Africa Telecoms - Issue 12

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REGULARS regulars

CONTENTS

ISSUE 12 2011

20 Thought Leadership 04 Guest Editorial

An exclusive interview with Karel Pienaar, Managing Director of MTN, South Africa.

Spiwe Chireka ICT Industry Analyst, Africa for Frost & Sullivan.

06 News

The latest local and global telecoms news.

16 Gadgets

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

36 Statistics

to 28 Down Business

A new regime at South Africa’s department of communications under the guidance of minister Radhakrishna Padayachie promises to accelerate change in the local industry – and they have their work cut out for them.

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

52 Calendar

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

2 AFRICA TELECOMS Issue 12 2011

38 2010 - Year in Review

54

Critical Decisions for SA Telecoms industry

Is South Africa falling behind the rest of the continent in terms of the liberalisation of telecommunications?

Spescom Telecommunications MD Thomas Makore investigates.

FOR AFRICA TELECOMS

62

Consumer Electronics Show 2011

58 Q&A

With James Munn, Vice President of Business Development in Sub Sahara Africa for Qualcomm Incorporated.

78 Job Listing

A list of the latest telecoms positions from across Africa.

70

80 Last Word

Ready to run with the bulls.

Red Bull Mobile to launch in South Africa.

Executive Editor Mohammed Khan mkhan@3ipublishing.co.za Managing Editor Bradley Shaw bshaw@3ipublishing.co.za Sales Director Sarah Theron stheron@3ipublishing.co.za Sales Manager Thuli Mdletshe nmdletshe@3ipublishing.co.za Design Team: Hayley Davis hdavis@3ipublishing.co.za Gretha Hanekom ghanekom@3ipublishing.co.za Sub-Editor Niki Sampson Printing Tandym Press Contributors: Lesley Stones, Brett Haggard, Mohammed Khan, Simon Dingle, Hawa Omar, Thomas Makore, Auten Mascranghe, Sipwe Chireka 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 Worldwide Business Publication Audit, Membership Applied for – October 2009.

Issue 12 2011 AFRICA TELECOMS 3

Guest Editorial

Spiwe Chireka

ICT Industry Analyst, Africa.

Frost & Sullivan Smart phone outlook in Sub Saharan Africa: 2010 marked the beginning of change

Saharan African market in addressing price issues. In addition to facilitating affordable internet access, cheaper smart phones will be critical to grow services such as m-commerce, m-health, m-education and even m-governance.

Other major vendors such as Samsung, Nokia, Motorola and LG are expected to follow suit with low cost smart handsets targeted at emerging markets. This would be in line with these vendors’ strategies to drive penetration into Africa – their main frontier for growth. It is therefore a matter of time before we see smart phones in the sub US$50 range in Sub Saharan Africa.

With the issues of access and devices well on their way to being addressed in Africa, the main question is: What should be done next to ensure that these developments amount to sound wireless broadband access across the region?

The deployment of 3G networks will need to gain momentum, in order to support some of the advanced functionality on these low cost smart devices, including in rural areas. This is likely to happen as more devices find their way into the underserved or rural population; operators will have no choice but to start expanding coverage into those areas. Furthermore, relevant local content will be critical in generating interest in use of the devices and broadband access in general. Operators should also consider handset distribution as part of their strategies in order to synchronise network deployment and usage. AT

Broadband penetration remains dismally low in Sub Saharan Africa. According to Frost & Sullivan, broadband penetration in Sub Saharan Africa was less than 4%. DSL access stalled before it could actually accelerate and while fibre deployment is growing, albeit slowly, widespread access is not expected to take off for another 10 years.

In comes wireless access. Most countries in Africa have mobile network geographic coverage of over 70% and licences for alternative technologies such as CDMA and WiMAX have become more affordable and readily available in the region.

Major mobile operators in the region such as MTN, Safaricom and Orange have invested in WiMAX as an alternative to drive wireless broadband access, while fixed line operators are using CDMA to expand their existing copper infrastructure. Wireless access is therefore well positioned to be the next growth driver for broadband access in Sub Saharan Africa.

However, despite expansive wireless network deployments in the region, the Of the cost of devices, especially smart phones, to facilitate access to broadband services has 168 million mobile been prohibitively expensive. Until recently, handsets shipped to the average selling price for a smart phone – Sub Saharan Africa in or high tier phone – was on average US$2502009, only 9% (15.1 US$350. This created high cost barriers for million) were smart African users – both consumer and business phones. including the middle and high end users. Of the 168 million mobile handsets shipped to Sub Saharan Africa in 2009, only 9% (15.1 million) were smart phones.

In August 2010, Chinese manufacturer ZTE released its Racer model smart phone which began retailing at US$100. In the US, Dell released a US$99 smart phone.

Huawei also launched its Ideos smart phone in South Africa – its point of entry into the rest of Africa – at US$100-US$150. This is a welcome development for the Sub

4 AFRICA TELECOMS Issue 12 2011

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news INTERNATIONAL LONG-DISTANCE SLUMPS, WHILE SKYPE SOARS New data from TeleGeography shows that growth in international call traffic has slumped while international traffic routed via Skype continues to accelerate.

International phone traffic grew an estimated 4 percent in 2010, to 413 billion minutes, down from 5 percent growth in 2009, and a far cry from the 15 percent average growth rate achieved during the previous two decades.

Where did the growth go? One factor contributing to the slowdown is the deep recession of 2007-2009, which affected business demand for international communications and many consumers’ ability to pay for international telephone calls. Economic conditions are

reflected in sharply reduced calling card volumes, and in a drop in traffic from the U.S. to Central America.

Internet-based voice services, like Skype, account for another, longer-term challenge to international carriers.

Cross-border traffic routed by Skype, by far the largest provider of Internet-based voice communications, is projected to grow by an astonishing 45 billion minutes in 2010 - more than twice the volume added by all of the world’s phone companies, combined.

“Demand for international communications remains strong,” notes TeleGeography analyst Stephan Beckert.

“But ever more people are discovering that they can communicate without the services of a telco.” AT

TO TAX OR NOT TO TAX? THAT IS THE QUESTION? THE FIGHT CONTINUES…..

October 1st 1975, Muhammad Ali vs. Joe Frazier. Weighing 224 lbs. vs. 215 lbs. respectively, the third and without a doubt, the bloodiest, and most destructive of rivalries in the history of modern sport was about to unfold. It came to be known as “The Thrilla in Manilla,” and it almost went the distance.

Within the African telecoms landscape, we are witnessing a similarly brutal and winner

takes all fight. There may be no fists, no jabs and no upper cuts, but the debate rages on and it’s getting bloody!!! It seems there can only be one winner.

In the Red Corner, the reigning heavyweight champion of the world, the GSMA. In the Blue Corner, the national regulatory authorities of Ghana and the Democratic Republic of Congo. The referee for the fight is the honourable International Telecommunications Union.

By November last year (2010), the Global System for Mobile Association (GSMA) applauded the decision of Senegalese president, Maître Abdoulaye Wade, to suspend taxes on inbound international calls. The issue was highlighted at the International Telecommunications Union (ITU) Global Symposium for Regulators held in Dakar, Senegal on 9-12 November 2010 where the GSMA sought a consensus on the taxation issue.

A statement from the GSMA emerged stating that “[F]ollowing our constructive dialogue with governments, we are delighted with the leadership shown by Senegal in suspending this counterproductive tax. Around 95 per cent of international traffic is carried over mobile networks, so mobile consumers will immediately benefit from lower international calling rates,” said Isabelle Mauro, Head of External Affairs, GSMA. Ding Ding!!!

Round 1 over. Both camps head to their corners.

Round 1 to the GSMA.

The Bell for Round 2 and the action resumes. Without a moment to lose, the regulatory bodies in Ghana and Congo launch heavy counter attacks. Each corner seizing on the weaknesses of the opponent. Both fighters landing heavy blows. It’s clearly all or nothing.

“The recommendations of the ITU Study Group-3 meeting, signed by the Regulators, acknowledged the necessity to set up “common platforms for the exchange of information in real time on the flow of traffic. This technological update is all the more important because it will serve to collect fees from the various players and to fight fraud – which is a scourge of the telecommunications sector – efficiently,” declared the NCA in Ghana.

Round 2 to the NCA. In Manilla in 1975, by the 15th and final round, with both fighters shattered, Frazier’s corner threw in the towel. Ali would never be the same again, and Frazier was finished. Inevitably, with swollen faces, bruised bodies and exhausted spirits, a winner was declared but at what cost. It made for a great spectacle but should the ref have stepped in earlier?

In the case of telecoms, without strong and assured guidance from the ITU, the ATU, and comparable organizations, this fight will go the distance, but at what cost. A clear, definitive, unambiguous and enforceable decision must be declared and soon. AT

>> According to Gartner the Worldwide semiconductor revenue is forecast to total $314 billion in 2011, up 4.6 per cent from 2010’s estimated revenue of $300.3 billion >> 6 AFRICA TELECOMS Issue 12 2011

news QUALCOMM DEMONSTRATES NEXT WAVE OF WIRELESS INNOVATION AT THE 2011 CONSUMER ELECTRONICS SHOW Qualcomm Incorporated has demonstarted its chipset and modem technology utilised in the next generation of connected devices for consumer electronics at the 2011 International CES, in Las Vegas. The Company is working with leading manufacturers and developers to showcase several new tablets and smartphones powered by Qualcomm’s award winning Snapdragon™ family of processors.

The expanding Snapdragon portfolio includes dual-CPU chips with highperformance processing and full HD graphic capabilities for the next generation of tablets and devices, as well as the only LTE and HSPA+ multi-mode chipsets.

Qualcomm also continues its legacy of innovation and connectivity with exhibits featuring next-generation modem developments, LTE-enabled mobile devices, and new 4G handsets for LTE and HSPA+ networks.

“Leading manufacturers and developers continue to turn to Qualcomm to help navigate and solve today’s wireless complexities and bring devices to market as quickly as possible,” said Steve Mollenkopf, Executive Vice President and Group President, Qualcomm. “Qualcomm’s integration of hardware and software creates a better user experience with longer battery life and smaller devices. Our evolving 3G and 4G technologies support the complex transition to LTE to meet rising consumer expectations for their wireless experiences.”

With its chipset portfolio that supports the Android™ platform, Qualcomm has helped launch more than five times as many Android devices as any other chipset provider, including larger-display devices such as tablets and smartbooks, as well as entry-level smartphones. Microsoft chose Qualcomm’s Snapdragon chipset to power its Windows Phone 7 launch devices this year, partnering with multiple OEMs and carriers worldwide. There are currently more than 55 Snapdragonpowered devices on the market and 125 Snapdragon device designs in process, including more than 10 OEMs designing tablets.

“We are excited to be working closely with over 10 OEMs as they plan to bring more than 20 different Snapdragon-enabled tablet designs to market in 2011,” said Luis Pineda, Senior Vice President of product management, computing and consumer products at Qualcomm CDMA Technologies. “PC and device makers continue to choose Qualcomm chipsets for our ability to provide the best combination of processing performance, efficient power usage and wireless connectivity on a single platform.”

Qualcomm also supports Adobe Flash 10.1 for an enhanced Web browsing experience, as well as embedded GPUs with 2D and 3D graphics capabilities for unparalleled multimedia performance and resolution.

“Qualcomm’s wireless technology makes them the right mobile Internet devices partner for Lenovo as we continue to bring new, innovative devices, such as the LePad tablet, to consumers,” said Liu Jun, Senior Vice President at Lenovo. “We look forward to integrating Qualcomm’s high-performance Snapdragon processor into future media-rich, connected devices.” AT

03b NETWORKS PLANS AFRICA INTERNET ROLLOUT BY 2013 03b Networks, backed by Google, HSBC Principal Investments and cable operator Liberty Global, will launch high-speed Internet services Africa to tap into one of the world’s potentially fastest growing markets.

The company has secured $1.2 billion from investors and banks for its satellite project to provide cheap, high-speed broadband access in 2013.

Funding of the project consists of additional equity from existing shareholders and new funds from Development Bank of Southern Africa, Africa Development Bank, International Finance Corporation and other investors.

“This has allowed us to achieve our goal of reaching the billions who have so far been poorly served or completely cut off from the Internet -- the greatest business and information resource of our time,” Mark Rigolle, Chief Executive of O3b, said in a statement. AT

>> New data from TeleGeography’s IP Transit Pricing Service reveal that prices for wholesale Internet access (IP transit) continue a years-long decline >>

Issue 12 2011 AFRICA TELECOMS 7

news MINISTER ED VAIZEY COMMENDS CTO’S WORK WHILE EMPHASIZING THE ROLE OF BROADBAND IN ENHANCING BUSINESS OPPORTUNITIES Initiatives to encourage innovation, spur local content development and support ICT industry policies The UK Minister for Culture, Communications and Creative Industries, Hon. Ed Vaizey has stressed the importance of broadband and ICT development in creating business opportunities for both the developing and developed countries. Speaking at a two-day ICT Finance: Emerging Markets Global Summit organised by the Commonwealth Telecommunications Organisation (CTO) at the BIS Conference Center from the 6-7 December 2010 in London, Hon. Vaizey said price, speed and competition, supplemented by regulation, are important ingredients for successful broadband implementation and connectivity.

Citing the UK Coalition Government’s announcement of an eight hundred million pound investment in superfast broadband, the minister said while the local authorities and councils will be given the opportunity to bid for the funding, it is equally important for the private sector to be involved in such initiatives. Repetitive as it may sound, especially in Commonwealth countries, the fact and reality still remains that mobile telephony has made such a difference to economies, offering opportunities to businesses, including farmers, to sell their products in a global base, the minister added.

Commending the CTO’s work, he went on to say that the CTO, having been in the business of ICTs for over a century, “knows better than most about telecommunications” and “we couldn’t be working with a more experienced and knowledgeable organisation.”

He also pointed out the importance of finance and

investment in ICTs and voiced his interest in the work of the CTO in promoting the financing of ICT projects in emerging markets.

Setting the stage for discussions at the opening of the summit, Dr. Ekwow Spio-Garbrah, CEO of CTO challenged governments, investment communities, and the private sector in general to engage proactively in the formation of Public-Private-People’s Partnership for the development and funding of ICT infrastructure in emerging economies. “It is important that governments and the private sector work together not only to understand the needs of particular emerging markets on an individual basis, identify the challenges and opportunities, and map out strategies to surmount such challenges, but also to take advantage of the existing business opportunities, and the availability of a wide range of local investment institutions and agencies.”

Themed “Developing ICT Investment Partnerships for Emerging Markets Globally”, the two-day ICT Finance Emerging Markets Global Summit brought together key ICT stakeholders from government ministries and regulatory agencies, operator companies in emerging markets with investors, financiers and professional advisors from the developed and developing countries. AT

>> Google has acquired Canadian mobile payments firm Zetawire as the Internet giant ramps up its focus in this emerging market. >>

8 AFRICA TELECOMS Issue 12 2011

news

SAFARICOM EXTENDS LEAD IN KENYA Dominant market leader keeps rivals at bay and steals a lead in mobile data services

SYNCHRONICA -

SIGNS INITIAL US$500,000+ CONTRACT WITH MASS MARKET-FOCUSED AFRICAN HANDSET MANUFACTURER Synchronica plc, the international provider of next-generation mobile messaging services, has secured an initial contract worth more than US$500,000 with a device manufacturer targeting the African mass market. The device manufacturer will bundle the white-labelled Synchronica Mobile Gateway with a number of MediaTek-based handsets, enabling consumers in Africa to experience a BlackBerry-like service on a range of low-cost devices.

The deal comes just days after the announcement of an initial US$1.25 million+ contract with an Indian handset manufacturer, and consolidates Synchronica’s position as a vendor of choice for both device manufacturers and mobile operators in emerging markets. This will provide Synchronica with a monthly per user hosting fee, in addition to licence fees and a 12-month support and maintenance contract.

Mobile Gateway will enable the device manufacturer to provide users with mobile email, calendar/contacts synchronization and instant messaging as well as connectivity to social networking sites and RSS feeds.

Synchronica is already a significant player in the fastgrowing market for mobile data services in the MEA region,

with 31 of its more than 70 customer wins to date coming from this region.

According to the Informa report “Africa’s Mobile Telecoms Market” (April 2010), there is tremendous potential for subscriber growth in Africa given that there were just over 450 million active subscriptions across the region at the end of 2009, a penetration rate below 45 percent. The significant market potential in Africa is illustrated by Informa’s forecast that mobile data revenues will rise from US$4.45 billion in 2009 to US$10.64 billion in 2014.

Carsten Brinkschulte, CEO of Synchronica, said: “This latest contract win underlines how well suited Synchronica’s advanced messaging solutions are for handset manufacturers and mobile operators in high-growth emerging markets who want to differentiate their offerings through VAS. This is the second contract in a matter of days from an emerging markets-based device manufacturer using the MediaTek platform. Synchronica Mobile Gateway appeals to device manufacturers because it supports any handset and can be bundled easily and cost-effectively to deliver an attractive range of phones aimed at the mass market.” AT

>> Operators will take measures to promote smartphones that place less of a strain on their networks in 2011, a move that could benefit BlackBerry maker RIM, according to analyst firm CCS Insight. >> 10 AFRICA TELECOMS Issue 12 2011

news According to Wireless Intelligence, Kenya’s Safaricom has strengthened its dominance in the country’s mobile market underpinned by the continuing success of its M-PESA mobile payments scheme and a new focus on data services.

According to the latest Wireless Intelligence data, the operator increased its market share by almost two percentage points year-on-year to 82 percent in Q3 2010, as ownership changes and the lack of 3G licences blunted progress at its competitors.

