa Each month Africa Telecoms will provide a platform to a telecommunications regulator from across the African continent to highlight their aims and goals from a regulatory perspective.

I

t is the nature of the political, legal and regulatory framework in which a certain technology is deployed that determines the social and economic ramifications for a country. Therefore, government support for technological innovation by way of formulating policy and regulations will have an impact on the macro environment.

As we all know, information is power, and information which is unequally distributed can lead to inequalities in the spread of power, income and wealth in many countries. New information systems, if implemented correctly, could create an information-based society, one which we are all currently clamouring for.

Depending on the political will which might exist and the level of economic investment which a country might attract, the digital divide that afflicts millions in poor countries might be tackled, and finally bridged. This could result in the targets which have been set for the Millennium Developmental Goals being attained within the time period which has been specified for this venture. Satellite communications could become the panacea for connecting the unconnected.

Computer data-banks which are dedicated to issues such as important commercial data or international security information related to terrorism and crime are capable of being linked together instantaneously via satellite.

This allows data to be shared globally.

A conflict does exist between the idea of regulating technology centrally, especially in high technology, and that of allowing the market to perform in a manner which might be the most resourceful and efficient way. In its 6th March 1982 issue, The

16 AFRICA TELECOMS November 2009

Economist, renowned as a champion of free market principles, asserts that “In the new information era, the way forward lies through competition and diversity, not through monopoly or centralized control”.

Competition rarely meets the classical model of rivalry among many small size firms; rather it exhibits features of rivalry between a few very powerful industrial complexes. The existence of a free market presupposes at least three conditions, which are rarely actually fulfilled in practice.

These can be described as follows; 1. There must be competition among a number of independent producers offering distinctive products.

2. Consumers’ choice through purchase must determine these products and their pricing.

3. Entry must be open to all capable of making a profit without restrictions.

But if financial failure results in an increased concentration and reduction of competitors then market failure results. It is this problem that got protagonists to emerge from the woodwork and wage a pitched ideological debate around the free market forces versus state intervention.

Much of the advanced communication hardware, such as satellite technology, is financially risky, especially when the product or system produced is likely to have a small number of buyers. Also, the existence of legal monopolies can hamper technological development.

The economies of scale and the associated reduction in cost as a result of technological

innovation can help achieve universal access of basic electronic communication services.

Satellite broadcasting can help in realising the world as a truly global village.

If national, cultural and political problems can be resolved through an international understanding then we have a chance of this succeeding.

The use of satellites has allowed world economies to be linked together, through which the transfer of billions of dollars can occur within minutes. Satellite communication networks are also of strategic importance in conveying military, political and diplomatic information across the globe.

The regulator is a very important link in this value chain of policy formulation, clear electronics communication law and the drafting of regulations. The devil is in the detail when it comes to implementation a country’s economic growth and social development. Empowered by legislation, the regulator can become a catalyst in the conversion process.

In the final analysis, the prime role of the regulator is to regulate for the welfare of the commonwealth or in the public interest.

In fulfilling its mandate of fulfilling policy objectives and achieving economic growth and social development, the regulator must act professionally. In doing so, the regulator will become a fierce consumer watch-dog and not a fairy god-mother for the operators.

Satellite technology for communication has found its place in the sun occupying a prominent spot in the market place. AT

Gadgets

We look at some of the latest innovations designed to integrate your work and home life. Bringing convergence to a device near you.

H Uncool HH Poor HHH Average HHHH Excellent HHHHH Died and gone to heaven

iPhone 3G S

Nokia 5530 XpressMusic

NEED TO KNOW

NEED TO KNOW

The iPhone 3G, but better / Silky smooth operation /Fast 600MHz

Phone for music lovers / 4GB MicroSD card / Touch Screen / Nokia

processor

Music Store access

Cost: R8,500 (16GB), R9,700 (32GB)

Cost: R3,800

Rating: HHHH

Rating: HHHH

The iPhone is a tough act to beat, and it seems the only people who can do it are the folks at Apple. The 3GS is the upgraded version of

Nokia’s 5530 XPressMusic Phone is for music lovers everywhere – not

the old 3G model that couldn’t send an MMS or take decent photos.

only is it a capable multimedia device with a touch-sensitive screen

Now, the 3GS can send and receive MMS messages and take good photos and video with its more-than-decent 3MP camera. Apple

– but with the purchase price comes 12 months of free access to Nokia’s Music Store.

has also released the phone with the third iteration of its iPhone

The only catch is that all Music Store music comes with DRM

operating system as well as a faster 600MHz processor. Thanks to

software, so you’ll only be able to play it on your PC or the phone

these two significant changes, applications and general navigation

itself. This is a small price to pay for the potential 5 million songs.

are both faster and smoother than before.

The 3G S looks identical to the older 3G, boasting the same slim build and solid construction. It also still doubles as an iPod, boasting 16GB and 32GB versions for people with lots of mobile media.

The iPhone is undoubtedly one of the best phones on the market,

Oddly, the 5530 does not support 3G connectivity, making downloading songs over the air a tedious process. You would be better off downloading music from your PCs using broadband.

The phone itself is a competent device for everyday use if your usage is limited to calls and messaging. Disappointingly, its touch

and this is reflected in its price point. At between R8k and R10k it’s a

screen isn’t massively responsive, and the overall operation is a bit

little pricey, but well worth the expenditure.

sluggish, leading to a lot of waiting and uncertainty as to whether your last touch actually registered.

This is all made better by the fact that it comes with as many downloads from the Nokia Music Store as you can handle. It’s a pretty fair trade and one most people would be more than satisfied with.

18 AFRICA TELECOMS November 2009

SolarMonkey

Blackberry Curve 8520

NEED TO KNOW

NEED TO KNOW

Solar-powered cellphone recharger / Connections for most popular

Entry-level Blackberry / EDGE only, no 3G / Music controls at top

phones

COST: R3,200

COST: R750

Rating: HHHH

Rating: HHHH The Curve 8520 is an entry-level Blackberry phone with a good few The only thing better than having a spare battery in your bag is

improvements over the older 8300 series phones, starting with an

a charger that uses the sun to re-juice your gasping gadgets. The

optical touch-sensitive trackpad in place of a tracker ball. It’s one

oddly-named SolarMonkey is one such device that can come to your

of the best optical trackpads seen on phones recently, and once

aid when all you have is access to the sun, which in sunny South

sensitivity has been set to a user’s liking, it is responsive and accurate.

Africa is pretty much everywhere.

The device comes with all the connections needed to connect to

Also new on the 8520 are the media control keys positioned on the top of the device consisting of playback, forward and backward

the most popular cell phone makes, although for some reason its

buttons. Positioned for easy access and encased in sturdy rubber,

manufacturers don’t believe that list includes Samsung, which is only

they are easily accessed, but not overly sensitive to bumps.

obtainable with a further purchase. Luckily, the SolarMonkey also

The full QWERTY keyboard on the 8520 is typical of RIM’s build

ships with a female USB connector, making it compatible with any

standards, with easy-to-press keys that are spaced far enough apart

device that has a USB charging cable.

for easy access by people with average-sized fingers.

Open it up, set it in the sun, and wait. That’s all you have to do –

The screen is not as bright or clear as in some of RIM’s other,

once the SolarMonkey has gained enough of a charge from the sun,

higher-end products like the Curve 8900, but it’s more than good

it’ll start pushing that power out to your gadgets. This is the ultimate

enough for the entry-level market the 8520 is aimed at.

way to keep your gadgets powered – the sun is an abundant source

RIM has another winner on its hands here, and we think folks

of energy, and it’s about time we took advantage of that fact. With

interested in an entry-level Blackberry will certainly get their money’s

the SolarMonkey, you need never run out of juice again.

worth.

November 2009 AFRICA TELECOMS 19

GADGETS

Lenovo IdeaPad S10-2 Netbook with 3G

Minigorilla mobile gadget charger

NEED TO KNOW

NEED TO KNOW

Integrated 3G functionality / Netbook size and price / Windows XP

Portable gadget recharger / Variable voltage / USB port

Pro SP3

COST: R1,500

COST: R4,000

Rating: HHHHH

Rating: HHHH This nicely-specced IdeaPad netbook from Lenovo is fitted with the

Using mobile technology comes at a cost: power. We are forever

kind of hardware that easily supports activities like movie watching,

recharging our phones, notebooks, netbooks, MP3 players, and it

listening to music and consuming social media. It’s also highly

sometimes can feel like a never-ending cycle. Enter the Minigorilla, a

mobile, and sports built-in 3G capabilities that allow it to connect to

product from the UK that promises to add up to six hours of battery

the Internet wherever there is 3G signal.

life to your netbook. Even better, it ships with various connections to

In addition to appealing looks and compact build, the S10-2 is kitted out with the fastest Atom processor, the N270 running

recharge other devices at the same time.

All that’s required is to set the Minigorilla to the appropriate

at 1.6Ghz as well as a gigabyte of DDR2-667 memory, something

voltage, hook up your device and Robert is your father’s brother,

Windows XP Home with Service Pack 3 can make good use of. The

you’re recharging while you’re on the go. It has a USB port for iPod

Atom is a low voltage processor that consumes far less power than

recharging (or any device that has a USB charger cable, really), and it

a regular Core 2 processor would, leading to extended battery life to

supports the whole iPod range, from the Shuffle all the way up to the

make your regular notebook jealous – around 6 hours.

Touch. iPhones, too, since it uses the same connection as the others.

The S10-2 also offers enhanced Dolby sound: just plug in any

The Minigorilla is barely the size of a portable hard drive and

set of headphones and experience 5.1 channels of sound thanks to

weighs a ridiculous 265g; taking it with you in your laptop bag won’t

some very clever engineering. Throw in a card reader, USB ports and

add significantly to your travel weight. It’s the kind of useful device

a 10.1-inch screen and you’re looking at a definite contender for your

all gadget-lovers would do well to own.

netbook budget.

20 AFRICA TELECOMS November 2009

GADGETS

Sony eReader PRS 700

Nikon Coolpix S1000PJ

NEED TO KNOW

NEED TO KNOW

Touch screen / Variable font size / Large memory

Active zoom / 36MB internal memory / Hi-speed USB connectivity

COST: R3,500

COST: R5,200

Rating: HHHH

Rating: HHHHH

The newly launched PRS-700 comes with a new touch screen

With a ground-breaking design incorporating the world’s first

embedded into its 6 inch LCD, so a book lover could easily flip

integrated projector, the COOLPIX S1000pj offers a technological

pages as if it was a real book and also utilize its virtual keyboard to

innovation at the forefront of the photographic industry. The

search for terms as well as highlight areas of interest. If this eReader

projector enables users to share their photographs with friends

really takes off in educational institutions and publishers would be

and family like never before, without the need for additional

willing to offer their texts in e-format, you can see a really bright

equipment or crowding around the camera LCD display. The camera

future for students who are still carrying 15 kg’s of books compared

also features Scene Auto Selector Mode, whereby the camera

to 10 ounces of Sony e-reader in their backpacks. The new model

automatically selects an appropriate scene mode based on the

still features high-resolution, high contrast electronic paper display

contents of your shot, allowing picture perfect images at the touch

technology which provides a reading experience very much akin

of a button. In addition, five functions to reduce image blur and the

to ink-on-paper. The result is crisp text and graphics that are highly

Smart Portrait System ensure crisp photographs at all times. With a

readable, even in bright sunlight. For times when ambient light is

2.7 inch LCD screen, wide-angle 5x NIKKOR zoom lens, and offering

not available, Sony is the first to offer a built-in LED reading light.

12.1 megapixels, the COOLPIX S1000pj represents a brand new

Expanded memory offers enough capacity to store about 350

take on sharing photographs. Face-priority AF helps produce more

average digital books. Using an optional memory card, this Reader

satisfying portraits by adjusting focus and exposure for as many as

can hold around 13,000 books and documents. Turning pages is

12 faces in the framed shot. Smile Timer automatically releases the

as simple as sweeping a finger or touching a button on the touch

shutter when the subject smiles, while its Blink Proof function shoots

screen and a two week battery life ensures you won’t run out of

two sequential frames, then saves the one in which the subject’s eyes

reading material on your next holiday.

are widest open. The camera will be available in black and silver.

November 2009 AFRICA TELECOMS 21

THOUGHT LEADERSHIP

As he nears his second anniversary as CEO of Zain Africa, Chris Gabriel shares his views on the market and provides some insight into the operator's expansion across the continent in this exclusive interview with Africa Telecoms.

Chris Gabriel B

by JOHANN BARNARD

y its own admission, Zain is on an ambitious drive to be recognised as a global telecommunications player by the end of 2011. This goal is encapsulated in the Zain Group's ACE strategy (Accelerate, Consolidate & Expand), which aims to position it as one of the world’s ten largest mobile telecoms companies, with a target of more than 150 million customers. Africa is central to this strategy and has been seen in action under Gabriel's guidance. The network operator is already active in 16 countries with more than 40 million subscribers reported in mid-2009, representing growth of 23% over the previous year.

Gabriel is clearly passionate about the region, not only for the opportunities it presents, but also for the role Zain is playing in empowering communities through the delivery of its services.

“Africa is a strong marketplace with gigantic growth potential,” he says. “Mobile is the enabler for future prosperity and economic development, whether that be in health, education, or commerce and trade. Which makes it a very exciting market characterised by low penetration and high growth potential.

“If you look in other countries, penetration far exceeds 100%, and if you have an optimal business model to serve both the low- and high-end customers, you can effectively run a business.”

He adds that the youth market is identified as one of the key opportunities, with the majority of the market below the age of 25. This market, he says, is keenly attuned to emerging technologies, driven by a thirst for knowledge that creates significant demand for broadband content and data.

Africa is not without its challenges, however, and Gabriel notes that the primary ones are the current economic crisis and inflation on the one hand, and the regulatory framework and

22 AFRICA TELECOMS November 2009

LEAD STORY

Bridging the digital divide between third and first World

November 2009 AFRICA TELECOMS 23

opportunistic behaviour by some regulators, on the other hand.

“The regulatory regime is in its infancy, and so it is a bit of an education process for regulators,” he admits. “We are working with the GSM Association to educate them that in the medium to long term they will gather larger tax revenue from profit in the industry.

“We also see a proliferation of licences being issued, and the first thing new players do is compete on price. This shrinks the market and removes capital to invest in future growth and expansion.”

Gabriel says these smaller players will inevitably get gobbled up, leading to consolidation in the market that may see three to four super-players dominating the market, with little activity in the middle, followed by small, niche players.

Turning to Zain's performance in the past year and the impact of the financial downturn on its strategic focus in Africa, he says the continent remains the operator's growth engine and a longterm investment opportunity.

