AT 16

issue 16

west & central african

MObile cOMMunicatiOns

thought leadership interview ZAR 29.95 us$ 3.50 uk£ 2.25 Eu€ 2.95 Rest of Africa us$ 2.95

claire PaPOnneau

Director of the west and central african region for Orange

REGULARS regulars

CONTENTS

22 04 Guest Editorial

ISSUE 16

Thought Leadership

An exclusive interview with Claire Paponneau, Director of West and Central African Operations at Orange.

Saiful Alam, Group Chief Commercial Officer, Expresso Telecoms

06 News

34

Taking on the Challenges in Africa for prosperous growth

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.

30 Statistics

Africa Telecoms presents statistics and data relating to the African telecoms market.

40 Calendar

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

2 AFRICA TELECOMS Issue 16

by Jaques Rautenbach, Chief Strategy Officer: Emerging Africa at Internet Solutions.

42 West & Central African

Mobile Communications Mervin Miemoukand, Ict Industry Analyst, Frost & Sullivan provides an overview.

48 Seizing Opportunity: Africa’s Enterprise Messaging Market

by Charles Landry, Senior Vice President, Messaging, Syniverse.

56 What’s

Next for SA Telecoms

Sub-Editor Niki Sampson Printing Tandym Press

52 Q&A

with Douglas Reed, Chief Executive Officer of VOX Telecom.

The interconnect debate continues to be an emotive issue. Steven Ambrose argues for the removal of interconnect rates entirely.

Executive Editor Mohammed Khan mkhan@3ipublishing.co.za Managing Editor Bradley Shaw bshaw@3ipublishing.co.za Sales Director Sarah Theron stheron@3ipublishing.co.za Art Director: Hayley Davis hdavis@3ipublishing.co.za

Rapelang Rabana provides a commentary on the South African telecoms market.

Myth of 66 The Interconnect

FOR AFRICA TELECOMS

70 Job Listing

A list of the latest telecoms positions from across Africa.

72 Last Word

Real or Virtual? Eguchi Aimi begs the question!

Contributors: Bradley Shaw Brett Haggard Saiful Alam Steven Ambrose Costin Raiu Jacques Rautenbach Mervin Miemoukand Charles Landry Douglas Reed Rapelang Rabana Africa Telecoms and Africa Telecoms Online are published by: 3i Publishing Unit 9 & 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 Audited AverAge QuAlified CirCulAtion from nov 10 – JAn 11, 9989 Per edition.

Issue 16 AFRICA TELECOMS 3

Guest editorial

Group Chief Commercial Officer, Expresso Telecoms

Winners and losers in a price war Price wars have always been a controversial topic of discussion at industry seminars and forums. My recent interest in the issue has dragged me into numerous dialogues and debates with colleagues and counterparts from markets at different stages of evolution – in regions covered by the Expresso group as well as other regions. Very interesting insights have emerged from Greece, Tanzania, Indonesia, India and Kenya.

Everyone is grappling with two fundamental questions: 1. What is a price war good for?

2. Who are the winners in a price war?

Price wars are usually started by an operator with an aggressive desire for increasing market share. This is exactly what happened in Greece when one of the operators decided to break the market equilibrium. Within three months all the market players had responded with counter offers. The result for the total market at the end of the year was a revenue decrease of 13%, a reduction of €500 million from an overall revenue of €4.7 billion.

The impact of price wars is not contained within the mobile telecoms operators: governments feel the heat too, especially in economies with heavy dependency on telecoms taxes. In Tanzania, price wars amongst mobile phone operators have been blamed for reduction in value added tax (VAT) revenue collected during the early part of this year. According to the Bank of Tanzania’s Monthly Economic Review of March, the impact was a reduction of 6.4%. As VAT is a function of spend, this implies a reduction in total spend by the population. Of course the operators have seen an overall increase in traffic, but this is clearly not compensating for the proportional price decrease.

Asian markets are often compared with African regions for similarities in consumer behaviours. In addition to analysing the consumer behaviours in our own markets, we looked at the Indonesian telecoms market experience from the price wars of 2007; and India’s most active period during 2009. Our review

4 AFRICA TELECOMS Issue 16

‘‘

Competition is healthy in a market even in the form of intense price competition, but price wars without appropriate value analysis leads to prices that are not sustainable in the long run.

‘‘

Saiful Alam

has shown that although these are different markets, there are many similarities in consumer behaviours during price wars.

The three major behavioural trends observed were as follows: • High churn rates, especially the monthly rolling count • Increased multi-SIM ownership • Smart usage management leading to consumers getting more for less spend In some markets the lead operator is so dominant that all the other players are loss-making entities. Often these smaller operators find themselves in a ‘do-or-die’ position: either to grow their loss-making businesses or to exit the market completely. In the last few months of 2010, the Kenyan mobile telecoms market experienced a lot of excitement and change.

The market leader in Kenya with 78% market share was estimated to have 16 million subscribers; the competitor with two million subscribers was a loss-making operation. They took the decision to go with aggressive price cuts and call rates were dropped by 50%. The resultant gain in new customers was so substantial that the network’s quality of service dropped significantly.

In many industries the winner during a price war is always the consumer. In mobile telecoms the same can be said to be true, but only in the short term. During the early days of price wars the consumer reaps the most rewards. In the long run, in all the cases evaluated the sequence of events is very similar.

There is increased traffic but a decrease in overall market revenues, congested networks lead to lower quality of service and poor user experience, more pressure for the operators to run leaner operations, reduced R&D and limited innovations.

Eventually the losing operators quietly disappear.

Competition is healthy in a market even in the form of intense price competition, but price wars without appropriate value analysis leads to prices that are not sustainable in the long run. In this type of price war everyone loses.

A logical follow-on question is: what can operators and consumers do to avoid the detrimental price wars destroying markets? The answer to this question requires a discussion space of its own, perhaps in the near future. AT

news

All the latest telecoms news from Africa and around the world.

Bank Andara and Fundamo unveil AndaraLink, the world’s first mobileenabled microfinance services network

62% of South Africans purchase on mobile devices Research by InMobi, the world’s largest independent mobile ad network, reveals that African mobile web users prefer the mobile channel (46%) to their Desktop (10%) and even In-store (44%) when shopping for Apparel, Consumer Electronics and Entertainment Tickets. This clearly highlights the shift to ‘shopping on the move’ across Africa.

Surprisingly, non-smartphone users have an even higher preference of browsing and shopping using their Mobile versus Desktop than smartphone users. This signifies the higher dependence on mobile devices among feature phone users as it’s their primary means to digital content in many cases.

The study conducted among 3,100 African mobile web consumers found that 59% of South African users have purchased a digital product through their mobile device.

Commenting on the study, James Lamberti, VP Global Research & Marketing at InMobi, commented that “Mobile shopping is becoming increasingly commonplace in Africa. It’s an exciting time for the consumer, retailer, and manufacturer as mobile shopping solutions will become more accessible, intelligent and compelling to use. With the high level of consumer acceptance a new mass reach retail channel has emerged setting up huge opportunities in the world of mobile advertising. “ AT

most populAr purchAses from mobile devices in south AfricA product

% buying

Digital Goods

45 %

Consumer Electronics

11 %

Travel

10 %

Apparel

7%

Entertainment tickets

7%

Other

3%

The wholesale bank for microfinance institutions (MFIs) in Indonesia, Bank Andara and Fundamo, a Visa company and leading provider of mobile financial services for mobile network operators, have today unveiled AndaraLink. The network, the first of its kind in the world, enables MFIs to provide 40 million financially excluded Indonesians with access to previously unavailable financial services via mobile terminals connected to a mobile network. The mobile terminal allows MFIs to take the ‘bank’ out of the branch, to its consumer or business customers.

The microfinance sector in Indonesia is one of the largest in the world with over 50,000 MFIs (MercyCorps, 2011). MFIs are essential in enhancing financial inclusion by offering credit, loans and savings services to consumers and businesses that lack access to traditional banking services.

However, many MFIs in the region require access to traditional banking infrastructure to power services such as remittances and utility bill payments.

Due to the low-income levels of the majority of the population, there has been little appetite to roll out expensive banking infrastructure in these regions.

“MFIs need a fast, flexible, secure and innovative technical infrastructure to deliver financial services to a disparate populace in a cost efficient and scalable way,” said Irianto Kusumadjaja, COO & CIO of Bank Andara. “Instead of trying to reinvent the wheel, Bank Andara has combined existing MFI infrastructure with mobile technology to deliver new and enhanced services. These services help MFIs to boost financial inclusion and grow market share. On average the service has increased participating MFI revenues by 5-10%.”

“AndaraLink has enabled simple and inexpensive mobile financial services between existing MFIs, providing businesses and consumers with remittance and utility payments. The network will also help us provide MFIs with quick and easy access to capital allowing them to offer credit at better rates,” continued Kusumadjaja.

“Bank Andara has taken a unique and innovative approach to tackle the challenges facing MFIs in Indonesia. The Visa Fundamo platform underpinning the service is modular, application-driven and built on open APIs to enable easy development, integration and rollout of new services. This approach ensures that AndaraLink can evolve to meet the needs of consumers and businesses as they become more familiar with electronic financial services,” said Hannes van Rensburg, CEO at Fundamo. “AndaraLink is testament to the power of mobile financial services as an agent of fundamental social and economic change and we look forward to connecting more MFIs to the network in coming months and years.” AT

>> Ghana had over 1.66mn mobile internet users at the end of 2010. >>

6 AFRICA TELECOMS Issue 16

news Far South Networks successfully completes interoperability testing with Yealink Far South Networks, a Western Cape-based vendor of IP PBX and IP Gateway equipment, and Yealink, China’s leading designer and manufacturer of IP Voice and Video Phones, have successfully concluded interoperability testing between Far South Networks Phone System and Yealink IP Phones.

“With the completion of interoperability testing between our IP PBX products and Yealink IP Phones, telephony solutions providers will benefit from quick and easy deployment of converged IP telephony services with Yealink IP Phones” said Grant Broomhall, MD of Far South Networks.

“We are very pleased with the interoperability of our products and Far South Networks. The combination of Far South IP PBX and our Enterprise HD IP Phone create an excellent value and innovation solution for the Small and Medium Businesses.” said Stone Lu, VP of Yealink.

The Far South Networks range of IP PBX products includes the Com.X1, for SMMEs, and Com.X2, for larger corporate enterprises. Com.X platforms are built on Intel and Via x86 class servers with expandable support for all types of legacy telco interfaces. Com.X technology provides the user with a rich and extensible feature set, including voice recording, voice mail to email & fax server applications, and a simple migration path to IP based, unified communications services.

Yealink SIP-T2x series enterprise HD IP Phones, including are equipped with the TI TITAN chipset and TI Voice Engine, offer high definition voice, a broad range of voice codecs, security protection for privacy, and rich features including BLF/BLA, PoE, PnP Auto-provision. These models work seamlessly with the Far South IP PBX. AT

>> First National Bank (FNB) of South Africa processes more than 13.5 million mobile payment transactions every month to a value of 1.7 billion South African rand (US$251 million). >> Issue 16 AFRICA TELECOMS

7

news Airtel Africa Launches Synchronica-Powered Mobile Messaging Service ‘airtel connect’ in 16 countries Leading global telecommunications company Bharti Airtel (‘Airtel’) with operations in 19 countries across Asia and Africa, has successfully deployed its mass-market mobile messaging service, based on Synchronica’s Mobile Gateway infrastructure software, in 16 countries in Africa territories. The service, marketed as ‘airtel connect’, combines push email, synchronization, instant messaging and social networking in a single platform and is offered at an affordable, flat-rate, monthly charge.

The group-wide launch is the culmination of a group-wide framework agreement between Airtel Africa and Synchronica.

Airtel Ghana will be the first operator to launch ‘airtel connect’ which will offer a consumer-focused mobile messaging service which combines push email, synchronization, instant messaging and social networking in a single platform on a fixed monthly rental of GHC3 (US$1.99) for unlimited use, and will be available to any Airtel mobile customer, regardless of the type of mobile device they own.

Airtel has embarked on a major print and radio advertising campaign to promote ‘airtel connect’. As an incentive, customers will be offered the chance to take advantage of a free 30-day trial. “Synchronica has proven itself to be the ideal mobile messaging partner for us,” said Andre Beyers, Chief Marketing Officer, Airtel Africa. “Since we chose to work with Synchronica, they have met

8.ta “Goes Big” with data

South Africa’s fourth and newest mobile network operator 8.ta, is going to market with a big, fast and low cost mobile broadband promotion that will get South Africans using the Internet more. With the lowest mobile broadband rates supported by its new network; 8.ta is living up to its promise to change the mobile communications market.

The new post-paid Internet 5 Promotion offers subscribers a 10GB data bundle at R199 per month with the option of an additional 10GB Midnight Surfer data bundle at R100 per month for use between 12am and 5am. Subscribers in essence, will be getting 20GB’s of data at R299 and will therefore be paying as little as 1.5 cents per MB – the lowest mobile broadband rate available in South Africa, says Amith Maharaj, Managing Executive of Telkom Mobile.

“To mark the launch of our new high speed network 8.ta is “Going Big” with an amazing promotional data offer for a limited time period. Mobile broadband users will agree that the value provided in this offer cannot easily be found anywhere in the world”, Maharaj said.

Maharaj further added that “while the sale of the offer will be for a limited time, it is important to note that customers who sign up will be eligible for the Internet 5 promotional price as well as the Midnight Surfer price for the full 24 months”.

With 8.ta’s new data promotion, high monthly subscription is removed as the barrier to entry for first time subscribers while seasoned mobile broadband subscribers will find the price per MB to be extremely attractive. Many first time subscribers fear running out of bundle and receiving huge bills at the end of the month, however, with a combination of the large bundle, and 8ta’s unique redirect functionality, this concern is circumvented.

To prevent bill shock, 8.ta provides users with a ‘safety net’ to check balances and make out-of-bundle purchase decision in real-time using the redirect functionality. Subscribers on the Internet 5 Promotion and Midnight Surfer have the option to purchase a once-off bundle or utilise out of bundle rates.

With the average size of an electronic music file (MP3) download of 4MB, 10GB will allow 2560 MP3 music track downloads. 10GB will also allow 12 full length movie downloads if the average size of a movie is 800MB. Further innovation for 8.ta data subscribers is a free email account with online Office Web Applications such as MS Word, Excel and PowerPoint to store documents online without having to purchase a license. Subscribers will also have access to a free home support service with every purchase of a 3G data modem from 8ta.