Safaricom – which is 40 percent-owned by UK-based Vodafone – last month produced another set of impressive results for its first-half (fiscal) year ended 30 September. Its financials boasted double digit growth in revenue (up 15.9 percent), EBITDA (13.8 percent) and net profit (15.1 percent) from a year earlier, while its customer base was up 15 percent to 16.7 million. Mobile data was a key driver, accounting for 23.8 percent of revenue in the period, up from 17.7 percent a year earlier. Total non-SMS data revenue (mobile and fixed) rose 68.5 percent to KES2.26 billion (US$28.1 million) over the period.

Safaricom’s advantage in mobile data is due primarily to it being the only operator to date to have launched 3G/WCDMA. According to the data, Safaricom has succeeded in migrating 12 percent of its customer base to 3G by Q3 and now claims to have covered all of Kenya’s main urban centres with the faster network. The number of 3G sites had increased to 829 by the end of Q3 (out of a total 2,282 sites), more than double the number in place a year ago. Safricom is supporting 3G with WiMAX following its acquisitions this year of a further two WiMAX operators, IGO Wireless Ltd and Instaconnect Ltd, which has enabled it to ramp up its WiMAX services to mobile and fixed customers in the 3.5GHz band. The operator had enabled WiMAX at 165 sites by end-Q3, which it claims makes it the country’s largest WiMAX operator. The market-leader has also begun technical trials of LTE, though how Kenyan regulators plan to license next-generation networks has yet to be defined.

One option being considered by the government is to build a wholesale access network funded by a public/private partnership that will rent capacity

to operators.

Meanwhile, Safaricom’s pioneering M-PESA service continues to go from strength-to-strength.

At the end of Q3, the operator had 13.5 million registered M-PESA users, representing over 80 percent of its customer base. Safaricom has concentrated in recent quarters on expanding the service beyond person-to-person payments notably via the launch in May of M-KESHO, which allows an M-PESA account to function as a regular bank savings account. The operator says it signed up 613,000 users to M-KESHO within the first five months of launch. Rival Kenyan operators have attempted to replicate the success of M-PESA with similar products of their own. Orange launched its Orange Money service in Kenya in November 2010, making the country the sixth African market where Orange has rolled-out the service (it claims over 1 million Orange Money customers in the Ivory Coast, Madagascar, Mali, Niger and Senegal). Yu launched ‘Yu Money’ while Airtel has rebranded Zain’s Zap service as ‘Airtel Money’ following its recent acquisition of the network. AT

news

DETECON URGES TELEVISION PROVIDERS TO ENTER THE 3-D TV MARKET EARLY: HDTV Network Prepares the Way for 3-D Television TV platform providers should start making use of the existing HDTV infrastructure for their 3-D TV activities right now. That is the key recommendation of the opinion paper “3-D TV – The Next Challenge for TV Platform Providers?” from the ICT management consultancy Detecon. By taking this approach, the television providers would be able to establish three-dimensional content step by step and to offer full high-definition 3-D TV in two years at the latest. In addition, the platform operators must pay close attention to, and play a role in shaping, the ongoing developments of the 3-D technology. Strong growth in the 3-D TV market is expected from 2012 at the latest.

3-D TV presents special challenges to the providers of content which is transmitted to viewers directly via the data network (linear television, live TV): the bandwidth requirements are greater than for HDTV, and the data quantities for this latter standard are even today pushing at the capacity limits for some of the existing infrastructures. So in the middle term the broadcasting of high-definition three-dimensional television will leave no choice but to invest in a new infrastructure for the data networks.

Nevertheless, Detecon consultant Falk Wöhler-Moorhoff is convinced that the necessity for these investments is not yet upon us.

“3-D panels will be slow to conquer the markets and will not begin to gain a significant share until 2012. So TV platform providers should first take a look at the opportunities for using the existing HDTV structure for the provision of 3-D TV,” he explained.

Although this shortcut means compromises in the picture quality, it also has significant advantages: additional investments in network elements, bandwidths, or storage capacities will not be required for the moment. Moreover, the scrambling procedures and certain set-top boxes already in use can continue to do service.

“This approach will enable live TV providers to access the market and benefit very quickly from 3-D TV. All viewers will have to do is purchase a screen which is capable of displaying 3-D images,” says Falk Wöhler-Moorhoff. Video on demand (VoD) solutions are another opportunity for TV platform operators to compete with the full HD 3-D TV already being offered on Blu-ray. Since the content of VoD, in contrast to live TV, is stored in an interim memory, the issue of bandwidth is not decisive, so loss of picture quality can be avoided.

Three steps to full HD 3-D TV

Detecon recommends that TV platform providers follow a threestage schedule for the next few years. To start with, they should examine their existing HDTV infrastructure (live TV and VoD) to determine whether it is capable of displaying 3-D images.

At the same time, they should sit down for consultations with the manufacturers of the devices such as set-top boxes and the infrastructure providers for IPTV (television via the Internet).

During the second stage, the providers should position their own platform as “3-D ready”, using exemplary 3-D content, by 2011.

This will strengthen their own brand image, provide proof of their innovation standard, and attract the so-called “early adopters”.

From 2012, the operators should finally determine the investment requirements for the transmission of full HD 3-D TV or multiview 3-D TV (three-dimensional TV without 3-D glasses).

The opinion paper also urges television providers to become involved at an early stage in the definition of industrial standards for the production, dissemination, and presentation of threedimensional contents. This would enable providers to secure the long-term 3-D-capability of their own platforms. Along with this standardization, a sufficient amount of 3-D content will be a decisive success factor for its broadcasting in the form of live TV. The significance of this for television platform providers: they must develop cooperation models with 3-D content providers as soon as possible. AT

>> Novatel Wireless filed lawsuits against Franklin Wireless and ZTE, alleging infringement of five patents related to the “architecture and functionality” of its mobile hotspot products. >> 12 AFRICA TELECOMS Issue 12 2011

news

NEW REPORT

HIGHLIGHTS POWER OF ICTS IN TACKLING CLIMATE CHANGE ITU AND GESI CONFIRM ROLE IN ADAPTATION AND MITIGATION Information and Communication Technologies (ICTs) are of fundamental importance in reducing greenhouse-gas (GHG) emissions, as well as in helping countries everywhere adapt to climate change and to deal with its sometimes catastrophic effects. This is the message of a report by ITU and the Global e-Sustainability Initiative (GeSI) on Using ICTs in tackling climate change.

The environmental impact of ICTs is being tackled through the introduction of more efficient equipment and networks, alongside better waste management through the entire lifecycle of electronic devices, according to the report.

It notes that for every watt of energy saved by a billion end users of ICT equipment, a whole power plant is no longer required. And all sectors of the economy can significantly reduce their energy needs (and thus GHG emissions) through ICTs, which, for example, can maximize the efficiency of power systems in “smart” grids that distribute electricity with much less wastage and can harness effectively the power from renewable resources.

The report also highlights the crucial importance of ICTs in keeping watch over the Earth’s climate and weather, and in warning of impending natural disasters. Thousands of lives are saved every year through monitoring systems that use data from satellites as well as sensors on land and sea. To ensure that these operations can be undertaken without interference, ITU, as the international steward of the limited resource of radio-frequency spectrum, allocates the necessary frequencies and approves technical standards.

Computing power and broadband networks are essential in analyzing these monitoring data and transmitting the results. In addition, notes the report, ICTs and especially broadband Internet access - are playing an increasing role in delivering services that help to create and support a sustainable future. These include online access to education and medical services, even in remote communities, as well as information that helps protect food security. Within the next ten years, up to 250 million people living in Africa will experience increased water stress, and crop yields in some

African countries are expected to drop by half, according to the report. ICTs can systematically monitor world supplies and shortages of water and food crops, as well as delivering advice to farmers on how to improve yields.

“ICTs are uniquely powerful tools for reducing emissions in every other sector. They also play an essential role in climate science. And because of this major role, they offer one of the most significant opportunities to reduce GHG emissions, especially in those industries that are among the highest producers of CO2, such as energy generation, waste disposal, construction and transport,” commented ITU Secretary-General Hamadoun I. Touré. “I call on the international community to recognize that ICTs must be a key component of efforts to mitigate climate change, and that ICTs support what climate change threatens most: sustainable development,” he added. AT

>> Speculation has it that Apple may release a CDMA iPhone >>

14 AFRICA TELECOMS Issue 12 2011

news console gaming, or for watching action-packed video content like movies and sports.

The 9 Series Monitor and the 7 and 9 Series HDTV/Monitors can SAMSUNG IN automatically analyse and render 2D content in real-time to stunning CORPO PROPRIET ARY 3D TE RATES 3D, supporting not only PC content, but also content from Blu-ray players, CHNOLOG IN 2011 F Y LAGSHIP gaming consoles and set-top boxes. Offering a complete 3D solution in a IT DISP AND PRO single package, the 7 and 9 Series feature a built-in glasses sync emitter, and JECTOR LIN LAY ES they are packaged with a pair of 3D active-shutter glasses and middleware for 3D gaming.

New Monitors and Projector In addition to these monitors, Samsung further demonstrates its Offer the Ultimate Visual Experience for the Widest commitment to 3D display technology with the SP-A8000 3D projector. Home Variety of Gaming and Entertainment Content Yet users looking to enjoy 3D in a group setting will be able to do so, thanks to the large image the SP-A8000 can project. The 1,000 ANSI lumen SP-A8000 features Samsung have announced the latest line up of 3D computer displays, HDTV/ a single-bulb, single-lens design. The SP-A8000 also benefits from Samsung’s 3D monitors and a Home Theatre projector incorporating Samsung’s proprietary 3D engine and can convert 2D content to 3D, affording a realistic image and genuine technology available in 23- and 27-inch configurations.

3D end result.

Samsung has reinvented the 3D monitor experience to allow its users Users looking to consolidate their TV and PC monitors or utilise the 7 and 9 to experience the wide variety of 3D content now available. Unlike other 3D Series displays as secondary televisions will appreciate the HDTV/Monitor (MFM) solutions, which only work for video gaming, Samsung’s new 3D monitors and versions, which feature an HDTV tuner for live television in addition to PC and HDTV/monitors also allow users to enjoy 3D movies, 3D TV and user-created 3D AV playback. The HDTV/Monitor 7 and 9 Series displays integrate a convenient content like 3D photos and 3D videos. In order to do this, Samsung has created a picture-in-picture function, allowing for simultaneous activities like viewing live new 3D technology, based on 3D panels available only in Samsung displays. sporting games while managing player stats online. These products are expected The proprietary Samsung 3D panel gives the 7 and 9 Series monitors a hyper to be available in South Africa during Q2, 2011. AT realistic 3D playback, which makes them ideal for immersion in intense PC or

Gadgets

Cost: Approximately R 43,000 Rating: HHHHH FEATURES: Incredibly thin LCD TV, Gorgeous 47” LED-backlit screen, Capable of displaying compatible movies in 3D. 2011 is upon us and 3D screens are finally hitting the market in a big way and vendors like LG are taking bold steps with their high-quality, ultra-sleek TV screens that are facilitating the move to 3D. The 47LX9500 is one such screen, and it’s a beauty. Made even more beautiful by the fact that it’s LED-backlit, making the colours it displays that much more intense than LCD, and making it even harder to resist the urge to reach for your credit card. The Infinia’s borderless design is simply spectacular but you won’t be buying it for that.

Rather, the one feature you’d buy this TV for is its 3D capability, and we’re pleased to say that 3D looks incredible on the 47LX9500, with all the depth you’ll experience at the cinema.

You’ll need a 3D-capable Blu-ray player (a PlayStation 3 works just fine) and 3D movies, of course, as well as LG’s powered 3D glasses. The screen can accommodate up to three HDMI inputs, a single device that uses a Component cable (such as a standard DSTV decoder), and it outputs sound through either a 3.5mm jack or an optical audio-out port. Get yourself one, and consider it a future-proof investment.

16 AFRICA TELECOMS Issue 12 2011

HHHHH Awesome

>>

>>

LG Infinia Borderless 47LX9500 3D LCD TV

H Uncool HH Poor HHH Average HHHH Excellent

Lenovo IdeaPad U260

Cost: TBC Rating: HHHH FEATURES: Intel Core i3/i5 ULV processors (Core i3-380UM and Core i5-470UM), 4GB of RAM and 320GB of HDD, Ethernet and two USB ports, Bluetooth and Wi-Fi enabled.

The U260 is the world’s first 12.5-inch ultraportable netbook to deliver a 16:9 widescreen dimension in such a compact form factor. This latest addition to the IdeaPad U Series is all about luxury and features a sleek, minimalistic design that includes a magnesium-aluminum alloy real metal cover, a leather-patterned palm rest and a glass touchpad.

The U260 is powered by an Intel Core i3/i5 processor for impressive performance and long battery life and can be configured with up to 320GB of hard drive storage or up to 128GB of SSD flash-based storage providing plenty of room for music, photos and movies. With up to 4GB of DDR3 memory, you’ll enjoy a slick multimedia experience when browsing multiple web pages and using applications.

Additional features on the U260 include the Breathable Keyboard and Intel Advanced Cooling Technology that cools the netbook and makes it spill-resistant. If you’re looking to be entertained, you will enjoy the U260’s Dolby Advanced Audio surround sound speakers, HDMI output for streaming high definition to an HDTV and an integrated web camera for Skype and video calling.

The U260 comes with Genuine Windows 7 Home Basic or Premium and Lenovo Enhanced Experience for Windows 7, which is a certification that ensures speedy boot-up and shutdown times, rich multimedia capabilities and gives you easy system maintenance tools.

Gadgets

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

>>

>>

Navigon 70 Premium Live

Microsoft Arc Touch Mouse

Cost: Approximately R 2, 500 Rating: HHHHH

Cost: Approximately R 900 Rating: HHHHH

FEATURES: 12.7cm display touchscreen in 16:9 format, Live traffic, fuel, events information, Functions as a Bluetooth handsfree kit, Loads of truly helpful functionality.

FEATURES: Wireless mouse that folds flat, Touch-sensitive scroll pad, no wheel, Comes with an ultra-compact USB receiver.

The Navigon 70 Premium Live is designed to be the perfect solution for all common motorist frustrations. It’s not just the screen on this device (all 12.7cm of it) that’s enormous. Expect an enormous amount of help and stress-reduction from Navigon Live services as well. Live what? Live everything. These are live service notifications that give you the latest information on fuel prices, local events, speed trapping and traffic and Mobile Safety Camera Live will show you both stationary and mobile cameras.

We also loved Active Lane Assist that shows you which lane you need to be in, because it even reminds you to indicate when changing lanes. The thing we liked most about this Navigon 70 Premium Live device is its level-headed practicality. There’s the new improved City View 3D makes traveling through unfamiliar cities much easier – buildings are displayed realistically, which makes it easier to orient yourself with visual landmarks. There’s also Reality View Pro (in our opinion one of the best features for a GPS, ever) which shows roads not as little lines on a map, but as proper roads with lane markings – so you can see what to expect up ahead. Which is always a good thing, when you’re driving.

Microsoft’s new Arc Touch mouse improves on its predecessor in every way.

While it still retains the original arched design, this year’s model does four things the original Arc mouse didn’t: it folds completely flat for easy storage rather than just ‘in half’, it uses Microsoft’s cutting-edge BlueTrack technology so it can be used on just about any surface, and it has a tiny USB receiver that won’t stick very far out of a USB port.

The fourth difference is the touch-sensitive pad used for scrolling through web pages and documents instead of the more traditional scroll wheel.

It’s not just a flat piece of plastic, either – the scroll pad also provides force feedback to let you know that you’re scrolling, and it’s also speed-sensitive, responding to how slow/fast its flicked.

In a further nod to user-friendliness, Microsoft has heeded criticisms of the original Arc mouse by removing all side buttons. Now, what you get is a right- and left-click button, the touch pad and a third programmable button that takes the place of the clickable button found beneath the scroll wheel of other Microsoft mice.

Performance-wise, this is an excellent mouse, making it a comfortable, affordable purchase.

Issue 12 2011 AFRICA TELECOMS 17

H Uncool HH Poor HHH Average HHHH Excellent

Kodak PlaySport Zx3 video camera

HHHHH Awesome

>>

>>

Gadgets

Bookeen Cybook Orizon eReader

Cost: Approximately R 1, 700 Rating: HHHH

Cost: Approximately R 3,000 Rating: HHHHH

FEATURES: Waterproof up to 3metres, Full 1080p HD video recording, 5 MP 16:9 widescreen HD stills, Rugged, compact design.

FEATURES: 6-inch ePaper display, Bluetooth and Wi-Fi connectivity, Touchscreen interaction, 10,000 page flip battery life.

This compact video camera is a must for all adrenaline junkies as it’s rugged, drop-proof and it’s not afraid to get wet. This spunky little camera can be submerged in up to 3metres of water and will still capture your entire experience in full 1080p HD perfection. There’s also a 5-megapixel stills camera that’s also capable of 16:9 HD photos. This device is perfect for shooting skating, surfing or snowboarding videos, or you can even take it along when bungee jumping - worry not about blurry footage when things get a little shaky as the PlaySport has built-in image stabilisation.

There’s also smart face tracking technology that works to focus on your subjects, without you having to physically change any settings.

This pocket video camera performed excellently in low-light conditions and in over-lit conditions (think bright sunlight) you can use the LCD Glare Shield feature which gives you two filters to choose from to help you see your subject on the display in reflective outdoor lighting – the filters are only applied to the display (not your footage) so everything you record wont be overexposed. Speaking of displays, the PlaySport features a 2 inch LCD, and while this might be a bit small, there’s the accompanied HDMI and AV cable that lets you plug directly into your TV, if you’re looking for some more display space, to really do justice to the widescreen HD video footage you’ve just shot. Sharing your adventure footage is easy and the PlaySport comes with software that makes it easy to edit and share your videos on Facebook, YouTube and Twitter and the likes.

18 AFRICA TELECOMS Issue 12 2011

Bookeen’s latest offering, the multi-touch Cybook Orizon eReader uses a new kind of e-ink in conjunction with what they’re calling “SixPix Caress touch e-Paper”, which works with a motion sensor to provide a slick multi-touch reading experience.