“Our focus has moved from growing customer numbers to share of wallet. We are looking more at customer loyalty and retention, and growing the ARPU (ave. revenue per user) and optimising the business model to profitably service all segments of the market,” he says.

This is being done through a number of mechanisms aligned to the organisation's ACE strategy, which includes targeting high-value customers, rightsizing, outsourcing where possible

24 AFRICA TELECOMS November 2009

and sharing network infrastructure.

“We plan to optimise returns through customer loyalty and this business model,” he says.

This is being done through initiatives and innovations such as its Zap Mobile Banking service, Zain Create and, most notably, One Network.

Gabriel says that increasing ARPU is all about stimulating usage and thereby gaining a larger share of wallet. Data and content are central to Zain's efforts, which ties in with Gabriel's view on competing on value rather than price.

This does pose a challenge considering the network operator's expansion into rural areas where ARPU is naturally lower.

“We therefore have to have a sustainable business model to drive cashflow to fund expansion, but also a different business model to profitably service all segments of the market,” he explains. “This means understanding the requirements and offering proper, simple, low-cost practical services on a microgeographic basis.”

The execution of Zain's strategy is visible in various forms, but always subscribing to the Zain philosophy of making history, and is probably best illustrated by the award-winning free roaming offered on One Network.

This ground-breaking service, effectively offering a borderless mobile phone network, was launched in the African market late in 2007, which Gabriel says, subject to Regulatory approval, Zain aims to have available on all its African

“

and Western Union. networks by the end of 2009.

Mobile “Mobile money is very big and marks a “Zain is about making history, and One Network money is transformation that will revolutionise the way people is a world-first. Our aim is for Zain to be in the very big use phones and transfer funds,” states Gabriel.

Top 10 by offering a unique, consistent customer “With 77% of the African population unbanked, Zap experience,” he states. and marks a He adds that Zain believes this is the right way to transformation is a solution to meet a real need. It's relevant and affordable, and simple to understand and use.” go and although competitors have tried to emulate that will He admits that the service is seen more as a the model, they have been unsuccessful. This has revolutionise retention tool: “Like traditional banking, it is not prevented other networks in complementary the way people usually too difficult to move to a new bank. We geographies approaching Zain to become part of use funds have bundled it up so that a customer becomes more One Network.

Despite this success, he doesn't believe that and transfer 'sticky' because they use several services already.”

He says the distribution network has been roaming fees are likely to be stamped out funds. expanded exponentially to add true value that allows universally in the short to medium term. “There are customers to effect cross-border and cross-country too many vested interests from too many parties to transactions with literally any bank. see these fees removed,” he says.

“This will give us unparalleled scale with a service that is Zain's understanding of the market, its needs and opportunities, is further demonstrated by the introduction of its mobile banking as unique as One Network. The beauty is that its not a manual platform, Zap, which subject to regulatory approval, Zain aims process relying on human intervention. We partner with banks to have available across all of its African networks by the end in specific geographies, and are completely compliant with government, regulatory and anti-money laundering regulations. of 2009.

“We have collaborated with the banking sector and regulators to Launched at the beginning of 2009, the operator has demonstrated the underlying demand for such services on take all existing regulated services and bring them together in Zap. a continent noted for its dire lack of infrastructure, with We are not going to reinvent the wheel – we want to make history.”

Gabriel is confident that Zain has hit upon that ultimate killer communities living in some of the most remote regions.

Aside from basic banking transactions – possible with a app in this service, and says he doesn't believe any competitors host of banks, Zain customers can now also transfer money to are close to delivering a mobile money service that is as feature and from literally anywhere around the world thanks to Zain’s rich or compliant with regulations in numerous geographies.

“We are completely differentiated in that users can transact feature-rich Zap platform and strategic partnerships with banks

”

Ghanaian school benefits from zain's charity Zain's far-reaching corporate social responsibility programmes are aligned with the company's vision to be a true partner in community and environmental development, and is focussed particularly on education, poverty alleviation and social cohesion. One of the primary engines for this engagement is its Build our Nation campaign, which was started in Tanzania in 2003 and has expanded to its other territories. Zain CEO Chris Gabriel identifies this as a personally gratifying initiative that has delivered tangible results. He recalls the example of the Odumase Presbyterian Junior High School in the Lower Manya District, Ghana whose school buildings had been in serious disrepair until Zain's intervention. The project saw the company funding a new six-unit classroom block furnished with tables and chairs, 30 computers with Internet access, a library, staff common room, a headmaster's office, washrooms, and various other facilities. “We rebuilt the school – it was the most amazing thing,” comments Gabriel. He adds that he gets a particular satisfaction from the reaction of the children who benefit from the development projects, and the knowledge that he is able to make a positive impact on the quality of their life and education. “We are passionate about CSR and unleashing the passion of youth,” he says. n

November 2009 AFRICA TELECOMS 25

with any bank around the world, Zap is easy to use and we now offer money transfer. No-one close to having that.

“There is lots to be excited about … watch this space.”

The uptake and success of Zap is testament to Gabriel's view that actual technology is far less important than the demand for those services.

“The customers want products and services, they're not interested in the specifics of the technology. It is merely the vehicle to deliver on the customers' needs, so we're looking at it from the customer's perspective, not a technology perspective,” he says.

That's not to say that Zain isn't driving the demand for more

“The youth of today are the leaders of tomorrow,” is his take on the situation. “A lot of them are technology literate, and there is obviously a low literacy rate in some areas, but we can give them the platform to develop and keep pace with the rest of the world.

“The enthusiasm is there, they just need the foundation or platform upon which to increase their education to unleash this passion into real potential. The attitude and understanding these kids have is amazing – I was blown away. Their thirst for knowledge is unbelievable.”

Zain has a notable record for its corporate social responsibility programmes, with its Build Our Nation education project

“Customers want products and services, they're not interested in the specifics.”

and better services. It has identified the exponential demand that stems from initial contact with broadband services and the benefits they bring. One of its many initiatives is a campaign to deliver ultra low-cost handsets and laptops into the market that will naturally drive demand.

In order to survive, however, network operators are going to have to innovate on the business model front more than the technology front in order to deliver cost-effective services, suggests Gabriel.

This leads into one of his favourite subjects: Collaboration.

“We are going to see an evolution across all fronts, and that is going to require the most optimal technology and leanest business model to do that. This requires collaboration and nontraditional partnerships with competitors to optimise costs,” he says. He points to Zap as an example of how collaboration can deliver significant results.

“It’s an evolution and education process … we have taken the first step and done the hard yards, and now everyone wants to jump on the bandwagon. In the absence of a unified regulatory framework for mobile banking, the current collaboration model is the most optimal in terms of speed to market.”

He also sees potential to curb operating costs through the introduction of unified licensing, meaning networks will be able to deploy the technology that is most appropriate rather than being limited by the licences they hold.

Gabriel's commitment to the African market – not only for the benefit of Zain, but also for the betterment of its communities – is unstinting.

26 AFRICA TELECOMS November 2009

investing millions of dollars in books and educational supplies, as well as basic infrastructure such as the building and renovation of classrooms.

Other educational programmes include the Zain Africa Challenge – a televised quiz show featuring university student teams from various countries competing for grants for themselves and their schools.

“We are very heavily involved in all these causes, and creating and generating goodwill,” says Gabriel. “We are very focussed on community and developing them.”

He reveals that the community work is an area that fills him with great pride, and humility. “It touches my heart when we can give back to the community through these programmes.”

Zain's many community projects are aimed at advancing achievement of the Millennium Development Goals, with Gabriel confident that the aim of bringing mobile communication and Internet services to half a million people via the Millennium Villages project is achievable.

“The Millennium Development Goals are infinitely achievable,” he states. “Where there's a will there's a way and we are doing a lot as an organisation. It's not about talking, its about delivering, and our results speak for themselves.”

He notes that some of the highlights for him in the time that he has been with Zain include rolling out One Network across all African operations, and introducing the Zap mobile money service.

“It is fundamentally changing lives and basically connecting the most rural and remote person to now have access to banking facilities they didn't even dream of before,” he enthuses. AT

Master of Management in the field of ICT Policy and Regulation - MM (ICT PR)

Master of Management in the field of ICT Policy and Regulation - MM (ICT PR) Wits University Graduate School of Public and Development Management

Africa’s Leading School of Governance

http://pdm.mgmt.wits.ac.za http://link.wits.ac.za

The Birth of the

Hardly mobile One of the first mobile phones from the late 1950s.

Digital Divide “We are fully committed to turning this digital divide into a digital opportunity for all, particularly for those who risk being left behind and being further marginalized.” – Declaration of Principles from the World Summit of the Information Society, Geneva, 2003.

I

n April 1968, JCR Licklider and Robert W Taylor published a paper in the journal, Science and Technology appropriately entitled The Computer as a Communication Device. In this seminal and ground-breaking work, the authors explained an experiment undertaken amongst a group of scientists to communicate through machines. What today we take for granted as a part of our everyday lives was only a possibility in the minds of a number of intrepid scientists paving the way for the technological revolution we are all currently witnessing. This seemingly simple experiment, to pass an electronic message from one machine at a certain location, to another machine at a separate location, required the resources of the most powerful computers (ARPANET) and the greatest minds.

Although the message to be passed was LOGIN, the only letters received at the other end were “LO”. The system then proceeded to crash, ending the experiment, but starting a revolution.

This was the first time humans had communicated with each other through a computer. Although it is nigh impossible to determine the moment the Internet was born, but based upon what the Internet has become today, namely the greatest tool and

28 AFRICA TELECOMS November 2009

Leonard Kleinrock demonstrates the functions of the Interface Message Processor (IMP), an essential component of ARPANET.

facilitator for the sharing of information and communication in the history of mankind, those two simple letters passed across a network, not encumbered by geography, certainly qualifies as its birth. This seemingly benign, and oft-overlooked moment 40 years ago, also, it can be argued, has the ignoble honour of being the birth of the digital divide. The fissure that then developed

Dialling on the run The first car mobile phone.

between those with access to technology and information, and those without access to information resources began to grow.

The digital divide was born.

This began the movement from the industrial age to a technological one. Nowhere was this divide felt as strongly as Africa. With little access to technology and even less access to resources to redress the balance, the continent was certainly on the wrong side of this technological divide. This ever growing rift is now finally being addressed. Throughout the African continent, a seismic paradigm shift has occurred, making access to information and communication technologies no longer a luxury, but a genuine necessity and priority.

Whether a farmer in the High Atlas or a business executive in Cape Town, the transformative power of technology has been proven. Across the continent, there is an uniqueness and heterogeneity to every member of the family of African nations, yet they are all distinctly African, and it is this African-ness that must be tapped into in order to address the main issues of the digital divide. Through organizations such as International Telecommunications Union, a blueprint has been laid out and goals set. Setting these benchmarks has meant that a measurable target has been forged, and as societies and human beings, we will be judged on whether we attained the Millennium Development Goals set out in Rwanda in 2007, and repeated in Geneva in 2009. In this context, education becomes integral to reaching and surpassing the Millennium Development Goals. Education

must provide the glue to create societies whereby each generation builds upon its predecessor to leave a lasting legacy of betterment through ICT’s. It becomes only possible to achieve parity between the technological haves and have nots, across the planet once these issues are addressed. The African success story can be used as an example for other markets.

The pre-paid mobile telephony model, and Mobile Banking are potentially only a few innovations where Africa leads the world. With only approximately 4.3% of the African population currently online and with access to the Internet, the next challenge facing policy-makers is to ensure the egalitarian spread of accessibility to be able to provide Universal Access. Access to information and communication should only ever be an arms length away. Whether it is in the form of a mobile phone, a computer or a fixed line phone, it has become a basic human right to have access to technology. The recognition of the need for access to technology was stated in Geneva (2003), Tunis (2005), Kigali (2007) and affirmed recently in Geneva (2009). The goals are simple, noble and universal: “To build a people-centred, inclusive and development-oriented Information Society, where everyone can create, access, utilize and share information and knowledge, enabling individuals, communities and peoples to achieve their full potential in promoting their sustainable development and improving their quality of life, premised on the purposes and principles of the Charter of the United Nations and respecting fully and upholding the Universal Declaration of Human Rights.�

What began 40 years ago in a laboratory in California, has today become one the single most important aspects of human life. Whether in the bustling urban centres across Africa, or remote rural villages, the desire to connect has become as urgent as sustenance and shelter, and as it is our duty as human beings to eradicate poverty, war and disease, it is similarly our duty to bridge the digital divide and to bring the benefits of the technological revolution to every citizen, whether in Lagos or London, New York or New Delhi. With the emergence of the Semantic Web, and the very genuine possibility of the latent potential within GRID computing (CERN), the African continent cannot afford to be further isolated and to allow the divide to grow further.

It is within this environment that the 53 nations that make up the African continent find themselves on the eve of 2010. AT

November 2009 AFRICA TELECOMS 29

AFRICA TELECOM STATS The purpose of this page is to give readers of Africa Telecoms a brief overview as to the growth and statistics related to the Telecoms and ICT markets in Africa. What we will be doing on an annual basis is relooking at the statistics, this way over time Africa Telecoms will have a basis for tracking developments and growth in the Africa Market. Each Edition of Africa Telecoms will be focused on a specific area. This month we focus on the Digital Divide, hence the statistic shown here are related. Looking at ICT penetration in Africa, World Internet usage figures to show where Africa stands as a comparison.

I trust that you will find this information of value and interest, should you have comments on this page or statistics that you think would be relevant that we have not included (or that you have access to and would be of interest to our readership) the Africa Telecoms team would appreciate an e-mail to bshaw@3ipublishing.co.za

Oceania / Australia Middle East

Latin America & Caribbean

Africa 3.9

30 27.5 14.8 12.8 12.8 11.6 11.2 7.8 6.8 5.5 5.1 5.1 5 5 4.5 4.4 4.3 4.1 4 4 3.8 3.6 3.5 2.1 2 1.9 1.6 1.3 1.3 1.2 1 1 1 0

10

15

20

2.9 1.2

10.5 42.2 % Asia 15.1

North America

24.1% Europe

WORLD INTERNET USERS

BY WORLD REGIONS Source: www.internetworldstats.com/stats.htm

35

32.6

30 Per 100 inhabitants

Least developed countries

ICT DEVELOPMENTS IN AFRICA 1998-2008 PENETRATION RATE

25 20 15 10

4.2

5

1.5

O 1998

25 30

Households with a computer (%) Source: ITU World Telecommunication/ICT Indicators database.

