Africa Telecoms - Feb 2010

AFRICA TELECOMS

public private partnerships

TOP 10 for 2010

Companies to watch in the year ahead

making it work for the people

Michael Joseph ISSUE 3

Thought leadership Interview

Transforming Telecom Networks.

What does it take to stay at the forefront of your market?

The right partnerships will enable you to focus on your core business .

Improved competitive edge backed by the operational experience of a global Telco Total Cost of Ownership (TCO) reduction enabled by committed cost optimization Managing complexity through improved process efficiency Business agility driven by accelerated go-to-market rollout

Tata Communications Transformation Services (TCTS) delivers a range of Service Offerings across Network Engineering, Service Fulfillment and Service Assurance. We also assist our clients in the planning, migration & rollout phases of emerging technologies such as WiMAX & NGN. To know more about us, visit www.tatacommunications-ts.com

Š Tata Communications Ltd. Tata is a registered trademark of Tata Sons Limited used under licence by Tata Communications Ltd.

We will be happy to help you grow your business. Please feel free to reach us at transformation@tatacommunications.com for any further information.

DDB SA 30797

Send Money

Helping you send money to loved ones.

Voted the top r etail bank in the Sunday Times Top Brands S urvey 2009

First National Bank - a division of FirstRand Bank Limited. An Authorised Financial Services and Credit Provider (NCRCP20).

CONTENTS

February 2010

14 Calendar

04 Guest Editorial

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

Dr. Henry Chasia, Executive Deputy Chairperson of the NEPAD e-Africa Commission.

06 News

16 Regulator Speaks Dr Amr Badawi, Executive President, NTRA, Egypt

The latest local and global telecoms news.

18 Gadgets

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

p.22

Michael Joseph Thought Leadership p.26 Access for Africa An in-depth look at technology, infrastructure and services in Africa.

The CEO of Safaricom recounts some of the successes and highlights in transforming the company from state owned to private.

p.34

Special Report: Top 10 for 2010 Africa Telecoms presents the companies to watch out for in the year ahead.

40 Statistics 42 Dial PPP Africa Telecoms to Connect 54 Meeting presents statistics the Poorest Africa's and data on Public Private Partnerships. Extending ICTs to infrastructure Africa’s remote and needs rural areas.

Africa remains one of the 50 most exciting regions in Untangling which to do business.

ICT by 58 Changing 2020 Face of ICT A project of national importance by the South African Communications Forum is underway.

62 Zamtel

What's in store for the winning bidder.

65 Haiti

The world helps confront the calamity.

69 PPP Disputes

PPPs in ICT in Africa have paved the way for a communication revolution.

Efforts by the public and private sectors to work together don’t always have a happy ending.

60 Q&A

72 Last Word

Mark Williams, Senior Economist, World Bank.

Forgetting to renew annual licenses can be costly.

AFRICA TELECOMS Executive Editor Mohammed Khan mkhan@3ipublishing.co.za

Designer Alexander Flemming xflemming@3ipublishing.co.za

Managing Editor Bradley Shaw bshaw@3ipublishing.co.za

Web Development Wilbur Taute

Sales Director Sarah Theron stheron@3ipublishing.co.za Printing Tandym Press

Publishing Consultants SchreiberFord Publications Contributors Ken Wieland, Lesley Stones, Leslie Pean, Brett Haggard, Johann Barnard, Protea Hirschel, Thabiso Mochiko

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

Unit 10, Planet Art 2, 32 Jamieson Street, Cape Town 8001 T: +27 21 426 5590 E: info@3ipublishing.co.za www.3ipublishing.co.za www.africatelecomsonline.com BPA Worldwide Business Publication Audit Membership Applied for – October 2009.

Guest Editorial

Dr. Henry Chasia

Executive Deputy Chairperson of the NEPAD e-Africa Commission The NEPAD e-Africa Commission is the NEPAD Task Team responsible for developing policies, strategies and projects for the African Continent, as well as managing the structured development of the ICT sector in the context of NEPAD. The NEPAD e-Africa Commission, under the auspices of the African Union and NEPAD, exists to accelerate the development of the ICT sector in Africa so that every African can play his or her role in the Global Information Society and Knowledge Economy.

How can Africans take their place in the Global Information Society and Knowledge Economy? Africa needs to develop fast, high capacity and reliable ICT infrastructure for communication as well as ensuring that Africans have access to the best ICT technology. Africans should have access to applications that are relevant to their context and ways of working and that help them to make the most of the opportunities that an excellent ICT infrastructure will afford. The NEPAD e-Africa Commission is working to address each of these requirements through the NEPAD ICT Infrastructure Project, the NEPAD e-Schools Initiative and the Africa Payment Gateway Project.

Each of these initiatives represents a massive undertaking both in the scale of the project and its cost. For example, the NEPAD e-Schools Initiative aims to transform an estimated 650,000 primary and secondary schools throughout the African continent. The project will deliver ICT skills to more than five million teachers and more than 150 million pupils in Africa. The cost of the project was estimated at US$240 billion in 2008. It is easy to doubt the feasibility of the undertaking when faced with such large figures.

It is encouraging, therefore, that the African continent is once again demonstrating the power of partnership in achieving the “impossible”. Whether it was the simple act of building homes or schools or the painful process of liberating nations from colonial rule Africans worked together to do what had to be done. The NEPAD e-Africa Commission is helping the private sector and the public sector to join together in delivering the dream of NEPAD e-Schools across the African continent.

Sixteen African countries signed up to transform at least six secondary schools in each country into NEPAD e-Schools. In

4 AFRICA TELECOMS February 2010

2003 the NEPAD e-Africa Commission initiated the Information Society Partners for Development (ISPAD) programme; in this programme more than 50 companies and NGOs were harnessed to participate, along with the governments of 16 countries, in the NEPAD e-Schools Initiative Demo project. The 50 companies organized themselves into five consortia, each led by the corporate heavyweights AMD, Cisco, HP, Microsoft and Oracle. Over a period of four years, more than US$30 million dollars was spent

in transforming 80 community schools into NEPAD e-Schools. A public-private partnership on this scale revealed many challenges, but it also showed the power of partnership to accomplish what it would be difficult to attain in any other way.

Public-Private partnerships are not a panacea. However, given the right objectives, the right organization and the right rules of engagement, they can deliver results for Africa’s priority undertakings. We at the NEPAD e-Africa Commission learned valuable lessons from the Demo experience, lessons that we are carrying forward into new public-private partnerships that will build the infrastructure and applications necessary to move Africa’s Information Society and Knowledge Economy from pipe dream to reality. We urge Africa’s private sector to become key players in our initiatives so that we can all reap the potential of ICT on the African continent. AT

Global Leaders in Radio Communication

• WiMax in Licensed and Unlicensed frequency bands • Icom Digital Two-way Radio

Talk2us - www.talk2us.co.za - CE#387

• Microwave Backhaul Wireless Access

Yo u r S i n g l e W i re l es s C o n n e c t i o n . A touch of Genius.

Multisource Telecoms (Pty) Ltd Rochelle Jordaan SA Dealer Sales Executive Telephone +27 (0)11 321 0333 Fax +27 (0)11 440 3539 Email info@multisource.co.za

Multisource Western Cape: Samantha Van Jaarsveld Telephone Fax Mobile

www.multisource.co.za

SA Dealer Sales Executive +27 (0)21 555 1574 +27 (0)21 551 0221 +27 (0)76 483 3580

News

Africa’s first in-flight Wi-Fi South African independent wireless broadband provider WirelessG has announced that it will be introducing Africa’s first in-flight WiFi service within the year, contingent on Civil Aviation Authority approval. The service is being made available on domestic and long-haul flights through the provider’s exclusive agreement with US-based Row 44 that is already offering in-flight Wi-Fi Internet to Southwest Airlines and Alaska Airlines. The company is already in negotiations with local airlines, although further details are still expected on which carriers will offer the service. Company MD Carel van der Merwe says the new solution will be available to all passengers on participating flights for a fee, while G-Connect users can benefit from the service as they will be able to use their current G-Connect accounts onboard the aircraft.

Comviva shortlisted for two Global Mobile awards Comviva, the leading provider of mobile VAS solutions in emerging markets, has been shortlisted for the GSMA’s prestigious Global Mobile Awards for its Virtual SIM and mobiquityT mobile money solutions for ’Best Use of Mobile for Social & Economic Development’ and 'Best Mobile Money for the Unbanked’ Service respectively. The winners will be announced at the Mobile World Congress in Barcelona in February 2010. Comviva’s Virtual SIM solution enables people unable to afford a handset to make and receive calls, send and receive SMSs and make remittances, virtually, using other people’s phones and without the need for a SIM. Today, these consumers are anonymous users, who find it difficult to make and receive calls and for whom it’s practically impossible to receive text messages or make mobile payments. With Virtual SIM they are an identified subscriber, with their own phone number and virtual phone account. The solution requires no special handsets, SIM cards or additional client software – and works instantly on all mobile handsets.

Comviva’s mobiquityT platform has been widely deployed by over 40 service providers globally.

Manoranjan Mohapatra, CEO of Comviva said, “We are delighted to have been shortlisted for these prestigious award categories as they are representative of our vision of changing lives. This is among the most prestigious global awards for the mobile industry. To be recognized in this manner is indicative of the strength and relevance of our solutions.”

SA internet growth The number of South African Internet users has passed the five-million mark for the first time, finally breaking through the 10% mark in Internet penetration, according to the Internet Access in South Africa 2010 study, conducted by World Wide Worx. This represents growth of 15% in 2009 over the previous year, with similar growth projected for 2010.

“The good news is that we will continue to see strong growth in 2010, and we should reach the six-million mark by the end of the year,“ said Arthur Goldstuck, MD of World Wide Worx. The company says subscriber growth in South Africa was relatively stagnant from 2002 to 2007, when penetration levels never rose above 7%. This changed, however, in 2008 with growth figures doubling and continuing on the same trend in 2009. This was due in

part to the granting of Electronic Communications Network Service licenses to more than 400 organisations, meaning they were now able to build their own networks and no longer tied into restrictive agreements with large providers such as the semi-privatised Telkom. The landing of the Seacom undersea cable last year was another catalyst that spurred on growth.

World Wide Worx found that growth over the past two years has also been driven by the continued uptake of broadband connectivity by small and medium enterprises migrating from dial-up connectivity. “In the coming year, operators will begin to leverage the combination of new undersea cable capacity and new fibre-optic networks to supply corporate clients and resellers with bigger, faster and more flexible capacity,“ said Goldstuck.

>> Asia and the Pacific and Europe have the greatest numbers of mobile broadband subscriptions. >>

6 AFRICA TELECOMS February 2010

News

Openwave collaborates with African partner Openwave Systems has joined forces with Digital Solutions Group (DSG) that will allow it to reach African operators with its contextaware mobile Internet mediation and mobile analytics products.

This will enable mobile operators to cost-effectively monitor, manage and monetise the mobile Internet in emerging and growth markets. “DSG consistently identifies innovative companies that have a proven track record of providing winning solutions for partners and customers,” said Yaron Assabi, CEO, Digital Solutions Group. “Our strengths in providing professional value-added services, combined with Openwave’s mobile internet mediation solutions provides a compelling combination that we expect will be unparalleled by competitive offerings.”

The initial roll out of the software solution will be powered by the Openwave Mobile Internet ReadySet – a low-cost, prepackaged platform that provides operators with a central point from which to offer new, revenue-generating, mobile Internet services. This will be accompanied by Openwave Mobile Analytics that provides deep analytics and rich reporting for mobile devices, as it is designed to offer network operations managers and marketing executives a clear view across all aspects of mobile data activity. Both solutions are specifically packaged for smaller operators seeking a fast return on investment.

Nokia calls on creative developers Nokia has announced its Calling All Innovators 2010 development contest that aims to inspire creativity and change. Submissions are being called for in four categories, namely eco/being green, productivity, life improvement and entertainment. “With Forum Nokia’s community – more than four and a half million developers strong – we’re challenging those, particularly in emerging markets, to create educational tools that make a positive impact,“ said Jeffrey Fleishman, assistant vice president for Media Distribution Business Development, Sesame Workshop. “Our goal is to find some partners with which we can work to extend the power of Sesame Street to new platforms and places.” Sesame Workshop, the creators of Sesame Street, have been appointed by Nokia to judge the entries and provide assistance where needed. The collaboration will encourage developers to create educational applications, and possibly utilise the Sesame Street characters, for consumers around the world.

With an expertise in using media to reach children, Forum Nokia is looking to mobile as the newest distribution channel of literacy-based content through accessible mass media. One example was the regional Calling All Innovators Africa contest which took place from July 2009 and the winners were announced in early December 2009. The Calling All Innovators Africa competition called for South African and African developers to create locally relevant applications and solutions for the Ovi Store.

>> Even the country furthest behind (Myanmar) in terms of mobile cellular penetration is where Sweden was just 24 years earlier. >>

February 2010 AFRICA TELECOMS 7

News Rwanda joins the CTO as a Full Member Country

East Africa set for mobile growth Research firm Frost & Sullivan predicts that the mobile communications markets of Kenya, Tanzania, Uganda and Rwanda are in their growth stages and are expected to reach revenues of US$8.99 billion in 2015 from US$2.62 billion in 2008.

“The key drivers in these markets include strong gross domestic product growth rates, increasing demand for mobile money transfer services and declining handset costs,” says Frost & Sullivan Research Analyst Jiaqi Sun. “East African consumers are spending more on mobile communications due to the low fixed-line network coverage, underdeveloped banking systems, and the current limited availability of inexpensive handsets.”

Frost & Sullivan expects market penetration in this region to grow from around 37.6 million mobile subscribers to 99.5 million in 2015, at a compound annual growth rate of 14.9%.

“The launching of undersea cables is anticipated to reduce the cost of telecommunications by 60% over the next seven years,” says Sun. “This will boost the demand for mobile Internet access.”

The firm identifies high tax rates on mobile services, the lack of network rollout in rural areas, the current low demand for data services as well as low corporate demand as challenges that still need to be overcome.

“Frost & Sullivan expects mobile network operators to enhance their services by continuously investing in infrastructure like call-switching capacity,” says Sun. “This will help in developing innovative solutions like mobile money transfer services, and initiate managed services by outsourcing non-core businesses like network maintenances. These strategies will step up the demand for mobile services, boosting subscriber and revenue growth.”

The Republic of Rwanda joins the Commonwealth Telecommunications Organisation’s Full Country membership to enhance socio-economic development through ICT potential. The membership will give the Republic of Rwanda the opportunity to utilise CTO’s existing networks and capabilities to the maximum, with the ability to shape the organisation’s future through its seat at the CTO Council. Welcoming Rwanda to the CTO family, Dr. Ekwow Spio-Garbrah said, “It is pleasing to note Rwanda taking its rightful place at the CTO Council at a time when the Global ICT community is facing some challenges. Rwanda is a shining example of a nation rising from the ashes of a civil war to a modern day ICT powerhouse.

The speed with which Rwanda has seized the opportunity to imbibe ICTs for socio-economic development has indeed been impressive. The formalisation of the relationship between the CTO and the Republic of Rwanda bodes well not only for Rwanda but also for the entire Commonwealth of Africa. It is with great pleasure and anticipation that we look to the future of an ever growing CTO family and fostering closer links between these nations.”

>> In Africa, the cost of the ICT Price Basket represents 41 per cent of the region’s monthly average income >>

8 AFRICA TELECOMS February 2010

Vinaphone sticks with Motorola in network expansion Vinaphone, a subsidiary of Vietnam Posts and Telecommunications Group, has signed contracts with Motorola’s Home & Networks Mobility business to expand its GSM network.

The new deployment of more than 3000 sites will extend the network operator’s 2G network coverage and capacity in the southern and northern provinces of Vietnam over the next two years, including the densely populated cities of Hanoi and Ho Chi Minh City.

“With a strong relationship stretching back some 12 years, we are very pleased to continue our long-term co-operation with Vinaphone and to be able to ensure mobile users in Vietnam continual access to high-quality mobile services,” said Dr. Ray Owen, general director of Motorola Vietnam.

“The new deployment will extend coverage and increase the capacity of Vinaphone’s GSM network, meeting the rapidly growing demand for mobile communications services in the country. The contracts reinforce our leading position in Vietnam’s telecom market and our commitment to delivering scalable and quality mobile networks for Vinaphone to strengthen its position in the Vietnam market.”

Global

Mobile app stores set to exceed $6.2 billion in 2010 Consumers will spend $6.2 billion in 2010 in mobile application, stores while advertising revenue is expected to generate $0.6 billion worldwide, according to US research firm Gartner. Mobile application stores will exceed $4.5 billion downloads, of which 82% will be free to end users.

“As smartphones grow in popularity and application stores become the focus for several players in the value chain, more consumers will experiment with application downloads,” said Stephanie Baghdassarian, research director at Gartner. “Games remain the No. 1 application, and mobile shopping, social networking, utilities and productivity tools continue to grow and attract increasing amounts of money.”

Worldwide mobile application stores’ download revenue exceeded $4.2 billion in 2009 and will grow to $29.5 billion by the end of 2013, Gartner predicts. Advertising-sponsored mobile applications will generate almost 25% of mobile application stores’ revenue by 2013.

“Growth in smartphone sales will not necessarily mean that consumers will spend more money, but it will widen the addressable market for an offering that will be advertising funded,” said Baghdassarian. “The value chain of the application stores will evolve as rules are set and broken in an attempt to find the most profitable business model for all parties involved.” The research firm predicts that application stores will be a core focus throughout this year for the mobile industry and applications themselves will help determine the winner among mobile devices platforms.

>> In the UK more than one in 10 households presently don’t enjoy a 2Mbps connection. >>

February 2010 AFRICA TELECOMS 9

Global Motorola to broaden content security offering Motorola has signed an agreement to acquire SecureMedia, a developer of software-based digital rights management (DRM) and security systems for IP video distribution and management and which will fall into its Home & Networks Mobility business, once concluded.

SecureMedia develops and markets software systems for securing the distribution of digital entertainment over multiple platforms to multiple devices, including set-top boxes, wireless handsets, PCs and portable entertainment devices.

The acquisition will enable Motorola to enhance its content security product portfolio by providing both stand-alone and integrated software security solutions to IP video customers.

“Motorola continues to invest in our video infrastructure solutions as our customers evolve their networks to handle the explosion in consumer demand for video,” said John Burke, senior vice president, Motorola Home & Networks Mobility business. “SecureMedia has superior expertise in IP-based video security and digital rights management -- critical capabilities for the emerging Internet Era of Television, where video content is mobilized across the three screens of TV, mobile phone and PC.” “As part of Motorola, the SecureMedia team will continue to expand the reach of our award-winning digital security solutions by gaining

new customers and partners in business segments such as cable; and we will also continue to support our current customers and partners,” said Fred Ellis, chief operating officer for SecureMedia. “We’re thrilled to become a part of Motorola, a major global video leader.”