The post-paid data bundles are valid for the current calendar month. “We have removed the modem from the offer so that customers have the freedom to utilise their existing compatible modems or buy a compatible modem that suits their needs”, adds Maharaj. AT

>> Huawei signs deal with Ugandan Operator Warid Telecoms to upgrade to 3G and expand the geographical reach of the network. >>

8 AFRICA TELECOMS Issue 16

news all of our development, integration and deployment milestones.

With ‘airtel connect’ we can offer all of our customers, regardless of which mobile device they use, a user-friendly way of connecting to their favourite email, IM and social networking services.”

Carsten Brinkschulte, CEO of Synchronica, adds: “Airtel shares our view that forward-thinking operators need to introduce addictive data services that can be enjoyed by the mass market, not just those who own a high-end Smartphone. Our solution will help Airtel not only to increase ARPU but also to combat churn.”

Synchronica’s Mobile Gateway, on which ‘airtel connect’ is based, provides 100% device compatibility by using the built-in messaging clients found in a wide range of Smart Phones and Feature Phones, in addition to the MMS and SMS technologies for basic handsets.

Already licensed by more than 80 mobile operators worldwide, Synchronica’s messaging platform is simple and cost-effective to deploy in the operator data center, or hosted by Synchronica, and allows operators to offer a comprehensive next-generation messaging service which works on any handset in use today. The launch of airtel connect follows Airtel’s recent success at the Ghana Telecoms Awards where the company won awards in the best customer care company, the best marketing campaign, and CEO of the year categories. AT

Hewlett Packard launcHes suPer ligHt and Portable elitebook The ultra-mobile Hewlett Packard (HP) EliteBook 2560p and 2760p, offer users the ultimate combination of portability and performance. With a super compact 12” high definition LED screen and a starting weight of just over 1.6kg, this series fits easily into any briefcase for pack up and go convenience. But don’t let their compact stature fool you - these notebooks pack all of the power a user could want and are perfectly suited to business people whose desk is anywhere they happen to be sitting.

The 2560p is a standard notebook format device with a 12.5” diagonal screen and a full sized, spill resistant keyboard, designed to meet US military standards in terms of vibration, dust, humidity, altitude and high temperature. Users can take this notebook on the road confident in the fact that life’s little knocks and bumps will not destruct the notebook. Optional Solid State Hard Drives (SSD) make this rugged device even tougher than ever.

The 2760p offers the best of both worlds, featuring a 12.1” screen that combines the power and reliability of the 2560p with the flexibility of a tablet, complete with pen and touch capabilities.

Simply flip and swivel the lid to turn this notebook into a fully functional tablet, great for people who need the functionality of a laptop with the flexibility of a tablet PC. The 2760p meets the same stringent military standards as the 2560p and also offers Outdoor View display to enable the device to be used in sunlight and natural lighting conditions.

“The 2760p especially is ideal for specialised users. These include research environments such as science and medicine, where users often have to take notes by hand and want the convenience of being able to turn their handwritten notes automatically into typed documents. Particularly when users need to wear gloves, the ability to use a pen-like stylus on their notebook makes working a lot simpler and faster. It is also great for gadget geeks as it delivers full notebook performance and functionality as well as a tablet PC option,” says Deon Botha, HP PSG Business Unit Manager at DCC. “The 2560p and 2760p represent the latest generation of ultracompact, ultra-portable notebook devices. As small as a netbook, but with the performance of a much larger PC, these devices deliver full functionality in a small, thin, lightweight and above all rugged package, making them the perfect choice for people who are constantly on the move,” Botha concludes. AT

>> Galaxy Backbone Plc, has trained over 600 public servants in Nigeria with the latest knowledge on e-government. >>

Issue 16 AFRICA TELECOMS

9

news

3G Femtocells Now Outnumber Conventional 3G Basestations Globally Informa Telecoms & Media issued its latest femtocell market status report which revealed that there are now in excess of 2.3 million 3G femtocells globally compared to 1.6 million 3G macrocells, highlighting the growing popularity of the technology. There are now 31 commercial femtocell services worldwide which represent over 60% growth in deployments in the past quarter alone. This market growth is reflected in the fact that eight of the top 10 mobile operator groups (by revenue) now offer femtocell services, which includes AT&T Group, France Telecom Group, NTT DOCOMO Group, Sprint, Telefonica Group, Deutsche Telecom Group, Verizon Wireless and Vodafone Group.

Furthermore, in the vast majority of these markets, the devices now outnumber all generations of cell sites.

Informa forecasts this growth to continue with 48 million access points in use globally by 2014. Where last

quarter Informa noted the recent growth in enterprise femtocell usage, this quarter has been notable due to the growth in femtocells for public access, especially as a means for speeding up mobile broadband in busy areas as exemplified

by SK Telecom’s pure data offload strategy. The technology is also expected to grow in 4G networks with 60% of operators believing that small cells will be more important than macrocells for an effective LTE deployment strategy according to a recent Informa survey.

“Femtocells haven’t just passed a major milestone - it is now apparent that they are rapidly becoming less of a differentiator for service providers and more like an essential offering. Consumers are increasingly going to expect something that for a long time seemed impossible - near ubiquitous coverage for voice and high speed data. Femtocells make this a very real possibility,” said Dimitris Mavrakis, Senior Analyst at Informa.

Furthermore, the past quarter has also seen important progress in femtocell technology. The first industry-wide agreed set of API specifications for advanced mobile applications based on femtocell technology have been published. The API provides awareness information so developers can incorporate enhanced presence, context and location-sensitive features into new and existing apps, and can also take advantage of the lower cost and faster data connections enabled by femtocells.

The expansion of the femtocell industry is also reflected in the growing membership of the Femto Forum, the femtocell industry association, which now includes 74 vendors and 63 mobile operators representing over 1.71 billion mobile subscribers worldwide, across multiple wireless technologies (WiMAX, UMTS and CDMA) and accounts for 33% of total mobile subscribers worldwide. AT

>> Telkom, the incumbent South African fixed line operator to reduce call tariffs from August 2011. >>

10 AFRICA TELECOMS Issue 16

news

Gartner Says Worldwide Semiconductor Industry to Grow 5.1 Per Cent in 2011 With Revenue Reaching US$315 Billion Worldwide semiconductor revenue is projected to total US$315 billion in 2011, a 5.1 per cent increase from 2010 revenue of US$299 billion, according to Gartner, Inc. This is down from Gartner’s previous projection in the first quarter for 6.2 per cent growth this year.

The earthquake and tsunami in Japan raised concerns about the supply of silicon wafers, batteries, crystal oscillators, packaging and other specialised materials. However, supply constraints due to the situation in Japan have not derailed the electronics industry.

“The disaster in Japan clearly had an impact on the semiconductor market, and supply chain behaviour, but it is less than initially feared,” said Peter Middleton, principal research analyst at Gartner. “In response, in the last two weeks of March, vendors stepped up efforts to secure supply in the face of uncertainty and potential shortfalls — leading to some double ordering which continued into the second quarter. We think vendors were cautious with their second quarter guidance, and we expect the majority will exceed those estimates.”

“Although the impact is less than feared, we are anticipating some residual effects in the third quarter of 2011 as friction in the supply chain may impact some production and some surprises may occur,” Mr Middleton said. “However, once third-quarter trends are established and supply chain participants are satisfied that all issues are understood and production is normalized, we expect an effort to draw down inventory, which will weaken the semiconductor market in late 2011 and early 2012.”

Gartner forecasts worldwide application-specific standard product (ASSP) revenue to reach US$79.7 billion in 2011 and grow to UD$99.4 billion by the end of 2015. With Apple’s application-specific integrated circuit (ASIC) investment and a commanding grip on popular mobile devices, the ASIC market will experience solid growth through 2015. The highest overall growth through 2015 is coming from nonoptical sensors, which are primarily driven by automotive applications, but high growth is coming from increased sensor use in applications outside automotive, especially smartphones, tablets and video game hardware.

Analysts said they are seeing rapid semiconductor growth in the smartphone and media tablet categories. Through 2013, two-thirds of semiconductor industry revenue growth will come from smartphones and tablets.

“One critical trend is the introduction of new generations of high-performance mobile application processors, which form the heart of both smartphones and media tablets,” said Jon Erensen, research director at Gartner. “These high-end processors, combined with higher amounts of DRAM and NAND flash memory, will enable the performance and storage required for advanced new applications, including context-aware computing, augmented reality and computational photography.”

“The similarity in architecture between smartphones and media tablets enables handset and tablet OEMs to centralise design around the application processor, which hosts the operating system of choice, and allows the vendor to leverage that design across multiple product categories,” Mr Erensen said. AT

>> MTN Group has passed 150 million mobile subscribers, showing strong subscriber growth despite increased competition and has pledged to plant 150 000 trees to thank its customers. >> Issue 16 AFRICA TELECOMS 11

news

Ericsson acquires Telcordia The partnership reinforces and expands Ericsson’s position as a leading player in the operations support systems/business support systems (OSS/BSS) market, with a key position in service fulfilment, assurance, network optimization and real-time charging Ericsson has reached an agreement with Providence Equity Partners, LLC and Warburg Pincus to acquire 100 percent of the shares of Telcordia, a global leader in the development of mobile, broadband and enterprise communications software and services, for US$1.15 billion.

Hans Vestberg, President and CEO, Ericsson, says: “The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced. In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi-vendor product portfolio.”

“We have global presence and scale, global services capabilities and superior knowledge about networks and network performance, as well as an already established position in the OSS/BSS space. It is a perfect fit,” he adds.

One of the main challenges for operators is how to handle the growth in mobile and fixed broadband traffic, as well as the new types of connected devices, services and applications and the high expectations on user experience, while at the same time increasing the efficiency in business

and operations.

OSS and BSS are critical areas to handle this challenge and to simplify the processes that support the business. They drive the customer experience and serve as the engine to monetizing traffic, offerings and products that operators sell. All in all, these systems are crucial to create the experience users expect in a cost efficient manner.

Mark Greenquist, President and Chief Executive Officer, Telcordia, explains: “The combination of Ericsson’s global leadership position and Telcordia’s long-standing expertise in solving the most complex communications challenges will benefit customers through new services and expanded capabilities.”

“Together, we will lead the way into a new era of converged communications, while expanding our offerings to manage the world’s most dynamic networks. Ericsson’s acquisition of Telcordia signals their commitment to their future strategy to capitalize on the growth opportunities in the OSS/ BSS communications industry. We appreciate the significant value added by Providence and Warburg Pincus over the last six years,” he concludes Providence and Warburg said, “We are confident that the company will benefit from becoming part of Ericsson, a clear global leader in providing technology and services to telecom operators.”

TheOSS/BSSisagrowingmarketdrivenbythedemandforbusinessefficiency, innovation and high quality user experience. In 2010, the market for software and systems integration is valued at about US$35 billion and is expected to show a compound annual growth rate between 6-8 percent between 2010 and 2013. In addition, there is an attractive market for outsourced and hosted managed services, growing in the same range. AT

>> Nokia and Siemens failed to secure a deal for investors for a controlling stake in their unprofitable joint venture Nokia Siemens Networks. >>

12 AFRICA TELECOMS Issue 16

news Nokia enters into patent license agreement with Apple Nokia has finally signed a patent license agreement with Apple. The agreement will result in settlement of all patent litigation between the companies, including the withdrawal by Nokia and Apple of their respective complaints to the US International Trade Commission.

The financial structure of the agreement consists of a one-time payment payable by Apple and on-going royalties to be paid by Apple to Nokia for the term of the agreement. The specific terms of the contract are confidential.

“We are very pleased to have Apple join the growing number of Nokia licensees,” said Stephen Elop, president and chief executive officer of Nokia. “This settlement demonstrates Nokia’s industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market.”

During the last two decades, Nokia has invested approximately EUR 43 billion in research and development and built one of the wireless industry’s strongest and broadest IPR portfolios, with over 10,000 patent families.

Nokia is a world leader in the development of handheld device and mobile communications technologies, which is also demonstrated by Nokia’s strong patent position.

This agreement is expected to have a positive financial impact on Nokia’s recently revised outlook for the second quarter 2011 of around break-even non-IFRS operating margin for Devices & Services. AT

2 South Africans named in global top 40 of telecom professionals under the age of 40 Ryan Sher, COO at African carriers’ carrier WIOCC, has been named as one of the telecommunications industry’s 40 most important people under the age of 40 along with Pieter de Villiers the founder and CEO of Clickatell.

In its annual 40 under 40 award, international telecommunications magazine Global Telecoms Business (GTB) identified 40 of the industry’s current young leaders from around the world (all under 40 years of age) who, it is anticipated, will become the telecoms industry leaders of tomorrow.

South African-born Sher and De Villiers are two of only four professionals in the group to be based in Africa.

The GTB identified Sher as possessing “a rare combination of technical expertise and business acumen”. It sites Sher’s drive, energy and inspirational leadership as having been instrumental in the success of EASSy, which it describes as “a landmark project — delivered early and within budget”.

“De Villiers has led the company through a decade of robust growth and innovation by providing high value, application-to-person SMS services. With his leadership skills and knowledge, he has grown Clickatell’s global coverage immensely,” GTB said.

“With his vision, knowledge and exceptional leadership skills, De Villiers has successfully helped companies and organizations around the world provide better services to their clients while creating profits.” AT

>> Nigerian Telecoms Operators spend N3.63bil (US$ 23.5 mil) to fuel generators monthly. >>

Issue 16 AFRICA TELECOMS 13

news Etisalat launches the UAE’s first personalised Mobile Advertising Service

This launch by Etisalat and Alcatel-Lucent will see the UAE’s first permission and preference-based mobile advertising services in the UAE. The opt-in mobile advertising service provides a very smart and unique advertising model that will allow advertisers and brands to have an engaging dialogue with their target audience via Rich SMS/MMS Dialogue Ads. Moreover, it gives mobile customers access to a wide range of exclusive and relevant offers from leading brands in the UAE that is tailored to their personal interests and lifestyles.

The service will match customer’s voluntary preferences and deliver exclusive promotions and discounts accordingly. As such customers interested in sports, will get the latest on offers and promotions from sporting brands. The mobile advertising platform from Alcatel-Lucent Optism is also a monitoring tool for customers’ behaviors against the ads and promotions that they receive in a way that detects their registered interests and their interaction levels with the received offers. This type of intelligence, behavior monitoring and updating will get advertisers and brands to customize their offers to best suit their targeted audience and for customers to receive the best defined promotions that fit their likings.