30 AFRICA TELECOMS November 2009

2000

Mobile Cellular subscriptions

2002

2004

Internet users

Mobile broadband subscriptions

2006

0.9 0.1

2008

Fixed telephone lines Fixed broadband subscribers

Source: ITU World Telecommunication/ICT Indicators database.

COMPARISON OF THE SHARE OF INDIVIDUALS WITH BANK ACCOUNTS & MOBILE PHONES 0 10 20 30 40 50 60 70 %

Nigeria

34%

26% South Africa 19%

Côte d’Iviore 4% Tanzania 5% Ghana 5%

Kenya 7%

DISTRIBUTION OF MOBILE CELLULAR SUBSCRIPTIONS IN AFRICA 2008

Other

Rwanda Uganda Tanzania Mozambique Burkina Faso Benin Cameroon Senegal Côte d’Ivoire

Source: ITU World Telecommunication/ICT Indicators database.

Zambia * Namibia Kenya

OVERALL COUNTRY BENCHMARK RATING

Botswana

Benchmark 10

Source: researchictafrica.net

2.48 2.32 2.27 2.26 2.02 1.89 1.82 1.80 1.74 1.69 1.62 1.53 1.40 1.39 1.28 1.22 1.20 1.19 1.11 0.99 0.96 0.82 0.78 0.75 0.68 0.61 0.57 0.53 0.53 0.51

Ghana

30

South Africa

Share of 16+ with a bank account Share of 16+ with a mobile phone or active sim *Results for Zambia are extrapolations to national level, but not nationally representative.

MOBILE CELLULAR SUBSCRIPTIONS AND FIXED TELEPHONE LINES IN AFRICA 1998-2008 Country Benchmark - Africa

Egypt Muritius Nigerie Kenya South Africa Tanzania Uganda Algeria Senegal Botswana Morocco Ghana Madagascar Ethiopia Zambia Tunisia Burkina Faso Mozambique Sudan Cameroon Togo Malawi Gabon Namibia Côte d’Ivoire Mauritania Niger Rwanda Angola Gambia

20

250

246

200 Millions

0

Source: ITU World Telecommunication/ICT Indicators database.

Ethiopia

4.2 3.2 14.0 9.9 18.8 20.7 6.8 21.5 10.0 25.7 11.9 27.2 5.4 30.2 7.1 36.5 8.1 39.8 18.2 41.8 20.3 45.5 46.2 49.3 26.2 52 30.9 59.5 32.3 59.8 52.5 62.1

150 Mobile cellular subscriptions

100 50

Fixed telephone lines 10.6

0 1998

2000

2002

2004

2006

2008

Source: ITU World Telecommunication/ICT Indicators database.

M Mobile phones offer the best

chance for much of africa to

gain access to financial services according to a recent study by research ICT africa.

Banking

by Alex Comninos, Steve Esselaar, Ali Ndiwalana & Christoph Stork

32 AFRICA TELECOMS November 2009

A

FEATURE

cross Africa many more people possess mobile phones than bank accounts. Mobile banking services are already offered as an addition to existing bank accounts. Instead of adding a mobile phone as a complementary channel to a bank account, why not add a bank account to an existing mobile phone number? This would narrow the access gap to financial services considerably, allowing mobiles to be used to provide services to those without bank accounts.

There are two ways in which this could be done: first, airtime cash convertibility, already a de facto practice in many parts of Africa; and second, the mobile wallet, which would allow full banking services to be performed on the basis of a virtual wallet linked to a SIM card.

While the role of the informal sector in promoting economic growth in Africa is increasingly acknowledged, access to capital remains one of the biggest obstacles hindering the development and growth of the sector. Africa is struggling with access to formal financial services for its citizens and the informal sector.

In addition to the underlying structural limitations of poverty; risk-averse bankers, unsuitable financial products and high bank charges have also been blamed for this state of affairs. Poor people with irregular income and informal businesses often have no choice but to make use of informal financial services,

which are many times more expensive than formal ones. Formal financial services are usually only extended to those with regular income or collateral. Yet informal businesses often lack the required accounting skills and systems to generate necessary data to convince a bank to extend loans to them.

A critical issue to overcome is that of asymmetrical information. Someone without a bank account approaching a bank for a loan is likely to be rejected unless collateral is at hand. The bank has no transaction history for this person or informal business and hence does not know anything about the applicant’s creditworthiness. Transaction patterns can be used to predict whether or not a customer will be able to repay a loan.

Absence of a transaction history means that the ability to repay loans is unknown to banks, making it risky for banks to serve such a person unless the loan is fully collateralised.

November 2009 AFRICA TELECOMS 33

This is where m-banking could step in and move beyond simple payments and transactions to possibly provide an alternative banking system that provides access to formal financial services to the unbanked, such as credit, which may be easier to extend to the unbanked once they have built up a transaction history, through the use of m-banking and m-transfers: transactions over mobiles that go beyond the usual voice communications.

Access gap in Africa

Within the informal sector in Africa, mobile phones play a prominent role in creating and exchanging information. The RIA 2005/6 e-Access & Usage SME Survey revealed that 83.3% of the surveyed business operators owned a mobile phone, while 95.6% of all business operators rated mobile phones as either important or very important for their business operations. The results from the RIA 2007/8 e-Access & Usage Household Survey show that mobile telephony is the most used ICT in Africa and also that there are more people with mobile phones than there are with bank accounts (with the exception

Model 1»

Airtime cash convertibility Airtime is already being used in several African countries as a form of currency. In most cases it does not substitute for cash but rather complements it. Initially developed to enable friends to share airtime across multiple prepaid SIM cards, the absence of convenient alternatives to transferring money over long distances has led to this airtime exchange becoming a cash remittance substitute. In fact, remittances from family members living abroad, transferred as airtime, are fast becoming an easy and popular means of sending money.

The way it works is that the person abroad purchases airtime online or at dedicated agents and this airtime is then immediately transferred to the receiver’s phone.

The receiver can then either use the airtime for calls and SMSs or sell it on or purchase goods with it.

This points to the crucial success factor for airtime being accepted as an alternative to

cash – either airtime needs to be widely accepted as an alternative currency, in that transactions can be made, and goods and services can bought with airtime – or airtime needs to be convertible backwards to cash. If airtime could be used to pay for any product, there would be no need to convert airtime back into cash. If people could pay for day-to-day shopping with airtime they would build up a transaction history. If salaries could be paid in airtime, the loop would be complete. Airtime would move in this closed loop and liquidity would be increased by new airtime being bought by mobile users and reduced by airtime being used to

34 AFRICA TELECOMS November 2009

of Ethiopia and Rwanda where mobile penetration is minimal).

Sometimes the differences are very pronounced – for example, less than every fifth mobile phone user has a bank account in Benin, Cameroon, and Senegal.

Results from Research ICT Africa’s 2007/8 e-Access & Usage Household Survey indicate that significant reasons for not having a bank account are a lack of regular income and the perception that a bank account is either not needed or too expensive. In Africa, people usually only get a bank account once an employer requires it.

Another main obstacle is the distance to banking facilities or ATMs. Particularly in rural areas, it is not only transaction costs and service fees, but also the cost of transport to reach banking facilities that made people not want a bank account.

Conversely, in Africa banks charge high transaction fees often even for depositing money. High deposit and transaction fees ensure that banking remains the preserve of the relatively wealthy (i.e. the existing customer base) and high profit margins for banks. This is mainly possible because the banking

make calls or send SMS. The key success factor for airtime to be accepted as a means of payment is that it must resemble cash, i.e. there should be no transaction costs for the end-user and it must be widely accepted. All other forms of credit (such as credit cards and cheques) have substantial charges associated with their use.

Currently, there are no formal avenues to change airtime back into cash, though a vendor might convert airtime to cash by selling it to someone else that needs airtime. Transaction histories however could be built up through airtime transfers, regardless of whether it is backwards compatible to cash or not. Cash convertibility would be much more attractive however, but there are three obstacles that need to be overcome to allow for backwards convertibility: • If airtime is convertible to cash, then selling airtime would be equivalent to accepting deposits and mobile operators

would require banking licences.

Alternatively banks could cooperate more closely with mobile operators or become virtual network operators themselves (like Virgin Mobile in South Africa – and in many other countries worldwide – where it does not own any mobile infrastructure).

• Value added tax is charged on airtime. Some countries, like Uganda, also charge customs and excise duties. The value-added tax obstacle could be overcome by negotiating with the receiver of revenues to treat the VAT part of bought back airtime as input VAT. This would usually not be possible since private individuals are not registered for VAT and hence cannot issue VAT invoices.

However, it should be possible to get to a special agreement for airtime given its potential for poverty alleviation.

• Value is currently lost in the distribution channels for airtime.

Mobile operators pay resellers a commission for selling it. The value

sector is not as competitive as in the developed world.

Money transfer in Africa

Significant amounts of households receive remittances from another household, either in a different city or a different country. The cost of remittances however is a concern for those sending money home. International airtime transfer is therefore an efficient and cost-saving solution. Several multinational mobile operators, such as Zain, already allow cross-country airtime transactions.

The role of international remittances in developing economies is gaining increasing global recognition and economic significance to national economies. Estimated at about US$221 billion worldwide in 2006, sub-Saharan Africa accounted for only US$9 billion or 4% of the total (World Bank, 2006).

As a whole, developing countries received more than twice as much inward-bound remittance than official development assistance (ODA), excluding debt. In sub-Saharan Africa as a whole, inward-bound remittances were over three times larger

lost in the distribution channel can be 20%. That is, for every 10 US$ airtime sold the operator receives only 8 US$. If the operator would buy the airtime back it would make a 2 US$ loss.

Currently retailers sell airtime because they get a commission.

It is clear to see that if retailers are to become the cash-out points and banks the cash-in points then everyone will benefit. Retailers benefit because the cash they take in is instantaneously transferred into their bank accounts. Banks benefit since they can raise capital cheaply and get an additional tool to evaluate the creditworthiness of informal businesses and the unbanked (a critical future customer base).

The informal sector and the unbanked benefit from gaining access to formal financial services and being able to transfer money nationwide and beyond to family members and business partners.

The RIA household survey asked respondents what factors would make them prefer to

than ODA. On a country-by-country basis, however, it is by no means the norm for developing countries to receive more remittances than ODA. This is the situation in Benin, Burkina Faso, Cameroon, Côte d’Ivoire, Ethiopia, Mozambique, Namibia, Rwanda, Senegal, Tanzania, Uganda and Zambia. Nonetheless, international remittances are becoming increasingly significant to national economies.

However, the actual size of remittances would be much higher if informal remittances were taken into account. The large amounts of money that are remitted home by economic migrants each year are not sent home without cost and concerns.

According to the UK Department for International Development (DFID) the largest concern for those sending money is whether it will arrive home safely, followed by concerns over excessive charges and delays in receiving the money. Money transfer agencies in the UK have signed up to a new Customer Charter that commits them to provide transparent information on these issues. Charges for sending money internationally are dependent on whether sender and recipient have bank accounts, the speed

receive airtime rather than cash.

In all countries except Botswana, the transaction costs were more of a source of concern for the respondents than its acceptance as a means of payment, reflecting both the widespread acceptance of airtime as a means of payment, as well as fear of the charges involved – charges associated with formal banking.

Model 2 »

Mobile wallets The second model is based on the concept of several sub-accounts or wallets being associated with a particular SIM card. From a software and hardware perspective, it would be straightforward to give the user a second or third wallet that stores money electronically.

Administered on a secure server, money can be transferred using the same channel and technology as for airtime transfers.

Airtime purchase could then be a transfer between the two wallets.

At that point of transfer, VAT

would be applicable and a reverse transfer would not be possible.

This resolves the VAT problem of Model 1 and also addresses the loss of value in the distribution channel. VAT would only be charged at the transfer from the money wallet to the airtime wallet.

Mobile operators benefit from this system since they can cut out the distribution channel as users can now charge their phones with airtime anytime without the involvement of third parties. In this

model, airtime and cash are not the same thing, even though they use the same technology. Banks and users still benefit in the same way as they do for Model 1.

The GSM platform is already being used in Africa as a transfer mechanism for virtual currency which is convertible to cash, against transactions fees. Kenya’s MPESA, for example, is a mobilebased alternative for non-bankaccount transfer mechanisms such as Western Union and MoneyGram. It is clearly cheaper, but not yet cheap enough to function as an alternative currency.

The charges are too high for micropayment (i.e. to pay for small items such as bread or milk). As the amount of money transferred increases, the transaction costs become more reasonable.

Mobile wallets could be operator or bank specific or they could be completely independent, operating on servers that communicate with banks, individuals and companies across operator networks. n

November 2009 AFRICA TELECOMS 35

The survey indicates widespread use of airtime transfer, but of transfer, destination country, amount sent, exchange rates, and so on. The smaller the amount of money sent, the higher the not such a widespread use of airtime to pay for goods or services. charges (expressed as a proportion of money sent). The cost of For example, 88.3% of people in Kenya that had received airtime received it as a favour from a friend or family member, sending £100 can vary from four to 40%.

Results of Research ICT Africa’s household survey reveal compared to only 1.2% who received airtime as payment for the many households receiving money from, or sending money provision of goods or services. 24.8% had bought airtime from to another household. In all countries in the survey, between an independent source (i.e. from someone that was not a family 8.5% and 39% of households have received money from other member or a friend, most likely an electronic re-fill or top-up). households. Although it is more common to receive money from a household in another village or city, significant amounts are Mobile payment systems for Africa received from abroad (except in Burkina Faso and Ethiopia, In order to use the mobile phone as a strategy for the integration where more households receive money from abroad than they do of the unbanked into the world of formal banking, instead of from another village or city). In most of the countries surveyed, adding a mobile phone as an additional channel to an existing remittances were more often received through a money transfer bank account, a more transformational option would be to add a agency like MoneyGram or Western Union than through banks. bank account to an existing mobile phone. This should be feasible In Mozambique, Namibia, Nigeria, Tanzania, South Africa, since each mobile phone number is unique and would push the Uganda and Zambia, remittances were more often access frontier considerably by turning each mobile received from a bank account, reflecting either the phone number on an operator’s network into a bank Currently better-developed banking systems and higher bank account number. mobile penetration in these countries or else the absence of Currently mobile operators already maintain operators Western Union and MoneyGram services. some kind of bank account for each of their already Notably however, banks and agents such as subscribers in order to track their airtime usage. maintain some When airtime is purchased these accounts are Western Union and MoneyGram together make up kind of bank credited and when calls are made or SMSs sent only a small fraction of the transaction channels used. Sending money in person, through a friend or they are debited. These airtime systems could be account for family member, or through other informal channels each of their extended to cater for add-on financial services, is more popular. Similar trends can be observed for extend to the unbanked and the informal subscribers in which households sending money to another household. economy. Such a strategy would help leapfrog order to track some of the existing obstacles to getting a bank There seems to be substantial demand for a service their airtime account and other financial services (depending of that meets the concerns of people regarding security usage. and costs. In addition, institutions that reduce the course on the national regulatory environments). It costs of remittances can expect a higher-thanwould mean establishing an alternative transaction proportional increase in the value of remittances – mechanism to the expensive formal banking in other words, remittances display negative cost-elasticity. system, one that makes transacting electronically as convenient and cheap as dealing in cash.