TeliaSonera goes Nordic TeliaSonera says it expects to roll out 4G services in Sweden and Norway during this year, using Ericsson’s network hardware, including LTE radio access.

“We have chosen Ericsson to deliver TeliaSonera’s 4G core network and further radio network rollout in Sweden and Norway based on their high quality technology and competitive offer,” said Lars Klasson, senior vice president and CTO, Business Area Mobility Services at TeliaSonera.

“Our customers are the first in the world to use commercial 4G services. The use of mobile broadband in the Nordic region is exploding and we offer 4G to meet the demand for high speed and capacity.”

The national rollout follows the network operator providing the first and largest LTE service, in Stockholm, which was also based on Ericsson’s system. The vendor says that in addition to TeliaSonera, it has signed commercial LTE contracts with three other major operators, including Verizon Wireless and MetroPCS in the US, and NTT DoCoMo in Japan. >> In Egypt, local loop unbundling for DSL access was introduced in 2002 to kick-start broadband uptake, but real growth occurred only after a 50% tariff cut for unbundling >>

10 AFRICA TELECOMS February 2010

Global

IT budgets expected at 2005 levels IT budgets will essentially be flat in 2010, increasing by a weighted global average of 1.3% in nominal terms, compared with 2009 levels where IT budgets declined 8.1%, according to the January 2010 worldwide CIO survey by Gartner Executive Programs (EXP).

Last year is considered to have been the most challenging for the ICT sector since the survey began in 1999, with budget cutbacks resulting in CIOs having basically the same level of resources this year as they had in 2005.

“2009 was the most challenging year for CIOs in the corporate and public sectors as they faced multiple budget cuts, delayed spending and increased demand for services with reduced resources,” said Mark McDonald, group vice president and head of research for Gartner EXP. “This is set to change in 2010, as the economy transitions from recession to recovery and enterprises transition their strategies from

cost-cutting efficiency to value-creating productivity.”

The results of the survey show that, in the near term, business expectations and CIO strategies appear stable, with a continued focus on business process improvement, cost reduction and analytics.

Gartner says business expectations are shifting from a focus on greater cost-based efficiencies, to achieving better results based on enterprise and IT productivity. These gains will come from collaborative and innovative solutions that take advantage of new ’lighter-weight’ services-based and social media technologies, including virtualisation, cloud computing and Web 2.0 social computing.

Moreover, the technologies that CIOs are prioritizing in 2010 are technologies that can be implemented quickly and without significant upfront expense, instead of investing millions of dollars to get millions in benefits.

>> The Australian Government has established a company that will invest up to AUS$43 billion to operate a wholesale-only, open access National Broadband Network >>

February 2010 AFRICA TELECOMS 11

Global Nokia throws down the navigation gauntlet Nokia has upped the ante in its bid to deliver user-friendly services, announcing that it will make walk and drive navigation free on its smartphones as part of a new version of Ovi Maps. The move is believed in some quarters to mark a change in the navigation market that could well challenge traditional GPS vendors for market share.

The new version of Ovi Maps will include all car and pedestrian navigation features, such as turn-by-turn voice guidance for 74 countries in 46 languages, and traffic information for over 10 countries, as well as detailed maps for more than 80 countries.

“We want to make using your mobile for navigation as familiar as using it to send a text or take a picture. We believe that making the best maps with voice guided navigation available for free will be the catalyst to do this,” explained Anssi Vanjoki, executive vice president, Nokia.

“Why have multiple devices that work in only one country or region? Put it all together, make it free, make it global and you have something that is truly useful and can help you get round almost any city in the world whether you’re on foot or driving.”

Ovi Maps is immediately available for download for 10 Nokia handsets, including the popular Nokia N97 mini, Nokia 5800 XpressMusic and Nokia E72, with more Nokia smartphones expected to be added in the near future. Nokia said all its new Nokia GPS-enabled smartphones would include the new version of Ovi Maps from March 2010, pre-loaded with local country map data, with high-end walk and drive navigation and access to Lonely Planet and Michelin travel guides at no extra cost.

New EU telecoms regulator gets to work Today marks the start of a new era for telecoms in the EU. The telecoms regulators of the 27 EU countries will meet for the first time in Brussels as members of the new Body of European Regulators for Electronic Communications (BEREC). The new European telecoms regulator BEREC has been established following the adoption by the Council and Parliament of the new EU Telecoms rules in December 2009. With 12 fixed and 10 mobile telecoms companies offering services in many other EU Member States and hundreds of service providers operating across borders, BEREC is expected to play a crucial role in the single telecoms market and regulation across Europe. “The establishment of the EU telecoms regulator is an important milestone for telecoms in Europe,” said Viviane Reding, the EU Telecoms Commissioner who

proposed the creation of the body in 2007. “Indeed, Parliament, Council and the Commission all agreed that Europe’s Single Telecoms Market needs BEREC. The new body will help national telecoms regulators and the European Commission to provide consistent rules and competitive conditions across the EU. This will boost European telecoms services, which are evolving rapidly in areas like mobile internet and can become a major driver of economic recovery in Europe.”

“The first meeting of BEREC will be a step in the right direction for a more competitive telecoms market in Europe. I look forward to seeing real progress in developing further the European single market in telecoms and, in particular, to the positive impact that it will have for Europe’s 500 million citizens,” said Neelie Kroes, the EU Competition Commissioner.

>> The first telephone network in Barbados was developed in 1884 and played an importain role as a crucial link in the trans-Atlantic communications network >>

12 AFRICA TELECOMS February 2010

Global

BlackBerry extends IBM integration BlackBerry maker Research In Motion has extended the services and integration via its smartphone with IBM’s Lotus Software. The BlackBerry Client for IBM Lotus Quickr, enables secure mobile access to IBM’s document-based collaboration software from BlackBerry smartphones, while updating its BlackBerry Client for IBM Lotus Connections for enterprise social networking.

“Just as RIM securely and efficiently mobilised Lotus Domino email on the BlackBerry platform, we are mobilising collaboration and social networking for businesses,” said David Yach, CTO for Software at RIM. “We have built these powerful BlackBerry applications

for Lotus Software in order to make it very easy for mobile workers to tap into their enterprise knowledge-bases and stay connected with colleagues; and, equally important, we have made it easy for IT departments to align with corporate policies and efficiently deliver these capabilities in a protected and manageable environment.”

The BlackBerry Client for IBM Lotus Quickr makes content sharing easy and secure, allowing BlackBerry users to quickly and easily navigate IBM Lotus Quickr libraries and folders; upload, preview or download content; and edit files within Quickr’s version controls.

The application also tightly integrates

with the BlackBerry Email application and the Documents To Go suite on a BlackBerry smartphone – allowing users to edit Microsoft Word, Excel and PowerPoint files – for a robust and seamless work experience.

The BlackBerry Client for IBM Lotus Connections extends key IBM Lotus Connections components to BlackBerry smartphones, including the ability to work with IBM Lotus Connections Profiles, Communities, Bookmarks, Activities and Blogs. The Client also tightly integrates with core BlackBerry smartphone applications for phone, email, browser, tasks, contacts and camera to create a seamless and intuitive user experience.

>> By 2011 it is expected that most wireless companies will launch 4G Broadband networks >>

February 2010 AFRICA TELECOMS 13

The regulator speaks Public-Private Partnerships – A Story of Success

Dr. Amr Badawi, Executive President, National Telecommunication Regulatory Authority (NTRA), Egypt Africa Telecoms provides a regular platform to a telecommunications regulator from across the African continent to highlight their aims and goals from a regulatory perspective.

H

istorically, the term “public utility”, including the telecoms sector, has been associated with the role of government as a sole player. Nevertheless, the real rebound of the ICT sector has become manifest ever since liberalization was introduced. The NTRA has been playing, and will continue to play, a pivotal role in fostering the development of the ICT sector in Egypt through a continuous process of liberalization and deregulation of the sector, in order to augment the local and foreign investors participation in this sector within a Public-Private Partnership framework.

Public-private partnerships (PPPs) are a contractual arrangement whereby the resources, risks and rewards of both a public agency and private company are combined to provide greater efficiency, better access to capitals, and improve compliance with a range of governmental regulations.

Towards such goals, and since the early days of the Ministry of Communications and Information Technology (MCIT) and NTRA, it was decided to adopt a multi-stakeholder strategy towards the development of the ICT sector in Egypt. The invitation for participation was met with confidence and the trust of the stakeholders, whether they were public operators, governmental agencies, private operators or even international suppliers. Collectively they recognized that a Master Plan was called for to orchestrate the various roles of all parties,

16 AFRICA TELECOMS February 2010

with the ultimate goal of developing the telecommunications sector. The Free Internet Initiative represents a success story of PPPs, as it resulted in a better quality, and reduced prices, of Internet dial-up services in Egypt –ultimately in the best interests of Egyptian citizens.

Increasing the number of online users, analysing their usage patterns and boosting infrastructure as a whole is building a base for future e-Government projects in Egypt.

Egypt's Free Internet Project is an initiative that aims to provide everyone nationally with easy and affordable access to the Internet at the cost of a local call, with no additional subscription fees. Today, dial-up Internet users across Egypt are only charged for the price of local phone calls, associated with their connection to the Internet.

From the regulatory side, NTRA has adopted a regulatory framework that enables PPPs through an offloading/ revenue-sharing model where ISPs are allowed to co-locate their access equipment at incumbent operator local exchanges. In this way, customers’ internet calls are serviced at the closest local exchange and re-routed to the ISP data backbone. This resulted in a major offloading of incumbent PSTN networks. In return for offloading, revenues from the Free Internet, calls are shared between the incumbent and service providers.

Another significant achievement within this framework, was the issuing of licenses in order to establish submarine

cable systems, landing in Egypt, with the aim of improving the connectivity of Egypt to the world. We shall also be continuing our efforts to encourage further deployment of broadband as the new platform for communications in Egypt by creating a framework for content delivery and licensing new wireless technologies.

Another very good example of PPP that contributes to the augmentation of the ICT environment in Egypt is the smart Village. The Smart Village, in Cairo, was constructed as the first fully operational Technology and Business Park in Egypt, which accommodates multinational and local telecommunications and information technology companies as well as financial institutions and governmental offices.

The village offers a mix of business services, as well as a fibre-optic network and multi-source power supply. The project is a PPP between the MCIT and a private consortium. Under this partnership, the MCIT provided 300 acres of land (20% of the cost) and the private investors financed the remaining 80%. Last but not least, public-private initiatives shall continue directing most of the resources towards the improvement of the means of delivery of educational and health services, irrespective of its location or income.

Quality education and healthcare, coupled with public infrastructure that includes affordable advanced services, are the basic building blocks needed today to become competitive. AT For further information on the NTRA, please visit: www.tra.gov.eg

Gadgets

Africa Telecoms looks at some of the latest gadgets and devices 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

HP OfficeJet H470 WBT Portable Printer

Acer X1130 DLP Business Projector

NEED TO KNOW

NEED TO KNOW

Completely portable printing solution / Supports Bluetooth

Well-suited to business user / Eco-friendly design /

connections / Around 480 prints between battery recharges

Affordably priced

Cost: Approximately R3,169 Rating: HHHH

Cost: Approximately R4,500 Rating: HHH

For professionals on the go, a portable printer can often be a lifesaver, more so when it’s wireless. HP has developed a small, compact

Acer’s new X1130 projector is a small, inexpensive projector that can

colour printer that works off batteries and mains, and can also print

be used by both business people and home users alike. Its design

via Bluetooth. It is a very sturdy printer, easily able to absorb the

is modest, compact, quiet and eco-friendly, and while its native

small knocks and bumps that inevitably come with being carried

resolution is only 800 x 600, it is more than good enough for business

around. The 2kg unit is capable of 18 colour prints and 22 black

presentations or watching DVDs at home.

pages per minute, although this depends on the density of the

Business users looking for an inexpensive way to project meeting

ink coverage. This speed is more than adequate to print reports or

information onto a nearby wall would do well to consider this unit. It

presentations on the run, and will easily save the day if emergency

has three inputs: VGA, S-video and component, which means it can

prints are required before a big meeting. The H470WBT uses two

take input from computers, DVD players and even camcorders.

cartridges for printing, a black and a tri-colour cartridge, which is

The X1130 is also a very quiet projector, so won’t be spoiling your

convenient from a mobility point of view, although it has added cost

business meetings with an overly noticeable hum. Perhaps most use-

implications as the entire colour cartridge has to be replaced when a

fully, the projector is very capable, even in brightly lit rooms, with its

single colour is depleted. Print quality is excellent and up to business

brightness rating of 2300 ANSI Lumens and contrast ratio of 2500:1

standards in both colour and black. Text is laser-sharp, and so are the

ensuring that the image remains visible even with curtains open.

colours, even on plain paper.

18 AFRICA TELECOMS February 2010

Apple MacBook 13"

Canon PowerShot SX200 IS

NEED TO KNOW

NEED TO KNOW

Polycarbonate unibody design / 13” 1280 x 800 screen / Great value

Exceptional image quality / Extremely compact / Suits both

for money

beginners and pros

COST: Approximately R11,399

COST: Approximately R2,500

Rating: HHHHH

Rating: HHHH

With the arrival of the new ’unibody’ MacBook, Apple has upped

For easy use the PowerShot SX200 IS has many features. With its

the ante substantially and is likely to add even more momentum

12.1-megapixel resolution it delivers exceptional images and allows

to the growing contingent of users – even those in the corporate

you to crop and enlarge any portion of your photo freely. It features

environment – making the switch to Apple. The new MacBook sports

a powerful 12x optical zoom so you can get up close to the subject

a 2.26GHz Intel Core 2 Duo processor, 2GB of memory, a 250GB hard

of your photo every time. The 28mm wide-angle lens captures more

disk and an nVidia 9400M graphics processor, which means for all

in the frame and gives your pictures the feel of a professional. The

intents and purposes it offers the same performance as an entry-

PowerShot SX200 IS is equipped with Canon’s acclaimed Optical

level MacBook Pro. Probably most impressively, it features Apple’s

Image Stabilizer Technology that automatically detects and corrects

seven-hour battery, super bright and glossy 1280x800 resolution

camera shake which is one of the leading causes of fuzzy or blurred

screen, multi-touch gesture-aware glass trackpad and its famed

shots. Even when you zoom in, you get the steady, crisp images

unibody enclosure. While the MacBook might seem like a MacBook

you’ll be proud to shoot and share. It also functions perfectly with

Pro enrobed in a polycarbonate shell rather than Apple’s sleek

or without a flash. Smart AUTO intelligence always selects the right

aluminium casing, there are two notable differences between the

setting from a choice of 18 so you’re always assured a great shot.

two machines. Where the Pro has a FireWire 800 port, which allows

Canon PowerShot SX200IS also has HD movie shooting capability

transfer rates to a hard disk or from a digital camcorder at blazingly

plus HDMI output. It features a 3.0-inch LCD screen with Face

quick speeds, and an SD-Card slot, these two nice-to-haves aren’t

Detection and Blink Detection. It is compatible with SD/SDHC, MMC/

present on the MacBook. Other than that, the MacBook is essentially

MMC Plus/HC MMC Plus. It’s a great camera for everyone, from the

a more budget conscious MacBook Pro with a plastic, as opposed to

beginner to the avid photographer.

metal, casing.

February 2010 AFRICA TELECOMS 19

GADGETS

Philips NP2900 Wireless Music Player

Sennheiser HD800 Headphones

NEED TO KNOW

NEED TO KNOW

Compact, stylish, and solidly built / Wall mountable / Bright screen /

Outstanding sound / Pristine clarity / Comfortable / A little pricey

Surprisingly big sound Cost: Approximately R12,000 Cost: Approximately R3,500

Rating: HHHHH

Rating: HHHH These Sennheiser HD800s look a tad ‘conventional’ at first glance, Streaming music around the house and tuning into the world’s finest

but they’re very far from being ordinary cans. For starters, they use

radio stations are nothing new, so it’s a little baffling to find that

Sennheiser’s most advanced driver tech, a larger-than-usual 56mm

there are still so few affordable network media players.

diaphragm and a stainless-steel transducer. They’re also unusual in

Our current favourite is the Logitech Squeezebox Boom, but it finally

that they work by directing the sound into your ear at an angle –

looks to have a challenger in the form of the Philips NP2900, which

more like having a pair of speakers strapped to your head, in other

is wall mountable and packs a lovely full colour screen. Turn the

words. The HD800s are designed for performance above all else, and

NP2900 on and it’ll quickly connect to your network via its wireless

should be approached carefully if you have any need whatsoever

antenna or Ethernet port. If you use Windows Media Player on your

to keep your music private. The HD800s sound amazing. Bass kicks

PC, the Streamium will immediately be able to play all of your shared

hard and deep, while there’s intense precision and detail on offer.

music if it’s in the right format; if not, the excellent TwonkyMedia

A languid hour of sitting with these on your head is as good a way

software is bundled and once installed will handle all the server

to waste time as we’d admit to knowing. The Sennheisers can do

functions. Now, onto that file format issue. Compressed formats like

punchy, raucous and ragged equally well – yet still have a pristine

WMA, AAC and MP3 are covered, but the only lossless codec that’ll

way with tonal clarity and rhythm. Make no mistake, though – these

work is FLAC, which neither iTunes nor WMP will rip into. We reckon

are terrific headphones and definitely worth a listen.

WAV should be covered at the very least.