The new service will give the entire mobile advertising ecosystem in the UAE exactly what they need; targeted ads, personalized ads, engaging ads and most of all very well defined tailored ads that will increase their sales, enhance their ROI, enable them for more intelligent campaign planning and provide them with real time reporting. At the same time it will increase targeted audience satisfaction as customers will receive offers that are tightly linked to their lifestyles and tastes.

Matthew Willsher, Chief Marketing Officer of Etisalat commented: “There is a new wave of demand for deals, discounts and offers in the UAE. As part of our mobile strategy, we are constantly innovating to delight our customers. The UAE’s first mobile advertising service ensures that customers who choose to receive targeted messages get better value as well as a richer mobile experience.”

Amr El-Leithy, Head of Alcatel-Lucent business in the Middle East & Africa. “We are very enthusiastic about working with Etisalat to bring a more personalized and compelling experience to their customers.”

All mobile advertising with Etisalat is “opt-in” for customers, giving subscribers the freedom to choose. It ensures privacy of customer’s information and contact details through Etisalat’s ‘Personal Information Identifiers’ system. Maha Muraish, Director of Online Channel and Portal at Etisalat added, “It’s not about spamming our customers with numerous ads; it’s about providing preferencebased content. You will only receive offers from Etisalat that is relevant to you, at the time of day that suits you best and not more than 5 ads a week”. AT

Nokia Siemens Networks boosts base station power for greater capacity

New radio module provides 40% performance improvement at edge of cell while carriers can be distributed across 60 MHz frequency band range Nokia Siemens Networks has expanded its Liquid Radio architecture by launching a new, high power radio module for its Flexi Multiradio Base Station family at CommunicAsia 2011 in Singapore. The higher output power means that the module offers greater GSM coverage and increased 3G data capacity at the edge of cells, providing an overall 40% increase in performance. This provides operators with the ability to efficiently enhance their network. In addition, the ability of the new radio module to allocate carriers frequencies across a broad 60 MHz range reduces the size of hardware required per base station site allowing more flexibility in deployment.

In mobile networks, the radio module is the part of a base station that amplifies each individual radio signal before broadcasting it from an antenna. Due to its higher output power, the new module improves the signal used to transmit voice or data to a mobile phone user. This directly increases how much useful information the signal can carry or the number of people for whom it can provide a connection.

Nokia Siemens Networks’ all in one radio module can be used for all installation types, such as indoor, outdoor, distributed, mast pole and 6-sector sites, and it can provide

>> Vodacom is to build one of Africa’s greenest building at its HQ in Midrand near Johannesburg in South Africa. Its parent company Vodafone, plan an alternative energy innovation centre to help reduce carbon emissions across the world. >> 14 AFRICA TELECOMS Issue 16

news

Qualcomm collaborates with Microsoft on next version of Windows

up to 240 watts output power per sector, or provide 80 watts output to each of three sectors. It is also capable of allocating carriers within a 60 MHz range, which is particularly useful for operators with fragmented frequency bands. The module supports any combination of GSM, 3G, LTE or LTEAdvanced technologies in a single unit, significantly further reducing the hardware units a site may need.

“Our new radio module is especially suited for refarming GSM frequency bands for HSPA+ and LTE services and network sharing deployments,” said Thorsten Robrecht, head of Network Systems product management at Nokia Siemens Networks. “Moreover, we are the only vendor to combine the capacity to drive three remote radio heads – or sectors – into a single 25-liter unit, offering a smooth evolution for compact multiradio sites with lower power consumption.”

Nokia Siemens Networks’ radio module is also the only three-sector remote radio unit in the industry that can be placed next to an antenna, enabling a light multiradio set-up in limited spaces and sites, which cannot be equipped with traditional base stations.

The first frequency variants of the new radio module – including on the 900, 900 J, 1800 and 2100 frequency bands – will be available for commercial deployment at the beginning of 2012. Further variants will be rolled out during the first half of 2012. AT

The upcoming award-winning Snapdragon™ family of smart mobile processors, including the MSM8960™ with integrated 3G/LTE modem, is designed to power devices running the next version of Windows. The companies’ collaboration continues to address the converging and fast-changing mobile computing landscape, and Qualcomm’s Snapdragon family of dual-core and quad-core processors will enable optimal computing performance, extended battery life and connectivity, and top-notch graphics and multimedia in devices.

“Qualcomm and Microsoft have a long and productive history of collaboration focused on driving innovation forward, and we are pleased to be among the leaders of the next evolution of mobile computing,” said Luis Pineda, senior vice president of product management, computing and consumer products at Qualcomm. “Our upcoming family of Snapdragon processors is intelligently integrated, optimized for mobile and built smarter, making it the ideal processor to address consumers’ growing demands for new, innovative experiences and usage scenarios that we believe will be delivered by the next version of Windows.”

The first processor in the Snapdragon family to power devices using the next version of Windows will be the MSM8960, which is sampling this month, followed by the quad-core Snapdragon APQ8064™, which is anticipated to sample in early 2012. Qualcomm has built its Snapdragon family of mobile processors from the ground up to deliver enhanced power efficiency for devices running the next version of Windows. The MSM8960 from the Snapdragon family of mobile processors provides the first dual-core solution with an integrated multimode 3G/LTE modem and is designed to meet the multi-tasking requirements of the next version of Windows. The Snapdragon family of mobile processors will include dual and quad asynchronous CPU cores that can be independently controlled to deliver maximum performance at maximum efficiency.

“Windows 8 will enable customers to have the flexibility, connectivity and power that they expect from Windows today with new, touch-only devices like tablets. This will require high-performing, low-power processors like those from Qualcomm, with features like 3G and 4G wireless wide area network (WWAN) connectivity,” said Mike Angiulo, corporate vice president of Windows planning, hardware and PC ecosystem. “We collaborate with Qualcomm because Snapdragon-powered devices will help Windows 8 consumers experience more out of their Windows device and enable hardware manufacturers to try exciting new PC designs.” AT

>> Accenture has signed a definitive agreement to provide Symbian based software development and support services to Nokia through 2016. >>

Issue 16 AFRICA TELECOMS 15

news

Intel Capital to Make First Investment in South Africa This commercial investment agreement, between Intel Capital and Allied Technologies (Altech) is subject to Altech shareholder approval, is part of a strategic collaboration in which Intel and Altech will explore various areas of collaboration in the Telecommunications, Multi-media and Information Technology (TMT) sectors to accelerate the adoption of broadband services in Africa. With this investment, South Africa will become the 50th country to attract Intel Capital investment.

Arvind Sodhani, president of Intel Capital and Intel executive vice president said: “Altech has a track record of bringing new broadband services and products to the African marketplace.

Intel Capital is excited to have our team in South Africa complete our first investment in the country, which also marks the 50th country where we are investing. This is a clear indication of Intel Capital’s strategy to invest in successful companies around the world. We strive to foster technology innovation globally

and stimulate economic activity on the African continent and we are actively seeking additional opportunities to invest in technology companies in emerging nations.”

According to Altech CEO Craig Venter, the investment is evidence of the new market opportunities that are emerging as large scale broadband communications infrastructure becomes available in South Africa, West Africa and East Africa.

He stated that: “Communications plays a key role in job creation and economic development. As demand for more services grows, we will see more investment in communications infrastructure and the resultant services that follow on top of that infrastructure - be it mobile, broadband or data. Connectivity is a strategic driver of Africa’s growth. It is a well-known fact that the level of broadband penetration within a country has a direct impact on GDP– as much as 1% for every 10% of broadband penetration achieved. This investment is part of an on-going strategic engagement to explore various areas of collaboration within the TMT sector across Africa and we look forward to working with Intel Capital in developing communication services in the region”.

“Aligned to this, the migration to digital terrestrial television will be a stimulant for South Africa and the region’s telecommunication strategy – that of encouraging innovation, the development of local IP and the resultant creation of more employment, which is all linked to increased growth of the economies of these countries,” he said.

Christian Morales, Intel Corporation Vice-President for Europe, Middle East, Africa, stated that: “Africa remains a key growth region for Intel and we believe the collaboration with Altech will create exciting opportunities in Africa for both companies and bring a great experience to users.”

Intel Corporation has been trading in sub-Saharan Africa for over twelve years with offices in South Africa, Kenya and Nigeria. This Intel Capital investment forms part of Intel’s overall investment in the region which also includes education and corporate social investments such as training over 150,000 teachers on computer skills and the integration of ICT teaching and learning in the classroom.

Subject to the approval of Altech’s shareholders, Intel Capital will invest a convertible loan amount of USD$5M into Altech.

The loan will be convertible into Altech ordinary shares at any time between the first anniversary of the effective date of the transaction and the third anniversary thereof. The conversion price will be determined upfront and will be based on Altech’s volume weighted average price, 30 days prior to the effective date of the transaction, plus a premium of 5% thereon. AT

>> MTC of Namibia has slashed call rates for a limited period. The cut to 39 cents per minute from 49 cents per minute, making MTC’s call charges cheaper than a sms. >> 16 AFRICA TELECOMS Issue 16

news Motorola Mobility Unveils New IPTV Set-Top with a ‘Click-in’ DVR Module Service providers are now receiving an elegant and costeffective solution for expanding their service offerings with the new Motorola VIP1853 – an IP set-top with a ‘click-in’ Digital Video Recording (DVR) module. The Motorola VIP1853 was designed to reduce set-top box deployment costs for operators without compromising on performance by enabling them to choose the DVR capacity for set-tops.

With the Motorola VIP1853, service providers can market a set-top that can be easily upgraded for customers wanting to add DVR capability to their basic box or wanting to expand their recording capacity with an additional or larger capacity module. The flexible design of the Motorola VIP1853 offers a choice of DVR capacity – it has an 8GB DVR module that supports trick play/pause functionality, and hard drive capacity can be increased to 160, 320 or 500GB for full featured DVR functionality.

“The Motorola VIP1853 can further strengthen the operator’s relationship with its subscriber base and differentiates its position in the marketplace by offering a high performance IP set-top with a lower cost DVR option,” said Keith Kelley, vice president, home devices, Motorola Mobility.

“The modular design of the Motorola VIP1853 is attractive and environmentally friendly, and allows subscribers to increase the enjoyment of their home entertainment service with its opt-in DVR capacity at an affordable and easy-to-control price point.”

This latest addition to Motorola’s line of high-performance, IP set tops, comes in a sleek, compact design and by optimizing the feature set and employing an efficient mechanical design, Motorola has achieved an extremely cost-effective solution. In addition, the Motorola VIP1853 has low power consumption thereby helping to minimize its impact on the environment.

The Motorola VIP1853 works on the same hardware platform and runs on the same software as the highly successful Motorola VIP19x3 and Motorola VIP1003 set tops and boasts an even higher performance level. It is compatible with Motorola KreaTV 4.2 or higher, Motorola’s open software application framework designed to enable operators to deliver carrier-class IPTV services, while being able to easily add new functionality and services at any time. This allows the service provider to grow according to business needs and customer demands.

The Motorola VIP1853 is expected to be available for delivery globally from Q3 2011 and be launched by a major European operator by the end of 2011. AT

Romain Bausch, President & CEO SES, being interviewed by Haslinda Amin, News Correspondent & Anchor, Bloomberg Television

CASBAA Satellite Industry Forum 2011 The Annual CASBAA Satellite Industry Forum recently took place in Singapore on 20 June 2011, immediately prior to CommunicAsia 2011. The Forum brought together leading industry heavyweights from around the world to discuss the satellite industry in Asia, focusing on the effects of new technologies, hosted payloads and higher frequency utilisation.

The impressive line-up of market leaders and industry experts included: Dave McGlade, CEO Intelsat, Romain Bausch, President and CEO SES, Nongluck Phinainitisart, President Thaicom, Bill Wade, President and CEO AsiaSat, Paul Brown-Kenyon, CEO MEASAT, Tom Choi, CEO ABS and Cheng Guangren, President APT Satellite.

Romain Bausch, SES President & CEO, provided many insights into the satellite industry. Bausch highlighted government subsidised fibre as a major threat to satellite, reiterating the importance of satellite companies to work closely with telecommunications providers to ensure they have a thorough understanding of the complementary features and benefits of satellite which can work in conjunction with fibre.

NewSat’s Chief Technology Officer, David Ball, hosted the “Leadership Kick-Off” which openly debated the challenges many satellite operators are facing as well as initiating a lively discussion about possible solutions. The expert panel included: • Inoue Osamu, Senior EVP, SKY Perfect JSAT Corporation • Cheng Guangren, President, APT Satellite • Thomas Choi, CEO, ABS • Paul Brown-Kenyon, CEO, MEASAT • Nongluck Phinainitisart, President, Thaicom • Andrew Wallace, Chief Commercial Officer, Eutelsat Among the many key challenges discussed, Thomas Choi, ABS CEO, highlighted the need for more cost-effective satellite and launch solutions, such as “off the shelf” satellites, as technology costs within the industry are creeping up. He added that ABS is strategically focusing on markets such as DTH and video distribution, as satellite provides a superior solution compared to markets like consumer broadband, which compete with a range of technologies. Moreover, Andrew Wallace, Eutelsat CCO, underlined the continued growth of HD technology as opposed to 3D technology, which is not growing as expected and is still in its infancy. Also, Dr Nongluck Phinainitisart, Thaicom President, mentioned that the satellite industry can continue to grow as long as everyone works together to increase the size of the available pie. AT

>> Nigerian, Edo State Government, will spend about N20 billion on different Information and Communications Technology projects in the state. >> Issue 16 AFRICA TELECOMS 17

Fujifilm S2950

H Uncool HH Poor HHH Average HHHH Excellent

>>

>>

Gadgets

HHHHH Awesome

Epson EH-TM450

Rating: HHH PRICE: R 2 000

Rating: HHHH PRICE: R 9 000

The Lowdown: Powerful zooming, outstanding quality are offered by the Fujinon 18x (28mm - 504mm) optical zoom lens.

One of the oldest players in photography, is still around and kicking.

Its newest line of cameras aren’t anything to be sneered at, either, with the X100 winning the praise of many photographers worldwide.

One of its smaller brothers, the S2950, also boasts some respectable specifications.

A 14-megapixel sensor means pics that are large enough to print out on A4 pages, and its 18x optical zoom lets you get in as close as you need to, without disturbing that sleeping lion.

Sadly, picture quality simply falls into the “acceptable” category, rather than blowing us away. In regular sunlight the snaps are clear and vivid, but the sensor struggles in conditions with less-than-ideal lighting conditions.

It’s not all bad, though, since this is a budget camera at just under R2 000. The lens definitely makes it, along with the ability to record HD video (at 720P resolution), in addition to user-friendly scene modes, including a super macro mode that lets you take extreme close-up photos.