Alternatively, using the conception of such an account, an Airtime transfers in Africa individual can easily have multiple accounts associated to In all 17 countries surveyed, 7.4% to 53.9% of respondents indicated that they had transferred airtime to someone else’s their mobile phone, one for airtime, one for money value and mobile phone. The majority of the transfers conducted were another one for savings, for example. The saving sub-account as a favour to family and friends – however there is also would be money value as well, but not immediately accessible significant usage of airtime to pay for goods and services in a depending on the savings account conditions. In the case of only few countries. In Ghana, Nigeria, Tanzania and Zambia, 4.2% one account, airtime and cash would need to be convertible. This to 14% respondents indicated that the transfer was to pay for raises a couple of issues that will be discussed in the next section.

Using several sub-accounts may help avoid many conceptual goods and services.

On the other hand, 4.8% to 68% of respondents across all and regulatory issues. In the subsequent sections, we’ll look countries surveyed indicated that they had received airtime from at the implications of these two models. Firstly, airtime-cash someone else before. The most prevalent type of transfers were convertibility – using only one account on the mobile network those received from family or friends or airtime received as part servers, and secondly, Mobile Wallets – sub-accounts on the of a financial transaction with someone else. In all countries mobile network servers.

In both models transactions would need to cost very little or except Burkina Faso and Rwanda, 0.3% to 9.9% of respondents indicated that they had received airtime before as payment for nothing, and banks or operators would make their money from extending financial services and in other novel ways. goods or services.

36 AFRICA TELECOMS November 2009

SAVING LIVES Similar applications to M-banking, such as m-health, are providing crucial medical advice to those who might not otherwise have access.

Demand for mobile banking & payments

In Kenya, which has one of the most successful m-banking applications in Africa, banks are complaining to the financial services regulator that mobile operators are unfairly competing against them. John Wanyela, an executive director of the Kenya Bankers Association argued in The Sunday Nation that ‘you do not allow innovation to outsmart regulation’.

This is precisely the point: innovation often outsmarts regulation. It is up to policy-makers to create an environment that supports innovative applications and to adjust regulation to evolving innovations. Results from RIA’s e-Access & Usage Household Survey indicate that there would be significant interest in some of the above-mentioned options being offered as m-banking services. It is individuals’ attitudes to mobile banking in Botswana particularly that point to the opportunity for mobile operators and banks to cooperate. Between 19.7% and 26.3% trust mobile operators and banks respectively, but together 44.4% state that they would consider depositing their salary into a mobile bank account. A similar picture emerges in Ghana and South Africa.

Regulatory aspects

The challenge to policy-makers and regulators is two-fold: firstly, to encourage banks and mobile operators to develop solutions that are not proprietary, and secondly, to allow access to potential new entrants that can disrupt the lucrative business models of 38 AFRICA TELECOMS November 2009

the banks and mobile operators. The key challenge is to do this while at the same time ensuring high levels of security and trust.

Just like convergence forced the integration of broadcasting and telecommunications, so mobile banking is forcing the convergence of the financial and telecommunications sectors.

Unfortunately, the convergence of two such heavily regulated industries means that this potential is unlikely to be met unless policy-makers lay the ground rules for innovation.

Recommendations could include encouraging the development of industry standards for mobile banking security based upon open access principles and changing regulatory systems to allow mobile operators to become banks, or banks to operate Mobile Virtual Network Operators (MVNOs). Banks need to get back to basics and focus on making money through financial intermediation rather than through transaction fees. Policymakers and regulators need to ensure that evolving systems serve the broader objectives of economic growth and development as well as protect consumer interests, while creating an environment that encourages and rewards innovation.

The unbanked are unbanked for a reason. They will only transact electronically if there are limited or no transaction costs involved, and if doing so is convenient and secure. Serving the currently unbanked profitably and sustainably requires a radically different approach. A complete paradigm shift needs to occur in order to determine how the poor can be profitably brought into the banking sector. AT

Comment Len Pienaar of FNB mCommerce looks at the mBanking phenomenon from a banks perspective.

1973 saw the birth of the Cellphone. At the time it was dubious whether this new invention would be successful. Today cellphones are as vital as water or air.

For many years, journalist, academics and businesses have spoken about the promises that cellphone (mobile) banking holds for the financial service industry. Mobile operators, NGOs, technology and service providers have invested millions in the development of new services, technology and business models.

Today we are seeing the emergence of some successful new entrants into this space, but are we not focusing on a micro trend and ignoring a real macro trend that is establishing in the industry? I believe that the trend to keep an eye on is the potential that cellphone banking offers incumbent banks to extend their service to new market segments and to deepen it to their existing customer base. Cellphone banking allows traditional banks to service their customers electronically on a scale that has never been possible before, especially in Africa.

Banks, like FNB who has identified cellphone banking as a key service differentiator just over four years ago, has seen this trend materialising in a significant expansion of its service to its entry level customers. In our established market segments, we have seen a rapid adoption of the service.

Far from replacing our traditional

40 AFRICA TELECOMS November 2009

bricks and mortar infrastructure, cellphone banking has become an extension of it, ensuring optimum use of it and allowing us to service our customers better, at lower costs. Today 50% of registered cellphone banking customers are brand new customers to FNB and we continue to see a significantly improved retention of these customers.

We started the process with a simple subscription service that allows customers to obtaining personal banking information by SMS. This information services is known as inContact and was the forerunner to the introduction of our other cellphone banking services.

We have adopted widely accepted technology and telecommunication services that are regularly used by our customers, specifically USSD and SMS, as our entry platform. Our objective was to allow our customers to bank with any cellphone, on any national mobile network and using any SIM card. In addition our technology choice also did not require our customers to make any setting changes on their phone, nor download any software.

After the introduction of the basic services (inContact and Cellphone Banking for Individuals) we embarked on a segmentation approach. Today we offer services aimed at small business customers (Cellphone Banking for Businesses and inContact Pro) and have also introduced a “light� version of Cellphone Banking that is specifically

targeted at our entry level customers.

The service is simple to take up, has a limited functionally and allows for easy upgrade to the full Cellphone Banking service. This approached has been tremendously successful in terms of take-up and usage, also 20% of these customers chose to upgrade to the full functional service.

Apart from the traditional Cellphone Banking transactions (balance enquiry, payments, transfers etc) our services are optimised for the distribution of prepaid products.

Providing a seven day a week, 24 hour a day topping up service through cellphone banking has allowed us to take a key position in the prepaid distribution chain, but more importantly, it is becoming the preferred way of funding prepaid account for customers.

Today this is still the leading reason why many people take up cellphone banking. FNB has expanded the prepaid top up services to include international calling cards, prepaid electricity and prepaid data and SMS bundles.

Africa has a large number of cellphone users without traditional bank accounts. Cellphone Banking is easily accessible to the un-banked as a FNB Product which allows people to send money to a phone is now available.

The world of mobile banking is in its infancy stages and like all new inventions necessity and convenience will ensure its success. AT

Cellphone Banking

Cellphone banking, convenient banking wherever you are!

With Cellphone Banking from FNB you can do the following transactions: t

Buy prepaid airtime or electricity for yourself or someone else

t

Make payments to beneďŹ ciaries

t

Make transfers between your own FNB accounts

t

Check your account balances

t

Get a mini statement

Cellphone Banking from FNB is available in: Botswana, Namibia, South Africa and Zambia Terms, conditions and standard rates apply

First National Bank - a division of FirstRand Bank Limited.

An Authorised Financial Services and Credit Provider (NCRCP20).

FNB 02316-2009

Rwanda

by SARAH LACEY

Crossing the Digital Divide, Rwanda-Style China, India, Brazil, Israel and Rwanda.

Then I get the inevitable question, “Rwanda? Is there even any technology in Rwanda?”

W

henever I tell someone the countries I’m hitting for my new book, they start out nodding, then the nodding slows, then they just get confused.

‘China, India, Brazil, Israel and… Rwanda.’

Then there’s the inevitable question: ‘Rwanda? Is there even any technology in Rwanda?’ Sometimes I even get asked if I have to stay in a tent when I go there. The answer to the second question is no. There are plenty of hotels, and I don’t do tents unless they have outlets and WiFi. The answer to the tech question is two fold. First: despite the last decade of covering nothing but tech, I actually consider myself more of a reporter who covers entrepreneurs. It just so happens that normally correlates with technology, especially in the US. But increasingly some of the best opportunities to build the next great billion-dollar company, even in markets like India and China, are more tech-enabled service and product businesses than classic high-tech plays.

42 AFRICA TELECOMS November 2009

And really, are web businesses even about the sheer technology anymore these days? Second: Yes, there is technology in Rwanda.

And there will be more in the next few years. Rwanda is emerging as an interesting test case on how a digital divide is actually being bridged in a methodical, well-considered, step-by-step manner.

The first step was basic connection to one another and the web over cellphones. Nearly everyone has a cellphone in Rwanda, even people in some of the poorest, most remote areas of the country. My Rwandan SIM card and enough minutes to last a month cost me the equivalent of US$12. It’s one of the only things that’s cheap in a land-locked country that has to import almost everything it consumes. And the cellphone connection works everywhere – even on winding dirt roads where there’s no electricity. We got a connection on safari in the middle of nowhere, but can’t seem to get a good connection in our living room in the middle of San Francisco.

Online A street scene in the capital, Kigali, and a NASA image of Kigala (below).

FAST FACTS Population Just under 10 million, making it the most densely populated country in Africa. Life expectancy is around 49 years and the literacy rate is just over 70%.

Languages Kinyarwanda (official) which is a universal Bantu vernacular; French (official); English (official), and Kiswahili (Swahili), used in commercial centers.

Religion Roman Catholic 56.5%, Protestant 26%, Adventist 11.1%, Muslim 4.6%, indigenous beliefs 0.1%.

Economic Overview About 90% of the population is engaged mainly in subsistence agriculture. The country is landlocked with few natural resources and primary foreign exchange earners are coffee and tea. The 1994 genocide decimated Rwanda’s fragile economic base, severely impoverished the population, particularly women, and eroded the country’s ability to attract private and external investment.

However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy to pre-1994 levels, although poverty levels are higher now.

November 2009 AFRICA TELECOMS 43

Who’s the developing nation now, America?

The second step is being rolled out now, literally. Everywhere you go in Rwanda, there are huge spools of fibre-optic cable.

In two years, every district of the country will be connected to each other and the Internet – something the United States can’t boast about. It’s being operated by a private company, but the Rwandan government owns the fibre infrastructure and welcomes competing players to make sure no one company has too much power over the country’s web access, according

to Nkubito Manzi Bakuramutsa, the deputy CEO of Rwanda’s Development Board in charge of IT. The next steps are being coordinated by the government as well: Rwanda sends 300 students at a time to the India Institute of Technology (IIT) to develop skills in hardware, software and telecom they can bring back to their home country. When one kid graduates, another one gets to go. Why IIT? It’s cheaper than Western schools, just as good at training engineers, and has a better understanding of the challenges and needs of emerging markets,

44 AFRICA TELECOMS November 2009

Bakuramutsa says. In addition, Rwanda hopes their kids will pick up some of the Indians’ entrepreneurial spirit. (Pay attention here, US: we’re no longer the education destination of choice for the emerging world.)

And of course, you need computers to use all that fibre and enjoy all those new web applications being built by these kids. Right now, all 30 districts of the country have Internet centers with 50 computers for surfing the web at the low cost of 50 cents per hour, and several more computers for learning computer basics, like Microsoft Word.

There are also privately run Internet cafes dotting the country.

One Laptop per Child (OLPC) just opened a computer-learning center in Rwanda’s capital city – in fact, the OLPC folks were in the country at the same time I was, doing more outreach.

But the Rwandan government isn’t going to leave it up to others. The country itself is buying 100 000 lowcost laptops in the next year to distribute between teachers and students in the country. ‘I’m in charge of IT here, and I’m rarely short of cash,’ Bakuramutsa

says with a smile. Last year the government spent $43 million on all of this; this year he says that’s increasing to $100 million.

So where the hell is all this money coming from in a so-called poor African nation? A lot of it traces back to aid and foreign investment. The national budget for Rwanda is 60 percent taxes and income from the country itself, and 40 percent from ‘partners’ – many of those partners are countries and organisations that let Rwanda down during its brutal 1994 genocide and are stepping up to help the country rebuild. President Paul Kagame has long said he’d rather have foreign investment in Rwanda than foreign aid. But clearly he’ll take it to make the country a place that one day doesn’t need aid. Call it guilt money if you want, but at least the country is putting it to good use.

The man in charge of all of this, Bakuramutsa, is a Rwandan national but never actually lived in the country until 2007. Just before moving back, he spent a number of years in California working for Hewlett Packard, so he knows tech. He dreams of a totally

CASE STUDY Karisimbi Integrated Energy and Communications Project The project begun in April 2008, is located at one of the highest mountain summits in Rwanda and has the objective of enhancing electronic communications and broadcasting capabilities in both Rwanda and neighbouring countries. The idea is to provide low cost, high-capacity communication capacity for both rural and urban areas as well as expand coverage for mobile phone, Internet, and TV/FM radio. The project also aims to provide surveillance capability through a Communication Navigation Surveillance – Air Traffic Management. One major achievement of the project has been to lower the cost of international bandwidth from about US$ 3,500 per MB/month to only US$ 1,500.

A number of selected rural schools and hospitals have been connected with DVB-T/H and Broadband Internet services. Once fully operational, it is expected that the cost of communications in Rwanda will come down on average 50%. The project intends to offer various e-application services on its network, among them: virtual tourism, e-learning, e-health, e-commerce and e-government.

automated Rwandan society – one where even the milking of cows is automated.

That’s a pretty big leap from the Rwanda of today, where city councils pay people dollars a day to manually trim the grass on the side of highways with machetes and sickles. First steps will include all government forms to move online in the country, along with medical records.