20 AFRICA TELECOMS February 2010

GADGETS

Nexus One vs iPhone

The beginning of the new decade has seen Google make its first brazen,

the Nexus One at this stage), sleek design and integration with Google’s

yet tentative steps into the mobile handset market. Renowned, lauded,

online services, the phone is slick and quick enough to comfortably

despised and feared for its dominance of the search market, Google’s

compete with the iPhone.

entry into the handset market is viewed similarly, and depending on

And there appear to be few complaints on that front, with early criticism

which side of the fence you’re on, you’ll either love or hate this device.

and complaints of Google’s device centring on issues such as customer and

The move isn’t really surprising considering its increasing forays into

development support as well as accessibility. One critical issue has been

non-search disciplines – such as its web-browser Chrome, the Android OS

complaints about the phone switching to EDGE connectivity despite 3G

for mobile phones and its expected launch of the Android desktop OS. It

services being available. Google’s direct distribution model will be sorely

does redraw the battle lines somewhat, with the company butting heads

tested, especially considering the iPhone’s broad appeal and availability,

with players already entrenched in their own market sectors – think all the

with both distribution and support highlighted as lacking in the first weeks

handset manufacturers.

after it was launched. Such teething problems can always be expected,

The question of its impartiality in dealing with its former collaborators,

although the true measure of its adoption will be how Google responds,

and now competitors, has already been raised and only time will tell how

and particularly how it intends reaching markets outside of Europe and the

they handle that tricky question. For now, though, the focus is on how the

United States. Even in a straight shoot-out between the two devices, there is

phone is accepted in the marketplace, with natural comparisons made

very little to discern between them, with personal preferences and prejudices

with the king of smartphones – the Apple iPhone. With its Qualcomm

playing a far bigger role than features and specifications. These can be

Snapdragon 1 GHz processor, Android 2.1 operating system (exclusive to

summarised as follows:

Google Nexus One

Apple iPhone

Storage capacity Battery life Camera Wi-Fi GPS App store Multi-tasking Voice commands

4GB 7 hours talk time 5MP, with video recoding Yes Yes, turn-by-turn Yes (16 000 apps) Yes Yes

16GB 5 hours talk time 3MP, with video recording & editing Yes Yes, turn-by-turn Yes (127 600 apps) No Yes

February 2010 AFRICA TELECOMS 21

THOUGHT LEADERSHIP

Conducting business in Africa is approached by many with some degree of trepidation due to the continent's reputation as a bit of a Wild West, where the rules of engagement are not only different, but the goal posts are also constantly moving. There is, however, evidence of success in some public-private partnerships, as Safaricom has shown by innovating to stay ahead.

Michael Joseph N

by JOHANN BARNARD

umerous and recurring success stories in Africa illustrate that all is not lost and that the Afro-pessimist argument does not hold water. No one says it’s easy, but it’s not insurmountable either. To illustrate this point, and continuing the theme of investigating the role and success of public-private partnerships, one only has to look to Kenya’s Safaricom to see how it can be done. The company was founded in 1993 as a department within the former state-owned telecoms provider, Kenya Posts & Telecommunications Corporation, before establishing a joint venture with the UK’s Vodafone. This 60:40 initial shareholding was revisited in 1998 when the government shed 25% of its stake to the public when it listed on the Nairobi Stock Exchange.

It is the leading mobile operator in the country today, with about 85% market share and more than 14 million subscribers generating almost US$1 billion in the financial year to end-March 2009.

The story of its success lies in the successful privatisation, combined with a spirit of innovation that has introduced new and exciting services that are being mimicked around the globe.

In an exclusive interview with Africa Telecoms, Safaricom CEO Michael Joseph recounts some of the successes and highlights, while providing insight into the transformation from a state entity to a majority privately owned company. He has been at the helm since Vodacom acquired its 40% stake, directing the company’s growth and continuing privatisation.

22 AFRICA TELECOMS February 2010

LEAD STORY

the government shed 25% of its stake to the public when it listed on the Nairobi Stock Exchange.

November2010 2009 AFRICA AFRICATELECOMS TELECOMS 23 2 February

M-Pesa is revolutionising banking worldwide as a growing number of operators, and banks, have latched onto the novel, yet highly valued, service of bringing millions of geographically isolated customers into the formal economy.

He has extensive industry experience and has worked in many markets including the United States, Australia, Spain, Brazil, Peru, Argentina, Korea, and the Middle East, and has been awarded numerous awards for his efforts. Some of the most recent include being named CEO of the Year by the Kenya Institute of Management and the Moran of the Order of the Burning Spear, awarded by the President of Kenya.

He was appointed to the board of South Africa’s largest mobile operator Vodacom, in which Vodafone holds a 65% stake.

Managing the relationship with his government partners has proven to be the biggest challenge in achieving this, but not impossible, says Joseph.

“It was always a successful joint venture, although initially a little tricky for all of us to understand each other (from a business point of view). The government had to understand that Safaricom was independent with rather strong governance criteria,” he says.

Laying down the ground rules, and getting the buy-in, from the very start has helped enormously to foster a healthy working relationship, he adds.

“We had no problems with the government as a majority shareholder prior to the listing, and now as a 35% shareholder it is still an interested shareholder, but doesn’t interfere maliciously in the company.”

He comments that achieving that level of cooperation doesn’t come naturally and took some doing on Vodafone’s part to ensure that governance rules were adhered to and that its government partners stood by that.

“We have to have a strong stance towards pressure from government and deal with it politely and correctly,” Joseph says.

He denies that the close relationship with government gives

24 AFRICA TELECOMS February 2010

Safaricom an undue advantage in the market and that in some ways it counts against the company as competitors use this alliance as criticism of unfair benefit.

He says the overall success of the company is due to far more than the joint shareholding with government.

“It is difficult to quantify, but it is almost as if we (Vodafone) came at just the right time, with the right product for this region.

The price of calls and device prices were going down, prepaid was becoming mature, and what Safricom did was we made sure the products were aimed at the person in the street. This was a crucial decision at the time.”

This included offering per-second billing while other African operators were still working on per-minute billing, introducing low-denomination prepaid cards, low-cost handsets and roundthe-clock customer service.

The prepaid model has been one of its big successes, but this is also due to the nature of the Kenyan population. Joseph says

Safaricom CEO, Michael Joseph, with the Central Bank of Kenya Governor, Dr. Njuguna Ndung’u, at the official launch of the international money transfer service by M-PESA.

the very conservative nature that sees them buying a single cigarette at a time, for example, converted perfectly into the prepaid airtime model.

While tailoring services and pricing to the market’s needs has been the mainstay of its business success, Safaricom is probably most well known for its introduction in 2007 of the world's first mobile banking service.

M-PESA is revolutionising banking worldwide as a growing number of operators, and banks, have latched onto the novel, yet highly valued, service of bringing millions of geographically isolated customers into the formal economy.

The simple to use SMS service now allows more than 8,5 million users to transfer money to each other – without the need to hold a bank account. By the end of 2009, M-PESA was handling monthly user-to-user transfers valued at more than US$300 million, reaching a cumulative total of almost US$4 billion since it was launched.

The volume of the transactions being delivered can be measured by the average value of transfers being as little as US$27. The maximum transfer allowed is a little more than US$450.

Joseph says Safaricom was able to take advantage of a glaring gap left in the market after Kenya's banks withdrew all or some of their rural services. He adds that banks simply can’t compete on

price via traditional channels due to the low value of transactions, and that many are now partnering with Safaricom to reach out to far-flung customers.

He expects this service to grow as new services are added, but says this has to be done with a fair degree of caution to ensure the integrity of the system is maintained. Regulatory foresight is an equally important ingredient for success, he says, that requires an understanding by Safaricom of the value derived by extending banking services to people who wouldn’t normally have access by them. Safaricom is also looking at the technology and network required to enable that, he says, with its 21Mbps network playing an integral part in this evolution.

Joseph is confident the mobile data revolution will continue and points to the rapid increase in bandwidth capacity coming on stream from the undersea cables as a major contributor to that.

The operator is a 22,5% shareholder in The East African Marine System cable that was initiated by the Kenyan government, and has bandwidth capacity on the recently completed Seacom cable.

“Demand has grown 10 times since the cables arrived,” he says.

The priority for now is to build on the company’s success, while continuing to innovate and bring new services to the market.

That, says Joseph, is contingent on those services being what its subscribers want and use. AT

February 2010 AFRICA TELECOMS 25

Access for Africa

an in-depth look at Technology, infrastructure and services in africa

By Laura Recuero Virto

20 AFRICA TELECOMS February 2010

February 2010 AFRICA TELECOMS 21

T

he private sector has driven the expansion of information and communications technology in recent years. Resource scarce landlocked countries in SubSaharan Africa have attracted the lowest volume of investment. These countries have much lower levels of income, larger rural populations, and lower educational levels than other regions. Oil producer Nigeria has been increasing its dominance, and in 2007 accounted for well over half of total investment in resource rich countries. South Africa’s contribution to the resource scarce coastal total has been falling.

Between 2000 and 2003, South Africa accounted for 60 percent of average investment. From 2004 to 2007 this decreased to 22 percent. North African countries which have higher levels of income and a smaller rural population, accounted on average for 44 percent of investment in Africa from 2004 to 2007.

Overall investment with private involvement represented an average 1.3 percent of Africa’s Gross Domestic Product (GDP) between 2004 and 2007. In absolute terms, in 2004-2007 Africa attracted on average USD 11.5 billion, behind OECD and Central Asia with USD 19 billion and Latin America and Caribbean with USD 13.3 billion, and slightly ahead of South Asia with USD 10.8 billion. East Asia and Pacific countries lagged behind on USD 5.3 billion. Most African countries have extremely low rates of access to ICT services, however, compared to other world regions. According to the Networked Readiness Index 2007-2008 developed by the World Economic Forum and L’Institut Européen d’Administration des Affaires (INSEAD), Sub-Saharan African countries came bottom of the worldwide rankings. North African countries ranked higher, particularly Tunisia, with Egypt and Morocco improving their scores. South Africa and Mauritius led the Sub-Saharan rankings.

Africa has the lowest internet penetration rate in the world.

In Sub-Saharan African countries, for internet users the

28 AFRICA TELECOMS February 2010

penetration rate is below 7 percent and for broadband it is under 1 percent.

In Latin America and Caribbean, and East Asia and Pacific countries, the figure is around 20 percent for internet users. North African countries are relatively better off than their SubSaharan counterparts with a rate of 40.4 percent. However, even in North Africa the penetration rate for broadband subscribers is only 2 percent. In contrast, European broadband penetration is about 15 percent. In Africa most internet is by low speed dial-up connections which are concentrated in Egypt, Kenya and South Africa. Faster speed broadband connections through Asymmetric Digital Subscriber Lines (ADSL) are found in South Africa, Egypt, Morocco and Algeria.

The penetration of fixed-line services varies significantly. In some North African countries there is a penetration rate of up to 32 percent, while in SubSaharan Africa it can be as low as 3 percent and this is a major cause of the current difficulties of fixed-line operators.

In other regions of the world, fixed-line operators had a strong base when mobile penetration arrived. In Africa, the low penetration rate and limited availability of fixed lines made it easier for new mobile entrants to make an impact.

Africa had the world’s fastest growth in new mobile phones in 2008. In some Sub-Saharan countries there was growth of about 40 percent, yet overall penetration rates remain low. North African countries, on the other hand, are reaching mature levels with an average penetration rate of 93 percent, so their average annual growth rate is down to 19 percent. There are also significant differences between Sub-Saharan countries, with penetration rates in resource rich and resource scarce coastal countries at about 50 percent, compared to 15 percent in resource scarce landlocked countries.

Among the big coastal African nations, Nigeria (60 million), South Africa (47 million), Egypt (37 million), Algeria (31 million) and Morocco (24 million) had the biggest number of subscribers in 2008. Among the landlocked countries, Sudan, Congo and Uganda share the first three places with 10, 8 and 7 million subscribers respectively. With Tunisia’s market of 9 million subscribers, four North African countries are among the largest mobile markets in Africa.

But when using market penetration as the measure, Libya, Cape Verde and Comoros have the highest coverage among coastal countries, having reached levels above 100 percent in 2008. Similar levels have also been reached by Gabon, Algeria

and Tunisia. In contrast, in the landlocked countries, the three best performing nations, Lesotho, Sudan and Mali, barely average penetration rates of 25 percent. At the other end of the scale, Ethiopia, Eritrea and Somalia with a combined population of 92 million people have a penetration rate of just 3.4 percent.

Burundi, Central African Republic and Rwanda have between 5 and 10 percent.

Operators have concentrated investment on second generation networks in Africa and they will now probably recover this money before getting into third generation high speed networks, even if licences are being granted. As of early 2009 there were only 5 million subscribers – 2.3 percent of the total subscribers in Africa – for services with Wideband Code Division Multiple Access (WCDMA) and WCDMA High Speed Packet Access (HSPA). The heaviest investment has been in South Africa. The country has three WCDMA and two WCDMA HSPA networks that in 2008 accounted for 45 percent of third generation network connections in Africa. South Africa, Libya and Egypt

make up to 82 percent of third generation connections in Africa.

Second generation Global System for Mobile (GSM) communications account for 96 percent of subscriptions. Code Division Multiple Access (CDMA) technology is only used by 1.5 percent, but some operators such as Expresso in Sudan have adopted CDMA because it requires less capital investment.

Sub-Saharan Africa has the highest internet prices in the world. According to International Telecommunication Union (ITU) and World Bank estimates, the average price of a broadband connection in Sub-Saharan Africa is about USD 110 for 100 kilobit per second. In Europe and Central Asia the price was USD 20 while in Latin America and the Caribbean it was USD 7. Middle East and North African countries also pay below USD 30. But there is huge potential demand. A 2006-2007 study of 16 Sub-Saharan countries found that in Cameroon, Kenya, Nigeria, Senegal and South Africa more than 10 percent of the surveyed population use internet. There is a large potential for growth since internet awareness remains very low. In Burkina Faso, Tanzania, Ethiopia, Rwanda, Uganda and Mozambique, less than 10 percent of the surveyed population knew what internet was. In Namibia, Ghana, Botswana, Benin and Côte d’Ivoire, less

Africa has the lowest internet penetration rate in the world, below 7 percent in Sub-Sahara.

February 2010 AFRICA TELECOMS 29

than 30 percent knew what internet was. The telecommunications industry is investing in international bandwidth to meet this potential demand and has currently reached annual growth rates of 96 percent, compared to a global average of 51 percent, according to the Telegeography 2008 survey.

The low internet penetration rates and high tariffs stem mainly from a lack of high-capacity international networks. This allows operators to charge prices far above the marginal cost of the service. There is currently only one submarine fibre-optic cable off the West Africa coast, SAT-3, that provides a high quality international service and access is limited to members of the consortium which built the link in 2002. Since mid-2007 operators can purchase capacity at tariffs that have been as high as USD 25,000 per mega bit per second (MBPS) each month and now range between USD 2,000 and USD 10,000 MBPS per month as the cable operators anticipate new competition. Depending on the volume of traffic, South Africa´s wholesale prices are lower while Cameroon and Gabon pay the highest tariffs.

Except for Ghana and Benin, it is often impossible to buy a link to SAT-3 and so it has unused capacity. Africa relies on satellites and Very Small Aperture Terminal (VSAT) earth stations for most of its connectivity. This results in high prices – though tariffs often of USD 3,000 – USD 5,000 are often lower than SAT-3 – and the applications are slow compared to other technologies. A web page request can take up to 16 seconds to complete. Intelsat, the world’s largest commercial satellite service provider, provides full coverage in Africa.

Thuraya, which has Middle East and North African telecommunications and investment companies as shareholders, gives coverage to North and Central Africa.

Moves are being made in West, East and Southern Africa to increase the international networks. But for now, East and Southern Africa relies on satellites and has just 0.07 percent of the world’s international bandwidth capacity. The 10,000 kilometer long East Africa Submarine Cable System (EASSy) was to connect 21 countries from South Africa to Sudan by 2008. Prices were expected to fall to USD 500 - USD 1,500 per Mbps/month under an open-access scheme where every service provider could purchase at the same price, whether or not they were investors. The USD 263 million project has suffered delays largely due to disagreements over management of the consortium.

While EASSy has been delayed, other projects have advanced. Seacom is a 17,000 kilometre submarine fibre-optic cable costing USD 650 million linking South Africa with Mumbai in India, Marseille in France and London via Kenya, Tanzania, Mozambique and Madagascar. Kenya is also working with Etisalat to connect its coastal city of Mombasa to Fujairah in the United Arab Emirates. Alcatel-Lucent has been awarded USD 82 million to lay the 4,500 km fibre-optic cable for the East African Marine System (TEAMS). The World Bank has allotted USD 424 million to boosting regional networks in eastern and southern Africa under the Regional Communications Infrastructure Programme (RCIP) which it hopes will increase traffic by at least 36 percent a year and cut bandwidth costs 30 AFRICA TELECOMS February 2010

two realities. while the first world is using technology to create virtual worlds and aid development, africa is still trying to connect communities on a basic level.

http://manypossibilities.net/african-undersea-cables/

Connecting the African continent: Africa's Undersea Cabling 2010 - 2011

February 2010 AFRICA TELECOMS 31

by one tenth. Kenya, Burundi and Madagascar are involved in the first phase of RCIP, involving USD 164.5 million. By the end of the programme, it is expected that all capitals and major cities in eastern and southern Africa would be linked to competitively priced high bandwidth. The RCIP accounts for more than 10 percent of total World Bank support to Africa. The African Development Bank is also helping infrastructure development.

On the West coast, Ghana, Nigeria and Senegal have the most significant potential demand for international capacity. Up to seven investment groups have said they would add international capacity in the region but only a few will succeed. Globacom, the second oldest operator in Nigeria, is expected to lay a 9,500 km fibre-optic link to Lagos with plans to later link Accra, Ghana and Dakar, Senegal. The GL01 project, costing USD 150 million, is risky as the operator’s current traffic volume in Nigeria, Benin and Ghana does not justify the investment. MaIN OnE is another Nigerian project implemented

by Mainstreet Technologies to link Portugal with Lagos and Accra by May 2010 with USD200 MBPS/month wholesale prices. The link is ultimately expected to go on to South Africa and cost USD 865 million. The West African Cable System (WACS) is supported by the largest operators in South Africa, MTN, Neotel, Telkom and Vodacom, which have traffic along the West coast.

Only landing stations in Lagos and Accra are planned.

The Africa Coast to Europe (ACE) project supported by France Telecom and 14 African operators is expected to connect France to Gabon by 2011. The cable will be built by a France Telecom-managed consortium. The Other Three billion (O3b) satellite, costing USD 750 million, is expected to be in service by 2011 with prices around USD 700 MBPS/ month. It will be able to download web pages in 4 seconds.

NEPAD’s Uhurunet plan for an undersea fibre-optic link around Africa does not have much support. Finally, Thales Alenia Space is constructing the first pan-African telecommunications satellite, Rascom. Originally planned for the 1990s, it is now only expected to provide services after 2010. The West African Festoon System (WAFS) aims to connect countries along the west coast from Nigeria to Namibia. It is expected to have the same governance structure as the SAT-3 cable and also be managed by Telkom SA so WAFS might not offer open access.

Some alternative networks operate with mixed success. More than six electricity companies have received a licence to sell capacity directly or through another company. A 2,000 km fibre optic cable is owned by Société Nationale d’Electricité (SNEL) in Democratic Republic of Congo. These companies have been badly hit by the country’s war. The World Bank is spending USD 315 million in Democratic Republic of Congo, including

USD 33 million on a fibre-optic cable network. This could be expanded to other members of a proposed Southern African Energy Pool. Escom in Malawi will soon have fibre-optic cable links to Mozambique and the Tanzania Electric Supply Company (Tanesco) says it will build a new national grid with spare capacity used for telecommunications.