The Orizon makes use of new e-paper technology that is capable of around 16 levels of grayscale and you’ll be getting a 800 x 600 pixel resolution with a 167dpi.

And the touch. Oh the multi-touch of the Orizon is something worth experiencing.

The technology that powers it? They call it “Caress touch ePaper”. Enough said.

As for portability – this little beast is no thicker than a magazine, and with Bluetooth and Wi-Fi and an unlimited browser, you can go anywhere with this device.

Gadgets

>>

Acer Aspire One A150 Happy netbook

>>

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

new iPod Touch 4G

Cost: R 5, 000 Rating: HHHHH

Cost: TBC Rating: HHHHH

FEATURES: Intel Atom Processor N550, 250GB hard drive, Comes with a Bluetooth mouse, Up to 8 hours of battery life.

FEATURES: 960x640p Retina display, HD video recording, Game Center, 8/32/64GB variations.

This 10” netbook from Acer is different from its predecessors that all feature names made from numbers and letters. This one actually comes with a far more memorable title: Aspire One Happy. Seriously – who wouldn’t want a netbook that Aspires to make One Happy? It’s available in a range of colours that Acer calls Hawaii Blue, Lavender Purple, Candy Pink, and Lime Green. Ooh la la! We’re also happy to see that there are not two, but three USB ports, a VGA port, a 2-in-1 card reader and a LAN port. On top of all this, the Happy incorporates advanced communication technologies, including Wi-Fi, an embedded 3G connection and Bluetooth so you can share photos and music with other Bluetooth-enabled devices. If the multi-gesture touchpad - which incidentally supports two-finger scroll, pinch, rotate and flip doesn’t cut it for you, this netbook comes with its own Bluetooth mouse, making it accessible to everyone. If multiple operating systems make you happy, prepare to smile, as the Happy comes loaded with both Windows 7 Starter Edition and Google’s awesome Android 2.2 operating system. In terms of thinking power and computing muscle, the Happy sports an Intel Atom Processor N550 processor running at 1.5GHz combined with Intel’s Mobile NM10 Express chipset and 1GB of DDR3 memory provides a very responsive Windows 7 Starter experience, with loads of room in the trunk with 250GB of storage.

The fourth generation iPod Touch somehow manages to be slimmer in looks than ever before, yet even more functional than before. This little media player has the same display qualities as the new iPhone 4, and also runs the same A4 Apple processor which makes it capable of high-powered tasks like recording 720p HD video and burning through apps and games with ease.

The iPod Touch has a rear camera that’s capable of 720p video and there’s a second camera around the front – a VGA camera that’s similar to that of the iPhone, and it’s perfect for on-the-spot snaps. There’s also the added element of novelty that is the video chat facility, FaceTime which is a nice alternative to keeping in touch with distant family or travelling spouses.

Much hype has also been made about the Game Center on iPod Touch. That A4 processor combined with the Retina Display and threeaxis gyroscope and multi-touch support makes the iPod Touch the ideal portable gaming device. Overall, an incredibly lustworthy gadget, Apple really knows how to keep their fans happy and spending.

Issue 12 2011 AFRICA TELECOMS 19

thought leadership

Balanc 20 AFRICA TELECOMS Issue 12 2011

thought leadership

ing Act Tempering the vibrant, high growth African market with the more mature, conservative appetite of the South African market makes for an interesting balancing act.

Brett Haggard take a closer look at MTN’s operation in South Africa and finds out that even in a lower growth market, voice and the data boom are the primary focus areas.

Issue 12 2011 AFRICA TELECOMS 21

thought leadership

W

ith Africa’s penetration levels way below the rest of the world and healthy annual double-digit growth, there’s not a great deal for telcos not to like about this vibrant, innovative and exciting market.

There are a couple of exceptions to this rule, however, and for MTN, balancing the relatively mature environment in South Africa with the untapped potential of the rest of the continent and the Middle East is challenging to say the least.

It’s a job the telco group seems to be carrying out with a great deal of aplomb though, raking in US$13.4 billion in the past financial year – a 9.2% increase on last year – and growing its subscriber base by 25.2% to a total of 129.2 million in the same time frame.

The SEA region into which South Africa fits contributed 22.2% of that revenue in the past financial year – a drop of 2.5% on the previous year – and accounts for 28.7 million or 12.6% of the subscribers across the group.

22 AFRICA TELECOMS Issue 12 2011

South Africa accounts for 17.1 million of these customers.

Karel Pienaar, CEO of MTN South Africa, says that although the South African operation experienced a small, albeit significant 0.7% shrinkage in subscriber numbers during that same period, since January 2010, MTN South Africa saw growth in the region of 10%.

Voice remains king

What’s particularly interesting is that Pienaar says that across the group, mobile voice remains the killer application, regardless of whether it’s in a high growth market or a much lower growth market such as South Africa.

“Africa is one of the lowest penetrated markets for mobile voice in the world, and it has a long way to go to catch up with South Africa, which has well over the 100% mark,” he says.

But, despite the more than 100% penetration in the South African market, Pienaar says there are still communities

thought leadership

Karel Pienaar MD MTN SA

“ The expectations of customers in rural areas climb very quickly, and we’ve found that as the quality of the experience improves, so usage levels improve.”

in South African – with no more than 100,000 to 200,000 potential users and limited access to all forms of infrastructure such as power and clean water – where there’s zero penetration.

So, it makes sense that this is where MTN South Africa is focusing the majority of its efforts today.

And, Pienaar says, even though these communities would be perfectly served by a 2G base station, MTN is implementing base stations with a full complement of 3G services.

“3G technology is ripe and ready for rural environments,” Pienaar says.

“Today’s base station technology allows us to get by with 70% lower power consumption and zero air conditioning, meaning that wind turbines and solar panels are more than capable of supplying the power required to run a rural base station,” he explains.

When it’s looked at from this perspective, the question

is not ‘Why is MTN using 3G technology to supply rural communities with communications?’ but is rather ‘Why isn’t everyone?’.

Rural markets need different business models

“Those benefits aside, addressing the rural market also means coping with declining ARPUs, which means the value proposition into those markets needs to be applicable to the needs of the community it services.

MTN’s focus for these regions is therefore squarely on the affordability of telecoms services, which translates into per second billing and lower denominations when it comes to transactions.

And obviously, entry-level smart devices that lower the barriers to entry but also allow for services outside of voice to be consumed are very important in the mix of things.

With all of these factors considered, Pienaar says there’s

Issue 12 2011 AFRICA TELECOMS 23

thought leadership more than enough potential to go around.

“There’s a clear need for telecoms services in these rural areas,” he says, “and I believe it’s part of our responsibility as telcos to address these regions where little or no existing infrastructure exists.

“I’m not a fan of the so-called ‘cream skimmers’, who are looking at rolling services out almost exclusively for the urban and high-end portions of the market,” he says.

And looking at how under-addressed parts of the South African

market are today, it’s not hard to agree with his sentiments.

Pienaar says that MTN South Africa’s investments – both in rural and urban areas – are centred on delivering improved quality.

“Rolling services out in rural markets is only the first part of the equation,” he says.

“After a month or two of a customer in one of these areas making use of your services, it becomes all about the quality of the experience.

“The expectations of customers in rural areas climb very quickly,” he says, “and we’ve found that as the quality of the experience improves, so usage levels improve.”

Data services for rural markets

Bearing out Pienaar’s point about the quality of the experience, he says MTN has seen uptake of data services in rural areas happen organically, with little or no marketing assistance.

“We’ll make 21Mpbs of capacity available on one of our base stations without creating too much noise about it and within weeks, almost magically, data growth appears,” he says.

And to make rural data services cost effective, where other South African mobile telcos are making use of 900MHz UMTS to provide data services in urban areas, MTN South Africa is using this technology as the basis for its rural, green sites.

“The quality of the codecs being used for voice in this environment have improved dramatically, so we’re able to provide an improved customer experience with data and voice, while running a more efficient, sustainable network,” he adds.

Data is the next big thing

“By 2014, we believe that smartphones will account for 60% of the handsets shipped into the South African market ”

24 AFRICA TELECOMS Issue 12 2011

When it comes to growth across all areas of the South African market, Pienaar says it’s all about data.

“African countries as a norm have a data penetration rate of between 1% and 5%,” he says.

“And quite simply, if we as a continent want to be competitive with the rest of the world, we need to get these penetration rates up – and quickly.”

Part of arriving at this point, Pienaar says, will be setting targets for the continent, like committing as an industry to ensuring that 50% of households have access to affordable broadband Internet services by 2020.

“Right now, across the group, the percentage of revenue we derive from data is well below the 10% mark,” he continues, “and while I feel that in the future data will be where we derive the majority of our revenues, the time frames are debatable.”

thought leadership Across all of MTN’s operations at 12%, South Africa is the leader in terms of revenue contribution from data.

The next closest is Cyprus with 3% and Cameroon with 2%.

All of the other countries where MTN has operations are well below the 2% mark.

While having networks capable of supporting speedy Internet access is an obvious underlying requirement to begin driving the adoption of data, Pienaar says that the importance of smartphone penetration into the market is a factor that cannot be overstated.

Devices drive data adoption

“By 2014, we believe that smartphones will account for 60% of the handsets shipped into the South African market,” Pienaar says.

By contrast, smartphones are currently less than 5% of the South African market. Smartphones are only the start, however.

“Notebooks, tablets and other forms of terminals drive this trend too. Currently MTN South Africa ships between 3,000 and 5,000 notebooks on data contracts each month. And that’s likely to grow,” he says.

For the telcos it means substantially changing their strategy to focus more heavily on stockholding, logistics and providing support around these devices.

“That means we will have to get into the device business as operators,” he says.

More than a bit-pipe

At the same time, Pienaar says that operators realise they can’t exist as nothing more than a ‘bit-pipe’.

“Operators will have to move into the application and social networking business instead of simply providing the infrastructure that underpins these entities.

While there’s a shortage of solutions to this conundrum, the answers are coming, Pienaar says.

“It’s clear though, that operators won’t be able to survive in the long term if all they provide is the underlying transport for data,” he says.

The biggest challenge the industry faces at present, however, is making worthwhile profits from data, since the margins are vastly different from those in the voice market.

“Once again, this hasn’t been solved as yet, but it’s clear that it’s a volume game,” he says.

“As the old analogy goes, he with the most packets on his network wins,” Pienaar quips, “and there’s a great deal of technology helping this process along. Since we can’t raise the costs of data to the end user, technology and smart business practices will be called on to raise the efficiency and lower the cost of providing data services.

“We have to bring the costs of providing data services to the end user to one fifth, or 20%, of what they are today if we are to substantially impact the market and drive penetration rates up to the level we need,” he says.

While technology has an uncanny ability to bring costs down through the natural and constant drive towards more efficiency, Pienaar says that MTN is actively engaged in infrastructure development programmes that see it placing fibre-optic infrastructure in the ground and in many cases, sharing the costs of laying that fibre on a national, municipal and metropolitan level with other telcos.

In some cases, there are even infrastructure-sharing agreements in place.

MTN South Africa is also investing heavily in international, undersea infrastructure, since as the costs of international access decrease, so the costs of Internet access to the masses are directly impacted.

Driving innovation around prepaid

“There’s also a great deal to be said about driving innovation at a pricing level,” he says.

“We haven’t yet moved into the prepaid market for data properly and we both want to and need to become more innovative on this front,” he says.

If one considers that – in Africa – the mobile communications market only really flew when voice and SMS services became available on a prepaid basis and telcos became innovative around how these prepaid offerings were structured, there’s plenty of truth in what Pienaar says. With more innovative pricing structures for data on the prepaid front and affordable smartphones that make active use of data connections becoming commonplace, the benefits of mobile Internet access will be brought within reach of the mass consumers in the market.

And that is in all likelihood going to be the tipping point. AT

Issue 12 2011 AFRICA TELECOMS 25

The great mobile race in Africa The growth of the mobile internet in Africa and the challenge that comes with it.

“

South Africa remains among the world’s top five active mobile markets

“

26 AFRICA TELECOMS Issue 12 2011

W

BY Hawa Omar

Sales Director, BuzzCity South Africa

ith over one billion people in Africa and an excess of 500 million handsets across the continent, Africans are spearheading mobile innovation with the precision of former Zulu king Shaka’s assegai. We are by nature an inspired nation: in the absence of technologies or resources we adapt and improvise.

From a mere telecommunications device we have transformed the mobile phone into a banking platform and social meeting place as well as a PC – now that’s AYOBA! Take the case of Uganda for example, where mobile phones are more prevalent than fixed lines: a leap of 23% between 2005 and 2008. This trend is set to continue as comparative rates of owning and maintaining a mobile phone is cheaper than subscribing to the internet via traditional channels. Ernst & Young predicts that mobile penetration in Africa can be expected to climb to more than 60% by 2012 at its present rate, which will align it as the equivalent of the PC internet penetration in first world countries.

SEACOM’s inexpensive internet bandwidth has resulted in a proportionate decrease in the cost of accessing the internet; however the mobile internet still remains the trusted medium for low cost browsing.

Reports from BuzzCity, the global mobile media company, reveal that mobile internet traffic from African countries in 2010 has grown by leaps and bounds. South Africa remains among the world’s top five active mobile markets, while Kenya single-handedly saw a 116% growth in the third quarter of 2010. Impressions in Nigeria grew by an astounding 478%.

Users are flocking to the internet on their mobiles to communicate and to get informed.

The BBC figures strongly in the top ten most visited sites in Nigeria, Kenya, Ghana, Tanzania, Namibia and Zambia. CNN features prominently in the top ten in Nigeria, Ghana and Zambia.

These examples highlight one of the chief issues facing the growth of the mobile internet: the role of local content creation. It is often pointed out that local content has advantages over content produced for global consumption. If content is locally produced it can be more responsive to local interests and needs, and individuals often relate better to it. Closely related to the issue of local content creation is the use of language. Local language content is seen as positive as local people obviously have easier access to it.

Clearly, there needs to be an emphasis on content development at the local level.

Currently, content and applications primarily originate in developed countries. But in the developed world people have different information and communication needs from people in Africa. It follows that the content produced in developed countries is often not appropriate or useful in developing countries.

While the significance of information and communication technologies is undisputed, the specific role of these technologies (including mobile for development) is still being explored. Marketing is one of the uses of mobile technology and has a role in the creation of local content. After all, advertising needs content in order to work – a context in which it can place its messages.

The media/advertising industry needs to develop a better understanding of the audience that is emerging on mobile Internet. From the end of 2009 to the end of 2015, the number of mobile internet users will increase by 233%, making mobile the primary internet access channel for brands and businesses to communicate with customers.

Despite the overall growth of African traffic, the mobile content and advertising ecosystem has yet to mature as many businesses and marketers are still evolving to grasp this growing opportunity. In order to do this, understanding the needs and wants of the mobile consumer is crucial. Once this is achieved more services (and content) can be deployed in order to fuel the users’ thirst for content.

“If we cannot ensure that this global revolution creates a worldwide information society in which everyone has a stake and can play a part, then it will not have been a revolution at all,” Nelson Mandela said at Telecom 95 in Geneva. It seems that Madiba had it figured out a long time ago! AT

Issue 12 2011 AFRICA TELECOMS 27

A new regime at South Africa’s department of communications under the guidance of minister Radhakrishna Padayachie promises to accelerate change in the local industry – and they have their work cut out for them.

Down to

busine

28 AFRICA TELECOMS Issue 12 2011

ess

A

BY Simon Dingle

combination of bad political leadership, misguided policy and conflicted interest has held back South Africa’s telecommunications industry by at least a decade. The problems, for the most part, were centred squarely on government’s department of communications (DoC). Recently, however, political will, private litigation and the rise of competition in the sector have accelerated change. South Africa is at a vital time in terms of policy and regulation of telecoms and has just welcomed a new regime into the DoC. We cannot understate the urgency with which the new leadership need to address key issues such as digital terrestrial television migration, spectrum allocation, local loop unbundling and several others.

Radhakrishna ‘Roy’ Padayachie is the new minister following the ousting of Siphiwe Nyanda in president Jacob Zuma’s cabinet reshuffle.

Padayachie took office and made it immediately clear that he realises how quickly things need sorting out. Within a week of stepping in he had called a media briefing and set out his priorities. The timing of the event made it clear that while Padayachie had been in office for only a couple of weeks he had clearly been pondering communications in South Africa for far longer – let’s not forget that this is his second stint at the department following his deputyship under Ivy Matsepe-Casaburri that lasted for five years from 2004.

Issue 12 2011 AFRICA TELECOMS 29

Much-needed introspection

At the media presentation Padayachie said that the department’s activities would be implemented in 30-day, three-month and 12-month periods.

“We have identified six critical pillars to our programme that will establish a new platform, creating the necessary wave of change that will lead us to actualizing the vision that the DoC has set for itself; that is to be a global leader in the development and use of information and communications technologies for socio-economic development and the betterment of people’s lives,” he said.

Padayachie added that this could only be achieved through building a people-centred inclusive information society “in a sustainable world class ICT environment”.

“In this context, Cabinet has called upon us to initiate programmes and activities that support the building of a new economic growth path for the country. We seek to guarantee that ICT will make its substantive contribution as an enabler for economic growth and the creation of new jobs and skills amongst our people as we strengthen the foundation for a knowledge-based economy,” he added.

But Padayachie’s first port of call in terms of action will be the department itself, which he says must be reconstructed and developed.

“We will improve our performance through more efficient and effective leadership, internal communication, planning and budgeting, risk management, staff performance management, information management and process redesign,” he said.

Some might construe this as a jab at the former minister, Siphiwe Nyanda, who was widely regarded in the industry as a lame duck in terms of execution and at the helm of a quarrelsome department, made evident by his clashes with his then Director General, Mamodupi Mohlala.