The Lowdown: HD projector for less than R10k, Accepts HDMI, S-Video, VGA, Composite inputs, 1W Speaker provides basic sound.

The most important things to know about this projector are that it does HD and it costs less than R10k. Those two facts alone should already have you reaching for your wallet, but there’s more – it uses Epson’s excellent 3LCD technology that results in brighter colours than competing DLP projectors can offer.

The excellent affordability and high display resolution on offer make it perfect for home and office use, especially if your desired use is to hook it up to your HD PVR decoder so you can watch sport in HD, or a PlayStation 3 for Blu-ray movies. 720p is only entry-level when it comes to “high definition”, but it’s still sharper and clearer than standard definition TV and even DVD. If you have the space, the EH-TW450 can project an image that is up to 100 feet wide – that’s huge! In an average-sized room, expect to project a screen even bigger than a 55” TV can offer. Its fan is a little loud when in operation, but output your audio to a decent sound system, and you won’t even notice. As a first-time HD projector, the EH-TW450 is a very good buy.

18 AFRICA TELECOMS Issue 16

Gadgets

Africa Telecoms is always in the know when it comes to the hottest gadgets and devices.

>>

>>

Mede8er MED-500X

Alienware M17x R3

Rating: HHHH PRICE: R 3 600

Rating: HHHHH PRICE: R 30 000

The Lowdown: 2TB internal storage, Internet connectivity, HDMI output.

Last month we looked at the Mede8er MED 200X, a media streamer that’ll play almost all digital movie and music files you’ve got stored on a USB hard drive. At the price, it had a solid feature set but lacked some things we considered essential. Now we have its bigger brother, the MED 500X, and it’s what you really want if you’re backing up lots of DVDs, at around 8GB each. And the reason is simple: it’s got an integrated 2TB hard drive. That’s plenty of storage space - enough for around 250 uncompressed DVDs. Of course, it’s not just limited to what you can fit on the internal hard drive. Like the MED 200X, the 500X sports two USB ports, for attaching external hard drives. More importantly, it also has an Ethernet port, endowing it with network capabilities. This means it can either access shares on other computers (such as a home storage server) or additional online content, such as streaming radio stations, YouTube and more. Its network features also include being able to serve stored content to other devices. Any computers on the network will be able to see content on the Mede8er, even if it’s being used to play back content on a TV. It’s far more complete than the 200X, but that does come at a price - it costs more than 3.5 times as much.

The Lowdown: High-end Core i7 processor, nVIDIA Geforce 460M graphics card, Full HD 3D display.

When it comes to high-end computers, there’s little need to look any further than Alienware. The brand has earned its reputation through supplying the very best gaming rigs, to the most demanding computer users of them all: PC gaming enthusiasts.

A few years after its desktops made headlines, the company started rolling out mobile gaming machines, and the M17x R3 is the latest iteration of its fastest portable gaming rig.

The 17” display has a full HD resolution (1920 x 1080), but why stop there? It’s also kitted out with 3D technology, used in conjunction with a wireless set of active shutter glasses. Powering the visual experience is a quad-core Intel Core i7 chip and a GeForce 460M graphics card.

Compatible games look simply fantastic and run without a hitch.

The truth is that the M17x is more a mobile desktop than a portable powerhouse. It weighs a ton (well, 5.3kg), and the exterior design makes no bones about the fact that it’s a heavy piece of kit with one role to fulfill. Vents, glowing lights and gloss black trim lend it an almost... alien-like appearance. If you can afford to game without sparing an expense, then this is for you.

Issue 16 AFRICA TELECOMS 19

Gadgets

H Uncool HH Poor HHH Average HHHH Excellent

>>

>>

Apple iPad 2

HHHHH Awesome

BlackBerry Playbook

Rating: HHHHH PRICE: R 4 400

Rating: HHH PRICE: TBA

The Lowdown: 9.7” display, Dual-core processor, Fast graphics, Great design.

Just like you can count on the sun setting and the hour hand passing the minute hand, Apple will release an update to a successful product.

In this case, its 2010 gadget-of-the-year, the iPad, was on the receiving end of the facelift treatment for the 2011 model year.

Much can be said about the iPad - who it’s for and what it can be used for - but we’ll let its immense popularity (25-million units sold) and software selection (90 000 applications in the App Store) tell the story.

The second-gen device refines the original concept. It’s now faster, boasting a dual-core processor and more memory, while retaining the proven 9.7” IPS display. The new processor also has improved graphics capabilities - Apple says it is up to nine times faster - but the impressive battery life remains unchanged, at 10 hours during use and up to a month on standby.

More performance for the same battery life hasn’t even resulted in a form-factor compromise, since it’s thinner and lighter than before. There’s no denying that this has upped the bar for other tablet manufacturers, and even though Apple might be leading the pack for now, consumers are going to be the real winners in the end.

The Lowdown: 7” display, Dual-core processor, Runs BlackBerry Tablet OS. BlackBerry’s long-awaited tablet, the PlayBook, is finally available for consumers to get their grubby paws onto. Mind you, they’ll need to be slightly undersized grubby paws, since the 7” form factor is smaller in person than it sounds on paper. As the adage goes, though, it’s not about the size but rather how you use it, and in the PlayBook’s case it makes the most of what it has. The new operating system (based on QNX, a system that also runs power plants and automotive assembly lines) is super slick, no doubt aided by the dual-core processor and generous amounts of memory. Video playback is smooth, multitasking works a treat and web browsing is effortless. In fact, when you first unpack it, it’s a stunning device.

It’s only once you realise that you need a BlackBerry phone to get more out of it, that the fairytale takes a turn for the worse. Want email, address book or calendar functionality? You’ll need to use it with a BlackBerry phone, over Bluetooth. Want to post stuff on Twitter? There’s no app for that. In fact, the software selection is very, very limited. Until these two negatives are sorted, it’s going to be difficult recommending the PlayBook over its competition running iOS or Android.

20 AFRICA TELECOMS Issue 16

GadGets

Africa Telecoms is always in the know when it comes to the hottest gadgets and devices.

>>

>>

nikon d5100

8TA HuAwEi E367 HSpA+ uSB

Rating: HHHH PRiCE: R 9 000

Rating: HHHHH PRiCE: R 699

thE Lowdown: 16-megapixel stills, Full HD 1080p video recording, Flip-out screen with live view.

Nikon and Canon both started selling entry-level digital SLR cameras a few years ago, with prices sneaking in at just under R10 000. That was the magical mark, then, but things have changed. The entry-level models have dropped in price (even while growing in feature set) and now cost around R5 000. The cameras that were originally just under R10 000 have only dropped in price slightly, sticking around the R8 000 or R9 000 mark, but their feature sets have grown significantly. The D5100 is one such camera. While its baby brother, the D3100, has many powerful features for beginners, the 5100 is aimed more at those who want to upgrade their ageing D70 or D90 camera bodies.

16-megapixels might not sound like much if the average point and shoot now boasts around that much, but it’s how you use those pixels that count. In the Nikon’s case, the bigger sensor means better picture quality. Being a dSLR, it can also be used with most of Nikon’s high-end quality lenses (except older ones that require an in-camera autofocus motor). Resulting photo quality is magnificent, even in very poor light, and the 1080P video is extremely close to the quality you’d get from a dedicated HD video camera.

thE Lowdown: 8ta have been causing a stir in the Mobile broadband market in South Africa offering a 10Gb data bundle package on their network for R199 per month (the equivalent of 28USD). This has taken many of the operators in South Africa by surprise as it is by far the best priced mobile broadband offering in South Africa at the moment.

This test was conducted using the 8ta network and Africa Telecoms was well surprised by the throughput speeds seen off this Huawei device. It supports HSPA+/UMTS 2100/1900/900/850MHz, GSM/GPRS/EDGE 850/900/1800/1900MHz, with HSPA downlink speeds of up to 21.6Mbps and uplink speeds of up to 5,76Mbps.

The design of the device is slick and looks great. The USB rotator makes connecting easy as well as keeping the USB connector protected when not in use.

From the 8ta network perspective this test was done in Cape Town and have received fairly impressive speeds and the best I have seen using a Mobile Broadband connection peaking at 11Mbps down and averaging at around the 6Mbps area. Overall this is a very compelling Mobile Broadband proposition.

Issue 16 AFRICA TELECOMS 21

thought leadership

The

colour of innovation Claire Paponneau Director of the West and Central Africa Region for orange 22 AFRICA TELECOMS Issue 16

thought leadership

by brett haggard

How Orange is winning in West and Central Africa

M

anaging one’s business dealings across a massive geographical area like Africa from a single, regional head office is

no mean feat.

It takes solid insight into each country’s cultural nuances, a good understanding of how mature that country’s market forces are and someone heavily focused on the legislative landscape. But, as different as some of the countries on the African continent are (think South Africa and Nigeria), certain constants exist.

A case in point, says Claire Paponneau, Director of West and Central African Operations

at Orange, is the booming demand for mobile communications and the strong appetite for data services, which make product development a far more predictable process for large, multinational operators.

“That said,” she continues, “each country has different economic and regulatory environments.

“Our aim in all of the African markets we do business in is to get the coverage that is expected by the population and the government, while at the same time remaining profitable.”

It’s a goal that sounds far easier to attain than what it is in reality.

Issue 16 AFRICA TELECOMS 23

thought leadership “The reality is that we have successful operations regardless of the language spoken within the markets we operate. This is because we go to great lengths to understand the market and are committed to the long-term.”

Strong evidence of this is provided by its investments in entities such as its Africa technology centre, which staffed by a research and product development team from the Ivory Coast and a manager from Senegal.

“This centre has worked on and developed a multitude of services and solutions that have been successful on the African continent,” Paponneau says.

A great example of such a service is Facebook for mobile, which Orange developed and launched in multiple African countries six months ago.

“In six short months, the service has already garnered one million customers and is continuing that growth. It’s important for us that these services weren’t exported from other parts of the world.

“They were designed in Africa with local relevance in mind,” she says.

The growth of broadband

Still speaking to the topic of local relevance, Paponneau

24 AFRICA TELECOMS Issue 16

says that although Orange has a name that’s synonymous with mobile telephony throughout the world, it has a convergence strategy at heart that sees it committed to driving new services on the voice and data fronts.

Paponneau says Orange is driving voice, data and new services such as mobile banking for the African markets

“

The reality is that we have successful operations regardless of the language spoken within the markets we operate. This is because we go to great lengths to understand the market and are committed to the long-term.

“

All about local relevance

Orange’s presence in Africa is not exactly something that’s recent. And Paponneau says that her company hasn’t seen Africa as a territory to conquer, like so many of its peers.

“Orange has been active in a number of countries on the African continent since the eighties and nineties. And in every case, it’s been a distinct opportunity that’s lured us there as opposed to a need to conquer the continent,” she explains.

Paponneau says Orange’s past policy preferred a ‘greenfields’ environment where it could shape and mould the goto-market strategy and infrastructure before taking any steps into the market.

Today, however, some of Orange’s most successful ventures have been into markets where they’ve taken over or merged with existing players.

“There’s also a misconception around Orange being more successful and comfortable with operations in Frenchspeaking countries, because of the company’s clearly French roots,” she adds.

thought leadership it operates in.

“We see broadband as a key lever for growth in the next years,” she adds, “and that’s the reason we launch a 3G network wherever possible.”

“And where we can’t have a 3G service, for whatever reason, we do our best to roll out a WiMAX service to ensure that the high-value business segment is addressed with speedy, reliable communications infrastructure.”

Less visible but nonetheless critical, Paponneau believes, is Orange’s involvement with the submarine cables providing backhaul to Africa; and the numerous terrestrial cable projects focused on assisting countries without direct access to the submarine cables to still be provided with cheap international capacity.

“We feel it’s key for us to assist in developing this connectivity – terrestrial or submarine – since broadband is a key driver and enabler for our customers,” she says.

Competitive landscape

Despite its commitment to providing locally relevant services, driving broadband penetration and the fact that it’s the top operator in a number of the countries it operates in (Senegal, Mali, Ivory Coast and Madagascar, to name a few), Paponneau says that Africa is a competitive region.

“It’s difficult to say which countries have the most competitive landscape, since there are some factors that make markets with two to three players competitive and other factors that make markets with upwards of five players difficult to operate in,” she says.

“If I had to choose, however, I’d say that markets saturated with upwards of five players aren’t a good landscape for competition, since there’s just insufficient room for all of the players to be profitable while at the same time developing a quality of service that’s of

26 AFRICA TELECOMS Issue 16

thought leadership outsourcing certain elements of the business to effect reductions in operating expenditure.

For Orange, Paponneau says this takes on the form of infrastructure sharing, site sharing and outsourcing non-core activities, as this can reduce costs while leaving quality of service unaffected.

“

We already have interconnect costs that have been decided and defined by a regulatory body. If the retail market is also decided upon by a regulator, we will find ourselves in a situation that’s not very stable for very long,”

“

a high standard.

“The risk is always there that a price war will develop and as we’ve seen in markets such as Kenya, where a price war happens there are lower costs but also a lower quality of service.”

“In the beginning,” she says, “there’s benefit for the consumer and it might seem as if the price war is a good thing.

All it does is drive down innovation, which is counterintuitive to what an operator should be doing in any market.”

On the topic of a ‘price floor’, which has been suggested for the Kenyan market, Paponneau says it’s an interesting suggestion, but not one she feels is achievable.

“The price should be linked to the cost and when costs reduce, reductions in price should follow,” she says. “It’s a good suggestion and we’re ready to contribute, but it’s something that needs to be carefully worked through.

“We already have interconnect costs that have been decided and defined by a regulatory body. If the retail market is also decided upon by a regulator, we will find ourselves in a situation that’s not very stable for very long,” she says.

Paponneau says it’s sad when you’re part of a market where you can’t build value. “For me it’s not about where competition exists, but rather where we’re stronger for the existence of competition.

“Those markets, in my opinion, are the ones where we’re able to and encouraged to differentiate on services innovation – like bringing new devices to market before our peers, and launching innovative broadband offerings and services that enrich our customers’ lives,” she says.

The customer is king

An area that’s considered innovative to some and just plain smart business practice to others is the act of

Issue 16 AFRICA TELECOMS 27

thought leadership

Innovation the way forward

While Paponneau admits that it’s difficult to talk about what Orange has in the pipeline when it comes to upcoming services and differentiation, she says it’s clear that innovative services are the best way to add value to customers’ lives.

“We will continue looking at services that are heavily linked to content, such

28 AFRICA TELECOMS Issue 16

as the ‘football fan club’ we’ve launched in more than 10 countries to date.”