The financial crisis is likely to speed up consolidation of telecommunications markets in Africa. While small operators struggle to finance network expansion, large cash-flush operators such as South Africa’s MTN, Egypt’s Orascom Telecom, Kuwait’s Zain, France’s Orange and UK’s Vodafone will be able to move into African markets. Zain has increased its capital by USD 4.49 billion and says it will spend up to USD 4 billion in Africa before 2010. Business is still being done despite the crisis such as the sale of Ghana Telecom in August 2008, ONATEL in Burkina Faso in December 2008 and SOTELMA in Mali in January 2009.

Millicom’s new licence in Rwanda was awarded in November 2008; Orange’s new licence in Togo in November 2008 and in Uganda in October 2008, and Orascom Telecom purchased Cell One Namibia in January 2009.

Prospects for the future are uncertain however. The share price of mobile operators in Africa had fallen heavily: MTN by up to 20 percent in 2009 and Millicom by 66 percent. With growth slowing for the past three years, price competition will increase, reducing the high profits that have sustained capital investment. This means third generation networks will probably be delayed.

Foreign Direct Investment (FDI) inflows into African telecommunications were not greatly affected by the internet bubble burst in 2000-2001, though only a small number of firms account for a large share of investment. Between 1996 and 2006 France’s Vivendi injected USD 6.1 billon, France Telecom USD 4.9 billion and Vodafone UK USD 3.4 billion. South-South investments came from Kuwait’s Mobile Telecommunications Co. with USD 4.9 billion, South Africa’s MTN with USD 4.5 billion and Egypt’s Orascom with USD 3.7 billion. More recently, China has offered soft loans to state-owned telecommunications operators. Chinese equipments suppliers such as Huawei and ZTE are probably going to increase their presence in Africa.

The current crisis will probably have less impact on FDI for telecommunications because of Africa’s large potential market and the relatively low impact of the crisis on consumers. AT

The financial crisis is likely to speed up consolidation of telecommunications markets in Africa... business is still being done despite the crisis.

32 AFRICA TELECOMS February 2010

Laura Recuero Virto is an Economist at the OECD Development Center and is the author of the 2009 African Economic Outlook study on Innovation in ICTs in Africa. She is currently leading a program on ICT in Africa on open access, cyber-security and e-waste. For information, visit www.africaneconomicoutlook.org.

Top 10 for 2010 Our tips for the Top 10 Companies for the year ahead

Telecoms companies must continually innovate and evolve, otherwise they’ll disappear from this unforgiving industry in a jiffy. Some are better at it then others, and some bounce back after setbacks that would cripple less enterprising entities. Lesley Stones looks at 10 companies that Africa Telecoms believes will do big things in 2010.

They’re listed in no particular order, and since technology trends and public demand are notoriously fickle, don’t sue us if we’re wrong!

34 AFRICA AFRICATELECOMS TELECOMS February February 2010 2010 28

1.

GATEWAY COMMUNICATIONS Since its acquisition by Vodacom was finalised in early 2009, there has been considerable activity at the Pan-African data network operator Gateway Communications. Its reputation is well established in the wholesale business serving GSM, fixed line and wireless operators across the continent. The company had an undeniably tough year last year, as the economic recession saw its customers demanding cheaper rates. Gateway had to respond with an even greater focus on wholesale capacity to cope with the tighter margins across the industry. And things are definitely coming right in the capable hands of the new CEO, Mike van den Bergh, an industry veteran who is as likeable as he is experienced. Van den Bergh just exudes confidence , which is crucial when trying to persuade operators to use his company as their core network supplier.

Having Vodacom as its new parent is also beneficial, with Vodacom’s reputation, resources and cash adding considerable clout. Vodacom said buying Gateway was a great decision, and parts of their operations can be merged to further boost their profitability. “Gateway is Vodacom's platform into Africa,” said Vodacom chief executive Pieter Uys. Gateway has now re-organised to place even greater emphasis on its wholesale & carrier services. Gateway Carrier Services has received additional inward investment to better serve African carriers and those who wish to gain a foothold in the African markets.

With the re-structuring almost completed, the company is preparing to take full advantage of its position in Africa and 2010 promises continued investments in more fresh initiatives for its wholesale and carrier activities. The company already owns Africa’s largest and most advanced telecoms network. Investments in the West Africa Cable System (WACS) and the capacity it buys from Seacom are augmenting its ability to supply wholesale capacity through an infrastructure of satellite, submarine cables and terrestrial fibre lines. Gateway is one to watch because of the sector it is in, and its market leading position – it serves carriers that are enjoying a massive demand for voice and data services, with high growth potential in rural areas. Gateway is responsible for over 20% of Africa’s satellite cellular backhaul market. It already connects about 583 million people in more than 40 countries. Yet many people are only now getting their first cellphones and internet access, and many more businesses want to electronically transmit documents or hold video conferences. That needs massive bandwidth, and someone to supply it. “We are very excited about the prospects for African telecommunication in 2010; with South Africa hosting the World Cup and a variety of important elections taking place, the real benefits of Africa’s world class telecoms networks will be displayed to the whole world,” says Van den Bergh.

top10for2010 VNL Africa has tons of sun, but do we make much use of its energy? No, we just keep burning up fossil fuels. Thankfully, companies like India’s VNL are working to harness sun-power, and its innovations are bound to become more popular as pressure mounts on everyone to go green.

VNL has developed the award-winning solar-powered WorldGSM base station, which is specifically designed for remote rural areas that lack electricity.

Many African operators are running pilot projects to test the base stations in communities where the average customer will spend less than $2 a month.

WorldGSM will not only let operators serve those remote areas, but promises to be so cost-effective that operators will make a profit out of those low-spending customers.

The GSM Association reckons up to three billion people live in rural areas not covered by a mobile network, and 1.6 billion of those have no electricity, so the target market is huge. VNL has won enviable endorsements for its technology. It was named as the third most innovative company in the world – and the most innovative in the telecoms sector – in the Wall Street Journal’s annual Technology Innovation Awards.

In December it was hailed as a technology pioneer by the World Economic Forum.

The company plans to open offices in Africa and to partner with local distributors and system integrators this year.

Six years of engineering lie behind WorldGSM. One key attraction is the low running cost as the sun is its only energy source. No mains power, generator, diesel fuel, shelter or air conditioning are needed. The units cost less than normal base stations, are compact and durable and can be installed in six hours by two unskilled people.

VNL founder Rajiv Mehrotra says: “We are the only company that enables operators to build commercially viable and sustainable networks in low ARPU (average revenue per user) areas. Finally operators have a way to reach the poorest, most remote communities around the globe.”

If the trials by African operators prove successful – and it’s hard to imagine they won’t be – then buying VNL base stations seems a no-brainer.

2.

February 2010 November 2009 AFRICA AFRICATELECOMS TELECOMS 35 2

top10for2010 FUNDAMO Fundamo calls itself the Enterprise Mobile Financial Services Platform, and a specialised mobile banking and payment software solutions provider. What does all that mean?

Well, basically it does the clever stuff that gets people’s money from A to B via a cellphone. It can’t do that alone, of course, so it partners with financial organisations, cellular operators such as MTN and consultancies and systems integrators like Accenture to piece together the chain of processes involved in electronic money transfers.

Fundamo is worth watching because mobile banking and payments via a handset have the potential to become very big indeed. Think about the number of cellphones in circulation compared to the number of computers and the number of people with bank accounts. In Africa, cellphones win hands down. The potential is so enormous that the GSM Association expects mobile operators to earn US$5 billion by connecting 360 million ‘unbanked’ users to financial services by 2012.

Another reason to believe in Fundamo is because the venture capital fund HBD, founded by Africa’s internet billionaire Mark Shuttleworth, believed in it first. Fundamo was founded in South Africa in 2000 and HBD invested R36 million in 2007, which was used to expand into Africa, the Middle East, Asia Pacific and America. Venfin and Sanlam have also invested in the business.

Fundamo targets emerging markets as they are the most in need of its non-traditional, cheap to deploy banking solutions.

It now operates in the whole of Africa, South America, Mexico, North America and Pakistan, with more than 40 successful roll-outs in more than 30 countries. The largest so far is a mobile money service launched with MTN, which could see up to 100 million subscribers sign up for mobile banking across 21 countries. Fundamo expects millions of people to experience financial independence for the first time in 2010 as mobile financial services evolve. Its technology is being developed to cope with that growth and to offer a wider range of banking functions over a handset. Fundamo also plans to announce more global partners this year.

3.

GOOGLE Google hasn’t taken Africa terribly seriously in the past, and it showed. But Africa should still take Google seriously. The internet giant upset South African agents who resell its AdWords technology, which charges advertisers a small fee each time an internet user clicks on their link. One local agent accused Google of hiking its prices and trying to persuade customers to deal with Google directly.

When Stephen Newton became the head of Google South Africa last year he promised “to listen a lot” to customers and agents. The complaints have fizzled out, so presumably he’s doing a good job.

Advertisers love AdWords as it’s a great way to measure customer response. At least 8,000 advertisers use Google tools in South Africa, but with the rest of the continent largely untapped there is much more work to win. Google’s technologies don’t end with internet searches and advertising. Google Maps are extraordinarily popular, admired for their cool technology as well as their business benefits. The Street View feature lets you explore a neighbourhood through panoramic street-level photographs. That helps you find the exact location of a meeting, check out neighbourhoods if you are moving house, or mark your own offices on a map displayed on your website so clients can find you easily. Last year Google sent its Street View cars around South Africa’s major cities, making it the first African country to gain Street View status. A global audience will be able to explore the country’s cities and landscapes from their computers or cellphones, as the maps also work on handsets.

“Mobile is booming and is an area that businesses can't afford to miss out on,” Newton says. “We are looking at some exciting new developments in the mobile space.

Since my arrival in South Africa, we have been continuing to develop a robust platform on which we will build further.

We've already launched Google Maps, along with Local Business Centre listings, and have made good progress with Street View driving.”

Another priority is to ensure that businesses across Africa see the benefits of being online and treat the internet not only as a space to find information, but also as a place to create and contribute information. Google's products can help those small businesses get started faster and more efficiently, giving it millions of potential new customers.

4.

36 AFRICA TELECOMS February 2010

top10for2010

5.

RIM Predicting that 2010 will be another good year for Research In Motion (RIM) is unimaginative, but it’s also a very safe bet. The company that gave us the BlackBerry has been a pioneer in mobile communications for 25 years and has no intention of slowing down. The BlackBerry has changed the way people communicate, first by giving us mobile email and now as a lifestyle tool to manage our business and personal lives. RIM has 36 million global subscribers and has shipped over 75 million smartphones. Its latest flagship, the Bold 9700, arrived in South Africa in January, and analysts hail it as the best BlackBerry ever. It’s expensive, though, at around R9,000, without a contract.

Regional director for Sub Sahara Africa Deon Liebenberg says RIM is treating Africa as a priority, seeing it as a high-growth market hungry for affordable mobile solutions. It clearly has more to offer than top-tier handsets.

“The rapid penetration of cellular phones into Africa will set the stage for mass adoption of the internet across the continent,” says Liebenberg.

Affordable smartphones coupled with internet

INTERNATIONAL TELECOMMUNICATION UNION (ITU) The ITU is an organisation rather than a company, but it wields tremendous influence over the telecoms sector. This United Nations agency works with governments and the private sector to develop networks and services, and it sets the worldwide standards that allow a vast range of communications systems to interoperate.

Right now it’s thrashing out universal standards for the upcoming 4G mobile wireless broadband technologies, known as IMT-Advanced, with IMT standing for International Mobile Telecommunications.

Six proposed standards are being assessed in a rigorous evaluation process involving equipment manufacturers, technology developers, network operators and service providers, user organisations, universities, research institutions and national administrations. The selected technologies are expected to gain official designation in October 2010.

The ITU’s Secretary-General, Hamadoun Touré, says: “We note with excitement that the technology developments in wireless communication continue to expand their reach and application to enrich the lives of people around the world.”

Stephen Blust, the Director of Radio Standards at AT&T, says when the strategic vision for 4G was laid out in 2002 it established a new level of expectation for the capabilities and performance of wireless broadband systems that many thought could not be reached in this decade. The performance required by IMT-Advanced will truly raise the bar for mobile wireless, he says, and he is confident that the vision can be achieved in the near term.

IMT-Advanced systems will feature new capabilities to handle advanced mobile services that go beyond third-generation (3G) offerings. Quite what they will be nobody is saying, but everyone is promising higher-quality multimedia applications with a significant improvement in performance and quality of service. What is certain is that telecoms players are going to have to raise their game once again, and try to figure out what consumers will and will not be prepared to pay for.

The ITU also works to improve telecommunication infrastructures in developing countries, and holds forums where government and industry representatives from developing nations can exchange ideas and knowledge and discuss the technologies needed to take their economies forward.

bundles will bring internet access to small businesses and consumers who could not afford it in the past, he says.

Handsets begin with affordable entry-level devices like the Curve 8520, and are available in 30 SubSaharan countries through more than 60 operators.

That gives a previously untapped market of African users access to communications, multimedia, navigation and personal productivity tools to stay in touch with everything that matters, while keeping their data and communications secure, he says.

“In the year ahead, RIM will keep evolving and offer smartphones and other services with new features and functionalities that make life easier and more productive for professionals and consumers alike,” says Liebenberg. RIM does not disclose how many handsets it sells in different countries, but its African user base is tiny. Among the very top end consumers in South Africa its market share is estimated at a respectable 7,5%, but that plunges dramatically to a mere 3,2% just one category of consumers down, who are still the elite by mass-market standards.

If RIM can bring its prices down a little further, its market penetration has room to soar.

6.

February 2010 AFRICA TELECOMS 37

top10for2010

7.

NEOTEL Neotel has been a big disappointment for South Africa’s telecoms sector, but 2010 may finally change that. The operator arrived too late to pose much threat to the incumbent player Telkom, largely because of government interference and inactivity. By the time Neotel launched Telkom had become far savvier, while Neotel has struggled to get base stations and networks rolled out fast enough to make an impact.

“This year we are going to shift gears in terms of growing our business,” says head of corporate communications Wandile Zote.

“If we continue on this growth trajectory, soon we will be counted amongst the bigger players in the telecoms sector in this country. We have set ourselves very aggressive targets for the next financial year starting on April 1 and we have already exceeded some of the targets in the current year.”

What should help enormously is that the government in no longer a shareholder, after the 30% it had clung onto was sold to Neotel’s largest shareholder, the Indian telecoms giant Tata Communications. That will speed up decision-making by taking politics out of the equation. The deal was followed by a fresh injection of R3.1 billion from Neotel’s remaining and newly streamlined shareholders. It has now secured the right to set up more CDMA and WiMAX sites to finally provide the services customers are waiting for. In the past, clients who wanted to switch their telecoms services over to Neotel were often disillusioned to find their areas were not covered. New legislation letting individuals port their fixed line numbers from Telkom to Neotel from April 2010 could also boost its business.

Neotel now serves more than 500 enterprises including Standard Bank and Internet Solutions. Its metropolitan area network spans 3,500km in Johannesburg, Pretoria, Cape Town and Durban. Another initiative to boost its capacity is laying a national 5,000km cable in partnership with MTN and Vodacom for a joint R2bn. It has invested in data centres in Johannesburg and Cape Town and launched a Telepresence facility in Johannesburg, which lets customers hold video conferences without installing their own equipment. Such initiatives should see Neotel fulfil its promise.

glo mobile Cellular operator Glo Mobile was launched in 2003 by its Nigerian parent company Globacom, and now ranks as the second largest operator in Nigeria. Although Glo Mobile hints that it’s the dominant player, so it depends whose figures you believe really.

Not content with serving one country the operator has its eye on West Africa as a whole. It launched a network in the Republic of Benin in 2007, where it sold 600,000 SIM cards to win an estimated 30% of the cellular subscriber base within two weeks.

It launched in Ghana last year, despite facing fearsome competition from MTN, Zain and Vodafone. Fourth on its list is Côte d’Ivoire, where it has a licence to operate but has not yet made its move.

Glo Mobile is upgrading its networks in Nigeria and Benin to improve their voice and data quality. It also operates one network rate between Nigeria and Benin to eliminate roaming charges and has scrapped the fees charged for accepting in-coming calls while roaming.

Globacom chairman Mike Adenuga says Glo Mobile aims to become the biggest and best telecoms network in Africa. By gaining more than 25 million subscribers so far “we are well on track to achieving our goal,” he says. “We are indisputably the fastest growing network in Africa, if not the world. Our goal is to cover all of West Africa by 2012.”

Adenuga certainly scores an A for Ambition, but there is still a lot to achieve. However, its trump card may prove to be Glo-1, the $800 million fibre optic cable it has laid to link Nigeria to the UK. The project makes Globacom the first single company to successfully lay a cable from the UK to Nigeria. Switching on the 9,500km cable is slightly behind schedule, but it landed in Lagos last September.

At the moment Nigeria depends on the SAT-3 cable run by a handful of monopoly operators for high-speed bandwidth. Glo-1 promises to decrease prices and provide fast and abundant bandwidth to the 16 cities it branches off to in countries including Ghana, Senegal, Mauritania, Morocco, Portugal and Spain. That should win it some lucrative long-term contracts from other operators and large companies in West Africa that have been starved of bandwidth for too long.

38 AFRICA TELECOMS February 2010

8.

top10for2010 safaricom Kenyan cellular operator Safaricom successfully serves 14.4 million customers, giving it an estimated 77.5% of Kenya’s market share and 83% of the total cellular revenue. For the six months to September 30, 2009 its subscribers rose 21% from under 12 million while its data revenues surged by 93.6%.

Safaricom was formed in 1997 as a fully owned subsidiary of state-owned Telkom Kenya. The government still owns 35%, after the UK’s Vodafone bought a 40% stake in 2000, with 25% floated on Nairobi Stock Exchange.

When Safaricom is in the news it’s usually because of its M-PESA service, which lets customers transfer money between each other via their handsets. Since

mobile money transfers and micro-payments are tipped to become very big business indeed, numerous other operators are looking at Safaricom’s world-first system with envy. The innovative system uses more than 12,000 agents to register customers and handle their cash deposits and withdrawals. Neither users nor recipients need a bank account, as the sender gives the agents their cash and the recipient is notified immediately by SMS and can collect the cash from any other agent. Users can also send money to subscribers on other networks, and the agents earn a small commission on each transaction.