All that automation is where those 300 IIT grads come in. For Rwanda to truly bridge the digital divide it’ll need locally developed sites and software, and there’s a lot of work to be done. I don’t think anyone is translating Wikipedia or Facebook into Kinyarwandan any time soon, and local websites and information pages for Rwandan businesses, hotels and attractions are lacking to nonexistent. To make an appointment to see the famous Silverback gorillas, you have to physically go to an office in Kigali and pay $500 in cash. In fact almost every place in Rwanda only accepts cash. And if you’re paying in US dollars – the date on the bills better be later than the year 2000. That’s not exactly going to be e-commerce friendly.

When Bakuramutsa says he wants

to build a mini-Silicon Valley in Rwanda, he means less a region that will birth the next Hewlett Packard or Google, and more a place that can churn out IT services for Rwanda first, and surrounding countries like Kenya, Tanzania, Uganda second. IT is core not only for the education, connectivity and productivity, but the future economic development of Rwanda.

The tiny country is blessed with some of the most fertile soil in Africa, but few rich deposits of minerals and very little manufacturing and industry. Ninety percent of its people are subsistence farmers, and with a booming population there is not enough land for that kind of economy to scale. Many in the country doubt they can compete with more mature industrial economies like those of Kenya and Uganda when it comes to manufacturing to say nothing of the dirtcheap prices of making things in China.

But IT services? Few places in Africa can call that a specialty. And that’s why Bakuramutsa never has a lack of money to invest in IT: Rwanda isn’t just trying to bridge a digital divide – but an economic one. AT

November 2009 AFRICA TELECOMS 45

From computers to handhelds Intel eyes the handheld device segment with new processors and software

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he handset environment is about to become a hotly contested market, with Intel’s announcements last month at its San Francisco Developer Forum that the mobile phone market will become a major focus for it in the coming years. The company is already somewhat of a leader in the desktop and mobile computing markets – it now believes that through tweaking some of the technology it has on offer for its ultra-mobile platforms, it will be able to offer handset processors and platforms that enable mobile phone vendors to take device capabilities to the next level.

The motivation behind Intel’s new thrust is actually quite a logical, well thought out one – mobile phones have already proven themselves to be capable Internet access devices, giving users the ability to use e-mail and web-browsers while on the move. But, as people begin doing more with these devices, such as playing and recording high definition video and audio or working with office productivity applications, handset manufacturers will have to find higher performing componentry.

That means driving their current suppliers to design and manufacture powerful processors that don’t negatively impact battery life, opening a healthy gap for Intel, since this has been the same mandate it has had in the in the notebook market for the longest time. The company’s Atom family of low power processors that currently power the new category of extremely small form factor notebooks known as netbooks is where the main focus will be. Instead of just shoehorning Atom into handheld devices, Intel believes that in evolving this massively successful family of processors, it can offer manufacturers ‘system on chip’ (SOC) versions of the technology – something that makes for faster production cycles, simpler device manufacturing process and smaller form factor hardware which suits the constraints of the handheld market.

System on a chip Like their traditional counterparts, SOC processors incorporate technology like cache memory and processor cores.

46 AFRICA TELECOMS November 2009

Additionally however, they incorporate other aspects of the computer – such as memory controllers, video and graphics engines, input/output interfaces and logic circuits normally mounted on a motherboard – and in doing so, bring the ability to lower power consumption and increase performance substantially. In traditional PC platforms, a large number of embedded controllers, USB chips, clock chips and storage controllers are distributed throughout the motherboard.

On the SOC Atom platform, Intel has taken aggressive measures to integrate this functionality into the processor itself to help achieve drastic form factor reductions. Intel’s SOC versions of its Atom processor are some way off though. The company has committed to a having an intermediary step to the SOC vision ready by the end of 2010, and then make the move to SOC entirely within 12 months of reaching that milestone. At the same time however, it will continue to product non-SOC versions of the Atom platform for the netbook and low-power computing markets.

Looking at ‘Lincroft’ The SOC version in its upcoming ‘Moorestown’ 45nm processor line will be called ‘Lincroft’. In addition to standard processor cores, ‘Lincroft’ will incorporate graphics and video engines, as well as memory and display controllers. The platform also includes an Input/Output Platform Controller Hub (I/O-PCH) (codenamed ‘Langwell’), which allows the SOC processor to support devices such as wireless radios, a camera sensor and flash storage directly off of the processor.

The ‘Moorestown’ family ‘Lincroft’ belongs also implements next-generation OS Power Management (OSPM) to extend battery life. All of the new SOC features incorporated in the ‘Lincroft’ platform work in concert to dramatically reduce the idle power of the platform by up to 50 times and halve the board size by comparison to Intel’s first-generation Atom platform, known as ‘Menlow’. The company is already working on reference designs for the new design with system manufacturers that many handset providers work with when it comes to building the logic that powers their handsets, including Aava

new for the hardware focused company) in order to build a complete package.

It has already been doing a great deal of work on Moblin, its open source Linux operating system that is already tailored for More performance and features, the netbook market. The work done on Moblin so far has now lower power been poured into a version that works well for handhelds.

And if the demo given by the company at its developer forum The ‘Moorestown’ family ‘Lincroft’ belongs to is designed and the ground lost by Microsoft with its to deliver high enough performance to Windows Mobile platform are anything to go run the rich PC-like Internet in its entirety, by, Moblin for handhelds is due to become while being extremely light on battery life. a strong contender in the years to come.

The ‘black magic’ that allows this to take The company has thrown additional fuel place exists in the processor’s ability to on the fire by announcing a new developer scale its frequency up and down as needed program for independent software vendors – essentially delivering the perfect level (ISVs) and developers that are focused on of performance for any one time, at the the Atom platform. Apart from creating a lowest power consumption. Additionally, the community space and giving developers processor’s ‘Bus Turbo Mode’ increases bus strong support, Intel has followed in the bandwidth and reduces CPU-to-memory bus Lenovo’s Ideapad U8 interlatency when the CPU is operating at higher face scrolls like butter, footsteps of Apple and Google, launching an application store of sorts, which developers frequencies, thus increasing the overall looks like candy can use to market and sell the offerings they system performance. The new platform also build. The developer program will feature borrows from Intel’s higher performance multiple platforms through its support for desktop and notebook processor designs’ the Adobe Flash and Microsoft Silverlight Hyperthreading technology – which allow run-time environments, which work on both logic cores to execute more than one Moblin and Windows. instruction simultaneously, enabling more Run-times such as Flash and Silverlight efficient multi-tasking oriented usage models. enable developers to use a single code base Focusing on reducing power consumption, to support multiple device platforms and ‘Lincroft’ supports the MIPI display interface, avoid extensive reprogramming, thereby which meets the unique needs of devices with OQO model 2+ For mobile reducing development costs and time-tohandheld screen resolutions while requiring professionals who need market.If Intel gets this right, it will close lower power consumption. ‘Lincroft’ also to work on the go the loop on the software market, from borrows from its larger siblings’ ‘Distributed application creation through to testing and, Power Gating’ technology, which in essence shuts off parts of the processor not in active use, resulting in finally, the go-to-market stage. Developers will also benefit from work Intel is doing with netbook and handset original equipment massive gains in power efficiency.

By shutting down transistors when not in use, power leakage manufacturers (OEMs) and in creating branded application reduces dramatically and as such, battery life goes up. The storefronts through which validated applications will be sold. processor is also tuned for enabling faster transitions in and out of power states, bursting power usage up for quick resolution of tasks Ballsy move and then returning to ultra-low power states to maximize battery life. Rounding the feature set out, Intel is working with industry Overall, Intel’s thrust into the handset market is a risky one, leaders to provide people with an always connected experience since it will face strong competition from the likes of ARM and using devices that feature 3G/HSPA modules from Option and Samsung. Its success will depend on what the performance to Ericsson, as well as support for Intel’s next- generation WiMAX power ratio looks like on its SOC chips looks like when it debuts or 4G technology codenamed “Evans Peak.” them next year. If things are promising when ‘Lincroft’ sees the light of day, Intel will likely gain solid enough momentum to push its plans for SOC through to the point where a comprehensive Supporting software list of features and functions are taken care of by the processor.

A solid hardware platform that delivers the benefits handset If the contrary is true though, Intel could be in for some pain. manufacturers need is not enough however – Intel is having to In the meantime we count the months until its first SOC version innovate heavily on the software front (a market that’s relatively of Atom sees the light of day. AT Mobile, Compal Communications, Compal Electronics, EB, Inventec, LG Electronics and Quanta.

November 2009 AFRICA TELECOMS 47

the rate of Termination

A case study on how Namibia resolved the termination-rates dilemma between telecommunications operators.

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egulators across Africa and Europe agree that termination rates should be based on the cost of providing the termination service.

In Namibia, following a dispute about interconnection charges between local telecommunication operators, a consultative workshop on interconnection models was held in October 2008 in Windhoek, where a consensus was reached among the participants. This included using international benchmarking as the preferred approach to determining interconnection rates prescribed by the regulator when carriers fail to agree on terms of interconnection within a reasonable period. Furthermore, the new telecommunications bill will extend the responsibilities of the regulator with respect to establishing an interconnection regime, including a dispute settlement framework for the sector.

In order to implement this industry consensus reached at the workshop, and in anticipation of the new Namibian telecommunications bill, the regulator will need to establish an interconnection termination model for Namibia based on benchmarks from other jurisdictions that have implemented cost-based interconnection regimes. Âť

This article has been summarised from the Namibian Interconnection Benchmarking Study, commissioned by the Namibian Communications Commission (NCC). It was first published by Research iCT Africa @ the EDGE Institute.

The full report can be downloaded at www.ncc.org.na/admin/ data/Publications/Namibia%20Interconnection%20Study.pdf 48 AFRICA TELECOMS November 2009

giving a clear signal termination rates will be based on the cost of providing the service.

November 2009 AFRICA TELECOMS 49

IP transition a global increase in data transmission has forced networks to build capacity – fast.

For now, the most widely applied cost standard is the forwardlooking, long-run incremental cost (LRIC) of termination of an efficient operator. Termination rates at cost of termination will remove economic distortions witnessed in Europe and Africa today and prepare the markets for a smooth transition to IP-based Next Generation Networks (see sidebar). Symmetry between mobile and fixed termination rates supports fixed-mobile convergence and removes distortions that would advantage mobile operators.

Benchmarking indicates that the cost of termination in Namibia is in the region between N$0.12 to N$0.35 (about US$0.015 to US$0.045) based on current technologies, and declining over time.

This case study proposes to set the ceiling for symmetric converged termination rates at N$0.30 starting from 1 July 2009. This includes a 25% mark-up over the estimated cost of termination of an efficient operator. Operators would, of course, be able to negotiate commercially for lower termination rates, including Sender Keeps it All or Bill & Keep.

telecommunication policy states: • Individual licensees must allow any other licensee to interconnect its services and network with that of the individual licensee unless such a request is technically or financially unfeasible. Interconnection charges must be such that they ensure a fair, transparent and pro-competitive access regime.

• The party providing interconnection and/or facility leasing must provide services that are sufficiently unbundled.

• The regulator may prescribe benchmark charges for interconnection. These charges should be determined in accordance with international benchmarks on interconnection.

A carrier must charge the benchmark fees prescribed unless it can prove to the regulator that its forward-looking incremental costs will exceed the prescribed benchmark fees.

• Interconnection creates open network access. Any commercial network should be fully accessible to any other operator in a nondiscriminatory manner, whilst protecting privacy of subscribers and databases.

Background

Telecom Namibia is the only fixed-line operator in Namibia and is owned by Namibia Post and Telecom Holdings (NPTH), which in turn is owned by the State. NPTH is also a majority shareholder of Mobile Telecommunications Ltd. (MTC), which was awarded a mobile telecommunication licence in 1996. In July 2006, 34% of MTC was bought by Portugal Telecom. MTC still has about 87% market share and subscriber numbers are increasing.

A second mobile licence was awarded to CellOne in 2006.

CellOne launched its services in April 2007. Telecel Globe, a subsidiary of Orascom Telecom, bought 100% of CellOne

The Namibian Communications Commission (NCC), established in 1992, reports to the Ministry of Information and Communication Technology, and is solely funded by the government. The NCC is expected to become a fully-fledged independent regulator for the entire ICT sector with the passing of the new telecommunications bill that has been in draft stage since 1999. The new telecommunications bill will extend the responsibilities of the regulator with respect to establishing an interconnection regime, including a dispute settlement framework for the sector. Regarding interconnection, the new

50 AFRICA TELECOMS November 2009

Namibia’s Telecommunication Sector

Executive Training: Alternative Regulatory Strategies for Telecommunications

12th April – 16th April 2010 UCT GSB Breakwater Campus V&A Waterfront, Cape Town, South Africa Successfully offered for the first time through the UCT GSB Programme in Infrastructure Reform and Regulation in association with LIRNE.net in 2009, this new programme is designed to enhance the strategic thinking of a select group of senior decision-makers in telecom and related sectors in developing countries and emerging economies. The aim of the programme is to address the many challenges posed by the current stage of telecom and ICT reform to governments, regulatory agencies, operators and other stakeholders. The certainties of yesterday are no more: traditional approaches to the licensing of networks and services are being challenged by converging technologies services and innovative business models; individual assignments of frequencies are being questioned in the light of new standards such as Wi-Fi and WiMax; the distinctions between wired and wireless are being blurred; classic price regulation is becoming less central to the missions of regulatory agencies; new pro-poor business strategies are challenging conventional universal service models; and all industry players are being challenged to address content issues at various levels.

Delegate profile:

Decision-makers in telecommunications and related sectors in Africa including government; regulatory agencies; operators; unions, ICT journalists, consumer groups and NGOs active in the sector

Programme benefits:

• Delegates will learn how to respond to the growing demands on the regulatory process and agencies, with the same resources.

• Policy makers will gain the knowledge of developments within the sector to think in alternative ways about creating an enabling environment for development and growth.

• Regulators will be provided with alternative approaches to regulation, particularly in developing countries with resource constraints, to facilitate more effective regulation.

• Operators will gain a deeper understanding of the regulatory process so that they can navigate its complexities.

• With telecom assuming a more prominent position in economies and societies, civil society and media can learn how to equip themselves to participate in its governance.

• Knowledge on how to deal with these new challenges is vital.

• Delegates will have the opportunity to reflect on these issues in the company of peers and away from the daily demands of the office environment • As part of the University of Cape Townʼs Infrastructure Management Programme, the course will be offered by LIRNE.net, a global collaboration of applied research and training entities specialising in ICT policy and regulation, led by Research ICT Africa.