Padayachie said that a new director general and other senior management would be appointed within three months – his speech was made in November 2010.

“The department will initiate a change management programme, which also deals with transformation matters. A transformation committee has already been established,” he explained.

30 AFRICA TELECOMS Issue 12 2011

Problem children

Padayachie said that the second “thrust of our intervention” would be to stabilise public entities within the portfolio. This is where the department really has its work cut out for it as these entities include troubled state broadcast agency the SABC and ailing signal distribution company Sentech.

Then there’s the Independent Communications Authority of South Africa (ICASA) – the country’s regulator for communications where the DoC must reinforce organisational independence while still providing an oversight role; essentially finding a way of implementing a situation that is by its very description a contradiction in terms.

“For the effective functioning of the ICT sector, the Regulator, ICASA, must be strengthened and, at all times, function with confidence and independence,” said Padayachie.

“Efforts to strengthen its capacity will include measures to enhance its technical and financial competency. In this regard we will actively support and promote its collaboration with the international institutions, such as the International Telecommunications Union. During the first half of 2011, an ICASA Amendment Bill will be finalised and submitted to Cabinet for approval for introduction to Parliament,” he added.

“In addition, the Department has begun with the process of developing a performance management system for ICASA as required by the law. We will therefore, during this month finalise our engagements with ICASA on this matter. We hope that the system will be implemented from the 1st April 2011.”

As for Sentech and the SABC, Padayachie seems to recognise the urgency of sorting out these failing parastatals.

“We will be working closely with the board of Sentech to ensure that senior management positions are filled within the next three months,” he promised.

The SABC represents a more complex engagement, however.

“Our first priority would be to stabilise the leadership within the

South African Broadcasting Corporation and to address its programme of work that will resolve its financial liquidity problems and guarantee that the corporation will deliver programme content in tune with the needs of the people,” he said.

“What we need is a public broadcaster that functions competently.”

“We will therefore work closely with parliament, the chairperson of the board, the board members, its executive leadership, the executive management and general staff of the corporation with a view to finding solutions to the problems besieging the corporation. This would include, amongst others, the finalisation of the turnaround strategy and the creation of stability within the board and the corporation,” explained Padayachie.

“Furthermore, we will, in dealing with the challenges facing the public broadcaster, accelerate the finalisation of the Public Service Broadcasting Bill. The main purpose of this Bill is to repeal the Broadcasting Act of 1999, so as to align the broadcasting system to the developmental goals of the republic,” he continued.

“This Bill will also deal with corporate governance matters in general. We envisage that this Bill will be submitted to Cabinet during the first quarter of 2011.

Due to huge public interest in the contents of the Bill, the Department will, from the 15-17 November 2010, conduct other public hearings to solicit further input on this critical issue.”

By the time you read this the hearings will have been concluded and drafting of the Bill will be well underway.

Meet the minister Radhakrishna Padayachie, better known as ‘Roy’ Padayachie, is the new minister of communications in South Africa, thanks to a Cabinet reshuffle that took place in October 2010. He is no stranger to the department, however, having served as deputy minister under the late Ivy Matsepe-Casaburri from 2004 until president Jacob Zuma’s first Cabinet was installed in 2009.

Zuma’s Cabinet saw the retired army general and former head of the South African Defence Force, Siphiwe Nyanda, taking the reins of the department of communications with deputy minister Dina Pule. Padayachie was moved to the department of public service and administration where he served as deputy.

Padayachie has a BSc in chemistry and microbiology from the University of Durban-Westville and an MSc in agricultural economics from the University of London.

32 AFRICA TELECOMS Issue 12 2011

He joined the ANC in 1972 and served at the economics desk of the party’s offices in Natal, and as deputy head of its local government portfolio.

In 1974 he took a job as a formulations chemist at Plascon Evans Paints and in 1976 began working as a microbiologist at Reckitt and Colman. He worked as a research chemist at Shell chemical from 1979 to 1980.

Padayachie was a trustee of the Transitional National Development Trust, serving on its audit and finance committees as well as its policy advisory group for the establishment of the National Development Agency. He also served as a consultant to UNESCO and UNICEF, along with the World Bank. His role as consultant was extended to the department of education, specifically regarding early childhood development, in which Padayachie has a particular interest. He was project director of the Community Education Development Trust, an agency that promotes early childhood development research; and has also been project director for a World Bank study project on the subject.

Open arms

The telecommunications industry in South Africa has, for the most part, welcomed Padayachie’s appointment. Industry body ISPA (The Internet Service Providers’ Association) has stated publicly that it welcomes the appointment of Padayachie, and Themba Dlamini, the new CEO at ICASA. “We welcome the news that Padayachie will be taking over this important ministerial portfolio,” said ISPA general manager Ant Brooks.

“He is no stranger to the sector, having served as a deputy communications minister in the past and was widely expected to take this post when president Zuma first announced his Cabinet.”

Brooks said that Padayachie has a keen understanding of the sector and has expressed his willingness to partner and engage with industry to address the country’s telecoms challenges.

One of the first things Padayachie made clear after his

“

“

Making good

Some of the promises of the previous administration will also be continued under Padayachie and his team. The new minister promised the building of an integrated national broadband plan.

“Building an efficient, competitive and responsive ICT infrastructure network is critical to propel South Africa into a knowledge-based economy. This would require that government continue to implement a programme to ensure the liberalisation of the ICT sector in order to promote competition,” he explained.

“In this regard we continue to implement interventions aimed at promoting appropriate cost structures in the ICT sector. We also note the significant progress made in addressing the mobile termination rates. The unbundling of the local loop remains a critical and important intervention. In this regard we will work closely with ICASA to ensure that the local loop is unbundled by November 2011.”

That’s a big promise given the complexity of the local loop, essentially Telkom’s domestic network. This is also an interesting commitment given that the new minister believes that government should maintain its stake in Telkom as a strategic asset.

Padayachie told technology news website TechCentral that he was concerned about the removal of government’s special – sometimes referred to as ‘golden’ – share that permits it special voting powers in the running of the group.

“It seems to me that it would be necessary to keep control,” said Padayachie.

“We need Telkom. Telecoms is too important an industry for us not to have a direct and active presence in the sector.”

“We have to look at all the assets the state owns in the sector to see if there is a better strategic focus we can bring to these investments. Telkom forms a critical component of that.”

Interesting, then, that he plans to undertake unbundling so rapidly.

It’s all eyes on the new minister then as he sets out to transform his department and the local industry it looks after.

appointment was that he would focus on fostering greater interaction between the private and public sector. ISPA said its members welcome this approach.

“We look forward to working with him to create a competitive telecoms industry that serves the needs of South Africa’s people,” said Brooks.

Moving over to ICASA, Brooks said that Dlamini also has the requisite experience and a track record of performance that will stand him in good stead in his role.

“ISPA is hopeful that he will be able to help ICASA strengthen its capacity as a regulator in a sector so vital to South Africa’s growth,” he commented.

One issue that Padayachie is yet to comment on but that the industry would like to see addressed is that of spectrum allocation in South Africa, where a postponed migration to digital terrestrial television is keeping so-called ‘digital dividend’ spectrum occupied, while Sentech continues to own a lucrative chunk of frequency. The allocation of available 2.6Ghz frequency in South Africa has also been delayed.

Ross Bateson, special government adviser for global cellular industry body GSMA, said that his company too is pleased with both the new ministry in communications and new councillors at ICASA. He added that spectrum should be addressed urgently.

Bateson explains that Sentech’s spectrum could easily be reallocated while still allowing the parastatal to pursue its own broadband rollout – something it has been green-lighted to do.

He points out that great examples of how this can be done are plentiful and include countries like Brazil and Australia.

Bateson also believes that ICASA is independent and that there are no problems with its autonomy or structure.

“South Africa is a fantastic and competitive market for mobile broadband. Operators are making huge investment in the space and all we need from government is stronger recognition of the need to harmonise the approach to spectrum,” he explained.

“ICASA has perfect independence from government in real terms. There are certainly issues with ICASA and it can be prone to issuing burdensome regulation on operators, but I am confident that it has the independence it needs.”

It’s all eyes on the new minister then as he sets out to transform his department and the local industry it looks after.

He’s certainly wasting no time in getting to work. AT

Issue 12 2011 AFRICA TELECOMS 33

advertorial

Data and apps to be the

Even as Africa’s well-established market for mobile voice services continues to enjoy strong growth, the next phase in the development of the continent’s mobile market will see an explosion in demand for data applications and services.

That’s according to Deon Liebenberg, regional director for Sub Sahara Africa at Research In Motion (RIM), the company behind the BlackBerry® solution. He says that cheaper international bandwidth, operator investment in cellular data technologies, more affordable smartphones and a demand for access to the Internet are all contributing to massive growth in the mobile data market.

Says Liebenberg: “Cellular operators are investing in high-speed cellular networks, even preparing for Long Term Evolution (LTE), and new submarine cables such as Seacom and Eassy are bringing abundant international bandwidth into the continent. The result is that data connectivity is becoming both more affordable and more widespread.

“And handset manufacturers such as RIM are

34 AFRICA TELECOMS Issue 12 2011

bringing smartphones with Internet connectivity, strong communications features and rich application ecosystems into Africa at affordable prices. We are starting to address Africa’s hunger for connectivity with solutions that are appropriate for the continent’s needs. In turn, affordable connectivity will feed demand for mobile apps and value-added services.”

Market researchers predict a boom in Africa’s data market over the next five years as the mobile broadband market ignites. Informa Telecoms and Media projects that there will be 265 million mobile broadband subscriptions in Africa by 2015, a huge increase from the current figure of about 12 million. That means nearly a third of the more than 800 million expected mobile subscribers in Africa will be using mobile technologies to access the Internet.

Furthermore, the African market for mobile value-added services such as games, banking and music is expected to grow at a compound annual rate of around 20% until 2014 when it should have a total value of $11,5 billion.

advertorial

future of mobile in Africa “What this means is that many Africans are coming into the world of digital communications, thanks to mobile connectivity,” says Liebenberg. “This is opening up new possibilities for consumers and small businesses by giving them access to instant messaging, mobile banking, email, media downloads and many other powerful applications, for the first time.”

In addition to the applications and services so popular in the rest of the world - Facebook®, Twitter®, BlackBerry® Messenger and so on - many African developers can be expected to create localised content for their markets.

“Mobile applications and services have the potential to help spur economic growth throughout the continent and support economic development,” says Liebenberg. “They empower people with access to information, increase productivity and drive transaction costs down.”

Although smartphones and other Internet access devices are becoming cheaper, the cost of mobile data still needs to

fall further in price to make it more affordable for more Africans to access online services,” says Liebenberg.

Operators, for their part, need more cost-effective ways of reaching people living in rural areas with their services and to manage capacity on congested networks in urban areas.

“As more and more consumers upgrade to smartphones and start to use Internet applications and services, it will place great strain on networks,” he adds. “It will become increasingly important for handset vendors and application developers to build data applications and services for maximum efficiency.”

Concludes Liebenberg: “It will be a long while before the pent-up demand for connectivity in Africa is satisfied.

One lesson we have learnt is that the more people use connectivity, the more of it they need because they start doing more and more things online. That, in turn, feeds demand for more bandwidth. There are still many years of exciting growth ahead for the continent.” AT

Issue 12 2011 AFRICA TELECOMS 35

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.

In our belief looking at these statistics monthly we can give the market a view different from any other magazine and quantify the growth and development of the market in Africa.

In each edition of Africa Telecoms will be focusing on a specific area. This month is different to most others in

that we are looking at 2010 in Review and 2011 as the Year ahead; to this end we have tried to include a range of related statistics relevant to the African Telecoms Markets.

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.

AVERAGE BLENDED ARPU BY COUNTRY, 2Q 2009 - 2Q 2010

Informa Telecoms & Media 2010

TUNISIA

SOUTH AFRICA

EGYPT

ALGERIA

GHANA

MOROCCO

SUDAN

KENYA

LIBYA

NIGERIA

TANZANIA

COTE D’IVOIRE

UGANDA

DRC (EX-ZAIRE)

CAGR (%)

Africa by cagr, 2010-2015 (countries with subs +10 million) 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

Informa Telecoms & Media 2010

30.00

ETHIOPIA LIBYA

25.00

SOUTH AFRICA ANGOLA

ARPU (UD$)

20.00

ZIMBABWE CAPE VERDE

15.00

BOTSWANA MAURITIUS

10.00

SWAZILAND NAMIBIA

5.00

TUNISIA CONGO

0.00

2Q 09

36 AFRICA TELECOMS Issue 12 2011

3Q 09

4Q 09

1Q 10

2Q 10

africa telecom stats NET INCREASE IN ILD AND SKYPE TRAFFIC, 2005 - 2010

ANNUAL GROWTH (BILLIONS OF MINUTES)

45

www.telegeography.com

INTERNATIONAL PHONE TRAFFIC INTERNATIONAL SKYPE-TO-SKYPE

40 35 30 25 20 15 10 5 0 2005

2006

2007

2008

INTERNATIONAL CALL VOLUMES AND GROWTH RATES, 1989 - 2009

2009

2010

www.telegeography.com

30%

450

TDM AND VOIP TRAFFIC (BILLIONS OF MINUTES)

350

VIOP MINUTES TDM MINUTES

25%

TOTAL MINUTES GROWTH

20%

300 250

15% 200 10%

150

SWITCHED AND VOIP TRAFFIC GROWTH

400

100 5% 50 0%

0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Issue 12 2011 AFRICA TELECOMS 37

FEATURE

a year in review

by Lesley Stones

T

he past 12 months can be written off as a dull kind of year for the telecoms industry, with economic turbulence making many players happy to survive rather than thrive.

The chief development for Africa was undoubtedly the belated entry of the Indians, as Bharti Airtel took over the bulk of Zain’s African activities.

Other than that there were a few price skirmishes, the axing of the telecoms minister in South Africa and the surprisingly low-key landing of the Eassy cable.

Here’s a brief reminder of a few or the more interesting moments in a year that most of us have probably forgotten already. Let’s hope the industry regains its usual energy and joie de vivre in 2011.

38 AFRICA TELECOMS Issue 12 2011

FEATURE

JANUARY The year began badly for Vodacom’s subsidiary in the Democratic Republic of Congo (DRC). A bitter clash with its 49% shareholder Congolese Wireless Network (CWN) saw CWN file papers in a Kinshasa court accusing Vodacom of “plundering” the company. CWN claims Vodacom illegally took up to US$180 million out of the DRC and repatriated the profits instead of reinvesting in the operations. Vodacom denied the allegations and initiated arbitration through the International Chamber of Commerce, which could take years to be resolved.

Both parties agreed to keep discussions

open to keep Vodacom DRC running, although Vodacom may decide to pull out of the country if arbitration looks likely to take too long, or if the relationship deteriorates further.

South Africa’s third cellular operator Cell C had a better start to the year and awarded a US$378m contract to China’s ZTE Corporation to supply equipment and managed services to roll out a national 3G network.

While ZTE was welcoming more open communications with the west, the Chinese government was less keen to embrace decadent western ways. Cyber attacks on Google and other companies

led to escalated tensions between the US and China, although the government claimed it wasn’t to blame.

US secretary of state Hillary Clinton called on the communist country to end online censorship, but Chinese officials said they would not tone down the way they censor the internet.

The internet also went down for parts of Africa, although by error rather than design. A planned interruption on the Sat-3 cable connecting South Africa to Europe caused chaos with users unable to access international websites. Traffic was routed over a different cable to Asia, emphasising the need for multiple cables.

"South Africa’s third cellular operator Cell C had a better start to the year and awarded a $378 million contract to China’s ZTE Corporation to supply equipment and managed services to roll out a national 3G network."

Issue 12 2011 AFRICA TELECOMS 39

FEATURE

FEBRUARY Nigeria’s government made yet another attempt to sell off its ailing incumbent operator Nitel. MTN Nigeria and Globacom were among six shortlisted bidders for a 75% stake, or to bid for stakes in some of its subsidiaries, including mobile arm M-Tel and its international gateway.

The government went on to approve a US$2.5bn bid for Nitel, which was five times the US$500m that industry experts considered its maximum value.

The deal went to the New Generation Telecommunications, a consortium of local and foreign investors including a Dubai investment house, Minerva Group.

But by November, sources were saying some of the backers were getting cold

feet and wanted an extension on the payment deadline.

GiCell, a Nigerian company in the consortium, blamed the government for taking almost eight months to give final approval, making the foreign investors jittery about what exactly they were getting into.

Further afield, the first images were transmitted back to Earth from South Africa’s Sumbandila satellite, a project that cost more than ZAR20 million to build and ZAR12 million to launch. The satellite is designed to strengthen the country’s technological capabilities, space resources and satellite engineering skills. Sumbandila can also collect imaging data during a national

emergency such as floods.

While the government can organise a presence in space, it’s struggling with the more mundane concept of TV. Plans to migrate from analogue to digital transmissions were delayed until April 2013 at the earliest, at least 18 months later than originally envisaged.

The regulatory authority partly blamed anticipated delays in the availability of the set-top boxes needed to receive the new digital signals. It forgot to say that the delays were being caused by the government prevaricating over which technology standard to adopt.

"It forgot to say that the delays were being caused by the government prevaricating over which technology standard to adopt."

APRIL Plans for Egypt’s Orascom Telecom to sell all or some of its African assets suffered a setback when the Algerian government said it would block the sale of Orascom’s subsidiary in that country.

Orascom is the majority owner of Algeria’s Djezzy network, which is a key part of its operations and contributes 47% of its revenue.

Algeria’s government would rather buy Djezzy using its pre-emptive rights as a minority shareholder than see it sold to a foreign entity.