Safaricom and Vodafone also offer international money transfers so people in the UK can send up to £250 to someone in Kenya. The two operators are working to increase the number of agents in the UK, and

Vodafone has launched similar services in Tanzania and Afghanistan. Since other countries can be added and the technology sold to operators around the world, growth opportunities seem endless.

“Safaricom will be expanding the services to allow remittances to Kenya from other relevant markets. We will be working towards facilitating transfers between neighbouring countries in East Africa to meet customer needs,” Safaricom confirms. M-PESA now has almost 8 million registered users, up a staggering 93% during the last six-month period.

For the future, Safaricom says capital expenditure will remain high to support its growth, boost the quality of its network, products and services, and augment its data services by rolling out a national fixed data service.

9. global voice group Laurent Lamothe, the president and CEO of telecoms solutions provider Global Voice Group, says his company is “not only a leader in the field, but that by improving the quality of communication, we are improving the quality of lives as well.”

That’s undeniably true, as Global Voice operates in many African countries and other emerging nations where communications have previously been scarce. Global Voice calls itself “a complete telecommunications transformational solutions provider” and focuses on international long distance, regulator and government services. It claims to be the market leader for signalling, revenue assurance and traffic management monitoring services across Africa and the Caribbean, with a presence in 56 national networks globally.

Services include international market rate stabilisation, telecoms fraud assessment and control, and revenue assurance through public-private partnerships. It designs those partnerships to bring significant value to international gateways to increase the revenue generated for all players in the telecoms value chain, including governments, regulators, mobile and fixed line operators. It also works to improve the quality of service and efficiency of

national networks. It has International signaling and traffic management agreements in Togo, Guinea Bissau, Guinea Conakry, Côte d’Ivoire, Central African Republic, Gabon, Congo Brazzaville and Ghana. This year it aims to expand its footprint across Africa by working with more governments, regulators and national operators. Its goal is to help them make their networks generate more revenue and to develop communication technologies as a national resource.

It will soon roll out its solution in Ghana in partnership with the National Communications Authority (NCA). The NCA wants to collaborate with telecom operators to develop a reliable telephone clearing house database to help control “gray routes”.

The system should stem fraud in the pricing of in-bound international calls, particularly in cases where some international calls terminate as local calls and therefore accrue less charge. It will introduce a uniform charge of US$0.19 per minute for all international in-bound calls, and the government believes that will generate an additional US$50 million a year, while the telecom operators themselves will also earn more.

10.

February 2010 AFRICA TELECOMS 39

CouNtry

ProJeCt NaMe

MaiN SPoNSor

iNveSMeNt CoMMitMeNtS (uS$ Millions) Payments to the Government

Physical assets

Benin

Globacom Benin

Globacom (100%, Nigeria)

69

0

Central African Republic

Orange Centrafrique

France Telecom (100%, France)

12

0

Gabon

Gabon Telecom

Maroc Telecom (51%, Morocco)

79

14.4

Ghana

Westel

Zain (75%, Kuwait)

120

0

Guinea

Orange Guinea

Sonatel (100%, Senegal)

0

0

Guinea-Bissau

Orange Bissau

Sonatel (100%, Senegal)

6.8

19.7

Kenya

Telkom Kenya

France Telecom (40%, France)

390

0

Namibia

Powercom (Pty) Limited

Nampower (37%, Namibia), Telecom Management Partner AS (39%, Norway)

8.5

0

Niger

Orange Niger

France Telecom (80%, France)

72

0

Nigeria

Alheri Engineering Limited

Dangote Group (100%, Nigeria)

150

0

Nigeria

Emerging Markets Telecommunications Services (EMTS)

Mubadala Development Company (60%, United Arab Emirates), Emirates Telecommunications Corporation (Etisalat) (40%, United Arab Emirates)

400

0

Rwanda

Rwandatel, Second Divestiture

Libya Africa Portfolio for Investments (LAP) (80%, Libya)

100

0

Senegal

Sudatel Senegal

Sudatel Group (100%, Sudan)

200

0

Uganda

Warid Telecom Uganda Limited

Abu Dhabi Group (100%, United Arab Emirates)

0

200

42 AFRICA TELECOMS February 2010

Dial PPP

to connect the poorest Extending ICTs to Africa’s remote and rural areas would be much more difficult without public-private partnerships (PPPs) by ken wieland

Even when economic times are good it is difficult to attract investment for rural ICT projects in emerging markets. Average village income is extremely low, network rollout can be expensive, and return on investment (ROI) is elusive.

In an economic downturn, rural connectivity will drop even further down the list of operator priorities (if it isn’t at the bottom of the list already). Why should an operator, state- or privatelyowned, allocate capex to a geographical area where there is little or no chance of an ROI in the near term?

Yet the ICT investment picture need not look so bleak for the world’s poorest people. Using PPPs, or public-private partnerships, the investment risk of a rural ICT project can be distributed. Moreover, through technological and service innovations – and the sharing of expertise among the different PPP partners – ROI should be achieved much sooner than if companies acted independently.

“PPP is truly a fantastic model, but it requires a long-term commitment of each of the parties,” says Elaine Weidman, vice president of sustainability and corporate social responsibility at Ericsson. “We’ve had some tremendous success with the Millennium Village Project [MVP] in Africa, as well as other PPP projects, in bringing concrete benefits.”

Nokia Siemens Networks (NSN), which is also involved in a ‘connect a village’ PPP project, is equally enthusiastic about the partnership model. “PPPs can accelerate network deployments in rural areas,” says Mika Skarp, who heads up NSN’s village connection programme. “Private investors might think twice about using their capex budget on a rural connectivity project, February 2010 AFRICA TELECOMS 43

ITU promotes partnerships»

The Partnership on Measuring ICT for Development is an international, multi-stakeholder initiative to improve the availability and quality of ICT data and indicators, particularly in developing countries. Launched in June 2004, on the occasion of UNCTAD XI, it provides an open framework for coordinating ongoing and future activities, and for developing a coherent and structured approach to advancing the development of ICT statistics globally, and in particular in developing countries. It helps measure the Information Society by: • Defining a core list of ICT indicators and methodologies to collect these indicators; • Helping developing countries collect ICT statistics, particularly through capacity building and hands-on training for national statistical offices; • Collecting and disseminating information society statistics in a number of formats, including a global report and database.

Current partners include ITU, OECD, UNCTAD, the UNESCO Institute for Statistics, the UN Regional Commissions, (UNECLAC, UNESCWA, UNESCAP, UNECA), the World Bank, and EUROSTAT.

especially if the ROI is not seen for four years. With public sector involvement, however, it becomes easier to justify the investment.”

Both Ericsson and NSN emphasise their involvement in PPPs is not a philanthropic exercise. Accountable to their shareholders, private investors also need a visible ROI. “Our objective is to have return on investment in all projects in three to five years’ time,” says Ericsson’s Weidman. “We don’t know if this is achievable with PPPs [in remote areas], as it’s too early to say, but it does look promising.”

If the PPP model could satisfy the business aspirations of private investors as well as help meet the wider ICT targets set out by the WSIS (World Summit on the Information Society) in Geneva (2003) and Tunisia (2005), it would be a startling achievement. One of the ambitious goals to emerge from WSIS is to connect all villages worldwide with ICTs by 2015. This aim was underlined at the October 2007 Connect Africa Summit held in Rwanda, where over US$55 billion of private sector money was committed to ICT projects across the continent.

One of Connect Africa’s five stated goals is “to connect African villages to broadband ICT services by 2015 and implement shared access initiatives, such as community tele-centres and village phones”.

Fulfilling these ICT aspirations – which are also key in achieving the UN Millennium Development Goals – will depend

44 AFRICA TELECOMS February 2010

largely on the success of the PPP model.

ITU and PPPs

ITU, the lead UN agency on ICTs, places the PPP model at the heart of its strategy to put every human being on the planet within easy and affordable reach of communications. With a membership comprising both governments and industry, ITU is ideally placed to try and bring both sectors together in a working partnership.

“The PPP model that ITU is focused on is to persuade governments [in emerging markets] to open up the appropriate spectrum and then guide them in the preparation of a regulatory framework for an open market,” says Fernando Lagraña, an ITU executive director. “The regulatory framework needs to be in place first before appealing to the private sector for investment.

Without a regulatory framework, there is no way that a private investor will come to the table.”

For Lagraña, the definition of a PPP in emerging markets (where there is no history of deregulation) can extend to those instances where governments provide private investors with a more business-friendly environment. A PPP, he implies, doesn’t have to be a formal joint investment project between the public and private sectors.

ITU also plays a key role in helping governments receive loans from development banks for ICT projects. “The development

“The regulatory framework needs to be in place first before appealing to the private sector for investment. Without a regulatory framework, there is no way that a private investor will come to the table.”

banks say they will not [allocate] money to any country that has not written in its national policy that ICTs are a priority,” says Lagraña. “ITU gives reassurance to the banks that governments will pursue the ICT effort, not only to develop the appropriate infrastructure but to maintain and operate it. Our role is to help governments or the public sector to prepare bankable projects, to help countries go through the screening process that the development banks require.”

A more traditional role of ITU is to identify technologies most suitable for certain topologies (such as rural areas). However, depending on the level of revenue in the region, ITU offers different types of recommendations to PPPs. For low-level income areas, ITU believes simple ‘2G’ solutions are suitable for connectivity purposes. On a GSM network, notes Lagraña, there is also the useful capability of providing internet services on the return channels.

In regions where there are potentially higher levels of income, ITU is pushing for PPP models based on wireless broadband infrastructure. Although ITU doesn’t promote specific technologies, ITU’s campaign for wireless broadband infrastructure would seem to auger well for WiMAX, which is standardized and has the backing of major equipment suppliers, including US chip giant Intel. “Some sectors of the industry need to push themselves to become more visible,” adds Lagraña, implying that WiMAX supporters need to ramp up their marketing efforts if they are to take full advantage of the PPP opportunity available in emerging markets.

ITU has initiated a number of flagship PPP projects for rural areas, but done on a global basis rather than focused on a particular region. The strategy is to develop first a successful PPP model on a small scale and then replicate it on a bigger, global scale.

One recent flagship ITU PPP project is ‘Connect a School, Connect a Community’, launched at the ITU Telecom World 2009 event in Geneva, October 2009. The aim of the scheme is to connect all schools to broadband internet services by 2015, which is one of the targets set out at the WSIS gatherings in Geneva and Tunisia. The project is designed to spread ICT access and knowledge to not only rural and underserved areas, but also to the disadvantaged and vulnerable groups

within those communities. ITU is currently in the process of developing an online toolkit to share best practices on school connectivity (expected to be launched in March 2010) and raising political awareness that ICT is a driver for economic growth, even in rural and remote areas. The ‘Connect a School, Connect a Community’ initiative is just one of a number of ITU projects that fall under its ‘Connect the World’ programme.

Another ITU flagship PPP initiative is ‘Connect a Village’, in cooperation with Nokia Siemens Networks.

Connecting villages

NSN has stepped up its PPP efforts in rolling out cheaper and more power-efficient mobile networks to the world’s poorest and remote areas. After two years developing its Village Connection 2.0 platform, which became commercially available in October 2009, NSN announced an agreement with ITU that same month to deliver – free of charge – 30 of its platforms to villages in the island countries in the Pacific region. Through its relationship with NSN, ITU will be working with governments of participating countries “to ensure a supportive policy, regulatory environment and administrative support”. ITU says it will also be looking for extra financial support for the ITU-NSN project from heads of state and other potential donors or partners.

Giving away network equipment and consultancy expertise for free is not, as you would expect, NSN’s long-term PPP strategy.

Nor are NSN’s reasons for partnering with ITU and donating 30 Village Connection platforms entirely altruistic. “By partnering with ITU we can get access into markets we have not previously been able to enter,” says NSN’s Skarp.

Rolling out cheaper mobile solutions in emerging markets is potentially a big growth area for network suppliers as mobile penetration reaches saturation point in developed economies.

According to NSN’s figures, over two billion people have no voice or internet connection, yet it is the unconnected people who have the lowest incomes on the planet (under US$2 per day). From a business point of view, partnering with ITU looks a smart move by NSN to grab a bigger slice of the low-cost mobile solutions market. It has become a very competitive sector, particularly as Huawei – a Chinese network supplier that has built up a strong international presence through aggressive

February 2010 AFRICA TELECOMS 45

pricing – has also developed its own low-cost village mobile solution.

From NSN’s perspective, it says it can provide individuals or families with a mobile connection for a monthly ARPU (average revenue per user) of US$2 and still achieve an ROI for the mobile operator within two to four years. “Much of the network capex reduction is achieved by not building [steel] towers for the base station but to use existing infrastructure for that purpose,” says Skarp. “Since we first started building GSM networks in the early 1990s, the price of electronics has fallen dramatically but the price of steel has gone up. In the past, the cost of the tower wasn’t an issue as the base station was so expensive. That’s no longer the case.”

Costs are further lowered by employing a local entrepreneur for customer sales and services support, using his or her own house as a point of contact for village mobile users. “There would be an incentive for that person to sell more air-time if he gets a percentage of the traffic revenue,” adds Skarp.

Using one base station – at a cost of around €10,000 – NSN says it can achieve a capacity of between 2,000 and 3,000 users over a 2-3km radius. Skarp doesn’t disclose when and where NSN’s Village Connection platform will arrive in Africa, but it is on the agenda. But NSN, like other telecom suppliers, can’t work in isolation to make these projects sustainable – that is, when villagers can generate enough income through mobile usage in order to afford to keep on using the service. Help from

Fishing for PPPs on Lake Victoria »

Lake Victoria is Africa’s largest lake and touches the borders of Tanzania, Kenya and Uganda. It also claims around 5,000 lives each year through drowning accidents, largely among the fishing community.

To try and make the lives of Lake Victoria’s fishing community much safer, Ericsson and mobile operator Zain are promoting a search and rescue system based on GSM mobile positioning technology. The project has involved the installation of 21 GSM sites on the borders of the three East African countries that Lake Victoria reaches, which went live in July 2009.

So far, however, governments have been slow in striking up a PPP (publicprivate partnership) that will enable the project to work effectively.

“We really need governments to support the establishment of a proper rescue capability on the lake [through staff and rescue boats], which is not something that telecom companies can do,” says Elaine Weidman, vice president of sustainability and corporate social responsibility at Ericsson.

Investment in the project has all come from the private sector to date, although Ericsson is in negotiations with Lake Victoria stakeholders, including LVBC (Lake Victoria Basin Commission) to encourage public sector involvement. Without it, the initiative will surely flounder. In January 2010, with a view to stimulating public sector interest, Ericsson demonstrated the system in action in Uganda, which, encouragingly, had a ministerial level attendance.

46 AFRICA TELECOMS February 2010

banks in terms of micro-financing to unleash entrepreneurialism – as well as agricultural information and advice services – will play an important part in PPP success.

Millennium Project

As part of the Millennium Project, commissioned by the UN Secretary-General in 2002 to develop a concrete action plan to achieve the Millennium Development Goals, is the Millennium Villages Project (MVP), which was launched in 2006. The MVP is designed by Columbia University’s Earth Institute, headed by economist Jeffrey Sachs. Using multiple partners from the public and private sectors, the MVP aims to connect around 500,000 rural people with mobile phones in 80 villages – across ten subSaharan African countries – by 2011. Each country programme includes a ‘cluster’ of communities of up to 11 villages, with a population of about 5,000 in each. “We are about 80% there in terms of meeting the MVP coverage target,” reports Ericsson’s Weidman. “If there is no network we build one; if there is one, we make sure that it’s adequate.”

Building a sustainable rural ICT service, however, means more than rolling out a telecoms network and handing out relatively cheap handsets and netbooks. It means collaboration among mobile operators, telecom suppliers and public sector agencies to achieve long-lasting socio-economic benefits – an objective that lies at the heart of the Millennium Villages Project.

As part of the MVP’s Mobile Health programme, for example,

13th Annual

FREE PASSES FOR AFRICAN OPERATORS

10-11 November 2010 International Convention Centre, Cape Town, South Africa

The Premier Pan-African Communications Event Africa’s MUST-ATTEND annual meeting place….

4,000 participants | 61% operator attendance 54% C-level attendance | 1,023 companies 220 exhibitors | 75 expert speakers | 102 countries

Produced By:

Part of the:

Sign up for your priority copy of the event brochure: www.comworldseries.com/africa

FR EE

The ONLY event focused on East Africa’s telecoms industry

fo & ro re pe gu ra la to to rs rs

The 6th Annual

27-28 April 2010 The Kenyatta International Conference Centre, Nairobi, Kenya

NEW venue

Adapting to Accelerate Progress, Connectivity & Growth The only regional telecoms event featuring 17+ Operator CEO speakers including these thought-leaders and government ministers: Bashar Arafeh, Chief Operating Officer, Zain Group, East Africa Region Jayant Khosla, CEO, Essar Group, Africa

Ali Bin Jarsh, CEO, Canartel, Sudan Tim Lowry, VP, MTN Group, Southern & Eastern Africa

Michael Joseph, CEO, Safaricom, Kenya

Hans Paulsen, CCO, Uganda Telecom

Mickael Ghossein, CEO, Orange Telkom, Kenya

Philippe Luxcey, CEO, Orange, Uganda

Bayan Monadjem, Technical Director, Zain Group, East Africa

Themba Khumalo, CEO, MTN, Uganda

Noel Herrity, CEO, Zantel, Tanzania

Jose Dos Santos, CEO, Vodacom, Mozambique

Official Ministerial Welcome:

Hon. Samuel Poghisio, Minister for Information and Communications in Kenya

Executive-Level Representation from the Region’s Regulators - Including: Charles J.K Njoroge, Director General, CCK (Communications Commission of Kenya)

5 reasons to attend this unique forum for the who’s who of the East African telecoms industry: 1.

The ONLY dedicated annual East-African communications event – network and do business with decision-makers from all of East Africa’s thriving markets

2.

Meet 1000+ communications professionals, including those from over 65 operator companies – an unrivalled pool of valuable connections to grow your business.

3.

35+ speakers featuring 17+ CEO-level operator representatives – learn from the industry leaders over 2 days of congress sessions, and make the most of the opportunity to meet & quiz them.

4.

Join an unrivalled cross-section of the East African telecoms community – share ideas and secure partnerships with mobile, fixed and satellite operators, ISPs, regulators, investors and analysts.

5.

50+ stand exhibition – be the first to discover the latest technologies and solutions to revolutionise your operations in East Africa.