Faculty:

The faculty on this course is not only composed of well known academics in the field of ICT policy and regulation, but several have practical experience as regulators and policy makers. They include the course convenor, Research ICT Africa Director, Alison Gillwald, also former broadcasting and telecommunications regulator in South Africa; CEO of LIRNEasia Rohan Samarajiva, who was the former Director General of Telecommunications in Sri Lanka when major reform gains were achieved; Helani Galpayi, COO of LIRNEasia and former telecom consultant and financial economist Dr. Christoph Stork, Research ICT Africaʼs senior researcher.

For more information, please contact Junita Abrahams on (+27) 21 406 or TELECOMS 51 November 20091323 AFRICA abrahams@gsb.uct.ac.za or visit either www.gsb.uct.ac.za or www.researchictafrica.net

• Cost of Efficient Operator: National Regulatory Authorities (NRAs) should set termination rates at the cost of an efficient operator, implying symmetric termination rates.

• LRIC: Cost of termination should be calculated on the basis of forwardlooking, long-run incremental costs (LRIC), only taking into account costs that are caused by the provision of wholesale call termination (wholesale call termination being the increment).

• Top-Down Addition: NRAs may use a top-down approach based on International Best audited cost data to improve the Practice and Trends bottom-up LRIC. Benchmarking Three considerations need to be kept in • Next Generation Network (NGN): What exactly is benchmarking? mind when discussing interconnection The core part of both mobile and The ICT Regulation Toolkit defines arrangements: fixed networks should be based on interconnection benchmarking as the NGN, and the access part for mobile process of establishing interconnection 1. Every operator has a monopoly networks should be a combination of rates based on rates in other on call termination on its network.

2G and 3G. jurisdictions. Benchmarking can be Interconnection therefore needs to • Definition of incremental costs: used as a common-sense check on the be regulated. 2. No operator builds a network solely to make money from Costs that can be avoided if a results of cost models and directly to interconnection. Operators build specific service is no longer provided set interconnection termination rates. networks to make money from selling (wholesale voice termination service Undertaking full forward-looking services to their subscribers. 3. Not provided to third parties). cost modelling is very challenging, only the calling party, but also the • Definition of traffic related cost: expensive and time-consuming, and receiving party derives a benefit from Fixed and variable costs, increasing often the detailed information required a call. with increased levels of traffic. is not available in developing countries.

• Asymmetric termination rates: In The ICT Regulation Toolkit therefore case it can be demonstrated that a states that ‘where benchmarked new mobile entrant operating below rates allow competition to develop satisfactorily, rates based on benchmarking may be used the minimum efficient scale incurs higher per-unit incremental for extended periods.’ Benchmarking involves selecting a costs than the modelled operator, after having determined that sample of countries or operators (possibly at similar stages of there are impediments on the retail market to market entry socioeconomic and industry development) and gathering price and expansion, the NRAs may allow these higher costs to be data for the services under consideration in each of the sample recouped during a transitional period via regulated termination countries. Furthermore, benchmarking also involves adjusting rates. Any such period should not exceed four years after rates to account for country specific differences and may need to market entry. be adjusted to account for differences in country characteristics. • NRAs should implement cost-efficient symmetric termination ‘The goal of the adjustments is to try to model interconnection rates by 31 December 2012. costs without having enough detailed information on local cost inputs to carry out a full forward-looking cost analysis.’

East African Community in January 2009. Telecom Namibia launched a mobile service in late2006/early-2007 called Switch, based on CDMA. Switch was restricted to fixed-wireless until May 2009 due to political pressure.

MTC and CellOne use GSM to provide mobile telephony, while Telecom Namibia uses CDMA. Telecom Namibia has a statutory licence but not a statutory monopoly. It remains a de facto monopoly until an additional fixed-line licence is awarded, thus breaking Telecom Namibia’s monopoly.

The European Termination Rate Debate

In October 2008 the European Commission issued a draft recommendation on the regulatory treatment of fixed and mobile termination rates in the European Union. This sparked a termination rate discussion in the EU. The recommendations are as follows:

52 AFRICA TELECOMS November 2009

Interconnection Guidelines

The East African Regulatory, Postal and Telecommunications Organisations (EARPTO, 2008) issued guidelines on interconnection arrangements for members of the East African Community in April 2008. These recommendations for termination rates are that: • Termination rates need to be transparent and cost oriented.

• Burden of proof that charges are derived from actual cost lies with the operator.

• LRIC is standard for cost-oriented termination rates.

• LRIC is to be phased in gradually: within 6 months fully allocated cost model based on historical cost (FDC); within 12 months FDC excluding non-relevant cost; within 18 months FDC based on current cost and excluding non-relevant cost; and within 2 years LRIC. • Termination rates shall be sufficiently unbundled.

• Operators need to keep separate accounts for the interconnection networks and services.

• Charges regarding universal service obligation should be unbundled and shown separately.

The guidelines further stipulate that accounting separation may be prescribed to operators holding significant market power.

Interconnection rate caps apply and regulatory interventions are foreseen for situations where interconnection negotiations fail or where there is evidence of uncompetitive behaviour.

Fixed Mobile Convergence

Which brings us to fixed-wireless services. In several European countries, as well as in Namibia, mobile network operators offer fixed-wireless services based on GSM, UMTS or CDMA technology. These are fixed-wireless services providing fixed services using wireless technology. MTC’s Home Phone is such an example. It uses GSM technology but the SIM card can only be used on one or two base stations, constraining its use to a relatively small geographic area. The Home Phone subscriber pays considerably cheaper prices for on-net calls

compared to a mobile subscriber. However, a caller to MTC’s Home Phone has to pay mobile retail rates, reflecting also mobile termination rates.

Symmetry vs Asymmetry

The general arguments for asymmetric termination rates on a transitional basis are that new entrants have a lower economy of scale due to low call volume and low subscriber numbers and that asymmetric termination rates could be justified where operators have different network coverage. New entrants may also have less bargaining power and hence pay higher equipment prices and add to this the fact that different technologies being used can lead to different costs. Operators entering the market at a later stage, that received only 1800 Mhz frequency for 2G, may face higher coverage costs compared to 900 Mhz. Asymmetric interconnection rates are considered as a market entry assistance. They provide an additional source for revenue and compensate for interconnection pay-outs due to traffic imbalances.

In conclusion, regulators across Europe and Africa agree that termination rates should be cost-based and that the forwardlooking, long-run incremental cost of an efficient operator is the appropriate way of determining the cost of interconnection.

Termination rates at cost of remove economic distortions witnessed in Europe and Africa today and prepare the markets for a smooth transition to IP-based Next Generation Networks.

Symmetry between mobile and fixed termination rates supports fixed-mobile convergence and removes distortions that would advantage mobile operators. AT

IP-based Next Generation Networks Next Generation Networks (NGN) denote the convergence between traditional fixed and mobile telecommunication networks with the Internet. The migration towards NGNs raises many issues, in particular interconnection arrangements. The migration towards NGNs can be differentiated into core and access NGNs: Access NGNs: fibre in the local loop and Core NGNs: replacement of legacy transmission and switching equipment by IP technologyin the core network (backbone).

Currently, fixed and mobile network billing systems in Europe and Africa are based on Calling Party Pays (CPP) on the retail level and Calling Party’s Network Pays (CPNP) on the wholesale level. For off-net calls, this translates into a caller being charged per minute for a call to the other network by his network operator. The network of the caller has to pay a termination fee to the network terminating the call, the network of the receiver of the call. The originating network sets the retail price in such a way that the cost of origination and the money it has to pay for the termination to the other network still results in a profit. For the Internet, however, end-users have been used to Receiving Party Pays (RPP), where both the receiver and the sender pay.

A Skype VoIP call is uploaded and downloaded for receiver and sender at the same time, for example. The same applies to downloading music (receiving data) or uploading a movie clip to www.youtube.com (sending data). Both cause traffic and both would be charged, either per minute spent online or per megabyte up- or downloaded (unless the customer has a flat-rate arrangement). On a wholesale level, Bill and Keep or peering agreements are used that do not require any termination payments.

54 AFRICA TELECOMS November 2009

Wake-up call.

Climate change is a serious problem. So at the International Telecommunication Union (ITU), we’re looking at serious solutions. For instance, by using information and communication technologies (ICTs) to monitor global climate change. Or by working with other industries to reduce greenhouse gas emissions through the innovative use of ICTs. And, of course, by promoting and adopting a carbon neutral approach within our own industry.

We’ve

heard the wake-up call. Through leadership and example, ITU is determined to answer it.

www.itu.int/wtisd

www.itu.int/climate

Committed to connecting the world November 2009 AFRICA TELECOMS 55

Committed to connecting the world

SEACOM

GOES LIVE

The undersea fibre-optic network is delivering unprecedented capacity and connectivity to Africa.

56 AFRICA TELECOMS November 2009

O

n 23 July this year SEACOM announced that its 1,28 Terabytes per second, 17,000km long, submarine fibre-optic cable system, linking south and east Africa to global networks via India and Europe was complete. Backhauls linking Johannesburg, Nairobi and Kampala with the coastal landing stations have been established and SEACOM is also working with its national partners to commission the final links to Kigali and Addis Ababa.

The launch of SEACOM opens up unprecedented opportunities, at a fraction of the current cost, as government, business leaders and ordinary citizens can now use the network as a platform to compete globally, drive economic growth and enhance the quality of life across the continent.

Commenting on the finalisation of the Project, Brian Herlihy, SEACOM CEO, said: “Today is a historic day for Africa and marks the dawn of a new era for communications between the continent and the rest of the world. Our tireless efforts of the past 24 months have come to fruition, and we are proud to be the first to provide affordable, high quality broadband capacity and experience to east African economies. Turning the switch ‘on’ has created huge expectation, but ultimately SEACOM will be judged on changes that take place on the continent over the coming years.”

The unprecedented capacity, quality of bandwidth and connectivity brought to Africa by the SEACOM network was demonstrated at the launch with simultaneous events in South Africa, Tanzania, Kenya, Uganda and Mozambique, where SEACOM, in conjunction with Cisco Systems, provided media and guests direct access to true broadband connectivity.

They demonstrated live broadcasts and interactive real-time presentations across the system. Yvon le Roux, Cisco VP for

Africa, added: “Cisco and SEACOM share a common goal, which is to enable accessible broadband across Africa while lowering the cost of communication to spur growth within urban and rural communities. We’re working with SEACOM to help transform Africa by outlining process change, building networks, and finally, providing the expertise that supports key services for citizens, such as education, healthcare, public safety, economic development, and national security.

SEACOM will provide the catalyst for African consumers, business and government to realise the benefits of connectivity and collaboration across the globe. During the event, SEACOM’s Chairman, Mr Nizar Juma, observed, ”This demonstration has been made possible by the collaboration of SEACOM and Cisco Systems who have jointly built a voice, data and video platform, relying on the SEACOM network, to create a collaborative environment. This first-hand experience of our high-speed capabilities has take place through a onegigabit-per-second live international connection as well as a live high-definition video feed over an Internet Protocol (IP) network to interconnect representatives and dignitaries across five countries. This is a momentous day for us. Milestones such as this are unique to any company and even more so to the countries and regions involved. It also clearly demonstrates that, provided with an enabling environment, the private sector can efficiently mobilise the resources required to deliver complex and expansive projects for the benefit of our people. The SEACOM cable will change the lives of every man, woman and child in the countries which are connected by making previously unavailable technology accessible to everyone. We truly look forward to the positive utilisation of the cable and the realisation of infinite social and economic possibilities unleashed by our arrival”. AT

November 2009 AFRICA TELECOMS 57

with BRIAN Herlihy ceo of seacom In light of our feature article in this edition of Africa Telecoms, briefly describe how you feel about Seacom assisting with breaching the digital divide in Africa?

SEACOM is providing a large broadband connection to global networks.

Consumers will be using the internet in ways they wouldn’t think of today: on-demand movies, music, home-made video, watching news programs, etc. With new web applications and uses being discovered daily, the potential economic benefits of affordable bandwidth are endless.

In Africa, it is projected that there will be a major demand for bandwidth driven by some of the following “hotspots”: • Tanzania is growing a logistics hub for eight East & Central African countries • Uganda and Zambia are set to develop strong pharmaceutical research centres • Kenya is looking at becoming a call centre hub with a major focus on Small & Medium Enterprises • Rwanda, which has developed a visionary broadband strategy, is looking to establish a hub of bilingual call centres.

SEACOM often hears stories about the impact of inexpensive bandwidth on

58 AFRICA TELECOMS November 2009

global Internet content in Europe, North America and Asia; however, SEACOM has seen much African-produced content that will vastly benefit the world.

Recently, we met with a research group that is gathering data from traditional healers on homeopathic medicines. We were amazed to learn of the information being gathered and the potential to add to medical research globally.

SEACOM’s partnership with southern African research and education networks through TENET (Tertiary Education and Research Network of South Africa) will facilitate faster development by providing subsidised international bandwidth to research and education networks across 40 universities. These education and research institutions now have 50 times more bandwidth at the same annual cost prior to the arrival of SEACOM. Bandwidth now equals the amount which was available to the entire Southern African population in 2008. TENET owns the capacity for the remaining life of the cable, resulting in substantial annual savings whilst enabling the affiliated institutions to develop and increase their international research collaborations and distance learning programmes. SEACOM is working to replicate this programme in East Africa.

Do you have an example of this scenario already or is it too soon?

We’ve already seen a decline in international long haul prices at the end consumer level. In East Africa specifically, Kenya’s progressive approach to telecoms, has resulted in large amounts of bandwidth being made available at a fraction of the cost, resulting in a reported 200% increase in data traffic within 14 days of SEACOM’s launch.

South Africa has disappointed SEACOM in translating low cost international bandwidth into reduced consumer price. This is largely due to the major operators investing in their own cables and slowing any adoption of our cable. They also have a large consumer dependence on the incumbent’s terrestrial backhaul and last mile, limiting the ability for ISPs and operators to pass on savings.

There has been a marked improvement though. In September 2009, for example, MTN announced a 50% increase in capacity for certain corporate clients in South Africa while Telkom and M-web also announced similar increases.

Connectivity is now available, and it's up to governments and internet service providers to pass on savings and capacity to their customers, circumventing constraints and bottlenecks wherever possible.

What is your opinion regarding cheaper broadband which will benefit those who already have access to the internet against those of those who currently have no access ?

Through supplying plentiful bandwidth at a fraction of the current cost, there is no doubt that SEACOM’s arrival opens up unprecedented opportunities for governments, business and ordinary citizens alike. They can finally make use of a network which forms a platform to compete globally, drive economic growth and enhance quality of life.