Paponneau says that the service provides users with access to a number of news articles related to African and European football (since a large number of professional African players play the majority of their football in Europe), information on upcoming games, as well as a chat feature for community members.

So far, Paponneau says, the service has been very successful and it provides a good blueprint for other contentdriven services.

“Orange feels that even though technical innovation is important, innovation that centres on services customers can derive real value from is just as important,” she says.

And as such, it won’t be surprising to see the company centring on services that reside above cost-effective, solid data services – as opposed to focusing on the data services themselves, as so many other telcos do today. AT

“

“We won’t do more than that, however,” she says, “as we want to remain masters of the customer relationship and quality of service.

“Instead we’ve embarked on a project to outsource internally, forming a single entity that is dedicated to developing and managing all of the value added services platforms across our African operations.

“This gives us the dual benefits of being able to reduce the costs of developing and managing value added services platforms in-country, while still being able to provide a guaranteed quality of service and local relevance,” she says.

“

Orange feels that even though technical innovation is important, innovation that centres on services customers can derive real value from, is just as important. And as such, it won’t be surprising to see the company centring on services that reside above costeffective, solid data services – as opposed to focusing on the data services themselves, as so many other telcos do today.

africa telecom stats The purpose of this page is to give readers of Africa Telecoms a brief overview as to the growth and statistics related to the Telecoms and ICT markets in Africa. What we will be doing on an annual basis is relooking at the statistics, this way over time Africa Telecoms will have a basis for tracking developments and growth in the Africa Market.

Each Edition of Africa Telecoms will be focused on a specific area. In this month’s issue we are focusing on West and Central

Africa, with the broader African telecoms market place. There is an emphasis on Nigeria as it is Africa’s largest Telecoms market by subscriber numbers.

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

Cellular phone handset shipment forecast (2002-2014) 1800

IC Insights

70 %

growth rate worldwide handset shipments

50 % 1200 30 %

900 600

10% 300 0

0% 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011F

2012F

2013F

2014F

-10%

Nigerian mobile off-net peak period tariff and connection fee (2001-2009) Nigerian Communications Commission

16,000

60 14,000 50

Airtime

40

10,000 8,000

30

6,000

20

4,000 10 2,000 0 2001

2002

2003

2004

airtime (peak/Min) 30 AFRICA TELECOMS Issue 16

2005

2006 cost of Sim

2007

2008

2009

Cost of SIM

12,000

Growth RATE

Millions of Cellular Handsets

1500

africa telecom stats Top five enterprise software vendors worldwide by total enterprise software revenue, 2010 ( US$ Millions) 2010 Revenue

2010 Market share (%)

2009 Revenue

2009 Market Share (%)

2009-2010 Growth (%)

Microsoft

54,711

22.4 %

48,650

21.9 %

12.5 %

IBM

25,436

10.4 %

24,073

10.7 %

5.7 %

Oracle

23,918

9.8 %

20,037

8.9 %

19.4 %

SAP

12,979

5.3 %

11,390

5.1 %

13.9 %

Symantec

5,655

2.3 %

5,513

2.4 %

2.6 %

Other Vendors

121,945

49.8 %

115,842

51.3 %

5.3 %

Total

244,644

100.0 %

225,505

100.0 %

8.5 % Gartner (May 2011)

Nigerian Subscriber data (2000-2010)

Nigerian Communications Commission

teledensity 90 M

50

80 M

45

70 M

40

60 M

35

50 M

30 25

40 M

Teledensity

Number of Lines ( Millions )

55

total subscribers

20

30 M

15

20 M

10 10 M

5 2001

2002

2003

2004

2005

2006

2007

2008

2009

Nigerian Market share of mobile operators (dec 2010) MTN

Nigerian Communications Commission

Globacom Airtel (i.e. Celtel) EMTE (i.e. Etisalat) Mtel Issue 16 AFRICA TELECOMS 31

Africa is a growing cybercrime hub

BY Costin Raiu Chief Security Expert, EEMEA Global Research & Analytics Team at Kaspersky Lab

A

ccording to the February 2011 figures from the RSA AntiFraud Command Centre, South Africa was, after America and Britain, the country experiencing the greatest volume of phishing attempts. In addition, according to the figures, over the past three years more than R1 billion is estimated to have been lost in South Africa alone owing to cybercrime – a startling statistic!

And, as the Internet penetration in South Africa and other African counties becomes more widespread in light of broadband fibre being made available, cybercriminals will become more sophisticated, developing viruses and real-time threats to target enterprises in a variety of ways – all of which can have detrimental consequences. With this in mind, it can be said that Africa is fast becoming a hot cybercrime destination, creating the need for businesses operating within the continent to be cautious and take the necessary measures towards effective network security.

If we consider the rapid landing of the undersea cables, with data becoming more of a commodity, an increasing number of Africans can now access the internet anytime and anywhere.

According to World Wide Worx, 10 million internet users are forecast in South Africa by 2013*, which highlights not only the potential growth in an unsaturated market, but also the potential for

32 AFRICA TELECOMS Issue 16

further cybercriminal activity throughout the African continent.

Emails are often the main form of this activity – through spam – and if we consider the stats, African companies should be warned. In the first half of 2011, according to statistics**, 14 893 cybersecurity incidents have been reported, of which 3 477 were related to fraud. Of these figures, 1 280 were phishing attacks that targeted banks in East and Southern Africa.

What’s more, according to Kaspersky Lab research, in Africa Egypt accounts for 31 percent of victims affected by malware.

Algeria sits at 12 percent, Morocco at nine percent and South Africa at seven percent.

And, as if spam and phishing attacks aren’t enough, social engineering is on the rise, with many corporates allowing employees to use such sites on their business network. Globally we have already seen numerous natural disasters in 2011, all of which serve as an ideal platform for cybercriminals to exploit Internet users at work or at home. Social networking sites such as Twitter and Facebook are making this task much easier. Despite the tragic element associated with natural disasters and the deaths of high-profile people, hackers thrive on these types of events through cybercriminal activity for their own financial gain.

Adding to this is the growth in usage of mobile devices,

which also poses a potential security risk. Having access to the internet and emails on the go is certainly very convenient for the everyday working person ‌ as well as for the smart cybercriminal.

The fact is that there is no such thing as an ethical cybercriminal as they are constantly looking for more sophisticated ways to hack into corporate networks and entice internet users into giving up their personal information. This is evident in the number of attacks that are occurring every day. If we consider the security market in 2010, these events are likely to bring about a major shakeup in the types of criminals orchestrating cyber attacks as well as their aims and methods.

As a result, this year and going forward, businesses and the consumer will be faced with the widespread use of a new class of spyware programs, the aim of which can be defined quite simply as: steal everything! They will gather any information that they can about users, right down to the colour of their hair and eyes, and will examine every document stored on infected computers.

Furthermore, industrial and state espionage will become more pervasive, with less emphasis on precision attacks.

Cybercriminals will start targeting a much broader range of

organisations, no longer concentrating solely on online banks and electronic payment systems. The principal aim of many new virus writers and their clients will be the acquisition of someone or something’s complete profile, rather than making a quick buck by stealing credit card details or distributing spam.

Potential changes to the structure of the malware authoring community are also likely to have a profound impact on the IT threat landscape. The emergence in 2010 of the technologically sophisticated Stuxnet worm that attacked industrial-class programmable logic controllers, was an impressive demonstration to the whole world of just what can be accomplished by a malicious program, as well as a wakeup call to the IT security industry because of how difficult it was to counteract. It cannot be ruled out that governments and commercial organisations will make use of Stuxnet-like programs for their own ends.

It is possible that we will only see the beginnings of these kinds of attacks in Africa, with their full force only being felt in the years to come. However, it is already clear that the increase in internet access and subsequently this new generation of cybercriminals means that those tasked with counteracting such cyber threats will need to raise their game considerably. AT *World Wide Worx Research Group, IT Leaders Summit in Johannesburg 2010 **Cyber crime in Africa, May 2011, http://contadorwanarua.wordpress.com/2011/05/22/cybercrime-in-africa/

Issue 16 AFRICA TELECOMS 33

opinion piece

BY Jacques Rautenbach, CEO: Emerging Southern Africa & Chief Strategy Officer

Taking on the challenges in Africa for prosperous growth 34 AFRICA TELECOMS Issue 16

opinion piece

A

s Africa continues to outperform the developed world in terms of economic growth, and leads the way in terms of emerging market development, many companies are looking to the continent to drive their expansion and deliver an appreciable return.

It is for all these reasons that Dimension Data’s Internet Service Provider (ISP) subsidiary, Internet Solutions (IS), has been embarking on an aggressive African expansion strategy over the past five years. “However, the reason for our growth into Africa differs from that of a number of other companies as our expansion serves a dual purpose,” explains Jacques Rautenbach, Chief Strategy Officer: Emerging Africa at IS. “Not only are we looking to grow our top line revenue and increase profitability, as an ISP we also play a vital role in enabling our clients’ expansion into the continent. This requires that we have a presence in all the countries within which they operate, which gives them the ability to work with a single entity for all their connectivity requirements and ensures a level of consistency is maintained with regard to these mission critical services. This, in turn, allows our multinational clients to focus on their core business and execute their own expansion strategy into Africa.”

“The global business market has generally equated the developing region of Africa with the likes of the other emerging market superpowers, like Asia,” continues Rautenbach.

“However, the African business environment is much more complex than these markets, as it is not merely one country.

Africa is made up of various different countries, each with its own regulatory framework, tax structure, import laws and varying levels of infrastructure quality, making it difficult to leverage continental scale over the distinct boundaries.

“As such, it is difficult to make comparisons or draw similarities with the rest of the world, or even South Africa for that matter – especially when trying to ‘cookie cut’ business models and structures that have worked in other countries, and then apply them to the African market. There is no one-size-fitsall solution for conducting business in Africa and each country needs its own unique strategy, while maintaining as much operational uniformity as possible.”

Further to this, IS also seeks to find solutions to the various other challenges facing ISPs in Africa, such as building out network infrastructure in geographically diverse countries with varying degrees of population density, securing bulk power supply, mitigating the variable costs associated with securing materials, bureaucratic red tape, widespread corruption and the associated bribery.

“From a technology standpoint, Africa has moved from a broadband market that was predominantly enabled through satellite connectivity, to a position of having robust and abundant fibre infrastructure, which in most instances is now in oversupply,” explains Rautenbach. “This shift has been driven

Issue 16 AFRICA TELECOMS 35

opinion piece

by the large-scale fibre infrastructure projects that are aimed at harnessing the massive amounts of international bandwidth available on a number of undersea fibre-optic cable systems running along both the west and east coasts of Africa, which have recently come online. These include the SEACOM and Eastern Africa Submarine Cable System (EASSy) along the east coast of Africa; and the West African Cable System (WACS) and the incumbent SAT-3 cable system along the west coast.”

However, Rautenbach explains that not every country is currently able to take full advantage of these recent changes due to varying degrees of local infrastructure development or overregulated, non-competitive market environments. “The end result is that many African markets lack the level of redundancy required by corporate clients.”

There are also challenges in getting this international capacity to landlocked countries in Central Africa. Each region also has its own dynamic, as the Southern and North African regions are fairly advanced in terms of their wireless connectivity and fixed-line broadband capabilities, while the Central African region is still in the process of rolling out more advanced wireless and fixed line broadband capabilities and converting existing infrastructure into next generation networks. As such, ISPs operating in the region have to find more cost-effective solutions to meet the growing demand.

“The answer to this issue is not always self-provisioning as it can often take up to two years to realise a green fields project, by which time many of the market opportunities have been missed,” continues Rautenbach. “A number of different service providers have tried to enter these markets with solutions that they thought would provide the ideal solution, including wireless and satellite services, but these investments have failed to realize their anticipated potential as the technology alternatives advance faster than the deployment.”

Adding a further level of complexity to the market is the aggressive entry of Asian telecommunication providers, who are able to provision lower-cost infrastructure and connectivity services, supplemented by the big margins they still make on their voice services. “ISPs, on the other hand, are expected to provide the highest quality service at the lowest possible cost, as broadband access has already become commoditised in Africa,”

36 AFRICA TELECOMS Issue 16

he says. “As such, it is imperative that ISPs have a sustainable model that is specific to each African country and is based on its unique market conditions and level of maturity to ensure profitability.

“In our experience, the best way to achieve this is to keep the fundamentals the same, but the key lies in how these fundamentals are executed,” explains Rautenbach. “The name of the game when doing business in Africa is automation and operational efficiency. Lean organisational structures that support innovation are the ones doing well in Africa. Those with smaller management teams that have a wealth of skills and a solid knowledge base when it comes to doing business in Africa will always beat the more traditional, bloated, inflexible organisational structures so long as pricing can be maintained within a reasonable degree of parity.”

What has also worked well in terms of enabling IS’s successful expansion into Africa has been their market entry strategy. “Instead of trying to grow every operation organically and roll out our own infrastructure, we have chosen to make strategic investments alongside a strong partnership and aggregation model to gain access to those markets,” explains Rautenbach.

“When we acquire an established local ISP we acquire their expertise and skills, their licences and, most importantly, their client base. This is an important element to a successful rollout into Africa, as trying to organically grow a business and start realising a return, especially one that has made big capital outlays to penetrate the market, can be difficult. This inability to quickly capture market share can often kill a business before it has even gotten off the ground.”

IS has also looked at various wholesale approaches in countries such as Tanzania, Zimbabwe, Uganda, Botswana, Namibia and Angola, to secure capacity on existing infrastructure and then bundle their Service Level Agreement-based services with that.

“We are also currently rolling out this model into Zambia.”

CMC Networks is a proven Carrier, both within local and global markets. Recognised as a global leader in providing customized solutions in hard to reach and “no go” zones offering:  Managed Security & Compliance  Out & Co-sourcing

 Internet, MPLS, VoIP  Global Hosting

Managed Solutions over:     

MPLS L3 Fibre Ethernet Metro Ethernet EoMPLS

Tel: +27 (0)11 517 8400 Web: www.cmcnetworks.net E-Mail: globalsales@cmcnetworks.net twitter.com/cmcnetworks

opinion piece However, Rautenbach states that once an acquisition has been made or a presence established, the need for continued investment and development is essential to the continued success of that business. “It is not like mature markets, where you can allow an acquired company to merely continue on an autonomous path without much input,” he says. “The skills shortage in Africa means there is a vital need for continued education and development programmes that are woven into our organizational structure to help build and maintain strong leadership, nurture local culture and up-skill local staff.”