Networking refreshment sponsor: Sponsored by:

Produced by:

Prof. John Nkoma, Director General, TCRA (Tanzanian Communications Regulatory Authority)

Register today and save US$300 by quoting ‘EAAO1’ www.comworldseries.com/eafrica

Part of the:

mobile operators to recoup its investment, the signs look good. “We didn’t know whether or not the number of calls and minutes of use would take off, but it really has,” says Weidman.

Weidman adds that affordable handsets (US$20 and under) have been key to driving growth, but, in some cases, traffic usage can be driven without individual SIM cards or handsets. Using a virtual private number, individuals, with their own PIN code, can use other people’s handsets and have the air-time usage charged to their own account.

Another useful traffic-generating innovation is dynamic call discounting, where operators offer cheaper calls at times when network capacity is underused, such as in the middle of the night. It is innovative measures like these that give PPPs a much better chance of success in serving rural communities.

PPP stumbling blocks

handset supplier Sony Ericsson is working with local operator partners MTN and Zain to set up toll-free emergency numbers.

Community health workers are also being provided with specially configured SIM cards that enable them to call each other for free as part of a closed-user group.

Weidman says that Ericsson has so far invested between US$10 million and US$12 million in the MVP, which includes the supply of network infrastructure as well as funds allocated to the monitoring and evaluation of applications. In 2008, Ericsson set up Innovation Centres in Kenya, Nigeria and South Africa in order to develop mobile-based products for health, education, agriculture, small business development, finance and government. “There is a growing awareness that the mobile phone can be a useful information tool, but we need the help of specialist agencies to provide the content,” says Weidman.

On the commercial arrangement between Ericsson and its mobile operator partners, Weidman doesn’t reveal too much.

“On a simplistic level, we are co-subsidising the network investment,” she says. “Ericsson supplies the network capex, while the operator picks up the opex.”

Assuming that Ericsson has a revenue-sharing agreement with

48 AFRICA TELECOMS February 2010

The objectives of the private and public sector do not always coincide. While the likes of Ericsson and NSN are promoting low-cost GSM systems and basic phone functionality, which they think will give them the best chance of an ROI for rural projects, ITU’s Lagraña warns that this approach is not always appreciated at government level.

“While governments generally recognize the need to reach out to rural areas, a number of countries are saying they don’t want a secondclass ICT system,” he says. “They want the iPhone, the BlackBerry and all the latest technology tricks.

When that happens, it becomes extremely difficult for the public and private sectors to agree about how best to move forward.”

Either through a lack of resources or political will, the public sector can also be slow to seize the PPP opportunity. Weidman reports that the Weather Info For All (WIFA) initiative for Africa, backed by the Global Humanitarian Forum (GHF) and the Earth Institute, is lacking government involvement. The scheme, which involves mounting automatic weather stations on cell towers as they are being built across Africa (which is significantly cheaper than building dedicated towers) is not yet being supported at government level. Instead, it is the GHF which is trying to raise the necessary funds to purchase the automatic weather stations.

Meanwhile, the window of opportunity for WIFA is closing – mobile networks continue to be built across Africa without the weather monitoring equipment.

“There needs to be more advanced planning to secure that resources are in place [for PPPs],” says Weidman. “Government funding cycles can take years but the private sector can’t always wait that long.” AT

First National Bank (FNB) launched Cellphone Banking in South Africa in 2005. The future of Cellphone Banking was uncertain then as few of the local or international banks were actively developing cellphone services. FNB initially launched inContact to help customers keep control of their account activity and to reduce fraud. FNB’s inContact service alerts customers by SMS in real time about any money movement in their bank account such as a deposit, credit, transaction, or Internet banking activity and displays the account balance with each message. In addition to reducing fraud, it resulted in a significant decline in customer queries relating to balances in the branches and call centres. inContact is still a key forerunner to FNB’s Cellphone Banking Services.

In December 2005, FNB had approximately 42,500 customers who were active on Cellphone Banking. By December 2009 the number of active Cellphone Banking customers had grown to approximately 1,3m.

Ravesh Ramlakan, CEO of FNB’s Cellphone Banking Services, attributes the phenomenal growth of this channel to the simplicity of the service. Anyone, with any handset, anywhere, on any national network and at anytime can access Cellphone Banking. There are no software downloads required in order to activate the service. There is no specific type of cellphone that is a requirement. “We have noted that it is the convenience of not having to go into a bricks and mortar structure that appeals to customers.”

“There is an incorrect perception that Cellphone Banking is for the affluent,” says Ramlakan. “Upon monitoring the trends of our customers we have found that 65% of our customers are from our Smart segment. The Smart accounts were established for customers who

earn less than R100 000 per annum and 75% of customers are within the 19 – 40 age groups. We have found that the first time a customer tries the service, their initial reaction to the service is a deciding factor as to whether they would continue using this service.

Hence it is imperative that the initial experience of the customer has to be simple and easy to use with no technical difficulty.”

FNB found that customers were driven by convenience. In order to meet customer expectation prepaid products were introduced. FNB now offers a variety of prepaid products ranging from airtime, to electricity, to Ravesh Ramlakan, CEO FNB Cellphone Banking Services SMS and DATA Bundles.

FNB is the only bank and trusted channel for customers to that allows its customers to participate perform an array of transactions ranging in the National Lottery (LOTTO) using from checking account balances, to Cellphone Banking. FNB supports buying prepaid products, or to paying a responsible gambling, hence there beneficiary.” are daily limits for this product and Ramlakan confirmed that in customer behaviour and trends are December 2009, FNB’s Cellphone noted. During December 2009, the Banking channel processed a record of LOTTO channel generated transactions approximately 10 million transactions in excess of 150,000. in excess of R1 billion, confirming that Most of the services and products that Cellphone Banking is rapidly becoming are released in South Africa are being the preferred choice of its customers. rolled out to the African Subsidiaries.

Ramlakan advised that FNB has a few Africa is leading the world in terms innovative banking offerings which will of Cellphone Banking technology. soon be added to its Cellphone Banking Ramlakan says “Cellphone Banking channel. has come of age in South Africa and is more widely used than Online Banking.

Similar success is expected in Africa where there has been good adoption of cellular services. With 1.3 million active Cellphone Banking from FNB customers this shows that this is a convenient

February 2010 AFRICA TELECOMS 49

advertorial

Cellphone Banking Grows

2010

untangling ICT by 2020

2020

A project of national importance by the South African Communications Forum is underway.

First mooted by the ICT and broadcasting industry last year, ICT Vision 2020 will seek to boost the country’s digital infrastructure within the next decade.

by Thabiso Mochiko

44 AFRICA TELECOMS December 50 February 2010 09 / January 2010

T

he South African information, communications and technology (ICT) industry will have an industryled policy dubbed ICT Vision 2020 by the end of the year. Mooted in October last year by the ICT and broadcasting industry representatives, the objective of ICT Vision 2020 is to set clear goals for bridging the widening digital divide in South Africa and creating sustainable jobs through the development of ICT industries.

Lucky Masilela, the chairperson of the South African Communications Forum (SACF), says ICT Vision 2020 is a project of national importance.

“Ideally a country will have its own ICT policy to feed into the overall government policy,” he adds.

South Africa has been declining in the ranks of the Global ICT Development Index (IDI) in recent years. In 2002, it ranked 77th and fell to 87th place in 2007. At the same time, many developing countries increased their IDI ranks, and South Africa is being surpassed by other countries on the continent. There are many reasons for the decline, including high prices and the slow growth of internet and broadband services.

“One other factor has been the low levels of trust and co-operation between government and the

February 2010 AFRICA TELECOMS 51

“We want to start off with a basic document that people can read and understand.”

private sector ICT industry, which has often been marked by courtroom skirmishes. Now, government has committed to joining hands with industry and civil society to overcome these challenges,” he says.

Since the forum's meeting in October with the Minister of Communications, General Siphiwe Nyanda, Masilela says the SACF has been working on getting other stakeholders on board – including the parliamentary portfolio committee on communications – and also formulating the strategy for the ICT Vision 2020 policy, which is expected to be finalised by the end of the year.

“We want to start off with a basic document that people can read and understand and by the end of 2010 we would like to have Vision 2020 policy being promulgated,” he says.

The industry has identified issues such as infrastructure rollout and sharing, spectrum use and management, broadband, telecommunications pricing, and skills – especially the shortage of policy makers and regulators.

“We have a small pool of policy makers and regulators in the country hence policy decision making takes forever to be finalised. If we had a wider pool it would make policy making easy. We want to work with institutions to increase the number of learners specialising in this field,” says Masilela.

52 AFRICA TELECOMS February 2010

He emphasises that the process needs to be as inclusive as possible and that there should not be overlapping with government policies.

Masilela adds that ICT Vision 2020 will support the government’s plans and will, in turn, be driven by them.

The ICT Vision 2020 project has received support from the minister, who says the department of communications will finalise a national integrated ICT policy framework that will set a long-term vision for the development of the sector.

Nyanda stresses that there is an urgent need to respond to the question of how ICTs can be positioned as a critical instrument in the fight against poverty.

“ICTs provide the information and knowledge needed by those tasked with helping the poor to overcome their destitute situations. Access to electronic communication and network services, especially broadband and the internet, continue to stay unaffordable to large sections of our society. Broadband services, if made available at an affordable rate, can add great value to our developmental agenda,” Nyanda adds.

He invites the SACF to contribute to participate in all processes initiated by his department such as the national broadband strategy, radio frequency spectrum usage policy, and set-top box strategy. AT

advertorial

Mobile Data Services

Quality Experience Requires Holistic Network Management

Mobile data services continue to soar with global traffic expected to grow 131% annually through 2013, according to Analysis Mason. Such numbers come up as providers launch 3G networks in emerging markets and as Long Term Evolution (LTE or 4th generation mobile broadband standard) will be available in mature markets in the next few years.

With this growing demand for data services that provide access to any content on any device at any time, providers cannot afford poor quality of experience (QoE).

A key aspect is that the actual transport of that data is done by the underlying IP infrastructure, rather than the wireless network.

By bringing together the QoE perspectives from these two domains, providers can comprehensively assure end-to-end quality. And with more of the wireless network becoming IP based, a converged view is vital to troubleshoot service degradation proactively, down to every infrastructure sub-element, and in real time.

A holistic approach to mobile data service quality management involves several key considerations, including service topology awareness for troubleshooting and capacity planning. Management tools should track the connectivity between packet core elements, and between GPRS nodes and base station controllers to enable operators to sectionalise traffic and impairments across downstream elements.

Operators will also need modeling of the critical transport elements supporting the packet core elements to help operations teams isolate

A key aspect is that the actual transport of that data is done by the underlying IP infrastructure, rather than the wireless network. impairments in the exact network equipment that might have caused the packet core not to provide the required services. Combined with advanced analytics, such modeling also aids in comprehensive capacity planning.

Predictive reports on indicators such as interface saturation and time to saturation, together with corresponding reports on mobile infrastructure, help ensure that design decisions are not made in a silo fashion.

Once the service topology is modeled, the capability to monitor end-toend quality on the service delivery paths comes as a natural benefit, achieved by leveraging built-in vendor instrumentation to report on parameters like latency, delay variation and packet loss all the way to the end-users.

With wireless networks becoming increasingly IP-based, it is critical to provide one single view to assure the mobile network infrastructure together with IP infrastructure. Traditionally, one set of tools is used for each of these domains, and these tool sets are operated by different teams. When it comes to delivery of mobile data services, there is inherent inefficiency in interdependent teams using separate solutions to manage different

domains. Productive hours can be lost, for example, if internal teams are going back and forth before eventually discovering causes of problems.

Another key aspect is that mobile service providers are achieving significant revenue from partnerships and wholesale subscriptions. By offering a dashboard for corporations that purchase enterprise data services, service providers can enable them to view the performance of the respective private data service.

The same applies to mobile virtual network operators, enabling mobile providers to offer additional services and to build trust among these critical customers.

While commitment to QoE must be genuine, ultimately it must also be cost effective. This requires holistic engineering perspectives to plan and size supporting network infrastructure.

This will become even more critical as LTE technology is deployed.

Ranga Thittai, Product Manager at InfoVista.

February 2010 AFRICA TELECOMS 53

Meeting Africa's infrastructure needs

Africa remains one of the most exciting regions in which to do business despite the global financial crisis having slowed the wild scramble for the continent to steady, inevitable progress. By Brett Haggard

W

an ITU session in Minsk last year. Africa's infrastructure featured on the agenda

ith an estimated population of around 1 billion people, some of the fastest growing economies in the world and a thirst for knowledge and technology, it's easy to identify the region as one ripe with opportunities.

As anyone active in Africa will relate, however, it is easier said than done and many a business leader's hopes of quick riches have been dashed by the continent's unique business conditions and challenges. A general lack of resources, fewer skills and costly delays are common obstacles to overcome and are difficult to plan for, and practically impossible to cost properly.

54 AFRICA TELECOMS February 2010

Public-private partnerships (PPPs) therefore provide a safer, even if not failsafe, way to help governments realise their objective of service delivery while enabling private enterprise to enter markets without taking on absolute risk.

According to the World Bank, telecommunications, energy, transport, and water and sewerage are the main infrastructure projects to benefit from this approach, with more than US$100 billion invested in 204 telecommunications projects across the region between 1990 and 2008.

The impact of the recession The impact of the global recession started becoming evident in 2008, with the Public-Private Infrastructure Advisory Facility (PPIAF) reporting at the end of last year that investment levels fell by 50% in the Middle East and North Africa.

Sub-Saharan Africa, however, showed a 10% increased over 2007.

No comprehensive figures are available yet for 2009, but the downward trend from 2008 onwards is expected to have continued.

“Projects are being impacted through higher cost of financing, project delays and cancellations: The increased cost of financing is quoted as a major impact of the crisis in less than 2% of surveyed projects by investment. However, anecdotal information suggests the infrastructure projects are being affected by the higher cost of funding,” the PPIAF wrote in the first quarter of last year.

“A recent ITU report indicates that telecommunications companies’ debt issuances are 'being secured at spreads of up to 4.75% in late 2008, 3-4% higher than the financing available pre-crisis',” it reported.

According to the PPIAF report, this had the impact of many projects being postponed or cancelled, amounting to as much as US$81 billion. It said that 16% of surveyed projects by investment had been delayed, only 2% cancelled and another 2% at risk of being cancelled.

Will Hahn, principal analyst at Gartner

Technology & Service Provider Research, who is well versed in the African ICT sector is hardly surprised by these figures.

While the economic crisis had stunted investment last year, resource-rich African economies weren't as badly hit, he says, and are expected to show a more rapid return to growth that will spur on the continued need for infrastructure investment and development.

Enabling Africa data revolution An example of how the pooling of public and private funding and resources will be delivering very real benefits is the EASSy cable system that is due to connect more than 250 million Africans to the rest of the world via this high-speed broadband connection. The fibre-optic cable will connect 21 countries thanks to the efforts and money – US$248 million of it – of private, state and semi-state owned telecom companies, development agencies and lenders such as the African

Assured, but not guaranteed “Investors are comforted investing in a state-owned project as it is likely to be more stable,” he says, before adding that this comfort is based in part on the goal posts remaining static. “Investors need to know that the rules won't change.”

In return for that assurance, private sector investment has enabled states to deliver services to areas it could not previously reach, while also increasing the viability for the private concerns to achieve a decent return.

“You could end up with the situation whereby the government acts as the 'anchor tenant' in providing city-wide telecommunications services, for example, which is a big drawcard for the private sector service provider,” he says.

He points to the contribution that a public-private partnership can make in bringing services to under-serviced or previously neglected areas due to their remote location. “This is not easy to resolve, but is seen as absolutely necessary, and the government has to provide You could end up with incentives for them to operate the situation whereby in markets that aren't necessarily the government acts viable,” he says.

These incentives would be as the 'anchor tenant' the terms of the agreement that in providing city-wide increase the viability of bringing telecommunications services to a location that is suboptimal in usual business terms. services

February 2010 AFRICA TELECOMS 55

Education – a natural beneficiary

Development Bank, the Development Bank of France, the European Investment Bank, and International Finance Corporation.

Hahn says the sudden provision of broadband access – via this cable, Seacom and a spate of others making landfall in the near term – will provide a spark to connectivity and activity on the continent. A mark of all these projects is state participation.

“There is a crying need for bandwidth – Africa has the highest population with the smallest bandwidth. And there is room for everybody, and because the costs are much lower, the service providers can better service smaller and more remote areas. This will in turn make future investments more viable, and the benefits to the user is cheaper services.”

A critical success factor, he points out, is that while governments can be the catalyst for such projects, they need

56 AFRICA TELECOMS February 2010

to leave the operational elements to the service providers who are best geared to do so most effectively.

He believes that the catalytic role should include paving the way to enable efficient service delivery, including minimising regulatory and other costs that hamper affordable services being delivered to the end-users.

Looking to where the heaviest investment will be required and directed in the near term, Hahn says telecommunications projects are likely to focus primarily on data services – even above voice – as the potential and demand is greatest.

The interest shown by China in developing such infrastructure would be one area to watch, particularly as companies often enter with government backing and incentives as the country looks to strengthen its foothold on the continent. AT

Kenya has demonstrated the value that both the PPP approach and ICT can bring to help raise the standard of living in countries hampered by a lack of public funding.

According to the Ministry of Education, less than 2% of public primary schools have access to basic computer studies and only 800 out of the 4 000 public secondary schools have computers.

One of several e-learning initiatives, the Accelerating 21st Century Education (ACE) project was launched last year thanks to funding from the Clinton Global Initiative in collaboration with Kenya’s Ministry of Education. The project aims to improve the quality of primary and secondary education through the effective use of information and communications technology.

The US$9 million project will distribute more than 6 000 networked computers to students at 60 schools and train around 7 000 teachers to give effect to the “one-to-one e-learning” initiative.

The Ministry of Education has been attempting to establish e-learning projects since 2005, which eventually culminated last year in the launch of the first phase of the Kenya Institute of Education (KIE) curriculum digitisation project that will enable e-learning.

The ACE project, with additional support from the telecommunication regulator, the Communications Commission of Kenya, Cisco, Intel, Microsoft and USAid is expected to give effect to this initiative.

The Minister for Education, Prof.

Sam Ongeri, says the move will harness access to technology and reduce disparities in curriculum delivery.

“Curriculum review efforts will from now be geared towards modernisation, including intensification of the integration of ICTs to cover all subsectors,” he said. “A number of people have been coming with foreign e-learning content for us to adopt, but we have rejected all this so that we can develop our own.”

Cisco, Intel and Microsoft have also partnered to establish a School Technology Innovation Centre in Nairobi that will focus on research on innovative emerging technology solutions and serve as a repository and showcase for best-of-breed teaching, learning and educational technology.