Providing broader access to Information and Communications Technologies (ICT) in Africa is a catalyst to unlocking sustainable economic and social development. By supporting a broad range of stakeholders its possible to develop, create growth and promote the continent as a serious player in the global economy.

From this point onwards, what do you think the next step is? Now that Africa has a solid fibre backbone what more is needed in order to finally bridge the digital divide?

An open and liberal approach to telecommunications is essential.

Governments hold the key in allowing businesses to exploit ICT-linked opportunities which will enable the acceleration of broadband penetration.

There is also the catalyst effect that needs to be considered. Undersea cables will justify an investment in national fibre, fibre to the home, new wireless networks, data centres, call centres and BPOs. What has been the biggest hurdle thus far with the Seacom Project?

SEACOM is offering one, seamless product to end-users, across 11 sovereign nations. Some of our challenges were tax and contract related. SEACOM, as an international entity, had to figure out how

to sign contracts at a local level and then deliver that product throughout all the countries we were involved with.

SEACOM had to use its subsidiaries and local partners in each one of these countries, who were already licensed and established, to carry communication infrastructure. You're trying to set that up in a very short period – keeping in mind that construction of the cable is really only 18 to 24 months.

The availability of human resources which could interact with a venture such as SEACOM was also a challenge in some countries.

With only a small amount of capacity sold thus far and a total expected capacity of 1280Gbps, what is the projected time-frame that Seacom is working towards in having the full capacity sold and used throughout Africa?

We have seen capacity purchase continue at a healthy pace since the launch. In fact, we were pleasantly surprised to see East Africa leading the charge. As demand increases and users find new ways to utilise the Internet and overall connectivity, we will experience an exponential trend in capacity requirements leading to more purchases. From an investment perspective, we expect a return on this investment within five years.

In your estimation, what effect will the partnership with Altech’s KDN have on Broadband access in Central Africa?

From the outset of the project, we realised the importance of connecting inland countries to the international network and many countries set out to deploy massive terrestrial networks in anticipation of the arrival of real and affordable international bandwidth connectivity. With more and more countries getting connected to the rest of the world via the SEACOM system, it is only a matter of time before we see the direct socio-economic benefits this will have on the entire region.

The African market for international bandwidth is expected to swell within a short period of time, with a significant portion of this new demand coming from East and central Africa. Altech and SEACOM have taken a giant step towards unlocking this enormous potential in East Africa. Our success would not be possible without the infrastructure which links our beach landing stations to metropolitan PoPs (Point of Presence). KDN’s extensive inland infrastructure in East Africa will link our landing station in Mombasa to Nairobi, then on to Kampala and Kigali.

In addition, we hope to connect Kigali and Addis Ababa soon and will continue to explore further opportunities across central African countries.

Are there future plans to extend the SEACOM network to the west coast of Africa or is the current network as far as the project is planned at the moment?

Although no specific plans are in place at this point, we will continuously evaluate all opportunities and strategic options to compliment and improve our current offering.

What impact will SEACOM’s cable have on traditional voice communications in Africa or is SEACOM purely going to provide data services to the continent?

Access to previously unobtainable, cheap and easily available broadband will allow East and Southern Africa to connect to international broadband networks. The infrastructure should see Africa becoming a major competitor for call centres/business process outsourcing (BPO), research and education. Financial, manufacturing and other sectors will bring down their cost of doing business while increasing their productivity. This will, in part, be possible through the provision of cheaper traditional voice calls using fibre networks. As an example, Gateway Communications has purchase significant capacity on SEACOM. AT

November 2009 AFRICA TELECOMS 59

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I

CT is increasingly seen as a key to economic growth on the African continent. The recent conference in Geneva saw high-profile government representatives ITU Telecom World events are centrepieces in the International Telecommunication Union calendar. Held every two to three years, they bring together governments, regulators, operators and corporate leaders from around the world and provide a neutral setting to discuss – and plan – how to achieve the overriding ITU mission: to put every human being within easy and affordable reach of information and communications.

Despite the global economic downturn, ITU Telecom World 2009 still attracted over 650 VIPs to Geneva during 5-9 October, including in excess of 80 ministers – a testimony to the pulling power of ITU, the lead United Nations agency for ICT.

62 AFRICA TELECOMS November 2009

Africa featured prominently at the recent ITU Telecom World 2009 conference held in Geneva.

FEATURE

location, location Paul Kagame, President of Rwanda; Ban Ki-moon, UN Secretary-General; and Dr Tarek Kamel, Minister of Communications and Information Technology of Egypt, at the Egyptian Pavilion during the conference.

Participation from Africa was particularly strong. High-level attendees from the continent included Lesotho prime minister, Pakalitha Mosisili; Rwanda president, Paul Kagame; and Tanzania prime minister, Mizengo Pinda. Sierra Leone vice president, Samuel Sam-Sumana, was also in attendance. On the exhibition floor, Burundi, Egypt, Ghana, Kenya, Malawi, Morocco and Uganda each had national pavilions.

Yet from the outset of WT ‘09, Dr Hamadoun Touré, the Maliborn ITU secretary-general, was at pains to stress that emerging nations should not gather in Geneva to ask for assistance money from developed countries. On the contrary, he championed ICT investment in emerging markets because it is an attractive business opportunity. Why? There is still so much scope for subscriber growth – particularly broadband subscriber growth – which can create new wealth.

“Developing countries should not be here [at ITU Telecom World] to beg,” he said. “But neither should developed countries be afraid of being accused of any past wrongdoing [when engaging with emerging markets] and be asked for compensation.”

Investment aid

Paul Kagame, Rwanda president, has long advocated the need for investment aid in Africa, not charity. Speaking at the ITU

Telecom World 2009 opening ceremony, Mr Kagame talked about the importance of Connect Africa, an ITU initiative held in Kigali – the capital city of Rwanda – which bought together African leaders and industry heads to promote ICT investment on the continent. The outcome of Connect Africa, which took place in October 2007, was that industry pledged US$55 billion in ICT investment through to 2012. According to Mr Kagame, more than US$8 billion of that US$55 billion sum has already been invested in communication infrastructure in Africa. The impact of this investment on the continent has been significant in a number of ways, says the Rwanda president.

“First, we have seen a dramatic reduction on tariffs – averaging 30% – thereby enabling more people to access communications services and improve their lives,” says Mr Kagame. “Second, the investment has produced returns of $30 billion for the investors. Thirdly, these investments have contributed to the expansion of our tax basis, through the creation of small and medium enterprises and new jobs. Fourth, the new infrastructure is proving a powerful tool of regional integration by connecting individual countries while, in turn, connecting them to international gateways.”

The benefits of private sector ICT investment have also been felt directly in Rwanda, a country often credited as being one

November 2009 AFRICA TELECOMS 63

of Africa’s ICT success stories. Since Connect Africa alone, Mr Kagame points out that $500 million has been invested in the country’s ICT infrastructure, which has led to a 35% decrease in tariffs and a 200% increase in users.

Reinforcing one of the key messages at ITU Telecom World 2009 – that ICT can boost economies and empower people – was Nelson Mandela. Speaking at the opening ceremony via video link, the former president of South Africa and renowned international statesman said that ICTs are “the single most powerful tool we have for human progress”. He urged delegates to make the vision of connecting the world a reality.

The relationship between ICT development and economic growth has become well established among industry analysts.

According to the Deloitte consultancy, a ten percent increase in a country’s mobile penetration can lead to a 1.2 percent increase in annual GDP. A recent World Bank report says that for every ten percent rise in broadband penetration there is a 1.3 percent rise in GDP. More and more governments in Africa and other emerging markets appear to be recognising this link and finding ways to implement ICT initiatives.

New ITU stats highlight broadband gap During ITU Telecom World week, the ITU’s Telecommunications Development Bureau (BDT) published updated statistics on ICT deployment in developed and developing countries. They make for uncomfortable reading.

While mobile subscriptions are spreading like wildfire in emerging markets – developing countries now have 3.2 billion mobile subscriptions compared with the developed world’s 1.4 billion mobile subscriptions – a broadband gap is opening up between richer and poorer nations.

In Africa – ITU reports – there is only one fixed broadband subscriber for every 1’000 people; in Europe there are 200 fixed broadband subscribers for every 1’000 people.

"The spread of mobile communications in Africa in recent years has been significant and encouraging, with mobile penetration having risen to cover one third of the population,” Sami Al-Basheer, BDT Director, told Africa Telecoms. “However, we still have the challenge of connecting the many who remain without access to even the most basic information and communication technologies (ICT). Furthermore, to boost social and economic development in the region affordable access to high-speed broadband internet is crucial. To meet these challenges, ITU is working with key

64 AFRICA TELECOMS November 2009

De-risking investment

The challenge for some emerging markets – if they are to attract investment – is to shake off the perception they are extremely risky places to do business. At ITU Telecom World, African ministers had the opportunity not only to assuage investors’ fears but, in some cases, to promote their countries as outsourcing hubs.

Dr Tarek Kamel, Egypt’s minister of communications and information technology, said: “We are a favourite destination of both outsourcing and off-shoring because we have all the elements for success: good geographic location – situated at the centre of major cable routes – excellent multi-lingual skills, government incentives, business park facilities and a robust infrastructure among them.”

Ghana’s communications minister, Haruna Iddrisu, told WT ’09 delegates about Ghana’s buoyant economy and businessfriendly environment as big reasons to invest in the country’s fast-growing ICT sector. Ghana, too, fancies itself as an outsourcing hub. Over the next two years the government hopes to create thousands of jobs in areas like data management,

stakeholders to develop an enabling policy and regulatory environment as well as improve ICT infrastructure and networks, capacity building and applications and services."

The size of the challenge to make broadband more affordable in Africa – and other emerging markets – looks formidable.

ITU calculates that in Africa the ICT Price Basket – comprising fixed telephony, mobile and broadband services – represents 41% of the region’s monthly income. In Europe, where income levels are highest, the ICT Price Basket claims only around 2% of monthly income.

Of the three services in the ICT Price Basket, fixed broadband is by far the most expensive in emerging markets relative to income. ITU calculates that a fixed broadband connection in a developed country averages out at US$27.6 per month. In a developing country, on a purchasing power parity (PPP) basis, the price of a monthly fixed broadband connection shoots up to US$289.

But there is reason to believe that the broadband gap between developed and developing countries will be narrowed.

“Growth in emerging markets is the fastest it has ever been, and faster than developed countries where markets are becoming saturated,” says Mr Al-Basheer. “Focus and investment is heading towards developing countries.”

legal billing and back-office operations.

Mr Iddrisu believes the low cost of operating in Ghana will give it a big advantage over many rivals.

Egypt’s Dr Kamel echoed the sentiments of his counterpart from Ghana. “We want to create jobs for our young people,” he said, “but the developed countries can also benefit because by using us they can cut their own costs and be more efficient.”

Although four out of every ten people in Africa have a mobile phone, some countries are doing a lot better than others. Ghana, with a mobile penetration of around 70% is one such country. But with a sixth mobile operator poised to enter the market, and ARPU (average revenue per user) of just a few dollars a month, might investors feel that Ghana – and other relatively developed countries in Africa – is no longer such an attractive destination for investment?

They shouldn’t, says Mr Iddrisu, who says there is still a need for better fixed-line and no looking back Dr Hamadoun Touré, ITU Secretary-General, and Valery broadband services. Extending telecoms Timofeev, Director of the ITU Radiocommunication Bureau, during into rural communities is another potential the closing ceremony. investment opportunity. Kofi TotobiGabon, Niger, Nigeria, São Tomé and Principe and Sudan.

Quakyi, the chairman of Ghana’s National The CAB programme, which will be introduced in three Communications Authority, says WiMAX features prominently phases, is being supported through a partnership between the in the regulator’s plans for raising broadband penetration.

With foreign investors invariably nervous about the legal set- World Bank Group and the African Development Bank (AfDB). up in many emerging markets, Mr Iddrisu was keen to portray The programme also aims to leverage an additional US$98 Ghana as a safe haven. “Our government does not interfere,” he million from the private sector.

It was highlighted at the World Bank press conference at WT said. Both he and Mr Totobi-Quakyi sought to reassure investors at ITU Telecom World that Ghana’s regulatory authority was ’09 that the programme would bring much needed connectivity fully independent, and that legislation would protect their to Central Africa. Until now, people in Central Africa have the lowest quality and highest cost internet and telephone services investments.

The World Bank Group is certainly not easing up on its in Africa. The population pays up to two times more in monthly capital programmes for Africa. During ITU Telecom World, it internet rates than people living in other African countries, and up announced a $215m programme to bring low cost, open access, to three times more than those living in other parts of the world.

“This is very important to the countries involved and lies at high-speed internet to Central Africa.

The Central Africa Backbone Programme (CAB) will support the heart of their development strategies,” said Mary Bartonthe countries of the Central African region in developing their Deck, World Bank country director for Cameroon, Chad and high-speed telecommunications backbone infrastructure to Central African Republic. “It will assist countries to strengthen increase the availability of high-speed internet and reduce end- their enabling environment, create competition and ultimately user prices. It will also help countries harmonize the laws and increase access and lower the costs for end users.” A further regulations that govern the ICT sector to increase private sector programme for Western Africa is also in the pipeline,” says the World Bank investment and improve competition.

Three countries – Cameroon, Chad and Central African Republic (CAR) – are participating in the initial US$26.2 Capital attractions million phase of the programme. A further eight countries With more investment capital flowing towards Africa, these are also eligible to participate in the programme: Republic of are solid grounds for optimism that Africa can make up the Congo, Equatorial Guinea, the Democratic Republic of Congo, broadband gap with developed countries – in much the same

November 2009 AFRICA TELECOMS 65

way it is doing now with mobile phone connectivity.

And just as importantly as improved access links on the continent, Africa has the prospect of much more access – at lower prices – to international bandwidth. Several new international submarine fibre-optic cables along both the African west and east coasts are set to go live this year and 2010. In East Africa, the landing of the Seacom cable in Kenya in July 2009 marks the first time that fibre-based international bandwidth has been available in the entire region. On the west coast, several cables will be competing with the SAT-3/WASC cable, currently the only one serving that region.

Prices for international bandwidth in Africa, according to Paul Budde Communications, a consultancy firm, are set to plummet from several thousand US$ per Mb/s per month to a few hundred US$ – at least in countries where not only

Connecting communities Through its Telecommunications Development Bureau (BDT), ITU has developed a range of projects designed to drive ICT investment and development in Africa and other emerging markets. One of these projects was announced during ITU Telecom World 2009 – the ‘Connect a School, Connect a Community’ initiative, which was officially unveiled by UN secretarygeneral Ban Ki-moon.