With the fundamentals and a strategic plan to tackle the inherent challenges of Africa in place, Rautenbach believes that the opportunities in Africa are limitless. “A few years back an ISP such as IS could only make an access and email play into many African countries, which wasn’t a very attractive proposition as you require scale of investment to win on the back of the cost leadership strategy needed in this space.

“However, as we see economies grow – especially in countries such as Kenya, where there are a growing number of big corporate and small businesses – we are able to offer a growing number of IP-based solutions such as hosting and cloud services, VoIP and managing a growing number of complex VPNs for clients who want to run multisite environments. But this is only achievable once the necessary infrastructure and data centre layer is optimally in place, so we can then start applying the software layer that addresses the specific needs of the market.

“In the less mature markets that we currently operate in and need to self-provide like Mozambique, we are already offering three different wireless access technologies and have built out our own network in the capital Maputo, with no issues in the quality or reliability of the service to date,” continues Rautenbach. “It’s an absolute pleasure going to sleep at night knowing the network is stable under our control.”

38 AFRICA TELECOMS Issue 16

Rautenbach also believes that as African business markets continue to mature, the type of services they will want to use over the Internet will advance. “We are seeing a demand for richer content media, like teleconferencing and video, which requires more complex Internet architecture to enable such services. So, as the Internet user experience in Africa becomes richer and the capabilities of the networks advance, there will be even more opportunities for growth within our product and service mix,” he says.

Another area that has seen growth within various African countries due to advances in network infrastructure and telecommunication capabilities is the Independent Software Vendor (ISV) space. “We are starting to work with a number of local ISVs who are developing and selling software that is locally relevant to the unique demands of African businesses,” says Rautenbach. “This is important as these smaller businesses cannot afford to pay the licensing and support costs of vanilla enterprise software, and want something that will scale with their business and provide the functionality they need to conduct business in the unique business environment of Africa.

This is driving growth in hosted services, as ISVs can test proof of concept before going to market and can also deliver their software on demand, allowing users to scale as they grow.

“We also expect the local corporate market to grow rapidly, as it is still relatively small. As Internet connectivity grows it will enable local business to grow with it and it will also drive socioeconomic development within the various other Africa countries that currently lag behind. And with various projects underway to level the playing fields in Africa, which we expect to filter through to ground level in the medium term, we are very bullish about the prospects that lie ahead for us and our growing number of clients within Africa, as we work to create a single platform for doing business in Africa,” concludes Rautenbach. AT

EVENTS CALENDAR july 05-06 VAS Africa

Johannesburg, South Africa Caroline Wiezien +44 (0)20 7017 5605 Informa Telecoms & Media www.nafrica.comworldseries.com

06-07 broadcast & film africa 2011 Nairobi, KENYA Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

20-21

02-03

Management World Africa 2011

The internet show africa 2011

25-28

24-26

Johannesburg, South Africa Jamie Rudolph: +1 973-944-5100 TM Forum www.tmforum.org

Submarine Networks World Africa 2011 Johannesburg, South Africa Tatum Willis: +27 11 516 4059 Terrapinn www.terrapinn.com/2011

august

06-09 MOBILE HEAlth summit GSMA www.mobilehealthsummit.com

13-14 africa communications & satellite summit

01-04 social media world africa 2011 Johannesburg, South Africa Tatum Willis: +27 11 516 4059 Terrapin www.terrapinn.com/2011

Nairobi, KENYA Claire Garrett: +27 (0) 87 820 7106 www.acssummit.com

If you would like Africa Telecoms to add an event to the calendar, please contact Mr. Bradley Shaw at: bshaw@3ipublishin g.co.za 40 AFRICA TELECOMS Issue 16

Johannesburg, South Africa Tatum Willis: +27 11 516 4059 Terrapinn www.terrapinn.com/2011

6th Annual CRC Africa Forum 2011 Dar es Salaam, Tanzania Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

25

gil 2011: africa

Cape Town, south africa Mimi James: +27 21 680 3208 Frost & Sullivan www.gil-global/africa

september 13-15 NGT africa summit

Jake Mazan: +44 117 921 4000 www.ngtafricasummit.com/

JULY 2011 - FEBRUARY 2012

20-21

18-19

nigeria com

ICT LEADERS SUMMIT

Lagos, Nigeria Caroline Wiezien: +44 (0) 207 017 5605 www.comworldseries.com

november

Luanda, angola Marcella Caciolato: +34 91 700 49 57 www.iirangola.com

09-10

24-27

Cape Town, South Africa Caroline Wiezien: +44 (0) 207 017 5605 www.comworldseries.com

africa com

20-21 management world africa 2011 Jamie Rudolph: +1 973-944-5100 TM Forum www.tmforum.org

4g world

Chicago, ILLINOIS Kate Mitchell: 617 259 2320 www.4gworld.com

16-17 AFRIHEALTH

october

24-27 itu telecom world

11-12 north africa com

Tunis, Tunisia Caroline Wiezien +44 (0)20 7017 5605 Informa Telecoms & Media www.nafrica.comworldseries.com

12-13 AItec mozambique ict congress 2011

Maputo, MOZAMBIQUE Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

Ledia Ariza: +41 22 730 52 07 www.itu.int/world2011

26-27 AITEC EAST AFRICA ICT SUMMIT 2011 Nairobi, KENYA Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

Nairobi, KENYA Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

february 07-09

7TH Annual Digital Broadcasting Switchover Forum 2012 Johannesburg, South Africa Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

Issue 16 AFRICA TELECOMS 41

West and Central African

42 AFRICA TELECOMS Issue 16

Mervin Miemoukand ICT Industry Analyst, Frost & Sullivan

Issue 16 AFRICA TELECOMS 43

Market introduction

For the purposes of this article, West and Central Africa refers to Nigeria, Côte d’Ivoire and Cameroon. West and Central Africa is one of the richest regions in sub-Saharan Africa, with most of the countries being oil, mining and agricultural exporters.

• Nigeria, Côte d’Ivoire, and Cameroon are oil exporters and home to dozens of mining companies.

• Nigeria is the third largest African economy in terms of GDP after South Africa and Egypt.

The three countries had GDP per capita (PPP) of more than $1,500 in 2010, higher than the average of $1,000 in sub-Saharan Africa. Moreover, all three countries have outstanding literacy rates, more than 60 percent in 2010.

This, coupled with high GDP per capita, is an indication that higher end-services, other than voice, can easily be adopted by the population. That said, these countries still face high levels of corruption and regulatory challenges that hamper market growth in terms of telecommunications services. Unlike Cameroon, Côte d’Ivoire and Nigeria are connected to three undersea cables: Main One, SAT-3 and Glo-1. These countries also expect the landings of other undersea cables such as the West Africa Cable System (WACS) and Africa Coast to Europe (ACE) in 2011 and 2012, respectively.

The landings of these undersea cables have started to have a positive impact on the telecoms sector, with the reduction of wholesale bandwidth costs. This situation has led to the introduction of advanced applications such as unified communications and IPTV. Moreover, the landings of these cables have triggered the deployments of terrestrial fibre-optic backbones by mobile operators in Nigeria and Côte d’Ivoire. For example, MTN Nigeria and Globacom have rolled out nationwide fibre-optic cable backbone in Nigeria.

In 2009, there were approximately 92.6 million mobile subscribers in the three countries, representing a mobile penetration rate of 40 percent. This indicates that there are still growth opportunities in the region, especially in rural areas.

MTN and Globacom remain the largest mobile operators in the

GDP per capita & mobile penetration rate in west and central africa

Mobile Penetration Rate (%)

HIGH

three countries, with 44.4 percent and 18.9 percent market share, respectively.

However, with the acquisition of Zain by Bharti Airtel, the competitive landscape is expected to change in Nigeria. Frost & Sullivan expects that Airtel is likely to increase its market share in Nigeria in the next five years, thanks to the implementation of its Indian model.

This model of Airtel’s has started to bear fruit in Kenya where the company has managed to chip away at its competitors’ market share. Moreover, CDMA operators have been losing market share to GSM operators in Nigeria. This is mainly due to the lack of economies of scale. In response to this downward trend, CDMA operators should focus on mobile broadband services and complement their product offerings with GSM services.

The mobile market generated US$8.6 billion and is expected to reach US$12.6 billion, growing at a CAGR of 5.6 percent from 2009 to 2016. The healthy growth rates can be attributed to an increase in mobile data and subscriber acquisition revenues as mobile operators initiate several new data tariff plans to boost their overall revenues.

Regulatory and infrastructure overview

The level of telecoms deregulation varies among the three countries, with Nigeria being the most liberalised. Other factors include: • Nigeria has introduced a unified licensing regime.

• No monopoly on intercity fibre-optic deployments is present.

• Nigeria is on the threshold of implementing mobile number portability.

• Unlike Cameroon, mobile operators are allowed to deploy intercity fibre-optic backbone in Côte d’Ivoire and Nigeria.

• In Cameroon, mobile operators are only allowed to roll out metro fibre-optic backbone.

• Only the incumbent Cameroon Telecommunications (Camtel) is allowed to build nationwide fibre-optic backbone.

Market share by mobile operator, west & central africa

Cote d’Ivoire 0.5 Cameroon

Nigeria

LOW 0.0

GDP Per Capita ($)

44 AFRICA TELECOMS Issue 16

5,000.0

MTN - 44.4%

OTHERS - 21.1%

Globacom - 18.9%

ZAIN - 15.6%

57

4

+27 21 4 2

6

issue 15

5

E SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBS UBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIB SCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE IBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZ GAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE NE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMSPHONE MAGAZINE SUBS Satellite & Fibre UBSCRIBE TO AFRICA TELECOMS MAGAZINE inSUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCR aFrica hing.c o. z SUBSCRIBE : n SCRIBE TO AFRICA TELECOMS MAGAZINE a b li s uses o SUBSCRIBE TO AFRICA TELECOMS MAGAZINE ry f o c pu , co u n t N I S S TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO RIBE TO AFRICA TELECOMS MAGAZINE LE K e n yadSUBSCRIBE W I R E E TS O U T a n L L a a g W MAGAZINE SUBSCRIBE TO AFRICAuTELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGA pia ethio AGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZIN MAil s le d l B SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE BSCRIBE TO AFRICA TELECOMS MAGAZINE ca ere au t .c o .z a/su H t li n e SUBSCRIBE SUBSCRIBE TO RIBE TO AFRICA TELECOMS MAGAZINE bs K lu N T TO AFRICA TELECOMS MAGAZINE on c c E n L a I S E TO AFRICA TELECOMS MAGAZINE SUBSCRIBE AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AF B ION THuE OLUTTO p V n Elo O AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA MAGAZINE SUBSCRIBE TO AFRIC g,TELECOMS a RE heScott ISprague, K p n e O , N a C E O, W , g SUBSCRIBE TO AFRICA TELECOMS AZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE od click MAGAZINE S go ad gly Jin e th e b hMAGAZINE NE SUBSCRIBE TO AFRICA TELECOMS SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUB eu th nd t 162011 a MAGAZINE SUBSCRIBE TELECOMS MAGAZINE AZINE SUBSCRIBE TO AFRICA TELECOMS e code:AFRICA referencTO **Please quote NE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUB SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSC BSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIB OMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MA S MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGA RICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TE A TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELEC • The first fully integrated monthly publication aimed at ELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOM all stakeholders within the African ITC environment.

COMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS • The Africa Telecoms website provides further coverage RIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TOand extended reach.

AFRICA TELECOMS MAGAZINE SUBSCRIBE TO The site is updated daily and features all the latest news TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFR on the African Telecoms landscape.

ZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SU • Africa Telecoms has an audience reach across the entire E SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSC African continent, the Middle East, Asia, Europe and the UBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRI Americas.

TO AFRICA TELECOMS MAGAZINE SUBSCRIBE T SCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE • The magazine strives to bring its readership fair, MS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAG balanced and stimulating news, MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZ in addition to articles by the top players in telecommunications in Africa.

LECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOM • MAGAZINE The magazine is published 11 times a year.

OMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS SUBSCRIBE TO AFRICA TELECOMS M • Articles from the Continent’s Thought Leaders and MS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAG Innovators MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZ • Africa Telecoms is the first African publication to be AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA audited by BPA Worldwide.

ICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TEL ECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS www.africatelecomsonline.co.za/subscribe OMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MA S MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGA AGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZINE SUBSCRIBE TO AFRICA TELECOMS MAGAZIN ue

13

of

afr

ic

r an

eg

ul

ato

5 9.9 0 .95 R 2 .5 $2 ZA s$ 3 2.25 us u k£ 2.95 frica u € fA Eu st o Re

.95 ZAR 293.50 us$ 2.25 uk£ 2.95 $ 2.95 Eu€ of Africa us Rest

Q

l ua

c

om

tervie

w

ship in leadership interview thought

leader

.

Senior Vice President of Global Sales nc

m

,I

SeS World Skies

ric at ele c o m

ht thoug

af w.

rs

sh ZAR 29.95 der us$a3.50 uk£ 2.25 le 2.95 htEu€ Rest of Africa us$ 2.95

ie w

ww

th

g ou

erv

ib e

nt ip i

cr

s

su

bs

c ri p ti o n s @

3i

iss

All graphs source: Frost & Sullivan

Ivory Coast

Cameroon

Yes

Selected Urban Cities

WiMAx

Yes

Selected Urban Cities

2G / 2.5G

Yes

Nationwide

3G / 3.5G

Yes

Only Abidjan

WiMAx

No

None

2G / 2.5G

Yes

Nationwide

3G / 3.5G

No

None

WiMAx

Yes

Selected Urban Cities

However, in Cameroon, the regulator has drafted a new ICT bill that will put an end to this situation. This bill is expected to come into force before the end of 2011.

Only the Nigerian Communications Commission (NCC) has a clear policy on mobile number portability (MNP) in the region. The NCC is expected to implement MNP before the end of 2011.

This implementation is likely to boost competition in Nigeria’s telecoms sector and subsequently mobile operators are expected to provide enhanced services to their customers.

Similar to other sub-Saharan African countries, there remain little or no competition laws and this lack of regulations has led to anti-competitive behaviour among the telecoms operators.

Currently, competition-related issues are handled by telecoms regulators. There are interconnection regulations in these countries.

NCC has recently introduced asymmetric interconnection rates, while regulators enforce symmetric interconnect rates in Cameroon and Côte d’Ivoire. Small market participants and new entrants are expected to benefit from this new interconnection regime in Nigeria.

Mobile operators have deployed nationwide 2G/2.5G networks in these countries, whereas 3G/3.5G and WiMAx networks are still limited to major urban cities.