Hear from

Nolo Letele Group CEO Multichoice

Paul Edwards Chairman Starcomms Holdings

Conference: 12 - 15 April 2010 | Exhibition: 13 - 14 April 2010 Sandton Convention Centre, Johannesburg, South Africa

Investment and development for operators, developers, government and investors SatCom Africa 2010 is the leading satellite conference and exhibition in Africa! Understand how your business can benefit from satellite technology, how you can grow your bottom-line and thrive in competitive times.

Honourable Minister Naledi Pandor Department of Science and Technology South Africa

Honorable Minister John Nsambu Ministry of ICT Uganda

s Discover how Africa’s satellite sector is moving forward amidst tough competition; end-user demands and changing terrain s Africa’s biggest buyers debate the current capacity situation; future prospects for expansion and how satellite is meeting their need s Helping you explore vertical market opportunities with more end-user content – so you have more opportunity to hear from your peers and find the right solution for your business

2 workshops, 2 days Pre-conference workshop: 12 April 2010 Satellites role in emerging markets Sean Victor Principal Specialist Vodacom Business

Dawood Shah Managing Director: Afsat Services Afsat Kenya

Post-conference workshop: 15 April 2010 Satellite spearheading broadcasting innovation

Africa’s leading satellite event is going all out for 2010! To be apart of Africa’s only satellite forum contact Alison Forder now on +27 (0)12 786 4390 or email alison.forder@terrapinn.co.za now to secure your place in front of potential clients!

Book before 5 March and save up to R2051

www.satcomafrica.com Sponsors:

Edwin Thompson General Manager: Infrastructure and Technology MTN Business

Kai Wulff CEO Kenya Data Networks, Kenya

RASCOMS TAR-Q AF THE PAN-AFRICAN SATELLITE OPERATOR

Produced by:

Mashilo Boloka Director: Broadcasting Policy Department of Communications, South Africa

Reply form Yes! I am interested in SatCom Africa 2010

c I would like to attend – please register me

Fax: +27 (0)11 707 9974 Voucher code: A13 101178

c My company would like to participate – please send me more information

Name ..........................................................................................................................................................................................................................................................

Job title .................................................................................................................... Organisation ............................................................................................................

Endorsers:

Address ......................................................................................................................................................................................................................................................

Post code .................................................................................................................. Country ....................................................................................................................

Tel ............................................................................................................................. Fax ...........................................................................................................................

Email...........................................................................................................................................................................................................................................................

BOOK NOW! online www.satcomafrica.com | email jaylene.naidoo@terrapinn.co.za | phone +27 (0)11 516 4051 | fax: +27 (0)11 707 9974

2569 Africa Telecoms

Sarat Lallah CEO Mauritius Telecom, Mauritius

The changing face of African ICT Public-private partnerships in ICT in Africa have paved the way for a communication revolution in many African countries

by Mark Williams (Senior Economist, World Bank Group)

58 AFRICA TELECOMS February 2010

The World Bank Building in Washington.

T

he ICT sector in Africa has undergone a revolution over the past ten years. The continent has moved from a situation in which only the privileged few had access to the phone at the start of the decade to the current situation in which many people, even those living in poor or rural communities, consider telecommunications to be part of their everyday lives. The majority of African families can now use ICT to keep in touch with relatives living away from home, improve the productivity of their businesses and benefit from services delivered to them over the phone.

This revolution has been driven by private investment into the telecoms sector, particularly in the case of mobile operators which have rapidly come to dominate the telecoms landscape in Africa. The role of the government has been to create the right market conditions for investment and competition to flourish, bringing networks and services to more and more of the population. These policy decisions, taken by governments across the region, have been remarkably successful. Around two-thirds of Africa’s population now live within range of a mobile telecommunications network and this increases every year as networks expand. However, just as one form of the digital divide – access to basic voice telephony – is closing, a new one

is opening up. The internet is rapidly coming to occupy the same central role in people’s lives that the telephone has done in the past. The explosion in the number of people using the internet around the world and the proliferation of applications and services is profoundly changing the way societies live and economies function. Looking ahead, this transformation will only deepen, as the internet continues to expand. However, to date, Africa has largely been left out of this process. Internet penetration rates remain close to zero and the positive impact of broadband connectivity is yet to be felt by the overwhelming majority of Africans.

The question of how to make broadband affordable and accessible is therefore quickly moving up the policy agenda.

The model of private-operation and government-regulation which has worked so successfully for the mobile voice market, may not be so easily adaptable to broadband. Large investments are required to expand broadband networks and much of this will be in high-capacity fibre-optic networks.

Partnerships between the public and the private sector are a good way of reducing the risk of these investments and helping the networks to expand beyond the core urban areas and into less-profitable rural areas. However, it is early days for governments trying to understand how to design and implement these partnerships. Successfully balancing

the interests of private investors and the objectives of public policy is a major challenge for which there are few ready models to follow in the telecoms sector.

We need to look at the experience of other infrastructure sectors such as transport and energy to ensure that the lessons that have been learned in the design and implementation of partnerships in these industries are included in the design of structures in the telecoms sector.

If these lessons can be successfully adapted for the telecoms sector, the continent stands to benefit enormously.

But PPPs in the ICT sector need not be restricted to infrastructure. There are many aspects of public service delivery which can be successfully provided in partnership with the private sector.

Customs processing, service outsourcing, financial transfers, for example, can all be carried out by private companies, working together with government. PPPs offer the opportunity to combine the investment resources and skills of the private sector with the financial resources and policy expertise of government to meet the infrastructure needs of the region. This is an exciting new area which holds a lot of promise for the future. AT Note: the views expressed in this article are those of the author and do not necessarily represent those of the World Bank Group

February 2010 AFRICA TELECOMS 59

Marc Stane

with MARK WILLIAMS SENIOR ECONOMIST, WORLD BANK What initiatives or projects has The World Bank launched or been involved with over the past 6 months highlighting Public Private Partnerships (PPPs)?

The World Bank Group is looking increasingly at PPPs throughout the telecommunications sector in Africa.

The World Bank and International Finance Corporation (IFC) teams both worked on East African Submarine Cable System (EASSy) from the initial conception stage through to providing financing for the project. This was one of the first PPPs in the telecoms sector in the region and is due to be operational by June 2010. At the same time, the World Bank has been involved in supporting PPPs in terrestrial communications infrastructure through the Regional Communications Infrastructure Program (RCIP) in Eastern and Southern Africa.

We also recently approved the Central Africa Backbone (CAB) project which will utilize the oil pipeline connecting Chad and Cameroon for backbone telecommunications capacity.

Can you elaborate on The World Bank‘s position regarding market liberalization to encourage ICT development?

The liberalization of markets in the

60 AFRICA TELECOMS February 2010

telecommunications sector has been an overwhelming success in Africa.

The advent of private investment and competition has created large communications networks and prices are falling. We continue to support a policy of full liberalization, together with clear and stable sector regulation as we think this will deliver the desired results of affordable communications for all. Broadband is the next policy challenge for the region. Some elements of the infrastructure may need public financial support. However, this should be channelled through partnerships with the private sector, which has significant financial resources and the necessary technical expertise to provide telecommunications services.

What are some of the obstacles encountered while trying to build effective PPPs? The political environment is a key obstacle to successful implementation of PPPs. Both governments and private partners need to clearly understand their rights and obligations under the partnership and to understand that the arrangement is for mutual benefit.

Instability or inconsistency in financing or performance on either side is likely to jeopardize a successful outcome. These

difficulties can be minimized through a clear contractual structure in which both parties fully understand what is expected of them and containing appropriate remedy mechanisms in the event that either party fails to meet its obligations.

How can The World Bank ensure that backbone infrastructure developments such as the East and Central African Backbone projects will reach the most needy rural and geographically challenged areas?

This is a key focus of our work on backbones in Africa. In our view, the market, if properly established and regulated, will take care of backbone networks in urban areas and on routes that link major urban centres. However, in rural areas, the costs of establishing backbone networks often outweigh the monetary rewards. We recommend that governments target any financing of telecommunications infrastructure in these areas to encourage the private sector to develop backbones. This lies at the heart of our approach to financing these projects. In Burundi, for example, we are co-financing a backbone network through a PPP. The network will cover the entire country, including parts of the country which are not financially viable, particularly in the immediate future.

How did technology assist in the recent devastation in Haiti, and what lessons can be learnt for effective Disaster Management and the effective use of communications technology therein?

In your opinion, has the African continent begun to see the dramatic price reductions in broadband Internet costs or are the prices remaining prohibitively high?

Aman Emoto

Effective communications is a vital part of disaster recovery from the moment of the disaster itself, through to the long process of reconstruction. The mobile networks in Haiti showed remarkable resilience during a disaster of such magnitude and enabled survivors to contact loved ones and to coordinate the relief effort. This ability to withstand major natural events is an important aspect of telecommunications in developing countries which is often overlooked.

second objective is open access and competition. The SPV will be able to sell its capacity as a wholesaler into all of the markets in the region. This will create an internal marketplace on EASSy which will drive down prices and greatly benefit customers.

Can you share some further insight into the EASSy cable project and its success as a model for PPP framework?

The EASSy cable project is a 10,000km submarine fibre-optic communications cable running along the east coast of Africa from South Africa to Sudan. This cable will provide low-cost, high-bandwidth international connectivity to all of the countries in the region. EASSy will have the highest capacity (1.4 Tbps) of all submarine cables along the east coast of Africa and will interconnect with multiple international submarine cable networks for seamless onward connectivity to Europe, USA, the Middle East and Asia.

The total investment in EASSy is US$263.3 million. The cable is owned directly and indirectly by 26 telecom companies, including 21 licensed African telecommunications operators. Together, they have contributed approximately US$190 million to the financing of the project. A further US$70 million has been provided through loans from four Development Finance Institutions (DFIs), which became involved on the basis of the commercial viability of the

“We recommend that governments target any financing of telecommunications infrastructure in rural areas to encourage the private sector to develop backbones.� project and the open-access principles on which it was structured. The financing of EASSy by DFIs through a PPP will enable the cable to achieve two major policy objectives. The first is that it allows smaller operators from the region to participate in the cable as shareholders.

EASSy is owned by a consortium of investors, including some of the major regional telecommunications operators and a Special Purpose Vehicle (SPV) called WIOCC. The SPV was created by 11 smaller telecommunications companies in the region to allow them to invest at the consortium level by pooling their resources and obtaining debt financing from the DFIs. This structure ensures that they will be able to access connectivity on the same terms that the larger investors are receiving. The

The price of broadband in Africa remains high but, in those countries that have established a competitive market which largely encourages investment, we are seeing positive signs of market developments. The bandwidth available to customers is beginning to increase and the number of ways in which broadband can be accessed is going up.

However, we have a long way to go before broadband will be available in same way as affordable mobile voice telephony has become part of everyday life. It is important that we all keep a close watch on how the market is developing to ensure that broadband prices are moving in the right direction.

What would you say are the highlights to watch for in 2010 in terms of PPPs and the move towards an improved connectivity for the African continent?

We are working hard on preparing a project in West Africa which will utilize the electricity transmission networks to provide international backbone connectivity throughout the region. We are also looking to build on our experience in Ghana where we are working with the government of Ghana on a PPP for the delivery of e-government services. We think there are many more opportunities like this to utilize ICT as a platform for service delivery. AT

February 2010 AFRICA TELECOMS 61

Zamtel

What’s in store for the winning bidder?

By Protea Hirschel (ICT analyst , Frost & Sullivan)

L

ast year the Zambian government put up for sale a 75% stake in Zambia’s fixed line incumbent, Zamtel.

Zamtel is also the operator of the mobile brand CellZ. The government will retain at least 25% equity in the company, with the stated intention of floating these shares on the Lusaka Stock Exchange at a later stage. This will allow ordinary Zambians to benefit from the investment opportunity. Towards the end of 2009, the Zambian Development Agency (ZDA), which is overseeing the privatisation with commercial assistance from RP Capital Advisers, short-listed eight bidders from an initial 30 or so interested parties. Of these, only four companies – Libya’s LAP Greencom, Russia’s Altimo, India’s BSNL and Angola’s Unitel – have decided to pursue offers for Zamtel. What do these remaining bidders bring to the party?

LAP Greencom is part of Libya’s sovereign wealth fund. It is likely that it is at least in part politically motivated in the investments it targets, and it has the funds to follow through.

LAP Greencom was also involved in the privatisation of Rwandatel, so has experience with African operators.

Unitel is owned in part by Portugal Telecom (PT).

Interestingly, PT is one of the bidders that withdrew its original interest. Unitel’s geographic proximity may make it easier to

62 AFRICA TELECOMS February 2010

extend its experience in growing the telecommunications market in its neighbouring country. BSNL itself appears to be in some trouble as it is reportedly seeking aid of US$1.9 billion from the Indian government. Neither BSNL nor Altimo has a presence in Africa. Altimo particularly has identified Africa as one of the last remaining high growth opportunities. With few other established opportunities coming to market, Altimo is bidding for what it can.

It is also worth considering what the winning bidder for Zamtel will be buying. The number of fixed lines in Zambia has not only stagnated but declined by 3% over the past two years to around 90,000 lines. In the absence of investment in Zamtel’s fixed line infrastructure, mobile operators Zain and MTN are meeting much of the demand for telecommunications, having grown subscribers by a combined 73% over the past two years to the current 4.2 million subscribers. Over the same period, CellZ, Zamtel’s mobile subsidiary, has lost both market share and subscribers. In an era when brand identity for mobile operators is becoming increasingly important, CellZ has neglected to build a brand separate from Zamtel.

Frost & Sullivan believes that there is some value in Zamtel’s national fibre backbone, which is in the process of completion, as well as the international gateway. Zamtel has an exclusive

licence to the international gateway, and derives money from the other mobile operators to route calls through it. This is, however, reduced to mere accounting revenue as gateway access fees are offset against the company’s interconnection fee obligations.

Zamtel is a net loser as a result of its low market share.

The financial status of Zamtel is subject to some speculation, as neither the valuation report nor the financial statements are publicly available. Nonetheless, despite revenues of US$100 million, Zamtel has not made a profit. Much of Zamtel’s woes have been blamed on a lack of investment, some of which is presently being rectified. This is due in part to ongoing cash flow problems as it is owed substantial amounts of money by the Zambian government. The winning bidder will have to address operational costs urgently and inject capital in order to bring the company back to profitability. Undoubtedly this will include restructuring the bloated staff complement and tackling procedural inefficiencies.

Cost savings are, however, not enough. The technological platform needs to be created to take advantage of the next wave of growth, namely internet access through mobile or fixed broadband. Current investment by the company in the national fibre backbone, as well as DSL and WiMAX roll-outs in the capital, are a start.

Frost & Sullivan’s analysis also shows that mobile communications, with a projected compound annual growth rate of 10.7% to 2015, remain a significant growth area in Zambia.

In order for Zamtel to benefit from this growth, CellZ needs to bring its service offering in line with those of its competitors.

Value-added services are becoming increasingly important in preventing a slide in average revenue per user (ARPU). In a market which is characterised by strong competition between the largest two mobile operators, establishing CellZ’s brand identity separate from Zamtel’s should be a priority.

Criticism has been levelled at the Zambian government about the lack of transparency in the privatisation process. To date, neither the Zambian government nor the ZDA has made Zamtel’s valuation report available to the public, seemingly using it as a bargaining chip. Criticism has also been directed at RP Capital Advisers, with allegations of back-hand dealings. Opposition parties have vowed to reverse the privatisation. However, this is likely to be political posturing ahead of the elections rather than a real threat. AT For more information on Frost & Sullivan’s analysis of Zambia’s telecommunications markets, please contact Patrick Cairns on Patrick.cairns@frost.com.

February 2010 AFRICA TELECOMS 63

64 AFRICA TELECOMS February 2010

The compassion of the world confronts a calamity in Haiti

by Leslie PĂŠan

Helping Haiti find its voice

February 2010 AFRICA TELECOMS 65

T

he Haitian tragedy touched the hearts of people all around the world. For the past four years, Haiti has seen a cascade of disasters, from armed gangs to food riots, from collapsed governments to back-to-back hurricanes. Four separate hurricanes and tropical storms (Fay, Gustav, Hanna and Ike) in August/September 2008 destroyed 60% of harvests and left vast swathes of land and major cities under water for months, with 800,000 left homeless. Now an earthquake has destroyed buildings, burying people alive and tossing many corpses into the streets. Haiti is threatened with being burned in the flames of debt as this natural disaster is likely to lead to a 24 percentage-point increase in the country’s debtto-GDP ratio, because of new loans to meet its rebuilding and redevelopment costs. Real relief from the worldwide call for salvation can happen if Haiti’s debt burden, leading to its calculated impoverishment, throughout the 19th century until 1947, is not increased as a result of its reconstruction efforts or is forgiven.

The aftermath of the earthquake

A magnitude-7.0 earthquake equivalent to the power of several nuclear bombs, devastated Haiti on January 12. The earthquake struck the most densely populated part of Haiti, Port-au-Prince.

Approximately 25km from the capital and 13km below ground, the earthquake also destroyed other cities in the south-eastern area, such as Cayes-Jacmel, La Vallée, Bainet, Côtes-de-Fer, Jacmel and Thomazeau.

In the western areas several communities were affected such as Cabaret, Cité-Soleil, Croix-des-Bouquets, Tabarre, Carrefour, Grand-Goâve, Gressier, Léogâne and Petit-Goâve. More than 100 aftershocks have been felt ranging from 4.2 to 5.9 on the Richter scale. The death toll is estimated at between 200,000 and 250,000, with at least 1,000,000 people left homeless. Seventy percent of buildings in Port-au-Prince were destroyed, 80-90% in Leogane and 50-60% in Jacmel. Three million people are in need of emergency aid. Twentythree medical centres and hospitals were destroyed.

Most government structures collapsed including the presidential palace, customs and tax administrations and the United Nations Mission headquarters, that lost close to 100 members. Four thousand people had amputations, 30,000 commercial enterprises were shattered and 250,000 houses were destroyed. Fear of new earthquakes was fuelled by the aftershocks, compelling over 500,000 people to sleep under tents in the streets and public parks of devastated areas. It’s a huge task to restore potable water, electricity and telecommunications as well as clearing roads full of rubble from fallen buildings and to bury the dead with dignity.

International community response

Fifty countries sent rescue teams, totalling 1,800 personnel, that contributed to help save 132 victims under the rubble. The

66 AFRICA TELECOMS February 2010

Dominican Republic opened its borders and gave access to hospitals for the wounded and critically injured. Rescuers from China, Iceland, Spain, France, Brazil and from several States in the US like Virginia, Florida and California pulled survivors from wrecked buildings like Hotel Christopher and Hotel Montana as well as government buildings.