Analysts warned that the inability to sell Djezzy could scupper the sale of Orascom’s

40 AFRICA TELECOMS Issue 12 2011

FEATURE

"Zain had been trying to sell its African networks

for more than a year, despite initially denying that any such plans were afoot. Bharti now has 163 million subscribers, with Zain Africa’s 41.9 million looking rather paltry compared to Bharti’s homegrown user base of 121 million."

MARCH After two aborted efforts to merge with MTN, the Indian operator Bharti Airtel finally began its African adventure by acquiring Zain’s African activities. The US$10.7 billion deals saw Bharti take over operations in 15 countries, and excluded Zain’s operations in Morocco and Sudan.

Bharti is handing over a tidy sum of US$9 billion in cash and discounting US$1.7 billion of debt. Hopefully it still likes what it got, because the remaining US$700 million is due this March.

Zain had been trying to sell its African

networks for more than a year, despite initially denying that any such plans were afoot. Bharti now has 163 million subscribers, with Zain Africa’s 41.9 million looking rather paltry compared to Bharti’s home-grown user base of 121 million. So at least the feisty Indians should teach Zain a thing or two about economies of scale and serving low-income consumers.

Bharti is expected to be a more formidable operator than Zain was, and is now a rival to MTN instead of the potential partner it tried to be. Yet MTN CEO Phuthuma Nhleko described suggestions that Bharti posed a serious threat and could

assets to potential buyers including MTN. That proved true, with MTN walking away from the deal.

By November Russia’s Vimpelcom had agreed to buy a controlling stake in Orascom for US$6.6 billion. But as the year drew to a close those plans began to look increasingly shaky as Algeria remained a hurdle and regulatory issues also emerged in other countries. Orascom operates GSM networks in Algeria, Tunisia, North Korea, Canada, Pakistan, Bangladesh, the Central African Republic, Zimbabwe, Burundi and Namibia.

As usual, Africa’s elite got looked after a whole lot better than its poor, when wellheeled consumers welcomed Apple’s new

iPad device. The first models arrived via the grey market without the official support of Apple.

The tablet computer is a multifunctional device with a 9.7-inch high-resolution screen, making it perfect for watching podcasts, videos, browsing the web, checking e-mail, reading magazines, watching movies and listening to music. It also runs close to 200,000 applications.

trigger potential price wars as “exaggeration and oversimplification.” His comments were based on the opinion that a business model that works in India may not transport easily to a totally different environment.

How well Bharti will manage to replicate its operations is still playing out, with a business model designed to serve millions of people in densely crowded areas now having to adapt to sparsely populated regions lacking basic facilities.

Zain has rebranded as Airtel and has already slashed prices in Kenya to steal market share from Safaricom, Kenya’s dominant player.

Issue 12 2011 AFRICA TELECOMS 41

FEATURE

MAY Network operator MTN said it had invested nearly ZAR450 million specifically for the 2010 Soccer World Cup in South Africa. It rolled out infrastructure to all the stadiums so fans could make calls and connect to the internet without sucking up all the bandwidth from businesses and consumers in the neighbourhood. At Soccer City in Soweto alone it erected 22 base stations.

May also saw two of those occasions where something we already know is finally admitted in public.

Firstly, the outgoing chairman of the Independent Communications Authority of South Africa (Icasa) admitted that the regulatory authority had failed the sector. “I concede we have failed you,” Paris Mashile told his stakeholders. In reply to complaints about how long Icasa took to deal with industry issues, Mashile said its performance had been “inexcusable and unacceptable” and had affected the telecoms companies in very

serious ways. Mashile complained that the industry poached Icasa’s best staff and that it was beholden to the government for its budget.

“We are not serving the sector well and it requires a turnaround strategy,” he said. The mea culpa was welcome, but there was little clue as to when or how a turnaround strategy may begin.

The second “yes, we already knew that” came when a study by Ookla confirmed that Africa is poorly served for broadband.

Ookla’s Net Index, based on millions of tests, ranks South Africa 93rd in the world for broadband download speeds. Uganda fares just a fraction better in 92nd place.

The index found the average global consumer download speed is 7.7MB per second. The average in South Africa is 2.2Mbps. The worst countries in which to attempt a data download include Mali and Sudan.

JULY The East African Submarine System (Eassy) undersea cable started commercial operations on July 30, remarkably ahead of schedule and about 10% below its US$300million budget. Not bad for a project that’s literally been in the pipeline for seven years.

The 10,000km fibre optic cable on Africa’s east coast links South Africa, Mozambique, Madagascar, Tanzania, Kenya, Somalia, Djibouti and Sudan with other submarine cables from Europe, Asia, the Middle East and the US. One change of plan was unexpectedly caused by pirates, as the consortium has chosen not to build a landing point in Mogadishu in Somalia yet because of pirate activities.

About 25 telecoms operators are buying its bandwidth so far, and its investors include

42 AFRICA TELECOMS Issue 12 2011

South Africa’s MTN, Vodacom, Telkom and Neotel, as well as Dalkom Somalia, Comoros Telecom and Mauritius Telecom.

Chairman Trevor Martins said the cable had been launched with an initial 60Gb per second of capacity, which would be increased as demand grew. He expects to see a broadband capacity explosion in Africa between 2012 and 2014.

Although Martins said the cable would provoke another sharp reduction in wholesale international bandwidth prices and cheaper broadband for consumers, that hasn’t been particularly noticeable. South African internet service providers say the cable has had little impact on the price of bandwidth so far.

Neotel’s Angus Hay agreed that Eassy’s arrival hadn’t had a big impact on

international bandwidth prices, as Eassy, Seacom and Sat-3 cables all charge roughly the same.

Hay said Eassy simply wasn’t big enough to make a large impact, but it was a valuable redundancy option for telecoms operators and internet service providers, which still have vivid memories of the lengthy breakdown of Seacom.

"The East African Submarine System (EASSy) undersea cable started commercial operations on July 30, remarkably ahead of schedule and about 10% below its US$300 million budget."

JUNE "Network

operator MTN said it had invested nearly R450 million specifically for the 2010 Soccer World Cup in South Africa.

It rolled out infrastructure to all the stadiums so fans could make calls and connect to the internet. "

June was a month in which plans went awry for several companies. MTN formally ended negotiations to buy the African assets of Orascom Telecom. The deal probably fell through because the Algerian government blocked the sale of the Djezzy network, which was perhaps the asset MTN most wanted to get its hands on.

MTN instantly bounced back by declaring that growth in Nigeria is far from over, and announcing that it had raised another ZAR16 billion to expand its network there. The new infrastructure investment follows heavy investments in 2008 and 2009, which now lets MTN cover 83% of Nigeria’s land and 84% of its people.

While MTN was raising money, Neotel was losing it in vast amounts. The operator licensed to rival Telkom in South Africa suffered a net loss of nearly ZAR1.6 billion in the 2010 financial year. It was the first time its majority stakeholder, India’s Tata Communications, had revealed the extent of the losses being clocked up by its subsidiary.

Neotel was initially seen as a much-needed, much-delayed alternative to Telkom, so businesses and consumers had high hopes of enjoying decent competition at last. But Neotel has failed to set the market alight.

Plans at Telkom also went wonky when the company announced that CEO Reuben September was resigning – in other words, his contract wasn’t renewed.

FEATURE

Politics turned out to be the chief reason, with September and his chairman – government appointed Jeff Molobela – repeatedly clashing. He was replaced

by Jeffrey Hedberg as acting CEO, with no news yet of who will become the permanent head.

Issue 12 2011 AFRICA TELECOMS 43

FEATURE

"South Africa’s largest cellular network Vodacom teamed up with Nedbank to launch the M-Pesa money transfer service."

AUGUST South Africa’s largest cellular network Vodacom teamed up with Nedbank to launch the M-Pesa money transfer service. M-Pesa is already enormously popular in Kenya, where it’s operated by Safaricom and used by 10 million people. It’s also available from Vodacom in Tanzania.

The technology was developed by the Vodafone Group to let cellphone users transfer money quickly, easily and securely from person to person.

Vodacom CEO Pieter Uys said: “The beauty of this service is the ease and speed with which people can send money to each other anywhere in the country. As anyone can receive M-Pesa without having to be an M-Pesa customer or even a Vodacom subscriber, it has the power to reach all cellphone users.”

Only Vodacom customers can send M-Pesa, but anyone on any cellphone network can receive it.

Nedbank chief executive Mike Brown said cellphone penetration was extremely high in South Africa, but banking was far less widespread, with more than 13 million economically active South Africans not having a bank account. M-Pesa would make basic financial services accessible to all and help bring marginalised individuals into the economic mainstream, he said.

Customers can register for the service and deposit money into their M-Pesa account at outlets including shops, spazas and all Nedbank branches.

Once they have money in their account, they can send it to any other cellphone user in South Africa, and the receiver can collect the cash at any M-Pesa outlet or a Nedbank ATM. Customers access their accounts using a four-digit PIN code and as long as that PIN remains secret their transactions are secure.

SEPTEMBER Price war skirmishes have become a regular feature in East Africa, and bubbled up again as Kenya made some drastic cuts in mobile call fees. Analysts said that posed a huge competitiveness challenge to its regional counterparts following the launch of the East African Common Market.

High cross-network call rates force many subscribers to buy multiple Sim cards to call cheaply on one network then swap cards to call another network.

Kenyans had been making crossnetwork calls at the equivalent of Ushs 300 a minute, with Uganda charging Ushs 340. But the price difference changed dramatically after the Communications 44 AFRICA TELECOMS Issue 12 2011

FEATURE "Telkom launch its new mobile services. The mobile offerings, dubbed 8ta, include a full range of prepaid and contract packages for consumers and corporate customers."

powered by Telkom

Commission of Kenya halved the interconnection rate.

Kenyans now call for an equivalent of Ushs 75 a minute across all networks. In Rwanda, the rate is about Ushs 270 a minute, while Tanzanians pay about Ushs 7.5 per second, and MTN Uganda charges Ushs 9 per second.

When the Uganda Communications Commission tried to force down interconnection rates from USh180 to Ushs 131 last year it was immediately sued by MTN, which claimed that was well below the actual cost of the service and the fee should not drop below Ushs 151.

Then Warid Telecom instigated a price war by slashing cross-network calls to Ushs 5 per second, making it the cheapest in the market. Warid said the new rate was half its previous fee, and was designed to make cellphone services affordable to more people. Next Bharti Airtel led a price war in Kenya by cutting call rates by up to 45%. Bharti said usage soared by 50% after the cuts, and within eight weeks its revenue was back to normal as higher usage offset the lower call fees.

"Price war skirmishes have become a regular feature in East Africa, as Kenya made some drastic cuts in mobile call fees."

OCTOBER Few tears were shed when a shake-up in South Africa’s cabinet saw Communications Minister Siphiwe Nyanda unceremoniously axed.

Nyanda was replaced by the former deputy communications minister Roy Padayachie, seeing the return of a man who once showed far greater promise than the late minister he served under, Ivy Matsepe-Casaburri.

Nyanda had allowed the department to totter from crisis to crisis. First he bought two extravagant BMWs then racked up massive hotel bills at the taxpayer’s expense. He never shook off allegations that he benefited from dodgy tenders. Then a spectacular clash saw him fire director-general Mamodupi Mohlala, who wanted to change the tendering processes.

As internal wrangling absorbed much of the minister’s time, the state-owned signal distributor Sentech and the SABC were allowed to keep spiralling downwards through mismanagement, corruption, boardroom spats and failure to deliver on business plans.

Analysts agree that Padayachie is a great choice, but given the department’s appalling track record for more than a decade, anyone with a touch of common sense and motivation ought to be an improvement.

October also saw South Africa’s fixed line monopoly Telkom launch its new mobile services. The mobile offerings, dubbed 8ta, include a full range of prepaid and contract packages for consumers and corporate customers. Its “ultra-competitive contract offers” starting at R90 a month were designed to encourage more usage of mobile voice and data services, said 8ta’s Managing Executive Amith Maharaj. “We will provide more minutes for your money than any other network.”

Telkom has erected 800 base stations of its own and has a roaming agreement with MTN to cover areas it has not yet reached. The initiative has already cost ZAR205m in operating expenditure and a further 3,200 of its own base stations are planned.

Issue 12 2011 AFRICA TELECOMS 45

FEATURE

NOVEMBER The long-awaited switch from analogue to The long-awaited switch from analogue to digital broadcasting in SADC countries by 2015 looked set to be delayed by another five years as countries argued over which technology to adopt. The prediction of long delays came from Mgqibelo Gasela, head of regulatory affairs for MultiChoice Africa.

He advised SADC leaders not to bow to pressure from Japan and Brazil to adopt a technology that is cheaper but less robust than the one they initially supported.

Engineers in the Southern African Digital Broadcasting Association strongly recommend the adoption of DVB-T over the Brazilian and Japanese ISDB system, but politicians were being swayed by

46 AFRICA TELECOMS Issue 12 2011

"SADC should choose a standard that is the best standard worldwide and the latest " political pressure from those countries.

“SADC should choose a standard that is the best standard worldwide and the latest,” Gasela said. And that meant DVB-T. He urged ministers to vote in the best interests of the region and not for political expediency.

In January 2011, everyone breathed a sign of relief when South Africa’s Communications Ministry announced that SA would adopt DVB-T2, the latest version of the European standard.

The Southern African Digital Broadcasting Association called the decision “visionary.

Meanwhile, research by Informa Telecom declared that Africa now has 506 million active cellphone subscribers. Africa

accounts for 10% of the world’s mobile subscriptions as user numbers in the continent rose 18% from last year due to demand for new services such as mobile internet access.

In Ghana, a change of ownership took place as Kasapa Network was sold to Dubaibased Expresso Telecom. Kasapa serves 400,000 customers as the fourth operator behind MTN, Tigo and Vodafone.

Expresso operates the Intercellular network in Nigeria and holds new licences in Mauritania and Senegal. CEO Isham Ayub said his company would upgrade the network across Ghana to enhance coverage, attract more users and offer a more customer-oriented service.

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DECEMBER As the year limped to a close, MTN finally declared that outgoing CEO Phuthuma Nhleko would be replaced by Sifiso Dabengwa on Apri 1. Nhleko will stay on as non-executive deputy chairman.

Dabengwa is currently the chief operating officer (COO) and was seen as the obvious choice, since he worked closely with Nhleko in driving MTN’s growth strategy. The COO position will be scrapped and a new position, CEO of MTN International, will be created to focus intensely on opportunities abroad. No candidate has been name for that yet.

Christmas was grim for employees at South Africa’s fixed and mobile operator Neotel with retrenchments looming.

Neotel has more than 1,000 staff, which cynics would say almost outnumbers its customers.

The company’s debt providers have apparently brought in independent management consultants to assess the situation.

Neotel will consult staff in January and February, with retrenchments expected in April. Neotel says it is evaluating its business strategy, operational performance, efficiency and competitiveness with a view to achieving long-term sustainability.

Staying in South Africa, the government pledged to build 18 information and communications technology centres in 2011 to take technology to the rural poor.

The ZAR180 million scheme will provide broadband internet access and computing resources in underserviced areas to help raise the country’s appalling low broadband penetration rate of 4% to double digits.

Bringing us full circle, we end back in the Democratic Republic of Congo (DRC), where Vodacom and its minority shareholder Congolese Wireless Network (CWN) have agreed to appoint investment bank NM Rothschild & Sons to explore options to settle their acrimonious dispute and keep their network viable.

And a quick look at what’s brewing for 2011:

"Icasa’s new termination rates – designed to finally correct what it calls “market failure” – will cut peaktime mobile call termination rates"

Bharti should make a big impact in the countries where it aquired the networks of Zain. Expect more price wars, more innovative offerings and a general slashing of any flabby bits in the operating expenses.

In South Africa the mobile interconnection fees finally fell, but the Independent Communications Authority of SA (Icasa) didn’t really get its way against wily operators Vodacom and MTN. It will try again in 2011 with plans to cut call termination rates in March. Consumers are advised not to hold their breath. AT

Issue 12 2011 AFRICA TELECOMS 47

advertorial

SMS

48 AFRICA TELECOMS Issue 12 2011

advertorial

FROM PT

PROTECTS PROVIDERS AND SUBSCRIBERS ALIKE For every new innovation that comes along to improve our communications, a new method arises to circumvent it, and Short Message Service (SMS) is no different. With SMS traffic overtaking voice, the threat of fraud is increasing, and network operators are hastening to protect their networks and defend their subscriber base. Mobile-to-mobile SMS fraud comes in many forms and can cause substantial damage with respect to customer satisfaction, financial performance and network operations. Each variety of fraud carries its own obvious risk, but the residual impact is much more extensive. Subscribers find spam annoying and view it as an invasion of privacy.

I

n turn, service providers are concerned that irritated subscribers will cause increased churn, higher network support costs, and damage to the carrier’s reputation.

If that’s not enough, they face lost revenue for inter-carrier messages since they are unable to collect termination fees on counterfeit traffic. As a result, the large volume of unauthorized messages increases operational costs and can degrade the network and the Short Message Service Center (SMSC) performance. In the end, subscribers lose faith in the network integrity and they are reluctant to adopt new revenue-generating services.

Issue 12 2011 AFRICA TELECOMS 49

advertorial

“ providers merit through safer, more efficient networks, subscribers will rest easier knowing a firewall is in place for their security.”

EXAMPLES OF FRAUD

• SMS Spam is when unwanted messages are delivered to subscribers – it results in irritated customers, degrades network performance, and is blamed for spam relay • SMS Flooding occurs when a remote system sends massive numbers of messages targeting subscribers and nodes – the result is overload in the signalling network, and the home operator incurs relay operator costs • SMS Faking is when a foreign system uses the identity of a legal SMSC – as a result, home operators cannot collect termination fees • SMS Spoofing happens when messages are sent illegally by simulating subscribers who are in a roaming situation – thus subscribers are wrongfully billed for unsent messages and perhaps unwanted content • SMS Smishing is patterned after email phishing, and occurs when messages are disguised to appear as if coming from a legitimate company attempting to acquire subscriber information – as a result, compromised handsets cause customer service problems and may send unwanted messages African carriers are among the prime targets for this type of criminal activity because many are in the process of migrating networks to the more efficient performance of a hierarchical topology. Previously used mesh-designed networks leave far too many gaps that might be penetrated by unmonitored traffic. It is essential for mobile service providers transitioning their architecture to take serious measures to properly protect their business and their networks.