46 AFRICA TELECOMS Issue 16

Country

Provisions of Enterprise and Data Services

3G / 3.5G

2G/2.5G Deployments

Nationwide

3G/3.5G Deployments

Yes

MPLS/All-ip Infrastructure

Network Coverage

2G / 2.5G

Fibre Optic Deployments

Nigeria

Infrastructure Yes / No Platform

Outsourcing

Country

market trend, west & central africa

Mobile Payments

Technology deployed, west & central africa

Cameroon Nigeria Ivory Coast Increased Development

Unchanged Development

Decreased Development

West and Central African market development and trends To mitigate decline in revenues from voice revenues, mobile operators have started to provide mobile money services to consumers in Côte d’Ivoire and Cameroon. These offerings are expected to help mobile retain customers and sustain profit margins. This is likely to remain the trend in the next five years in these countries as Nigeria’s Central Bank has issued licences for mobile money services to mobile operators.

Another key trend is the moving of mobile operators in the broadband space in these countries. Unlike in other sub-Saharan African countries, mobile operators in these 3 countries have started to play aggressively in the broadband market. To this effect, these mobile operators have acquired ISPs and built data centres to cater to the lucrative corporate customers.

Moreover, mobile operators have been outsourcing the management and maintenance of their networks to third parties.

This is mainly observed in Côte d’Ivoire and Nigeria, where mobile incumbents closed outsourcing deals with vendors such as Nokia Siemens Networks and Helios Towers Africa Limited.

Due to the lack of xDSL infrastructure and other alternatives, 3G and 3.5G networks are expected to become primary access technology for the Internet. Mobile operators are expected to deploy 3G and 3.5G networks in Cameroon and Côte d’Ivoire by 2012, due to high demand for mobile broadband services. AT

Seizing Opportunity:

Africa’s Enterprise Messaging Market

48 AFRICA TELECOMS Issue 16

By Charles Landry, Senior Vice President, Messaging, Syniverse

T

here’s no doubt that mobile has changed the way people communicate, work and play around the globe. And nowhere are its effects more evident than in Africa, where mobile penetration is skyrocketing.

Mobile has emerged as the ubiquitous, nearly ideal, communications channel in the region, due to factors such as the lack of fixed-line infrastructure in Africa’s expansive rural areas and the relative affordability of a mobile device versus a television or PC. With even the most inexpensive, basic feature phones, millions of people in developing areas of the continent are empowered with access to news, health information, banking, and more.

The African mobile ecosystem holds vast potential, particularly for enterprises who wish to engage with untapped audiences in the region. Let’s take a closer look at how mobile, specifically application-to-peer (A2P) SMS messaging, can be used to reach customers and build brand loyalty; and how these campaigns can drive network traffic to boost operator revenues.

Why should enterprises go mobile?

With mobile penetration growing at enormous rates in Africa, now is the time for enterprises to leverage mobile as one of the best ways to engage with target audiences. Mobile offers an array of benefits as a communications tool that has caused its popularity to grow enormously among major brands looking to better connect with customers and prospects: • Customizable – The options for different types of mobile campaigns are endless and can easily be customized to target specific market segments or regions • Direct channel – Unlike outdoor or print, mobile reaches consumers directly on their own personal devices • Low-cost – Enterprise messaging campaigns are relatively inexpensive to implement, and mobile marketing campaigns have enjoyed higher return on advertising investment than expensive, traditional media campaigns • Two-way – Mobile communications promote real consumer engagement by facilitating two-way interaction between brands and their audiences In short, mobile messaging is a compelling communications channel that enables a dialogue with consumers to build awareness, relationships, loyalty and value in a measurable, scalable and highly flexible way.

Issue 16 AFRICA TELECOMS 49

160 chArActErs – WhAt cAn yOu sAy?

While the functionality of mobile websites and apps is impressive, their reach is extremely limited compared to SMS. This is especially true in markets like Africa, where smartphone proliferation is very limited, but nearly all devices can send and receive an SMS message. Consequently, SMS leads the way as one of the best communication vehicles for today’s enterprises building business in Africa.

Almost any organization can employ SMS to communicate directly with its target audiences. The following are just a few ways in which different types of verticals can use SMS: • Government, utilities and non-profit – Weather alerts, crime reporting, crop information, licence renewals • Healthcare – Health information, prescription refills, doctor or clinic location, appointment reminders • Retail – New inventory alerts, coupons, store event alerts • Shipping and logistics – Shipping confirmation, transit times, drop-off locations • Travel and hospitality – Currency conversion, itinerary changes, deals and promotions

WhAt’s in it fOr OpErAtOrs?

For operators, the primary benefit of enterprise messaging comes down to increasing revenue. As mobile data usage has yet to see the same astronomical growth as in more developed markets, new revenue streams are invaluable for operators in Africa.

To drive enterprise SMS traffic and the resulting revenue, operators must make three moves: First, they must show enterprises the capabilities of A2P messaging, so they will invest in and implement campaigns.

Operators can use case studies of successful implementations in other regions to elucidate both the benefits and the processes required to achieve those benefits.

Second, operators need to familiarize consumers with the concept of receiving messages from enterprises. Although consumer spending power will be a major hurdle to overcome in Africa, growing familiarity with the notion of communications coming directly from an organization to a user’s handset will help drive participation.

Third, operators need to optimize their A2P offerings to support enterprise needs by providing full reporting on outreach efforts, such as click-throughs and direct responses.

A measure of success offered by the operator and organizations will be necessary to justify an investment in mobile tactics.

grOWing OppOrtunity fOr EntErprisEs And OpErAtOrs

As mobile subscriber numbers and SMS usage in Africa increase at unprecedented rates, the scale of the opportunity for enterprises and operators to leverage A2P messaging grows.

Technological barriers have been overcome and relationships are in place between operators and messaging platform providers, who can work directly with the enterprises to provide essential customer service and minimize the technological demands placed on brands.

The Syniverse message to enterprises and operators in Africa is simple: SMS represents an opportunity to better empower consumers at the lowest cost. As familiarity grows and campaign successes build momentum, mobile messaging will become a major part of enterprises’ communications strategies as well as operators’ revenue streams. AT

For operators, the primary benefit of enterprise messaging comes down to increasing revenue. As mobile data usage has yet to see the same astronomical growth as in more developed markets, new revenue streams are invaluable for operators in Africa.

‘‘

50 AFRICA TELECOMS Issue 16

with Douglas Reed, Chief Executive Officer of Vox Telecom This issue of Africa Telecoms is focused on two distinct topics. That of West and Central Africa as a region and the interconnection debate. Vox has always taken an active role in interconnection discussions in South Africa. What is your opinion on the correct way to calculate a fair interconnection rate?

We believe it should be regulated, there should be one interconnection rate for both mobile and fixed, and the guideline should be 3 to 4 US cents.

Does Vox Telecom have any operations outside South Africa?

We have operations in Namibia.

Do you have any plans of expanding into the continent? If so, when would you expect to start this expansion? And in which markets would you look to start working in?

We will expand into Africa once we develop a formula that will work in major cities and once the markets liberalize further.

How has the last set of interconnection reductions as set

by ICASA affected Vox Telecom’s revenue? Have you seen a substantial drop in costs and revenue due to the reductions?

Overall, it has had a positive effect on the Vox Group, improving our competitiveness – but it was very much a gaining on the swings, losing on the roundabouts scenario. We will have to replace obsolete business models with new ones.

52 AFRICA TELECOMS Issue 16

Do you think that interconnection rates are a valid cost in the telecoms space? And do you think that South Africa will ever see itself in a position where there is no interconnect cost?

Yes, the Interconnection rate is valid; and we must be careful of eroding the value chain so much that we drive away investment in telecommunication infrastructure. Also, if we have a zero cost it will result in the consumer paying for the call. This scenario will make it almost impossible to compete with any telco that has a dominant market share and cause havoc amongst the consumers.

How do you see the fixed termination rate ruling by ICASA affecting Vox’s business in the next 12-18 months?

Overall it is positive, good for the consumer and good for Vox. Although I do think that South Africa should have a one price policy, I don’t believe you can regulate around technology: it changes too fast and the service should be defined. For example, termination of a voice minute, not VoIP, mobile, fixed, wireless etc.

Vox has seemingly been on a big drive to convert its leastcost-routing clients (LCR) to Cristal Vox. What is the difference between the two and is Cristal Vox a higher margin earner than LCR?

The Cristal Vox margins are much better than the LCR margins (old and current) when you take into account the additional minutes captured and the inbound minutes.

Are you seeing a good conversion rate of new clients in South Africa moving onto Cristal Vox?

Yes, and we are fortunate enough to do it at a pace that suits our customers and Vox Telecom because the value proposition and margins are very similar at the moment.

What is the expected saving that a consumer can expect when moving onto your network?

Vox is a low-cost operator and thus should always provide 15 to 30% savings against the standard incumbent pricing.

Does Cristal Vox run on an entirely Vox Telecom-owned network? And what is the extent and make-up of this network?

Cristal Vox does not travel across the ADSL cloud or any other network where we do not control the quality until we switch the minutes to the destination network. ADSL voice services are branded differently.

What is Vox doing to improve the quality of calls made on its own network? Has there been a quantitative improvement on the network quality since the upgrade from Cisco to Juniper equipment? What did this upgrade involve?

We have invested extensively in carrier-class equipment, Cisco, Juniper and Alcatel; and that along with fibre and Metro E have made an enormous difference to the quality for the network. We have also heavily invested in security, load balancing, monitoring and measurement infrastructure.

Since the launch of your video-conferencing service have you seen a strong performance from this product?

the lower LSMs and are building a distribution network and prepaid systems along with suitable products for this end.

Has number portability had the desired effect on your corporate voice business that you expected a year ago?

No, we have had to overcome a lot of technical and routing issues that are out of our control and had to slow down our implementation. However, the strategy is sound and we are speeding up the implementation process again.

What is the current churn rate for Vox Telecom?

If we include downgrades, just under 1,4% pm.

What do you think the biggest game changer is going to be in the telecoms industry in Africa in the next 12 months?

Vox Telecom, of course

Skype is certainly making waves in the VoIP business worldwide. How do you view Skype – as a competitor or as an enabler of the technology?

Microsoft Hosted Platforms are a major part of our strategy and we welcome the integration of Skype into Microsoft’s new Link Product which we aim to market shortly. Skype is also an important value add in the broadband sector. AT

Yes, so much so that we have invested further and now have some of the best skills available in South Africa in this field.

Vox Telecom has always been a company driven by innovation. What can we expect from Vox in the coming years and what is the most innovative product launched

by Vox in the past 12 months?

Towards the end of the year we will technically be able to differentiate our internet and broadband offering extensively with price, billing and having the ability to tailor-make unique solutions. We are also going to attack

Issue 16 AFRICA TELECOMS 53

What next for

SA telecoms?

A commentary on the South African telecoms market and the recent budget vote delivered by the Honourable Communications Minister Roy Padayachie.

T

he positive influence of telecommunication services on the growth and development of a country is an undisputed reality. A large pool of statistics demonstrates the strong links between the growth in mobile and broadband penetration, labour productivity and a country’s gross domestic product (GDP). Indications are that a 10% increase in broadband access can boost GDP by up to 1.5% in developed countries1 – and even more so in developing countries.

The story of the Tower of Babel is represented across many religions and best illustrates the power of a united humanity, unified by free and open communication. It is said that the people wished to build a tower so tall it would reach into the heavens. Upon observation, God concluded that the people were so truly united that their unity would ensure they achieved whatever goal they set their minds to. In response, God scattered them across the earth, created different languages and, in one sweep, disrupted their ability to communicate. Such is the power of open and free communication that it enables people, and countries, to aspire to and reach their greatest goals and dreams.

56 AFRICA TELECOMS Issue 16

Rapelang Rabana Global Head of Research & Development for Telfree

Issue 16 AFRICA TELECOMS 57

‘‘

Meaningful change

Of primary importance in the creation of a level playing field was the regulation of the interconnect rate – the wholesale rate charged to any service provider to terminate calls onto the networks of the incumbent operators. As with any other wholesale rate, the interconnect rate was supposed to indicate the lowest price available in the market, upon which a margin is applied to reach a retail rate.

However, this was not the case in South Africa. The anti-competitive situation whereby the wholesale interconnect was higher than the retail rate the very same incumbent operators provided in their shops, was only corrected in 2010, six years after so-called deregulation. This then eventually brought about the true meaning of the word ‘wholesale’.

For many years, the incumbent operators could comfortably undercut this wholesale rate to provide lowerthan-wholesale retail rates because the economies of scale they had built up over the decades enabled them to offset

‘‘

The build-up

South Africa’s telecommunications market saw deregulation on 1 February 2005, with the legalization of Voice over Internet Protocol (VoIP). This was a mooted first step in opening the market to greater competition. Despite great expectations to see lower rates for their local and international calls immediately, the South African customer did not notice any savings. While many new entrants into the market were licensed by the Independent Communications Authority of South Africa (ICASA) under the much-touted VANS license, there was no significant market shake-up. In reality, the big networks do not need to reduce their rates unless they are forced to by the critical mass created by the action of new operators entering the market. Despite the licensing of new entrants, the crucial steps to creating a climate that would enable potential competitors to begin eating away at the incumbent networks’ big cake simply did not happen for a very long time.

Of primary importance in the creation of a level playing field was the regulation of the interconnect rate – the wholesale rate charged to any service provider to terminate calls onto the networks of the incumbent operators.

losses with their significant revenues. By keeping the interconnect rate artificially high, they had skilfully blocked new entrants starting from a zero base without revenues – thus preventing them from providing any significant competition as they were not in a position to offset such losses.

The proper and appropriate channel of establishing carrier interconnections between new entrants and the incumbent operators to create competition was therefore unviable. Instead, most new entrants were drawn down the path of exploiting the arbitrage opportunity presented by the low retail rates on the larger cellphone contracts of the incumbent operators as compared with the rates businesses paid to use the fixedline operator. These SIM cards were used in a business environment instead of for the individual personal use for which they were originally intended, through devices known as SIM farms and LeastCost Routers (LCRs). These made it possible for calls made by the business to be directed over the SIM cards instead of the fixed-line operator. This inelegant approach enabled some service providers to boycott the absurdly high interconnect rate and promote the rampant use of SIM farms and LCRs. While for many years this offered cheaper pricing options for the business, it was to the severe detriment of voice quality, consumer choice and development of an efficient and competitive telecoms market in South Africa.