A massive humanitarian effort was immediately undertaken by the United Nations that called for US$560 million from the world community. The World Food Program requested US$279 million to feed two million people for the next six months. Thousands of donors, including countries, private organizations and individuals answered the call generously.

Logistical problems hampered the delivery of supplies and food from the beginning. But with the help of the United States, Portau-Prince’s airport capacity, with one runway usually handling at most 40 flights per day, has been increased to 140 flights per day. It’s a big improvement but there is still a substantial backlog of 1,400 relief flights waiting to land. Medical evacuations have been organized to Dominican Republic, Florida, Martinique and Guadeloupe. A Telethon sponsored by George Clooney on ABC, CBS, NBC, FOX, CNN, BET, HBO, MTV, VH1 and CMT, all without commercial interruption, raised US$58 million in two

hours on January 22 in New York, Los Angeles and London.

Celebrities such as Jennifer Hudson, Bruce Springsteen, Bono, Madonna, Morgan Freeman, Dave Matthews, Neil Young, Mary J Blige, Coldplay, Stevie Wonder, John Legend, Wyclef Jean, Robert De Niro, Jack Nicholson, Halle Berry, Julia Roberts, Ellen Barkin and Leonardo DiCaprio participated in the event.

Kaka, Figo, Zidane and Thierry Henry are among the stars who participated in a soccer match organized by UNDP and the Portugal club Benfica in Lisbon to raise s56,000 for the victims of Haiti’s earthquake.

In Africa, financial support for the Haiti earthquake victims has

The reconstruction bill is likely to reach tens of billions of dollars over two decades. also been pouring in from several countries like Gabon, Ivory Coast, Benin, Senegal and Equatorial Guinea. Telethons are being organized by various artists in Senegal, Nigeria, Liberia, Congo and the Ivory Coast to raise money through music for the victims. The presidents of both Senegal and Liberia offered Haitians wanting to resettle an invitation to come and live in their respective countries.

A meeting of donors took place in Montreal, Canada on January 25 to initiate discussions on the reconstruction of Haiti among donors and the Haitian government represented by Prime Minister Jean-Max Bellerive. The parties agreed to reconvene in New York in early March for a larger pledging conference.

In the meantime, experts are preparing an overall reconstruction plan with detailed cost estimates. The reconstruction bill is likely to reach tens of billion of dollars over two decades. Haiti’s plight has not deterred former US President Bill Clinton from continuing his work in attracting businesses worldwide to come and invest in Haiti. Following his participation at the World Economic Forum at Davos, Switzerland, he has been appointed by the United Nations as Chairman of the Reconstruction Authority to rebuild Haiti.

Government response

The shock knocked out the government. There was an absence of guidance and President Rene Preval said nothing to the population for the first nine days. But since then, the government has started to coordinate humanitarian actions and take certain measures such as the removal of corpses and burials in mass

graves. Also the government initiated the transportation of people living in the provinces using private and public buses as well as trucks to carry 500,000 people out of the capital to secondary towns. Coordinating entities were created on a sectoral basis, starting with health, water supplies, energy, security, shelter and reconstruction. The emphasis is on the distribution of food, the supply of tents, water and drugs as well as the functioning of 94 health institutions and health units.

ICT contribution to raise money and to the rescue efforts

Cell telephone technology contributed to saving many lives. The Short Messages Service (SMS) has been instrumental in helping many people during this disaster. People under the rubble were able to communicate with family and friends in Haiti and also with people abroad.

High-tech means are being used to raise money for relief operations and to enable Haitians living abroad to communication with loved ones at home. With the exception of Haitel, using CDMA, the quake shut down all landlines and GSM services.

Telecom Sans Frontières sent two emergency response teams to Haiti to offer free two-minute phone calls to anywhere in the world. The ITU deployed 40 satellite terminals for basic communications, along with 60 other terminals with satellite broadband capability. Haitian telecom operator Voila, with US company Trilogy International Partners providing cellular communication, was able to re-establish its network a week later and to restore wireless data service with GPRS and EDGE. After a week of service interruption, Digicel was able to restore its

February 2010 AFRICA TELECOMS 67

Haitian Creole speakers were found to translate incoming texts from Creole to English. cell sites that were affected by the earthquake and to boost its international circuits to support the major increase in international traffic to and from the country. The company created a Haiti Relief Fund that donated US$5 million to NGOs in Haiti to support the relief efforts. In order to ease the trauma of the survivors, Digicel also gave each of its two million customers US$5 in free credit – totalling US$10 million.

Other fundraising efforts by ICT include the donation by mobile-phone users in the US of more than US$10 million to earthquake relief within 36 hours by texting ‘HAITI’ to the shortcode 90999 from their phones. Within a week more than 900,000 people donated US$10 per text message. Aid organizations have also successfully solicited donations via social-networking sites such as Twitter and Facebook.

Public communication of the quake was enhanced by the coverage it received from the news channel CNN with seven of its reporters on the ground. Through this media, families searching for their missing ones were able to send and receive messages.

Josh Nesbit, a 24-year-old Washington DC resident and co-founder of FrontlineSMS:Medic, a non-profit organisation that utilises SMS technology to improve medical care in developing nations, decided to establish a local SMS gateway to help rescue survivors.

He received the support of Jean-Marc Castera, a Haitian network engineer for Digicel, who secured a short code, 4636, to be used by people to send text messages to report injuries or give word of survivors trapped in the rubble. With the contribution of the GPS supplied by the Office of Innovation at the State Department, any texts sent through 4636 were passed along to the Red Cross and the US Coast Guard, with the message and location of the sender.

Companies like US Google, Ushahidi and Instedd lent their support to this project and CrowdFlower and Samasource, two companies from San Francisco, recruited Haitian Creole speakers to translate incoming texts from Creole. Each day, 4636 received 2,500 messages ranging from hospitals reporting fuel shortages, people offering free beds or requests for help for women going into labour.

68 AFRICA TELECOMS February 2010

What GVG and some other companies are doing

Global Voice Group (GVG), founded in Port-au-Prince in 1998, and its partners System One World Communications Iberia (SOWCI) and Business Telecommunications Services (BTS), sent a team of experts to work on communications in Port-au-Prince.

GVG offices and staff were safe but many family members are still unaccounted for. The home of SOWCI’s country manager crumbled and fell down a ravine. GVG’s country manager chose to remain behind to assist in the clearing and rebuilding effort. GVG staff voluntarily donated a day’s pay to relief effort and these funds have been matched by Global Voice Group. In addition to donations of money, medical supplies, anaesthetic drugs, antibiotics and orthopaedic surgeons are still needed for earthquake victims, some of whom need reconstructive surgery.

A silver lining

In addition to the dissemination and adherence to stricter antiseismic building codes, consensus is being built to move the capital Port-au-Prince to the north toward Saint Marc. The reason is to move away from the fault line that generated both left-lateral and vertical movements, something geologists and geophysicists consider an anomaly that does not resemble a typical earthquake.

Hence their decision to consider rebuilding the main political, commercial, medical and educational facilities in a different location. Only half of the Enriquillo fault line ruptured on January 12, along 45 km. Haiti is thankful for the immense international response to this unconscionable destruction. The compassion of the world is supporting the resilience of Haitians who face adversity.

It will take years to rebuild. It’s an opportunity for Haiti to start on new ground, assuming that all debts will be cancelled by other countries, like Venezuela did. It is not just enough to have a debt moratorium, as international financial institutions are proposing.

Considering the way Haiti’s society has been shattered, debt cancellation is one of the most meaningful, serious and organised ways to assure the long term survival of Haiti. AT

If everyone agrees, why are we still arguing?

Efforts by the public and private sectors to work together in harmony don’t always have a happy ending. Sometimes despite all the good intentions, the conflicts of interests are just too great, as Lesley Stones reports.

w

ith years of incessant bitching and moaning by consumers and smaller telecoms operators about the high cost of telecommunications in South Africa, the situation came to a head last year.

Maybe it was sheer weight of numbers, or the impetus of new Communications Minister Siphiwe Nyanda itching to introduce some changes. No specific event triggered it, but the discontent finally gained some political clout when Nyanda warned that if the operators did

not voluntarily lower their fees, political intervention might be necessary.

The regulatory authority Icasa had been fiddling around with the issue for at least three years, but in typical Icasa style nothing had actually happened. Yet suddenly momentum grew, floodgates of anger erupted, and parliament’s portfolio committee for communications declared that enough was enough. Telephone bills were too high, the committee announced, and the fastest way to bring them down was to slash the interconnection rates that rival operators charge each other for

terminating a call on a different network.

Politicians came out with some fabulous comments slamming the operators for “shockingly high fees” that were “socially indefensible” and based on collusive practices. The committee also slated Icasa for letting them get away with iniquitous pricing practices, and urged Icasa to finally “act professionally, effectively and boldly.”

The operators – once their hands were forced – finally conceded that their fees probably did have some room for reduction, and yes, maybe it was a good February 2010 AFRICA TELECOMS 69

Drawn-out rate cuts proposed by the operators is unfair to consumers who have been affected by high telecommunications costs for too long.

– Siphiwe Nyanda

idea to cut them. So the government and the private sector agree that a rate cut is a very smart idea, and consumers start planning how to spend all the cash they’ll soon be saving.

End of story? No – it’s just the beginning.

The trouble is that for all the veneer of public-private cooperation, the operators really didn’t want to toe this particular line. The biggest players make billions of rands a year from interconnection fees and don’t want to relinquish that easy money. Vodacom raked in R8.6 billion from interconnection fees in South Africa alone in its 2009 financial 70 AFRICA TELECOMS February 2010

year, accounting for 16% of its revenue.

Much of that is retained in pure profit, because its position as the country’s largest operator means it pays out less in interconnection fees than it receives. Vodacom calculated that a 10% reduction in interconnection rates would wipe R200m off its annual profit.

The communications committee proposed a dramatic rate cut from the current unjustifiably high peak rate fee of R1.25 a minute to just 60c, with further reductions of 15c a year until consumers were paying just 15c by 2012. Naturally the operators balked at that, and began devising proposals to justify a minimal cut that would barely dent their profits.

Several attempts were made to come up with a harmonious solution.

At first Icasa believed the best approach was to sit back and let the operators thrash out a lower rate regime amongst themselves then present it for regulatory approval.

The communications committee blasted that as a dereliction of duty by Icasa, saying the regulator must set out clear guidelines instead of allowing the operators to fix their own fees. Their misgivings were vindicated when the talks initiated by Icasa collapsed within a farcical 20 minutes.

MTN and Vodacom proposed cutting the blended interconnection fees to 78c a minute, and to 61c over time. Since the

blended rate combines both peak and off peak rates, the actual affect was cut the peak rate fee to R1.01 a minute and the off-peak rate from 77c to 62c – both well above the maximum of 60c demanded by the politicians.

If Cell C had played ball the operators could have presented a united front. But Cell C took the moral high ground by saying what everyone else was thinking, and described the cut proposed by its far larger rivals as mere cosmetic tweaking that wouldn’t benefit anyone.

The debate was heated but brief, and Icasa chairman Paris Mashile called a halt to the whole embarrassing event by declaring that attempts at “moral suasion” had clearly failed.

Discord within the public sector grew even more pronounced when Mashile complained that the law prevented Icasa from simply forcing the operators to cut their rates. Instead it was legally obliged to conduct a long-winded study to determine which players held dominant positions before it could demand any price cuts. Clearly a ludicrous position, since MTN and Vodacom hold almost 90% of the market between them.

Yet the feisty telecoms operator ECN consulted a legal expert, advocate Gilbert Marcus, who declared that Icasa was misinterpreting the law and could force down the rates without conducting any further studies. ECN’s CEO John Holdsworth reckons the actual cost of switching a call between networks is less than 25c a minute, and possibly as little as 10c if the network is run efficiently.

The fact that the fees are indefensibly high is clearly demonstrated by their history: the interconnection rate stood at just 25c a minute until the third operator Cell C was about to launch, at which point MTN and Vodacom hiked it by more than 500% to R1.25.

The reason was simple. As a new operator Cell C would have very few customers, so they would all be calling friends on the rival networks. If Cell C was forced to charge at least R1.25 a minute just to cover its interconnection bill, its ability to enter the market with attractive prices was stymied and it was doomed to struggle.

As the wrangling continued the

communication committee’s deadline of a sharp rate cut to 60c by November 30 slipped by unheeded, and everyone took a breather over Christmas.

The colourful public-private sector battle recommenced when the operators told Icasa they had agreed to cut peaktime interconnection rates to 89c a minute in March. It would fall again to 85c in October 2011 and to 80c a minute in October 2012, while the offpeak rate would remain unchanged at 77c a minute.

The proposal incensed Icasa for two reasons: firstly, the fees were still far higher than the 60c demanded by MPs and substantially higher than the actual cost of providing an interconnection service. Secondly, the proposal came with a major caveat: Icasa had to agree not to re-examine the fees until at least 2013.

For once Icasa found its teeth. It

angrily declared that it would not accept a proposal which tied its hands, and said it would issue draft regulations on the effectiveness of competition in the market as a prelude to enforced price cuts. Icasa’s stance won the support of Minister Nyanda, who said Icasa was right not to let the operators dictate the terms that govern them.

Nyanda said he respected Icasa’s independence and agreed that the drawnout rate cuts proposed by the operators was “unfair to consumers who had been affected by high telecommunications costs for too long.”

At last there was some unity in the public sector, even though it was just a united animosity towards the private sector players.

MTN and Vodacom said they would cut their rates in March whether Icasa approved or not. But Icasa’s surprising

AIRCOM - Innovation in Africa, for Africa AIRCOM provides simple solutions for complex networks.

Be it network deployment, roll out, optimisation or management, our expert consulting services and market leading products provide a one stop shop to ensure your network reaches its maximum potential at every stage of its life cycle. With offices in Africa, we work with the regions’ leading operators to deliver superior network performance, helping you deliver optimal quality of service to your subscribers, whatever the network technology.

ferocity had stunned them into back peddling behind the scenes, and they reworked the proposal by removing the unacceptable clause that sought to prevent Icasa from doing its job as the industry regulator. “We are taking out the clauses we have learnt should not have been in those agreements,” said Vodacom CEO Pieter Uys. The standoff unexpectedly dissolved in mid-February when Icasa approved the revised proposal from Vodacom, MTN and Cell C, and agreed that peak interconnection fees will fall to 89c a minute on 1 March.

The whole affair should finally result in lower bills for consumers who have been paying far too much for far too long. But it’s been a process achieved by hostility, not harmony. AT

M 15 OBI SE -1 LE E 8T W US H O A FE RL T B, D 1B BA CO 14 RC NG EL RE O SS N , A

To find out more, visit www.aircominternational.com, call +27 11 745 1475, or email sales@aircominternational.com

THE LAST WORD

No Fly Zone Annual renewal notices, however small, should never be ignored, as SAA discovered.

W

hat a way to begin. South Africa’s national airline South African Airways (SAA) didn’t get 2010 off to a flying start when an unpaid bill of $7.50 grounded its online operations.

On January 17 its website www.flysaa.com went down with a notice saying the website had expired “pending renewal or deletion”. Which is a posh way of saying that somebody forgot to pay the annual fee of $7,50 to maintain its domain registration. SAA’s slogan is “Bringing the World to Africa and taking Africa to the World,” but that tiny oversight meant no one was going from anywhere to anywhere via its website.

SAA blames its USbased contractor Network Solutions (NS) for failing to settle the bill for the registration. Stung into a response, NS posted a blog entitled “Over Communicating Can Be a Good Thing”.

In it, they explain that they send domain renewal notices 75 days before the expiry date, then again before 45, 20 and 10 days.

If the email bounces back, they send a written notice to the registrant’s physical address.

SAA claims its site was back up within a matter of hours, yet other reports suggest it was down for a few days. So exactly how much did this $7,50 slip-up cost SAA? Arthur Goldstuck, MD of research company World Wide Worx, did some number crunching.

He reckons SAA carries 6.5 million passengers a year, with an average ticket price of R2,000. A conservative estimate suggests at least 25% of tickets are booked online, or 2.1 million tickets.

That adds up to R4.2bn per year, or at least

R11.5m a day. Let’s say that again – an offline website may cost SAA R11.5 million a day.

The acting CEO of SAA, Chris Smyth, made his position clear: “The problem was a direct result of service providers not meeting their obligations and SAA will be taking further action in this regard.”

This incident is a valuable lesson on how important e-commerce administration is. A simple oversight can cause substantial financial losses or prove very harmful to a company’s reputation. Lance Greyling, the Independent Democrat’s Chief Whip in Parliament was provoked to slam SAA for its ineptitude: “One wonders how it is possible that a company the size of the national carrier can reach a level of such incompetence that it forgets to renew its website.

“As a public enterprise pivotal to the success of Soccer World Cup 2010, this incompetence does not bode well for the future. As an airline that is at the frontline of forming tourists’ perceptions about our country, SAA must come clean on who is responsible for this frightening level of incompetence,” he blustered. And he wasn’t finished: “The Minister must urgently intervene and ensure that this does not happen again. She must also remind all public entities that they drastically need to lift their standards”.

A little known third party may be the main villain in this not-so-very-funny comedy of errors. In The Net Technologies, a South African ISP listed as the primary contact for the flysaa domain, may be the culprit who neglected to pay the $7.50.If that proves true, In The Net Technologies has certainly scored a huge own goal.

THE AUTHOR | Bradley Shaw is managing editor of Africa Telecoms magazine.

72 AFRICA TELECOMS February 2010

Transforming Telecom Networks.

What does it take to stay at the forefront of your market?

The right partnerships will enable you to focus on your core business .

Improved competitive edge backed by the operational experience of a global Telco Total Cost of Ownership (TCO) reduction enabled by committed cost optimization Managing complexity through improved process efficiency Business agility driven by accelerated go-to-market rollout

Tata Communications Transformation Services (TCTS) delivers a range of Service Offerings across Network Engineering, Service Fulfillment and Service Assurance. We also assist our clients in the planning, migration & rollout phases of emerging technologies such as WiMAX & NGN. To know more about us, visit www.tatacommunications-ts.com

Š Tata Communications Ltd. Tata is a registered trademark of Tata Sons Limited used under licence by Tata Communications Ltd.

We will be happy to help you grow your business. Please feel free to reach us at transformation@tatacommunications.com for any further information.

AFRICA TELECOMS

public private partnerships

TOP 10 for 2010

Companies to watch in the year ahead

making it work for the people

Michael Joseph ISSUE 3

Thought leadership Interview