To prevent these threats, a carrier must begin by filtering messages to identify which are fraudulent. Since each message must pass through the signalling node, this is the most efficient method of capture. By including a simple plug-and-play capability in the Signalling Transfer Point (STP), a carrier is equipped to stop unwanted traffic before it has a chance to compromise the network. PTs SEGway™ SMS Defence Solution provides the most advanced network visibility and post-analysis trending tool, enabling the classification of ‘normal’ activity.

Once a ‘normal’ baseline is established, the system can recognize and differentiate unusual, nonthreatening traffic patterns as opposed to real threats, whether they are mobileoriginated or internet-originated.

In addition to various types of fraud, certain circumstances require the need to impose individual restrictions on the use of SMS, a matter that is an

50 AFRICA TELECOMS Issue 12 2011

increasing concern for parents. According to independent market surveys, 80% of parents would consider changing their network provider in order to obtain the option of exercising parental controls. Further value, therefore, is attained through an SMS Defence feature known as SMS Parental Control, whereby a parent subscriber can easily set restriction on their children’s messaging by placing limits on quantity, time, and day of week. For example, a parent may configure their child’s phone to prevent SMS messaging during school hours and after bedtime. This crucial subscriber feature is readily accessible through the use of SMS text or via an online web portal.

The most effective SMS filtering solution must have the intelligence to interpret signalling flows and provide a viable summary of the threat along with a recommended action. It is impossible to accurately solve a problem if it cannot be properly identified and quantified. PT’s Visibility and Trending feature differentiates between non-threatening activity and real network threats, based upon advanced algorithms which continually monitor the signalling flows. In this way, it is even feasible to preemptively catch spam planning exercises that mine the network for valuable subscriber and network data. Not only will providers merit through safer, more efficient networks, subscribers will rest easier knowing a firewall is in place for their security. AT

EVENTS CALENDAR january

march

20-21

01-02

3.9 g: 3G to 4g

Management World Middle East 2011

Cape Town, South Africa Patricia Chong: +65 6391 2555 Magenta Global www.magenta-global.com.sg/3g4g/

Dubai, UAE TM Forum www.tmforum.org

26-27

01-03

Management World Asia 2011

5th Annual e-Gov Africa Forum

Singapore TM Forum http://www.tmforum.org

february 01 6TH Annual Digital Broadcasting Switchover Forum South Africa South Africa Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

14-17 GSMA MOBILE world congress Barcelona, Spain GSMA www.mobileworldcongress.com

Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

02-03 AITEC Banking & Mobile Money COMESA 2011 Nairobi, Kenya Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

21-23 HR4ICT11

Nairobi, Kenya Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

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

If you would like Africa Telecoms to add an event to the calendar, please contact Mr. Bradley Shaw at: bshaw@3ipublishin g.co.za 52 AFRICA TELECOMS Issue 12 2011

08-09 AITEC Banking & Mobile Money west africa 2011 Accra, Ghana Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

29-30 Eurasia Com

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

31 mobile money world africa Johannesburg, South Africa Tatum Willis: +27 11 516 4059 Terrapinn www.terrapinn.com/2011

april 12-13 east africa com

Nairobi, Kenya Veronika Pete: +44 207 017 5818 Informa Telecoms & Media www.comworldseries.com

may 04-05 African Outsourcing Summit 2010 Nairobi, Kenya

JANUARY 2011 - NOVEMBER 2011 23-27 Management World 2011 Nice, France TM Forum www.tmforum.org

30 satcom 2011 africa

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

june

06-07

26-29

VAS Africa

telecoms world africa 2011

Johannesburg, South Africa

20-21 Management World Africa 2011 Johannesburg, South Africa TM Forum http://www.tmforum.org

august

West & Central Africa Com Dakar, Senegal Veronika Pete: +44 207 017 5818 Informa Telecoms & Media www.comworldseries.com

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

05-08 Submarine Networks World Africa 2011 Johannesburg, South Africa Tatum Willis: +27 11 516 4059 Terrapinn www.terrapinn.com/2011

AITEC Banking & Mobile Money southern africa 2011 Johannesburg, South Africa Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

october 11-12 north africa com

02-03 The internet show africa 2011

july

28-29

01-04 social media world africa 2011

15-16

Cape Town, South Africa Tatum Willis: +27 11 516 4059 Terrapin www.terrapinn.com/2011

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

september 20-21 nigeria com

Hammamat, Tunisia Veronika Pete: +44 207 017 5818 Informa Telecoms & Media www.nafrica.comworldseries.com

november 09-10 africa com

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

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

Issue 12 2011 AFRICA TELECOMS 53

Critical Decisions

for SA Telecoms industry

Is South Africa falling behind the rest of the continent in terms of the liberalisation of telecommunications? Spescom Telecommunications MD Thomas Makore believes not, but he also notes there are some complex issues emerging locally which cannot be hastily or thoughtlessly addressed.

54 AFRICA TELECOMS Issue 12 2011

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will operators move forward fast to meet escalating demand and ensure economic advantage to users and the economy or does this ‘advance’ too need to be regulated/legislated?

here are a number of interesting dynamics at play in the telecoms environment in South Africa. These are the result of not only ongoing liberalization but also the introduction of rapidly advancing technologies, the availability of new services, increasing demands from consumers, as well as the entry of new local and international players and pricing models.

The decisions of policy makers and regulators at this juncture thus need to be carefully balanced between further stimulating growth in this market and ensuring it is capable of evolving steadily – i.e., that major players such as the network providers continue to achieve a reasonable return on their existing investments in order to advance their networks at a rate that enables them to meet burgeoning demand for mobile broadband in the short term, and provide 4G speed and cost advantages to a broader customer base in the long term. The question is: will operators move forward fast to meet escalating demand and ensure economic advantage to users and the economy or does this ‘advance’ too need to be regulated/legislated?

These decisions are always two-edged swords - too much stimulation and the market becomes unstable; too little and it stagnates. The recent delay in the awarding of WiMax spectrum licences is a case in point.

The reasoning behind the delay was prompted by the fact that the major network players have invested in 2G and 3G technologies. WiMax is an all-IP platform, a 4G technology.

To offer this service, a costly bootstrap upgrade of the networks would be necessary. LTE (Long Term Evolution) standards are thus being considered as an alternative. LTE will allow operators that have deployed 2G and 3G networks to evolve their networks to an all-IP architecture at a regulated pace. LTE will, for instance, allow operators to significantly increase data up- and download capabilities on their networks with just a software upgrade to existing hardware, enabling them to offer mobile broadband and exploit new data revenue streams. In effect, this allows them to continue to drive value out of their existing network investments, and to structure the evolution of their networks to all-IP 4G technologies (like WiMax) to meet demand.

These are critical decisions and we need to keep asking ourselves if the decisions South Africa is making are too conservative given the pace of global telecoms adoption? We have nonetheless come a long way in the last three years.

The 2008 granting of 400+ ECNS licenses sent a clear message to the market, allowing network providers to build out their own networks for the first time. And in the

Issue 12 2011 AFRICA TELECOMS 55

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There’s more than 100% penetration of mobile devices in South Africa and revenues on voice traffic are beginning to flatten.

intervening years, both metro and national fibre networks have seen massive investments from network providers Neotel, Vodacom, MTN, Infracom, IS, iBurst and Cell C. Then, of course, there’s the go-live of the Seacom and EASSy submarine cables that make large amounts of international bandwidth available – offering South Africans more choice and better pricing.

But all the new connectivity investment in metro, national and international networks means very little without local connectivity options. Our biggest challenge at present is thus unbundling the local loop. The masses of newly available bandwidth capacity simply won’t get used if consumers and businesses cannot access it easily.

At present, residential wireline broadband connectivity is primarily achieved via the incumbent’s local loop copper infrastructure. While there is some wireless connectivity and some fibre reaching the curb, and (where there is spectrum) some WiMax connectivity, it does not enable the kind of broad access that unbundling the local loop would achieve.

This stops the growth cycle in its tracks – i.e., delayed and limited access to broadband means low take-up, which means less reinvestment and slower expansion of the networks, which means price competitiveness is delayed and benefits to business, the consumer and the economy as a whole are also dampened. We need to thus reopen the debate on local loop unbundling set for 2011.

The Rest of Africa is ahead of us in this respect. With little copper in the ground, the market is more ‘open’ and investments in terms of local connectivity are going ahead.

In South Africa, by contrast, everyone is waiting for local loop unbundling – there is little advantage to be gained by investing in local connectivity solutions if the market is to be deregulated in a short 6-12 month period. However, given the history of deregulation, there may be multiple delays of

56 AFRICA TELECOMS Issue 12 2011

the local loop unbundling – which will not do South African businesses, the economy or consumers any favours.

The benefit of a healthy and competitive market with lots of low-priced broadband connectivity is that it will stimulate business. Lowered communication costs and greater access to a broader marketplace provides considerable incentive to enterprise start-ups. And for existing businesses that know how to leverage broadband connectivity it enables the generation of more income, creating demand for more capacity which increases competition, lowers prices … and so the cycle is initiated.

In the meantime, mobile technologies are providing some relief. There’s more than 100% penetration of mobile devices in South Africa and revenues on voice traffic are beginning to flatten. The next growth area is data traffic. As more datacapable smart phones enter the market, mobile Internet access is growing, along with exchange of data. Driving this uptake is the significant decrease in 3G pricing over the last two years. LTE technologies will allow operators to offer mobile Internet at lower prices using optimised 4G technologies but they will also need to significantly increase their network coverage capabilities, and invest in expanding the reach and footprint of their networks (including backhaul capabilities) to keep pace with demand.

The benefits of broadband are immense, but the realities of the rollout of these technologies need to be born in mind.

There will always be the supporters of an open market who believe market forces can best dictate the pace of development, and there will always be the policy makers and regulators who oppose them, taking a more sedate approach to ensure infrastructure and technology investments are sustainable. In South Africa, there are strong opinions either way – well informed role players with insight into long-term outcomes will add much value to the ongoing debate. AT

Issue 12 2011 AFRICA TELECOMS 57

with James Munn Vice President of Business Development in Sub Sahara Africa (SAA) for Qualcomm Incorporated This issue of Africa Telecoms is looking at back at the high and low points of the Telecoms Industry in Africa for 2010 and what’s in store for 2011. As a whole, what do you think the most positive and negative events were for the year? What were the highlights for Qualcomm specifically in Africa for 2010?

The highlight for us this year came from the ‘leap frog’ technology jumps we saw with the launch of UMTS900 networks in Ghana and South Africa and the introduction of HSPA+, which is leading-edge 3G technology. UMTS900 for Africa makes a great deal of sense because it addresses all the key criteria for operators, namely capacity, coverage and the ability to provide data at a lower cost. The FIFA World Cup helped the region tremendously in accelerating telecoms, primarily through the deployment of new deep sea cables and fiber rings which to the end user translated to faster and cheaper data, South Africa being the most positively effected.

2010 was a milestone year for Qualcomm celebrating 25 years of growth and innovation. To what do you attribute this tremendous success?

Twenty-five years ago, our co-founder Dr. Irwin M. Jacobs declared that whatever the endeavour, Qualcomm should always strive to “do the right thing.” That opportunity to make a difference in the world is a principle that continues to guide us today. Qualcomm’s pioneering mobile technologies, coupled with our strong commitment to global citizenship, is making life more connected and more productive for mobile subscribers.

It’s been an exciting quarter century for us, for our partners, and for people all around the world who have made mobile a part of their everyday lives.

58 AFRICA TELECOMS Issue 12 2011

2010 was also a milestone for South Africa due to the Fifa World Cup. How do you think South Africa faired from a communications perspective?

The FIFA World Cup was a significant catalyst for growth of South Africa’s ICT and mobile telecoms sector. Operators have made substantial infrastructure investments and service upgrades that will benefit subscribers for years to come. In particular, HSPA+ has given consumers significant improvements in data speeds.

Qualcomm has become an Associate Member of the Africa Telecommunications Union (ATU). Could you inform us of what the rationale behind Qualcomm joining the ATU? Do you think that the ATU is currently active enough in the regulation or assistance of regulators in Africa and where could the ATU have more of an influence?

We joined the ATU as part of Qualcomm’s commitment to growth and development of the regional telecoms sector.

As many people know, ATU is the ITU (International Telecommunications Union) recognized regional telecommunications organization for Africa. Partnering with operators and government entities is an important element of Qualcomm’s operations in Africa. Our associate membership in ATU provides us another channel to maintain close proximity to the people, governments and important industry events that are driving the African telecommunications industry forward.

Africa is a large region and there is currently much emphasis on the harmonization of policies and regulations. ATU, as the specialized agency of the African Union (AU) in the field of telecommunications, is expected to become increasingly

Qualcomm, through its Wireless Reach Program recently announced a Mobile Health Information System in the city of Port Elizabeth in South Africa. Could you tell us more about this project and how active is Wireless Reach in Africa?

In South Africa, where access to relevant health literature and broadband Internet access is limited, nurses at the Port Elizabeth Hospital Complex are using 3G wireless technology to provide better care to their patients. The project, called Mobile Health Information System (MHIS), uses commercially available smartphones pre-loaded with an electronic library of professional development materials to help build nurses’ build their knowledge and skills. The library includes digitized medical guidelines, protocols, diagnostic tools and other clinical content drawn from publicly available information sources. It’s designed to enable nurses to deliver comprehensive patient care.

The MHIS pilot project was funded by the Henry E. Niles Foundation, John M. Lloyd Foundation, and Qualcomm’s Wireless Reach initiative. MTN provided smartphones, discounted connectivity and technical support. AEDSATELLIFE was the lead implementing agency, developed the Mobile Content Library and trained the nurses and SA Partners

provided logistical support. The Nelson Mandela Metropolitan University carried out the initial needs assessment and the final evaluation research study.

We just completed the MHIS pilot. Now that the concept is proven, we’re optimistic that the interest it has generated will provide opportunities to expand the program. In Africa, Wireless Reach has also launched projects in Tanzania and Kenya and is in discussions to implement other projects in the coming year.

One of the more exciting technologies that Africa Telecoms came across in 2010 was that of Augmented Reality (AR).

Qualcomm has made its AR extension available to Unity for the development of AR games for Android. Are any games or applications using AR available on the market place as yet? If so could you describe them to us? Finally when can we expect to see AR applications in Africa?

We’ve received a very positive response to Qualcomm’s Augmented Reality platform. As the name suggests, augmented reality is the concept of superimposing digital graphics on top

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more involved in ICT policy issues. We look forward to participating in these policy discussions and working with private sector and government authorities to build awareness of development issues.

Augmented Reality is the concept of superimposing digital graphics on top of a view of the real world.

Issue 12 2011 AFRICA TELECOMS 59

of a view of the real world. Qualcomm’s technology uses a vision-based approach whereby the mobile device processes data captured by the camera in order to recognize what the user is pointing at. Many existing GPS-based Augmented Reality technologies do not use camera data, resulting in graphics that “bounce” or do not appear anchored to the environment.

Qualcomm is offering an AR software development kit to developers free of charge, opening the door for them to create a variety of potential application types: games for mobile devices, AR-based advertisements and marketing pieces, instructional applications and much more.

The world’s largest toy company, Mattel, has announced plans to commercialize an application based on Qualcomm’s AR platform, a game called “Rock ‘Em Sock ‘Em.” Qualcomm is also in discussions with other companies about similar collaborations. It’s not clear when applications based on Qualcomm’s AR platform will be available in Africa, but we’d certainly like to see developers create products for the African market sooner rather than later.

Multichoice recently announced that it will be using the Qualcomm Services Labs Magic Link TM service for its mobile TV offering. Could you describe what benefit this will be to Multichoice and then to the end user?

Delivering content to consumers on their handheld devices is often challenging due to wide variability in devices’ screen sizes, screen resolution and even differences in content formats. The Magic Link service eliminates these hurdles and allows consumers to discover and enjoy multimedia content directly from their social networks through their devices. We are very excitited about the value proposition of Magic Link.

The collaboration with Multichoice enables them to promote content across Africa through the most valuable piece of realestate, namely the mobile device.

60 AFRICA TELECOMS Issue 12 2011

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This is good for consumers because it means they don’t need to wait for LTE to enjoy high-speed mobile services.

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2010 also saw a lot of hype around 4G. LTE seems to be winning ground worldwide with many operators announcing intentions to move to LTE. From a technology perspective do you think that the shift from GSM/CDMA to LTE is going to be a difficult move? Has Qualcomm started working on product offerings in the LTE arena?

Qualcomm is LTE-ready and has already announced multimode 3G/LTE chipsets, and there is considerable interest globally in LTE to meet anticipated data demand. With that said, Africa still has a long road to travel with 3G as it starts to pick up pace. 3G still offers very compelling data speeds with single-carrier HSPA+ peak download rates of 21 Mpbs and dual-carrier HSPA+ rates of 42 Mbps.

The fastest mobile network in the world right now — Telstra’s Next G network in Australia — is based on 3G HSPA+ technology. This is the same technology used by MTN, Cell C and others for their high-speed 3G services.

Certainly, mobile operators in Africa will look to implement new networks in the years ahead. While they are making these plans, though, they will continue to use and upgrade their existing networks, making them faster and faster using the latest 3G technologies. This is good for consumers because it means they don’t need to wait for LTE to enjoy high-speed mobile services.

With that being said, Qualcomm has always been a supporter of the CDMA ecosystem with what seems to be the merging of CDMA and GSM networks in to LTE, how will this affect Qualcomm’s business model moving forward?