It took six years, a change of telecommunication ministers, ICASA chairmen and Telkom CEOs – plus the threat by parliament to regulate the retail call rates in the market – before we saw any meaningful change in the correction of the wholesale interconnect rate.

Cultivating greater competition

It would however be a grave failing if this is as far as the change goes for another six years. Disappointingly absent from the budget speech was the minister’s guidance and thoughts on the

58 AFRICA TELECOMS Issue 14

3i Publishing

your future is our now

How are your

conversation skills?

Communication is at the source of all business transactions and, while everyone knows this, not everyone knows how to start a conversation with the right people in the right way.

Networx PR is a new PR and communications agency that’s been established to meet the growing demand for effective and relevant technical and specialised media relations in South Africa and Africa.

Based in Cape Town with a satellite office in Johannesburg, Networx PR is best placed - in the gateway to Africa - to help telecommunications and related industry businesses gain traction.

We can help you start the conversations you need to have in order to do the business you want to do.

tel: 021 461 6764 | www.networxpr.co.za | kate@networxpr.co.za

‘‘

AlternAtive to locAl loop unbundling The LLU saga, which has been on the cards for more than five years, seems highly unlikely to meet the intended deadline of November 2011. A much easier and quicker win to open up last mile access is for the ministry to push progress on ‘carrier pre-select’ services (CPS). Carrier pre-select is a much cleaner and more sophisticated approach to give new entrants access to the last mile infrastructure of the incumbent operators to provide telephony services.

CPS would allow any service provider to be reachable from a telephone or cellular line of any of the incumbent operators by dialling a short prefix – such as 1616 – followed by the number to be reached. The prefix effectively switches the call to the service provider that the prefix belongs to. This would open up access to last mile infrastructure of all the incumbent operators, not just Telkom, to provide open telephony services more effectively than the proposed process of unbundling the local loop.

The next crucial steps in forcing greater competition will be to break the stronghold that the incumbent operators have on the ‘last mile’ access to the customer’s end device.

cpS reAcheS beyond broAdbAnd penetrAtion

The traditional limitation of VoIP services is that they, by definition, require the customer to have a broadband connection to enjoy the benefits of IP telephony.

With only a 5% broadband penetration in South Africa, the benefits of IP telephony are notably far away from reaching the broader population of consumers. Carrier pre-select overcomes the broadband barrier, as it is a service accessible from any normal telephone line or cellular phone and therefore within the reach of most ordinary consumers. CPS would be the most viable approach to deliver more affordable communication throughout the country and to the fringes of society.

leAderShip required

Carrier pre-select was gazetted last year, but has seen limited planning and implementation. Key to the success of its implementation in South Africa is the extent to which the ministry and ICASA will exert influence and regulate the origination fee that the incumbent operators will charge other service providers to ‘originate’ calls from their network. Regulation of this rate is crucial to ensure that the rate charged is truly reflective of costs faced by the incumbent operators.

History has already shown us, through the interconnect rate sitting at R1.25 for several

Deloitte for the GSMA report: Global Mobile Tax Review 2006-07; World Bank, Qiang 2009; Booz & Company, Enabling Sustainable Digital Highways; Strategies for Next-Generation Broadband 60 AFRICA TELECOMS Issue 14

years, that without regulatory pressure the rates set by the incumbent operators can be set artificially high to undermine competition. This is certainly an area where the ministry can play a role, as the fee charged can easily be used as a tool to make CPS unviable.

While CPS focuses on telephony, and doesn’t deal with ADSL/broadband access that LLU would also consider, it is a much easier battle to win while we continue to unravel the complexity around local loop unbundling.

The Telfree Group is a privately owned group of companies headquartered in Switzerland, which has positioned itself to penetrate the ‘last growth market’, namely Africa and other emerging markets. Telfree is fully licensed by ICASA to provide all telecommunications-related services in South Africa.

As a next generation operator, Telfree has the combined ability of being able to compete with incumbent operators, through its full operator SS7 carrier capabilities for voice and SMS, as well as providing value-added services that leverage IP connectivity like presence, instant messaging and push email, through its desktop and mobile applications. AT

‘‘

next steps of how the competitiveness of the telecommunications market in South Africa would be further improved for the benefit of the end-user community at large.

The next crucial steps in forcing greater competition will be to break the stronghold that the incumbent operators have on the ‘last mile’ access to the customer’s end device. This access needs to be opened up to new entrants as a matter of urgency. The traditional way to approach the opening up of last mile access is through local loop unbundling (LLU): this means, essentially, allowing other service providers physical access to the copper cable infrastructure that connects customers to Telkom’s exchanges. This is however a complex process and we may well find that the cost and complexity of such a physically intensive process will ultimately be paid by the very customer that this solution was initially aiming to help.

by steven ambrose managing Director, WorlD WiDe Worx strategy

62 AFRICA TELECOMS Issue 16

m e h t

f o h t y

r e t in

It is not difficult in the normal course of things to miss an opportunity or to be made to look a little silly by a turn of events. It is human, and it is not unusual.

Technology has started to make this set of circumstances more and more commonplace, and there is no clearer example of this than when regulators, government and industry try to hash out a set of regulations for something we all take completely for granted: the basic fact that when you make a call to someone, anyone, anywhere, a phone will ring, no matter if that someone is next door, or across the world. That, in its most basic form, is called interconnect.

Issue 16 AFRICA TELECOMS 63

T

here are many ways to approach this contentious issue. If you are an incumbent operator such as Telkom in South Africa or a major mobile network such as MTN that operates in much of Africa, you may want as high a fee as possible for others to terminate on your network. If you are a smaller, newer and less established operator, you will definitely want a low or no interconnect fee to terminate your calls on the dominant networks.

The two needs are actually mutually exclusive and have created much legislation, regulation, and public expectation.

In most competitive environments, interconnect fees are negotiated and, as in any negotiation, the bigger or more dominant player can dictate the terms of the arrangement. As mobile communications have become dominant in the African continent, the issue of affordability has become both commercially and politically relevant. Much of Africa has a very low penetration of fixed lines and so the cost of communication is very heavily dominated by the mobile operators. The interconnect has been used as an anti-competitive tool in much of Africa – with the dominant and/or first to market operators using high interconnect fees to maintain pricing, and as a serious barrier to entry for new operators.

Once a dominant operator or even two dominant operators maintain high interconnects, as we have seen in South Africa until recently, with both Vodacom and MTN essentially sharing the subscribers between themselves, the growth potential of new operators is hindered, and the overall costs of communication are kept artificially high. The key issue is that it is not the actual quantum of the interconnect that is having the effect of keeping

64 AFRICA TELECOMS Issue 16

prices high, but rather the anti-competitive nature of the price ceiling that is effectively maintained, and the resultant lack of competition amongst the operators that causes high prices.

The operators have a very simple view of the interconnect: they maintain that they must charge a commercially viable amount for other operators to terminate calls on their network in order to supply the service that is demanded from them by their customers. In my opinion, the entire argument is completely fallacious, and deeply rooted in the anti-competitive nature of any dominant operator. It is a given that telecommunications is a capital intensive business, and scale and deep pockets are needed to roll out effective and comprehensive networks, both fixed and mobile. It is also understood that rolling out and maintaining these networks costs huge sums of money, which any business must make a return on – otherwise they will invest in other more lucrative ventures.

The stark reality is that, in the race to connect the most people, price has been seen to be an anti-competitive tool for operators, and has been largely ignored by consumers eager to get connected. In that high growth environment, there is actually no need to be price competitive: just throw in government mandated and approved monopolies, and you have an environment where

In most competitive environments, interconnect fees are negotiated and, the bigger or more dominant player can dictate the terms of the arrangement.

operators make huge if not super profits, and consumers pay high and unnecessary charges for basic telecommunication services.

The business models that operators utilise then come to depend on these massive cash flows and profits. And as the various markets mature, and some competition is introduced, the big interconnect dance begins.

The very same governments that sanctioned the operator monopolies that instituted the interconnects in the first place, become the instigators of the regulators who then make the operators the first target of these interconnect and other regulations. We have all heard the political posturing around the reduction of the interconnect rate, and how this is going to assist the poor consumer who has been so badly taken advantage of.

Then all the politicians, lawyers, regulators, and operators go on expensive public hearings, market dominance investigations, and other costly junkets to wonderful international places to investigate best international practice.

And once all this intricate and hugely expensive dancing has concluded, the “regulator” issues an edict reducing the rates on a glide path that ensures that interconnect rates finally come down. Politicians herald their pro consumer bias, the operators lament their lost billions and nothing actually happens for the poor consumer. In fact, in most instances the actual prices you pay for your cell phone bill goes up, as most contract customers in South Africa found out recently, much to their consternation.

This state of affairs would actually be very funny if it were not so serious.

There is no doubt that with penetration exceeding 100% in South Africa and growth rates in the high double digits in much of Africa, consumers, in their relentless quest to be connected, are being taken huge advantage of. Telecommunications is the gold rush of this era. Big rewards are available to those with the finance and the connections to get licences, and the interconnect is a tiny player in this regard. There is no transparency from any operator anywhere, as to what the actual make-up of the cost of calls is, and in fact the interconnect is a small part of the overall tariff picture. Business models once established are very difficult to change. Ask any accountant.

My contention here is that interconnect is largely a zero sum game. Especially if there are two or three dominant players in a market, they tend to share the “spoils” of the interconnect received and paid to each other; the most affected are the smaller players in any market and these need not be only mobile players. Other operators, especially in the Voice over Internet Protocol (VoIP) market, are greatly disadvantaged, as they have to pay out huge amounts to connect to phones on other networks.

All of this boils down to a simple equation. High costs are selfdefeating; and no amount of regulation and regulator intervention will effectively bring down costs. Because many governments see mobile operators as enormous cash cows for the fiscus, we have all the elements of a very complicated five-act opera, with all the showcasing and drama expected.

It is my contention that interconnects are essentially artificial accounting constructs. If the operators, regulators and other government players in the market took a long hard look at their own long-term interests, and considered the fact that communication

throw in government mandated and approved monopolies, and you have an environment where operators make huge if not super profits 66 AFRICA TELECOMS Issue 16

communication is no longer a luxury for which we should all pay a premium, but a basic human right, like freedom of association and clean water, the whole debate goes away. Interconnects simply should not exist. is no longer a luxury for which we should all pay a premium, but a basic human right, like freedom of association and clean water, the whole debate goes away. Interconnects simply should not exist.

The regulators could ensure that regulation exists to enforce actual physical interconnection between any operator, based on technical requirements, at no cost, and all suppliers of telecommunication services would then base their costs on a cost plus profit equation like any other business. Companies offering telecommunication services would then compete, like any other business, on service and product offerings, and the market would decide what services would exist and what the correct pricing would be in the long term. The benefit for us all would be a far more competitive market, far lower market dominance and distortion, and far far better service levels overall. And all of this at a much more appropriate price that more and more people could afford.

This may sound like unachievable utopia, but it is thinking based on a carefully considered and well-documented market model that has worked well for many industries over many years.

68 AFRICA TELECOMS Issue 16

There is no reason that the telecommunications industry should be exempt from this, nor is the industry so special that the rules should be that different. Clearly, the overregulation and multiple legislative attempts to manage and regulate the industry – from spectrum to licencing to interconnect regimes – are all effectively creating far greater complexity and cost that there should be.

There is no doubt that scarce resources should be managed, but currently we have such an overwhelming plethora of regulation and resultant market imperfections, that telecommunications overall are being hampered to such an extent that we are all suffering the consequences, both in penetration levels, and cost. It is a sad fact that even those who are currently making huge profits in their environment are also being negatively affected.

The beneficial link between internet access and the telecommunication infrastructure that provides much of this access in Africa is well established. For countries on this huge and potentially globally influential continent to thrive and grow, we need a much more coherent and simple regulatory environment.

The interconnect debate has shown us that regulating the interconnect has little effect on price, so I urge regulators and governments across the continent to clear the playing field, remove the interconnect entirely, and let the clever accountants figure out how to make money for the operators in its absence. I am convinced we will all benefit. AT

tHe last word

Japanese clone takes

centre stage

How many of you have been enchanted (perhaps perplexed) by a gorgeous creature, Eguchi Aimi – the latest member of the Japanese girl idol pop band, AKB48? Globally, fans have fallen head over heels for her cute looks and amazing voice, which were prominently featured in Weekly Playboy Japan.

Aimi’s spectacular rise to fame is easy to understand.

There is perfection in her eyes, lips, smile, hair, nose and chin – each feature flawless, all just adorable.

TokyoHive, a Japanese culture blog, reported that “everyone” was eager to check out the pictures “in order to find out all the secrets behind her beauty”. Controversy raged, with fans questioning her resemblance to other band members and wondering whether she was ‘family’.

Her profile on the AKB48 website stated that she was born in 1995 in Saitama, near Tokyo. However, the deep, dark secret of her birth was finally revealed after Aimi starred in an advert for confectionary manufacturer Glico’s ice candy, Aisu no Mi. AKB48 producer Akimoto Yasushi and Glico broke the story after the first advertisement was aired across television networks in Japan. Aimi (‘beautiful, loved one’) is in fact a 150GB computer-generated image sourced from the faces of six other band members and the voice of a seventh.

Oshima Yuko’s hair, Itano Tomomi’s nose, Shinoda Mariko’s lips, Takahashi Minami’s facial outline, Maeda Atsuko’s eyes and Watanabe Mayu’s eyebrows were

72 AFRICA TELECOMS Issue 16

‘borrowed’ to create a composite girl idol that has wowed Japan’s pop devotees.

The impact of the fictitious Eguchi Aimi was so sudden and so unusual for a member of AKB48 that it has kept the band and Glico in the international press long after the truth of her ‘make-up’ was exposed.

And the moral of the story?

In future, if you fall in love with an ‘ideal’ human being, beware: the object of your affection may be an empty CGI composition. Take a good hard look at your beloved’s elderly relatives. Is it genes or is it graphics? Family or fake?

Creature or clone? Virtuous or virtual?

Personal relationships aside, this brilliant Japanese marketing ploy does highlight a potential collision between the digital and physical realms. Is this where our world is headed? Machines creating virtual life and humankind blending seamlessly into a digital world – albeit after an initial confrontation?

We can all name movies in which a war between opposing worlds has been graphically depicted. At least the lighthearted, mischievous ‘scam’ of Eguchi Aimi has been conducted peacefully and has faded with a chuckle, albeit at the cost of some virtually broken hearts.

But do bear this in mind, as stated best by William Gibson: “The future is here. It’s just not widely distributed yet.” AT

THE AUTHOR: Bradley Shaw writes exclusively for Africa Telecoms.