The aim of the project is to support countries to connect all schools to broadband internet services worldwide. The idea is that connected schools can function as community ICT centres in developing markets, while also giving broadband

access in rural areas without the expense of rolling out individual connections.

Sami Al-Basheer, BDT director, accepts that encouraging private sector investment to connect rural areas, which are more expensive to reach than urban areas, can be tough at the best of times – even without an economic crisis. But there are solutions. “One way is to focus on community centre projects,” says Mr Al-Basheer.

“Individual connections in emerging markets are still a long way from reality.”

Hence the ‘Connect a School, Connect a Community’ project.

“We will be working closely with sister organizations in the UN family, specifically UNESCO and

66 AFRICA TELECOMS November 2009

the technology is in place but where there is also an enabling regulatory framework.

The economic benefits of ICT investment, already filtering through to some African nations, should encourage more governments on the continent to provide business-friendly environments. The initial success of Connect Africa, which has led to cheaper tariffs and job creation, certainly enthuses Mr Kagame, Rwanda president. “Connect Africa is vindication in our belief of private sector-led growth and development, and the importance of ICT – both as an industry in its own right and a facilitator for other sectors,” he told delegates at ITU Telecom World 2009.

When ITU Telecom World reconvenes in 2011 – again in Geneva – there should be more African ICT success stories to talk about. AT

UNICEF,” says Mr Al-Basheer. “Most importantly, however, we will be working with the private sector and governments to raise funds where we can to help establish these community projects.

Students can also benefit, but so can poor and needy people.”

These types of projects, combined with a growing awareness at governmental and regulatory level that ICTs can foster economic growth, is a source of optimism for Mr Al-Basheer that connecting everybody on the planet is within grasp. He adds: “The ICT sector may have slowed down a little bit in the financial downturn, but it was not really a major downturn and has done better than many

other sectors. This is because of the nature of the sector [people still need to communicate] and the importance that governments now attach to this sector as a basis for economic development.”

But there is no room for complacency. Work still needs to done to ensure business-friendly environments in all emerging markets. Towards that end, the ITU-backed Global Symposium for Regulators (GSR) is key for Al-Basheer and his team at BDT. The next GSR takes place in Beirut in November 2009. “We are very proud of these events,” he says.

“It’s where regulators can come together, exchange ideas and learn about best practice.”

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Botswana SUPPLY, INSTALLATION AND COMMISSIONING OF AN IP PBX SYSTEM Ministry of Lands and Housing Tender No. MTC/MLH/DSM/IP-PBX SYSTEM/634/17082009 Tenders are invited from suitably qualified companies to supply, install and commission an IP PBX system at the Department of Surveys and Mapping Headquarter.

Tender Documents can be obtained from Supplies Office, Department Surveys and Mapping. Private Bag 0037.Plot No. 1285, Station Road, Gaborone with effect from 26 October 2009.

A non-refundable deposit of P100 payable in cash or by bank guaranteed cheque - is required on collection of the tender documents.

Any queries for clarification should be addressed to the following person between 07:30 hours and 16:30 hours during weekdays.

Mr CB. Mokone, Ms P Kgosiyareng and Mr K Mantu. Telephone No. 3953251, Fax No. 3952704 E-mails cbmokone@gov.bw, pkgosiyareng@goc.bw and khmolefi@gov.bw Tenders should provide two (2) original documents marked ‘Original’ and three (3) copies of their Tender response in a plain sealed envelope to: The Secretary, Ministerial Tender Committee, Ministry of Lands and Housing, and to be deposited into a box at the reception, 2nd Floor, AKD House, Main Mall, Private Bag 00434. Gaborone.

Tenders shall be clearly marked “Tender No. MTC/MLH/DSM/ IP-PBX SYSTEM/634/17082009 – Supply Install and Commission an IP PABX System at the Department of Surveys and Mapping Headquarters.”

The Closing time for receipt of the tender offers shall be 10:00 hours on 24 November 2009 Tenders received after the closing date and time will not be accepted Telephonic, telegraphic, telex, facsimile or e-mail tenders will not be accepted. Tenders will be opened in the presence of tenderers wishing to attend.

The Public Procurement and Asset Disposal Board’s Standardised Conditions of Tender apply to this procurement, for which all the applicable Tender Data is contained in the Tender Documents.

Notwithstanding anything contained in the foregoing, the Government of the Republic of Botswana is not bound to accept the lowest or any tender, nor incur any expenses in the preparation thereof.

M. Tiro Ministerial Tender Committee Secretary, Ministry of Lands and Housing.

SOUTH AFRICA SUPPLY OF PUBLIC INTERNET SERVICES Airports Company South Africa Limited (ACSA ITB REFERENCE NUMBER: POP-14.09/2009 Airports Company South Africa

68 AFRICA TELECOMS November 2009

Limited (ACSA) invites interested and suitably experienced Tier 1 Bandwidth Service Providers to submit priced bids for the installation of Points of Presence (POP) at OR Tambo International Airport, Cape Town International Airport and the new international airport at La Mercy lo provide wireless hotspots, introduce Voice Over Interne! Protocol (VOIP), internet service provision and Multiprotocol Label Switching Virtual Private Network (MPLS VPN) at ACSA airports in South Africa.

Bid Presentation: A non-compulsory Bid Presentation will be held at 14h00 on Monday 02 November 2009 at the InterContinental Hotel Johannesburg (Mezzanine Floor), OR Tambo International Airport.

Collection of Bid Documents Electronic copies of the bid documents will be made available via a URL from 28 October 2009 to 09 November 2009 weekdays only upon payment of a nonrefundable deposit (bank and EFT deposits only) of R2 000.00, The monies should be deposited into ACSA’s bank account Details are as follows: Nedbank, Branch code 198742. Account Number: 1987339282.

Account holder: Airports Company South Africa (please quote Ref. Number; POP-14.09/2009).

Valid proof of payment will be required prior to bid documents being forwarded to bidders.

Submission Closing Date: Bid Submission will close at 12h00 on 23 November 2009.

Enquiries and Contact Information: Bidders are encouraged to forward their enquiries prior to

the Briefing Session using only fax: +27 86 535 9125 or via E-mail: Procurement.Corp@acsa. co.za Enquiries will close at 16h00, 13 November 2009.

Pre- qualification Criteria: 1. Bidders must be a Tier 1 Bandwidth Service Provider 2. Bidders must be in possession of a current ECNS or PTN license.

3. Bidders must meet the minimum monthly guaranteed rental specified in the ITB. 4. Bidders must meet the minimum revenue share specified in the ITB. 5. Local Bidders must have a valid SARS Tax Clearance Certificate 6. Local Bidders must be a minimum Level 4 B-BBEE contributor verified in accordance with the Codes of Good Practice for B-BBEE issued by the DTI. Valid certification is to be submitted ACSA Corporate, Procurement Services. E-mail: Procurement.

Corp@acsa.co.za Facsimile: +27 36 535 9125 www.acsa.co.za

SOUTH AFRICA FIXED AND REMOTE BROADCASTING UNITS ICASA Open bidding process: Bid Number: ICASA 44/2009 Appointment of a supplier who will supply, deliver. Install and commission 8 x (eight) Fixed Broadcasting Monitoring units and 16 x (sixteen) Remote Broadcasting units with associated client/server software providing unattended recording and togging of stations, associated hardware and antennas,

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Marwan Zawaydeh, CEO, Vtel Holdings

Kamal Shehadi Chairman, TRA Republic of Lebanon

Alan Horne, Director General, TRA Bahrain

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Tenders configured In such a manner as to allow at least 8 x (eight) Radio Stations to be monitored per unit in the- Frequency range 87-108 MHz. A total of at least 192 Radio Stations are to be monitored and continuously recorded for a period of 65 days.

Hard copies of the bid document will be available on Friday, 30 August 2009 and obtainable at ICASA, 164 Katherine Street, Pin Mill Farm, Block B, Sandton, Johannesburg, South Africa, and a soft copy of the bid document will be available on the ICASA website: www.icasa.org.za on the same day.

Compulsory briefing session will be held as follows: Date: Wednesday, 11 November 2009. Time: 10:00-11:00. Venue: ICASA, Block C, Presentation Room.

(No Bidder will be allowed to respond to bid if they did not attend the compulsory briefing session) Bids must be deposited in ICASA’s bid box on or before Thursday, 26 November 2009 not later than 11:00am (South African Time).

No late, electronic, scanned and facsimile submissions will be accepted. The bid box is situated at the reception area of ICASA, Head Office, 164 Katherine Street, Pin Mill Farm Block B, Sandton, Johannesburg, and is accessible for twenty-four (24) hours.

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IMPLEMENTATION OF AN ELECTRONIC CARGO TRACKING SYSTEM (ECTS) [IFB No. TMP/ PG/08/24] Tanzania Revenue Authority: Tax Modernization Program This invitation for Bids follows the General Procurement Notice for this Project that appeared in Development Business, issue no.

689 of 31st October 2006.

The United Republic of Tanzania has received funds from Development Partners toward the cost of Tax Modernization Program and it intends to apply part of the proceeds of this funds to payments under the contract for the Supply, Configuring and Implementation, of an Electronic Cargo Tracking System (ECTS. The Tanzania Revenue Authority (TRA) now invites; sealed bids from eligible and qualified bidders for the Supply, Configuring and Implementation, of an Electronic Cargo Tracking System (ECTS) as follows.

Bidding will be conducted through the International Completive Bidding (ICB) procedures specified in the World Banks guidelines; Procurement under IBRD Loans aid IDA Credits, and is open to all bidders from Eligible source countries as defined in the Guidelines that meet the following minimum Qualification criteria Qualifications: Requirements include, among others, the following: Bidders must submit copies of certified ban statements covering the period of 12 months ending one month before the deadline for the submission of bids.

70 AFRICA TELECOMS November 2009

Bidders must provide audited financial reports of the last three years The or his local agent shall have at least 3 (three) years of experience in the supply, configuring and implementation of an electronic cargo tracking system (ECTS) with adequate and proven after sale Technical Support facilities in Tanzania If at the time of bidding the Bidder does not have adequate and proven after sale Technical Support, then the bidder shall submit his plans for setting up such facilities in Tanzania in the event of award of the contract and as to how he proposes to carry out testing and provide after sale technical support services until such facilities are set up in Tanzania by the bidder.

Interested eligible Bidders may obtain further information from Tanzania Revenue Authority Headquarters and inspect the bidding documents at the address given below from 8am to 5pm.

A complete set of Bidding Documents in English may be purchased by interested bidders on the submission of a written application bearing the name of the firm, e-mail, postal address, fax and telephone to the Address indication or cash to Tanzania Revenue Authority. The bidding documents will be sent by airmail or courier for overseas delivery and surface mail or courier for local delivery. Tanzania Revenue Authority will not be held responsible and accountable for any delays or non-receipt of the bidding documents. Any authorized person may collect bidding documents from the Address given below.

Bids must be delivered to the

address below at or before 10:00 hours local time on Wednesday November 18, 2009. All bids must be accompanied by a bid security of not less than United States Dollars five thousand ($5,000) or an equivalent amount in a freely convertible currency. Late bids will be rejected, Bids will be opened in the presence of the Bidders representatives who choose to attend at TRA Boardroom located at third floor TRA Headquarters immediately after the deadline for submission date.

The attention of prospective bidders is drawn to (i) the fact that they will be required to certify in their bids that all hardware is genuine and software is either covered by a valid licence or was produced by the bidder and (ii) violations are considered fraud, which is, among other remedies, punishable by potential blacklisting from participation in future World The Addresses referred to above are: Secretary to TRA Tender Committee Tanzania Revenue Authority TRA Headquarters Room No. G15, Ground Floor PO Box 11491 Sokoine Drive Dar Es Salaam, Tanzania Tel: +255 22 2119591/4 Fax: +255 22 2128594 E-mail: secretarytratender@tra. go.tz; info@tra.go.tz

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November 2009 AFRICA TELECOMS 71

THE LAST WORD

SA broadband survives on a wing and a prayer The Unlimited Group, grew fed up with its retarded Telkom ADSL service.

S

TEP ASIDE Tiger Woods, here comes Winston, the data-carrying racing pigeon that’s already put Telkom’s ADSL service to shame. Well, sort of... As some of you might have heard, Winston set off in early September for a brief flight – by racing-pigeon standards – between Howick and Hillcrest, outside Johannesburg, with 4GB of data strapped to his leg.

His opponent may as well have been a rat for all the chance it stood of winning this rather absurd exercise. But, it was Telkom’s ADSL service that was being put to the test after financial services group, The Unlimited Group, grew fed up with its retarded Telkom ADSL service. It uses this network to transfer data between its call centre and branch offices.

Given that it’s a 512kbps line, there was no surprise when Winston completed the transfer way ahead of its digital adversary, at a very respectable rate of around 1Mbps. But, this was always going to be no more than a publicity stunt, that amounts to no more than an exercise in futility. Ironically, the instigator of the race has hardly escaped scott-free, being shown up as technologically deficient for not investing in a faster service – as Telkom has previously advised it to do, the operator claims.

It does however raise the question: for how much longer can SneakerNet (PigeonNet, if you will) trounce the advances in data transfer technologies? SneakerNet is the tongue-incheek reference to the hand-to-hand transfer of data, which remains a far more efficient way to transfer large amounts of data, although latency, of course, is practically non-existent.

72 AFRICA TELECOMS November 2009

Whether its a 4.7GB DVD being carried across the office to a colleague, or a 747 Jumbo jet packed full of Blu-ray disks, this type of manual transfer makes even Winston look like one of London’s famed ‘rats with wings’ weighed down by former Mayor Ken Livingston’s mayoral chains. The truth is that file size and data requirements have outstripped the capacity of many networks. Especially so in South Africa where the only thing slower than the broadband networks is the SAPS’s response rate.

Hopefully the moves by the Department of Communications to set firm policy in place will combine satisfactorily with new access becoming available through the spate of undersea cable connections. But while the industry ponders these issues and business and consumers cry for affordable and faster connectivity, Winston will be pondering a future of flight unencumbered by Gigabytes of data strapped to his leg. And if he is to live up his true destiny – considering his fame at such an early age – he could well be sharing a million-dollar platform with Tiger Woods at Sun City while earning his biggest pay check. See, the Sun City Million Dollar Pigeon Race is scheduled for January next year in which 4,300 birds will be flying 550km for a share of the $1,3-million prize money. The overall winner takes home $200,000 while runners up win … wait for it … not an Internet connection, but a car.

And as the SneakerNet argument has shown, a car is a far superior data transfer method – so, can we assume the race organisers are trying to take a further dig at Telkom?

Johann BARNARD