Qualcomm’s aim has always been to meet the needs of its partners regardless of which technology path they choose. We provide a variety of products, technologies and services based on CDMA, WCDMA/UMTS, LTE and evolutions of these technologies. Qualcomm is not a systems vendor so we have a unique position in advising and helping our operator partners enhance their networks and deploy new technologies. We also work with an extensive ecosystem of device manufacturers.

This flexability has enabled us to function as a trusted advisor to companies across the industry, precisely because Qualcomm’s success depends on the success of its partners.

In your opinion, when can Africa expect to see its first LTE network and which market do you think will be an earlier adopter in Africa of LTE technologies?

I couldn’t speculate on a time or location for the first LTE network, but East Africa and South Africa could well be jump off points. We’ll have to wait and see. AT

Issue 12 2011 AFRICA TELECOMS 61

consumer technology rules, OK?

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The announcements at this year’s CES confirm that the consumer market is still in the driver’s seat and that the business sector will have to continue taking its lead from a market that’s centred on shiny, ever more connected devices for the foreseeable future.

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Issue 12 2011 AFRICA TELECOMS 63

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users to create their own 3D content, they can get their 3D televisions flying off the shelves.

As was expected, the show was also filled with a number of new handsets that US networks are still getting away with calling 4G, when in fact they’re equipped with nothing more than HSPA+ or LTE. There were of course some exceptions.

One rather unexpected move came from US network operator Cricket, which aims to provide users with an ‘all– you-can-eat’ music service along with an unlimited voice, SMS and data plan.

Another – and one that has stronger relevance on African shores – was the announcement of Motorola’s Atrix handset that becomes a desktop computer, media centre or notebook computer as and when the user’s needs dictate.

But enough glossing over the details … Let’s get knee-deep in what was announced.

Tablets take centre stage

When Apple announced the iPad a little more than Microsoft’s keynote address

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64 AFRICA TELECOMS Issue 12 2011

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More of the same

While there were some new takes on technology, the majority of the products announced at CES could have been predicted six months ago.

For example, tablet or slate PCs continued to be a big focus area and well over five of the industry’s big names made announcements in and around the tablet or slate computing space.

Another slightly predictable ‘hot topic’ was the evolution of 3D and the rather shrewd realization by manufacturers that in enabling Microsoft

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f technology exhibitions were mythical cartoon characters, the Consumer Electronics Show (CES) held in Las Vegas every January would undoubtedly have to be Godzilla.

Bigger than any other technology trade show in the world, more brutal on attendees’ feet than a marathon and more taxing on their minds than a master’s degree in advanced computational mathematics, CES has for some time now been ‘the’ place to unveil new technology.

There are so many new things to see and so many different vendors to engage with, most news agencies take entire teams of journalists to the event – and begin reporting on the goings on two days before the show opens its doors to the public.

However, this year’s CES wasn’t as impressive as in previous years.

That’s partly because the world is still recovering from the economic meltdown and partly because the industry seems to be stuck in

that uncomfortable space between new technologies becoming available and the mass adoption of those technologies.

Think 3D television, tablet/slate PCs and cloud computing if you need examples.

This year the show only played host to 2,500 different exhibitors and managed to command the attention of somewhere close to 120,000 attendees.

But even in its small form, the sheer scale of the tradeshow means it’s the perfect event for gauging market sentiment towards specific products and technologies, and a great opportunity to identify the trends that will shape the electronics space in the years to come.

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Next in line when it comes to interesting tablet announcements, ASUS – the company that pretty much invented the netbook market with the release of the Eee PC all those years ago – let fly with the only remotely compelling Windowsbased tablet we’ve seen to date. Called the Eee Slate EP121, this little puppy has a 12.1-inch capacitive touch screen, runs an Intel Core i5 processor, 4GB of memory and a 64GB solid-state drive.

Reality check. That’s a more powerful specification than the vast majority of notebooks out there today.

When the EP121 was demonstrated on stage, the presenter retouched a 60MB image using the stylus while simultaneously playing back a 1080p video in the background.

Finally there’s a

The first was Motorola’s announcement of its 10-inch, Honeycomb-powered Xoom tablet. As yet, we’re unsure what processor it runs (Motorola has said no more than ‘it’s a dual-core’), exactly how

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tablet capable of running Windows 7 in a compelling way. Again, details that weren’t dished out readily at the event include the unit’s battery life and what the expected price point will be. Despite this, it looks promising.

Best of both worlds

Rounding up the tablet announcements, Lenovo finally showed off its U1 Hybrid: as the name suggests, a mix between a tablet or slate and a full-blown notebook that doesn’t compromise on either device’s core functionality.

The idea is simple. Tablets are great for certain things, but sometimes notebooks are just far better for getting the job done.

With the U1 Hybrid, users won’t have to make that tough choice. One on side , the U1 consists of a Core2Duo notebook, complete with a keyboard, trackpad, hard disk and other system essentials running Windows 7.

But, instead of a normal screen, the U1 has a LePad – Lenovo’s touch screen tablet – which unclips

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much memory it has on board and what it will cost.

What we do know is that it’s the closest thing we’ve seen to an iPad – both in terms of the overall polish of the hardware and the fluidity of the graphical user interface – and in a field of unsuccessful imitators is a good thing.

Unfortunately, we’ll have to wait some time for Motorola to firm some of those details up.

year ago and the market finally got to experience how trouble free this new mode of computing was – browsing the social web and consuming media with ridiculous ease – it was clear that everything was about to change. And even though it’s taken the market some time to catch up, now that RIM is aiming to ring-fence its customer base and Google has released Honeycomb, the tablet version of its Android operating system, things are becoming interesting.

While it’s par for the course for us to expect the vast majority of vendors to simply take the ‘me too’ approach, much like Samsung did with its release of the Galaxy Tab, there will be some bold attempts at redefining the market.

And there are really only three that stand out from the array of tablet-centric announcements at CES.

Issue 12 2011 AFRICA TELECOMS 65

Samsung’s keynote address

announcements that are relevant to the rest of the world before the end of the year.

A horse for every course

The majority of the announcements made around 3D capable cameras came from the likes of Panasonic and Sony who together seem to have a solution for every user.

Panasonic’s announcements comprised a number of new camcorders with 1MOS sensors (designed primarily for capturing 1920 x 1080 clips), a gaggle of others with a 3MOS sensor (designed for more professional 1080/60p shooting) – both

66 AFRICA TELECOMS Issue 12 2011

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Putting tablets on a shelf for the meantime, the second major trend at CES was 3D technology and more specifically the strategy the leaders in the market will be employing to continue driving this new technology segment.

As most analysts and some large consumer electronics brands will admit, 3D technology hasn’t been nearly as much of a success as the big noisemakers in the industry would have liked.

While it’s still early days for 3D, like anything in the consumer electronics space there’s always time pressure to contend with. And although there is a wealth of display devices available today (and some that don’t require glasses coming during 2011) there’s not nearly enough content to create any real interest for the average person in the street.

This, and the fact that we’re living at a time when social media interactions and users’ ability to create/contribute their own content to the mix is of massive importance.

It follows logically then that the number of 3D-capable still and video cameras announced at this year’s CES are designed to get users excited about 3D content creation … and in doing so, sell more 3D televisions.

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from the notebook chassis and transforms into an Android tablet when the user wants to transform their work mode.

To make the whole scenario more awesome, Lenovo has ensured that when the U1 is in ‘notebook mode’ the tablet’s internal memory is mounted like a USB flash drive in the Windows 7 file system and that whatever content was loaded into the tablet’s browser when the machine was docked is automatically synchronised to the Windows 7 browser. As would be expected, the same applies when undocking the tablet from its chassis.

While Lenovo has an interesting approach for taking the Hybrid and LePad to market – selling the tablet separately and the U1 as a kit, but not the U1 chassis as an upgrade – what’s also interesting is that this product in its current form won’t make it outside of the Chinese market.

That said, however, a couple of tweaks to this design could well see it released elsewhere in the world before the end of the year.

Whatever happens, Lenovo has committed to making tablet or slate related

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ranges capable of recording 3D video with an additional lens – and a new ‘professional’ 3D camcorder with a US$21,000 recommended price tag.

On the upside, it does come with a special lens, dual memory cards and more.

Looking next at the company that could well have the largest vested interest in 3D, it’s not surprising that the number of camera-centric announcements from Sony dwarfed the rest of the industry.

Starting with 3D video, the company announced a new Handycam that features what Sony calls ‘Double Full HD 3D’.

In more simple terms, these Handycams feature an integrated dual lens system, which includes two Sony G Lenses, two ‘Exmor R’ CMOS sensors and two ‘BIONZ’ image processors. The result is the ability for 2D high definition and 3D high definition footage to be recorded seamlessly and simultaneously.

Next up, jumping on the 3D stills bandwagon, Sony’s five-unit lineup of Cyber-shot cameras have 16.2 megapixel sensors and quite remarkably, are able to take 3D stills using only one lens and imager.

Rounding its announcements out, Sony added a 3D unit to its popular Bloggie range of shoot and share cameras. The new 3D camera, as expected, makes use of two lenses, two image sensors and a stereo microphone to record 3D footage.

Whether or not the focus on 3D cameras will save the 3D display space

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remains to be seen. One hopes that the current focus on user generated content on a worldwide basis will be enough to give this new market segment impetus.

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battery while it’s being used.

The Atrix is by a long shot the most interesting announcement to see the light of day at CES and one that could see Motorola taking the kudos for finally unseating the iPhone’s dominance in the market: not because it’s better at doing what the iPhone does so well, but rather because it solves a whole bunch of problems the iPhone doesn’t.

The Atrix will undoubtedly be as significant as the release of the first tablet device, the original mainstream release of 3DTV and almost certainly, those first smartphones.

And in a year’s time, who knows where this trend will drive things?

Summary

So, there you have the announcements that are likely – from a trends perspective, at least – to shape 2011’s tech landscape.

While we wait with bated breath to see Apple’s response to many of the announcements made by its rivals at CES (the fruit company doesn’t unveil or exhibit at CES), it’s clear that the consumer electronics industry is alive, well and where the majority of the innovations are coming from today.

Will the focus ever return to the business market?

It’s unlikely.

Does it matter?

Not really.

Most new consumer technologies make their way into the business sector sooner or later. It’s managing that transition that remains tricky and more importantly, where the business sector should be focusing its attention. AT

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a single device that has a large enough screen to provide access to one’s most vital information while on the road, but back at the office be attached to an external display, keyboard and mouse so that real work can commence. It would also be cool if this device was media centric so that it could double as a media hub some of the time, playing back high-definition stills and video on a large screen if needs dictate.

And it seems like Motorola is the only company that listened.

The Atrix does exactly what the dream outlined above calls for – and more.

Not only is it a smartphone when you need it to be, a net-top when you need it to be (using a separately sold dock) and a media hub when you need it to be (using the same separately sold dock), Motorola has gone ahead and developed a notebook-chassis style dock – much the same form factor as a MacBook Air – into which the Atrix can be slotted, giving users a netbook while they’re out on the road.

Again, while there’s relatively little tangible info available on the Atrix (it’s due for release in March in the US), we know that it runs Android, uses a dual-core NVidia Tegra chip and that the notebook-style dock has a six-hour battery, which simultaneously charges the smartphone’s internal

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Smarter phones

No technology trade show would be complete without a bunch of smartphone-centric announcements. And CES played host to a number of new handset launches. While for the most part it was more of what we’ve become accustomed to expecting, there were obviously some exceptions.

Carrying on the 3D trend, LG showcased an early concept of a 4.3-inch smartphone that’s capable of playing back glasses-free 3D video (using the parallax barrier method). This is a long way off, but it was interesting to see vendors thinking in this direction.

However, hot on the heels of its announcement of the Xoom, it was Motorola that again stole the show with the release of two new handsets – the Atrix and the Droid Bionic.

While the Droid Bionic is nothing more than a crazy-fast LTE-equipped cellphone, the Atrix is a completely new concept that we believe will take the market by storm.

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Issue 12 2011 AFRICA TELECOMS 67

advertorial First commercial launch of Dynamic Tariffing™ was by MTN Swaziland.

The History and Future of Dynamic TariffingTM Dynamic Tariffing™: Bringing value to all parties by intelligently varying pricing in order to modify customer behaviour - Des Griggs (Product Director at Digitata Limited) and Hilton Goodhead (CEO of Rorotika Technologies) What is Dynamic Tariffing™?

The concept of Dynamic Tariffing™ appears, at first sight, to be a non-starter; how can an operator benefit by reducing tariffs? Surely this will negatively impact revenue?

At the time of its introduction, Dynamic Tariffing™ (also referred to as “dynamic pricing” or “dynamic discounting”) was indeed an unconventional business practice, even though the ideas behind it are based on sound economic principles. However, it has since been vindicated following several highly successful commercial implementations.

Dynamic Tariffing™ is a concept that allows mobile operators to change the prices charged for calls, on an area, time and usage basis, to best meet revenue and network efficiency targets, while satisfying their customers.

What are the benefits of Dynamic Tariffing™?

Dynamic Tariffing™ delivers the following benefits: - Increased customer acquisitions and market share.

(Figure 1 illustrates MTN Uganda’s market share growth despite increasing competition).

- Maximising revenue per cell by considering the price elasticity of the customers in each cell. Increased calls add to the revenue stream. The dynamic nature of the

68 AFRICA TELECOMS Issue 12 2011

system allows the operator to target regions, social events or customer segments for specific promotions.

- Improved network efficiency by stimulating calls during periods of low network load. The network traffic profile can also be shaped by using Dynamic Tariffing™ to reduce the peak traffic and by doing this reducing the marginal capital investment and operating costs per customer.

How does it work?

The typical Dynamic Tariffing™ offering has a fixed tariff from which (hourly) varying discounts are applied throughout the day. Discounts are automatically calculated by complex mathematical models to ensure that the operator’s objectives are met while still offering customers tariffs that are sufficiently attractive for them to change their normal calling behaviour. Furthermore, the Dynamic Tariffing™ Engine is able to adapt to changes in traffic patterns that result from seasonal variations, religious and cultural festivals, as well as unforeseen random events (such as faults) in the network.

Principles, similar to Dynamic Tariffing™, have also been applied in other industries including: - Road traffic control – using variable toll fees to discourage use of congested routes and peak traffic times,

-Parking metering – using variable cost according to time of day and location, -Electricity metering – using variable unit cost to encourage power conservation during peak periods.

Brief history MTN South Africa implemented a pilot study of Dynamic Tariffing™ in the Eastern Cape in 2006.

The first commercial implementation was by MTN Swaziland in August 2007 using a Dynamic Tariffing™ System originally developed by Rorotika Technologies (now marketed by Digitata Limited [4]). The service, branded as “MTN Zone”, was subsequently launched in MTN Guinea Bissau (November 2007), MTN South Africa (January 2008) and MTN Uganda (June 2008). In total, Dynamic Tariffing™ has been launched in 14 MTN operations.

Other discounting systems have also been implemented in Tanzania, Uganda, Sudan, Kenya, Sri Lanka and India, and trials are being carried out in South America.

Ericsson [5] has deployed the majority of solutions to date but most of the major vendors have similar offerings. The significant number of implementations to date validates the principles underlying the concept.

Launch success As with the launch of all new products, the take-to-market strategy and system configuration are critical to ensure success. In this regard a vendor with a proven track record of implementations and experience is invaluable. If correctly commissioned, product adoption by tens of thousands of customers per day can be achieved. Subscribers typically opt in using USSD, SMS, IVR or by calling the operator’s call centre.

“MTN Zone” in South Africa and Uganda are documented in the annual reports of the MTN Group as success stories, where phenomenal subscriber growth and retention is directly

attributed to the product.

Various markets have now established that Dynamic Tariffing™: - Balances traffic load, leading to improved network efficiency, - Increases net revenues, - Increases market share by stimulating customer growth and reducing churn (amongst other benefits).

Dynamic Tariffing™ has also proved invaluable in addressing current challenges operators face with regard to: - Improving general business efficiency in times of pressure on margins, - Adapting to, and competing with, reductions in tariffs and new competitors, - Minimising capital investment at times when access to capital is difficult, - Offering a very flexible platform on which to build a range of advanced and novel tariff options that: • Adapt appropriately to network failures • Offer unique short term campaigns or promotions • Provide geographically defined offerings • Dynamic Tariffing™ has been applied to SMS and could be available on mobile data services in the near future.

Conclusion Dynamic Tariffing™ enables operators to improve their business efficiency, while providing customers with opportunities to make calls at lower cost, thus opening mobile telephony to a broader base, without eroding revenue from high value customers. This is expected to have a particularly profound effect in African markets and will enable millions of people to cross the “digital divide” by making telephony Des Griggs affordable. and Hilton The concept can be Goodhead have successfully applied been intimately by new entrants involved with the development as well as mature of the Dynamic operators. Dynamic Tariffing™ concept Tariffing™ empowers and solutions since the operator with a 2001. Des is Product greater level of control Director at Digitata Limited. Hilton is on price and revenue CEO of Rorotika than ever before. AT Technologies.

Issue 12 2011 AFRICA TELECOMS 69

advertorial

Impact of Dynamic Tariffing™ on MTN Uganda’s market share - Despite the intensely competitive environment, MTN’s market share increased significantly.

Telecoms companies must continually innovate and evolve, otherwise they’ll dissappear from this unforgiving industry in a jiffy. Some are better at it than others, and some bounce back after setbacks that would cripple less enterprising entities.

70 AFRICA TELECOMS Issue 12 2011

LESLEY STONES looks at 11 companies that Africa Telecoms believes will do big things in 2011.

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

01 Airtel

This should be a great year for Bharti Airtel with the bedding down of its US$10.7 billion Zain acquisition behind it and a continent of opportunities ahead of it. It now serves 200 million customers across 19 countries, having acquired Zain’s commercial presence in 15 of them.

Analysts warn that the Indian operator can’t just import its methods to Africa. Bharti executives know that, but they’ve made such an effort to get into Africa that they must be fully convinced they can have a major impact – and in return, see a major impact on Bharti’s bottom line.

Bharti Airtel International CEO Manoj Kohli acknowledges it must evolve country-by-country strategies to transform its Africa operations.

“It is no doubt an exciting challenge – 15 countries, 42 million customers, 15 different regulatory regimes, multiple time zones, different currencies and cultures. We will bring tremendous scale and efficiency and more importantly, our execution excellence to the Africa operations,” he says.

BusinessWeek has ranked Bharti among the six best performing technology companies in the world. That’s not enough for Bharti Enterprises chairman Sunil Mittal, whose personal goal is that by 2015, Airtel will be the most loved brand, enriching the lives of millions. He doesn’t specify if he means in India, in Africa too, or whether he’s aiming for global domination. Mittal makes a point of stressing that Bharti is “the first Indian brand to go truly global,” and national pride will ensure he pays full attention to getting it right in Africa. So expect price cuts, innovative services and aggressive campaigns in the countries where Bharti now plays.

It’s about time someone really spiced up the telecoms market on behalf of consumers, and our money is on the Indians to do it.

Issue 12 2011 AFRICA TELECOMS 71

02 Cambridge

Broadband Networks Running a satellite service is notoriously difficult, with some spectacular collapses and bankruptcies littering the skies. Nevertheless, Yahsat is wading right in there as the first player in the Middle East and Africa to offer hybrid satellite services to the region.

The satellite telecoms company is owned by Mubadala, an investment and development vehicle of the Abu Dhabi government.

Feasibility studies began in 2005, it was incorporated in 2007 and it will launch its first two satellites this year, through a deal struck with Arianespace and International Launch Services.

The satellites are currently being built in Europe and the first should shoot up in the first quarter of this year, with the second launch in the second half of 2011.

Yahsat promises to offer YahClick, a satellite broadband service; YahSecure, a satellite service for government use; and YahLink, a general connectivity service. At least the names are in place even if the satellites aren’t.

It has also partnered with a European satellite operator to create a new company, YahLive, to offer direct-to-home television broadcasts. Yahsat aims to serve about 85 countries across the Middle East, Africa, Europe and South West Asia, with its target markets being governments, banking and financial institutions, broadcasters, manufacturers, mobile telecoms networks and internet service providers.

Obviously plans are still in a developmental stage and the caveat is that a government is involved, which often hampers innovation and agility. But Yahsat certainly talks a good story, so let’s hope it’s not just pie in the sky.

72 AFRICA TELECOMS Issue 12 2011

Another technology developer worth watching is Cambridge Broadband Networks, which sounds awfully English but has offices in South Africa and Malaysia, manufacturing facilities in China and operations in 33 countries. It manufactures microwave solutions to significantly reduce capital expenses and backhaul operating costs of telecoms carriers.

It’s particularly proud of VectaStar, described as the world’s most technically advanced and widely deployed point-to-multipoint (PMP) packet microwave platform for cellular backhaul. VectaStar “enables service providers to handle exponential voice and data growth in a costeffective way and deliver the high rates of user satisfaction they need to grow the value of their subscriber base,” it says.

Cambridge says operators are increasingly using PMP in their network upgrades to meet rising demand for broadband mobile data. In November it raised US$16.5m to fund aggressive growth to capitalise on demand for its technologies.

CEO Graham Peel said the investment it secured was an affirmation of faith in its technologies and recognition of the significant opportunities.

The cash will let it invest more in product development, enhance its sales and customer support and push into new territories. Its products can reduce backhaul costs by up to 60% and are being used in more than 30 countries so far. In November, Deloitte ranked Cambridge in the top 200 fastest-growing technology companies in Europe, the Middle East and Africa. Rankings are based on percentage revenue growth over five years, with Cambridge enjoying 864% growth for the period. Which certainly sounds worth exploring.

03 Yahsat

04 Heita UK-based Arieso is a behind-the-scenes player that does a lot of the work without getting much of the glory.

In 2011 mobile operators will face challenges like never before, Arieso says, through bandwidth-hungry applications, unlimited data tariffs, exponential traffic growth and the need to look at 4G networks without blowing their evertightening budgets. Operators must innovate to survive and their legacy tools and business models no longer cut it. That’s where Arieso comes in. It already works with many of the world’s major players including MTN, and other tier one European and US operators on projects including boosting iPhone performances over GSM and UMTS technologies and planning LTE networks.

During South Africa’s 2010 World Cup, MTN worked with Arieso to manage the surge in traffic as foreign fans descended. MTN South Africa has subsequently decided to roll out Arieso technology in all its networks.

Its software helps operators to make better use of their capital expenditure, optimise their networks ahead of special events, plan microcell deployments and hone network performance to reduce churn and increase revenues.

Reported benefits have included 20% to 40% improvements in network performance. Its ariesoGEO software lets operators see where their subscribers are, down to individual buildings; monitors which services they use and the handsets they are using; and analyses the user experience to diagnose network issues or identify problems. Operators can use the results to enhance their network engineering, run targeted sales and marketing campaigns, and jack up customer care. Arieso solutions are often summoned to help deal with anticipated traffic spikes during sports events or conferences, to assist with new network rollouts and to determine the most appropriate sites and configurations before a network is launched.

South Africa’s fixed line operator Telkom finally did something dynamic last year by launching into the mobile business. Too late, perhaps, but dynamic nonetheless. Revenue from its fixed lines is falling as more people use mobiles, so the company was in danger of becoming increasingly irrelevant.

Voice traffic fell 9.3% in the year ending March 2010 due to competition from mobile players and rival fixed-line services.

The answer, it hopes, is 8ta, which offers pre-paid and contract voice and data services, with contracts ranging from R90 to R500 a month.

Telkom ambitiously aims to capture 15% of South Africa’s mobile phone market in five years. That sounds highly unlikely given the entrenched strength of Vodacom and MTN, and the efforts third player Cell C has made recently to boost its customer base. Analysts can’t agree on whether launching so late into the market as a fourth operator is suicidal or essential. Suicidal as Telkom has budgeted ZAR6 billion for its mobile network, yet the level of interest isn’t seen to be enormous. Or essential, because without a mobile service all its fixed line users could gradually drift away. 8ta is initially chasing clients from Telkom’s 4.3 million fixed-line users, of which 2.1 million are businesses, says 8ta’s Managing Executive Amith Maharaj. The attractions are that calls from the 8ta network to a fixed-line phone are 60% cheaper than the typical market rates, with no peak and off-peak rates. Customers who send five SMSes a day also get 50 free SMSes to use that day. Another innovation is that contract customers can make unlimited free calls to a single landline number of their choice.

Those are enticing for new cellphone users, but may not be sufficient to lure those already served by a rival network.

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Arieso Issue 12 2011 AFRICA TELECOMS 73

06 MeshPotato An estimated 1.6 billion people live in areas not served by an electricity grid.

So as well as lacking an easy source of light and heat, it’s a bit of a struggle to recharge a mobile phone too.

The statistics come from the GSMA, which is working with operators to address off-grid charging issues. The GSMA believes there’s a sound commercial reason for operators to support its efforts, as trials in Madagascar and Haiti suggest that once off-grid subscribers acquire mobile charging solutions, their usage and ARPU rise by 10% to 14%.

Not everyone living without electricity has a phone, of course, but the GSMA reckons 600 million do. That’s a huge market for companies such as Fenix International, which produces affordable power generation and storage solutions.

One product is the ReadySet battery that can quickly charge from a bicycle generator, solar panel or from the grid using a wall adapter. The next version will also be charged by wind.

The resulting electricity can power lights, phone chargers and other small devices. A ReadySet will cost around US$150 with a power source such as a solar panel. Fenix plans to launch its products in Africa first, and hopes to sell them through phone distributors and network operators, which lose money when customers have flat phones.

The packs aren’t designed for individual buyers, but for entrepreneurs who can run a business by selling the power. In a pilot project in Uganda, Fenix found people could earn US$50 a month from the batteries.

74 AFRICA TELECOMS Issue 12 2011

Okay, so Mesh Potato has nowhere near the potential of Bharti or Etisalat, but we love the name so much that it deserves a mention! Besides, it’s a technology developed in Africa for Africans, and that’s got to be worth supporting.

The Mesh Potato is a device for providing low-cost telephony and internet access in underserved areas where power supplies and handsets are scarce. The concept was developed at a workshop run by the Shuttleworth Foundation, created by South Africa’s internet billionaire Mark Shuttleworth.

It’s a marriage that pairs an Analogue Telephony Adapter (ATA) with a low-cost wireless access point (AP) running mesh networking software. So you can plug in an ordinary telephone to get online, as the Mesh Potato converts the analogue signal of a standard phone to the digital signal needed for internet access.

The initial internet signal will probably come from a village internet café, and be broadcast via rooftop antennae for a radius of about 1km, after which it is picked up by one Mesh Potato. That would pass it to another Mesh Potato, then to the next, until it reaches the Mesh Potatoes in individual homes and businesses.

The device should go to market early this year, and it’s designed to be hardy and weather resistant. To keep costs down it runs on open source software, is easy to install and uses very little energy.

Once it scales up, the devices should be available for about US$60.

The developers say although the network is innovative, they’re not inventing anything new. The technology already existed; it just hadn’t been put together in quite this way to make it cheap and simple for the communities that will use it.

07 Fenix Intl.

08 Zephyr While Bharti has been getting all the publicity, Etisalat is quietly getting on with being another of the largest telecoms companies in the world.

Its claim to be the leading operator in the Middle East and Africa by serving 100 million customers in 18 countries is being challenged by Bharti, but technically Etisalat is right, since the bulk of Bharti’s customers are Indian. Still, with a total population of almost two billion people in the countries where Etisalat operates, there’s plenty of room for both.

Etisalat bills itself as a one-stop shop for mobile and fixed-line voice and data, with sidelines including SIM card manufacturing, payment solutions and clearing house services.

Other fingers in related pies saw Etisalat and six other companies announce in December that they are building the Middle East’s longest fully-redundant terrestrial communications infrastructure. The 7,750km round-trip route from the UAE to Europe will cover the entire Gulf region with a uniform infrastructure for the first time and serve as a gateway to the internet for two billion people.

A consortium including Etisalat has also launched a 13,000km fibreoptic submarine cable linking India to Europe via the Middle East with landings in the UAE, Saudi Arabia, Egypt and Lebanon.

For the future, Etisalat aims to use technology to extend into other fields. “As the pace of technological change increases, Etisalat will extend its reach into new technologies, services and markets to create opportunities for our customers,” it says.

It doesn’t get specific, but implies it’s looking more deeply at education, healthcare and online commerce.

The need for operators to cut their running costs to successfully serve poor rural areas is well known. Most efforts to cut down on costly diesel seem to focus on solar power, but Africa can be awfully windy.

Just take a walk through Cape Town. So perhaps wind-powered base stations are the answer.

Tokyo-based Zephyr Corporation thinks so, and says using wind power to replace diesel generators can cut both the capital and operating expenses at off-grid sites or in areas where the power supply is erratic. But its technology isn’t only for third world countries, as it already has customers in the US, Canada and Australia.

In November it signed a deal with telecoms systems integrator Lapp Group Southern Africa to sell wind turbines to operators in Namibia, Lesotho, Zimbabwe and South Africa.

The turbines weigh just 17.5kg, and their blades can generate power at remarkably low wind speeds. As long as there’s a breeze of at least 9km/h they’ll be revolving.

Zephyr expanded its team last year as rising diesel prices and demands for greener technology affected operators around the world.

Zephyr is a member of the GSMA Green Power for Mobile initiative that is encouraging the adoption of alternative energy.

The GSMA expects nearly 639,000 off-grid base stations to be rolled out in emerging markets by 2012 and wants 118,000 of them to run on renewable energy.

09 Etisalat Issue 12 2011 AFRICA TELECOMS 75

10 Corning

Google search for Corning Incorporated tells you the company is the world leader in specialty glass and ceramics.

What does that have to do with telecoms, you ask.

Well, one of its divisions is Corning Telecommunications, and within that division is Corning Optical Fiber.

Turns out that Corning actually invented the first low-loss optical fiber (or fibre, as we prefer to spell it) in 1970. It followed that breakthrough by inventing a mass manufacturing process, making it possible to roll out low-cost, high-capacity optical transport systems.

Given the massive demand for high-speed bandwidth that submarine cables are finally delivering to Africa, Corning is sitting pretty.

The company says its innovations provide customers with high-quality solutions that bring infinite bandwidth capabilities right to their doorstep.

In the US, perhaps, but not quite in Uganda or Somalia. But we’ll get there. Maybe. Anyway, Corning remains the market leader 40 years after its innovation helped launch the communications age, says Corning Optical Fiber senior vice president Martin Curran. “Today, optical-fibre innovation is as vibrant as ever.

Corning has built on its groundbreaking invention by continuing to develop new fibre technologies for submarine, long-distance, enterprise, and fibre-to-the-home networks that enable faster, better, and more cost-effective communication.”

Look at the GSM Association’s website at www.gsmworld.com and you’ll see a number that reads something like 4,805,227,587. As you watch, it keeps getting higher. That’s the number of GSM and 3GSM subscribers around the world. It’s not a precise figure, the GSMA warns somewhat needlessly, but it’s a flipping good estimate. Since this industry has such as huge number of customers, it’s comforting to know an overarching body is working to keep the sector, its technology standards and its ethics on track.

At the moment it’s concentrating heavily on mobile broadband using technologies such as HSPA, HSPA+ and LTE. Any operator or manufacturer wondering which to adopt can consult the association, which says HSPA is by far the most successful, with more than 1,900 HSPA-enabled devices launched globally. Important to emerging nations are the GSMA’s Digital Dividend initiatives. The switchover from analogue to digital terrestrial TV will free up an unprecedented amount of spectrum and it’s lobbying to ensure a fair reallocation to ensure that countries reap the full social and economic benefits.

The GSMA also runs a Development Fund to encourage the industry to devise mobile solutions for people living on under US$2 a day. That includes a specific initiative to promote mobile money services for the unbanked.

It also champions energy efficient technologies such as base stations that run off renewable energy. Thankfully, it’s also encouraging manufacturers to end their annoying habit of designing incompatible devices, and at least agree on a common format for mobile phone chargers.

On the policy front the GSMA influences legislation relating to the industry through meetings with ministers and regulators. Given the parlous state of some African telecoms ministries and regulatory authorities and their habit of thwarting growth through bad decisions over taxes, spectrum allocation, new licences and the level of competition allowed, sensible lobbying from such an experienced organisation is clearly crucial.

76 AFRICA TELECOMS Issue 12 2011

11 GSMA

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THE last word

TIN CAN PHONE -IF RED BULL HAS A SAY On 20 January 2011, Red Bull, of energy and changes the landscape of that market. drink, Formula One and Extreme sports This has been proven time and time again, fame heralded its arrival into the South whether its those magnificent men and African mobile market with the launch of women in their flying machines or the Red Bull Mobile.

Charlie Manson-like cult following of its The company will become South consumers, Red Bull makes it mark. It Africa’s second Mobile Virtual Network has the potential to do so in South Africa Operator (MVNO), through a partnership with Red Bull Mobile and across the with Cell C and according to reports, be entire continent, if the model is successful available by March 2011. What does this in SA. By doing the opposite of what mean for consumers? everyone else does, Red Bull has been The answer to this question can be able to make a success of an enterprise found at the bottom of one of those where others have failed. ubiquitous blue and silver cans.

Some characteristics that have defined Everything about Red Bull is an anomaly. the company’s way of doing things The company founded and headed by include seducing the consumer to buy Dietrich Mateschitz has become a pioneer into its products, exclusivity through in launching game changing products targeted marketing rather than elitism, within over crowded marketplaces. From consistency in its maverick approach, the launch of the Red Bull energy Drink and most importantly, an emphasis on in 1987, when Red Bull’s market research individuality coupled with a unique sense firm advised Mateschitz not to quit his of community. day job,” concluding that “no other new As with all Red Bull products, there product has ever failed this convincingly,” will be a clear proposition, a highly well to the company winning the 2010 Red Bull enters markets with little profiled and understood target market, Formula One Championship after only hoopla and fanfare and changes and unique content to drive adoption and 6 seasons in a sport that is known for use. Add an element of the Red Bull the landscape of that market. its ruthlessness and notorious difficulty myth and mystique, and you are left with to master, the company continuously a formidable proposition. challenges the accepted way of doing things and define new “If someone preaches profit-maximising as a company’s paradigms. highest goal, then that’s simply wrong. Hell, it’s criminal,” In between, Red Bull has supported and flourished a host says Matechitz. With logic like that, and brands built on of other activities. What ever may happen, we do know 2 quality of product rather than the bottom line, Red Bull things. Dietrich Mateschitz has big balls and deep pockets.

Mobile will take the industry by the horns and give it the These seem to go hand in hand. One does not take on the shaking it so desperately needs. In the words of Mateschitz likes of the Coca-Cola Company, beat them at their own about Red Bull’s ingredients, “I always have to fly to game, and create a revolution in the process.

Pamplona to source bull’s testicles.” Although it is clear no It is this tenacity and unique way of getting things bulls are harmed in the making of this innovative brand, it done that will ensure that Red Bull succeeds where its does show the irreverent and unconventional approach that predecessor, Virgin Mobile, failed. Red Bull’s genius is its the company takes with its mythology, and the products it ability to understand its market and offer market leading offers. Bring on the Bulls……. AT products, rather than just another “me-too” imitation.

Red Bull enters markets with little hoopla and fanfare THE AUTHOR:

80 AFRICA TELECOMS Issue 12 2011

Mohammed Khan is the Executive Editor of Africa Telecoms Magazine

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